Attached files
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| 8-K - 8-K - NuStar Energy L.P. | ns3q158-k.htm |
Exhibit 99.1
NuStar Energy L.P. Reports Increased EPU, EBITDA and DCF in the Third Quarter of 2015
Distribution Coverage Ratio 1.05 times for the Quarter
Storage Lease Revenues Rise 17%
Pipeline Segment Throughput Volumes Continue to Grow
SAN ANTONIO, November 3, 2015 - NuStar Energy L.P. (NYSE: NS) today announced third quarter 2015 distributable cash flow (DCF) from continuing operations available to limited partners was $89.4 million, or $1.15 per unit, compared to 2014 third quarter DCF from continuing operations available to limited partners of $87.9 million, or $1.13 per unit. For the nine months ended September 30, 2015, DCF from continuing operations available to limited partners was $288.3 million, or $3.70 per unit, compared to $259.4 million, or $3.33 per unit, for the nine months ended September 30, 2014.
Third quarter 2015 earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $155.1 million, compared to third quarter 2014 EBITDA from continuing operations of $145.1 million. For the nine months ended September 30, 2015, the partnership reported $512.1 million of EBITDA from continuing operations, compared to $411.9 million for the nine months ended September 30, 2014.
The partnership reported third quarter 2015 net income applicable to limited partners of $52.9 million, or $0.68 per unit, compared to $50.1 million, or $0.64 per unit, earned in the third quarter of 2014. For the nine months ended September 30, 2015, net income applicable to limited partners was $209.9 million, or $2.69 per unit, compared to net income applicable to limited partners of $121.8 million, or $1.56 per unit, for the nine months ended September 30, 2014.
Absent a gain related to our January 2, 2015 acquisition of the remaining 50% ownership in the Linden terminal, adjusted EBITDA from continuing operations for the nine months ended September 30, 2015 would have been $455.8 million, while adjusted net income applicable to limited partners would have been $154.7 million, or $1.98 per unit.
As previously announced on October 30, 2015, the third quarter 2015 distribution of $1.095 per unit will be paid on November 13, 2015 to holders of record as of November 9, 2015.
“Higher storage utilization and positive renewals at several of our terminals, as well as the added benefit from our Linden terminal acquisition, contributed to a 17% increase in storage lease revenues for the quarter,” said Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “Despite the recent pullback in domestic shale production, overall our pipeline segment experienced improved crude and refined products throughput volumes, compared to the same quarter last year.”
Barron went on to say, “Due to the continued strength of our core, fee-based operations, we achieved a healthy distribution coverage ratio of 1.05 times, our sixth consecutive quarter above 1.0 times, and we remain on track to cover the distribution for the full-year.”
Earnings Guidance
Barron continued, “We haven’t changed our overall view of 2015 from what we conveyed to you in the past, but we have adjusted our expectations for each segment. We now expect our pipeline segment EBITDA to be $25 to $35 million higher than 2014, which is less than prior guidance, due to lower expected throughputs on our crude oil pipeline system as a result of recent Eagle Ford shale production declines. Our 2015 storage segment EBITDA, on the other hand, should be $40 to $50 million over 2014, higher than we previously anticipated, due to better than expected throughput activity and renewals, as well as insurance proceeds related to our Linden terminal that we expect to receive in the fourth quarter.” Barron then said, “Our fuels marketing segment EBITDA is now projected to be in the range of $10 to $20 million, less than previous guidance, due to weaker than expected margins across the segment.
“We expect our 2015 strategic capital spending, which includes internal growth and acquisition spending, to be $435 to $445 million. Our anticipated 2015 reliability capital spending has been reduced slightly to reflect estimated savings and is now expected to be $30 to $40 million.”
Looking ahead to 2016, Barron commented, “We expect increased throughputs on our refined product pipelines to be largely offset by lower projected Eagle Ford crude oil system volumes. As a result, our pipeline segment’s 2016 EBITDA should be
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comparable to slightly higher than 2015. We expect 2016 storage segment EBITDA to decrease $15 to $35 million compared to 2015, primarily due to lower projected storage throughputs at our North Beach terminal that serves our South Texas Pipeline System and the absence of expected current year insurance proceeds in 2016. We project 2016 EBITDA in our fuels marketing segment to be $15 to $35 million.
“With regard to capital spending projections for 2016, we plan to spend $360 to $380 million on strategic capital spending and $35 to $45 million on reliability capital spending.”
Barron concluded by saying, “Based on our current projections, we expect to cover our distribution again for the full-year 2016.”
