MMP - Earnings call transcript Q1 2021 | Magellan Midstream Partners, L.P.

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Operator

Greetings, and good afternoon, everyone. Welcome to the First Quarter 2021 Earnings Call. [Operator Instructions]. It is now my pleasure to turn the call over to Mike Mears, Chief Executive Officer. Please go ahead, sir.

Michael Mears

right. All thank call. us and first for for earnings quarter you hello, today joining our Well,

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

been inform the risk am filings factors and own discussed guidance of future well. the a the weather results information Magellan's our from SEC that and an pleased our amount. The Magellan for I review other with has started Magellan's as with in performance. the cold by the the should exceeding first your announce industry midstream that, previous about XXXX, were opinions theme quarter industry year effects on affected unusually You With results, EPU February considerable stronger-than-expected in to

our half driven financial to improved product of events. gains oil the which butane our basis volumes, due because week later short-term occur throughput offset nearly activity. basis portfolio during crude lower hedging management in the were were these of impact weather items, our included of on from a Pasadena by marine we $XX venture. a million a week, continued recognized additional in our to combined These Although Further, quarter also inoperable Overall, interest by to on result quarter. activity. joint related about refined freezing timing touch outperformance positive sales relate terminal but other sale differentials we to number weather our power favorable of expected the we the of announced blending refinery our positive net the of of conditions from in a like our that about power events the a outages, some for for on expenses as mid-February. and was also some Last I estimate system our activities a of These positives on to total, assets impact and issues during the positives would year. are

has facility. position past, both intend investments this $XXX meaningful With participate will we portfolio and position we and in facility. have stated consistent operatorship retaining export a We unit potential we from products an the value future opportunity able this demonstrated the to portion million continue investors. Magellan As our to of at in were review priorities, price use this of attractive transaction, capital for own and proceeds this repurchases of potential asset unlock a while an refined to our to regularly ownership strategic our our opportunities of monetize allocation for including expansions incremental transaction, to with

Jeff now before review results CFO, latest the our I'll will be then to detail for answering outlook discuss Holman, versus in the Our period more year questions. XXXX your back our financial

Jeffrey Holman

Mike. Thanks,

our reported Adjusted million in to certain first release references financial Longhorn the XX% due primarily to or quarter million mark-to-market these which, earnings $XXX following quarter exhibits morning, of margin reconcile their adjustments, was expiration lower we've lower quarter, me commodity-related to measure. pointed current metrics flow is distributable $XXX as to of September and compared of DCF XXXX. the significantly portion this crude non-GAAP our cash included last cash than GAAP in $XXX and earnings which free for to making usual, quarter $X.XX, and per that Earlier the in impact net as as excludes unit I'll nearest exceeded approximately including let XXXX, Mike $X.XX. out, that, well commitments metrics, quarter we oil guidance the as of for of of revenue First, flow, lower quarter first the be profits the our million quarter of mention first year. for commodity-related operating a about DCF, income of

detailed our going was margin release actually was offsetting impact sales operating the approximately the marine just Refined through periods, a and find XX% than partially transportation segment overall of Refined million lower in period. quarter-over-quarter a the themes can from description of up XXXX. quarterly in on the our quarter the $XXX XXXX touch products between You in terminals morning early this of so issued variances highlights we I'm performance. earnings to few revenue

XXXX. pandemic continue West recovering yet drilling offset refined XXXX These not still of third volumes did activity, While impacts and volume volumes quarter in quarter the significant products lows, declines our Texas to were the the period. in partially COVID-XX factors from by operations improve reflect which began expansion, year-over-year first were which contributions lingering from pipeline

note that business And that just by more resulted X.X% completed South of refinery these mentioned July projects. which decline. excluding gasoline during lower in Texas recently our Taking were of supply volumes part were XX% disruptions average than I our portion aviation quarter volatile growth our offset figures outages South more well portion Texas up of X% volumes fuel. quarter total X% various and resulting on versus Is addition, on Higher the to XXXX. for note was accommodate, our lower both these increase tariff higher transportation base I'll our this distillate by quarter are system, the altogether, in X% product implemented of more finally, Please including factors volume lower much the the average XXXX. than average first transportation network move and volumes Due a our X%. to the refined enter at inclusive storms impact that throughput in positioned slight caused offset total in the In pipeline systems. refined incremental that rates overall down by volumes, rate, system,

also mentioned movements ago, haul moment per I to supply resulted a the just rate longer incremental average our in the higher on further contributing system, barrel. Additionally, disruptions

