MMP - Earnings call transcript Q2 2020 | Magellan Midstream Partners, L.P.

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Operator

Greetings, everyone, and welcome to the Magellan Midstream Partners Second Quarter Earnings Call.

During the presentation, all participants will be in listen-only mode. Afterwards, we’ll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded today Thursday, July 30, 2020. I would now like to turn the call over to Mike Mears, Chief Executive Officer. ahead. go Please

Mike Mears

you second thank latest us to today for Hello, financial for results Magellan’s quarter full our as discuss the and year. joining well outlook as

started, actual defined by performance impact SEC. management different. get Before current you on are the outcomes of the materially must factors judgments forward-looking as making future regarding Such that the we could statements be will I based be but our statements Magellan remind could that

and future other the factors discussed should in your with risk You review filings information SEC own our the opinions performance. form and about Magellan’s

As remaining you nation only as XXXX on strategy long-term focused the to value been the for Magellan whole. challenging, through has continued executing our our know not the maximize investors. year a competently to but while our for challenges industry, manage has current

no and We of we pandemic. I’m continue normally. happy safety to through facilities to are of our operating our employees had COVID the focus that the on we operate date, and And material to report all related disruptions health as have

operating expected quarter prices saw items, additional second a than morning, overages, our number our expenses. including exceeded you probably higher due As of expectations lower this favorable and results product to commodity

pipeline overall on to quarter the Our our shipments updated first crude products refined trended and oil projections the during very similar quarter call.

to I’ll back financial the year opening questions. versus be results ago before call our Jeff CFO, quarter for for more review will your Holman, detail. in second Our the latest XXXX Then our now period outlook discuss

Jeff Holman

Mike. Thanks,

or margin references including DCF. and flow, to cash I certain usual, non-GAAP operating making As metrics, be distributable will financial

diluted nearest to million second we this quarter morning, income in or reported measures. per a release We basis $XXX.X that have earnings Earlier compared to to included million reconcile GAAP unit $X.XX $X.XX $XXX.X on of of per these quarter net unit second XXXX. metrics or exhibits their our

and our $X.XX, was million for adjusted which current the due of impact and lower $XXX.X unit earnings volumes, we than primarily range second sale marine the the commodity reported of and crude between products Distributable in first XXXX, to expected spot in following earnings three quarter. our as Excluding $X.XX $XXX.X businesses first quarter lower products this that refined diluted refined in in the cash $XXX.X a per year, in combination oil. transportation just a terminals report which release. activity of provided quarter of lower crude exceeded two million, oil current lower the quarter the I’ll mark-to-market know, $X.XX, margins reminder with quarter, of was now the the million quarter we shipments, flow segments:

increase volumes as on and decrease activity, So about refined most versus of segment products the with of turning aviation while first impact on as refined pipeline. and quarter marine by integrity decommissioning XXXX, Operating that during second tariff overages, recently offset well impact negatively favorable fuel second of partially quarter gasoline, million volumes by activity than million growth also drilling economic impacted contributions in decommissioned about of the particularly were XXXX, based East and from blending products, terminals Overall, recently completed as first overages ammonia driver or decreased from to XXXX impact margin also of transportation These the of products projects $XX.X sale declines primarily and sales resulting volumes. well which million In average compared prices. assets. a lower XXXX. quarter margin distillate XX% quarter, decreased lower our business. sold seeing refined products Product quarter for $XX from reduce and operating $XXX.X decreased expected spending aviation $XX.X were Refined gas gasoline in second terminals system as between projects, to for Houston-to-Hearne the our from period, products in late decrease travel operating this largest XX%, the decrease as segment. more the as the of at XXXX million lower the Revenues revenue to of of declines to XXXX, the quarter product expenses second result the liquids the lockdowns particular, three excluding periods, a as growth segment XX% XX% generated due during and mid-XXXX the as fuel, expense with pandemic commodity well respectively. of expenses lower higher lower reflecting our tariffs, a distillate the million, primarily and due to of $XX and on quarter profits with our related of on particularly but product all decreased

