Guides to 2023 Annual Net Income of
$975 Million and Distributable Cash
Flow of $1.18 Billion
TULSA,
Okla., Feb. 2, 2023 /PRNewswire/ -- Magellan
Midstream Partners, L.P. (NYSE: MMP) today reported net income of
$187 million for fourth quarter 2022,
compared to $244 million for fourth
quarter 2021. The 2022 results were negatively impacted by a
$58 million non-cash charge for the
impairment of our investment in the Double Eagle pipeline joint
venture.
Diluted net income per common unit was 91
cents in fourth quarter 2022 and $1.14 in fourth quarter 2021. Diluted net income
per unit excluding mark-to-market (MTM) commodity-related pricing
adjustments, a non-generally accepted accounting principles
(non-GAAP) financial measure, was $1.06 for fourth quarter 2022, or $1.34 excluding the 28-cent negative impact of the Double Eagle
impairment. These results exceeded the $1.22 guidance provided by management last fall
primarily due to higher-than-expected refined products
transportation revenues and improved commodity margin resulting in
part from additional blending volumes during the quarter.
Distributable cash flow (DCF), a non-GAAP financial measure that
represents the amount of cash generated during the period that is
available to pay distributions, was $345
million for fourth quarter 2022, compared to $297 million for fourth quarter 2021. Free cash
flow (FCF), a non-GAAP financial measure that represents the amount
of cash available for distributions, additional expansion capital
opportunities, equity repurchases, debt reduction or other
partnership uses, was $324 million
during fourth quarter 2022, versus $291
million during fourth quarter 2021.
"Magellan wrapped up the year with another solid quarter,
supported by record refined products transportation volumes and
financial results that exceeded our expectations. During 2022, we
delivered over $1.3 billion of value
to our investors via opportunistic equity repurchases and
Magellan's attractive cash distribution, marking 21 years of
continuous annual distribution growth," said Aaron Milford, chief executive officer.
"More than ever, world events during 2022 reinforced the
criticality of the energy industry and the essential fuels our
nation relies on every day," Milford continued. "Magellan remains
committed to running our business responsibly, with a continued
focus on safe and reliable operations, while maintaining our proven
financial discipline and balanced capital allocation strategy to
maximize long-term investor value."
An analysis by segment comparing fourth quarter 2022 to fourth
quarter 2021 is provided below based on operating margin, a
non-GAAP financial measure that reflects operating profit before
depreciation, amortization and impairment expense and general and
administrative (G&A) expense.
Refined products. Refined products operating margin was
$303 million, consistent with the
prior-year quarter, as higher financial results from this segment's
core fee-based transportation and terminals activities were offset
by unfavorable MTM adjustments on our commodity hedge
positions.
Transportation and terminals revenue increased $26 million primarily due to higher average
transportation rates and record quarterly transportation volumes.
The higher rates were largely driven by our 6% average tariff
increase in July 2022. In addition,
customers took advantage of the extensive connectivity of our
pipeline system to overcome various supply disruptions in the
Midcontinent and Texas regions
during the current period, resulting in a higher proportion of
long-haul shipments.
Operating expenses increased $6
million primarily due to less favorable product overages
(which reduce operating expenses) and higher power costs associated
with more long-haul movements, partially offset by lower property
taxes related to a favorable true-up in the current
quarter.
Product margin (a non-GAAP measure defined as product sales
revenue less cost of product sales) decreased $23 million primarily due to the recognition of
additional unrealized losses on futures contracts in the current
period, partially offset by higher realized margins and increased
sales volume for our gas liquids blending activities in the fourth
quarter of 2022.
Crude oil. Crude oil operating margin was $128 million, an increase of $24 million. Transportation and terminals revenue
increased $9 million primarily due to
higher average rates on our Longhorn pipeline as well as higher
terminal throughput fees and additional dock activity resulting
from more customers utilizing a simplified pricing structure for
services in the Houston area.
Overall volume shipped was higher and overall average rate was
lower due to increased shipments on our Houston distribution system, which move at a
lower average tariff, in part due to a new pipeline connection in
2022.
Operating expenses decreased slightly, mainly due to lower
integrity spending related to the timing of maintenance work.