XXXX quarter from in a to products our $X.XX from gas results closer to financial declined due about XXXX first in $X.XX first and per our Margins versus profitability business declined refined transportation terminals in XXXX. gallon liquids activities. commodity-related gallon blending lower revenue, Beyond to quarter our

negatively With fewer economic the quarter. also total blended volumes blending affected being in by current the opportunities

in reminder, a year. decline prior quarter commodity place As XXXX, our results last and the hedges in blending price first from benefited XXXX put to late

margin improvement most was period captured current to locked prior in commodity prices. of While in recent the the the we in

business. Turning oil to crude our

was margin first the First quarter million, down quarter XXXX. operating of from was approximately X% which $XXX

compared storms oil result average volume XXX,XXX as day impact recent rates Longhorn mainly shipped. lower by of Our barrels was first as segment impacted XXX,XXX on our the crude in well of quarter customers. per partly per of XXXX. the operations day Volumes tariff about barrels a This and of is by to averaged the decrease lower

fall In addition, you may recall in that of some expired XXXX. Longhorn the commitments

contracts. differential have and currently decrease shipments our marketing volumes well prevailing Permian is offset below tariff realize resulting related we been the activities. activities Houston, reflective by third-party the The largely affiliate to was previous more which of the While in is we on Basin between the on earning the margin those

distribution part again, caused previous to due way we on period, winter a contract to year the rate discussed versus per on the average provided by our As guidance. disruptions Houston as also with a change the consistent system storms Volumes during we've the barrel in had our our expectations prior declined for result, declined realized calls. well recent when period, to as access the in as customers we Seabrook,

volatility see average Longhorn which rate volumes those on than they're impact HDS actual their is in sometimes our at significantly that in our impact between quarters, lower much shipments, greater and volumes revenues. our move we Although longer volumes rates reported haul than means

the per to Moving on ventures. barrels Driven to barrels first XXX,XXX the due joint costs. XXX,XXX per approximately volumes uncommitted Operating quarter both favorable day shipments. 'XX XXXX, approximately power to in XXX,XXX periods. expenses were barrels quarter segments per XXXX. between BridgeTex of compared primarily of flat by a were in Saddlehorn essentially of day our decrease lower first during were volumes in across day business approximately

realize focusing to to optimization business, as a dedicated those may we've formed As you our team opportunities and recall, we XXXX, begun late as efforts. early across efficiencies on

One of of has savings been are significant seeing a most the we where that costs, impacts team result significant year-over-year power the of in direct team's area as efforts. of optimization the

a those to of addition efficiency long-haul expense. of In we've gains, our a long-standing practice power had hedging portion

power that expense. gains in in reflected activity in costs, hedging During lower recent power results quarterly resulted as volatility our that the were

during the expense between was Just the expense current to to other capitalized periods, relative are prior a this activity in a couple interest G&A result lower on compensation quarter, just as results, quick primarily of lastly, seeing primarily our higher the year-over-year of our which we And compared notes outperformance the net increased period. expense as reflects a ongoing as in during decrease due quarter construction environment. year capital result lower higher of interest, incentive

XX, $X.XX interest of billion, weighted X.X%. face long-term was As average with about of the outstanding debt March our of value a rate debt net on

metrics sheet capital and allocation. to on Moving liquidity. Balance

bond to until million terms our we available have paper XX. through XXXX, program next $XX in billion mid commercial to in our credit March us liquidity, continue our on of First, $X isn't outstanding facility with XXXX. And maturity

few a cash free remarks make quickly to like I'd regarding flow. Next,

calculated added have free cash in any expansion financial we allocation calculation continued earnings capital As based schedules interest in and investor you have flow general. DCF, on capital We've quarter the a our flow in concept from and less just may including release, as noticed, this proceeds accompanying in divestitures. cash free the

was quarter with cash flow to flow after million. million, cash first $XX XXXX amounting of distributions the $XXX free For free approximately

of and remain distributions, we approach repurchases. through financial Xx disciplined of An quarter. that limit leverage likely into value are investments Finally, long-standing XXXX, focused anticipating quarterly played combination believe policy been note has this capital we with limit, our delivering delivering came investors an role would quarter disciplined a their We years. important first of our predictable that cash unitholders important I'll on leverage part our its long-term to returns and many the has that strong, for equity over which approach Xx ratio

result commodity a of elevated XX-month Just And during of of as as pandemic full EBITDA price environment the quarter. leverage, and units on of first a the relatively trailing impact any not the lower we the expectation quarter. of repurchase this end the result period the as did of

in X.XXx project. calculated business Texas However, around recently still expansion the pipeline outperformance incorporates pro impact our credit agreement, of lower which the than forma anticipated. in West as leverage resulted completed At or X.XXx our about coming the of our for

our we with recent venture, Pasadena marine of the from course periods. updated the improve guidance, As And the a sale trailing reflected to in in the partial expect of coming in year. a position be over proceeds EBITDA joint opportunistically to should terminal our in repurchase interest we XX-month the units

efforts important continue We to existing our for repurchases have And unit million of program. an unitholders. tool view our authorization value repurchase our under to maximize nearly remaining million as $XXX $XXX in

regulatory updated as and discuss year. conditions guidance timing, Mike and have the spending, unit legal call a as capital within our excess factors, will back Of cash I'll past, noted course, turn that, requirements, expected metrics, With of our price price the the as our and number market consistently the over balance expansion volume of on well trading we to the for equity. in depend the including repurchases sheet available, to

