NuStar GP Holdings, LLC - FORM 8-K - EX-99.1 - PRESS RELEASE - October 28, 2011

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Exhibit 99.1

NuStar GP Holdings, LLC Reports Increased Third Quarter 2011 Net Income

and Distributable Cash Flow

SAN ANTONIO, October 28, 2011 – NuStar GP Holdings, LLC (NYSE: NSH) today announced that distributable cash flow available to unitholders for the third quarter of 2011 was $21.1 million, or $0.50 per unit, compared to $20.7 million, or $0.49 per unit, for the third quarter of 2010. Third quarter 2011 net income was $18.4 million, or $0.43 per unit, compared to $17.8 million, or $0.42 per unit, for the third quarter of 2010.

In addition, the company announced that its board of directors has declared a third quarter 2011 distribution of $0.495 per unit. The third quarter 2011 distribution will be paid on November 16, 2011, to holders of record as of November 8, 2011.

“NuStar GP Holdings, LLC should benefit from a couple of internal growth projects completed by NuStar Energy L.P. during the third quarter,” said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC. “These projects should increase NuStar GP Holdings, LLC’s future distributable cash flows and net income.”

A conference call with management is scheduled for 11:00 a.m. ET (10:00 a.m. CT) today, October 28, 2011, to discuss the financial results for the third quarter of 2011. Investors interested in listening to the presentation may call 800/622-7620, passcode 13712546. International callers may access the presentation by dialing 706/645-0327, passcode 13712546. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 13712546. A live broadcast of the conference call will also be available on the company’s Web site at www.nustargpholdings.com.

NuStar GP Holdings, LLC is a publicly traded limited liability company that owns the two percent general partner interest, a 15.6 percent limited partner interest and the incentive distribution rights in NuStar Energy L.P., one of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation with operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey. For more information, visit NuStar GP Holdings, LLC’s Web site at www.nustargpholdings.com.

-More-

This release serves as qualified notice to nominees under Treasury Regulation Sections 1.1446- 4(b)(4) and (d). Please note that 100% of NuStar’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals and corporations, as applicable. Nominees, and not NuStar, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding future events. All forward-looking statements are based on the company’s beliefs as well as assumptions made by and information currently available to the company. These statements reflect the company’s current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P. and NuStar GP Holdings, LLC’s 2010 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.

 

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NuStar Energy L.P. and Subsidiaries

Consolidated Financial Information

(Unaudited, Thousands of Dollars, Except Unit Data and Per Unit Data)

 

     Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
     2011     2010     2011     2010  

Statement of Income Data:

         

Revenues:

         

Services revenues

    $ 210,681      $ 201,390      $ 608,689      $ 585,772   

Product sales

      1,613,669        936,989        4,039,461        2,623,077   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

      1,824,350        1,138,379        4,648,150        3,208,849   

Costs and expenses:

         

Cost of product sales

      1,535,609        860,942        3,797,424        2,422,751   

Operating expenses

      135,615        121,748        390,480        363,028   

General and administrative expenses

      17,731        26,860        69,833        76,324   

Depreciation and amortization expense

      42,418        38,539        124,354        114,653   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total costs and expenses

      1,731,373        1,048,089        4,382,091        2,976,756   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      92,977        90,290        266,059        232,093   

Equity earnings from joint venture

      2,599        2,454        6,997        7,571   

Interest expense, net

      (21,565 )      (20,583 )      (62,644 )      (58,059 ) 

Other (expense) income, net

      767        (235 )      (5,699 )      14,882   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income before income tax expense

      74,778        71,926        204,713        196,487   

Income tax expense

      4,497        3,616        13,311        9,052   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 70,281      $ 68,310      $ 191,402      $ 187,435   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income applicable to limited partners

    $ 59,783      $ 58,375      $ 160,932      $ 158,950   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income per unit applicable to limited partners

    $ 0.92      $ 0.90      $ 2.49      $ 2.55   
  

 

 

    

 

 

    

 

 

    

 

 

  

Weighted average limited partner units outstanding

      64,612,423        64,610,549        64,611,181        62,386,373   

EBITDA (Note 1)

    $ 138,761      $ 131,048      $ 391,711      $ 369,199   

Distributable cash flow (Note 1)

    $ 90,970      $ 94,202      $ 276,524      $ 243,372   
     September 30,
2011		     September 30,
2010		           December 31,
2010		  

Balance Sheet Data:

         

Debt, including current portion (a)

    $ 2,525,655      $ 1,990,507        $ 2,137,080   

Partners’ equity (b)

      2,525,049        2,690,235          2,702,700   

Debt-to-capitalization ratio (a) / ((a)+(b))

      50.0 %      42.5 %        44.2 % 

NuStar Energy L.P. and Subsidiaries

Consolidated Financial Information - Continued

(Unaudited, Thousands of Dollars, Except Barrel Data)

 

     Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
     2011     2010     2011     2010  

Segment Data:

         

Storage:

         

Throughput (barrels/day)

      721,618        673,121        679,031        666,635   

Throughput revenues

    $ 21,743      $ 19,139      $ 58,388      $ 56,085   

Storage lease revenues

      120,146        111,998        359,820        330,493   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

      141,889        131,137        418,208        386,578   

Operating expenses

      71,386        66,153        213,230        198,186   

Depreciation and amortization expense

      21,725        19,349        64,656        57,004   
  

 

 

    

 

 

    

 

 

    

 

 

  

Segment operating income

    $ 48,778      $ 45,635      $ 140,322      $ 131,388   
  

 

 

    

 

 

    

 

 

    

 

 

  

Transportation:

         

Refined products pipelines throughput (barrels/day)

      523,279        526,825        509,354        529,380   

Crude oil pipelines throughput (barrels/day)