Earnings of non-controlled entities increased $6 million due to higher deficiency revenue
recognized for both the BridgeTex and Double Eagle pipelines in the
fourth quarter of 2022. Product margin was $6 million favorable due to additional crude oil
marketing activities.
Other items. Depreciation, amortization and
impairment expense increased $59
million primarily due to an impairment of our investment in
the Double Eagle pipeline joint venture, as a result of the
non-renewal on existing terms of customer commitments that expire
later this year and reduced demand for transportation of condensate
from the Eagle Ford basin. G&A expense increased $5 million primarily due to higher incentive
compensation costs resulting from improved financial results.
Net interest expense was relatively flat between periods. As of
Dec. 31, 2022, Magellan's debt
balance was $5.0 billion, including
$32 million outstanding under our
commercial paper program.
Other expense increased $6 million
due to higher pension settlement expenses, and income from
discontinued operations declined $10
million following the sale of our independent terminals
during the second quarter of 2022.
Annual results
For the year ended Dec. 31, 2022,
net income was $1,036 million,
compared to $982 million in 2021,
with both operating segments generating higher financial results
between periods. Our refined products segment benefited from tariff
increases and record annual transportation volumes as a result of
additional contributions from our Texas pipeline expansion projects and
continued demand recovery from pandemic levels. Our crude oil
segment profits increased mainly due to additional crude oil
marketing activities in 2022. We also benefited from a gain on the
sale of our independent terminals network in 2022, partially offset
by higher impairments during the current year.
Full-year diluted net income per common unit was $4.95 in 2022 and $4.47 in 2021. Annual DCF was $1,128 million in 2022, or 1.3 times the amount
needed to pay distributions related to 2022, compared to
$1,118 million in 2021. Annual FCF
was $1,486 million during 2022 versus
$1,316 million during 2021.
Capital allocation
Magellan remains focused on delivering long-term value for our
investors through a disciplined combination of capital investments,
cash distributions and equity repurchases.
During 2022, Magellan spent $83
million on expansion capital, with current plans to spend
approximately $110 million in 2023
and $40 million in 2024 to complete
projects already committed. The incremental 5,000-barrel per day
(bpd) expansion of our refined products pipeline from Kansas to Colorado is nearing completion and projected
to be in service during March. Further, Magellan continues to make
progress on the 30,000-bpd expansion of our refined products
pipeline to El Paso, Texas, with
right-of-way acquisition underway currently and an early 2024
start-up still expected.
Management continues to assess additional capital investments to
create future value for investors, while maintaining Magellan's
long-standing commitment to capital discipline.
For the year, Magellan declared cash distributions of
$4.17 per unit for 2022 compared to
$4.13 for 2021, representing 21 years
of uninterrupted annual distribution growth since our initial
public offering in 2001. Recognizing that investors value steady
increases to the cash distribution, management currently targets
annual distribution growth of 1% for 2023, consistent with the
increase provided over the last two years.
During fourth quarter 2022, we repurchased 1.9 million of our
common units for $95 million,
resulting in nearly 9.6 million units repurchased during 2022 for
$472 million. Magellan has
repurchased 26 million units for $1.27
billion under our $1.5 billion
equity repurchase program over the last three years, representing
an 11% reduction in units outstanding. The timing, price and
quantity of potential future equity repurchases will depend on a
number of factors including expected expansion capital spending,
excess cash available, balance sheet metrics, legal and regulatory
requirements, market conditions and the trading price of our common
units.
Financial guidance for 2023
Magellan currently expects to generate annual DCF of
$1.18 billion for 2023, resulting in
1.38 times the amount needed to pay cash distributions for the
year, assuming 1% annual distribution growth on the current 203.3
million units outstanding. FCF is projected to be $1.07 billion for full-year 2023, or $216 million after distributions.
Guidance assumes that refined products demand remains steady,
with 2023 refined products shipments expected to be approximately
1% higher than the record annual volume moved in 2022. In addition,
refined products tariffs are expected to increase by an all-in
average of about 8% on July 1.