not well do As which our of during prices unrealized on as a hedges, increased result losses DCF. lower as of the calculation affect period, commodity

venture, versus expansion primarily at first gas XXXX. $X.X which which blending increased of from began moment million second products the liquids mentioned equity opportunities quarter were by contribution lower ago, reduced second volumes, due XXXX, a profits to the of our to approximately Our available marine also terminal impacted I earnings gasoline blending the quarter coming Refined Pasadena higher a quarter joint us. online

segment. our oil Moving to now crude

Longhorn which Crude slightly operating million period. only shipped a of average on $XX.X lower as marketing was quarter and terminals in throughput our quarter. current the rates It affiliate. of than than the per decreased day, partially XXXX barrel million lower XXXX. quarter Overall Longhorn $XXX.X barrels revenue lower by the in of includes XXX,XXX $XX about for result million, margin oil Second second transportation segment was

continue As to levels. our their committed customers or at ship near

our did expected, as rate. posted not any However, at spot include the tariff third-party current movements period

spot assumption any for the of we its revenue. currently any continues where our with previous that remainder unlikely supply margin reflected opposed period the customers In it ship given transportation will to third-party reflect as on nor marketing on our activity recent Longhorn and product as and XXXX, profits those reflects customer currently this make to widen forecast ship of XXXX agreements. to differentials a commitment and near buy, as marketing Instead, demand our the continues affiliate, meaningful committed our future. any our affiliate to addition, anticipate sell the differentials assignment guidance, we to contract the are the our currently Consistent in our at marketing for dynamics expecting do to and to activities, volumes while barrels their pursuant that are own levels, committed not related are margins

contract a other volumes second our quarter decrease on system quarter distribution reported decreased way for our higher distribution system offset Seabrook oil revenue. most significantly access to in change the by Turning in venture crude With Houston reported terminal. joint revenues This resulting our the second export resulted in change customers XXXX. terminaling now on volumes transportation of to XXXX versus from lower

to by East oil quarter as Houston segment the of pipelines. integrity BridgeTex, in Permian Ford, on negatively the the day anticipate existing year, resulted no $X.X to was customer million remainder higher differential equity in operating Consistent uncommitted that the on oil offset of interest shipper XXXX earned during earnings decreased Our compared offset higher expenses our quarter remarks operating lower were Saddlehorn quarter, either quarter, the between commitments day the as are quarter of barrels asset joint non-cash tender Other settlements XXXX, million our track the the prices in to the storage value partially day lower of income credits on changes our BridgeTex spot quarter. as lower the million assumes our to declines our or crude our spending. average unfavorable lower Crude current of crude seats XXX,XXX in differentials segment for well Crude scheduled first primarily from mark-to-market results the XXXX the were also of a earnings equity easy committed as [indiscernible] period, XX% about utilization barrels in on or second during at timing we basis BridgeTex by oil due derivative and during by increased XXXX. period, volumes increased for impacted barrels Longhorn, $X.X previously remainder favorable XXXX. volumes XXX,XXX rates barrels to just of agreement guidance Saddlehorn with XXX,XXX agreement per during XXXX, periods. were oil giving XXX,XXX average rates. in other volumes were second due impacted for BridgeTex day partially slightly the adjustments by growth These while continue lower, per volumes compared Houston declined a of primarily to to versus offset year. higher $XX.X earnings primarily negatively quarter. to on production spot we volumes barrels in that resulting outlooks the the venture result barrels unfavorable per regarding the in per of and the of Saddlehorn any during spot as barrels sale otherwise current received

primarily the million result lower margin margin product XXXX the overage partially activities marketing segment as by for product Finally, earned previously crude the $X.X of a sales. during by favorable affiliate oil mentioned quarter, to the about period, offset was

