Magellan Midstream Partners, L.P. (MMP) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

May 4, 2023 1:30 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Magellan Midstream Partners First Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, May 4, 2023.

It is now my pleasure to turn the conference over to Aaron Milford, CEO. Please go ahead.

Aaron Milford

Hello, and thank you for joining us today to discuss Magellan’s first quarter financial results. Before getting started, we must remind you that management will be making forward-looking statements as defined by the Securities and Exchange Commission. Such statements are based on our current judgments regarding the factors that could impact the future performance of Magellan, but actual outcomes could be materially different. You should review the risk factors and other information discussed in our filings with the SEC and form your own opinions about Magellan’s future performance.

We are pleased to report that Magellan began 2023 with strong financial results that exceeded our initial guidance. This beat primarily related to higher-than-expected commodity profits as improved location differentials in our markets resulted in higher sales prices and we simply had the opportunity to blend additional volumes during the quarter. Refined transportation revenues were similar to our projections as we expected long-haul shipments to continue early this year in both the Midcon and West Texas regions as our extensive pipeline network has provided much needed supply to backfill various refinery turnarounds throughout the heart of our system.

Headline refined shipments may have been lighter than some expected as supply disruptions also impacted the more volatile volume on our supply push South Texas pipeline segment as well, which has a relatively nominal impact to actual revenues. Bottom line, overall demand remains solid in the core markets served by our refined products pipeline system.

I'll now turn the call over to our CFO, Jeff Holman, to review a few highlights from our first quarter earnings, then I'll be back to discuss our latest outlook for the year before answering your questions.

Jeff Holman

Thanks, Aaron. First, let me note that I'll be making references to certain non-GAAP financial metrics, including operating margin, distributable cash flow or DCF and free cash flow and we've included exhibits to our earnings release that reconcile these metrics to their nearest GAAP measures.