Crude oil transportation volume on our wholly-owned pipelines is
expected to increase over 2022 results primarily related to the
full-year impact of higher shipments on our Houston distribution system from a recent
pipeline connection. Similar to 2022, we expect some of the
customers of our joint venture pipelines to continue shipping below
their commitment levels and making deficiency payments in 2023.
Magellan expects higher contributions from our commodity-related
activities primarily due to higher realized margins on our gas
liquids blending activities, with nearly 70% of expected blending
activity hedged for 2023.
Storage revenues are expected to be lower as a result of the
ongoing backwardated market conditions, and overall cash expenses
are expected to be slightly higher in 2023 compared to 2022.
Further, the $20 million contribution
we received from the independent terminals during 2022 will not
repeat following the June 2022 sale
of those assets.
Commodity prices continue to be volatile in response to global
events, and our current DCF guidance assumes an average crude oil
price of $80 per barrel for 2023,
consistent with recent futures pricing. We currently estimate that
each $10 change in the price of crude
oil will impact Magellan's 2023 financial results by approximately
$35 million, primarily related to our
unhedged gas liquids blending activities and the value of our
pipeline tender deductions and product overages.
Based on the current number of units outstanding, annual net
income per unit is estimated to be $4.80 for 2023, with first-quarter guidance of
$1.20 per unit. Guidance excludes
future MTM adjustments on our commodity-related activities.
Magellan does not intend to provide specific financial guidance
beyond 2023 at this time but currently expects modest growth in DCF
over the next few years, with potential upside if commodity prices
remain similar to current levels. Our 2023 DCF guidance of
$1.18 billion would represent an
increase of 13% over our DCF of $1.044
billion in 2020, the year we initiated unit repurchases.
Assuming no additional repurchases in 2023, DCF per unit for 2023
based on our guidance would equate to approximately $5.80 per unit, an increase of 25% over 2020.
Given management's current expectation that FCF after distributions
will generally be used to repurchase units (subject to the
considerations noted in "Capital allocation" above), DCF per unit
is expected to continue increasing at a higher rate than
DCF.
Management continues to target annual distribution coverage of
at least 1.2 times for the foreseeable future and expects the large
majority of Magellan's operating margin to be generated by
fee-based transportation and terminals services, with direct
commodity-related activities contributing less than 15% of total
operating margin.
Earnings call details
Management will discuss fourth-quarter 2022 financial results
and annual guidance for 2023 during a conference call at
1:30 p.m. Eastern today. Participants
are encouraged to listen to the call via Magellan's website at
www.magellanlp.com/investors/webcasts.aspx. In addition, a limited
number of phone lines will be available at
(800) 951-1214, conference code 22024853.
A replay of the audio webcast will be available for at least 30
days at www.magellanlp.com.
Non-GAAP financial measures
We believe that investors benefit from having access to the same
financial measures utilized by our management. As a result, this
news release and supporting schedules include the non-GAAP
financial measures of operating margin, product margin, adjusted
EBITDA, DCF, FCF and net income per unit excluding MTM
commodity-related pricing adjustments and the Double Eagle
impairment, which are important performance measures used by
Magellan.
Operating margin reflects operating profit before depreciation,
amortization and impairment expense and G&A expense. This
measure forms the basis of our internal financial reporting and is
used by management to evaluate the economic performance of our
operations.
Product margin, which is calculated as product sales revenue
less cost of product sales, is used by management to evaluate the
profitability of our commodity-related activities.
Adjusted EBITDA is an important measure utilized by management
and the investment community to assess the financial results of a
company.
DCF is important in determining the amount of cash generated
from our operations, after maintenance capital spending, that is
available for distribution to our unitholders. Management uses this
performance measure as a basis for recommending to our board of
directors the amount of cash distributions to be paid to our
investors and for determining the payout for performance-based
awards issued under our equity-based incentive plan.
FCF is a financial metric used by many investors and others in
the financial community to measure the amount of cash generated by
a company after considering all investing activities, including
both maintenance and expansion capital spending, as well as
proceeds from divestitures. Management believes FCF is important to
the financial community as it reflects the amount of cash available
for distributions, additional expansion capital opportunities,
equity repurchases, debt reduction or other partnership uses.