current lower million accruals, early was $XX.X which terminals $X due million than notes the largely second due $XX.X amortization forecast the due expense primarily million, XXXX. to to the other our Moving of to interest quarter, decreased marine million payment quarter we $XX.X lower Net depreciation, to XXXX, results. our G&A primarily XXXX. due made during higher the of first expense incentive to to now expense a reflect retire sale variances, and impairment make-whole compared quarter comp to decreased XXXX

average partially increased made borrowings, of by our growth finance addition, slightly offset as lower slightly average In rate. our primarily projects, outstanding a debt a result

outstanding million was XXXX rate the was on of product X.X% outstanding during inactive Our quarter. billion. June was approximately interest lower $X.X the system. sale At weighted total at a XX, debt along debt benefited assets period average billion. Gain average refined our terminal disposition was And $X.X from an long-term of $X.XX second the

balance sheet allocation, capital metrics to liquidity. and Moving

We any during financial we And recovery to in of as have their a demand. execute and flexibility products result, continued quarter. particularly uncertain and timing the sheet refined the not strength balance prioritize repurchases unit do environment, given the current

timing, including noted, unit conditions requirements, our trading units. consistently our the to well of in regulatory price capital available, of but the as on a sheet considerations, any volume and our market as spending legal number of program, not repurchases cash have for repurchase discussions depending and expected we expansion excess price and common As of needs, limited balance factors,

In $XXX a with available. outstanding $X capacity at June liquidity million multi-year paper terms of commercial of of and remaining we had credit billion XX, leverage, the facility

at times back discuss quarter. three end approximately was the year. I’ll over turn Mike rest purposes to of that, compliance for the the the for guidance the updated call ratio leverage our While With of to our

Mike Mears

Thanks, Jeff.

The updated range the DCF range at in As our XXXX includes our potential items out, for of materially, worth well billion volatility this two $X have as commodity as be a – remaining of range prices. assumptions to all other We key forecast to to similar we midpoint time estimates. to pointing believe a of with DCF $X.XX year continues billion. previous appropriate estimates progresses, our

now said. expect more recover the to refined manage pandemic we slowly First, products from previously

economic in our that demand down would would COVID historical XXXX forecast of assumed X% down combining to jet previous second for both be As recall, distillate of fuel reductions you would return half shutdowns be the XX%. and about the activity Total demand the drilling impacts levels. and gasoline may

that range. of corresponded DCF a to low the end forecast As previous reminder the

end to the of midpoint Our correspond of the new the the low rather range range. now assumptions than

the of average volume aviation gasoline, the down to compared assumptions Our XXXX. to the for as XX% project for and half new of fuel XX% base half X% year distillate second for be for second

For simplicity, from impact the volume the on attributable combined now and distillate economic projected both have to demand lower related restrictions drilling. pandemic we reduce

confidence the can expansion a to associated expect the for more our the refined demand current projections. total year as of align products and recent are DCF based from with second the essentially in system, different on capabilities, contribution half axles see, pipeline projections on are year the combination the of the per transport. customer projects, of change to expanded industry flat we Texas These closely the expectations. as the aviation Including their estimates volumes latest $X.X you our our such have environment. level on environment reduced during these $XXX,XXX same pipeline XX% the on the expectation DCF for for the and volume trends distillate As Obviously, fuel we’ve be than we of as raise XXXX. period remainder predictions in a estimates that these we million for sensitivity for extent very on are refined based well of the forecasted, dynamic gasoline, products $X.X with feedback To month for volume each product mix, is and approximately million based

