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| 8-K - 8-K - Arc Logistics Partners LP | d93909d8k.htm |
 Investor
Presentation August 2015
Exhibit 99.1 |
 Cautionary Note 2 Forward Looking Statements Certain statements and information in this presentation constitute "forward-looking statements." Certain expressions including
"believe," "expect," "intends," or other similar
expressions are intended to identify Arc Logistics Partners LP’s (the “Partnership” or “Arc Logistics”) current expectations, opinions, views or beliefs concerning future developments and their potential effect on the
Partnership. While management believes that these forward-looking
statements are reasonable when made, there can be no assurance that
future developments affecting the Partnership will be those that it anticipates. The forward-looking statements involve significant risks and uncertainties (some of which are beyond the Partnership's control) and assumptions that could cause
actual results to differ materially from the Partnership's historical experience and
its present expectations or projections. Important factors that could
cause actual results to differ materially from forward-looking statements include but are not limited to: (i) adverse economic, capital markets and political conditions; (ii) changes in the market place for the Partnership's services; (iii) changes in
supply and demand of crude oil and petroleum products; (iv) actions and
performance of the Partnership's customers, vendors or competitors; (v)
changes in the cost of or availability of capital; (vi) unanticipated capital expenditures in connection with the construction, repair or replacement of the Partnership's assets; (vii) operating hazards, unforeseen weather events or matters
beyond the Partnership's control; (viii) inability to consummate acquisitions, pending
or otherwise, on acceptable terms and successfully integrate acquired
businesses into the Partnership's operations; (ix) effects of existing and future laws or governmental regulations; and (x) litigation. Additional information concerning these and other factors that could cause the Partnership's actual
results to differ from projected results can be found in the
Partnership's public periodic filings with the Securities and Exchange
Commission ("SEC"), including the Partnership's Annual Report on Form 10-K
for the year ended December 31, 2014, as filed with the SEC on March 12,
2015 and any updates thereto in the Partnership's subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. These factors are not necessarily all of the important factors that could cause actual results to differ materially from those
expressed in any of the forward-looking statements contained herein. Other unknown
or unpredictable factors could also have material adverse effects on the
Partnership’s future results. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The Partnership undertakes no obligation to publicly update or revise any
forward-looking statements after the date they are made, whether as a result of new
information, future events or otherwise. The Partnership does not, as a matter of course, disclose projections as
to future operations, earnings or other results. However, the Partnership
has included herein certain prospective financial information, including estimated EBITDA. This information was not prepared with a view toward disclosure, but, in the view of the Partnership’s management, was prepared on a reasonable basis,
reflects the best currently available estimates and judgments and presents, to the best
of the Partnership’s knowledge and belief, the expected course of
action and expected future financial performance of the assets. However, this information is not fact and should not be relied upon as being indicative of future results, and readers of this presentation are cautioned not to place undue
reliance on the prospective financial information. |
 Arc
Logistics Overview The Partnership is a fee-based, independent logistics
service provider formed by Lightfoot Capital Partners,
LP (“Lightfoot Capital” or “Sponsor”) to acquire,
operate and grow energy logistics assets
The Partnership is principally engaged in the
terminalling, storage, throughput and transloading of
crude oil and petroleum products
The Partnership utilizes its strategically located assets
in the East Coast, Gulf Coast, West Coast and
Midwest regions of the United States to provide its
customers with multiple supply and delivery modes and
a diverse slate of petroleum products
The Partnership is focused on developing existing
and/or acquiring new assets to service current and
