Oct 31, 2013
Executives
Michael N. Mears - Chairman of Magellan GP LLC, Chief Executive Officer of Magellan GP LLC, President of Magellan GP LLC and Chief Operating Officer of Magellan Gp LLC John D.
Chandler - Chief Financial Officer of Magellan GP LLC, Principal Accounting Office of Magellan GP LLC, Senior Vice President of Magellan GP LLC and Treasurer of Magellan GP LLC
Analysts
Steven C. Sherowski - Goldman Sachs Group Inc., Research Division Edward Rowe Brian J.
Zarahn - Barclays Capital, Research Division Paul Jacob John Edwards - Crédit Suisse AG, Research Division
Operator
Good day, everyone, and welcome to the Magellan Midstream Partners Third Quarter 2013 Earnings Results Conference Call. This call is being recorded.
At this time, for opening remarks and introductions, I would like to turn the call over to Magellan's Chief Executive Officer, Mike Mears. Please go ahead, sir.
Michael N. Mears
All right, thank you. Well, good afternoon, and thank you for joining us today to discuss Magellan's third quarter financial results and our outlook for the remainder of 2013.
Before we get started, I'll remind you that management will be making forward-looking statements as defined by the SEC. Such statements are based on our current judgments regarding some of the factors that could impact the future performance of Magellan.
You should review the risk factors and other information discussed in our filings with the SEC in forming your own opinions about Magellan's future performance. Magellan continued its solid performance in 2013, generating significantly higher third quarter financial results for each of our business segments compared to the year-ago period.
We also exceeded our earnings per unit guidance for the quarter by $0.06 due to a number of favorable items, including higher refined transportation revenue, lower power costs and less integrity expenses than initially expected due to timing of project work that is now slated to occur during the fourth quarter. I'll hand the call over to our CFO, John Chandler, to discuss our third quarter results in more detail, then I'll be back to discuss our outlook for the rest of 2013 and the status of our expansion capital projects.
John D. Chandler
Thanks, Mike. Before I begin discussing specific business unit performance, I want to mention that I will be commenting on the non-GAAP measure operating margin, which is simply operating profit before G&A expenses and depreciation and amortizations.
A reconciliation of operating margin to operating profit was included in our earnings release this morning. Management believes that investors benefit from this information because it gets to the heart of evaluating the economic success of the partnership's core operations.
As noted in our press release this morning, we reported net income of $125.6 million this quarter versus net income of $50.5 million in the third quarter of 2012 period or a $75.1 million increase versus the same period last year. Part of this increase can be explained by the out-of-period mark-to-market NYMEX hedge losses incurred in the third quarter of 2012 that we did not experience in the third quarter of 2013.
But even excluding these mark-to-market items, net income increased significantly, going up over $43 million. Details reflecting the out-of-period NYMEX hedge activity can be found on our distributable cash flow reconciliation to net income, which can be found attached to our earnings release this morning.
Each of our segments produced higher results than the previous period and of course, the big story for the quarter was the continued ramp-up of our Longhorn crude pipeline system, which contributed around $20 million to this quarter's results. In addition, the quarter benefited from strong commodity-related margins, mostly butane blending, that added an incremental $8 million to this quarter's results.
And finally, we saw incremental profits coming online from our various capital projects, including from our New Mexico refined products pipeline acquisition that was closed in July of 2013. As is usual, I'll go through the operating margin performance of each of our business lines and then discuss variances in depreciation, G&A and interest to come to an overall explanation of the variance in net income.
So first, let's look at operating margin which was up $84.1 million versus the same period last year. Our refined product segment saw operating margin increase $50.9 million versus the same period last year, going from $95.9 million to $146.8 million this period.
This segment's variance, however, was impacted by the out-of-period NYMEX hedge losses in the third quarter of 2012. If you factor out the out-of-period activity on the NYMEX hedges, the variance between periods is still a strong increase of $19.1 million for the quarter.
Transportation and terminal revenues for the refined product segment were $12 million more than the same period last year. About 70% of this increase in revenues comes from increased tariff revenues.
Tariff revenue was significantly increased as a result of the New Mexico pipeline acquisition completed in July of this year. In addition, tariff revenues increased as a result of the 4.6% PPI tariff adjustment made on the majority of our tariffs in July of this year, as well as from deficiency revenues earned on our pipeline systems from committed volumes that did not ship.
