News Release
NuStar Energy Covers Distribution by a Strong 1.14x in the First Quarter of 2016
Quarterly Distribution Remains at
Strategic Capital Spending Guidance Reduced by Approximately 50%/Key Growth Projects Maintained
The partnership reported first quarter 2016 earnings before interest,
taxes, depreciation and amortization (EBITDA) from continuing operations
of
“We are very pleased with our strong first quarter 2016 results,” said
“NuStar is very fortunate to have geographically diverse assets that are
also well-balanced between our storage and pipeline business segments,
which has allowed us to weather the tough market challenges very well.
For example, we benefited from robust utilization of our storage assets,
which are effectively full, as well as strong refined product pipeline
throughput volumes during the first quarter of 2016. We are also
thrilled to announce our recently signed one-year, 850,000 barrel
storage contract at our formerly moth-balled
The partnership also announced that its board of directors has declared
a first quarter 2016 distribution of
2016 Earnings Guidance
“Our overall expectations for the remainder of 2016 remain unchanged. We
continue to expect 2016 EBITDA guidance in our pipeline segment of
“We remain focused on disciplined capital spending,” said Barron. “While
our 2016 strategic capital spending has been reduced by approximately
50% to
Barron concluded by saying, “Based on these projections, we expect to cover our distribution in 2016 for the third consecutive year.
“I believe that our dependable business model, diverse asset base, blue-chip customers, proven strategic direction and fiscal discipline, uniquely position NuStar to continue achieving strong earnings despite the challenging market conditions. I know that I speak for every NuStar employee when I say that we are all 100% committed to covering our distribution and delivering long-term, stable value for our unitholders.”
First Quarter Earnings Conference Call Details
A conference call with management is scheduled for
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
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
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 Energy L.P. and Subsidiaries Consolidated Financial Information (Unaudited, Thousands of Dollars, Except Unit and Per Unit Data) |
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Three Months Ended March 31, | ||||||||||
2016 | 2015 | |||||||||
Statement of Income Data: | ||||||||||
Revenues: | ||||||||||
Service revenues | $ | 266,566 | $ | 269,973 | ||||||
Product sales | 139,137 | 284,971 | ||||||||
Total revenues | 405,703 | 554,944 | ||||||||
Costs and expenses: | ||||||||||
Cost of product sales | 128,990 | 262,506 | ||||||||
Operating expenses | 105,221 | 115,647 | ||||||||
General and administrative expenses | 23,785 | 25,053 | ||||||||
Depreciation and amortization expense | 53,142 | 52,457 | ||||||||
Total costs and expenses | 311,138 | 455,663 | ||||||||
Operating income | 94,565 | 99,281 | ||||||||
Interest expense, net | (34,123 | ) | (32,037 | ) | ||||||
Other (expense) income, net | (171 | ) | 62,268 | |||||||
Income from continuing operations before income tax expense | 60,271 | 129,512 | ||||||||
Income tax expense | 2,870 | 2,387 | ||||||||
Income from continuing operations | 57,401 | 127,125 | ||||||||
Income from discontinued operations, net of tax | — | 774 | ||||||||
Net income | $ | 57,401 | $ | 127,899 | ||||||
Net income applicable to limited partners | $ | 44,750 | $ | 114,536 | ||||||
Basic and diluted net income per unit applicable to limited partners: | ||||||||||
Continuing operations | $ | 0.57 | $ | 1.46 | ||||||
Discontinued operations | — | 0.01 | ||||||||
Total | $ | 0.57 | $ | 1.47 | ||||||
Basic weighted-average limited partner units outstanding | 77,886,078 | 77,886,078 | ||||||||
EBITDA from continuing operations (Note 1) | $ | 147,536 | $ | 214,006 | ||||||
DCF from continuing operations available to limited partners (Note 1) | $ | 97,027 | $ | 106,754 | ||||||
DCF from continuing operations per limited partner unit (Note 1) | $ | 1.25 | $ | 1.37 | ||||||
March 31, | December 31, | |||||||||
2016 | 2015 | |||||||||
Balance Sheet Data: | ||||||||||
Total debt | $ | 3,206,650 | $ | 3,139,612 | ||||||
Partners’ equity | $ |
1,557,652 |
$ | 1,609,844 | ||||||
Consolidated debt coverage ratio (Note 2) |
4.6x |
4.5x | ||||||||
NuStar Energy L.P. and Subsidiaries Consolidated Financial Information - Continued (Unaudited, Thousands of Dollars, Except Barrel Data) |
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Three Months Ended March 31, | ||||||||||
2016 | 2015 | |||||||||
Pipeline: | ||||||||||
Refined products pipelines throughput (barrels/day) | 521,272 | 506,381 | ||||||||
Crude oil pipelines throughput (barrels/day) | 411,109 | 506,272 | ||||||||
Total throughput (barrels/day) | 932,381 | 1,012,653 | ||||||||
Throughput revenues | $ | 118,873 | $ | 124,425 | ||||||
Operating expenses | 33,004 | 35,308 | ||||||||
Depreciation and amortization expense | 21,604 | 20,477 | ||||||||
Segment operating income | $ | 64,265 | $ | 68,640 | ||||||
Storage: | ||||||||||
Throughput (barrels/day) | 828,327 | 880,271 | ||||||||
Throughput revenues | $ | 29,400 | $ | 31,691 | ||||||
