Tallgrass Energy, LP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 2, 2018

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EX-99.2 - EXHIBIT 99.2 - Tallgrass Energy, LPexhibit992tgeproforma20186.htm
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Exhibit 99.1
Tallgrass Energy Reports Strong Second Quarter 2018 Results
•
Pro Forma Net Income, Adjusted EBITDA and Cash Available for Dividends of $51.2 million, $202.7 million and $165.1 million respectively
•
Pro Forma Cash Available for Dividends of $0.59 per share, Declared Dividend of $0.4975 per share, resulting in dividend coverage of 1.18x
•
TGE financial leverage of approximately 2.7x; proportionally consolidated (REX) financial leverage results in approximately 4.2x at TGE
•
Average daily throughput on Pony Express of approximately 348,000 barrels per day for the second quarter
LEAWOOD, Kan.--(BUSINESS WIRE)--Aug. 2, 2018--Tallgrass Energy, LP (NYSE: TGE) ("TGE") today reported financial and operating results for the second quarter of 2018.
"In the second quarter, our team successfully executed a smooth, seamless combination transaction while delivering outstanding financial, commercial and operational results," said President and CEO David Dehaemers Jr. "Excluding merger costs, Pro Forma Net Income and Adjusted EBITDA would have been approximately $56 million and $208 million respectively. Driving the quarter's results were our highest-ever quarterly average daily throughput on Pony Express and strong performance in our Natural Gas Transportation and Gathering, Processing and Terminalling segments. With the merger completed, a strong balance sheet, healthy dividend coverage and improved cost of capital, TGE is well-positioned as one of the country's leading core infrastructure companies."

Second Quarter Dividend
As previously announced, the board of directors of TGE's general partner declared a quarterly cash dividend of $0.4975 per Class A share for the second quarter of 2018. This quarterly dividend represents $1.99 per Class A share on an annualized basis, a sequential increase of 2.1 percent from the first quarter 2018 dividend and an increase of 45.3 percent from the second quarter 2017 dividend. The quarterly dividend will be paid on Aug. 14, 2018, to Class A shareholders of record as of the close of business on July 31, 2018.

1


Tallgrass Energy, LP Summary Financial Information
 
Three Months Ended June 30, 2018
 
Six Months Ended June 30, 2018
(in thousands, except coverage and per unit data)
Pro Forma(1)
 
As Reported(2)
 
Pro Forma(1)
 
As Reported(2)
 
 
 
 
 
 
 
 
Net income
$
108,962

 
$
109,701

 
$
212,277

 
$
224,014

Net income attributable to noncontrolling interests
(57,804
)
 
(108,638
)
 
(110,839
)
 
(206,216
)
Net income attributable to TGE
$
51,158

 
$
1,063

 
$
101,438

 
$
17,798

Add:
 
 
 
 
 
 
 
Interest expense, net
31,282

 
12,403

 
61,043

 
23,189

Depreciation and amortization expense(3)
27,294

 
9,942

 
53,148

 
18,438

Distributions from unconsolidated investments
94,250

 
53,808

 
182,083

 
97,299

Non-cash compensation expense(4)
1,189

 
1,009

 
4,003

 
1,971

Deferred income tax expense
17,548

 
16,809

 
35,238

 
23,501

Net income attributable to Exchange Right Holders
56,536

 
38,424

 
107,810

 
87,389

Less:
 
 
 
 
 
 
 
Equity in earnings of unconsolidated investments
(78,187
)
 
(44,554
)
 
(146,589
)
 
(76,967
)
Loss (gain) on disposal of assets(3)
279

 
103

 
(9,138
)
 
(3,109
)
Non-cash loss (gain) related to derivative instruments(3)
1,449

 
559

 
(1,225
)
 
(313
)
Deficiency payments, net(3)
(71
)
 
(43
)
 
11,124

 
3,737

Adjusted EBITDA(5)
$
202,727

 
$
89,523

 
$
398,935

 
$
192,933

Less:
 
 
 
 
 
 
 
Cash interest cost
(30,104
)
 
(11,899
)
 
(58,564
)
 
(22,181
)
Maintenance capital expenditures, net(3)
(7,521
)
 
(2,745
)
 
(10,551
)
 
(3,771
)
Cash Available for Dividends(5)
$
165,102

 
$
74,879

 
$
329,820

 
$
166,981

Less:
 
 
 
 
 
 
 
