News Release
NuStar Energy L.P. Reports Earnings Results for 4Q 2016/Covers Quarterly Distribution for 11th Consecutive Quarter and Third Consecutive Year
Announced Sale of Axeon’s Asphalt Marketing Business is Expected
to Generate a
Immediately Accretive Acquisition of Martin Terminal Assets Completed in the Fourth Quarter
Fourth quarter 2016 earnings before interest, taxes, depreciation and
amortization (EBITDA) from continuing operations were
All of these amounts include a
Distributable cash flow (DCF) from continuing operations available to
common limited partners was not impacted by the non-cash charge. DCF
from continuing operations available to common limited partners was
As previously announced on
“I am very pleased with the many initiatives that we completed in 2016
that set the stage for a great year in 2017 and beyond,” said
Recapping 2016, Barron said, “Our base storage and pipeline operations performed very well in the face of a continued weak commodity price environment throughout the year. During 2016, our storage segment benefitted from increased storage rates at some of our facilities, while our pipeline segment experienced higher overall refined product throughputs, due in part to some completed expansion projects in our Central East System and higher utilization at some of the refineries we serve.”
Barron went on to say, “These positive developments, in combination with a decrease in operating expenses across both segments, allowed us to deliver solid results in 2016 despite significantly decreased Eagle Ford crude oil throughputs during the year. In fact, NuStar has now covered its distribution for 11 consecutive quarters and three consecutive years, which is a testament to the strength of our balanced and diversified asset base and the resilience of our employees.
“And the future looks bright as we will benefit from the additional 2.5
million barrels of storage at our
Fourth Quarter 2016 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/9594wmas 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. 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. and Subsidiaries Consolidated Financial Information (Unaudited, Thousands of Dollars, Except Unit and Per Unit Data) |
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Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Statement of Income Data: | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Service revenues | $ | 268,438 | $ | 281,025 | $ | 1,083,165 | $ | 1,114,153 | ||||||||||||
Product sales | 203,319 | 183,894 | 673,517 | 969,887 | ||||||||||||||||
Total revenues | 471,757 | 464,919 | 1,756,682 | 2,084,040 | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of product sales | 191,917 | 169,500 | 633,653 | 907,574 | ||||||||||||||||
Operating expenses | 113,052 | 117,612 | 448,367 | 473,031 | ||||||||||||||||
General and administrative expenses | 25,418 | 27,096 | 98,817 | 102,521 | ||||||||||||||||
Depreciation and amortization expense | 55,997 | 52,687 | 216,736 | 210,210 | ||||||||||||||||
Total costs and expenses | 386,384 | 366,895 | 1,397,573 | 1,693,336 | ||||||||||||||||
Operating income | 85,373 | 98,024 | 359,109 | 390,704 | ||||||||||||||||
Interest expense, net | (34,976 | ) | (33,559 | ) | (138,350 | ) | (131,868 | ) | ||||||||||||
Other (expense) income, net | (58,773 | ) | (70 | ) | (58,783 | ) | 61,822 | |||||||||||||
(Loss) income from continuing operations before income tax expense | (8,376 | ) | 64,395 | 161,976 | 320,658 | |||||||||||||||
Income tax expense | 2,680 | 4,915 | 11,973 | 14,712 | ||||||||||||||||
(Loss) income from continuing operations | (11,056 | ) | 59,480 | 150,003 | 305,946 | |||||||||||||||
Income from discontinued operations, net of tax | — | — | — | 774 | ||||||||||||||||
Net (loss) income | $ | (11,056 | ) | $ | 59,480 | $ | 150,003 | $ | 306,720 | |||||||||||
Net (loss) income applicable to common limited partners | $ | (24,342 | ) | $ | 47,485 | $ | 99,068 | $ | 257,366 | |||||||||||
Basic and diluted net (loss) income per common unit: | ||||||||||||||||||||
