UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 3, 2022
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 3, 2022, NuStar Energy L.P., a Delaware limited partnership, issued a press release announcing financial results for the quarter ended September 30, 2022. A copy of the press release announcing the financial results is furnished with this report as Exhibit 99.01 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Exhibit | |||||||
Press Release dated November 3, 2022. | ||||||||
| Exhibit 104 | Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101 | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NUSTAR ENERGY L.P. | ||||||||||||||
| By: | Riverwalk Logistics, L.P. | |||||||||||||
| its general partner | ||||||||||||||
| By: | NuStar GP, LLC | |||||||||||||
| its general partner | ||||||||||||||
Date: November 3, 2022 | By: | /s/ Amy L. Perry | ||||||||||||
| Name: | Amy L. Perry | |||||||||||||
| Title: | Executive Vice President-Strategic Development and General Counsel | |||||||||||||
Exhibit 99.01
NuStar Energy L.P. Reports Solid Third Quarter of 2022 Earnings Results
Permian Crude System Volumes Hit Record-Breaking Average of 580,000 Barrels Per Day/Expect to Exit 2022 at Approximately 600,000 Barrels Per Day
Refined Product Volumes Still Tracking at Pre-Pandemic Levels
West Coast Renewable Fuels Network Continues to Grow with Two New Renewable Fuel Projects
Debt Metrics Continue to Improve Significantly
Full-Year Guidance/Positive Update on Optimization Initiative
SAN ANTONIO, November 3, 2022 - NuStar Energy L.P. (NYSE: NS) today announced solid results for the third quarter of 2022 fueled by record-breaking volumes in its Permian Crude System.
NuStar reported net income of $60 million for the third quarter of 2022, or $0.20 per unit, compared to a net loss of $125 million, or $1.48 per unit, for the third quarter of 2021.
NuStar also reported earnings before interest, taxes, depreciation and amortization (EBITDA) of $178 million for the third quarter of 2022, compared to third quarter of 2021 adjusted EBITDA of $177 million.
“On an ‘apples-to-apples’ basis, excluding the contribution of the Eastern U.S. terminals we sold in October of 2021, and the Point Tupper terminal we sold in April of this year, our third quarter 2022 EBITDA increased $9.3 million, a 6 percent increase compared to adjusted EBITDA in the third quarter of 2021,” said NuStar Chairman and CEO Brad Barron.
Distributable cash flow (DCF) available to common limited partners was $93 million for the third quarter of 2022, compared to DCF of $92 million in the third quarter of 2021. The distribution coverage ratio to common limited partners was a strong 2.12 times for the third quarter of 2022.
Permian Crude System Hits Record-Breaking Volumes
NuStar’s Permian Crude System’s volumes hit another high in the third quarter of 2022 with a record-breaking average of 580,000 barrels per day (BPD), an increase of 15 percent over third quarter of 2021 volumes and an increase of 11 percent over the second quarter of 2022.
“The steady, strong volume growth we have seen in 2022 is a testament to our producers and to the quality and strength of our acreage,” said Barron. “We now expect to exit 2022 at around 600,000 BPD, or about 15 percent above our 2021 exit.”
Refined Product Volumes Still Tracking at Pre-Pandemic Levels
Barron stated that while a planned turnaround at a customer refinery reduced NuStar’s third quarter of 2022 volumes compared to the third quarter of 2021, its refined product volumes continue to track at pre-pandemic levels, which he said reflects the strength of its assets and the stability of demand in the markets NuStar serves across the mid-Continent and throughout Texas.
Barron added, “In addition, our Northern Mexico refined products supply system continues to perform well, with third quarter of 2022 throughput up 26 percent compared to the third quarter of 2021. And our
Valley refined product pipeline throughputs were also up, with third quarter of 2022 throughput 14 percent above the third quarter of 2021.”
Corpus Christi Crude System Averaging Above Minimum Volume Commitments/Fuels Marketing Segment Performing Well
Barron commented that throughputs on NuStar’s Corpus Christi Crude System averaged over 341,000 BPD in the third quarter of 2022, which is above its minimum volume commitments for the system.
