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NuStar Energy (NS) Q4 Earnings Miss Estimates, Revenues Top

NuStar Energy L.P. NS reported fourth-quarter adjusted earnings per unit of 13 cents, below the Zacks Consensus Estimate of 22 cents. The partnership’s bottom line also fell from the year-ago earnings of 40 cents per unit. Quarterly performance was affected by lower product sales and higher cost of goods.

However, the company reported total quarterly revenues of $387 million, beating the Zacks Consensus Estimate of $360 million, attributable to better-than-expected revenues from the Pipeline unit. Precisely, the partnership’s Pipeline unit generated revenues worth $180.8 million, surpassing the Zacks Consensus Estimate of $177 million. The top line, however, declined 3.25% year over year.

Also, the company recorded an operating income of $104.4 million, lower than the profit of $124.1 million in the corresponding quarter of last year.

Segmental Performance

Pipeline: Total quarterly throughput volumes were 1,657,310 barrels per day (Bbl/d), down 19.8% from the year-ago period. Throughput volumes from crude oil pipelines decreased 23.3% from the year-earlier quarter to 1,121,378 Bbl/d. Also, throughput from refined product pipelines witnessed a decrease to 535,932 Bbl/d from 601,505 Bbl/d. As a result, the segment’s revenues dipped 6.75% year over year to $180.8 million. Moreover, the firm’s Pipeline unit reported an operating income of $85.5 million compared with the operating income of $98.6 million in the year-ago period.

Storage: Throughput volumes descended to 387,149 Bbl/d from 656,000 Bbl/d in the prior-year quarter. However, the unit’s quarterly revenues increased to $129.4 million from $126.4 a year ago owing to surging storage terminal revenues (from $83.3 million to $92.9 million). Evidently, the segment’s operating income summed $49.1 million in the December quarter compared with $45.9 million in the comparable period last year.

Fuels Marketing: Product sales decreased to $76.5 million from $79.4 million in the year-ago quarter. Moreover, cost of goods rose 8.8% from the prior-year period to $63.2 million. However, NuStar Energy delivered weak margins from its bunkering business. The segment recorded an operating income of $2.5 million in the quarter under review compared with the profit of $11.2 million in fourth-quarter 2019.

NuStar Energy L.P. Price, Consensus and EPS Surprise

NuStar Energy L.P. price-consensus-eps-surprise-chart | NuStar Energy L.P. Quote

Cash Flow, Debt and Guidance

Fourth-quarter 2020 adjusted distributable cash flow available to limited partners was $63.1 million, lower than $107.1 million in the year-ago period. Moreover, adjusted distribution coverage declined to 1.44X from 1.64X in the fourth quarter of 2019. A coverage ratio in excess of 1 implies that the partnership is generating more than enough cash to cover its distribution.

As of Dec 31, 2020, the partnership’s total consolidated debt was $3.6 billion.

For the current year, oil pipeline operator NuStar Energy anticipates its capital expenditure in the $140-$170 million band, all of which will be financed by internally generated cash flows. Of the total estimated capex, nearly $50 million will be allocated to its Permian system while another $50 million will be devoted to renewable fuels along with related improvements of its West Coast storage assets. Further, the company intends to spend around $40-$50 million on reliability capital spending.

Zacks Rank & Key Picks

NuStar Energy has a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energy space are DCP Midstream Partners, LP DCP, Plains Group Holdings, L.P. PAGP and Matador Resources Company MTDR, each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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