future customers On May 14, 2015, the Partnership acquired a crude oil unloading terminal in Joliet, IL (the “Joliet Terminal”) located at the intersection of key Midwest commodity flows and major refineries On July 14, 2015, the Partnership acquired all of the limited liability company interests of UET Midstream, LLC (“UET Midstream”) The assets include a substantially completed crude oil terminal (the “Pawnee Terminal”) and land for future development opportunities 3 Pro Forma Partnership Structure Exchange NYSE: ARCX Common Units Outstanding 13,167,744 Subordinated Units Outstanding 6,081,081 Current Annual Distribution $1.70 Common Unit Price (as of 08.18.15) $16.73 Implied Distribution Yield 10.2% Market Capitalization (1) $322.0 million 52-Week High / Low $26.59 / $15.85 Lightfoot Capital (our Sponsor) Common / Subordinated Units Common and Subordinated Units 0% GP Interest 27.1% LP Interest 72.9% LP Interest (1) Includes all outstanding common and subordinated limited partnership units. |
 Investment Highlights 4 Diversified and well positioned asset portfolio to capitalize on organic and third-party growth opportunities
Supportive sponsor group with energy industry expertise and access to capital and
investment opportunities Arc Logistics Partners LP is a fee-based,
growth-oriented, independent logistics service provider Financial
flexibility to achieve near- and long-term
opportunities Stable and predictable cash flow profile
Customer driven, attractive and visible growth opportunities
Experienced management team with a proven track record of growing the
business |
 Growth-Oriented Partnership
5 Organic Growth Opportunities Pipeline connected assets being repositioned for rail and marine opportunities Customer driven tank and facility upgrades/expansion opportunities Pawnee Terminal provides a platform in PADD IV for the development of identified future growth opportunities Acquisitions from Third Parties Evaluating third-party acquisitions that would complement the Partnership’s existing
operating expertise New business lines (i.e. Jones Act shipping, dry bulk, pipelines) and/or geographic
expansion History of executing successful accretive acquisitions Built in Contracted Growth CPI escalators in various terminalling agreements Throughput incentive structures to drive incremental volumes The newly acquired Pawnee Terminal operates under several five-year agreements,
with full-term take-or-pay volume commitments increasing by 7% annually
Acquisitions from/with
Our Sponsor Partners of our Sponsor include some of the largest energy investors in North America Acquisition of the Joliet Terminal through a joint venture with GE Energy Financial Services, Inc. (“GE EFS”) illustrates our Sponsor’s continued support
of the Partnership Growth from incremental utilization of existing terminal capacity, organic growth projects and
third-party acquisitions |
 Baltimore Brooklyn Blakeley Chickasaw Crucial marine access points, including both ship and barge berthing Connections to major U.S. pipeline infrastructure Buckeye Pipeline Colonial Pipeline Inland Pipeline Sun Pipeline Rail facilities at selected locations allow for loading/unloading opportunities Baltimore Chickasaw Cleveland Portland Cleveland Mobile Norfolk Portland The Partnership’s assets have multiple supply/receipt modes that provide flexibility to new and existing customers
Portland Supply & Delivery Modes by Terminal Terminal/ Mode Baltimore Blakeley Brooklyn Chickasaw Chillicothe Cleveland Joliet Madison Mobile Norfolk Pawnee Portland Selma Spartanburg Toledo Pipeline Colonial None Buckeye None None Buckeye / Inland Proprietary Shore None Colonial NECL-PXP None Colonial Colonial Sun / Buckeye Truck Rail Barge Ship Gathering System Saraland (servicing Blakeley, Mobile and other third- party terminals) Toledo Joliet Joliet West Shore Pipeline Mokena-Joliet Pipeline Pony Express Pipeline’s Northeast Colorado Lateral (“NECL-PXP”) Information provided as of August 18, 2015. 6 Well Positioned Assets |
 The
Partnership’s contract portfolio generates cash flows through minimum service fees, while providing for upside exposure to throughput and ancillary service fees Storage & Throughput Services Fees Typically contract with customers for the receipt, storage, throughput and transloading of crude oil and petroleum products for one to ten year terms with evergreen provisions Many agreements contain take-or-pay provisions whereby the Partnership generates revenue regardless of its customers’ use of the facility Creates stable cash flow and mitigates exposure to supply and demand volatility and other market factors As of December 31, 2014, the weighted average remaining term for all of the Partnership’s service agreements was approximately three years Ancillary Fees Heating, blending and mixing associated with customers’ activity Varies based upon the activity levels of the Partnership’s customers Gulf LNG Distributions Distributions are supported by two 20- year (2) , terminal use agreements with firm reservation charges for all of the capacity of the LNG Facility with several integrated, multi-national oil and gas companies Historical Revenue Composition Contributions to Arc Logistics (1) from Gulf LNG (1) Contribution of equity earnings and cash distributions represent the 10.3% limited liability company interest in Gulf LNG Holdings Group, LLC pro
forma contribution to Arc Logistics.
