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8-K - FORM 8-K - SemGroup Corpd349617d8k.htm

Exhibit 99.1

 

LOGO

SemGroup Reports First Quarter 2012 Results

First Quarter Adjusted EBITDA Increased 8% Over 2011; Company Reaffirms 2012 Guidance

Tulsa, OK – May 9, 2012—SemGroup® Corporation (NYSE: SEMG) (“SemGroup”) today announced its financial results for the three months ended March 31, 2012.

SemGroup’s adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $28.6 million for the quarter ended March 31, 2012, an increase of 8% compared to Adjusted EBITDA of $26.5 million for the same quarter in 2011. Key factors impacting our results included higher volumes in the crude segment, somewhat offset by lower performance in our SemLogistics storage business, and the absence of SemStream®, L.P. earnings. Adjusted EBITDA, which is a non-GAAP measure, is defined and reconciled to net income below.

SemGroup reported revenues of $317.7 million with a net loss attributable to SemGroup of $1.4 million, or $0.03 per share, compared to revenues of $406.9 million with a net income attributable to SemGroup of $0.03 million, or an income of $0.00 per share for the quarter ended March 31, 2011. The first quarter 2012 results reflect our strategic shift towards a more fee-based business model and improved capital structure. Compared to the same period last year, our current results reflect the elimination of SemStream, L.P. revenue from assets which were contributed to NGL Energy Partners LP in late 2011, and the reduction of net income related to the non-controlling interest in Rose Rock Midstream, L.P. due to the initial public offering in December 2011.

“We continue to realize strong demand in our crude segment, as crude oil transportation volumes have doubled compared to last year’s first quarter, and we completed our 1.95 million barrel storage expansion in Cushing ahead of schedule ” said Norm Szydlowski, president and chief executive officer of SemGroup. “We are making excellent progress on implementing our growth plans in the crude and gas segments, and are well positioned to meet the growing demand for storage, transportation and processing assets in our key growth areas in the mid-continent U.S.,” said Szydlowski. “This growth is offsetting the low natural gas price markets and ongoing challenges in the European storage market. We are reaffirming the company’s previous guidance of expected Adjusted EBITDA of between $125 and $135 million for 2012.”

“We are continuing to enhance our asset position in key areas like the Mississippi Lime play,” Szydlowski continued. “The recently announced crude oil pipeline joint venture, or Glass Mountain Pipeline, will continue to bring barrels into Cushing and increase SemGroup’s presence in an area with a real demand for midstream services we can provide.”


Recent Developments

 

   

In February, SemGas® completed the Hopeton/Nash plant connection which will provide additional processing efficiency within the Mississippi Lime play.

 

   

We are expanding our previously announced gas processing plant with Exterran Holdings, Inc. (NYSE: EXH) from 60 mmcf per day to 125 mmcf per day processing capacity.

 

   

Rose Rock Midstream completed construction of the 1.95 million barrel Cushing expansion project March 31, 2012, three months ahead of schedule.

 

   

On May 7, 2012, we announced that we had entered into a crude oil pipeline joint venture with an affiliate of Chesapeake Energy Corporation (NYSE:CHK), and Gavilon, LLC, to construct and operate a 210-mile pipeline in western and north central Oklahoma, named Glass Mountain Pipeline, which will deliver crude oil to a one million barrel storage facility at Gavilon’s terminal in Cushing, Oklahoma.

Earnings Conference Call

SemGroup will host a conference call for investors today at 10 a.m. EDT. The call can be accessed live over the telephone by dialing 800.706.7745, or for international callers, 617.614.3472. The pass code for the call is 28106505. A replay will be available shortly after the call and can be accessed by dialing 888.286.8010, or for international callers, 617.801.6888. The pass code for the replay is 54082430. The replay will be available until May 16, 2012. Interested parties may also listen to a simultaneous webcast of the conference call by logging onto SemGroup's Investor Relations website at www.semgroupcorp.com. A replay of the webcast will also be available for a year following the call at www.semgroupcorp.com on the Calendar of Events-Past Events page. First quarter 2012 earnings slide deck will be posted under Investor Relations/Presentations.