Reconciliations of operating margin to operating profit,
adjusted EBITDA, DCF and FCF to net income and FCF to net cash
provided by operating activities accompany this news release.
We use exchange-traded futures contracts to hedge against price
changes of petroleum products associated with our commodity-related
activities. Most of these futures contracts are not designated as
hedges for accounting purposes. However, because these futures
contracts are generally effective at hedging price changes,
management believes our profitability should be evaluated excluding
the unrealized gains and losses associated with petroleum products
that will be sold in future periods. Further, because the financial
guidance provided by management excludes future MTM
commodity-related pricing adjustments, a reconciliation of actual
results to those excluding these adjustments is provided for
comparability to previous financial guidance.
Since the non-GAAP measures presented in this news release
include adjustments specific to us, they may not be comparable to
similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly
traded partnership that primarily transports, stores and
distributes refined petroleum products and crude oil. Magellan owns
the longest refined petroleum products pipeline system in the
country, with access to nearly 50% of the nation's refining
capacity, and can store more than 100 million barrels of petroleum
products such as gasoline, diesel fuel and crude oil. More
information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release
constitutes forward-looking statements as defined by federal law.
Forward-looking statements can be identified by words and phrases
such as: every, remains, continue, maintain, long-term, plans,
committed, expected, projected, future, targets, potential,
assuming, ongoing, guidance, estimate, intend, would, will,
foreseeable, contributing, believes, should and similar references
to future periods. Although management believes such statements are
based on reasonable assumptions, such statements necessarily
involve known and unknown risks and uncertainties that may cause
actual outcomes to be materially different. Among the key risk
factors that may have a direct impact on Magellan's results of
operations and financial condition are: impacts from inflation;
changes in supply, price or demand for refined petroleum products,
crude oil and natural gas liquids, or for transportation, storage,
blending or processing of those commodities through our facilities;
changes in laws applicable to us; changes in government incentives
or initiatives that negatively impact us or positively impact
competitive alternatives; changes in our tariff rates or other
terms as required by state or federal regulatory authorities;
reductions of hydrocarbon production or cutbacks at refineries or
at other businesses that use or supply our services; changes in the
throughput or interruption in service on pipelines or other
facilities owned and operated by third parties and connected to our
terminals, pipelines or other facilities; the occurrence of
operational hazards or unforeseen interruptions; the treatment of
us as a corporation for federal or state income tax purposes or us
becoming subject to significant forms of other taxation; changes in
our capital needs, cash flows or availability of cash to fund unit
repurchases or distributions; and failure of customers or vendors
to meet or continue contractual obligations to us. Additional
factors that could lead to material changes in performance are
described in Magellan's filings with the Securities and Exchange
Commission, including our Annual Report on Form 10-K for the fiscal
year ended Dec. 31, 2021 and
subsequent reports on Forms 8-K and 10-Q. You are urged to
carefully review and consider the cautionary statements and other
disclosures made in those filings, especially under the headings
"Risk Factors" and "Forward-Looking Statements." Forward-looking
statements made by Magellan in this news release are based only on
information currently known, and we undertake no obligation to
revise our forward-looking statements to reflect future events or
circumstances.
