Magellan Midstream Partners LP (MMP) Q3 2022 Earnings Call Transcript

For the period ending September 30, 2022

October 27, 2022 1:30 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Magellan Midstream Partners Third Quarter Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Thursday, October 27, 2022.

I would now like 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 third 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.

As you saw this morning, we reported third quarter results that beat our EPU guidance, continuing our trend of solid financial performance so far this year. Most notably, our refined products transportation revenues exceeded our expectations primarily due to higher average tariff rates and our commodity margin benefited in part from the basis differential that flipped positive briefly, just as the gas liquids blending season began at the end of the quarter. There were a number of other favorable items including overall lower expenses that led to our outperformance.

In addition, we announced a $0.01 increase to our quarterly cash distribution last week, consistent with our guidance in general approach from last year. At current yield of over 8%, our yield remains attractive, and we recognize the distribution growth is important to a portion of our investors. Magellan is proud to continue our trend of increasing the pay out to investors each year.

I'll now turn the call over to our CFO, Jeff Holman, to briefly review our third quarter financial results versus the year ago period. Then I'll be back to discuss guidance for the remainder of the year before answering your questions.

Jeff Holman

Thanks, Aaron. First I will note that as usual 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.