News Release
NuStar Energy L.P. Reports Higher than Anticipated Third Quarter 2011 Earnings
Third Quarter Earnings Per Unit and EBITDA results higher than 2010
SAN ANTONIO, Oct 28, 2011 (BUSINESS WIRE) -- NuStar Energy L.P. (NYSE: NS) today announced its third quarter net income applicable to limited partners was $59.8 million, or $0.92 per unit, compared to $58.4 million, or $0.90 per unit, earned in the third quarter of 2010. For the nine months ended September 30, 2011, net income applicable to limited partners was $160.9 million, or $2.49 per unit, compared to $159.0 million, or $2.55 per unit, for the nine months ended September 30, 2010.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $138.8 million for the third quarter of 2011 compared to $131.0 million for the third quarter of 2010. For the nine months ended September 30, 2011, EBITDA was $391.7 million, higher than the $369.2 million for the nine months ended September 30, 2010.
Distributable cash flow available to limited partners for the third quarter was $80.3 million, or $1.24 per unit, compared to 2010 third quarter distributable cash flow of $84.0 million, or $1.30 per unit. For the nine months ended September 30, 2011, distributable cash flow available to limited partners was $244.8 million, or $3.79 per unit, compared to $214.0 million, or $3.40 per unit for the nine months ended September 30, 2010.
NuStar also announced that its board of directors has declared a distribution of $1.095 per unit, which would equate to $4.38 per unit on an annual basis. The third quarter 2011 distribution will be paid on November 14, 2011, to holders of record as of November 8, 2011. Distributable cash flow available to limited partners covers the distribution to the limited partners by 1.13 times for the third quarter of 2011.
"Our third quarter results were better than we expected when we provided guidance in late July," said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC. "Higher than projected revenues in our transportation segment, reduced operating expenses in both our transportation and storage segments and lower-than-expected administrative expenses were the primary causes of our higher-than-anticipated results."
Anastasio added, "Improved results in our transportation and storage segments and lower administrative expenses contributed to third quarter EBITDA results being higher than the same quarter in 2010. Increased tariffs and new revenue streams generated from two Eagle Ford-related projects brought on-line this year more than offset lower throughput volumes in our transportation segment. Our storage segment continues to benefit from internal growth projects completed late last year, while lower compensation-related costs reduced our administrative expenses quarter over quarter."
Internal Growth Project Update
"Our internal growth program is progressing nicely, and I am pleased to report that during the third quarter we completed a 3.2 million barrel storage tank expansion project at our St. James, LA terminal facility. This expansion project increases the storage capacity of the facility to over eight million barrels, making the St. James facility our largest domestic terminal. Multi-year contracts, which are already generating EBITDA, are currently in place for all 3.2 million barrels of new storage," Anastasio stated.
"In addition, during September we reactivated and reversed a previously idle eight-inch refined products pipeline that now gives us capability to transport Eagle Ford crude and condensate to Valero Energy's Corpus Christi refinery. We also plan to construct a new 12-inch pipeline that will connect existing pipeline segments and will move crude oil from Corpus Christi to Valero's Three Rivers refinery. This new pipeline should be in service in the second quarter of 2012," said Anastasio.
Full-Year 2011 Guidance
In regard to the full-year outlook for NuStar Energy L.P., Anastasio said, "We expect NuStar's 2011 EBITDA to be comparable to 2010. We expect EBITDA in our storage segment to be $20 to $30 million higher than 2010, as this segment should continue to benefit from the completion of internal growth projects. EBITDA in our transportation segment should be $5 to $15 million lower due to reduced throughputs caused by the refinery turnaround activity of our customers and changing market conditions.
"With regard to the margin-based asphalt and fuels marketing segment, EBITDA should be comparable to the $111 million of EBITDA earned in 2010. Projected earnings from our April 2011 San Antonio refinery acquisition and improved results in our fuels marketing operations are expected to be offset by weak margins in our asphalt operations."
A conference call with management is scheduled for 11:00 a.m. ET (10:00 a.m. CT) today, October 28, 2011, to discuss the financial and operational results for the third quarter of 2011. Investors interested in listening to the presentation may call 800/622-7620, passcode 13712546. International callers may access the presentation by dialing 706/645-0327, passcode 13712546. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 13712546. A live broadcast of the conference call will also be available on the company's Web site at http://www.nustarenergy.com.