Storage lease revenues | 122,999 | 118,643 | ||||||||
Total revenues | 152,399 | 150,334 | ||||||||
Operating expenses | 66,003 | 72,628 | ||||||||
Depreciation and amortization expense | 29,383 | 29,728 | ||||||||
Segment operating income | $ | 57,013 | $ | 47,978 | ||||||
Fuels Marketing: | ||||||||||
Product sales and other revenue | $ | 140,446 | $ | 286,434 | ||||||
Cost of product sales | 132,581 | 266,218 | ||||||||
Gross margin | 7,865 | 20,216 | ||||||||
Operating expenses | 8,638 | 10,291 | ||||||||
Segment operating (loss) income | $ | (773 | ) | $ | 9,925 | |||||
Consolidation and Intersegment Eliminations: | ||||||||||
Revenues | $ | (6,015 | ) | $ | (6,249 | ) | ||||
Cost of product sales | (3,591 | ) | (3,712 | ) | ||||||
Operating expenses | (2,424 | ) | (2,580 | ) | ||||||
Total | $ | — | $ | 43 | ||||||
Consolidated Information: | ||||||||||
Revenues | $ | 405,703 | $ | 554,944 | ||||||
Cost of product sales | 128,990 | 262,506 | ||||||||
Operating expenses | 105,221 | 115,647 | ||||||||
Depreciation and amortization expense | 50,987 | 50,205 | ||||||||
Segment operating income | 120,505 | 126,586 | ||||||||
General and administrative expenses | 23,785 | 25,053 | ||||||||
Other depreciation and amortization expense | 2,155 | 2,252 | ||||||||
Consolidated operating income | $ | 94,565 | $ | 99,281 | ||||||
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NuStar Energy L.P. and Subsidiaries Consolidated Financial Information - Continued (Unaudited, Thousands of Dollars, Except Per Unit Data)
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Notes: |
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(1) |
NuStar Energy L.P. utilizes financial measures, such as earnings before interest, taxes, depreciation and amortization (EBITDA) and distributable cash flow (DCF), which are not defined in U.S. generally accepted accounting principles (GAAP). Management uses these financial measures because (i) they are widely accepted financial indicators used by investors to compare partnership performance and/or (ii) they provide investors an enhanced perspective of the operating performance of the partnership’s assets and the cash 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. |
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The following is a reconciliation of income from continuing operations to EBITDA from continuing operations and DCF from continuing operations: |
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Three Months Ended March 31, | ||||||||||
2016 | 2015 | |||||||||
Income from continuing operations | $ | 57,401 | $ | 127,125 | ||||||
Plus interest expense, net | 34,123 | 32,037 | ||||||||
Plus income tax expense | 2,870 | 2,387 | ||||||||
Plus depreciation and amortization expense | 53,142 | 52,457 | ||||||||
EBITDA from continuing operations | 147,536 | 214,006 | ||||||||
Interest expense, net | (34,123 | ) | (32,037 | ) | ||||||
Reliability capital expenditures | (6,017 | ) | (6,798 | ) | ||||||
Income tax expense | (2,870 | ) | (2,387 | ) | ||||||
Distributions from joint venture | — | 2,500 | ||||||||
Mark-to-market impact of hedge transactions (a) | 4,684 | (1,119 | ) | |||||||
Unit-based compensation | 1,086 | — | ||||||||
Other items (b) | (503 | ) | (54,645 | ) | ||||||
DCF from continuing operations | $ | 109,793 | $ | 119,520 | ||||||
Less DCF from continuing operations available to general partner | 12,766 | 12,766 | ||||||||
DCF from continuing operations available to limited partners | $ | 97,027 | $ | 106,754 | ||||||
DCF from continuing operations per limited partner unit | $ | 1.25 | $ | 1.37 | ||||||
(a) | 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. | ||
(b) | Other items consist of (i) the net change in deferred revenue associated with throughput deficiency payments and construction reimbursements for all periods presented and (ii) in 2015, a $56.3 million non-cash gain associated with the Linden terminal acquisition on January 2, 2015. | ||
NuStar Energy L.P. and Subsidiaries Consolidated Financial Information - Continued (Unaudited, Thousands of Dollars, Except Per Unit Data) |
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Notes (continued): |
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The following are reconciliations of projected operating income to projected EBITDA for our reported segments: |
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Year Ended December 31, 2016 | ||||||||||||
Pipeline | Storage | Fuels Marketing | ||||||||||
Projected operating income | $ 250,000 - 265,000 | $ 195,000 - 210,000 | $ 15,000 - 35,000 | |||||||||
Plus projected depreciation and amortization expense | 85,000 - 90,000 | 115,000 - 120,000 | — | |||||||||
Projected EBITDA | $ 335,000 - 355,000 | $ 310,000 - 330,000 | $ 15,000 - 35,000 | |||||||||
(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. |
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View source version on businesswire.com: http://www.businesswire.com/news/home/20160427005590/en/
Source:
NuStar Energy, L.P., San Antonio
Investors, Chris Russell,
Treasurer and Vice President Investor Relations
Investor Relations:
210-918-3507
or
Media, Mary Rose Brown, Executive Vice
President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com