      319,103        382,845        304,554        381,606   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total throughput (barrels/day)

      842,382        909,670        813,908        910,986   

Revenues

    $ 81,899      $ 80,597      $ 226,471      $ 232,817   

Operating expenses

      30,796        30,488        85,381        88,784   

Depreciation and amortization expense

      12,855        12,597        38,282        38,029   
  

 

 

    

 

 

    

 

 

    

 

 

  

Segment operating income

    $ 38,248      $ 37,512      $ 102,808      $ 106,004   
  

 

 

    

 

 

    

 

 

    

 

 

  

Asphalt and fuels marketing:

         

Product sales

    $ 1,618,693      $ 937,074      $ 4,049,079      $ 2,625,994   

Cost of product sales

      1,545,340        864,904        3,821,379        2,438,703   
  

 

 

    

 

 

    

 

 

    

 

 

  

Gross margin

      73,353        72,170        227,700        187,291   

Operating expenses

      41,862        31,575        113,506        96,924   

Depreciation and amortization expense

      6,073        5,138        16,505        15,254   
  

 

 

    

 

 

    

 

 

    

 

 

  

Segment operating income

    $ 25,418      $ 35,457      $ 97,689      $ 75,113   
  

 

 

    

 

 

    

 

 

    

 

 

  

Consolidation and intersegment eliminations:

         

Revenues

    $ (18,131 )    $ (10,429 )    $ (45,608 )    $ (36,540 ) 

Cost of product sales

      (9,731 )      (3,962 )      (23,955 )      (15,952 ) 

Operating expenses

      (8,429 )      (6,468 )      (21,637 )      (20,866 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total

    $ 29      $ 1      $ (16 )    $ 278   
  

 

 

    

 

 

    

 

 

    

 

 

  

Consolidated Information:

         

Revenues

    $ 1,824,350      $ 1,138,379      $ 4,648,150      $ 3,208,849   

Cost of product sales

      1,535,609        860,942        3,797,424        2,422,751   

Operating expenses

      135,615        121,748        390,480        363,028   

Depreciation and amortization expense

      40,653        37,084        119,443        110,287   
  

 

 

    

 

 

    

 

 

    

 

 

  

Segment operating income

      112,473        118,605        340,803        312,783   

General and administrative expenses

      17,731        26,860        69,833        76,324   

Other depreciation and amortization expense

      1,765        1,455        4,911        4,366   
  

 

 

    

 

 

    

 

 

    

 

 

  

Consolidated operating income

    $ 92,977      $ 90,290      $ 266,059      $ 232,093   
  

 

 

    

 

 

    

 

 

    

 

 

  

NuStar Energy L.P. and Subsidiaries

Consolidated Financial Information - Continued

(Unaudited, Thousands of Dollars, Except Per Unit Data)

Notes:

 

1. NuStar Energy L.P. utilizes two financial measures, EBITDA and distributable cash flow, which are not defined in United States generally accepted accounting principles. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare partnership performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the partnership’s assets and the cash that the business is generating. Neither EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

The following is a reconciliation of net income to EBITDA and distributable cash flow:

 

     Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
     2011     2010     2011     2010  

Net income

    $ 70,281      $ 68,310      $ 191,402      $ 187,435   

Plus interest expense, net

      21,565        20,583        62,644        58,059   

Plus income tax expense

      4,497        3,616        13,311        9,052   

Plus depreciation and amortization expense

      42,418        38,539        124,354        114,653   
  

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA

      138,761        131,048        391,711        369,199   

Less equity earnings from joint ventures

      (2,599 )      (2,454 )      (6,997 )      (7,571 ) 

Less interest expense, net

      (21,565 )      (20,583 )      (62,644 )      (58,059 ) 

Less reliability capital expenditures

      (15,104 )      (13,841 )      (41,257 )      (38,327 ) 

Less income tax expense

      (4,497 )      (3,616 )      (13,311 )      (9,052 ) 

Plus distributions from joint venture

      2,668        2,450        9,397        7,500   

Plus other non-cash items

      —          —          5,093        —     

Mark-to-market impact on derivative activity (a)

      (9,944 )      1,198        (8,718 )      (20,318 ) 

Contingent loss adjustment

      3,250        —          3,250        —     
  

 

 

    

 

 

    

 

 

    

 

 

  

Distributable cash flow

    $ 90,970      $ 94,202      $ 276,524      $ 243,372   

EBITDA

    $ 138,761      $ 131,048      $ 391,711      $ 369,199   

EBITDA attributable to noncontrolling interest

      100        —          386        —     
  

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA attributable to NuStar Energy L.P.

    $ 138,661      $ 131,048      $ 391,325      $ 369,199   

Distributable cash flow

    $ 90,970      $ 94,202      $ 276,524      $ 243,372   

Distributable cash flow attributable to noncontrolling interest

      87        —          388        —     
  

 

 

    

 

 

    

 

 

    

 

 

  

Distributable cash flow attributable to NuStar Energy L.P.

    $ 90,883      $ 94,202      $ 276,136      $ 243,372   

General partner’s interest in distributable cash flow

      10,600        10,160        31,350        29,371   
  

 

 

    

 

 

    

 

 

    

 

 

  

Limited partners’ interest in distributable cash flow

    $ 80,283      $ 84,042      $ 244,786      $ 214,001   
  

 

 

    

 

 

    

 

 

    

 

 

  

Distributable cash flow per limited partner unit

    $ 1.24      $ 1.30      $ 3.79      $ 3.40   

 

(a) Distributable cash flow excludes the impact of unrealized mark-to-market gains and losses that arise from valuing certain derivative contracts, as well as qualifying hedged inventory. The gain or loss associated with these contracts is realized in distributable cash flow when the contracts are settled.

NuStar GP Holdings, LLC Reports