(2) As of June 30, 2015, the remaining term was approximately 17 years. 7 Contracted, Stable Cash Flow Profile |
 Diversified Portfolio of Logistics Assets
8 The Partnership continues to acquire logistics assets that serve as a critical link between supply and local
demand locations 1. The capacity represents the Partnership’s 50% share of the 884,000 barrels of available total storage capacity of the Baltimore, MD terminal and the 165,000 barrels of available total storage capacity of the Spartanburg, SC terminal. The terminals are co-owned with and operated by CITGO Petroleum Corporation.
2. The physical location of this terminal is in Mobile, AL. 3. The physical location of this terminal is in Chesapeake, VA. 4. Represents 100% of the Joliet Terminal. 5. The capacity represents the full capacity of the LNG Facility. The Partnership owns a 10.3% interest in Gulf LNG Holdings Group, LLC, which owns
the LNG Facility. Joliet, IL
Terminals and Transloading Facilities
Arc Terminals Headquarters
Arc Logistics Headquarters
LNG Facility 2015 Acquisitions Information provided as of August 18, 2015. Pawnee, CO Spartanburg, SC Location Capacity Products Blakeley, AL (2) 708 mbbls Crude Oil; Asphalt; Fuel Oil; Chemicals Brooklyn, NY 63 mbbls Gasoline; Ethanol Chickasaw, AL 609 mbbls Crude Oil; Distillates; Fuel Oil; Crude Tall Oil Chillicothe, IL 273 mbbls Gasoline; Distillates; Ethanol; Biodiesel Cleveland, OH – North 426 mbbls Gasoline; Distillates; Ethanol; Biodiesel Cleveland, OH – South 191 mbbls Gasoline; Distillates; Ethanol; Biodiesel Joliet, IL (4) 300 mbbls Crude Oil; Dry bulk Madison, WI 150 mbbls Gasoline; Distillates; Ethanol; Biodiesel Mobile, AL – Main 1,093 mbbls Crude Oil; Asphalt; Fuel Oil Mobile, AL – Methanol 294 mbbls Methanol Norfolk, VA (3) 213 mbbls Gasoline; Distillates; Ethanol Pawnee, CO 200 mbbls Crude Oil Portland, OR 1,466 mbbls Crude Oil; Asphalt; Aviation Gas; Distillates Selma, NC 171 mbbls Gasoline; Distillates; Ethanol; Biodiesel Spartanburg, SC (1) 83 mbbls Gasoline; Distillates; Ethanol Toledo, OH 244 mbbls Gasoline; Distillates; Aviation Gas; Ethanol; Biodiesel Total Terminals 6,925 mbbls Crude Oil Loading / Transloading Facilities Chickasaw, AL 9 mbpd Crude Oil; Distillates; Fuel Oil; Crude Tall Oil; Chemicals Joliet, IL (4) 85 mbpd Crude Oil Portland, OR 18 mbpd Crude Oil Saraland, AL 14 mbpd Crude Oil; Chemicals Total Transloading 126 mbpd LNG Facility Pascagoula, MS (5) 320,000 M³
Liquefied natural gas Terminals Baltimore, MD (1) 442 mbbls Gasoline; Distillates; Ethanol |
 Financial
Flexibility The Partnership continues to position itself to achieve its
long-term growth objectives 9
Capitalize on Financial
Flexibility $300.0 million amended and restated credit facility Access to the capital markets Seek to maintain a balanced capital structure Maximize flexibility to fund growth Maintain Stable Cash Flows Focus on long-term fee-based growth opportunities Focus on maintaining stable customer profile with contracted revenues History of enhancing commercial opportunities by cross-selling services Continue to renew expiring contracts with similarly attractive or higher rates; amend contracts to include complementary business lines Focus on counterparty concentration and credit profile Deliver Consistent Distribution Growth Intend to maintain a conservative distribution coverage ratio Seek to maintain liquidity and financial flexibility to grow distributions Business model seeks to produce consistent and stable cash flows Creatively Structured Acquisitions Joint venture transactions to acquire large assets Lease transactions to acquire operational rights in new geographic locations Issue common units to sellers |