And these positives were offset somewhat by reduced diesel volumes in the Mid-Continent as farmers were delayed getting into the fields for planting, and to a much less degree, reduced gasoline volumes on our Texas City assets due in part to a refiner exporting more product, where during the 2012 period this refiner was having dock issues and was more heavily utilizing our pipeline. To that point, shipment volumes for this segment overall -- for the segment increased 0.5 million barrels or less than 1%, again due to contributions coming from the New Mexico pipeline acquisition, but those volumes are mostly offset by reduced diesel shipments to the Mid-Continent and reduced gasoline shipments on our Texas City assets.
The remaining 30% of the transportation and terminal revenue increases for this segment were the result of higher throughput revenues at our Southeast terminals and higher pipeline lease revenues related in part to idle pipe being leased to oil and gas producers. Product margin from commodity-related activities for this segment increased $40.4 million versus the third quarter of 2012, going from a $17.3 million loss last year to a $23.1 million gain this quarter.
Again, the 2012 period was heavily impacted by mark-to-market activity for hedges related to future periods. Taking out that activity, income between periods actually increased $8.6 million.
Again, you can arrive at this number by taking the product margin from our operating margin reconciliation and make the adjustments identified as commodity-related adjustments on the DCF reconciliation page, both of which are attached to our press release this morning. Higher butane blending processes explained much of this variance, where we saw higher margins and higher volumes.
Volumes were up due to blended gasoline carried over from the second quarter of this year, while margins were higher due to butane costs that are significantly cheaper relative to gasoline, a product of a recent decoupling of butane prices to gasoline given the significant increases in natural gas liquids production in the United States. Refined product segment expenses were $1.5 million more than the same period last year.
The increase in expense was primarily due to lower product overages largely due to price declines towards the end of the quarter on carried inventory and increased expenses because of the New Mexico pipeline acquisition in July. These expense increases were offset somewhat by lower environmental accruals and lower losses on asset retirements where the 2012 period experienced a write-down for an idle segment of pipe.
Now going to the crude segment. Our operating margin from the crude oil segment was up $28.2 million or 126% versus the same quarter last year as Longhorn shipment volumes have continued to ramp up.
Our transportation and terminals revenues for this segment were $25.7 million more than the same period last year. Nearly 85% of this increase can be attributed to incremental revenues coming from our Longhorn Pipeline System, where the pipeline began shipments services in the second quarter of 2013 and continued to ramp up during this quarter.
The remaining increases came from incremental terminal revenue at our Corpus Christi Texas terminal as Double Eagle condensate volumes have begun flowing into Corpus Christi, and to a lesser degree, from higher revenues from our Houston area distribution system as a result of rate increases. Pipeline shipment volumes for the crude oil segment increased 9.3 million barrels versus the same period last year, with all of that increase coming from the Longhorn Pipeline System.
The average tariff realized for the crude oil segment increased from $0.31 per barrel in the third quarter of 2012 to $1.01 per barrel in the third quarter of 2013. This increase in rate is primarily because of the growth of the Longhorn shipment volumes which ship at a much higher rate than our Houston-area distribution system.
For the quarter, the average realized rate on the Longhorn shipments was $2.35 per barrel versus $0.34 per barrel on our Houston-area distribution system. And our Longhorn volumes represent about 1/3 of the volumes shipped for the segment during the quarter, so you can do the math to come up with $1.01 per barrel shipment realized for the quarter.
Our crude segment expenses were $600,000 more than the same period last year, with increases in compensation and other operating costs related to the ramp-up of the Longhorn Pipeline System, being offset by higher product gains, which also benefited from the ramp-up of the Longhorn System. And finally, affiliate management revenue increased $3.2 million due to fees being collected for construction management on BridgeTex and as well as management fees earned for operating of the Osage pipeline joint venture.
Now going to the marine story segment. Operating margin for this segment was up by $4.9 million or 25% versus the same quarter last year.
Terminal revenues were $2.2 million more than the same period last year, largely as a result of new storage coming into service at Galena Park. For the period, our average lease storage utilization declined 400,000 barrels going from 23.6 million barrels per month leased for the third quarter of 2012 to 23.2 million barrels leased this quarter.
Of this change, we had 900,000 barrels of new storage coming online most at Galena Park offset by 800,000 barrels of tankage taken out of service for maintenance and 500,000 barrels of tankage going unleased, mostly from our Wilmington, Delaware terminal. Revenues increased in part because the new tanks brought into service have higher rates than the tanks taken out of service for maintenance, or the tanks that were going unleased at Wilmington.
