News Release
NuStar Energy L.P. Reports Earnings Results for the First Quarter of 2017
Entered into Definitive Agreement to
Closed on Upsized Equity Offering of 14,375,000 Common Units for
Gross Proceeds of Approximately
Since announcing the Navigator Acquisition last week, NuStar has closed
an equity offering and priced an offering of Senior Notes. On
For the first quarter of 2017, net income applicable to limited partners
was
DCF available to common limited partners was
The partnership also announced the Series A Preferred Unit distribution
for the first quarter 2017 of
“Our strong first quarter results were primarily driven by higher
renewal rates at several of our terminal facilities, incremental
throughput fees associated with our Martin terminal acquisition and an
increase in ammonia throughput volumes due to a warmer spring season. In
addition, we experienced improved results in our Fuels Marketing segment
and a decrease in overall operating expenses during the quarter,” said
“For the last three years, we have been focused on de-risking our base business, strengthening our balance sheet and restoring our distribution coverage. But for the timing of our equity offering, which closed before the ex-dividend date for the first quarter common unit distribution, this would have been our twelfth consecutive quarter of distribution coverage, demonstrating, once again, the resiliency and strength of our legacy pipeline and storage operations.”
“Our base business delivered solid results in first quarter, and in the
second quarter, we are poised to acquire Navigator’s Permian assets,
providing a new platform for future growth in one of the most prolific
basins in
Barron went on to say, “We are very pleased with the pending Navigator
acquisition and related financing transactions. We upsized the equity
offering and the underwriters exercised the entire greenshoe, increasing
the offering from 10.5 million common units to almost 14.4 million
common units, with gross proceeds of approximately
First Quarter 2017 Earnings Conference Call Details
A conference call with management is scheduled for
Investors interested in listening to the live discussion or a replay via the internet may access the discussion directly at http://edge.media-server.com/m/p/8beg7bko or by logging on to NuStar Energy L.P.’s website at www.nustarenergy.com.
The discussion 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, and the related conference call will
include, forward-looking statements regarding future events, such as the
partnership’s future performance and the consummation of the
acquisition. 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
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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, | ||||||||||
| 2017 | 2016 | |||||||||
| Statement of Income Data: | ||||||||||
| Revenues: | ||||||||||
| Service revenues | $ | 266,462 | $ | 266,566 | ||||||
| Product sales | 220,968 | 139,137 | ||||||||
| Total revenues | 487,430 | 405,703 | ||||||||
| Costs and expenses: | ||||||||||
| Cost of product sales | 207,806 | 128,990 | ||||||||
| Operating expenses | 101,026 | 105,221 | ||||||||
| General and administrative expenses | 24,595 | 23,785 | ||||||||
| Depreciation and amortization expense | 56,864 | 53,142 | ||||||||
| Total costs and expenses | 390,291 | 311,138 | ||||||||
| Operating income | 97,139 | 94,565 | ||||||||
| Interest expense, net | (36,414 | ) | (34,123 | ) | ||||||
| Other income (expense), net | 140 | (171 | ) | |||||||
| Income before income tax expense | 60,865 | 60,271 | ||||||||
| Income tax expense | 2,925 | 2,870 | ||||||||
| Net income | $ | 57,940 | $ | 57,401 | ||||||
| Net income applicable to common limited partners | $ | 38,452 | $ | 44,750 | ||||||
| Basic and diluted net income per common unit | $ | 0.49 | $ | 0.57 | ||||||
