Magellan Midstream Partners Reports Record Quarterly Earnings [April]

TULSA, Okla. – Magellan Midstream Partners, L.P. (NYSE: MMP) today reported record quarterly operating profit, net income and earnings per limited partner unit for the first quarter of 2005.

First-quarter 2005 operating profit was $54.0 million compared to $34.6 million for first-quarter 2004, representing a 56% increase. Net income increased to $42.1 million during first-quarter 2005 from $25.8 million in the corresponding 2004 period, a 63% increase. Earnings per limited partner unit were 54 cents during first-quarter 2005 compared to 44 cents during 2004, for a 23% increase.

“Magellan's base refined products businesses continued to produce strong results. In addition, the pipeline systems we acquired late last year from Shell also performed very well, enabling us to set several all-time financial records,” said Don Wellendorf, chief executive officer. “We were also pleased to be able to increase the cash distribution for the quarter by 5% over last quarter's distribution amount due to our strong cash generation.”

An analysis of variances by segment comparing first-quarter 2005 to first-quarter 2004 is provided below based on operating margin, a financial measure that reflects operating profit before general and administrative (G&A) expenses and depreciation and amortization:

Petroleum products pipeline system. Pipeline operating margin was $62.7 million, an increase of $22.4 million. Operating results from the pipeline system acquired during Oct. 2004 and higher product margins were the primary contributors to the increase. Although the partnership generally does not own the product it transports, its petroleum products management business and third-party supply agreement benefited from the sale of product during the current high price environment. Operating margin also increased due to additional management fee revenue associated with operating third-party pipelines and higher ancillary revenues, partially offset by higher system integrity and power costs.

Petroleum products terminals. Terminals operating margin was $17.6 million, an increase of $4.2 million. The 2005 period benefited from higher utilization and rates at the partnership's marine terminals and increased throughput at its inland terminals. First-quarter 2005 also benefited from additional earnings resulting from 2004 acquisitions and higher ancillary revenues.

Ammonia pipeline system. Ammonia operating margin was $1.0 million, a decrease of $1.6 million. Revenues declined as a result of lower shipments due in part to planned maintenance work at a customer's ammonia production facility during the current quarter. Higher system integrity costs and additional environmental accruals related to a fourth-quarter 2004 pipeline release also contributed to the unfavorable variance.

Depreciation, amortization, G&A and interest expenses increased between the first quarter of 2005 and 2004, all principally due to acquisitions completed during 2004.

Based on first-quarter results and expectations for the remainder of 2005, management is raising its annual earnings guidance from $1.90 to $2.05 per limited partner unit, while remaining committed to its goal of raising distributions by at least 10 percent annually. Earnings for second-quarter 2005 are currently expected to be approximately 51 cents per unit.

An analyst call with management regarding first-quarter 2005 earnings is scheduled today at 1:30 p.m. Eastern. To participate, dial (800) 406-5356 and provide code 1566420. Investors also may listen to the call via the partnership's web site at http://www.magellanlp.com/webcasts.aspx.

Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on May 3. To access the replay, dial (888) 203-1112 and provide code 1566420. The replay also will be available at http://www.magellanlp.com.

Management believes that investors benefit from having access to the same financial measures being utilized by the partnership. As a result, this news release includes a discussion of operating margin, which is an important performance measure used by management to evaluate the economic success of the partnership's core operations. Operating margin is a non-GAAP measure that reflects operating profit before G&A expenses and depreciation and amortization. A reconciliation of operating margin to operating profit accompanies this release.


About Magellan Midstream Partners, L.P.  

Magellan Midstream Partners, L.P. is a publicly traded partnership formed to own, operate and acquire a diversified portfolio of energy assets. The partnership primarily transports, stores and distributes refined petroleum products. More information is available at http://www.magellanlp.com.



Portions of this document may constitute forward-looking statements as defined by federal law. Although the partnership believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.  

Contact Information:

Paula Farrell Investor Relations 918-574-7650 paula.farrell@magellanlp.com