In addition, ancillary revenues increased at Galena Park due to increased activity at the terminal. Our net product margin for the marine storage segment was $200,000 less than the same period last year, and our terminal expenses were $2 million less than the same period last year.
This positive variance in expense is largely due to an environmental accrual made in the 2012 period for remediation costs at Corpus Christi for historical releases. Offsetting this positive variance somewhat was higher compensation and integrity expenses due to increased maintenance, as well as higher property taxes.
Therefore, in summary, those are the reasons operating margin for the quarter increased $84.1 million going from $138.5 million to $222.6 million this quarter. Now stepping from operating margin to net income, depreciation was up $3.6 million due to capital additions.
Our G&A expenses were up $5.2 million due in part to higher bonuses. In addition, G&A costs are up in part related to incremental costs associated with construction and management services provided to some of our JV arrangements, as well as additional personnel costs related to our growth projects.
And finally, G&A expenses increased due to diligence costs associated with the yet to close Rocky Mountain refined products pipeline acquisition from Plains. Finally, interest expense net of interest income and capitalized interest is essentially unchanged with the cost of additional borrowings outstanding being offset by more capitalized interest associated with our numerous growth capital projects.
During the third quarter of 2013, we had $330 million in additional average borrowings outstanding versus the 2012 period, resulting from the fact that in November of 2012, we proactively issued $250 million in 30-year debt to take advantage of the low-rate environment. In addition, during this quarter, we had on average $80 million outstanding on a revolver.
As of the end of the quarter, we had $14 million in cash on hand and had $90 million in borrowings outstanding on the revolver. However, on October 3, we did once again proactively issue $300 million in 30-year debt, paying off the revolver balance and leaving us with cash for the upcoming expansion capital spending.
So therefore, after this financing, our debt is 100% fixed, we had $0 outstanding in revolver and had over $200 million in cash. Therefore, in total MMP's net income increased $75.1 million for the quarter going from $50.5 million for the 2012 period to $125.6 million for this period.
Our leverage metrics include $2.4 million in debt outstanding at the end of the quarter, resulting in a debt to EBITDA ratio of 3.1x for the last 12 months and actually in the 2.7 to 2.8 range if you pro forma for Longhorn and BridgeTex full year operating performance. I'll now turn the call back over to Mike to discuss capital projects and DCF guidance for the remainder of 2013.
Mike?
Michael N. Mears
Thanks, John. Looking ahead to the rest of 2013, we have increased our DCF guidance by $10 million to a new annual record of $640 million.
The increased guidance primarily incorporates the favorable items that benefited our third quarter results. If you do the math, we're expecting a record quarter during the fourth quarter, which is probably not surprising to many of you.
The fourth quarter generally tends to be our strongest quarter due to the timing of the butane blending season. Additionally, this will be the first quarter that we are recognizing the benefits of Longhorn operating at full capacity.
So on the distribution front, we raised our cash distributions last week to $0.5575 per unit, which is in line with the increased guidance we provided at the last earnings call and keeps us on track to reach our goal of 16% annual distribution growth for 2013. For the full year, we expect distribution coverage of 1.3x based on our latest DCF guidance of $640 million.
At this point, our 2013 DCF guidance does not incorporate operating results from our pending Rocky Mountain acquisition. I'm pleased to report that the FTC review of this transaction is now complete, and we expect to acquire this pipeline system in the near future.
Moving onto our other growth projects. I know many of you have called recently with questions about our Longhorn pipeline.
During the third quarter, we averaged approximately 100,000 barrels per day with construction activities associated with the new pump stations limiting throughput. As of mid-October, we completed the work to be able to achieve a nameplate capacity of 225,000 barrels a day of crude oil from the Permian Basin to the Houston area.
However, as with any pipeline, we don't expect to run at this nameplate capacity 24 hours a day, 7 days a week. As a result, we expect to run at around 85% to 95% of this capacity on average on a monthly basis to allow downtime for scheduled and unscheduled maintenance, as well as scheduling processes for multiple supply points at the origin.
As a result and accounting for reduced throughput in early October as construction work was being completed, we are forecasting approximately 190,000 barrels a day of throughput during the fourth quarter. Of note, we don't generally disclose the operating capacity of any given segment of our pipeline, but are doing so for now as part of our quarterly result to help our investors and the industry have insight into the system, as clearly it is a large growth project for us and a significant component of the change in crude oil landscape.