About SemGroup

Based in Tulsa, OK, SemGroup® Corporation (NYSE: SEMG) is a publicly traded midstream service company providing the energy industry the means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end-users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminalling and storing energy.

SemGroup®, SemGas®, SemMaterialsMéxicoMR, SemStream® and White Cliffs Pipeline® are registered trademarks of SemGroup Corporation.

Non-GAAP Financial Measures

Adjusted EBITDA is not a generally accepted accounting principles ("GAAP") measure and is not intended to be used in lieu of a GAAP presentation of net income/loss. Adjusted EBITDA is presented in this Press Release because SemGroup believes it provides additional information with respect to its financial performance and its ability to meet future debt service, capital expenditures and working capital requirements. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization,


adjusted for selected items that SemGroup believes impact the comparability of financial results between reporting periods. Although SemGroup presents selected items that it considers in evaluating its performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in SemGroup's operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions and numerous other factors. These types of variances are not separately identified in this Press Release. Because all companies do not use identical calculations, SemGroup's presentation of Adjusted EBITDA may be different from similarly titled measures of other companies. Reconciliations of net income (loss) to Adjusted EBITDA for the periods presented are included in the tables at the end of this Press Release.

Forward-Looking Statements

Certain matters contained in this Press Release include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical fact, included in this Press Release including the prospects of our industry, our anticipated financial performance, NGL Energy Partners LP (NYSE: NGL) anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters, may constitute forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, our ability to comply with the covenants contained in and maintain certain financial ratios required by our credit facilities; NGL’s operations, which we do not control; the ability of our subsidiary, Rose Rock Midstream, to make minimum quarterly distributions; the possibility that our hedging activities may result in losses or may have a negative impact on our financial results; any sustained reduction in demand for the petroleum products we gather, transport, process and store; our ability to obtain new sources of supply of petroleum products; our failure to comply with new or existing environmental laws or regulations or cross border laws or regulations; the possibility that the construction or acquisition of new assets may not result in the corresponding anticipated revenue increases; any future impairment to goodwill resulting from the loss of customers or business; changes in currency exchange rates; and the risks and uncertainties of doing business outside of the U.S., including political and economic instability and changes in local governmental laws, regulations and policies, as well as other risk factors discussed from time to time in each of our documents and reports filed with the SEC.


Readers are cautioned not to place undue reliance on any forward-looking statements contained in this Press Release, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements.

Contacts:

Investor Relations:

Alisa Perkins

918-524-8081

investor.relations@semgroupcorp.com

Media:

Liz Barclay

918-524-8158

lbarclay@semgroupcorp.com


Consolidated Balance Sheets

 

(dollars in thousands, unaudited, condensed)    March 31,
2012
     December 31,
2011
 

ASSETS

     

Current assets

   $ 464,596       $ 389,735   

Property, plant and equipment, net

     758,587         743,235   

Goodwill and other intangible assets

     19,262         18,403   

Equity method investments

     325,583         327,243   

Other noncurrent assets, net

     10,279         12,565   
  

 

 

    

 

 

 

Total assets

   $ 1,578,307       $ 1,491,181   
  

 

 

    

 

 

 

LIABILITIES AND OWNERS' EQUITY

     

Current liabilities:

     

Current portion of long-term debt

   $ 3,147       $ 26,058   

Other current liabilities

     320,851         270,453   
  

 

 

    

 

 

 

Total current liabilities

     323,998         296,511   

Long-term debt, excluding current portion

     120,601         83,277   

Other noncurrent liabilities

     139,333         132,728   
  

 

 

    

 

 

 

Total liabilities

     583,932         512,516   

Total owners' equity

     994,375         978,665   
  

 

 

    

 

 

 

Total liabilities and owners' equity

   $ 1,578,307       $ 1,491,181   
  

 

 

    

 

 

 


Consolidated Statements of Operations

 