NuStar Energy L.P. is a publicly traded, limited partnership based in San Antonio, with 8,417 miles of pipeline; 90 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; and two asphalt refineries and a fuels refinery with a combined throughput capacity of 118,500 barrels per day. The partnership's combined system has over 97 million barrels of storage capacity. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey. For more information, visit NuStar Energy L.P.'s Web site at http://www.nustarenergy.com.
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's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals and corporations, as applicable. Nominees, and not NuStar, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements regarding future events.All forward-looking statements are based on the partnership and company's beliefs as well as assumptions made by and information currently available to the partnership and company.These statements reflect the partnership and company'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 NuStar GP Holdings, LLC's 2010 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.
| NuStar Energy L.P. and Subsidiaries | ||||||||||||||||||||||
| Consolidated Financial Information | ||||||||||||||||||||||
| (Unaudited, Thousands of Dollars, Except Unit Data and Per Unit Data) | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
| Statement of Income Data: | ||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||
| Services revenues | $ | 210,681 | $ | 201,390 | $ | 608,689 | $ | 585,772 | ||||||||||||||
| Product sales | 1,613,669 | 936,989 | 4,039,461 | 2,623,077 | ||||||||||||||||||
| Total revenues | 1,824,350 | 1,138,379 | 4,648,150 | 3,208,849 | ||||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||
| Cost of product sales | 1,535,609 | 860,942 | 3,797,424 | 2,422,751 | ||||||||||||||||||
| Operating expenses | 135,615 | 121,748 | 390,480 | 363,028 | ||||||||||||||||||
| General and administrative expenses | 17,731 | 26,860 | 69,833 | 76,324 | ||||||||||||||||||
| Depreciation and amortization expense | 42,418 | 38,539 | 124,354 | 114,653 | ||||||||||||||||||
| Total costs and expenses | 1,731,373 | 1,048,089 | 4,382,091 | 2,976,756 | ||||||||||||||||||
| Operating income | 92,977 | 90,290 | 266,059 | 232,093 | ||||||||||||||||||
| Equity earnings from joint venture | 2,599 | 2,454 | 6,997 | 7,571 | ||||||||||||||||||
| Interest expense, net | (21,565 | ) | (20,583 | ) | (62,644 | ) | (58,059 | ) | ||||||||||||||
| Other (expense) income, net | 767 | (235 | ) | (5,699 | ) | 14,882 | ||||||||||||||||
| Income before income tax expense | 74,778 | 71,926 | 204,713 | 196,487 | ||||||||||||||||||
| Income tax expense | 4,497 | 3,616 | 13,311 | 9,052 | ||||||||||||||||||
| Net income | $ | 70,281 | $ | 68,310 | $ | 191,402 | $ | 187,435 | ||||||||||||||
| Net income applicable to limited partners | $ | 59,783 | $ | 58,375 | $ | 160,932 | $ | 158,950 | ||||||||||||||
| Net income per unit applicable to limited partners | $ | 0.92 | $ | 0.90 | $ | 2.49 | $ | 2.55 | ||||||||||||||
| Weighted average limited partner units outstanding | 64,612,423 | 64,610,549 | 64,611,181 | 62,386,373 | ||||||||||||||||||
| EBITDA (Note 1) | $ | 138,761 | $ | 131,048 | $ | 391,711 | $ | 369,199 | ||||||||||||||
| Distributable cash flow (Note 1) | $ | 90,970 | $ | 94,202 | $ | 276,524 | $ | 243,372 | ||||||||||||||
| September 30, | September 30, | December 31, | ||||||||||||||||||||
| 2011 | 2010 | 2010 | ||||||||||||||||||||
| Balance Sheet Data: | ||||||||||||||||||||||
| Debt, including current portion (a) | $ | 2,525,655 | $ | 1,990,507 | $ | 2,137,080 | ||||||||||||||||