Michael Mears

million our guidance environment XXXX $XX well activities. Jeff. result first gas This for Thanks, announced increased during of more commodity guidance DCF morning strong the We performance have a $X.XX our higher favorable our as blending liquids by this as quarter we a is to pricing that billion.

into butane joint margins. tracking to interest also sale guidance curve due takes Pasadena for lower forward the venture. distributions Many you of half the the have updated nearly terminal Our of account our recent in been blending

aware are margins provided February. that we you improved have guidance since in so And early

blending in versus Based activity As the $X.XX as started per year environment, far. year, on average we year. for of is our about fall hedged the enter forecast price XX% the blending have expected for the typical commodity now improved time gallon fall with margins we this of we $X.XX so of locking the margins expectation

reminder, a the gallon. X-year blending As margin about average is $X.XX per

towards activities. butane of back margin. blending trending a is buyer blending result are normal of RINs a we Magellan more net as our So a

have As we RIN increased higher into this prices current these factored you estimates. prices know, our and may have year, dramatically

the XXXX last spend double to more of We of average an over which than cost obligation have per at around most purchased our is all-in $X.XX related few for our annual RIN gallon. about currently million RINs We blending expect years. activity $XX year, this price to

Turning to refined products demand.

Based forecasted We recent line higher with and a total refined trends still higher in travel and than year, last the in year. to shipments expect projected product higher months, and increases projects in further general total volume volumes. XX% expect be activities previous to be than volume we XX% recovery continued to our coming distillate for the be XX% shipments Texas our gasoline date, with economic aviation on estimates XXXX our to our fuel XX% higher, expansion on

XXXX shipments Our to overall XXXX. in above be demand the refined expected more still year product saw about normal are X% we

distribution As maintain XXXX. to previously current discussed, intend through we quarterly cash our

once levels. product the historical X.XXx approaching the outstanding, billion $X.XX we refined long-term units target current of result X.Xx returns year, distribution number is our DCF coverage at which of our to Assuming in demand to expect annual least guidance of for full

we value distributions, and of through repurchases capital our focused Jeff investments. delivering long-term for disciplined a As equity combination investors remain mentioned, on cash

continue recent low-risk our $XX we X,XXX These our $XX expansion spending service potential and in capacity long-term New our assess of and XXXX expected day supported our expected to more in currently million of barrel in expansion mid-XXXX, successful $XXX value to a million expand is capital be Mexico refined our to spending than system investors, committed additional pipeline additional XXXX. include projects generate projected estimates available now The While million, with and products volumes. is open totals offering than less for by season. per following

balance we to generate return million, a to of While targeting. than generally lower multiple end the EBITDA We to cost discipline Xx $XX long-standing Magellan's Mexico less expansion to and X at the sheet we is committed expect are remain the forecasted strength. New capital

cash concludes unit free now generate million and opportunities remarks. additional that our to That after available $XXX for planned will expect year distributions for We be flow of investment repurchases. prepared the

the can for you questions. operator, open lines So

Operator

[Operator Instructions].

question comes Our with Barclays. Chen first Theresa from

Theresa Chen

nicely. Mike, recovery lower throughput. within Slightly gasoline what's And to changes to higher seems demand versus within about about and progressing be your wanted clean individual And refined rates distillate The Can the then driving themselves. with guidance product pipeline you ask system. talk growth expectations separately, I jet that? the guidance, previous eager data season in but related, down summer seen to demand to on we out and people pent-up year. hear potential anecdotal any this a evidence house in yet? lot after get a relates as are of the you of as of gasoline, driving about we for it of locked your cusp are Have system the being products

Michael Mears

forecast. are through Well, in that. previous more the primary trends saw our seeing guidance We to of we informed what what of our in in quarter. all, quarter first it really kind And far first than really seeing the magic second so by the the we're of the there's no we're by the extrapolated adjustments rest year to just and to relation

and is it determine is base the to far As and any much hard seeing it's I pent-up much as how how demand. us data demand demand. through for really pent-up parse mean, of

can't seeing or whether to actually that speak really I we're not. So

are think as of gasoline expectations we are our is predicting for at to we point. it's evidence summer. But that this a consistent through see are that at the going other what I improved hard go to us demand point finger right direct with