| Basic weighted-average common units outstanding | 78,642,888 | 77,886,078 | ||||||||
| Other Data (Note 1): | ||||||||||
| EBITDA | $ | 154,143 | $ | 147,536 | ||||||
| DCF available to common limited partners | $ | 88,942 | $ | 97,027 | ||||||
| March 31, | December 31, | |||||||||||||||||
| 2017 | 2016 | 2016 | ||||||||||||||||
| Balance Sheet Data: | ||||||||||||||||||
| Total debt | $ | 3,023,980 | $ | 3,206,650 | $ | 3,068,364 | ||||||||||||
| Partners’ equity | $ | 1,570,343 | $ | 1,557,652 | $ | 1,611,617 | ||||||||||||
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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, | ||||||||||
| 2017 | 2016 | |||||||||
| Pipeline: | ||||||||||
| Refined products pipelines throughput (barrels/day) | 514,016 | 521,272 | ||||||||
| Crude oil pipelines throughput (barrels/day) | 408,809 | 411,109 | ||||||||
| Total throughput (barrels/day) | 922,825 | 932,381 | ||||||||
| Throughput revenues | $ | 121,240 | $ | 118,873 | ||||||
| Operating expenses | 33,074 | 33,004 | ||||||||
| Depreciation and amortization expense | 23,138 | 21,604 | ||||||||
| Segment operating income | $ | 65,028 | $ | 64,265 | ||||||
| Storage: | ||||||||||
| Throughput (barrels/day) (Note 2) | 315,010 | 828,327 | ||||||||
| Throughput terminal revenues | $ | 20,690 | $ | 29,400 | ||||||
| Storage terminal revenues | 126,741 | 122,999 | ||||||||
| Total revenues | 147,431 | 152,399 | ||||||||
| Operating expenses | 62,139 | 66,003 | ||||||||
| Depreciation and amortization expense | 31,533 | 29,383 | ||||||||
| Segment operating income | $ | 53,759 | $ | 57,013 | ||||||
| Fuels Marketing: | ||||||||||
| Product sales and other revenue | $ | 222,702 | $ | 140,446 | ||||||
| Cost of product sales | 210,599 | 132,581 | ||||||||
| Gross margin | 12,103 | 7,865 | ||||||||
| Operating expenses | 6,963 | 8,638 | ||||||||
| Segment operating income (loss) | $ | 5,140 | $ | (773 | ) | |||||
| Consolidation and Intersegment Eliminations: | ||||||||||
| Revenues | $ | (3,943 | ) | $ | (6,015 | ) | ||||
| Cost of product sales | (2,793 | ) | (3,591 | ) | ||||||
| Operating expenses | (1,150 | ) | (2,424 | ) | ||||||
| Total | $ | — | $ | — | ||||||
| Consolidated Information: | ||||||||||
| Revenues | $ | 487,430 | $ | 405,703 | ||||||
| Cost of product sales | 207,806 | 128,990 | ||||||||
| Operating expenses | 101,026 | 105,221 | ||||||||
| Depreciation and amortization expense | 54,671 | 50,987 | ||||||||
| Segment operating income | 123,927 | 120,505 | ||||||||
| General and administrative expenses | 24,595 | 23,785 | ||||||||
| Other depreciation and amortization expense | 2,193 | 2,155 | ||||||||
| Consolidated operating income | $ | 97,139 | $ | 94,565 | ||||||
Consolidated
Financial Information - Continued
(Unaudited, Thousands of
Dollars, Except Ratio Data)
Notes:
(1)
Our board of directors and management use EBITDA and/or DCF when assessing the following: (i) the performance of our assets, (ii) the viability of potential projects, (iii) our ability to fund distributions, (iv) our ability to fund capital expenditures and (v) our ability to service debt. In addition, our board of directors uses a distribution coverage ratio, which is calculated based on DCF, as the metric for determining the company-wide bonus and the vesting of performance units awarded to management. Our board of directors believes DCF appropriately aligns management’s interest with our unitholders’ interest in increasing distributions in a prudent manner. DCF is a widely accepted financial indicator used by the master limited partnership (MLP) investment community to compare partnership performance. DCF is used by the MLP investment community, in part, because the value of a partnership unit is partially based on its yield, and its yield is based on the cash distributions a partnership can pay its unitholders.