Dividends to Class A (TGE)
(77,052
)
 
 
 
(105,368
)
 
 
Dividends to Class B (Exchange Right Holders)
(62,339
)
 
 
 
(124,110
)
 
 
Distribution to TEP public unitholders
—

 
 
 
(46,391
)
 
 
Amounts in excess of dividends
$
25,711

 
 
 
$
53,951

 
 
Dividend coverage
1.18
x
 
 
 
1.20
x
 
 
 
 
 
 
 
 
 
 
Class A shares outstanding(6)
154,878

 
 
 
154,878

 
 
Class B shares outstanding(6)
125,305

 
 
 
125,305

 
 
Cash Available for Dividend per share
$
0.5900

 
 
 
$
1.1800

 
 
Dividend per share
$
0.4975

 
 
 
$
0.9850

 
 
(1) 
Indicated amounts presented for the three and six months ended June 30, 2018, are on a pro forma basis (excluding dividend/distribution figures, dividend coverage figures and Class A and Class B shares outstanding) assuming that our combination transaction with TEP (the "TEP Merger Transaction") had closed on Jan. 1, 2018.
(2) As reported amounts presented are based on actual Tallgrass Equity, LLC ("Tallgrass Equity") ownership in Tallgrass Energy Partners, LP ("TEP") net of noncontrolling interests associated with the TEP common units held by the public prior to the closing of the TEP Merger Transaction, which was effective June 30, 2018.
(3) Net of noncontrolling interest in operating assets.
(4) Represents TGE's portion of non-cash compensation expense related to Equity Participation Shares and TEP Equity Participation Units, excluding amounts allocated to Tallgrass Development, LP ("TD") prior to the merger of TD into Tallgrass Development Holdings, LLC, a wholly-owned subsidiary of Tallgrass Equity, on Feb. 7, 2018.
(5) Adjusted EBITDA and Cash Available for Dividends are non-GAAP measures. For additional detail see "Non-GAAP Measures" below.
(6) 
Class A and B shares represent the actual number of shares as of the dividend record date for the second quarter 2018.

2


Conference Call
Please join Tallgrass Energy for a conference call and webcast to discuss second quarter 2018 results at 3:30 p.m. Central Time on Thursday, Aug. 2, 2018. Interested parties may listen via a link posted on the Investor Relations section of our website and the replay will be available on our website for at least seven days following the live call.
Tallgrass Energy, LP Merger Adjusted Segment Overview(1) 
The following summary provides a reconciliation of the operating income and Segment Adjusted EBITDA for each of our reporting segments with the amounts adjusted for the impact of the TEP Merger Transaction, assuming it had closed on the first day of the period presented. Merger Adjusted Segment Adjusted EBITDA is a Non-GAAP Measure. For additional detail see "Non-GAAP Measures" below.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands)
Natural Gas Transportation
 
 
 
 
 
 
 
Operating income
$
16,882

 
$
14,726

 
$
36,266

 
$
32,894

Add:
 
 
 
 
 
 
 
Depreciation and amortization expense
4,851

 
4,792

 
9,678

 
9,575

Distributions from unconsolidated investment
91,806

 
59,290

 
179,639

 
89,415

Other, net
720

 
282

 
1,554

 
352

Less:
 
 
 
 
 
 
 
Non-cash gain related to derivative instruments
—

 
—

 
—

 
(116
)
Merger Adjusted Segment Adjusted EBITDA(3)
$
114,259

 
$
79,090

 
$
227,137

 
$
132,120

 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
Merger Adjustments
(53,175
)
 
(39,734
)
 
(95,401
)
 
(67,249
)
Segment Adjusted EBITDA as Reported in 6/30/18 10Q
$
61,084

 
$
39,356

 
$
131,736

 
$
64,871

 
 
 
 
 
 
 
 

3


 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands)
Crude Oil Transportation
 
 
 
 
 
 
 
Operating income
$
65,714

 
$
50,259

 
$
112,241

 
$
93,984

Add:
 
 
 
 
 
 
 
Depreciation and amortization expense(2)
13,593

 
13,359

 
26,872

 
26,646

Non-cash loss (gain) related to derivative instruments(2)
—

 
16

 
—

 
(634
)
Deficiency payments, net (2)
(1,035
)
 
7,016

 
6,974

 
20,703

Less:
 
 
 
 
 
 
 
Adjusted EBITDA attributable to noncontrolling interests
—

 
(1,000
)
 