Theresa Chen

view provide Pasadena. about Magellan with on some of that the seller then not what of And on one. just what this you came the typically that build-outs just it. future how is and even build-out about, sale given gears curious assets. impacts more for prompted in additional facility, And it domestically? to just part look what maybe base you the topic and that And rationalization does of phases the a Can extent Got to your like? in case refining the of half I'm light interest And future your any switching color is

Michael Mears

Well, rather into happening. specifics thanks get I'd to that the not negotiations for this led question. the the of

of sold their Valero also know, portion As you a interest.

so are we and believe premium entire falls to do that good that is at we or this a happening whether there we And I we look into that. transaction. And simultaneously. that we've was valuation. category at not portfolio assess of very would got at price look asset can what of our view a assets routinely our to routinely we say for What will all be sell assets that that And

years BridgeTex. selling We I So year optimizing we with have evaluate few I assets. We've going our to forward. did last that at that continue a our don't -- we will with our that there's determine that portion a done think and marine add terminals be look historically did now portfolio by MDP to said Northeast. -- to the value ago we of what portfolio We with in

view our strategic them to a think evaluate you more So assets monetize I routine premium and part of just get think we that with should our options process as as can if price. we

Theresa Chen

are other prune portfolio that Okay. at interest And may your point, assets you or partial assets in this further? likely in there

Michael Mears

is whether good what say likely and environment premium and is the ongoing the in assets will Well, versus them buy is the price back look evaluate a we're consideration what not to evaluating which What at it. being most for this pay regularly paid price alternative we use value couple all versus against think a in the market that also funds, arbitrage whether of of and that's as I'll a value of equity our we benchmarks. the or

not got the future. part or we're just not will our that a whether going it's assets specific in that I'm I say of regular or So now we've will mention to at process. looking

Operator

Jeremy question Our next from JPMorgan. at is Tonet

Jeremy Tonet

question guess. buyback the with more guess, I follow-up, of kind directly, to wanted Just I

the with a get sense that makes to sense to for you term? Just current levels on trying in something you here see sales, pace. the mean I how the push think about buybacks as near With capacity asset

Michael Mears

can that part you're timing But core buybacks tell our of those. the pace again, asking I'm part is our going than are directly. Well, or I that's a question a capital unit whether not specific more our are as not of reiterate, plan. probably part allocation can that I answer I forward. comment you they are, buybacks of a the be on to can't price going What going-forward allocation because But going tell appropriate. address strategy. is don't I strategy not price good I'm would to I said, this equity think just or capital specific you I've to core can't. of

Jeremy Tonet

makes opportunities. last you you legislation quarter, any updates additional that do Pivoting this here, currently being That opportunities it. assessing sense. on any considered discussed Got increase MMP's have renewable Is front? fuel And here? there would

Michael Mears

opportunities We renewable are transporting evaluate our fuels -- primary systems. we're by continuing the And focus pipe. with on on to renewable

of know, you blended area the market is all the at our consumed As in ethanol terminals. that's

the the And are in into to it's pipe, opportunities the market in All efficient and transportation in one, the blended or which biodiesel the efforts will the areas is create more mean, a fuel transport terminals. way market we're the two, in products will post either I of transport in those our at or for blended fuel, the our it do things. e-form downstream terminals evaluating than X to an us; trucking. market

think very opportunities update that. with evaluating on do don't regards promising we're some to We have I So yet. that. an we've got that

with biodiesel on consideration. under If are those are transporting pipeline. I -- there's look fit a with at goals regards pending increased our of our what strategic particularly that blending legislation fuels number have And you that mandates states favorably the the to in markets, think

Operator

Wells from Fargo. next is Praneeth question Our Satish,

Praneeth Satish

the spot enough there'll could when a sense that And speed to this, to able guess contract When tied be pipeline at something think on capacity be and pipelines of you Permian, versus some in Longhorn? your the do makes might process? do this tightening takeaway think up I of you Permian you in emerging you supply look that

Michael Mears

shippers on I oil in years tight of this get we I status pipeline when Well, tough trajectory number probably if at even still out to in years basin. a kind of first gets for into I it's were and contracts. capacity. least -- frame I Permian contract years future, to before until a see. line In environment because that quo the incentive growth think capacity There's number number crude enough the of environment, projections -- of long-term X would mean, time a the And out. shippers that question, is a there's sight the before -- see going capacity, market improve, not pipeline the to think That's the to in a reasonable years, there's challenge you a our to to there's in of to view, commit to any clear based get for really be say low to X the

as said, may change, years use short conversions to going You short-term able can of pipeline the that to I crude that currently long-term X mean secure contracts of optimize get that's -- number predict, X challenges on the there's to things a something probably happen, it's and term get not going get to So challenging not oil or be to But to I'm And lock next contracts changes, done. I for and assets. to would pipes. in the the pricing. a Unless here whether are obviously, sit environment, or that mergers

conditions say, contracts. it's with different X those And pipeline have existing tariff different that One many systems multiple difficult rates in different harmonize all There's there I'm to pipe. and the I'm done. is pipelines contracts of have way that not reduce And the to saying basin. X that. oversupply it's But to at probably challenges that impossible. is get stop certainly into,