“We are encouraged by the continued growth in October, as our average volumes rose to almost 390,000 BPD for the month,” said Barron.
Barron also noted that operating income and EBITDA in NuStar’s Fuels Marketing Segment were $9 million in the third quarter of 2022, an $8 million increase compared to the third quarter of 2021, largely due to stronger margins.
West Coast Renewable Fuels Network Continues to Grow with Two Renewable Fuel Projects
Barron once again highlighted the growth of NuStar’s West Coast Renewable Fuels Network, which plays an integral role in facilitating the low-carbon renewable fuels that significantly reduce emissions from transportation.
“Our West Coast region’s revenues were up 20 percent in the third quarter of 2022 compared to the third quarter of 2021. And we are pleased to report that two new renewable fuel projects were brought into service at the end of the last quarter, which increased our renewable diesel storage capacity and augmented our ethanol transportation logistics capabilities at our Stockton, California terminal.
“Those two projects should further solidify the significant role that NuStar plays in facilitating California’s transition to low-carbon renewable fuels, where we already handle 77 percent of California’s sustainable aviation fuel; 19 percent of the state’s renewable diesel volumes; 9 percent of its ethanol; and 5 percent of its biodiesel,” said Barron.
Debt Metrics Continue to Improve Significantly
NuStar Executive Vice President and Chief Financial Officer Tom Shoaf gave an update on the company’s continued progress in reducing its debt and building its financial strength and flexibility.
“At the end of the third quarter of 2022, our total debt balance was $3.1 billion, and by continuing to pay down our revolving credit facility balance last quarter, we increased our facility availability to $993 million of the facility’s $1.0 billion capacity,” said Shoaf.
Shoaf continued, “Thanks to the progress we have made in reducing our debt balance, our interest expense in the third quarter of 2022 was $1 million lower than in the third quarter of 2021, despite higher interest rates on our variable rate debt.
“We ended the third quarter of 2022 with a debt-to-EBITDA ratio of 3.79 times, which is substantially improved from our ratio of above 4 times in the third quarter of 2021, and also improved from our ratio of 3.93 times in the second quarter of 2022.
Full-Year Guidance/Positive Update on Optimization Initiative
Shoaf also gave full-year guidance for net income and EBITDA, as well as strategic capital and reliability capital for 2022.
“We expect to generate full-year 2022 net income in the range of $193 to $206 million and full-year 2022 adjusted EBITDA in the range of $700 to $730 million,” said Shoaf.
He also noted that NuStar now plans to spend $105 to $125 million in strategic capital in 2022.
“We still expect to allocate almost $60 million to growing our Permian system and plan to spend about $10 million to expand our West Coast Renewable Fuels Network,” said Shoaf. “In addition, we now expect to spend between $30 and $40 million on reliability in 2022.”
Barron then provided an update on NuStar’s optimization initiative that was kicked off earlier this year with the goal of making meaningful reductions in NuStar’s expenses and capital spending to increase the company’s free cash flow in 2022 and beyond.
“In August, we told you we had identified almost $60 million in reductions across 2022 and 2023,” said Barron. “And I am happy to report that total is now up to almost $100 million. We have successfully reduced our full-year 2022 capital spending and expenses by over $40 million and our total 2023 spending and expenses by over $50 million. Thanks to our optimization initiative, we have been able to mitigate the impact of 2022’s historic inflation rate and maximize our free cash flows.
“Because of the meaningful progress we have made, we are now positioned to accelerate our time frame for addressing the Series D preferred units by completing the redemption in 2024, which is several years ahead of our previously scheduled timeframe. We are currently in discussions with the holders to repurchase approximately one-third of the Series D preferred units by the end of this year. We then plan to redeem approximately another third of them in 2023, and complete the redemption in 2024, while continuing to target our debt metric at about 4 times. This redemption is another important step in our ongoing optimization and will meaningfully increase our cash flow over the next few years.”
Barron closed by mentioning his appreciation for Bill Greehey, who stepped down from his position as NuStar’s chairman of the board last week to become chairman emeritus.