(350
)
 
(1,871
)
Merger Adjusted Segment Adjusted EBITDA(3)
$
78,272

 
$
69,650

 
$
145,737

 
$
138,828

 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
Merger Adjustments
(49,767
)
 
(35,859
)
 
(82,361
)
 
(70,469
)
Segment Adjusted EBITDA as Reported in 6/30/18 10Q
$
28,505

 
$
33,791

 
$
63,376

 
$
68,359

 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands)
Gathering, Processing & Terminalling
 
 
 
 
 
 
 
Operating income
$
5,722

 
$
6,777

 
$
29,027

 
$
11,883

Add:
 
 
 
 
 
 
 
Depreciation and amortization expense(2)
7,674

 
4,404

 
14,786

 
8,201

Non-cash loss (gain) related to derivative instruments
1,449

 
68

 
(1,225
)
 
278

Loss (gain) on disposal of assets(2)
279

 
129

 
(9,138
)
 
(1,319
)
Distributions from unconsolidated investments
2,444

 
573

 
2,444

 
1,267

Deficiency payments, net
574

 
1,264

 
3,377

 
3,648

Other, net
—

 
143

 
—

 
143

Less:
 
 
 
 
 
 
 
Adjusted EBITDA attributable to noncontrolling interests
(1,268
)
 
51

 
(2,679
)
 
43

Merger Adjusted Segment Adjusted EBITDA(3)
$
16,874

 
$
13,409

 
$
36,592

 
$
24,144

 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
Merger Adjustments
(10,707
)
 
(6,726
)
 
(20,269
)
 
(12,310
)
Segment Adjusted EBITDA as Reported in 6/30/18 10Q
$
6,167

 
$
6,683

 
$
16,323

 
$
11,834

(1) Segment reporting does not include corporate general and administrative costs or intersegment eliminations.
(2) Net of noncontrolling interest in operating assets.
(3) Represents Adjusted EBITDA which is a non-GAAP measure. For additional detail see "Non-GAAP Measures" below.


4


Rockies Express Pipeline LLC Summary Financial Information
TEP acquired a 25 percent interest in Rockies Express Pipeline LLC ("REX") effective May 6, 2016, and an additional 24.99 percent interest in REX effective March 31, 2017. Tallgrass Equity acquired a 25.01 percent interest in REX effective Feb. 7, 2018. The financial results of TGE subsequent to Feb. 7, 2018, include its aggregate 75 percent membership interest in REX. The table below is a reconciliation of REX's Adjusted EBITDA and Distributable Cash Flow for the three and six months ended June 30, 2018 and 2017, presented to provide additional information on REX's financial results. REX's Adjusted EBITDA and Distributable Cash Flow are non-GAAP measures. For additional detail see "Non-GAAP Measures" below.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands)
Rockies Express Pipeline LLC
 
 
 
 
 
 
 
Net income
$
88,662

 
$
70,945

 
$
179,630

 
$
137,195

Add:
 
 
 
 
 
 
 
Interest expense, net
41,483

 
42,051

 
83,453

 
83,877

Depreciation and amortization expense
54,962

 
54,608

 
109,824

 
108,799

Adjusted EBITDA
185,107

 
167,604

 
372,907

 
329,871

Less:
 
 
 
 
 
 
 
Cash interest cost
(40,649
)
 
(41,217
)
 
(81,785
)
 
(82,209
)
Change in contract asset
(15,575
)
 
—

 
(31,150
)
 
—

Maintenance capital expenditures
(7,226
)
 
(3,359
)
 
(11,022
)
 
(6,940
)
Distributable Cash Flow
$
121,657

 
$
123,028

 
$
248,950

 
$
240,722

 
 
 
 
 
 
 
 
Distributions to Members
$
(122,808
)
 
$
(118,604
)
 
$
(254,548
)
 
$
(239,105
)
Contributions from Members
$
1,691

 
$
22,289

 
$
6,419

 
$
49,060

Financial Leverage(1)
3.00x

 
3.90x

 
3.00x

 
3.90x

(1) Calculated in accordance with the definitions in REX's revolving credit facility.

TEP Merger Transaction
In connection with the merger agreement announced on March 26, 2018, that closed effective June 30, 2018, TGE acquired the TEP common units held by the public in a taxable share-for-unit merger transaction at a ratio of 2.0 TGE Class A shares for each outstanding TEP common unit. Approximately 85 percent of the outstanding TEP units were voted and of that amount, greater than 99 percent voted in favor of the merger. Effective July 2, 2018, TEP's common units ceased trading on the New York Stock Exchange.

