News Release
NuStar Energy Reports Higher EPU, EBITDA and DCF Results in the Third Quarter of 2014
Covers Third Quarter Distribution and Remains On Track to Cover Distribution for the Full-Year 2014
Quarterly Results Improved in all Three Operating Segments
Pipeline Throughput Volumes Continue to Increase
Company Plans to Finalize Joint Venture Agreements with PMI in Early 2015
Third quarter earnings before interest, taxes, depreciation and
amortization (EBITDA) from continuing operations were
The partnership reported third quarter net income applicable to limited
partners of
The partnership also announced that its board of directors has declared
a third quarter 2014 distribution of
“Strong performance in all three of our operating segments led to our
solid third quarter earnings and distribution coverage of 1.03 times,”
said
Barron went on to say, “As a result of these strong third quarter results, we were able to cover our quarterly distribution, for a second consecutive quarter, and we remain on track to cover our distribution for the full-year.”
Joint Venture with PMI
NuStar and PMI, an affiliate of Pemex, continue to work toward
finalizing agreements for a proposed joint venture in which the two
companies will develop new pipeline infrastructure to transport
liquefied petroleum gases (LPGs) and refined products from the U.S. into
northern
Internal Growth Project Update
Phase 2 of the South Texas Crude Oil Pipeline expansion remains on schedule to come online during the first quarter of 2015 and will allow for increased throughputs of up to 65,000 barrels per day.
NuStar’s 12-inch pipeline between
Earnings Guidance
“Fourth quarter EBITDA results in our pipeline segment are expected to be higher than last year’s fourth quarter, while fourth quarter EBITDA results in our storage segment should be comparable to last year’s fourth quarter adjusted EBITDA results. EBITDA results in our fuels marketing segment should be comparable to the fourth quarter of 2013,” said Barron.
“For the full-year 2014, we still expect our pipeline segment EBITDA to
be
“We still expect to spend
Looking ahead to 2015, Barron commented, “Our pipeline segment’s EBITDA
should increase by an additional
“With regard to capital spending projections for 2015, we plan to spend
Barron concluded by saying, “Based on our projections, we again expect to cover our distribution for the full-year 2015.”
Third Quarter 2014 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 September 30, |
Nine Months Ended September 30, |
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
Statement of Income Data: | |||||||||||||||||
Revenues: | |||||||||||||||||
Service revenues | $ | 266,651 | $ | 243,712 | $ | 755,551 | $ | 700,922 | |||||||||
Product sales | 527,771 | 534,433 | 1,637,829 | 1,977,423 | |||||||||||||
Total revenues | 794,422 | 778,145 | 2,393,380 | 2,678,345 | |||||||||||||
Costs and expenses: | |||||||||||||||||
Cost of product sales | 509,794 | 527,217 | 1,578,508 | 1,928,237 | |||||||||||||
Operating expenses | 115,964 | 117,101 | 337,566 | 341,933 | |||||||||||||
General and administrative expenses | 24,967 | 18,831 | 68,986 | 65,978 | |||||||||||||
Depreciation and amortization expense | 48,599 | 46,245 | 142,765 | 133,116 | |||||||||||||
Total costs and expenses | 699,324 | 709,394 | 2,127,825 | 2,469,264 | |||||||||||||
Operating income | 95,098 | 68,751 | 265,555 | 209,081 | |||||||||||||
Equity in earnings (loss) of joint ventures | 2,749 | (5,358 | ) | 1,737 | (26,629 | ) | |||||||||||
Interest expense, net | (33,007 | ) | (30,823 | ) | (100,546 | ) | (92,849 | ) | |||||||||
Interest income from related party | — | 1,828 | 1,055 | 4,560 | |||||||||||||
Other (expense) income, net | (1,388 | ) | 1,389 | 1,816 | 3,917 | ||||||||||||
Income from continuing operations before income tax expense |
63,452 | 35,787 | 169,617 | 98,080 | |||||||||||||
Income tax expense | 4,335 | 105 | 10,317 | 8,087 | |||||||||||||
Income from continuing operations | 59,117 | 35,682 | 159,300 | 89,993 | |||||||||||||
Income (loss) from discontinued operations, net of tax (Note 1) |
2,831 | (2,446 | ) | (2,316 | ) | 616 | |||||||||||
Net income | $ | 61,948 | $ | 33,236 | $ | 156,984 | $ | 90,609 | |||||||||