 Overview
Joliet, IL Terminal Acquisition
10 On May 14, 2015, Arc Terminals Joliet Holdings LLC (“Arc Joliet”) acquired the Joliet Terminal Arc Joliet is a joint venture with GE EFS The Partnership owns 60% of Arc Joliet and serves as Manager The Partnership has a “right of first offer” if GE EFS should decide to sell its interests in Arc Joliet Facility Site Terminal Summary The Joliet Terminal is a multi-modal crude oil unloading terminal in Joliet, IL Dual loop track capable of storing two unit trains and unloading 85,000 barrels per day Heat infrastructure in place 300,000 barrels of storage and pipeline connectivity Waterfront access and 84 acres of land available for expansion Two, three-year agreements, at the minimum volume commitments, with a major oil company The two long-term agreements support estimated annual EBITDA (1) of $23.0 to $25.0 million (1) Estimated annual EBITDA attributable to the JBBR joint venture company. Projection assumes minimum contracted revenue, minimum volumes and
forecasted operating expenses for the estimated annual period. Further
detail provided in Form 8-K filed with the SEC on February 19, 2015.
(2) Reflects ownership interest held directly or indirectly by GE EFS. Joint Venture Structure |
 Overview Pawnee, CO Terminal Acquisition 11 On July 14, 2015, the Partnership acquired all of the limited liability company interests of UET Midstream Acquired assets include Pawnee Terminal and land for future development opportunities Commercial operations began on May 1, 2015 Current inbound receipt capacity up to 150,000 bbls/d via truck unloading and gathering systems 200,000 bbls of commingled storage capacity Permits in place for construction of a third tank for additional storage capacity Supported by five-year commercial agreements Fee-based throughput agreements Take-or-pay commitments with annual volumetric increases Partnership controlling the completion of the remaining construction Remaining construction work principally includes punch list related activities Other projected terminal upgrades include installation of a third tank and a fire protection system The long-term agreements support estimated annual EBITDA (1) of $9.0 to $9.5 million Facility Site Development Opportunities The Partnership also acquired additional development land to expand terminal operations in the Denver-Julesberg Basin Site is located 11.5 miles south of the Pawnee Terminal Will provide enhanced accessibility for customers Receipt of initial permits to construct a 100,000 bbls terminal to support additional commercial opportunities Capable of connecting to PXP-NECL (1) Projection assumes minimum contracted revenue, minimum volumes and forecasted operating expenses for the estimated annual period. Further detail
provided in Form 8-K filed with the SEC on July 15,
2015. |
 The
Partnership has achieved a track record of organic and acquisitive growth in spite of volatile commodity markets and economic headwinds Shell Capacity (mmbbls) (1) Reflects 100% of the Pawnee Terminal storage capacity. (2) Adjusted EBITDA is a non-GAAP measure. Please see reconciliation pages in the appendix to this presentation.