Non-GAAP Measures
Adjusted EBITDA, Cash Available for Dividends, and Distributable Cash Flow are non-GAAP supplemental financial measures that TGE management and external users of our consolidated financial statements and financial statements of our subsidiaries and unconsolidated investments, such as industry analysts, investors, lenders and rating agencies, may use to assess:
•
our operating performance as compared to other publicly traded midstream infrastructure companies, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods;
•
the ability of our assets to generate sufficient cash flow to make dividends to our shareholders;
•
our ability to incur and service debt and fund capital expenditures; and
•
the viability of acquisitions and other capital expenditure projects and the returns on investment of various expansion and growth opportunities.

5


We believe that the presentation of Adjusted EBITDA, Cash Available for Dividends, and Distributable Cash Flow provides useful information to investors in assessing our financial condition and results of operations. Adjusted EBITDA, Cash Available for Dividends, and Distributable Cash Flow should not be considered alternatives to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP, nor should Adjusted EBITDA, Cash Available for Dividends, and Distributable Cash Flow be considered alternatives to available cash or other definitions in our partnership agreement. Adjusted EBITDA, Cash Available for Dividends, and Distributable Cash Flow have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities. Additionally, because Adjusted EBITDA, Cash Available for Dividends, and Distributable Cash Flow may be defined differently by other companies in our industry, our definition of Adjusted EBITDA, Cash Available for Dividends, and Distributable Cash Flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
We generally define Adjusted EBITDA as net income excluding the impact of interest, income taxes, depreciation and amortization, non-cash income or loss related to derivative instruments, non-cash long-term compensation expense, impairment losses, gains or losses on asset or business disposals or acquisitions, gains or losses on the repurchase, redemption or early retirement of debt, and earnings from unconsolidated investments, but including the impact of distributions from unconsolidated investments and deficiency payments received from or utilized by our customers. We also use Cash Available for Dividends and Distributable Cash Flow, which we generally define as Adjusted EBITDA, less cash interest costs, maintenance capital expenditures, distributions to noncontrolling interests in excess of earnings allocated to noncontrolling interests, and certain cash reserves permitted by our governing documents. Adjusted EBITDA and Cash Available for Dividends are both calculated and presented at the Tallgrass Equity level, before consideration of noncontrolling interest associated with the Exchange Right Holders or calculating distributions from Tallgrass Equity to us, on one hand, and to the Exchange Right Holders, on the other. We believe calculating these measures at Tallgrass Equity provides investors the most complete picture of our overall financial and operational results and provides a consistent metric for period over period comparisons that is not impacted by any future exercises by the Exchange Right Holders of the right to exchange TGE Class B Shares and Tallgrass Equity Units for an equal number of TGE Class A Shares (the "Exchange Right"), which does not have a dilutive effect on TGE's net income per share. For a reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, please see "Summary Financial Information" above.
In this press release we have also presented Merger Adjusted Segment Adjusted EBITDA for each of our reporting segments. We define Merger Adjusted Segment Adjusted EBITDA as Adjusted EBITDA for such segment as adjusted for the impact of the TEP Merger Transaction, assuming it had closed on the first day of the period presented. We believe that the presentation of this measure on a merger adjusted basis provides useful information to investors in assessing our financial condition and results of operations for each of our reporting segments because the accounting treatment of our ownership interests in TEP prior to the TEP Merger Transaction and the impact of non-controlling interests for the period was significantly impacted by the TEP Merger Transaction during the period but is not representative of the comparable measures during our historical periods. For a reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, please see "Tallgrass Energy, LP Merger Adjusted Segment Overview" above.