Contact:
|
Paula
Farrell
|
|
(918)
574-7650
|
|
paula.farrell@magellanlp.com
|
MAGELLAN MIDSTREAM
PARTNERS, L.P.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(In millions, except
per unit amounts)
|
(Unaudited)
|
|
|
Three Months Ended
|
|
Year Ended
|
|
December 31,
|
|
December 31,
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Transportation and
terminals revenue
|
$
466.6
|
|
$
501.1
|
|
$
1,798.9
|
|
$
1,875.8
|
Product sales
revenue
|
337.4
|
|
354.4
|
|
913.0
|
|
1,302.4
|
Affiliate management
fee revenue
|
5.3
|
|
5.5
|
|
21.2
|
|
22.2
|
Total
revenue
|
809.3
|
|
861.0
|
|
2,733.1
|
|
3,200.4
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Operating
|
146.8
|
|
149.6
|
|
569.7
|
|
592.1
|
Cost of product
sales
|
291.4
|
|
325.1
|
|
780.0
|
|
1,119.4
|
Depreciation,
amortization and impairment
|
59.5
|
|
118.4
|
|
227.9
|
|
292.8
|
General and
administrative
|
57.7
|
|
63.0
|
|
206.3
|
|
240.7
|
Total costs and
expenses
|
555.4
|
|
656.1
|
|
1,783.9
|
|
2,245.0
|
Other operating income
(expense)
|
(1.3)
|
|
3.1
|
|
2.8
|
|
5.3
|
Earnings of
non-controlled entities
|
38.3
|
|
43.7
|
|
154.4
|
|
147.4
|
Operating
profit
|
290.9
|
|
251.7
|
|
1,106.4
|
|
1,108.1
|
Interest
expense
|
57.1
|
|
57.4
|
|
228.1
|
|
229.8
|
Interest
capitalized
|
(0.5)
|
|
(0.6)
|
|
(1.7)
|
|
(1.8)
|
Interest
income
|
(0.1)
|
|
(0.6)
|
|
(0.5)
|
|
(1.2)
|
Gain on disposition of
assets
|
(2.1)
|
|
(0.6)
|
|
(75.0)
|
|
(0.9)
|
Other (income)
expense
|
2.8
|
|
8.4
|
|
20.9
|
|
20.3
|
Income from continuing
operations before provision for income taxes
|
233.7
|
|
187.7
|
|
934.6
|
|
861.9
|
Provision for income
taxes
|
0.3
|
|
0.7
|
|
2.3
|
|
2.7
|
Income from continuing
operations
|
233.4
|
|
187.0
|
|
932.3
|
|
859.2
|
Income from
discontinued operations (including gain on disposition of assets of
$164.0 million in 2022)
|
10.3
|
|
—
|
|
49.7
|
|
177.2
|
Net income
|
$
243.7
|
|
$
187.0
|
|
$
982.0
|
|
$
1,036.4
|
|
|
|
|
|
|
|
|
Earnings per common
unit
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
1.09
|
|
$
0.91
|
|
$
4.24
|
|
$
4.10
|
Discontinued
operations
|
0.05
|
|
—
|
|
0.23
|
|
0.85
|
Net income per common
unit
|
$
1.14
|
|
$
0.91
|
|
$
4.47
|
|
$
4.95
|
Weighted average
number of common units outstanding
|
213.5
|
|
205.6
|
|
219.6
|
|
209.4
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
1.09
|
|
$
0.91
|
|
$
4.24
|
|
$
4.10
|
Discontinued
operations
|
0.05
|
|
—
|
|
0.23
|
|
0.85
|
Net income per common
unit
|
$
1.14
|
|
$
0.91
|
|
$
4.47
|
|
$
4.95
|
Weighted average
number of common units outstanding
|
214.1
|
|
206.1
|
|
219.8
|
|
209.6
|
|
|
|
|
|
|
|
|
MAGELLAN MIDSTREAM
PARTNERS, L.P.
|
OPERATING
STATISTICS
|
|
|
Three Months Ended
|
|
Year Ended
|
|
December 31,
|
|
December 31,
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Refined products:
|
|
|
|
|
|
|
|
Transportation revenue
per barrel shipped
|
$
1.767
|
|
$
1.877
|
|
$
1.715
|
|
$
1.781
|
Volume shipped (million
barrels):
|
|
|
|
|
|
|
|
Gasoline
|
79.7
|
|
80.7
|
|
303.8
|
|
319.9
|
Distillates
|
53.2
|
|
54.7
|
|
205.6
|
|
206.1
|
Aviation
fuel
|
8.8
|
|
9.1
|
|
30.5
|
|
33.3
|
Liquefied petroleum
gases
|
0.3
|
|
—
|
|
0.9
|
|
0.6
|
Total volume
shipped
|
142.0
|
|
144.5
|
|
540.8
|
|
559.9
|
|
|
|
|
|
|
|
|
Crude oil:
|
|
|
|
|
|
|
|
Magellan 100%-owned
assets:
|
|
|
|
|
|
|
|
Transportation revenue
per barrel shipped(1)
|
$
0.854
|
|
$
0.617
|
|
$
0.815
|
|
$
0.643
|
Volume shipped
(million barrels)(1)
|
44.3
|
|
65.2
|
|
189.6
|
|
229.8
|
Terminal average
utilization (million barrels per month)
|
24.3
|
|
24.3
|
|
24.9
|
|
24.2
|
Select joint venture
pipelines:
|
|
|
|
|
|
|
|
BridgeTex - volume
shipped (million barrels)(2)
|
27.5
|
|
24.7
|
|
112.1
|
|
92.7
|
Saddlehorn - volume
shipped (million barrels)(2)
|
21.6
|
|
21.0
|
|
77.6
|
|
80.9
|
|
|
(1)
|
Includes shipments
related to our crude oil marketing activities.