| Partners' equity (b) | 2,525,049 | 2,690,235 | 2,702,700 | |||||||||||||||||||
| Debt-to-capitalization ratio (a) / ((a)+(b)) | 50.0 | % | 42.5 | % | 44.2 | % | ||||||||||||||||
| NuStar Energy L.P. and Subsidiaries | ||||||||||||||||||||||
| Consolidated Financial Information - Continued | ||||||||||||||||||||||
| (Unaudited, Thousands of Dollars, Except Barrel Data) | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
| Segment Data: | ||||||||||||||||||||||
| Storage: | ||||||||||||||||||||||
| Throughput (barrels/day) | 721,618 | 673,121 | 679,031 | 666,635 | ||||||||||||||||||
| Throughput revenues | $ | 21,743 | $ | 19,139 | $ | 58,388 | $ | 56,085 | ||||||||||||||
| Storage lease revenues | 120,146 | 111,998 | 359,820 | 330,493 | ||||||||||||||||||
| Total revenues | 141,889 | 131,137 | 418,208 | 386,578 | ||||||||||||||||||
| Operating expenses | 71,386 | 66,153 | 213,230 | 198,186 | ||||||||||||||||||
| Depreciation and amortization expense | 21,725 | 19,349 | 64,656 | 57,004 | ||||||||||||||||||
| Segment operating income | $ | 48,778 | $ | 45,635 | $ | 140,322 | $ | 131,388 | ||||||||||||||
| Transportation: | ||||||||||||||||||||||
| Refined products pipelines throughput (barrels/day) | 523,279 | 526,825 | 509,354 | 529,380 | ||||||||||||||||||
| Crude oil pipelines throughput (barrels/day) | 319,103 | 382,845 | 304,554 | 381,606 | ||||||||||||||||||
| Total throughput (barrels/day) | 842,382 | 909,670 | 813,908 | 910,986 | ||||||||||||||||||
| Revenues | $ | 81,899 | $ | 80,597 | $ | 226,471 | $ | 232,817 | ||||||||||||||
| Operating expenses | 30,796 | 30,488 | 85,381 | 88,784 | ||||||||||||||||||
| Depreciation and amortization expense | 12,855 | 12,597 | 38,282 | 38,029 | ||||||||||||||||||
| Segment operating income | $ | 38,248 | $ | 37,512 | $ | 102,808 | $ | 106,004 | ||||||||||||||
| Asphalt and fuels marketing: | ||||||||||||||||||||||
| Product sales | $ | 1,618,693 | $ | 937,074 | $ | 4,049,079 | $ | 2,625,994 | ||||||||||||||
| Cost of product sales | 1,545,340 | 864,904 | 3,821,379 | 2,438,703 | ||||||||||||||||||
| Gross margin | 73,353 | 72,170 | 227,700 | 187,291 | ||||||||||||||||||
| Operating expenses | 41,862 | 31,575 | 113,506 | 96,924 | ||||||||||||||||||
| Depreciation and amortization expense | 6,073 | 5,138 | 16,505 | 15,254 | ||||||||||||||||||
| Segment operating income | $ | 25,418 | $ | 35,457 | $ | 97,689 | $ | 75,113 | ||||||||||||||
| Consolidation and intersegment eliminations: | ||||||||||||||||||||||
| Revenues | $ | (18,131 | ) | $ | (10,429 | ) | $ | (45,608 | ) | $ | (36,540 | ) | ||||||||||
| Cost of product sales | (9,731 | ) | (3,962 | ) | (23,955 | ) | (15,952 | ) | ||||||||||||||
| Operating expenses | (8,429 | ) | (6,468 | ) | (21,637 | ) | (20,866 | ) | ||||||||||||||
| Total | $ | 29 | $ | 1 | $ | (16 | ) | $ | 278 | |||||||||||||
| Consolidated Information: | ||||||||||||||||||||||
| Revenues | $ | 1,824,350 | $ | 1,138,379 | $ | 4,648,150 | $ | 3,208,849 | ||||||||||||||
| Cost of product sales | 1,535,609 | 860,942 | 3,797,424 | 2,422,751 | ||||||||||||||||||
| Operating expenses | 135,615 | 121,748 | 390,480 | 363,028 | ||||||||||||||||||
| Depreciation and amortization expense | 40,653 | 37,084 | 119,443 | 110,287 | ||||||||||||||||||
| Segment operating income | 112,473 | 118,605 | 340,803 | 312,783 | ||||||||||||||||||
| General and administrative expenses | 17,731 | 26,860 | 69,833 | 76,324 | ||||||||||||||||||
| Other depreciation and amortization expense | 1,765 | 1,455 | 4,911 | 4,366 | ||||||||||||||||||
| Consolidated operating income | $ | 92,977 | $ | 90,290 | $ | 266,059 | $ | 232,093 | ||||||||||||||
