Storage terminal and pipeline operator NuStar has reported a Q1 net income of $42m for the first compared to a $148m net loss for the first quarter of 2020.
Last year’s Q1 loss was largely related to a $225m non-cash goodwill impairment charge when the fair value of NuStar’s crude oil pipelines reporting unit fell below its carrying value as a result of the global pandemic. On an adjusted basis, NuStar reported net income of $77m for the first quarter of 2020.
“As America begins to recover from the impact of COVID-19 and begins returning to normal activity and growth, we are seeing signs of stabilization and improvement across the US and in NuStar’s footprint,” said company president and CEO Brad Barron. “US refined product demand has improved as COVID vaccinations have continued to allow more and more Americans to return to normal day-to-day activities.”
Barron discussed the impact of Winter Storm Uri, which in mid-February brought extreme temperatures, snow and ice to Texas and nearby states and left millions of Texans without heat or water for days.
“Some of our customers in the region also experienced outages or downtime during and after the storm, which trimmed our earnings for the quarter by a total of about $11m,” Barron said. Despite the impact of Winter Storm Uri, NuStar’s Q1 pre-tax earnings were in line with consensus estimates and without the storm’s impact, earnings were comparable to the fourth quarter of 2020.
“Last year, our assets, our business and our employees demonstrated incredible strength and resilience,” Barron noted. “Faced with the challenges of a global pandemic, we still moved more barrels and generated more adjusted EBITDA in 2020 than we did in 2019. And in 2021, even after layering in the impact of a historically unprecedented winter storm, NuStar remains solidly positioned to fund 100% of our 2021 spending (approximately $140 to $170m) from our internally generated cash flows.
“We also remain on track to generate EBITDA for 2021 comparable to 2020’s strong results, after taking into account our sale of the Texas City terminal in December of last year. And we see continuing signs of recovery on the horizon, as expectations for demand, utilization, and crude prices for 2021 have all improved,” Barron concluded.
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