6


Cautionary Note Concerning Forward-Looking Statements
Disclosures in this press release contain "forward-looking statements." All statements, other than statements of historical facts, included in this press release that address activities, events or developments that management expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include whether TGE is well-positioned as one of the country's leading core infrastructure companies. Forward-looking statements may also include the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of TGE and its subsidiaries, including: the ability to pursue expansions and other opportunities for incremental volumes; natural gas and crude oil production growth in TGE's operating areas; expected future benefits of acquisitions or expansion projects; timing of anticipated spending on planned expenses and maintenance capital projects; and distribution rate and growth, including variability of quarterly distribution coverage. These statements are based on certain assumptions made by TGE based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of TGE, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to TGE's financial performance and results, availability of sufficient cash flow to pay dividends and execute its business plan, the demand for natural gas storage, processing and transportation services and for crude oil transportation services, operating hazards, the effects of government regulation, tax position and other risks incidental to transporting, storing and processing natural gas or transporting crude oil and other important factors that could cause actual results to differ materially from those projected, including those set forth in reports filed by TGE with the Securities and Exchange Commission. Any forward-looking statement applies only as of the date on which such statement is made and TGE does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
About Tallgrass Energy
Tallgrass Energy, LP (NYSE: TGE) is a growth-oriented midstream energy infrastructure company operating across 11 states with transportation, storage, terminal, water, gathering and processing assets that serve some of the nation's most prolific crude oil and natural gas basins.
To learn more, please visit our website at www.tallgrassenergy.com.


7


Tallgrass Energy, LP Financial Statements
TALLGRASS ENERGY, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
June 30, 2018
 
December 31, 2017
 
(in thousands)
ASSETS
 
Current Assets:
 
 
 
Cash and cash equivalents
$
5,031

 
$
2,593

Accounts receivable, net
213,973

 
118,615

Receivable from related parties
2,923

 
1,340

Inventories
21,063

 
21,609

Prepayments and other current assets
12,829

 
13,165

Total Current Assets
255,819

 
157,322

Property, plant and equipment, net
2,595,063

 
2,394,337

Goodwill
404,838

 
404,838

Intangible assets, net
134,663

 
97,731

Unconsolidated investments
1,475,056

 
909,531

Deferred financing costs, net
11,116

 
12,563

Deferred tax asset
298,112

 
312,997

Deferred charges and other assets
3,529

 
2,694

Total Assets
$
5,178,196

 
$
4,292,013

LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Accounts payable
$
196,705

 
$
98,882

Accounts payable to related parties
—

 
5,342

Accrued taxes
19,221

 
19,272

Accrued interest
46,448

 
25,167

Accrued liabilities
14,653

 
10,540

Deferred revenue
99,991

 
88,471

Other current liabilities
11,937

 
11,202

Total Current Liabilities
388,955

 
258,876

Long-term debt, net
2,535,555

 
2,292,993

Other long-term liabilities and deferred credits
20,036

 
18,965

Total Long-term Liabilities
2,555,591

 
2,311,958

Commitments and Contingencies
 
 
 
Equity:
 
 
 
Class A Shareholders (154,878,296 and 58,085,002 shares outstanding at June 30, 2018 and December 31, 2017, respectively)
1,744,665

 
48,613

Class B Shareholders (125,305,459 and 99,154,440 shares outstanding at June 30, 2018 and December 31, 2017, respectively)
—

 
—

Total Partners' Equity
1,744,665

 
48,613

Noncontrolling interests
488,985

 
1,672,566

Total Equity
2,233,650

 
1,721,179

Total Liabilities and Equity
$
5,178,196

 
$
4,292,013


8


TALLGRASS ENERGY, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands, except per unit amounts)
Revenues:
 
 
 
 
 
 
 
Crude oil transportation services
$
101,166

 
$
89,855

 
$
185,904

 
$
174,186

Natural gas transportation services
31,474

 
29,429

 
63,670

 
61,114

Sales of natural gas, NGLs, and crude oil
37,250

 
22,918

 
75,395

 
38,299

Processing and other revenues
23,699

 
18,661

 
47,714

 
31,664

Total Revenues
193,589

 
160,863

 
372,683

 
305,263

Operating Costs and Expenses:
 
 
 
 
 
 
 
Cost of sales
27,694

 
19,386

 
54,045

 
31,756

Cost of transportation services
12,664

 
14,758

 
23,084

 
28,261

Operations and maintenance
18,440

 
15,254

 
34,839

 
28,157

Depreciation and amortization
27,690

 
22,091

 
53,813

 
43,494

General and administrative
19,085

 
15,334

 
37,511

 
29,551

Taxes, other than income taxes
8,462

 
6,912

 
17,341

 
15,138

Loss (gain) on disposal of assets
279

 
184

 
(9,138
)
 
(1,264
)
Total Operating Costs and Expenses
114,314

 
93,919

 
211,495

 
175,093

Operating Income
79,275

 
66,944

 
161,188

 
130,170

Other Income (Expense):
 