Throughput (mbbls/d) Revenue ($mm) Adjusted EBITDA (2) ($mm) 12 (1) Proven and Resilient Business Model |
 Questions |
 Appendix |
 Non-GAAP Financial Measures
15 Non-GAAP Financial Measures
The Partnership defines Adjusted EBITDA as net income before interest expense, income
taxes and depreciation and amortization expense, as further adjusted for
other non-cash charges and other charges that are not reflective of our ongoing operations. Adjusted EBITDA is a non-GAAP financial measure that management and external users of the Partnership's consolidated financial statements, such as industry analysts,
investors, lenders and rating agencies, may use to assess (i) the
performance of the Partnership's assets without regard to the impact of
financing methods, capital structure or historical cost basis of the Partnership's
assets; (ii) the viability of capital expenditure projects and the
overall rates of return on alternative investment opportunities; (iii) the
Partnership's ability to make distributions; (iv) the Partnership's ability to incur and service debt and fund capital expenditures; and (v) the Partnership's ability to incur additional expenses. The Partnership believes
that the presentation of Adjusted EBITDA provides useful information to
investors in assessing its financial condition and results of operations. The Partnership defines distributable cash flow as Adjusted EBITDA less (i) cash interest expense paid; (ii) cash income taxes paid; (iii)
maintenance capital expenditures paid; and (iv) equity earnings from the
Partnership’s interests in Gulf LNG Holdings Group, LLC (the “LNG
Interest”); plus (v) cash distributions from the LNG Interest. Distributable cash
flow is a non-GAAP financial measure that management and external
users of the Partnership’s consolidated financial statements may use to evaluate whether the Partnership is generating sufficient cash flow to support distributions to its unitholders as well as measure the ability of the Partnership’s assets to generate cash sufficient to
support its indebtedness and maintain its operations.
The GAAP measure most directly comparable to Adjusted EBITDA and distributable cash
flow is net income. Adjusted EBITDA and distributable cash flow should
not be considered as an alternative to net income. Adjusted EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some but not all items that affect net income. Readers should not consider Adjusted EBITDA or
distributable cash flow in isolation or as a substitute for analysis of the
Partnership's results as reported under GAAP. Additionally, because
Adjusted EBITDA and distributable cash flow may be defined differently by other
companies in the Partnership's industry, its definitions of Adjusted
EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. Please see the reconciliation of net income to Adjusted EBITDA and distributable cash flow in the accompanying tables. |
 16 (1) The Long-lived asset impairment relates to the Chillicothe, IL Terminal. The Partnership re-evaluated the Chillicothe Terminal and based
upon the inability to enter into a service agreement with a new or
existing customer, the Partnership recognized a non-cash impairment loss of
approximately $6.1 million at December 31, 2014. (2)
The one-time transaction expenses relate to due diligence and transaction expenses
incurred in connection with acquisition related activity as described in the Partnership’s amended and restated credit facility. (3) The non-cash charges relate to deferred rent expense associated with the Portland, OR terminal lease transaction and non-cash compensation
associated with the Partnership’s long-term incentive plan.
(4) Adjusted EBITDA and distributable cash flow are defined as non-GAAP measures.
2012 2013 2014 6/30/2014 6/30/2015 Net Income $5,423 $12,831 $1,275 $2,742 $2,188 Income taxes 43 20 58 3 17 Interest expense 1,320 8,639 3,706 930 1518 Gain on bargain purchase of business - (11,777) - - - Depreciation 3,317 5,836 7,261 1,761 2,321 Amortization 624 4,756 5,427 1,353 1,719 Long-lived asset impairment (1) - - 6,114 - - One-time transaction expenses (2) 135 3,673 451 7 1,447 Non-cash charges (3) - - 5,885 942 1,422 Adjusted EBITDA (4) $10,862 $23,978 $30,177 $7,738 $10,632 Cash interest expense (3,398) (859) (1,320) Cash income taxes (58) (3) (17) Maintenance capital expenditures (2,522) (742) (707) Equity earnings from the LNG Interest (9,895) (2,487) (2,503) Cash distributions received from the LNG Interest 9,827 2,843 2,601 Distributable cash flow (4) $24,131 $6,490 $8,686 Total LP Units Outstanding 12,949 12,949 19,248 DCF (4) / Total LP Units Outstanding $1.86 $0.50 $0.45 Declared LP Distribution $1.61 $0.400 $0.425 (In thousands, except per unit data) Year Ending December 31, Quarter Ending, Reconciliation to Adjusted EBITDA and Distributable Cash Flow |