Net income applicable to limited partners | $ | 50,074 | $ | 21,924 | $ | 121,817 | $ | 56,811 | |||||||||
Net income (loss) per unit applicable to limited partners: | |||||||||||||||||
Continuing operations | $ | 0.61 | $ | 0.31 | $ | 1.59 | $ | 0.71 | |||||||||
Discontinued operations (Note 1) | 0.03 | (0.03 | ) | (0.03 | ) | 0.02 | |||||||||||
Total | $ | 0.64 | $ | 0.28 | $ | 1.56 | $ | 0.73 | |||||||||
Weighted-average limited partner units outstanding |
77,886,078 | 77,886,078 | 77,886,078 | 77,886,078 | |||||||||||||
EBITDA from continuing operations (Note 2) | $ | 145,058 | $ | 111,027 | $ | 411,873 | $ | 319,485 | |||||||||
DCF from continuing operations (Note 2) | $ | 100,684 | $ | 81,311 | $ | 297,717 | $ | 220,762 | |||||||||
September 30, 2014 | December 31, | ||||||||||||||||
2014 | 2013 | 2013 | |||||||||||||||
Balance Sheet Data: | |||||||||||||||||
Total debt | $ | 2,752,951 | $ | 2,473,678 | $ | 2,655,553 | |||||||||||
Partners’ equity | $ | 1,768,645 | $ | 2,380,979 | $ | 1,903,794 | |||||||||||
Consolidated debt coverage ratio (Note 3) | 4.0x | 4.3x | 4.4x |
NuStar Energy L.P. and Subsidiaries Consolidated Financial Information - Continued (Unaudited, Thousands of Dollars, Except Barrel Data) |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
Pipeline: | |||||||||||||||||
Refined products pipelines throughput (barrels/day) | 514,361 | 501,511 | 503,059 | 477,601 | |||||||||||||
Crude oil pipelines throughput (barrels/day) | 471,698 | 382,539 | 419,824 | 361,642 | |||||||||||||
Total throughput (barrels/day) | 986,059 | 884,050 | 922,883 | 839,243 | |||||||||||||
Throughput revenues | $ | 125,461 | $ | 111,508 | $ | 346,218 | $ | 301,761 | |||||||||
Operating expenses | 39,996 | 36,089 | 109,685 | 102,596 | |||||||||||||
Depreciation and amortization expense | 19,813 | 17,401 | 57,655 | 50,039 | |||||||||||||
Segment operating income | $ | 65,652 | $ | 58,018 | $ | 178,878 | $ | 149,126 | |||||||||
Storage: | |||||||||||||||||
Throughput (barrels/day) | 914,599 | 832,412 | 877,052 | 772,383 | |||||||||||||
Throughput revenues | $ | 32,498 | $ | 27,937 | $ | 91,184 | $ | 76,924 | |||||||||
Storage lease revenues | 111,447 | 110,671 | 330,313 | 346,040 | |||||||||||||
Total revenues | 143,945 | 138,608 | 421,497 | 422,964 | |||||||||||||
Operating expenses | 68,244 | 71,251 | 202,602 | 208,116 | |||||||||||||
Depreciation and amortization expense | 26,300 | 26,306 | 77,480 | 75,429 | |||||||||||||
Segment operating income | $ | 49,401 | $ | 41,051 | $ | 141,415 | $ | 139,419 | |||||||||
Fuels Marketing: | |||||||||||||||||
Product sales and other revenue | $ | 531,190 | $ | 534,919 | $ | 1,645,812 | $ | 1,978,531 | |||||||||
Cost of product sales | 513,300 | 531,481 | 1,590,605 | 1,944,415 | |||||||||||||
Gross margin | 17,890 | 3,438 | 55,207 | 34,116 | |||||||||||||
Operating expenses | 10,367 | 12,510 | 33,294 | 41,336 | |||||||||||||
Depreciation and amortization expense | 5 | 7 | 16 | 20 | |||||||||||||
Segment operating income (loss) | $ | 7,518 | $ | (9,079 | ) | $ | 21,897 | $ | (7,240 | ) | |||||||
Consolidation and Intersegment Eliminations: | |||||||||||||||||
Revenues | $ | (6,174 | ) | $ | (6,890 | ) | $ | (20,147 | ) | $ | (24,911 | ) | |||||
Cost of product sales | (3,506 | ) | (4,264 | ) | (12,097 | ) | (16,178 | ) | |||||||||
Operating expenses | (2,643 | ) | (2,749 | ) | (8,015 | ) | (10,115 | ) | |||||||||
Total | $ | (25 | ) | $ | 123 | $ | (35 | ) | $ | 1,382 | |||||||
Consolidated Information: | |||||||||||||||||
Revenues | $ | 794,422 | $ | 778,145 | $ | 2,393,380 | $ | 2,678,345 | |||||||||
Cost of product sales | 509,794 | 527,217 | 1,578,508 | 1,928,237 | |||||||||||||
Operating expenses | 115,964 | 117,101 | 337,566 | 341,933 | |||||||||||||
Depreciation and amortization expense | 46,118 | 43,714 | 135,151 | 125,488 | |||||||||||||
Segment operating income | 122,546 | 90,113 | 342,155 | 282,687 | |||||||||||||
General and administrative expenses | 24,967 | 18,831 | 68,986 | 65,978 | |||||||||||||
Other depreciation and amortization expense | 2,481 | 2,531 | 7,614 | 7,628 | |||||||||||||
Consolidated operating income | $ | 95,098 | $ | 68,751 | $ | 265,555 | $ | 209,081 |
NuStar Energy L.P. and Subsidiaries |
||
Consolidated Financial Information - Continued |