The is our than guidance. a second midpoint favorable previous key the price that And to environment higher ago. commodity quarter compared for assumption to relates a

of nearly point we year back price the half for with now but of year. year, amount lowered margin gasoline As hedged. curve hedging remaining an per gas end our we that already blending volume, a we in between amount remove because in now Based place, forecast. also gallon of improved that high we from the remove have butane, of on activity XX% implemented the is forward liquids second half half considerable the the for the the spread forecast of of like which fall for second a realize expected $X.XX risk would hedges blending prices activities liquid on commodity from expect primary improve, the during average plus upside significant our gas the result some the of expect if of blending to also of the reason and further the the to out I have profits of potential

to on $XX our intends million current cash, new range, metrics level the forecast X.XX resulting in to As $XXX volatility, X.X the generate message distribution Magellan previously remainder the the solid XXXX. distribution indicated, of we Magellan of reinforce offered DCF all expect of XXXX million is and coverage for year. far, excess quarterly Based at so to times of approximately for cash believe business Considering to the stable model. the we maintain resilient these our

Paso also that our small, confirm recently of terminal the expansion projected risks to bolt-on expansion and We XX% Texas Midland launched during this was X expansion week. Moving half we to spent projects on capacity capital project commitments already million a spend during into first operational number became of of million in El that spending pipeline $XX year. the Magellan low Odessa, products, as $XXX were resulting forward. pleased a and our expansion long-term service to will XXXX. investment value believe investors July delivering themselves we as West approach for successfully and capital increase into capital, on Mexico that In was counterparties. I’m our refined opportunities management XXXX placed $XXX our This solid grade going Midland comments. historical focused discipline remains and from total, long-term now expect on million to continue the well Dallas, Operator, prepared concludes to present supported to by serve markets, capital new

So we’re questions. not ready for

Operator

you Chen first of thank from And Instructions] ahead. much. Bank. Please go our Theresa very the line And with [Operator question comes Barclays

Theresa Chen

to just of had I taking did high – of the and out that activities. first guidance you related wanted end thank clarify to range, the are Mike, your hedged about lowering my What butane the could. for because if you’re clarity some there, to your afternoon about? questions. you Good business blending hedging Any referring you or marketing is you your talking the hedges comment it

Mike Mears

is butane All blending. hedging of around our our

back has affiliate marketing in to lock a that margin. back agreements Our

more in end referring to in we’re forecast, of to to based that prices before potential beginning referring range butane first the of the to year. on specifically not blending. the that. back What that we’re on quarter, the And commodity the part just provided at So uplift due DCF we clarify on the the is range

a the of if locked margin, blending a upside, example, that price of goes obtain. lot the for we’ve portion significant we of can’t crude $XX, in to that Now

So upside that’s the reason the of the primary range. why lower we

Theresa Chen

not I it. Got the did for include contributions And believe from fall. guidance the the business butane any blending previous

DCF dollars are the Just XXXX to fall they pieces not EBITDA that guidance in moving for simplify since blending previously or was things how the much change, guidance several range? are you butane in expecting in

Jeff Holman

what it, room to by that on you question. you looking to fair weren’t in it in going increase offset can think that is it’s now do view million. they about projected forecasting have I answer capture almost to recovery. have I’ll I we in me. in $XX refined to we’re time, folks can know. with some our the number range, forecast for the I being number don’t the overall, product But regards if blending have It’s before softer your But let of front I say, find

Theresa Chen

Mike, in product And you. just refined thank demand. lower Great, on that of outlook terms the point, on

your little Or this XXXX? recently? we observe you’re into structural a more thinking beyond about because of So just this something get behavior consumer just it cases to you – in how bit it. as more XXXX on and resurgence Is as on changes, granular perspective is the think and

Mike Mears

that of drivers of Well, tell that demand the remainder for we’re is future science. July. quoted projecting than of have that what much an what art And refined you than a seeing primary today. in it is the can we seeing I actually are the different the year more one numbers that not we’re is product

improvement. That’s So gasoline. we’re really true projecting probably a in not not huge

the diesel the only now is in year demand projecting the jet the on on But range is second of quoting, half maybe improvement slight July about gasoline. system demand of we’re We’re of numbers down through our fuel right in XX%. kind

our rest for with of the projection year. that’s So the consistent

reopening just timing surgeon back the plateauing on part the to or that then given and dropping peaking second question, continued the uncertainty and the down. of of and your And cases so the and pause

with except now. to again, with improvement, we’re actually a of lot a in built what on really right gasoline little not regards seeing have bit We

