NuStar Energy L.P. reported a lower-than-expected earnings per share (EPS) of $0.2 for Q3 2023, falling short of the anticipated $0.22. Despite this, the company's total EBITDA for the quarter was $180 million, a slight increase from the $178 million reported in Q3 2022.
The Pipeline segment's EBITDA saw an approximately 10% year-over-year (YoY) increase, fueled by robust revenues from refined product systems and the ammonia system. Total throughputs also experienced a boost, climbing about 7% compared to Q3 2022. In particular, the McKee System and Three Rivers refined product system demonstrated higher revenues and throughputs YoY.
However, the Permian Crude Systems volumes averaged 523,000 barrels per day, a decrease from Q3 2022 but an improvement from Q2 2023's volumes. The Fuels Marketing segment held steady with an EBITDA of $8 million in Q3 2023, mirroring the results from the previous year.
Looking ahead to the full year 2023, NuStar projects an adjusted EBITDA ranging between $720 million and $740 million. The company has also outlined its commitment to maintaining a healthy debt-to-EBITDA ratio below 4x by year-end.
In line with this objective, NuStar has taken significant steps towards reducing debt and bolstering its balance sheet. By July 2023, approximately two-thirds of the Series D preferred units had been repurchased. In August, the company raised $222 million net of fees through common equity issuance, which was directed towards redeeming the remaining Series D preferred units.
Following this redemption, Fitch upgraded NuStar's credit rating by one notch to BB, and S&P Global improved its rating outlook from stable to positive. NuStar announced plans to self-fund all operating expenses, growth capital, and distributions, and focus on strategic investments after the Series D preferred units are removed from its capital structure.
The company has earmarked between $120 million and $130 million for strategic capital expenditure in 2023. This includes approximately $25 million for projects related to its ammonia pipeline. Additionally, NuStar is progressing with initiatives such as connecting its ammonia system to OCI's advanced ammonia products facility in Iowa, advancing low-carbon ammonia projects, and expanding its West Coast renewable fuels network. These efforts underscore NuStar's leadership position in the renewable fuels market.
InvestingPro Insights
In light of the InvestingPro data and tips, it's worth noting that NuStar Energy's market cap stands at a solid $2260M, and the company's P/E ratio is 18.15 as of Q2 2023. Moreover, the company's revenue, despite a slight decline of 3.26% over the last twelve months as of Q2 2023, still remains substantial at $1615.4M.
From an investment perspective, two InvestingPro Tips stand out. Firstly, the company is expected to show growth in net income this year. This aligns with NuStar's projections of an adjusted EBITDA ranging between $720 million and $740 million for the full year 2023. Secondly, the company has maintained dividend payments for 23 consecutive years, a testament to its commitment to return value to shareholders. This is particularly noteworthy given the company's substantial dividend yield of 8.97% as of August 2023.
These insights are just a taste of the comprehensive data and tips available to InvestingPro users. With over ten additional tips and an array of real-time metrics, InvestingPro provides a wealth of information for investors looking to delve deeper into the financials of companies like NuStar Energy.
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