Continuing operations | $ | (0.31 | ) | $ | 0.61 | $ | 1.27 | $ | 3.29 | |||||||||||
Discontinued operations | — | — | — | 0.01 | ||||||||||||||||
Total | $ | (0.31 | ) | $ | 0.61 | $ | 1.27 | $ | 3.30 | |||||||||||
Basic weighted-average common units outstanding | 78,514,363 | 77,886,078 | 78,080,484 | 77,886,078 | ||||||||||||||||
Other Data (Note 1): | ||||||||||||||||||||
EBITDA from continuing operations | $ | 82,597 | $ | 150,641 | $ | 517,062 | $ | 662,736 | ||||||||||||
DCF from continuing operations available to
common limited partners |
$ | 87,697 | $ | 89,627 | $ | 365,157 | $ | 377,907 | ||||||||||||
December 31, | ||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Total debt | $ | 3,068,364 | $ | 3,139,612 | ||||||||||||||||
Partners’ equity | $ | 1,611,617 | $ | 1,609,844 | ||||||||||||||||
NuStar Energy L.P. and Subsidiaries Consolidated Financial Information - Continued (Unaudited, Thousands of Dollars, Except Barrel Data) |
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Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Pipeline: | ||||||||||||||||||||
Refined products pipelines throughput (barrels/day) | 546,878 | 551,246 | 535,946 | 522,146 | ||||||||||||||||
Crude oil pipelines throughput (barrels/day) | 374,170 | 435,007 | 392,181 | 471,632 | ||||||||||||||||
Total throughput (barrels/day) | 921,048 | 986,253 | 928,127 | 993,778 | ||||||||||||||||
Throughput revenues | $ | 122,721 | $ | 130,492 | $ | 485,650 | $ | 508,522 | ||||||||||||
Operating expenses | 37,364 | 40,081 | 147,858 | 153,222 | ||||||||||||||||
Depreciation and amortization expense | 23,858 | 22,058 | 89,554 | 84,951 | ||||||||||||||||
Segment operating income | $ | 61,499 | $ | 68,353 | $ | 248,238 | $ | 270,349 | ||||||||||||
Storage: | ||||||||||||||||||||
Throughput (barrels/day) | 789,369 | 888,033 | 789,065 | 899,606 | ||||||||||||||||
Throughput terminal revenues | $ | 29,279 | $ | 31,762 | $ | 117,586 | $ | 130,127 | ||||||||||||
Storage terminal revenues | 118,723 | 123,067 | 492,456 | 494,781 | ||||||||||||||||
Total revenues | 148,002 | 154,829 | 610,042 | 624,908 | ||||||||||||||||
Operating expenses | 69,695 | 70,185 | 276,578 | 290,322 | ||||||||||||||||
Depreciation and amortization expense | 30,002 | 28,541 | 118,663 | 116,768 | ||||||||||||||||
Segment operating income | $ | 48,305 | $ | 56,103 | $ | 214,801 | $ | 217,818 | ||||||||||||
Fuels Marketing: | ||||||||||||||||||||
Product sales and other revenue | $ | 205,435 | $ | 185,497 | $ | 681,934 | $ | 976,216 | ||||||||||||
Cost of product sales | 194,650 | 172,820 | 645,355 | 922,906 | ||||||||||||||||
Gross margin | 10,785 | 12,677 | 36,579 | 53,310 | ||||||||||||||||
Operating expenses | 7,661 | 9,926 | 33,173 | 39,803 | ||||||||||||||||
Segment operating income | $ | 3,124 | $ | 2,751 | $ | 3,406 | $ | 13,507 | ||||||||||||
Consolidation and Intersegment Eliminations: | ||||||||||||||||||||
Revenues | $ | (4,401 | ) | $ | (5,899 | ) | $ | (20,944 | ) | $ | (25,606 | ) | ||||||||
Cost of product sales | (2,733 | ) | (3,320 | ) | (11,702 | ) | (15,332 | ) | ||||||||||||
Operating expenses | (1,668 | ) | (2,580 | ) | (9,242 | ) | (10,316 | ) | ||||||||||||
Total | $ | — | $ | 1 | $ | — | $ | 42 | ||||||||||||
Consolidated Information: | ||||||||||||||||||||
Revenues | $ | 471,757 | $ | 464,919 | $ | 1,756,682 | $ | 2,084,040 | ||||||||||||
Cost of product sales | 191,917 | 169,500 | 633,653 | 907,574 | ||||||||||||||||
Operating expenses | 113,052 | 117,612 | 448,367 | 473,031 | ||||||||||||||||
Depreciation and amortization expense | 53,860 | 50,599 | 208,217 | 201,719 | ||||||||||||||||
Segment operating income | 112,928 | 127,208 | 466,445 | 501,716 | ||||||||||||||||
General and administrative expenses | 25,418 | 27,096 | 98,817 | 102,521 | ||||||||||||||||
Other depreciation and amortization expense | 2,137 | 2,088 | 8,519 | 8,491 | ||||||||||||||||
Consolidated operating income | $ | 85,373 | $ | 98,024 | $ | 359,109 | $ | 390,704 | ||||||||||||