|
(2)
|
These volumes reflect
the total shipments for these joint venture pipelines, which are
owned 30% by us.
|
MAGELLAN MIDSTREAM
PARTNERS, L.P.
|
OPERATING MARGIN
RECONCILIATION TO OPERATING PROFIT
|
(Unaudited, in
millions)
|
|
|
Three Months Ended
|
|
Year Ended
|
|
December 31,
|
|
December 31,
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Refined products:
|
|
|
|
|
|
|
|
Transportation and
terminals revenue
|
$
353.6
|
|
$
379.4
|
|
$
1,338.5
|
|
$
1,408.2
|
Affiliate management
fee revenue
|
1.6
|
|
1.6
|
|
6.4
|
|
6.6
|
Other operating income
(expense)
|
0.6
|
|
3.6
|
|
6.9
|
|
7.9
|
Earnings (losses) of
non-controlled entities
|
8.9
|
|
8.7
|
|
34.4
|
|
23.7
|
Less: Operating
expense
|
102.5
|
|
108.7
|
|
416.7
|
|
431.5
|
Transportation and
terminals margin
|
262.2
|
|
284.6
|
|
969.5
|
|
1,014.9
|
Product sales
revenue
|
276.3
|
|
322.2
|
|
763.9
|
|
1,173.1
|
Less: Cost of product
sales
|
235.8
|
|
304.3
|
|
630.1
|
|
1,020.2
|
Product
margin
|
40.5
|
|
17.9
|
|
133.8
|
|
152.9
|
Operating
margin
|
$
302.7
|
|
$
302.5
|
|
$
1,103.3
|
|
$
1,167.8
|
|
|
|
|
|
|
|
|
Crude oil:
|
|
|
|
|
|
|
|
Transportation and
terminals revenue
|
$
114.4
|
|
$
123.8
|
|
$
466.2
|
|
$
473.7
|
Affiliate management
fee revenue
|
3.7
|
|
3.9
|
|
14.8
|
|
15.6
|
Other operating income
(expense)
|
(1.9)
|
|
(0.5)
|
|
(4.1)
|
|
(2.6)
|
Earnings of
non-controlled entities
|
29.4
|
|
35.0
|
|
120.0
|
|
123.7
|
Less: Operating
expense
|
47.3
|
|
45.4
|
|
165.4
|
|
173.6
|
Transportation and
terminals margin
|
98.3
|
|
116.8
|
|
431.5
|
|
436.8
|
Product sales
revenue
|
61.1
|
|
32.2
|
|
149.1
|
|
129.3
|
Less: Cost of product
sales
|
55.6
|
|
20.8
|
|
149.9
|
|
99.2
|
Product
margin
|
5.5
|
|
11.4
|
|
(0.8)
|
|
30.1
|
Operating
margin
|
$
103.8
|
|
$
128.2
|
|
$
430.7
|
|
$
466.9
|
|
|
|
|
|
|
|
|
Segment operating
margin
|
$
406.5
|
|
$
430.7
|
|
$
1,534.0
|
|
$
1,634.7
|
Add: Allocated
corporate depreciation costs
|
1.6
|
|
2.4
|
|
6.6
|
|
6.9
|
Total operating
margin
|
408.1
|
|
433.1
|
|
1,540.6
|
|
1,641.6
|
Less:
|
|
|
|
|
|
|
|
Depreciation,
amortization and impairment expense
|
59.5
|
|
118.4
|
|
227.9
|
|
292.8
|
General and
administrative expense
|
57.7
|
|
63.0
|
|
206.3
|
|
240.7
|
Total operating
profit
|
$
290.9
|
|
$
251.7
|
|
$
1,106.4
|
|
$
1,108.1
|
|
|
|
|
|
|
|
|
Note: Amounts may not
sum to figures shown on the consolidated statements of income due
to intersegment eliminations and allocated corporate depreciation
costs.