Praneeth Satish

just increasing slightly. maybe been I'm long-term your wondering target of coverage if switching gears there's above X.X%. thought Great. any then And

I below your level think of this is peers. some

Or do backlog think the see? appropriate time? based if you of that So you that I'm CapEx wondering just increasing thought on there's it's over

Jeffrey Holman

reasons, our may too by the arrived thinking is Other from -- really think our ratio, drastically people think, it maybe need we business. think because business. overstretched don't backload X it's much lot the CapEx ratio at cutting coverage the other. or different way for that distributions ratio I we they coverage for comes a particular appropriate our them, We into in whatever of a frankly, appropriate were probably and our

Michael Mears

for I going come think us are to different they that than are the parties. factors for into that other are

As in leverage cases, issue. have we level. lower many distribution their specifically Well, increase their Jeff to don't cut mentioned, that coverage to peers their our have

to compelled down not debt. coverage increase we're to pay So

allow reasons better other instance, we why the is, are rather would distributions. that level cash we increase equity coverage So to for that use of a buybacks than think

so And a may time be that grow. But equity. coverage think that allow buyback it's that's we I in not the mean, rather would case. appropriate always the may distribute we to at it really an point than to evaluation where

really that's ratio. we'll we standpoint, So distribution But appropriate the for security the looking of think What us. be to of is the a regards business. stability with for our at X.Xx coverage

Operator

from with question Truist. Richardson Tristan Our next is

Tristan Richardson

a model Just the one on quick side.

perhaps storm? costs Just incidental about progress from permanent making, we your benefit about versus the you think -- it's the of how power how that should and optimization noted, much thinking is much team

Michael Mears

the is Well, that the $XX mean, the are optimization from a we're from power the number benefit getting million the benefit we incidental we we schedule our of pipes. of changing the permanent. I storm way is portion majority The mentioned.

electricity run power doing structurally We drag that use we're we producer cost whole lower there's rate. way of things a our host are the versus that changing will

Tristan Richardson

a In is but lot just then I cash-on-cash previous on return, you than quicker think just think And to That's is about the target about continued or distribution X.Xx words, great. when awaiting think you that that to think pulling we of buyback? getting mean, coverage other question recovery the I around buybacks, guys demand forward progress? framework factor the rather a that

Michael Mears

behind a strategy. all not our at That's buyback driver No.

value by our almost it's we'll it's investment, to because We strategy And Our believe value. a equity. back equity increasing our then is not coverage. distribution back buy our driven that buyback buy there's entirely because good

Operator

from Dounis, our And Suisse. Spiro Credit is question next

Spiro Dounis

ask of I the referenced to In backlog. CapEx. always past, the first want sort on you'd

to projects I think below for point, all now. something come mentioned X I you If million, that was it these $XXX fruition. think 'XX earlier, at

then Just fill curious, know a about number in at look share $XX of backlog that that, is if could XXXX, the is firm just thinking in just at it million. in million to now, you I when 'XX, point could say the you with have that terms much this $XX talking mentioned as pretty hopper you about we're below curious million similar $XXX how year? you and up safe

something just should expect we be curious trickle expecting if and to to So could about in small still we hear that? when

Michael Mears

Yes.

So let between we the a and distinction me be clear on backlog. announced what

we commitments. announced under success construction. million are projects We're look I where not are looking right probability on of the without to But returns money in the environment we're now. So and spend we are the That's money credit-worthy you. secure low-risk capital right our those, when lot but now, of they're would at we year you achieving is what in are just in the we're years. projects we're probably to that number projects in this out at. on going projecting give define approved we potential not would is as that and is potential, mention which we're that $XXX we Those the there's that -- expectations our already a not spending the any and few still. and they're $XX million didn't of growth next forecast capital going mean sense backlog year. for there that the $XX next million that them in in -- notes, I our year gave would That range per number a big be I capital pretty be the The our budget interested

returns, be I a and lower There's just would can there's it projects that number. mean a that's some Now secured number. won't, we're looking estimate. at of for possibility that they could an this that chance which year, move at also these attractive

a I'm million $XXX kind is give don't of trying rule a of I not prediction. but good XXXX, forecast want So to to thumb.