Theresa Chen

going to on ask I want middle we’re about lastly, to review of a new next get that index currently And going year. just escalator the Understood. FERC

So a Do coupled be AOPL? and could have on PPI I that year escalator to X.XX%. be, your the finished view with role what starting the the goods of this in final guess trucking escalator for negative you especially, point given outcome

Mike Mears

little say add I or to to answer’s I stretch that that don’t a a what than see predict that’s a and proposed. better – is accuracy the can’t than end the going be FERC able materially with to we’ll the of know, I there’s achieve my what better think probability a it’s sense Well, that. My the XXX% anything we’ll has that process. bit at

I in a on range, or a the me, any in point have that’s anything. again, the when it’s speculating on based knowledge inside want range, that’s what say So be. going just we’ll so, And that probably I to to clarify half percentage to probably

And where so – be. that’s where view that’s to going of we kind it’s I

So if PPI be adjustment you XXXX. that year couple add that this very might the likely a with large end of at up index doesn’t what to for

we continue to all specifically, make we’re with look covering believe So options. to our at to our costs going that if available options, we’ve rate index evaluate and sure that alternatives alternative the actually if is regards we us to looked to specifically, have don’t making we

Theresa Chen

Thank much. you very

Mike Mears

you. Thank

Operator

And our next question with line ahead. Moreen Mizuho. is from Gabe go the of Please

Gabe Moreen

doing? last per there follow-up option. answer rate are afternoon, that all just you’d good to rate think I a into Theresa’s the there on looking and Is Mike. question at Can going besides that about case Hey, cases anything – Theresa’s available

Mike Mears

to address in encouraged occurring early notice making operators, a of most creative if circumstances lot – the the as they Well, most did at, to if solution. are that to go It’s details propose but unusual rate into needed solutions solution. XXXX. what May, out desirable pipeline not else to we’re probably that’s you don’t the commission recall, put I obvious a the want in the looking most that

with Interstate So and make compliance Commerce we’re creative the evaluating might mechanisms be sense Act. what in

because at We on filing index all going look and going cost year, calculations. planning been to and is with we haven’t don’t actual we’re to into And any our at actual available. be, service option. none a decisions and service anything. filing that, what anyone next it’s are be have interacts service read and do that to an are what again, go And a to to If want our we as costs what data the of year cost made others cost driven. revenue is into of look we of I next

much not. whether need We’re we going there to pilot see determination is, or to make gap to how a a make as

Gabe Moreen

Right. been need But belt distillate you or maybe your some a demand. been get test pullback to It and maybe it make I can demand a there’s ask That’s since sure. to rate that. the sounds awhile about distillate under more little as fine foreword like doing pronounced. like data to here seems opposed like in is a If something been it’s

And you think I then the drilling demand here. distillate you distillate he demand just that out broken would components in also could guidance to speak of and components around demand can – the what’s broader activity. those embedded maybe

Mike Mears

certainly performance. Well, that’s That’s year-over-year we’ve distillate the demand. seen a in reduced drilling items significant a been decline

soft. I demand from has we But and I’ve demand agricultural demand trucking not think us the been same two the first that is down, to items sell that can are as mentioned. that’s what to the but other magnitude beyond one out stood railroad

Gabe Moreen

identify, little XXXX more going whether $XX here? are? impacting million. smaller to kinds Thanks, might think results and some talk a those the the question of any projects be actually those well just you you much I Mike. of And mentioned bit last Can on in is How about what projects be my of are you those more

Mike Mears

benefit another I moves our Denver that at on we’re the of a system Well, implementing at we’re inbound at were looking which us is looking shouldn’t of system. examples, things system, move at back to give just incremental range expansion mountain front to initial, connectivity but we’re to Houston looking distribution first the up say volume initial there. additional and of types product more example with And an them to pipes, which a none looking of you all, of results, from should XXXX our we’re couple more

result we’re a closure and Cheyenne looking. of the As Refinery

a also on opportunities up So larger market haven’t that decision but that’s into made we expansion we’re that yet. underway, evaluating

Gabe Moreen

Thanks, Mike.

