Magellan Midstream Partners LP (MMP) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 28, 2022 1:30 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Magellan Midstream Partners Second 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, July 28, 2022.

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

Aaron Milford

Hello, and thank you for joining us today to discuss Magellan's second 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 Securities and Exchange Commission and form your own opinions about Magellan's future performance.

As we previously announced, we closed on the sale of our independent terminals network on June 8 and have been actively putting those proceeds to work. Including working capital adjustments, we received a total of $447 million for these assets and deployed $190 million during the second quarter into our equity buyback program, underscoring our commitment to maximizing long-term value for our investors. And today, we've continued our trend of solid financial performance with second quarter results that slightly beat our EPU guidance.

With that, I'll now turn the call over to our CFO, Jeff Holman, to briefly review our second quarter financial results versus the year-ago period, then I'll be back to discuss a few more areas of interest before answering your questions.

Jeffrey Holman

Thanks, Aaron. First, let me mention that, as usual, I will 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.

Earlier this morning, we reported second quarter net income of $354 million compared to $280 million in second quarter 2021. As noted in our press release, these results include a $162 million gain in the current period related to the sale of our independent terminals network, which is reflected in income from discontinued operations and a $70 million gain in the prior period primarily related to the sale of a portion of our interest in the Pasadena marine terminal joint venture. Excluding both of these gains, net income decreased about $18 million quarter-over-quarter.