'XX As and probably million. year, this gigantic spending will above in year increase XXXX. the even this there's that get not additional far likely It's spending be announced the X just we going smaller, potential as that in though those that raise smaller projects to they're of sure, And into we roll if high-returning we even year would of there's the really $XX approve over they this are done, projects, like kind still any scale, the or projects.

probably high able $XXX caveat case I we of we just to in if stated $XXX So range of it's be want secure, I year. million that to now, at in project have the projects. cap. we're to million the as -- the the we're We just $XXX think call, just I returning, will very our said going we're that, wouldn't year. invest for we're right by landscape It's not million the than continue the last mean, expectation it the a as year, we $XXX that is end mean, $XX likely attractive, just to a for be going I for to types I use still that range. the $XX to in year. we the is going is look be of million most not I million think think estimate. to the but low-risk those going that But higher an to upper year for And that's kind an million

Spiro Dounis

Mike. helpful, That's it. Got

obviously, the other a question, extent interest Second that have we the very just shift was that storm. KMI natural I business. storm, the customer in or following to changed their But if different driving saw renewed interest following noted services, in behaviors in curious, just you've actions noticed price same and the in you're customer transport, change or gas. seen curious haven't behavior the

Michael Mears

was think thinking would things about I considerable just happen We that storm. would a customers markets mean natural lead obviously that products on didn't to mean through a experience in there gas haven't. I but stress market. very imagine different the the I differently, the refined it's doing I

So we any able or almost were the pipe of winter disruption operate with consequence. event to through products no

not in any we're behavior. So no, change customer seeing

Operator

Wolfe next Keith Research. Our is from question Stanley,

Keith Stanley

year, assumes balance there the sort the trajectory were characterize any QX? just over normal versus the on refined just to the normal? versus Is the guidance products in question First you way volumes volume volumes than of And where roughly of think of what outlook.

Michael Mears

was the expected. we product. overall, in think, total, consistent what was with our we quarter what by different In than I Well, first experience little expected a it

we Our diesel higher a expected. probably were than volumes little

were that's a overall tweaking numbers with consistent Our led expected. forward volume, little a total, bit. in what they lower were But and to gasoline volumes little the our probably than

So I to don't to know if I have add than that. any more it

Keith Stanley

Just any...

Michael Mears

the are things But And otherwise. of certain -- to they reason I is, product have spikes To said past I've would the going it's extent, can't some about those weather That, environment people talk some earlier. quantify It's the and would because somewhat comfort stands a the out the softness the mean to to We demand all impact didn't weather things. this were just the of businesses affected vaccinations, add in we level states, versus in likely that first vaccinations, offices. that, we saw look I fully, than predict that to to reopening to to calls, and events. gasoline you likely had about pace economy extent, demand, people hard at during extreme bring a with precision. great events the do instance, so that when been the but in it large quarter paces the have but refined less just the fools there's variables in downward. cold expectations, many back too. that relevant projecting of forward, this with to for game that in the this, that this numbers their

talk just I'd that we would forward So forecast. highlight -- as about I

Keith Stanley

Okay.

refined would that Xx more likely you'd kind more within were at And of release, your if talked about X EBITDA multiple? acquisitions opportunities? Can in to then Second return you me at relatedly, to growth think remind thresholds target multiple for having just Xx X to about for it before, network? bolt-ons relative you Or how is look products consider a and acquisitions, look you you have projects. you this guys core question, diversification the to

Michael Mears

I view Well, acquisitions our fairly conservative. you can tell on is that

in if buying. is nature applicable compensated you're risk the X X depending return. acquisition the on we don't risk As know recent very years. still to to appropriate multiple of is we've done really what -- the what and an expect, But you can few since look it to I acquisition is

system, had that, So West if in bolt-on system line around our where -- terminal our the for clear products, was sight the refined view, going a value. We crude buying in we a a say, we're that of pipeline risk to to Texas. buying or the then, lower gathering is instance, in

return than that lower business. So we type probably would a of threshold have

But things. M&A would I successful type we right. record we're that by -- opposite just that, buy suggests looked it. But hindsight, wish not look aren't can thankful mean, asset X historically, you, or high acquired years. bolt-on the probably or would assets going track would bolt-on. didn't a bid more said, I X not on. assets historically, being be back sounds you, look I say that look We high. is the And We're at the past at and know, the I acquisitions, we a assets we especially likelihood evaluate in evaluated, actually participate. diversification. list say single That not our this, we've the beat at we as we at be and like our at we've but had we extremely the In whether you're we to moment. I asset acquisitions, So tell I -- position. when the top We We're when our at conservative the in at the would it determine attractive. market negative, it. there's that level, priority bidder we tell and can We be are highlighting to of keep think view competitive we look with you opportunities But and we'll the that

our current so assets. And when at view analysis colors looking our we're that and

Operator

Our next question is from Shneur Gershuni, UBS.