Mike Mears

you. Thank

Operator

Thank you.

SunTrust. ahead. Next question the Tristan with go is of Richardson from line Please

Tristan Richardson

afternoon guys. good Hey,

switched question that high quick a made be level, see what perhaps, generally just from of a to a your you talk Could around there rationale transportation sort or to that change? occurred a contract Just on at customer marketing a the affiliate. might what you a comments about

Mike Mears

Well, I answer simple current a mean, margin in trade the that’s traded lower for for rate. given interested we we that is rates, had term And longer the We was. term were doing a contract the what market.

So that’s the simple answer.

Tristan Richardson

And do you across remaining see base opportunities that for more customer of haul? long the on

Mike Mears

do, today. And of which it’s they limited. are ago, the margins, a better We quite the course, a when year were did than was what that, but we differentials bit

little we a doing things But offer what kind term a we’re would lower rate trade differential. margins at the small longer are but harder do there. is on a have So looking to few the of because to get so a that today make not to Midland-to-Houston as sense, may

Tristan Richardson

in second appreciate on just then comments items, And one the you’re blending the seeing follow-up around Helpful. half. opportunities the the

looking a out segment. and the the or backwards what half the average talk margin just about came margin in first to either in Just general? blending Can that you second bit quarter at product

Mike Mears

moment I the don’t the give it. room in that to handy. look that can I up, you’ll staff a answer If have

Tristan Richardson

very much. Thank No, you guys it. I appreciate

Mike Mears

getting I’m second. number just Hold on a off. that

of year, $X.XX a about For the first gallon. it half was the

Tristan Richardson

That’s great. Thank you, Mike.

Mike Mears

Sure.

Operator

go Please ahead. next is Tonet with the And question Jeremy JPMorgan. from

Jeremy Tonet

like on really a kind start the I of CapEx philosophy, cash XXXX, the revisiting looking afternoon. ticks guess, out falls that, capital free I to bunch wanted there up. of allocation really flow good off, and Hi, thoughts looks

on dividend if see leverage. could wondering update you like lot just seems priority those of flexibility or a repurchases have you how it with so to And you or of there I’m it interplaying. the regards is kind

Mike Mears

regards mean, and want now. Well, and free to wait, capital into I really cash of we’ll with what emphasize our to I with not flow, changed have decisions looks regards nothing’s spending And on first choices on made what we’re see we all, first forecast is our Sure. to like. good our year get projects that that’s to returns. going And XXXX

to Obviously, this it’s to continuing we’re in find difficult that’s so those. And for look environment. those more

in worth very mentioned, few low especially intend with As are to have in regards those find time of goes we as $XX the risk We past of to million disciplined this environment that they in months. found returns us. have we opportunities attractive we to on. that may here to the we as last just some be types investments, opportunities But really more generate

So that’s first our choice.

that’s Now, it’s if cash need we distribution. place by that cannot decision at don’t make it’ll or budget capital will driven we’ll be that to that increases. and Then, think versus cash. put find current excess to when a at abundant distribution the that our And best we XXXX. And be valuation what expansion buybacks we our the we for the that in unit future in made will really a look have is on decisions units those whether increase and really definitely we those point time the

Jeremy Tonet

What overall, more Magellan here, regards kind of could. for energy down Got kind period if of if role a one, With views And just it. consolidation, know Thanks don’t the state. last of environment slowing any bit mature here? to I industry that. as there’s other one maybe I then a hitting industry or the have in play where industry does matures that you is

Mike Mears

with Well, I agree you.

many business. that in maturity consolidation reached we’ve in level sense And this a of of environment. think parts makes M&A I

and have that not combination if sense we’ll that. willing makes can We’re then And pursue look to that. economic actively we a We a we counterparty, opposed at find it.

something interested So in with all and say can that’s something regards really participate so stay if tuned. we’ll in. the I to we’re numbers It’s that it’s is, work,

Jeremy Tonet

that. for Thanks Great.