      Three Months Ended
March 31,
 
(dollars in thousands, except per share amounts, unaudited, condensed)    2012     2011  

Revenues

   $ 317,679      $ 406,954   

Expenses:

    

Costs of products sold, exclusive of depreciation and amortization shown below

     245,717        323,999   

Operating

     38,535        36,201   

General and administrative

     20,294        21,582   

Depreciation and amortization

     11,892        13,002   

Gain on disposal or impairment of long-lived assets, net

     —          (64
  

 

 

   

 

 

 

Total expenses

     316,438        394,720   

Earnings from equity method investments

     7,498        2,064   
  

 

 

   

 

 

 

Operating income

     8,739        14,298   

Other expenses (income), net

     7,626        14,599   
  

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     1,113        (301

Income tax benefit

     (1,013     (324
  

 

 

   

 

 

 

Income from continuing operations

     2,126        23   

Income (loss) from discontinued operations, net of income taxes

     (16     9   
  

 

 

   

 

 

 

Net income

     2,110        32   

Less: net income attributable to noncontrolling interests

     3,483        —     
  

 

 

   

 

 

 

Net income (loss) attributable to SemGroup Corporation

   $ (1,373   $ 32   
  

 

 

   

 

 

 

Net income (loss) attributable to SemGroup Corporation

   $ (1,373   $ 32   

Other comprehensive income, net of income taxes

     12,755        6,973   
  

 

 

   

 

 

 

Comprehensive income attributable to SemGroup Corporation

   $ 11,382      $ 7,005   
  

 

 

   

 

 

 

Net income (loss) attributable to SemGroup Corporation per common share:

    

Basic

   $ (0.03   $ 0.00   

Diluted

   $ (0.03   $ 0.00   

Weighted average shares (thousands):

    

Basic

     41,907        41,598   

Diluted

     42,055        41,831   


Adjusted EBITDA Calculation

 

     Three Months Ended
March 31,
 
(dollars in thousands, unaudited)    2012     2011  

Net income

   $ 2,110      $ 32   

Add: Interest expense

     3,669        13,605   

Add: Income tax expense (benefit)

     (1,013     (324

Add: Depreciation and amortization expense

     11,892        13,002   
  

 

 

   

 

 

 

EBITDA

     16,658        26,315   

Selected items impacting comparability

     11,897        147   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 28,555      $ 26,462   
  

 

 

   

 

 

 

Selected Items Impacting Comparability

 

     Three Months Ended
March 31,
 
(dollars in thousands, unaudited)    2012     2011  

Loss (gain) on disposal or impairment of long-lived assets

   $ —        $ (64

Loss (income) from discontinued operations

     16        (9

Foreign currency transaction (gain) loss

     37        (477

Remove NGL equity earnings

     (927     —     

NGL cash distribution

     1,160        —     

Employee severance expense

     381        4,243   

Unrealized (gain) loss on derivative activities

     146        (4,226

Change in fair value of warrants

     3,987        1,220   

Reversal of allowance on goods and services tax receivable

     —          (4,144

Depreciation and amortization included within equity earnings of White Cliffs

     2,541        2,654   

Defense costs

     3,000        —     

Allowance on (recovery of) receivable from AGE Refining

     —          (300

Restricted stock expense

     1,556        1,250   
  

 

 

   

 

 

 

Selected items impacting comparability

   $ 11,897      $ 147   
  

 

 

   

 

 

 


2012 Adjusted EBITDA Guidance Reconciliation*

 

(dollars in millions, unaudited)    Low      High  

Net income

   $ 28.5       $ 38.2   

Add: Interest expense

     10.0         9.7   

Add: Income tax expense

     8.4         8.9   

Add: Depreciation and amortization

     51.5         51.5   
  

 

 

    

 

 

 

EBITDA

   $ 98.4       $ 108.4   

Selected items impacting comparability

     26.6         26.6   
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 125.0       $ 135.0   
  

 

 

    

 

 

 

 

* Guidance is on a cash basis for NGL and includes fully Consolidated Rose Rock Midstream