We also recently announced that we're moving ahead with the expansion of Longhorn by an additional 50,000 barrels a day to a capacity of 275,000 barrels a day. We expect the work required to increase the hydraulic capacity of the pipeline to this level to be complete early in the second quarter of 2014.
This increase also requires regulatory approval, but we anticipate this approval will be obtained consistent with this timeframe. While we do expect to be able to begin shipping more than the current capacity of 225,000 barrels a day in the second quarter of 2014, our ability to reach the full 275,000 barrels a day will be limited until we complete additional origin and destination storage which we expect to complete by mid-2014.
Previously, we had forecast that the high case capital spending for this project would be $80 million. However, the final project scope is now quite a bit less at $55 million.
With this lower cost estimate, we expect to generate an EBITDA multiple of 3x on an incremental capital related to this increased capacity. As a reminder, the entire 275,000 barrels per day is fully committed with customer contracts.
We also previously announced that we'll be adding a new origin station on Longhorn at Barnhart, Texas to be operational in early 2015. This new origin will improve supply optionality for Longhorn and generate incremental origination fee income for us.
Our BridgeTex joint venture continues to move along as planned, and we still expect to deliver Permian crude oil to the Houston market via this pipeline system in mid-2014 as well. At this point, tank and pipeline construction are under way, and we have committed roughly 70% of the project cost and the project remains on budget.
Our Double Eagle joint venture is now handling condensate deliveries on the Eastern leg of the pipeline from Cooke Ranch, Texas and from Cooke Ranch, Texas on the Western leg, with the Western extension to Gordondale projected to be operational by year end. While the capacity of this pipeline is currently 100,000 barrels a day, we still have room for additional shipments.
You may recall that approximately 50,000 barrels a day of the capacity has been committed so far, but these volumes are expected to ramp to this level over time. While Magellan continues to find attractive organic growth projects, we remain actively engaged in the acquisition arena for assets that fit the fee-based, low-risk profile we prefer.
There are a number of refined petroleum products and crude oil assets on the market at this time, but in standard Magellan form, we'll plan to exercise conservatism when bidding on these assets and don't plan to stretch for acquisitions, especially in light of our active organic growth opportunities. We believe we paid an attractive multiple for our recently acquired New Mexico pipeline system and the pending Rocky Mountain refined pipeline system, and these assets nicely complement our existing asset footprint.
As many of you may know, we also purchased a small 15-mile bidirectional crude oil pipeline in the Houston area during August. This pipeline currently connects to our East Houston, Texas terminal and provides an additional route for crude oil, particularly from the Eagle Ford shale to reach our East Houston terminal.
From there, the crude oil may be stored or delivered to refineries in the Houston area or refineries throughout the Gulf Coast via third-party pipelines. This acquisition further expands our extensive Houston crude oil distribution system.
Based on the growth projects underway, we currently expect to spend $925 million during 2013 for our current slate of growth projects and our pending Rocky Mountain pipeline acquisition, which we expect to close this year with another $400 million to be spent in 2014 to complete the expansion projects now underway. We also continue to evaluate well over $500 million worth of potential opportunities.
One of these projects is the potential Little Rock refined products pipeline that we have discussed in the past. We're still in the midst of the open season to assess binding customer commitments for this project.
While we don't yet know if this project will move forward, industry feedback has continued to be positive and we remain optimistic that sufficient demand exists for this project to move forward. That concludes our prepared remarks, and so now I'll turn the call over to the operator for questions.
Operator
[Operator Instructions] We'll take our first question from Steven Sherowski with Goldman Sachs.
Steven C. Sherowski - Goldman Sachs Group Inc., Research Division
Would the proposed Longhorn expansion result in any downtime on Longhorn?
Michael N. Mears
The work that's required to expand -- the pump work that's required to expand has already been done. So that's what primarily was causing the downtime in the third quarter.
So we don't anticipate to have any significant downtime on the system in the fourth or first quarter while we're finishing the expansion work.
Steven C. Sherowski - Goldman Sachs Group Inc., Research Division
Okay. And I'm just wondering, on your $500 million project backlog that you identified, has the characteristics of that backlog changed at all with the recent widening in crude spreads or has shipper and customer interest been pretty consistent throughout those price movements?