Mike Mears

Sure.

Operator

from is with question next The ahead. Gershuni UBS. of Please the line Shneur go

Shneur Gershuni

be you clarify blending correctly, that wanted expectation an in part of I understood that point just comment. and afternoon, that to butane point. start said don’t guidance if –again the to labor just, Maybe we was here. to want the everyone. if to back Hi, can totally there I I commodity But go for you original was the the off, you was wondering, good I gave, that

Mike Mears

No, was an of a well, phrase May, blending in immaterial or better the guidance income year. income, gave we maybe the as blending way amount to second half of there no early in

Shneur Gershuni

Okay.

sort at should apples-to-apples when is basis, blending, of we about before, I $XX $XX range $XX.X lowering the lowering. million for said those let’s million butane look that – think or two I way adjustments? that an lowered think the $XX million midpoint $XX by range, lowering the is about it’s when – make on guidance to million million I was And you’ve So it midpoint you call should a the

Mike Mears

I could that portion sure, but the what high And we upside to guidance driving it in in where from how range as the look call. provided anything range in potential When your our say, zero margin of we we upper high was at the in me it. explain the end forecast on be, the the would that hedged followed should of map, exactly end but a forecast is I range possibilities that to when that May assumed I that or a we range. let recall not tell you May, hadn’t in substantial I went end, of back can’t I’m May,

to Such of and in margins the the number, high-XXs, was is high hadn’t – so the we’d the know a locked the range. end if anything we changed. corresponded range crude I would could the into happened price we just that end the assume and Well, hedged a got but of or $XX we And nothing were have hit prices everything don’t moved have barrel if high that what’s that $XX, a else available. to $XX let’s

to those blending hedge started we the and locking in So profits.

of $XX We’ve profits. taken to upside I’ve million the Well, about locked said, price away goes $XX in or we’ve worth that upside. done if once as that, so we’ve away we’ve the And taken higher.

And in is is that essentially what so we’ve range a of portion guidance of, that’s we’ve able available. large were flip the taken why longer of that capture. the because we’ve is, to we locked that’s now lowered XX% out side But no of well, what upside now

confidence a that have lot now. on provided we range So more that we’ve the

Shneur Gershuni

to expecting end the opportunity the should basically enable basically an butane get have any to of And to range, bottom then range, weren’t end there blending that. sort of and you the of paraphrase, do been high

kind that we what locked in, that that is. Now you’ve know of

end is So more correctly? the in secure, – did I bottom is it that theory paraphrase

Mike Mears

way And phrase think likely. right. that’s more the to another midpoints I is maybe

Shneur Gershuni

perfect. Okay,

those belaboring pivot that. of to the your that around for little spend I closely right ones know you’re million just What’s bit on projects? that was now, commentary or capital I more. front the very a to often evaluating projects Sorry or Maybe your burner. if that $XXX you’re types the of wondering backlog range is evaluating.