Shneur Gershuni

of my Most answered. have asked questions and been

to I questions So were asked. of few that just some the a have follow-ups

forth. had I coverage questions to and respect think multiple so ratio with you

doing of because sort clarify to just there I you're wanted does to that. your forth buybacks, back not and improve clarify, ratio? that coverage naturally Just on if seems to some be

Michael Mears

It does.

mean we not what of X.Xx. looking the related other unless that there's as I of we're normal an -- So ratio below do let talk we dislocation it's because wouldn't X.Xx, to operating I really, -- the we X.Xx And that. words, cap. coverage In saw -- at a what perceiving year the people are circumstances, we we we clarify mean, at. extreme when most level think when way is feel coverage But want we the with about put go prefer what we're that our below stability to we comfortable business not under last go went when below like that to me

that around growth with And mean that Now business. distribution. it And happened, in raised our historically, we've doesn't wouldn't right X.Xx X.Xx, when kept level. the the above naturally that's go coverage just that we've

Going excess coverage. now and was capital raising business of an adds EBITDA of environment, to equity. other and are for real. forward, we given our the is near but X.Xx. buy practice proceeds use coverage X.Xx the it's grows our business old the this the as units improves Use will option, your Buybacks still of above Obviously, option the from back go an valuation basis. X.Xx the In that option That the will above it grow, of cash only and for coverage keep distribution is just diminished. the not

in really we of go Do cash we fine below and think right raise the want we're much. and an we in what We distribution, in then to back is that environment, it's analysis we're invest back we'll if available be. with the make better back equity back and too to coverage be capital? But it. raise where Mean equity feel will above we that? matter when based it. choice, we environment we that's we're point what comfortable it's in. the that increase the equity. go the about just a to then we do decision that way So don't the to do X.Xx buying if If we distribution, X.Xx, it's it, it's a coverage an in we're do the make think all is buy still buy where distribution on with want above down. We X.Xx, to we'll at bring don't time But time that

Shneur Gershuni

Right.

Just units, you clarify, if XX% basically, to coverage a higher, be would XX% so buy and decision of your make. would your to have back then you

Michael Mears

No.

Shneur Gershuni

Sorry.

Michael Mears

we're it's we distributions, our flow above it's sell but a income if just mean, if there. to But reducing from I I caveat back an in cash free asset mean true. general, because buy one-for-one just that's units, yes. not

Shneur Gershuni

being a your call it of rest guidance? a And there the talk been product Is lot but to Perfect. fourth today of kind question, asked your way as have Okay. there XXXX us give to system there's a follow-up sort level. that expectations well, on products assets quarter, you the about refined respect where my the too. -- is during this sits way side your question I like to utilization of capacity the an to with on us refined apples-to-apples give as of know kind of added above But and was been a with respect

Michael Mears

has the difficult perhaps everything time, possible no. so to It's the determine shifting a to there's shipped But then I flex, some we a comparisons. can shipped of for back this make the point. down in to have parts, reason we're explain maybe environment many been anyway and the I last moving point because to that pipeline we the in when which dramatically. know when think But expanded, barrel get trying it's it's only refined barrel if a or determine in whether you know a is And so when don't that get if at Well, again, call. and is commitment, stable dropped has demand would that product tried overall we'll very on we've at that road demand, is

we we to why difficulty don't carve have the that's try and So out. that

Jeffrey Holman

in wouldn't a don't also about just characterizing that that's we system be -- typically the because question it's -- capacity utilization our we way now terms We of on we usually network just would not that. think

parse improving it's that's reasons and any for then the projections as versus XXXX opposed Mike start, I growth the throughout difficult out year. as products First our the will mentioned. do with specificity last of call, versus have all, we to second base very of lower on all discussed all, for say, just to demand But

Operator

Theresa is Chen, question from And our Barclays. next

Theresa Chen

for once actually in line a are volatile sense some to items quarter, -- strip that out had that like there OpEx the And wanted recent just in follow-up going run the just for I you to gains a related should I Jeff, experienced were the quarter? cash forward item. Granted savings. get rate cost be what were the this of most

Jeffrey Holman

a around items much Well, we impact the to mentioned related I and up to -- of bucket related expenses. things, detail, of say without was total Less Mike was which of than of revenue storm, expense made million number too in would $XX a getting items. half that

that's one-off you that other of if you. to say onetime for bookend, would quarter. would also items looking were some give things So in I But the kind I related the had storm, the we

later in that well, some year. to expect we of as that mentioned Mike think reverse I that the

believe kind $XX complicated year, lower we a absent we of figure expected million gave little the the expenses bit of been So came we -- case, effort. what would into mentioning our it's that. optimization have of than a more worth well, as versus we when Maybe I

would have And realized so otherwise pace, are this those I'd that what we just been. on say to versus be year

the And type of variances, first see, quarter year-over-year was so the some And incorporate that. that. reflective will you of