“I have had the privilege of working for Bill for over 20 years, and I am deeply grateful for the opportunity to learn from him and bear witness to his vision and leadership,” said Barron. “Here at NuStar, we are thankful to be able to carry forward the strong corporate culture Bill established. Because of Bill, we have an ethical culture that prioritizes safety, environmental responsibility, fiscal stewardship and giving back to our communities.
“We are committed to working hard to demonstrate our gratitude to Bill by nourishing the corporate culture he built and by generating long-term, stable value for Bill and all of our unitholders.”
Conference Call Details
A conference call with management is scheduled for 9:00 a.m. CT on Thursday, November 3, 2022. The partnership plans to discuss the third quarter 2022 earnings results, which will be released earlier that day. Persons interested in Q&A participation may pre-register for the conference call and obtain a dial-in number and passcode at https://register.vevent.com/register/BI1554769b53db4165b0ca04dc6997524b. Persons interested in listen-only participation may access the conference call directly at https://
edge.media-server.com/mmc/p/cignyz9w. A recorded version will be available under the same link two hours after the conclusion of the conference call.
The conference call may also be accessed through the “Investors” section of NuStar Energy L.P.’s website at https://investor.nustarenergy.com.
NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, Texas, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar currently has approximately 10,000 miles of pipeline and 63 terminal and storage facilities that store and distribute crude oil, refined products, renewable fuels, ammonia and specialty liquids. The partnership’s combined system has approximately 49 million barrels of storage capacity, and NuStar has operations in the United States and Mexico. For more information, visit NuStar Energy L.P.’s website at www.nustarenergy.com and its Sustainability page at https://sustainability.nustarenergy.com/.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes, and the related conference call will include, forward-looking statements regarding future events and expectations, such as NuStar’s future performance, plans and expenditures. All forward-looking statements are based on NuStar’s beliefs as well as assumptions made by and information currently available to NuStar. These statements reflect NuStar’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 2021 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements. Except as required by law, NuStar does not intend, or undertake any obligation, to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit, Per Unit and Ratio Data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Statement of Income Data: | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Service revenues | $ | 277,380 | $ | 296,473 | $ | 820,752 | $ | 869,144 | |||||||||||||||
| Product sales | 135,863 | 115,872 | 432,511 | 331,940 | |||||||||||||||||||
| Total revenues | 413,243 | 412,345 | 1,253,263 | 1,201,084 | |||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Costs associated with service revenues: | |||||||||||||||||||||||
Operating expenses | 91,286 | 100,143 | 272,636 | 287,923 | |||||||||||||||||||
| Depreciation and amortization expense | 63,140 | 66,126 | 188,683 | 203,508 | |||||||||||||||||||
| Total costs associated with service revenues | 154,426 | 166,269 | 461,319 | 491,431 | |||||||||||||||||||
| Costs associated with product sales | 117,324 | 107,047 | 378,217 | 300,801 | |||||||||||||||||||
| Goodwill impairment loss | — | 34,060 | — | 34,060 | |||||||||||||||||||
| Other impairment losses | — | 154,908 | 46,122 | 154,908 | |||||||||||||||||||