Third Quarter 2015 Earnings Conference Call Details
A conference call with management is scheduled for 2:00 p.m. CT today, November 3, 2015, to discuss the financial and operational results for the third quarter of 2015. Investors interested in listening to the presentation may call 800/622-7620, passcode 51999749. International callers may access the presentation by dialing 706/645-0327, passcode 51999749. The partnership intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 51999749. International callers may access the playback by calling 404/537-3406, passcode 51999749. The playback will be available until 10:59 p.m. CT on November 30, 2015.
Investors interested in listening to the live presentation or a replay via the internet may access the presentation directly by clicking here or by logging on to NuStar Energy L.P.’s Web site at www.nustarenergy.com.
The presentation will disclose certain non-GAAP financial measures. Reconciliations of certain of these non-GAAP financial measures to U.S. GAAP may be found in this press release, with additional reconciliations located on the Financials page of the Investors section of NuStar Energy L.P.’s Web site at www.nustarenergy.com.
NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar currently has approximately 8,700 miles of pipeline and 79 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids. The partnership’s combined system has approximately 93 million barrels of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and the United Kingdom. For more information, visit NuStar Energy L.P.'s Web site at www.nustarenergy.com.
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 Energy L.P.’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar Energy L.P.’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 Energy L.P., 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, such as the partnership’s future performance. All forward-looking statements are based on the partnership’s beliefs as well as assumptions made by and information currently available to the partnership. These statements reflect the partnership’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.’s and NuStar GP Holdings, LLC’s 2014 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements.
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Statement of Income Data: | |||||||||||||||
Revenues: | |||||||||||||||
Service revenues | $ | 288,574 | $ | 266,651 | $ | 833,128 | $ | 755,551 | |||||||
Product sales | 204,992 | 527,771 | 785,993 | 1,637,829 | |||||||||||
Total revenues | 493,566 | 794,422 | 1,619,121 | 2,393,380 | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of product sales | 193,958 | 509,794 | 738,074 | 1,578,508 | |||||||||||
Operating expenses | 122,634 | 115,964 | 355,419 | 337,566 | |||||||||||
General and administrative expenses | 23,679 | 24,967 | 75,425 | 68,986 | |||||||||||
Depreciation and amortization expense | 52,301 | 48,599 | 157,523 | 142,765 | |||||||||||
Total costs and expenses | 392,572 | 699,324 | 1,326,441 | 2,127,825 | |||||||||||
Operating income | 100,994 | 95,098 | 292,680 | 265,555 | |||||||||||
Equity in earnings of joint ventures | — | 2,749 | — | 1,737 | |||||||||||
Interest expense, net | (33,448 | ) | (33,007 | ) | (98,309 | ) | (100,546 | ) | |||||||
Interest income from related party | — | — | — | 1,055 | |||||||||||
Other income (expense), net | 1,776 | (1,388 | ) | 61,892 | 1,816 | ||||||||||
Income from continuing operations before income tax expense | 69,322 | 63,452 | 256,263 | 169,617 | |||||||||||
Income tax expense | 4,306 | 4,335 | 9,797 | 10,317 | |||||||||||
Income from continuing operations | 65,016 | 59,117 | 246,466 | 159,300 | |||||||||||
Income (loss) from discontinued operations, net of tax | — | 2,831 | 774 | (2,316 | ) | ||||||||||
Net income | $ | 65,016 | $ | 61,948 | $ | 247,240 | $ | 156,984 | |||||||
Net income applicable to limited partners | $ | 52,911 | $ | 50,074 | $ | 209,881 | $ | 121,817 | |||||||
Net income (loss) per unit applicable to limited partners: | |||||||||||||||
Continuing operations | $ | 0.68 | $ | 0.61 | $ | 2.68 | $ | 1.59 | |||||||
Discontinued operations | — | 0.03 | 0.01 | (0.03 | ) | ||||||||||
Total | $ | 0.68 | $ | 0.64 | $ | 2.69 | $ | 1.56 | |||||||
Weighted-average limited partner units outstanding | 77,886,078 | 77,886,078 | 77,886,078 | 77,886,078 | |||||||||||
EBITDA from continuing operations (Note 1) | $ | 155,071 | $ | 145,058 | $ | 512,095 | $ | 411,873 | |||||||