Michael N. Mears
Shipper interest has been fairly consistent. The day-to-day shifts and the basis differentials are not dramatically impacting our backlog of projects.
Operator
And we'll move next to Edward Rowe with Raymond James.
Edward Rowe
I apologize if I missed this, but given how butane blending has been tracking for the fourth quarter and first quarter of next year, how much in terms of hedges have you locked in, and can you provide some color on sensitivity on the upside to results if butane blending spreads widen now even further?
Michael N. Mears
I can tell you that for the fourth quarter, we're 90% hedged on our blending. And typically, we limit it to those levels so that we can accommodate any operational issues in case we can't blend to what our actual forecasted volumes are.
But right now, we're blended at 90%. So there's a little bit of room there in the fourth quarter for those numbers to move.
In the first quarter of next year, we are hedged 50%, so we're still actively hedging for the first quarter but we've got 50% of it hedged right now.
Edward Rowe
All right, that's helpful. Next question is, given your storage presence in Corpus and Galena Park and combined with the supply from the Eagle Ford condensates, do you guys have an update on if you're gaining enough demand for fee-based contracts for the condensates splitter?
Michael N. Mears
Well, what I can tell you on the splitters, we're still actively working on that. We have a couple of parties that we're talking to with regards to contracting for the capacity of the splitter, and those negotiations are very active.
I can't really predict for you whether or not we'll get that done or not, but I can tell you that we're actively working on it and there is significant interest in the market.
Edward Rowe
All right, that's helpful. Last question, in terms of incremental opportunities from the Rocky Mountains acquisition, once it's completed, would the potential Kansas, Colorado Springs movement of refined products, would that require minimum of capital?
And are there any other incremental projects surrounding these assets similar to what I mentioned?
Michael N. Mears
With regards to the opportunity to move barrels from Kansas to Colorado Springs, and that's something that if we were to do it, physically would require us to connect those 2 systems, which there's a little bit of capital. That's probably, oh, 5 to 10 miles of pipeline we'd have to build to connect those 2 systems.
I mean, you could also do that through product swaps, too. So we haven't fully vetted that out yet.
We've really been focusing -- and with regards to your second part of the question, whether opportunities are there, we really haven't had the opportunity to go out and develop opportunities on the system because we've been focused on getting through the FTC review, which now is complete. So we expect to close here soon and then we can diligently start working on those opportunities.
But we think there's a number of opportunities there for us to pursue. We just aren't ready really to talk about those yet until we close on the system.
Operator
We'll go now to Brian Zarahn with Barclays.
Brian J. Zarahn - Barclays Capital, Research Division
On your EBITDA guidance in the fourth quarter, it was expected to increase significantly about $65 million versus the third quarter, how should we think about the mix of that growth among Longhorn, butane blending and other sources?
Michael N. Mears
Well, those 2 are probably the lion's share of it. I don't have a percentage basis here, but you've got Longhorn going from 100,000 barrels a day in the quarter to a projection of 190,000.
Our average tariff on Longhorn, as we mentioned, is about $2.35 a barrel, so you can do the math there on the incremental...
John D. Chandler
We generated around $20 million in the third quarter on 100,000 barrels a day.
Michael N. Mears
Right. So there's -- that's obviously a big piece of it.
The blending piece of it is very significant. There's limited blending that takes place in the third quarter, and there's significant blending that takes place in the fourth quarter.
And so there'll be a big variance there. I don't have those numbers in front of me.
In addition to that, we're expecting additional throughput on Double Eagle to ramp up through the quarter. But those 2, Longhorn and blending, are far and away the lion's share of the third quarter to fourth quarter increase.
Brian J. Zarahn - Barclays Capital, Research Division
I'm looking at the third quarter crude pipeline volumes, the growth was driven pretty much just by Longhorn. Can you talk about the non-Longhorn volumes, what you're seeing for the crude demand?
Michael N. Mears
Yes, the non-Longhorn volumes are in, first of all, the Double Eagle volumes aren't in our volume statistics because that's joint venture. So you don't even see those numbers in our reports.
The other crude volumes are predominantly on our Houston area distribution system, and those we're expecting to be, were for the third quarter and I think we're generally expecting for the fourth quarter to be relatively flat. And just a comment on that, I mean, the incremental throughput on those assets is going up because all of our Longhorn volumes is going through those same distribution assets.