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(Unaudited, Thousands of Dollars, Except Per Unit Data) |
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Notes: |
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(1) | The results of operations for the following have been reported as discontinued operations for all periods presented: (i) the San Antonio Refinery and related assets, which we sold on January 1, 2013, and (ii) certain storage assets that were classified as “Assets held for sale” on the consolidated balance sheet as of December 31, 2013. | |
(2) | NuStar Energy L.P. utilizes financial measures, earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, distributable cash flow (DCF) from continuing operations and DCF from continuing operations per unit, 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 measures provide investors an enhanced perspective of the operating performance of the partnership’s assets and the cash that the business is generating. None of EBITDA from continuing operations, DCF from continuing operations or DCF from continuing operations per unit are intended to represent cash flows from operations for the period, nor are they 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, |
|||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
Income from continuing operations | $ | 59,117 | $ | 35,682 | $ | 159,300 | $ | 89,993 | ||||||||||
Plus interest expense, net and interest income from related party |
33,007 | 28,995 | 99,491 | 88,289 | ||||||||||||||
Plus income tax expense | 4,335 | 105 | 10,317 | 8,087 | ||||||||||||||
Plus depreciation and amortization expense | 48,599 | 46,245 | 142,765 | 133,116 | ||||||||||||||
EBITDA from continuing operations | 145,058 | 111,027 | 411,873 | 319,485 | ||||||||||||||
Equity in (earnings) loss of joint ventures | (2,749 | ) | 5,358 | (1,737 | ) | 26,629 | ||||||||||||
Interest expense, net and interest income from related party |
(33,007 | ) | (28,995 | ) | (99,491 | ) | (88,289 | ) | ||||||||||
Reliability capital expenditures | (6,264 | ) | (11,875 | ) | (18,262 | ) | (28,339 | ) | ||||||||||
Income tax expense | (4,335 | ) | (105 | ) | (10,317 | ) | (8,087 | ) | ||||||||||
Distributions from joint ventures | 2,785 | 1,135 | 5,879 | 5,787 | ||||||||||||||
Other items (a) | 4,177 | 2,457 | 8,046 | (4,043 | ) | |||||||||||||
Mark-to-market impact of hedge transactions (b) | (4,981 | ) | 2,309 | 1,726 | (2,381 | ) | ||||||||||||
DCF from continuing operations | $ | 100,684 | $ | 81,311 | $ | 297,717 | $ | 220,762 | ||||||||||
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 |
$ | 87,918 | $ | 68,545 | $ | 259,419 | $ | 182,464 | ||||||||||
DCF from continuing operations per limited partner unit | $ | 1.13 | $ | 0.88 | $ | 3.33 | $ | 2.34 | ||||||||||
(a) Other items consist of a net increase in deferred revenue associated
with throughput deficiency payments and construction reimbursements. For
the nine months ended
(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 projected annual operating income to projected annual EBITDA for a certain project in the pipeline segment: |
Houston Pipeline
NGL Project |
||||
Projected operating income | $ | 15,000 | ||
Plus projected depreciation and amortization expense | 8,000 | |||
Projected EBITDA | $ | 23,000 | ||
The following is a reconciliation of projected incremental operating income to projected incremental EBITDA for the pipeline segment:
Year Ended December 31, 2015 |
Year Ended December 31, 2014 |
|||||
Projected incremental operating income | $ 15,000 - 30,000 | $ 35,000 - 50,000 | ||||
Plus projected incremental depreciation and amortization expense | 10,000 - 15,000 | 5,000 - 10,000 | ||||
Projected incremental EBITDA | $ 25,000 - 45,000 | $ 40,000 - 60,000 | ||||
The reconciliation below shows projected operating income to projected EBITDA for the fuels marketing segment:
Year Ended December 31, 2014 |
|||
Projected operating income | $ 20,000 - 30,000 | ||
Plus projected depreciation and amortization expense | — | ||
Projected EBITDA | $ 20,000 - 30,000 | ||
(3) The consolidated debt coverage ratio is calculated as consolidated
indebtedness to consolidated EBITDA, as defined in our
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