 
 
 
 
 
 
Equity in earnings of unconsolidated investments
78,187

 
42,741

 
146,589

 
63,479

Interest expense, net
(31,282
)
 
(21,114
)
 
(61,043
)
 
(37,131
)
Other income, net
330

 
272

 
781

 
2,227

Total Other Income (Expense)
47,235

 
21,899

 
86,327

 
28,575

Net income before tax
126,510

 
88,843

 
247,515

 
158,745

Deferred income tax expense
(16,809
)
 
(9,676
)
 
(23,501
)
 
(12,340
)
Net income
109,701

 
79,167

 
224,014

 
146,405

Net income attributable to noncontrolling interests
(108,638
)
 
(70,414
)
 
(206,216
)
 
(125,623
)
Net income attributable to TGE
$
1,063

 
$
8,753

 
$
17,798

 
$
20,782

Net income per Class A share:
 
 
 
 
 
 
 
Basic net income per Class A share
$
0.02

 
$
0.15

 
$
0.30

 
$
0.36

Diluted net income per Class A share
$
0.02

 
$
0.15

 
$
0.30

 
$
0.36

Basic average number of Class A shares outstanding
59,397

 
58,075

 
58,745

 
58,075

Diluted average number of Class A shares outstanding
59,397

 
58,192

 
58,745

 
58,187


9


TALLGRASS ENERGY, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
Six Months Ended June 30,
 
2018
 
2017
 
(in thousands)
Cash Flows from Operating Activities:
 
 
 
Net income
$
224,014

 
$
146,405

Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
Depreciation and amortization
56,955

 
47,939

Equity in earnings of unconsolidated investments
(146,589
)
 
(63,479
)
Distributions from unconsolidated investments
145,581

 
63,374

Deferred income tax expense
23,501

 
12,340

Other noncash items, net
(6,504
)
 
(1,079
)
Changes in components of working capital:
 
 
 
Accounts receivable and other
(93,157
)
 
2,067

Accounts payable and accrued liabilities
106,592

 
3,150

Deferred revenue
10,711

 
24,593

Other current assets and liabilities
7,631

 
2,241

Other operating, net
2,525

 
419

Net Cash Provided by Operating Activities
331,260

 
237,970

Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(176,275
)
 
(53,995
)
Acquisition of BNN North Dakota, net of cash acquired
(95,000
)
 
—

Sale of Tallgrass Crude Gathering
50,046

 
—

Distributions from unconsolidated investments in excess of cumulative earnings
36,502

 
27,308

Acquisition of Pawnee membership interest
(30,600
)
 
—

Contributions to unconsolidated investments
(22,513
)
 
(17,835
)
Acquisition of 38% membership interest in Deeprock North
(19,500
)
 
—

Acquisition of Rockies Express membership interest
—

 
(400,000
)
Acquisition of Terminals and NatGas
—

 
(140,000
)
Acquisition of Douglas Gathering System
—

 
(128,526
)
Other investing, net
(12,521
)
 
(13,986
)
Net Cash Used in Investing Activities
(269,861
)
 
(727,034
)
Cash Flows from Financing Activities:
 
 
 
Borrowings under revolving credit facilities, net
242,000

 
332,000

Distributions to noncontrolling interests
(198,837
)
 
(145,109
)
Acquisition of Pony Express membership interest
(50,000
)
 
—

Dividends paid to Class A shareholders
(49,662
)
 
(32,813
)
Proceeds from public offering of TEP common units, net of offering costs
—

 
112,762

Proceeds from issuance of long-term debt
—

 
350,000

Partial exercise of call option
—

 
(72,381
)
Repurchase of TEP common units from TD
—

 
(35,335
)
Other financing, net
(2,462
)
 
(21,646
)
Net Cash (Used in) Provided by Financing Activities
(58,961
)
 
487,478

Net Change in Cash and Cash Equivalents
2,438

 
(1,586
)
Cash and Cash Equivalents, beginning of period
2,593

 
2,459

Cash and Cash Equivalents, end of period
$
5,031

 
$
873


10


CONTACT:
Investor and Financial Inquiries
Nate Lien
(913) 928-6012
investor.relations@tallgrassenergylp.com

Media and Trade Inquiries
Phyllis Hammond
(303) 763-3568
phyllis.hammond@tallgrassenergylp.com



11

Tallgrass Energy, LP Reports