DCF from continuing operations (Note 1) | $ | 102,126 | $ | 100,684 | $ | 326,578 | $ | 297,717 | |||||||
September 30, | December 31, | ||||||||||||||
2015 | 2014 | 2014 | |||||||||||||
Balance Sheet Data: | |||||||||||||||
Total debt | $ | 3,151,359 | $ | 2,752,951 | $ | 2,826,452 | |||||||||
Partners’ equity | $ | 1,653,900 | $ | 1,768,645 | $ | 1,716,210 | |||||||||
Consolidated debt coverage ratio (Note 2) | 4.4x | 4.0x | 4.0x | ||||||||||||
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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Pipeline: | |||||||||||||||
Refined products pipelines throughput (barrels/day) | 531,034 | 514,361 | 512,340 | 503,059 | |||||||||||
Crude oil pipelines throughput (barrels/day) | 477,537 | 471,698 | 483,974 | 419,824 | |||||||||||
Total throughput (barrels/day) | 1,008,571 | 986,059 | 996,314 | 922,883 | |||||||||||
Throughput revenues | $ | 131,395 | $ | 125,461 | $ | 378,030 | $ | 346,218 | |||||||
Operating expenses | 41,199 | 39,996 | 113,141 | 109,685 | |||||||||||
Depreciation and amortization expense | 21,660 | 19,813 | 62,893 | 57,655 | |||||||||||
Segment operating income | $ | 68,536 | $ | 65,652 | $ | 201,996 | $ | 178,878 | |||||||
Storage: | |||||||||||||||
Throughput (barrels/day) | 872,877 | 914,599 | 903,506 | 877,052 | |||||||||||
Throughput revenues | $ | 32,051 | $ | 32,498 | $ | 98,365 | $ | 91,184 | |||||||
Storage lease revenues | 130,052 | 111,447 | 371,714 | 330,313 | |||||||||||
Total revenues | 162,103 | 143,945 | 470,079 | 421,497 | |||||||||||
Operating expenses | 73,505 | 68,244 | 220,137 | 202,602 | |||||||||||
Depreciation and amortization expense | 28,612 | 26,300 | 88,227 | 77,480 | |||||||||||
Segment operating income | $ | 59,986 | $ | 49,401 | $ | 161,715 | $ | 141,415 | |||||||
Fuels Marketing: | |||||||||||||||
Product sales and other revenue | $ | 206,696 | $ | 531,190 | $ | 790,719 | $ | 1,645,812 | |||||||
Cost of product sales | 198,006 | 513,300 | 750,086 | 1,590,605 | |||||||||||
Gross margin | 8,690 | 17,890 | 40,633 | 55,207 | |||||||||||
Operating expenses | 10,509 | 10,367 | 29,877 | 33,294 | |||||||||||
Depreciation and amortization expense | — | 5 | — | 16 | |||||||||||
Segment operating (loss) income | $ | (1,819 | ) | $ | 7,518 | $ | 10,756 | $ | 21,897 | ||||||
Consolidation and Intersegment Eliminations: | |||||||||||||||
Revenues | $ | (6,628 | ) | $ | (6,174 | ) | $ | (19,707 | ) | $ | (20,147 | ) | |||
Cost of product sales | (4,048 | ) | (3,506 | ) | (12,012 | ) | (12,097 | ) | |||||||
Operating expenses | (2,579 | ) | (2,643 | ) | (7,736 | ) | (8,015 | ) | |||||||
Total | $ | (1 | ) | $ | (25 | ) | $ | 41 | $ | (35 | ) | ||||
Consolidated Information: | |||||||||||||||
Revenues | $ | 493,566 | $ | 794,422 | $ | 1,619,121 | $ | 2,393,380 | |||||||
Cost of product sales | 193,958 | 509,794 | 738,074 | 1,578,508 | |||||||||||
Operating expenses | 122,634 | 115,964 | 355,419 | 337,566 | |||||||||||
Depreciation and amortization expense | 50,272 | 46,118 | 151,120 | 135,151 | |||||||||||
Segment operating income | 126,702 | 122,546 | 374,508 | 342,155 | |||||||||||
General and administrative expenses | 23,679 | 24,967 | 75,425 | 68,986 | |||||||||||
Other depreciation and amortization expense | 2,029 | 2,481 | 6,403 | 7,614 | |||||||||||
Consolidated operating income | $ | 100,994 | $ | 95,098 | $ | 292,680 | $ | 265,555 | |||||||
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 financial measures such as earnings before interest, taxes, depreciation and amortization (EBITDA), distributable cash flow (DCF), adjusted net income and adjusted net income per unit (collectively, financial measures), which are not defined in U.S. generally accepted accounting principles (GAAP). 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 financial measures provide investors an enhanced perspective of the operating performance of the partnership’s assets and/or the cash that the business is generating. None of these financial measures are presented as an alternative to net income or income from continuing operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with GAAP. For purposes of segment reporting, we do not allocate general and administrative expenses to our reported operating segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the segment reconciliations exclude any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. |
The following is a reconciliation of income from continuing operations to EBITDA from continuing operations and DCF from continuing operations:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Income from continuing operations | $ | 65,016 | $ | 59,117 | $ | 246,466 | $ | 159,300 | |||||||