None of these financial measures are presented as an alternative to net income. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with GAAP. The following is a reconciliation of EBITDA, DCF and distribution coverage ratio:
| Three Months Ended March 31, | ||||||||||
| 2017 | 2016 | |||||||||
| Net income | $ | 57,940 | $ | 57,401 | ||||||
| Interest expense, net | 36,414 | 34,123 | ||||||||
| Income tax expense | 2,925 | 2,870 | ||||||||
| Depreciation and amortization expense | 56,864 | 53,142 | ||||||||
| EBITDA | 154,143 | 147,536 | ||||||||
| Interest expense, net | (36,414 | ) | (34,123 | ) | ||||||
| Reliability capital expenditures | (5,022 | ) | (6,017 | ) | ||||||
| Income tax expense | (2,925 | ) | (2,870 | ) | ||||||
| Mark-to-market impact of hedge transactions (a) | (2,586 | ) | 4,684 | |||||||
| Unit-based compensation (b) | 2,088 | 1,086 | ||||||||
| Preferred unit distributions | (4,813 | ) | — | |||||||
| Other items (c) | (274 | ) | (503 | ) | ||||||
| DCF | $ | 104,197 | $ | 109,793 | ||||||
| Less DCF available to general partner | 15,255 | 12,766 | ||||||||
| DCF available to common limited partners | $ | 88,942 | $ | 97,027 | ||||||
| Distributions applicable to common limited partners | $ | 101,913 | $ | 85,285 | ||||||
| Distribution coverage ratio (d) | 0.87x | 1.14x | ||||||||
| (a) | DCF 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 when the contracts are settled. | |
| (b) | In connection with the employee transfer from NuStar GP, LLC on March 1, 2016, we assumed obligations related to awards issued under a long-term incentive plan, and we intend to satisfy the vestings of equity-based awards with the issuance of our common units. As such, the expenses related to these awards are considered non-cash and added back to DCF. Certain awards include distribution equivalent rights (DERs). Payments made in connection with DERs are deducted from DCF. | |
| (c) | Other items primarily consist of adjustments for throughput deficiency payments and construction reimbursements. | |
| (d) | Distribution coverage ratio is calculated by dividing DCF available to common limited partners by distributions applicable to common limited partners. | |
Consolidated
Financial Information - Continued
(Unaudited, Thousands of
Dollars, Except Ratio and Per Unit Data)
(2) The following is a reconciliation of DCF and distribution
coverage ratio, adjusted to exclude distributions that will be paid on
the 14,375,000 common units that were issued subsequent to the end of
the current reporting period ending
| Three Months Ended March 31, 2017 | |||||
| DCF (see previous page) | $ | 104,197 | |||
| Less DCF available to general partner, as adjusted | 12,899 | ||||
| Adjusted DCF available to common limited partners | $ | 91,298 | |||
| Distributions applicable to common limited partners, as adjusted | $ | 86,172 | |||
| Adjusted distribution coverage ratio (a) | 1.06x | ||||
(a) Adjusted distribution coverage ratio is calculated by dividing adjusted DCF available to common limited partners by distributions applicable to common limited partners, as adjusted.
(3) The following is a reconciliation of net income applicable to limited partners and net income per unit to adjusted net income applicable to limited partners and adjusted net income per unit:
| Three Months Ended March 31, 2017 | |||||||||
| Net income applicable to limited partners / net income per unit | $ | 38,452 | $ | 0.49 | |||||
| GP interest and incentive distribution attributable to recently issued units (a) | 1,995 | 0.02 | |||||||
| Adjusted net income applicable to limited partners / adjusted net income per unit | $ | 40,447 | $ | 0.51 | |||||
(a) GP interest and incentive distributions that will be paid on the
14,375,000 common units that were issued subsequent to the end of the
current reporting period ending
View source version on businesswire.com: http://www.businesswire.com/news/home/20170424005439/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 and Chief Administrative Officer,
Corporate
Communications: 210-918-2314
website: http://www.nustarenergy.com
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210-918-INVR (4687)
