MPLX Q4 Earnings Miss Estimates on Lower Throughput Volumes

MPLX LP MPLX reported fourth-quarter adjusted earnings of 55 cents per unit, missing the Zacks Consensus Estimate of 61 cents. However, the figure increased by 3 cents from the year-ago level.

Revenues of $2,316 million were higher than fourth-quarter 2018 sales of $2,295 million. Also, the top line beat the Zacks Consensus Estimate of $2,226 million.

The lower-than-expected earnings were due to reduced Logistics and Storage throughput volumes and non-cash impairment charges from the Andeavor Logistics acquisition. This was partially offset by strong performance of core business and higher average tariff rates from pipelines.

Total 2019 revenues were recorded at $9,041 million, higher than the 2018 level of $7,005 million.

MPLX LP Price, Consensus and EPS Surprise

MPLX LP Price, Consensus and EPS Surprise

MPLX LP price-consensus-eps-surprise-chart | MPLX LP Quote

Segmental Highlights

MPLX’s operating income from the Logistics and Storage segment increased from $637 million a year ago to $677 million. The year-over-year upside is attributable to higher average tariff rates from pipelines. However, the reported figure missed the Zacks Consensus Estimate of $852 million. Total pipeline throughput volume of 5,119 thousand barrels per day decreased from the year-ago level of 5,157 thousand barrels.

Operating loss from the Gathering and Processing segment was recorded at $1,023 million against $254 million profit in the prior-year quarter. The reported figure missed the Zacks Consensus Estimate of earnings of $438 million. The quarterly loss can be attributed to an impairment charge related to goodwill associated with the acquisition of Andeavor Logistics’ gathering and processing businesses.

Costs and Expenses

Total costs and expenses in the quarter were recorded at $2,662 million, significantly up from the year-ago level of $1,404 million. Higher impairment expenses related to goodwill, associated with the Andeavor Logistics acquisition, led to the rise in costs, while lower operating expenses partially offset the effects from the same.

Cash Flow

Distributable cash flow available to limited partners in fourth-quarter 2019 was $1,045 million, providing 1.42x distribution coverage, up from $701 million in the year-ago period. Distribution per unit was 68.75 cents in the reported quarter. This marks a 6.2% hike from the year-ago period and sequential growth of a penny, representing the 28^th consecutive quarterly distribution increase.

Net cash flow from operating activities in the quarter under review increased to $1,092 million from $1,044 million recorded in the corresponding period of 2018. Notably, MPLX generated net cash of $4.1 billion from operating activities in 2019, which enabled it to return capital of around $2.8 billion to unitholders.

Balance Sheet

As of Dec 31, 2019, the partnership’s cash and cash equivalents were $15 million. Its total debt amounted to $20.3 billion, while debt-to-capitalization ratio was 55%.

Outlook

The partnership expects to complete the Omega 2 processing facility in first-quarter 2020. The Preakness and Smithburg 1 processing facilities are expected to be in service in the second and third quarters of 2020, respectively. MPLX now expects capital expenditure of around $1.5 billion for growth purposes in 2020, which is $500 million lower than the previous guidance.

It expects the Wink-to-Webster crude oil pipeline project to be completed in first-half 2021. In the Permian, the Whistler pipeline is expected to come online in second-half 2021. The partnership expects to generate positive free cash flow in 2021 with the help of growth projects.

Zacks Rank & Stocks to Consider

MPLX currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy sector include Marathon Oil Corporation MRO, Chevron Corporation CVX and Hess Corporation HES, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Marathon Oil’s revenues for 2020 are expected to rise 3% year over year.

Chevron’s bottom line for 2020 is expected to rise 14.8% year over year.

Hess’ bottom line for 2020 is expected to rise 91.6% year over year.

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