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NuStar Energy's (NS) Beats on Q1 Earnings, Misses Revenues

San Antonio-based publicly traded partnership NuStar Energy L.P. NS reported strong first-quarter 2016 earnings on the back of lower operating expenses and higher contribution from the storage segment.  

NuStar Energy’s earnings per unit (EPU) – from continuing operations – came in at 57 cents. The bottom line beat the Zacks Consensus Estimate of 49 cents but deteriorated from the year-ago quarter figure of $1.46.

Quarterly revenues of $405.7 million, however, failed to meet the Zacks Consensus Estimate of $500 million and also decreased from the year-ago level of $554.9 million. The decline in revenues was mainly attributable to lower throughput volumes from the pipeline segment and decreased revenues from product sales.

Quarterly Distribution

NuStar Energy announced a quarterly distribution of $1.095 per unit, unchanged from that in the previous quarter. The distribution is payable on May 13 to unitholders on record as of May 9, 2016.  

Distributable cash flow (DCF) available to limited partners for the first quarter was $97 million or $1.25 per unit (providing 1.14x distribution coverage), down from $106.8 million or $1.37 per unit in the year-earlier quarter.

Segmental Performance

Pipeline: Total quarterly throughput volumes in the segment were 932,381 barrels per day (Bbl/d), down 7.9% from the year-ago period.

Throughput volumes in the crude oil pipelines plunged 18.8% from the year-ago quarter to 411,109 Bbl/d. Also, throughput revenues witnessed a 4.4% year-over-year decline to $118.9 million. Moreover, the segment’s operating income dipped 6.3% year over year to $64.3 million due to decreased throughput volumes from crude oil pipelines.

Storage:Throughput volumes in the Storage segment fell nearly 5.9% year over year to 828,327 Bbl/d.

Quarterly revenues inched up 1.4% from the first quarter of 2015 to about $152.4 million. The segment reported operating income of $57 million, which marks an improvement from $48 million in the year-ago quarter. Improved storage lease revenues and lower operating expenses drove the upside.   

Fuels Marketing: The unit reported operating loss of $0.8 million due to significantly low revenues from product sales. Last year, the unit had delivered operating income of $9.9 million.

Total Expense

The partnership incurred total costs of $311.1 million, down 31.7% year over year.

Balance Sheet

As of Mar 31, 2016, the partnership had total debt of $3,206.7 million, which represents a debt-to-capitalization ratio of 67.3%.

Guidance

NuStar has lowered its 2016 strategic capital investment projection by 50% to $180−$200 million.

Stocks to Consider

NuStar currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the oil/gas prod pipeline MLP sector are Enable Midstream Partners, LP ENBL, JP Energy Partners LP JPEP and Rose Rock Midstream, L.P. RRMS. All of these stocks hold a Zacks Rank #2 (Buy).

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ENABLE MIDSTRM (ENBL): Free Stock Analysis Report
 
NUSTAR ENERGY (NS): Free Stock Analysis Report
 
ROSE ROCK MIDST (RRMS): Free Stock Analysis Report
 
JP ENERGY PTN (JPEP): Free Stock Analysis Report
 
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