|
MAGELLAN MIDSTREAM
PARTNERS, L.P.
|
|
RECONCILIATION OF
NET INCOME AND NET INCOME PER COMMON UNIT
|
|
EXCLUDING
COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES
|
|
(Unaudited, in
millions except per unit amounts)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
December 31, 2022
|
|
|
Net Income
|
|
Basic
Net Income Per
Common Unit
|
|
Diluted
Net Income Per
Common Unit
|
|
As reported
|
|
$
187.0
|
|
$
0.91
|
|
$
0.91
|
|
Commodity-related
adjustments associated with future
transactions(1)
|
|
30.8
|
|
|
|
|
|
Excluding
commodity-related adjustments
|
|
$
217.8
|
|
$
1.06
|
|
$
1.06
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common units outstanding
|
|
|
|
205.6
|
|
206.1
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes our net share
of commodity-related adjustments for our non-controlled entities.
Please see Distributable Cash Flow and Free Cash Flow
Reconciliation to Net Income for further descriptions of
commodity-related adjustments.
|
MAGELLAN MIDSTREAM
PARTNERS, L.P.
|
DISTRIBUTABLE CASH
FLOW AND FREE CASH FLOW
|
RECONCILIATION TO
NET INCOME
|
(Unaudited, in
millions)
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
2023
Guidance
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
243.7
|
|
$
187.0
|
|
$
982.0
|
|
$ 1,036.4
|
|
$
975.0
|
Interest expense,
net
|
56.5
|
|
56.2
|
|
225.9
|
|
226.8
|
|
228.0
|
Depreciation,
amortization and impairment(1)
|
59.5
|
|
118.4
|
|
233.9
|
|
292.8
|
|
249.0
|
Equity-based incentive
compensation(2)
|
6.1
|
|
9.7
|
|
15.6
|
|
29.6
|
|
12.0
|
Gain on disposition of
assets(3)
|
(2.1)
|
|
(0.6)
|
|
(70.6)
|
|
(158.6)
|
|
—
|
Commodity-related
adjustments:
|
|
|
|
|
|
|
|
|
|
Derivative (gains)
losses recognized in the period associated with future
transactions(4)
|
15.5
|
|
36.7
|
|
27.7
|
|
18.6
|
|
|
Derivative gains
(losses) recognized in previous periods associated with
transactions completed in the period(4)
|
(13.4)
|
|
11.0
|
|
(36.8)
|
|
(30.2)
|
|
|
Inventory valuation
adjustments(5)
|
(0.3)
|
|
(10.5)
|
|
2.1
|
|
(9.0)
|
|
|
Total
commodity-related adjustments
|
1.8
|
|
37.2
|
|
(7.0)
|
|
(20.6)
|
|
(9.0)
|
Distributions from
operations of non-controlled entities in excess of
earnings
|
14.4
|
|
9.0
|
|
38.9
|
|
27.3
|
|
39.0
|
Adjusted EBITDA
|
379.9
|
|
416.9
|
|
1,418.7
|
|
1,433.7
|
|
1,494.0
|
Interest expense, net,
excluding debt issuance cost amortization
|
(55.7)
|
|
(55.3)
|
|
(222.8)
|
|
(223.6)
|
|
(224.0)
|
Maintenance
capital(6)
|
(27.4)
|
|
(16.9)
|
|
(77.6)
|
|
(81.9)
|
|
(90.0)
|
Distributable cash flow
|
$
296.8
|
|
$
344.7
|
|
$ 1,118.3
|
|
$ 1,128.2
|
|
$ 1,180.0
|
Expansion
capital(7)
|
(5.4)
|
|
(20.3)
|
|
(73.0)
|
|
(83.0)
|
|
(110.0)
|
Proceeds from
disposition of assets(3)
|
—
|
|
(0.6)
|
|
270.7
|
|
440.3
|
|
—
|
Free cash flow
|
$
291.4
|
|
$
323.8
|
|
$ 1,316.0
|
|
$ 1,485.5
|
|
$ 1,070.0
|
Distributions
paid
|
(221.4)
|
|
(214.7)
|
|
(906.4)
|
|
(870.0)
|
|
(854.0)
|
Free cash flow after
distributions
|
$
70.0
|
|
$
109.1
|
|
$
409.6
|
|
$
615.5
|
|
$
216.0
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Depreciation,
amortization and impairment expense is excluded from DCF to the
extent it represents a non-cash expense.