| NuStar Energy L.P. and Subsidiaries | ||
| Consolidated Financial Information - Continued | ||
| (Unaudited, Thousands of Dollars, Except Per Unit Data) | ||
| Notes: | ||
| 1. | NuStar Energy L.P. utilizes two financial measures, EBITDA and distributable cash flow, which are not defined in United States generally accepted accounting principles. 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. Neither EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they 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 United States generally accepted accounting principles. | |
| The following is a reconciliation of net income to EBITDA and distributable cash flow: | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
| Net income | $ | 70,281 | $ | 68,310 | $ | 191,402 | $ | 187,435 | ||||||||||||||
| Plus interest expense, net | 21,565 | 20,583 | 62,644 | 58,059 | ||||||||||||||||||
| Plus income tax expense | 4,497 | 3,616 | 13,311 | 9,052 | ||||||||||||||||||
| Plus depreciation and amortization expense | 42,418 | 38,539 | 124,354 | 114,653 | ||||||||||||||||||
| EBITDA | 138,761 | 131,048 | 391,711 | 369,199 | ||||||||||||||||||
| Less equity earnings from joint ventures | (2,599 | ) | (2,454 | ) | (6,997 | ) | (7,571 | ) | ||||||||||||||
| Less interest expense, net | (21,565 | ) | (20,583 | ) | (62,644 | ) | (58,059 | ) | ||||||||||||||
| Less reliability capital expenditures | (15,104 | ) | (13,841 | ) | (41,257 | ) | (38,327 | ) | ||||||||||||||
| Less income tax expense | (4,497 | ) | (3,616 | ) | (13,311 | ) | (9,052 | ) | ||||||||||||||
| Plus distributions from joint venture | 2,668 | 2,450 | 9,397 | 7,500 | ||||||||||||||||||
| Plus other non-cash items | - | - | 5,093 | - | ||||||||||||||||||
| Mark-to-market impact on derivative activity (a) | (9,944 | ) | 1,198 | (8,718 | ) | (20,318 | ) | |||||||||||||||
| Contingent loss adjustment | 3,250 | - | 3,250 | - | ||||||||||||||||||
| Distributable cash flow | $ | 90,970 | $ | 94,202 | $ | 276,524 | $ | 243,372 | ||||||||||||||
| EBITDA | $ | 138,761 | $ | 131,048 | $ | 391,711 | $ | 369,199 | ||||||||||||||
| EBITDA attributable to noncontrolling interest | 100 | - | 386 | - | ||||||||||||||||||
| EBITDA attributable to NuStar Energy L.P. | $ | 138,661 | $ | 131,048 | $ | 391,325 | $ | 369,199 | ||||||||||||||
| Distributable cash flow | $ | 90,970 | $ | 94,202 | $ | 276,524 | $ | 243,372 | ||||||||||||||
| Distributable cash flow attributable to noncontrolling interest | 87 | - | 388 | - | ||||||||||||||||||
| Distributable cash flow attributable to NuStar Energy L.P. | $ | 90,883 | $ | 94,202 | $ | 276,136 | $ | 243,372 | ||||||||||||||
| General partner's interest in distributable cash flow | 10,600 | 10,160 | 31,350 | 29,371 | ||||||||||||||||||
| Limited partners' interest in distributable cash flow | $ | 80,283 | $ | 84,042 | $ | 244,786 | $ | 214,001 | ||||||||||||||
| Distributable cash flow per limited partner unit | $ | 1.24 | $ | 1.30 | $ | 3.79 | $ | 3.40 | ||||||||||||||
| (a) | Distributable cash flow excludes the impact of unrealized mark-to-market gains and losses that arise from valuing certain derivative contracts, as well as qualifying hedged inventory. The gain or loss associated with these contracts is realized in distributable cash flow when the contracts are settled. |
SOURCE: NuStar Energy L.P.
NuStar Energy, L.P., San Antonio
Investors, Chris Russell, Vice President
Investor Relations: 210-918-3507
or
Media, Mary Rose Brown, Senior Vice President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com
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210-918-INVR (4687)