Operator

next from Cusimano, Michael And Energy. is Heikkinen question our

Michael Cusimano

one for me. question Just

per about are the And On that that then barrel, there Or quarter-to-quarter. think was just oil deficiency how number? Houston like more I details was distribution also revenue forward. hoping of in transportation lower up function was that if crude thought it a if we I going for payments any volumes? And

Jeffrey Holman

biggest us volumes. with for HDS variance in single change minute. is The a Yes. Bear the

that per a barrel And quite impact it. it about really a That's they typically, when rate right. give to move to as why a out we've those bit pipeline. can point -- That's definitely average tried you're little try So color bit. we was more lot,

Michael Cusimano

related Okay. deficiency payments in all storm? any to you And XQ have did the

Jeffrey Holman

material. Not

Michael Mears

have related they didn't not storm. otherwise, were the anything we -- Not material. But to

Operator

question last Michael Sachs. And our is Goldman Lapides,

Michael Lapides

the $X.XX you the in to at Are barrel pipes a what getting some my range. balance I a X you how $X.XX and think markets. have of are sheet think year of Permian material the if oil newer of the now, today to of seeds years the whether Just supply mark-to-market back or a to where of about about everybody's not production, year goes roll, pipeline contracts you kind to X get it's to coming kind rationalization that when kind a how tariff it's X in or on pickup managing in case tariff over stage how yet to you, X If in just would as curious, you the do the or we industry do wide. you next closer or it's kind think or be about $X.XX of the don't kind year risk to what of about manage do from see

right You've just curious about you're you about got long now, but I'm thinking the how term. have runway some the given contracts

Michael Mears

on that's already. Well, mean, say renewals of contract been all, we've of question. first good through I'd round a a Longhorn I

So our the lower they structure. Longhorn substantially contract already rates were under on than are original

as has mentioned go the forward still rationalized of that rating. you come matter that where On the assuming I'll rates nothing's the mean Walmart. an Well, overcapacity. don't something between though on we're hopefully, in a And have volume. And before market, have risk you to of that of but to matter large to with re assumption. pipes. still is out I a current you been to of it's already considerably real expired. big aside regards if have such all first pipes there, even But a to fact that's But you not of a rates going on to second. BridgeTex, the to the re-rated market. the matter you range material spot up the tariff is It's get -- it's And of have level current a kind we've set from And acute be that's the So is Again, all in ourselves if problem. basin a as -- not on to point it's that do, environment. or it a gap position all, it's contracted changed, the a for get production the contracts fast our that risk if now, a low very is, years you're we to recontract, was trying what contract. -- movements Longhorn going and of again, X you

be going you to Before It's the very get shows it that now volume. to need the are The If to that the competitive. contracts. be There's I rates the no the rates the cheaper everyone's move Corp... rate, their Well, contracts that's we is based Corpus destination, to place, the all same. to ship be to to be mean, there trying are Houston. current even rates the going on same. to barrel are all in going than to are analysis talk about going

going X not lower the to than have You're that's other.

to creating on we're environment prefer got an go market. there's so a to And go demand working where shippers And large to reasons what to you've Houston, is Houston.

will capability. less all believe a futures to. development, is are attractive think we handle congested it's thing going announced it's in when in in very pipe few can advancing sufficient hope perhaps today, make anything that future. the it and to months export to still You is Houston we and announce place. -- to ago have an ship X We that something that attractive but the got to a have traders it's But port. to don't it capacity on Houston. That's we that market to we contract under argue a It's we announce be have for that to Corpus

said, evaluate I pipe, about the independent to our what to store want we And partnering possibilities don't pipes. portfolio mentioned alternative on this for other rationalization for being crude too looking at into that sold I But earlier, we're parties. think and with details go So frequently. optimizing many we our of

the X-year time for horizon, the to us find to -- to So that going that to is X use opportunities go potential talk optimize a of the on. over make when sense there's about you assets. activity And

Just as all doing certainly to have. peers helps of our the else everyone in are doing they're and it it, that extent successful

So leave I'll it at just that.

Operator

closing remarks. gentlemen, And for call the turn will I to you over back

Michael Mears

for you thank you Magellan, Thank to your you, and in for All today. Well, right. talk will everyone, your time we interest soon.

Operator

And thank We participation. our today. a conclude you for ladies your day. does of gentlemen, great all and call Have that rest for your

may You your line. disconnect

Magellan Midstream Partners (MMP) 29 Apr 212021 Q1 Earnings call transcript