| General and administrative expenses | 27,676 | 27,365 | 82,656 | 79,334 | |||||||||||||||||||
| Other depreciation and amortization expense | 1,935 | 1,881 | 5,582 | 5,841 | |||||||||||||||||||
| Total costs and expenses | 301,361 | 491,530 | 973,896 | 1,066,375 | |||||||||||||||||||
| Operating income (loss) | 111,882 | (79,185) | 279,367 | 134,709 | |||||||||||||||||||
| Interest expense, net | (52,294) | (53,513) | (153,053) | (162,211) | |||||||||||||||||||
| Other income, net | 1,475 | 8,450 | 7,158 | 11,744 | |||||||||||||||||||
| Income (loss) before income tax expense | 61,063 | (124,248) | 133,472 | (15,758) | |||||||||||||||||||
| Income tax expense | 1,430 | 685 | 2,328 | 3,535 | |||||||||||||||||||
| Net income (loss) | $ | 59,633 | $ | (124,933) | $ | 131,144 | $ | (19,293) | |||||||||||||||
| Basic and diluted net income (loss) per common unit | $ | 0.20 | $ | (1.48) | $ | 0.18 | $ | (1.18) | |||||||||||||||
| Basic and diluted weighted-average common units outstanding | 110,310,921 | 109,532,381 | 110,265,359 | 109,522,849 | |||||||||||||||||||
Other Data (Note 1): | |||||||||||||||||||||||
| Adjusted net income | $ | 59,633 | $ | 54,663 | $ | 174,558 | $ | 160,303 | |||||||||||||||
| Adjusted net income per common unit | $ | 0.20 | $ | 0.16 | $ | 0.58 | $ | 0.46 | |||||||||||||||
EBITDA | $ | 178,432 | $ | (2,728) | $ | 480,790 | $ | 355,802 | |||||||||||||||
Adjusted EBITDA | $ | 178,432 | $ | 176,868 | $ | 525,348 | $ | 535,398 | |||||||||||||||
DCF | $ | 93,485 | $ | 92,067 | $ | 267,545 | $ | 269,987 | |||||||||||||||
Distribution coverage ratio | 2.12x | 2.10x | 2.02x | 2.05x | |||||||||||||||||||
| For the Four Quarters Ended September 30, | |||||||||||
| 2022 | 2021 | ||||||||||
Consolidated Debt Coverage Ratio | 3.79x | 4.10x | |||||||||
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Barrel Data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Pipeline: | |||||||||||||||||||||||
| Crude oil pipelines throughput (barrels/day) | 1,335,336 | 1,374,909 | 1,288,489 | 1,241,152 | |||||||||||||||||||
| Refined products and ammonia pipelines throughput (barrels/day) | 560,202 | 599,423 | 568,533 | 572,040 | |||||||||||||||||||
| Total throughput (barrels/day) | 1,895,538 | 1,974,332 | 1,857,022 | 1,813,192 | |||||||||||||||||||
| Throughput and other revenues | $ | 209,008 | $ | 196,207 | $ | 598,256 | $ | 558,341 | |||||||||||||||
| Operating expenses | 53,837 | 51,303 | 157,110 | 147,762 | |||||||||||||||||||
| Depreciation and amortization expense | 44,806 | 45,506 | 134,076 | 135,290 | |||||||||||||||||||
| Other impairment loss | — | 59,197 | — | 59,197 | |||||||||||||||||||
| Segment operating income | $ | 110,365 | $ | 40,201 | $ | 307,070 | $ | 216,092 | |||||||||||||||
| Storage: | |||||||||||||||||||||||
| Throughput (barrels/day) | 439,239 | 462,094 | 410,594 | 416,288 | |||||||||||||||||||
| Throughput terminal revenues | $ | 26,933 | $ | 30,771 | $ | 84,303 | $ | 90,708 | |||||||||||||||
| Storage terminal revenues | 51,459 | 77,371 | 170,793 | 245,256 | |||||||||||||||||||
| Total revenues | 78,392 | 108,142 | 255,096 | 335,964 | |||||||||||||||||||
| Operating expenses | 37,449 | 48,840 | 115,526 | 140,161 | |||||||||||||||||||
| Depreciation and amortization expense | 18,334 | 20,620 | 54,607 | 68,218 | |||||||||||||||||||
| Goodwill impairment loss | — | 34,060 | — | 34,060 | |||||||||||||||||||
| Other impairment loss | — | 95,711 | 46,122 | 95,711 | |||||||||||||||||||
| Segment operating income (loss) | $ | 22,609 | $ | (91,089) | $ | 38,841 | $ | (2,186) | |||||||||||||||
| Fuels Marketing: | |||||||||||||||||||||||
| Product sales | $ | 125,843 | $ | 107,996 | $ | 399,912 | $ | 306,790 | |||||||||||||||
| Cost of goods | 116,763 | 106,478 | 376,627 | 300,944 | |||||||||||||||||||
| Gross margin | 9,080 | 1,518 | 23,285 | 5,846 | |||||||||||||||||||