But the tariff associated with those movements are all incorporated in the Longhorn volume and the Longhorn tariff. We don't count it as an incremental movement on the distribution system.
So the non-Longhorn-related crude oil throughput on the distribution system is what we're projecting to be flat. The actual throughput through that distribution system is going up quite a bit as we ramp up Longhorn.
Operator
We'll take our next question from Paul Jacob with Crédit Suisse.
Paul Jacob
So the first question I had was on the BridgeTex pipeline. I'm just curious if you could give us an update on the contracting of that pipeline and what the utilization might be when that comes online?
Michael N. Mears
Well, nothing's changed at this point since our latest update, which is, we have contracts on the pipeline. We have not disclosed the volume.
The capacity of the pipeline is 300,000 barrels a day. We have contracts that are sufficient to generate an 8x EBITDA multiple on our $600 million investment.
That being said, the pipeline is not fully contracted. We are talking to potential -- other potential shippers about their interest in doing a supplemental open season on -- not on Longhorn -- on BridgeTex for that available capacity.
We have not yet made a decision whether we're going to do that or not. So that's an overview of the status of it right now.
I mean, our expectation is, given obviously, I don't know what the margins are going -- but the differentials are going to be when we start it up next year. But if the differentials are consistent with where they are now, we would expect that, that uncommitted capacity is going to be heavily utilized.
And there's a balance there when you do that analysis because, obviously, there's a trade-off between tariff and commitments, to the extent that, that uncommitted capacity is used and those shippers would be paying spot tariffs which is considerably higher than the contracted rates. And so there's considerable upside to our 8x EBITDA multiple depending on how many spot barrels we get.
Paul Jacob
Okay. And then -- so then kind of thinking about that in terms of the Longhorn expansion, what would have prevented you from taking the 50,000 barrels that you're going to expand Longhorn by and just kind of putting them on the BridgeTex pipeline to fill that pipeline a little bit more?
Michael N. Mears
Well, there's a couple of reasons. I mean, one is that the contracts on Longhorn are on Longhorn, and the origin for many of those barrels are contracted at Crane, which is the origin for Longhorn and Colorado City is the origin for BridgeTex.
I think the other thing is that, we're 100% owner of Longhorn and we're only 50% owner in BridgeTex. And so to the extent that we have a low-cost expansion of Longhorn, which we do, and we're over-contracted, then that would be our first option.
Operator
[Operator Instructions] We'll move next to John Edwards also from Crédit Suisse.
John Edwards - Crédit Suisse AG, Research Division
Just -- if you could just remind us on the $400 million CapEx spend that you've now identified for 2014, has that changed from the last time you gave guidance on that?
Michael N. Mears
It's up, trying to remember -- yes, our last guidance was 320, $320 million, and now, it's $400 million. So we've got part of that is Longhorn expansion, part of that is the Barnhart origin that we announced a few weeks ago.
And then we've had a handful of other smaller $5 million to $8 million projects that have -- that we're working on now also.
John Edwards - Crédit Suisse AG, Research Division
Okay, that's helpful. So it's not cost escalation, it's opportunity escalation?
Michael N. Mears
No, not at all. It's BridgeTex and Longhorn, both of our largest projects are both on budget.
John Edwards - Crédit Suisse AG, Research Division
Okay, great. And just if you can sort of update us on the butane blending margin outlook.
And that's all I had, that'd be great.
Michael N. Mears
Well, the margin we're locking in now for the first quarter of next year are still very attractive compared to historical standards. They're perhaps not as attractive as what we were seeing earlier in the -- earlier this year.
Gasoline prices have come down and butane prices have not come down as much. On the other side of the coin, RINs, which we have to acquire associated with blending, have down quite a bit, so that's been a positive.
So I guess, our view is blending is still going to -- the margins are still going to remain very strong. Whether they'll be as high as the peak we saw earlier this year on a run-rate basis is probably challenging year-over-year.
But the margins are still consistent -- are still strong enough for us to feel very comfortable with our distribution guidance for next year.
Operator
And we have no further questions at this time. I will now turn the call back to Mr.
Mike Mears for closing remarks.
Michael N. Mears
Okay. Well, thank you for your time today.
Magellan continues to generate solid financial results for 2013, while commissioning the capital projects that will frame our future, and we appreciate your continued interest and support of Magellan. Have a good afternoon.
Operator
And this does conclude today's conference. You may disconnect at any time.