NuStar Energy L.P. and Subsidiaries Consolidated Financial Information - Continued (Unaudited, Thousands of Dollars, Except Ratio Data) |
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Note 1: NuStar Energy L.P. utilizes financial measures, such as earnings before interest, taxes, depreciation and amortization (EBITDA), distributable cash flow (DCF) and distribution coverage ratio, which are not defined in U.S. generally accepted accounting principles (GAAP). Management believes these financial measures provide useful information to investors and other external users of our financial information because (i) they provide additional information about the operating performance of the partnership’s assets and the cash the business is generating and (ii) investors and other external users of our financial statements benefit from having access to the same financial measures being utilized by management and our board of directors when making financial, operational, compensation and planning decisions. |
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 as 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, or for any period presented reflecting discontinued operations, income from continuing operations. 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 our non-GAAP financial measures: |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(Loss) income from continuing operations | $ | (11,056 | ) | $ | 59,480 | $ | 150,003 | $ | 305,946 | |||||||||||
Interest expense, net | 34,976 | 33,559 | 138,350 | 131,868 | ||||||||||||||||
Income tax expense | 2,680 | 4,915 | 11,973 | 14,712 | ||||||||||||||||
Depreciation and amortization expense | 55,997 | 52,687 | 216,736 | 210,210 | ||||||||||||||||
EBITDA from continuing operations | 82,597 | 150,641 | 517,062 | 662,736 | ||||||||||||||||
Interest expense, net | (34,976 | ) | (33,559 | ) | (138,350 | ) | (131,868 | ) | ||||||||||||
Reliability capital expenditures | (12,321 | ) | (17,936 | ) | (38,155 | ) | (40,002 | ) | ||||||||||||
Income tax expense | (2,680 | ) | (4,915 | ) | (11,973 | ) | (14,712 | ) | ||||||||||||
Distributions from joint venture | — | — | — | 2,500 | ||||||||||||||||
Mark-to-market impact of hedge transactions (a) | 3,825 | (1,120 | ) | 10,317 | (5,651 | ) | ||||||||||||||
Unit-based compensation (b) | 2,120 | — | 5,619 | — | ||||||||||||||||
Other items (c) | 62,018 | 9,282 | 71,921 | (44,032 | ) | |||||||||||||||
DCF from continuing operations | $ | 100,583 | $ | 102,393 | $ | 416,441 | $ | 428,971 | ||||||||||||
Less DCF from continuing operations available to
general partner |
12,886 | 12,766 | 51,284 | 51,064 | ||||||||||||||||
DCF from continuing operations available to common limited partners |
$ | 87,697 | $ | 89,627 | $ | 365,157 | $ | 377,907 | ||||||||||||
Distributions applicable to common limited partners | $ | 86,085 | $ | 85,285 | $ | 342,598 | $ | 341,140 | ||||||||||||
Distribution coverage ratio (d) |
1.02x |
1.05x | 1.07x | 1.11x | ||||||||||||||||
(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. |
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(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. |
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(c) |
Other items primarily consist of (i) adjustments for throughput deficiency payments and construction reimbursements for all periods presented, (ii) a $58.7 million non-cash impairment charge on the Axeon term loan in the fourth quarter of 2016 and (iii) a ($56.3) million non-cash gain and insurance proceeds of $7.8 million associated with the Linden terminal acquisition in 2015. |
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(d) |
Distribution coverage ratio is calculated by dividing DCF from continuing operations available to common limited partners by distributions applicable to common limited partners. |
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View source version on businesswire.com: http://www.businesswire.com/news/home/20170131005510/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
website: http://www.nustarenergy.com