Plus interest expense, net and interest income from related party | 33,448 | 33,007 | 98,309 | 99,491 | |||||||||||
Plus income tax expense | 4,306 | 4,335 | 9,797 | 10,317 | |||||||||||
Plus depreciation and amortization expense | 52,301 | 48,599 | 157,523 | 142,765 | |||||||||||
EBITDA from continuing operations | 155,071 | 145,058 | 512,095 | 411,873 | |||||||||||
Equity in earnings of joint ventures | — | (2,749 | ) | — | (1,737 | ) | |||||||||
Interest expense, net and interest income from related party | (33,448 | ) | (33,007 | ) | (98,309 | ) | (99,491 | ) | |||||||
Reliability capital expenditures | (9,239 | ) | (6,264 | ) | (22,066 | ) | (18,262 | ) | |||||||
Income tax expense | (4,306 | ) | (4,335 | ) | (9,797 | ) | (10,317 | ) | |||||||
Distributions from joint ventures | — | 2,785 | 2,500 | 5,879 | |||||||||||
Other items (a) | (1,100 | ) | 4,177 | (53,314 | ) | 8,046 | |||||||||
Mark-to-market impact of hedge transactions (b) | (4,852 | ) | (4,981 | ) | (4,531 | ) | 1,726 | ||||||||
DCF from continuing operations | $ | 102,126 | $ | 100,684 | $ | 326,578 | $ | 297,717 | |||||||
Less DCF from continuing operations available to general partner | 12,766 | 12,766 | 38,298 | 38,298 | |||||||||||
DCF from continuing operations available to limited partners | $ | 89,360 | $ | 87,918 | $ | 288,280 | $ | 259,419 | |||||||
DCF from continuing operations per limited partner unit | $ | 1.15 | $ | 1.13 | $ | 3.70 | $ | 3.33 | |||||||
(a) | Other items consist of the net change in deferred revenue associated with throughput deficiency payments and construction reimbursements. For the nine months ended September 30, 2015, other items also include a $56.3 million non-cash gain associated with the Linden terminal acquisition. |
(b) | DCF from continuing operations excludes the impact of unrealized mark-to-market gains and losses that arise from valuing certain derivative contracts, as well as the associated hedged inventory. The gain or loss associated with these contracts is realized in DCF from continuing operations when the contracts are settled. |
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Notes (continued):
The following is a reconciliation of net income and net income per unit to adjusted net income applicable to limited partners and adjusted net income per unit:
Nine Months Ended September 30, 2015 | |||||||
Net income / net income per unit | $ | 247,240 | $ | 2.69 | |||
Gain on Linden terminal acquisition | (56,277 | ) | (0.71 | ) | |||
Adjusted net income | 190,963 | ||||||
GP interest and incentive | (36,233 | ) | |||||
Adjusted net income applicable to limited partners / adjusted net income per unit | $ | 154,730 | $ | 1.98 | |||
The following is a reconciliation of EBITDA from continuing operations to adjusted EBITDA from continuing operations:
Nine Months Ended September 30, 2015 | |||
EBITDA from continuing operations | $ | 512,095 | |
Gain on Linden terminal acquisition | (56,277 | ) | |
Adjusted EBITDA from continuing operations | $ | 455,818 | |
The following is a reconciliation of projected incremental operating income to projected incremental EBITDA for the pipeline segment:
Year Ended December 31, 2015 | |
Projected incremental operating income | $ 18,000 - 23,000 |
Plus projected incremental depreciation and amortization expense | 7,000 - 12,000 |
Projected incremental EBITDA | $ 25,000 - 35,000 |
The following is a reconciliation of projected incremental operating income to projected incremental EBITDA for the storage segment:
Year Ended December 31, | |||
2016 | 2015 | ||
Projected incremental operating income | $ (17,000 - 41,000) | $ 30,000 - 35,000 | |
Plus projected incremental depreciation and amortization expense | 2,000 - 6,000 | 10,000 - 15,000 | |
Projected incremental EBITDA | $ (15,000 - 35,000) | $ 40,000 - 50,000 | |
The following is a reconciliation of projected operating income to projected EBITDA for the fuels marketing segment:
Year Ended December 31, | |||||
2016 | 2015 | ||||
Projected operating income | $ 15,000 - 35,000 | $ 10,000 - 20,000 | |||
Plus projected depreciation and amortization expense | — | — | |||
Projected EBITDA | $ 15,000 - 35,000 | $ 10,000 - 20,000 | |||
(2) | The consolidated debt coverage ratio is calculated as consolidated debt to consolidated EBITDA, each as defined in our $1.5 billion five-year revolving credit agreement. |