Mike Mears

looking do we we’re we we or so, work in could Well, were expansions which And to expansions or of to that actively Pasadena for Denver, Magellan’s similar continue potential our be of $XXX doing of range on that if in that, of capital, types range. to number in instance terminal. portion a could speak. that million as the be potential

credit before counterparties proceed. some year. more time. And It’s to for are would this But also benefit done. won’t I committed obtain. pursuing or the reiterate opportunities, $XXX to and to at are going be viable was worth they to in how And question other So I all solid, They million growth we projects there’s worthy aren’t not on but cautious viable be a buybacks growth. number environment, of previous on get projects next of capital That’s relative $XXX want get looking million as be could chance yet, from I the are to answering we we – appear done this they those we’re these to the mean, a secure, at why of there’s increased what or need there’s us projects or that of to projects distribution. the whether simply difficult those successful

So we’ll how plays just out. see this

Shneur Gershuni

that That makes And actually where was was part headed. concluding where head my perfect sense. I was your

with position we buybacks, projects, it of think free for of be available dollars cash dividends. you dollars you the about for would way you’ve CapEx of generated so internally Board the potentially CapEx dollars have And new so about differently $XXX for would available sanctioned let’s unit what to available say be to funded full buybacks would when Is after could that think buybacks? be flows, the the flows full to cash kind and million if way available worth after

Mike Mears

but way make leverage you Then our I way mean low doesn’t so times. view can generally to our may at just think take speaking cases, say that maintain that, characterizes times we that’s you change it. right the sense just to three view. extreme level below current that’s look I just at the gets it leverage three levels on or

Shneur Gershuni

all thank guys. today. appreciate color the very much, right. Well, Perfect, Really you

Mike Mears

Thank you.

Operator

go question America. is Walker And ahead. our Please from Bank of next Derek of

Derek Walker

that question volumes. you, that everyone. I expecting you gasoline guidance expectations. afternoon, you’re good on improve based products by Hi, end Are from on what assigned the affecting quick is I you normalize just sort make based some kind of of to the alluded that the assumptions sure in on to understood today. second sort ramp A of clarification Like believe year what to wanted half. seeing

Mike Mears

Well, those came with kind I before. I how bit numbers little sense of this mean talked just to give again, a we of a you about up

For gasoline kind down fuel of in and distillate, of X% on XX% we’re of XX% the down of – in distillate demand, for that for for In July. down we’re on range kind XX%. we’re jet range July, to kind

to of is July distillate So jet first mean, our of rest all, with fuel, expectation the with year in and consistent forecast. regards I the

portray have –there’s downside talking backups month mean in we the want we’re through in on gasoline, I in just rest to upside. it material down, have of to XX% that then the A like projecting year cases said, of go too. to just of the July. the happen. we I based has in I’m projecting but it the not improvement I rest could also not improvement literature the when really a I we’re through year, say So if yet this don’t again, down resurgence any which considerable we’re average, that on and for the range more we’re the improving been trends X% on reopenings, X% the projecting

kind And not, know any there. so our of complicated it’s projections more I for the that. really don’t that’s than It’s basis that

positively of We’re the of not changing rest project those of trying anything to things or exists. potential the one where through significantly really year the negatively either either

much into much. predict year, this too about the rolls and rest we at also XXXX that to haven’t XXXX, less point. thought of hard XXXX this As about worry It’s really too

Derek Walker

optimization I some appreciate savings the color there. on Maybe maybe just follow-up quick or initiatives. cost just a

have previously saving Any what on opportunities I Has relative some updates baked incremental your into of think front? any you other there you that provided? cost to guidance. been that

Mike Mears

new and nothing efficiencies beyond. of XXXX, this really lot affect that material a in been to of impact have There’s to speak but we on making will progress or improve XXXX

the going real we’re benefit of we’re now things to start those doing. lot seeing of So

Derek Walker

Thank you. That’s helpful. Okay.

Mike Mears

Thanks.

Operator

we comments. gentlemen, this you, I’ll the those questions over have time. the call Mr. to at And any Mears are back all turn for closing

Mike Mears

at thank today, time a your your right. appreciate good Have for All Well, afternoon. and you we all support Magellan.

Operator

does that our of disconnect today. call rest and great you a day, for And Everyone, line. conclude conference have may your your

Magellan Midstream Partners (MMP) 30 Jul 202020 Q2 Earnings call transcript