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Phillips 66 Partners (PSXP) Units Recover Since Q1 Earnings Miss

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Phillips 66 Partners LP’s PSXP units — which declined 4.1% after the announcement of weak first-quarter earnings on Apr 30 — have risen 4.4% since then. The partnership reported first-quarter adjusted 2021 earnings per unit of 74 cents, missing the Zacks Consensus Estimate of 78 cents. Moreover, earnings declined from 93 cents per unit in the year-ago quarter.

Revenues of $376 million decreased from $404 million in the year-ago quarter but beat the Zacks Consensus Estimate of $370 million.

The weak first-quarter earnings can be attributed to winter storms. Moreover, higher operating and maintenance expenses along with lower pipeline and terminal throughput volumes affected the bottom line. The negatives were partially offset by higher terminaling and pipeline revenues per barrel.

Phillips 66 Partners LP Price, Consensus and EPS Surprise

Phillips 66 Partners LP Price, Consensus and EPS Surprise
Phillips 66 Partners LP Price, Consensus and EPS Surprise

Phillips 66 Partners LP price-consensus-eps-surprise-chart | Phillips 66 Partners LP Quote

Operating Information

The partnership provides services through Pipelines, Terminals, and Storage Processing & Other activities.

Pipeline: In first-quarter 2021, the partnership generated revenues of $104 million, down from $111 million in the prior-year period. The drop was due to lower pipeline volumes of crude oil, refined petroleum products and natural gas liquids than the year-ago period. Pipeline volumes of 1,605 thousand barrels per day (Mbpd) were down from the year-ago figure 1,807 Mbpd. The negatives were partially offset by growth in average pipeline revenues to 71 cents per barrel from 67 cents in the year-ago quarter.

Terminals: The partnership generated $39 million revenues, down from $43 million in the year-ago quarter, primarily due to lower throughput volumes of refined petroleum products and crude oil. Terminal throughput volumes came in at 1,031 Mbpd, way below the year-ago period’s 1,208 Mbpd.

However, average terminaling revenue per barrel was 41 cents for the quarter versus 39 cents in the year-ago period.

Storage, Processing & Other activities: Through these activities, the partnership generated revenues of $109 million, down from $113 million in the year-ago quarter.

Costs & Expenses

For the March quarter of 2021, the partnership reported operating and maintenance expenses of $95 million, up from $88 million in the year-ago period. It incurred an impairment charge of $198 million in the quarter due to exit from the Liberty Pipeline joint venture. As such, total costs and expenses increased to $387 million for first-quarter 2021 from the year-ago figure of $177 million.

Balance Sheet & Capex

As of Mar 31, 2021, the partnership recorded cash and cash equivalents of $3 million, down from the fourth quarter-end level of $7 million. Total debt at the end of the quarter under review rose to $3,944 million from $3,909 million at fourth quarter-end. Notably, it has $299 million available under the revolving credit facility.

Capital expenditure and investment in the first quarter totaled $58 million.

Outlook

The partnership is constructing the 16-inch C2G ethane pipeline, which is expected to be completed by mid-2021. It will connect its Clemens Caverns storage facility to Gregory petrochemical facilities, located near Corpus Christi.

Zacks Rank & Stocks to Consider

The partnership currently has a Zacks Rank #5 (Strong Sell). Some better-ranked players in the energy space include Profire Energy, Inc. PFIE, NOW Inc. DNOW and Hess Corporation HES, each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Profire Energy’s bottom line for 2021 is expected to rise 100% year over year.

NOW’s bottom line for 2021 is expected to rise 70.8% year over year.

Hess’ bottom line for 2021 is expected to surge 150.9% year over year.

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Hess Corporation (HES) : Free Stock Analysis Report

Phillips 66 Partners LP (PSXP) : Free Stock Analysis Report

NOW Inc. (DNOW) : Free Stock Analysis Report

Profire Energy, Inc. (PFIE) : Free Stock Analysis Report

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