|
(2)
|
Because we intend to
satisfy vesting of unit awards under our equity-based long-term
incentive compensation plan with the issuance of common units,
expenses related to this plan generally are deemed non-cash and
excluded for DCF purposes. The amounts above have been reduced by
cash payments associated with the plan, which are primarily related
to tax withholdings.
|
(3)
|
Gains on disposition of
assets are excluded from DCF to the extent they are not related to
our ongoing operations, while proceeds from disposition of assets
exclude the related gains to the extent they are already included
in our calculation of DCF.
|
(4)
|
Certain derivatives
have not been designated as hedges for accounting purposes and the
mark-to-market changes of these derivatives are recognized
currently in net income. We exclude the net impact of these
derivatives from our determination of DCF until the transactions
are settled and, where applicable, the related products are
sold.
|
(5)
|
We adjust DCF for lower
of average cost or net realizable value adjustments related to
inventory and firm purchase commitments as well as market valuation
of short positions recognized each period as these are non-cash
items. In subsequent periods when we sell or purchase the related
products, we recognize these valuation adjustments in
DCF.
|
(6)
|
Maintenance capital
expenditures maintain our existing assets and do not generate
incremental DCF (i.e. incremental returns to our
unitholders). For this reason, we deduct maintenance capital
expenditures to determine DCF.
|
(7)
|
Includes additions to
property, plant and equipment (excluding maintenance capital and
capital-related changes in accounts payable and other current
liabilities), acquisitions and investments in non-controlled
entities, net of distributions from returns of investments in
non-controlled entities and deposits from undivided joint interest
third parties.
|
MAGELLAN MIDSTREAM
PARTNERS, LP
|
FREE CASH FLOW
RECONCILIATION TO NET CASH PROVIDED
|
BY OPERATING
ACTIVITIES
|
(Unaudited, in
millions)
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Net cash provided by operating
activities
|
|
$
317.1
|
|
$
352.5
|
|
$
1,196.2
|
|
$
1,141.3
|
Changes in operating
assets and liabilities
|
|
9.1
|
|
(20.0)
|
|
9.7
|
|
113.0
|
Net cash provided
(used) by investing activities
|
|
(42.0)
|
|
(45.7)
|
|
118.1
|
|
274.4
|
Payments associated
with settlement of equity-based incentive compensation
|
|
—
|
|
—
|
|
(6.2)
|
|
(8.9)
|
Settlement cost,
amortization of prior service credit and actuarial loss
|
|
(1.2)
|
|
(9.0)
|
|
(8.4)
|
|
(13.9)
|
Changes in accrued
capital items
|
|
11.9
|
|
7.9
|
|
7.8
|
|
7.3
|
Commodity-related
adjustments(1)
|
|
1.8
|
|
37.2
|
|
(7.0)
|
|
(20.6)
|
Other
|
|
(5.3)
|
|
0.9
|
|
5.8
|
|
(7.1)
|
Free cash flow
|
|
$
291.4
|
|
$
323.8
|
|
$
1,316.0
|
|
$
1,485.5
|
Distributions
paid
|
|
(221.4)
|
|
(214.7)
|
|
(906.4)
|
|
(870.0)
|
Free cash flow after
distributions
|
|
$
70.0
|
|
$
109.1
|
|
$
409.6
|
|
$
615.5
|
|
|
|
|
|
|
|
|
|
(1)
|
Please refer to the
preceding table for a description of these commodity-related
adjustments.
|
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SOURCE Magellan Midstream Partners, L.P.