| Operating expenses | 561 | 569 | 1,591 | (132) | |||||||||||||||||||
| Segment operating income | $ | 8,519 | $ | 949 | $ | 21,694 | $ | 5,978 | |||||||||||||||
| Consolidation and Intersegment Eliminations: | |||||||||||||||||||||||
| Revenues | $ | — | $ | — | $ | (1) | $ | (11) | |||||||||||||||
| Cost of goods | — | — | (1) | (11) | |||||||||||||||||||
| Total | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Consolidated Information: | |||||||||||||||||||||||
| Revenues | $ | 413,243 | $ | 412,345 | $ | 1,253,263 | $ | 1,201,084 | |||||||||||||||
| Costs associated with service revenues: | |||||||||||||||||||||||
| Operating expenses | 91,286 | 100,143 | 272,636 | 287,923 | |||||||||||||||||||
| Depreciation and amortization expense | 63,140 | 66,126 | 188,683 | 203,508 | |||||||||||||||||||
| Total costs associated with service revenues | 154,426 | 166,269 | 461,319 | 491,431 | |||||||||||||||||||
| Costs associated with product sales | 117,324 | 107,047 | 378,217 | 300,801 | |||||||||||||||||||
| Goodwill impairment loss | — | 34,060 | — | 34,060 | |||||||||||||||||||
| Other impairment losses | — | 154,908 | 46,122 | 154,908 | |||||||||||||||||||
| Segment operating income (loss) | 141,493 | (49,939) | 367,605 | 219,884 | |||||||||||||||||||
| General and administrative expenses | 27,676 | 27,365 | 82,656 | 79,334 | |||||||||||||||||||
| Other depreciation and amortization expense | 1,935 | 1,881 | 5,582 | 5,841 | |||||||||||||||||||
| Consolidated operating income (loss) | $ | 111,882 | $ | (79,185) | $ | 279,367 | $ | 134,709 | |||||||||||||||
NuStar Energy L.P. and Subsidiaries
Reconciliation of Non-GAAP Financial Information
(Unaudited, Thousands of Dollars, Except Ratio Data)
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, (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 and (iii) they highlight the impact of significant transactions. We may also adjust these measures to enhance the comparability of our performance across periods.
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 EBITDA, DCF and a distribution coverage ratio, which is calculated based on DCF, as some of the factors in its compensation determinations. DCF is a 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 net income (loss) to EBITDA, DCF and distribution coverage ratio.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income (loss) | $ | 59,633 | $ | (124,933) | $ | 131,144 | $ | (19,293) | |||||||||||||||
| Interest expense, net | 52,294 | 53,513 | 153,053 | 162,211 | |||||||||||||||||||
| Income tax expense | 1,430 | 685 | 2,328 | 3,535 | |||||||||||||||||||
| Depreciation and amortization expense | 65,075 | 68,007 | 194,265 | 209,349 | |||||||||||||||||||
| EBITDA | 178,432 | (2,728) | 480,790 | 355,802 | |||||||||||||||||||
| Interest expense, net | (52,294) | (53,513) | (153,053) | (162,211) | |||||||||||||||||||
| Reliability capital expenditures | (11,252) | (10,806) | (24,657) | (28,238) | |||||||||||||||||||
| Income tax expense | (1,430) | (685) | (2,328) | (3,535) | |||||||||||||||||||
| Long-term incentive equity awards (a) | 2,534 | 2,730 | 8,097 | 8,737 | |||||||||||||||||||
| Preferred unit distributions | (32,463) | (31,889) | (95,078) | (95,663) | |||||||||||||||||||
| Goodwill impairment loss | — | 34,060 | — | 34,060 | |||||||||||||||||||
| Other impairment losses | — | 154,908 | 46,122 | 154,908 | |||||||||||||||||||
| Income tax benefit related to the impairment loss for the nine months ended September 30, 2022 | — | — | (1,144) | — | |||||||||||||||||||
| Other items | 9,958 | (10) | 8,796 | 6,127 | |||||||||||||||||||
| DCF | $ | 93,485 | $ | 92,067 | $ | 267,545 | $ | 269,987 | |||||||||||||||
| Distributions applicable to common limited partners | $ | 44,125 | $ | 43,814 | $ | 132,418 | $ | 131,462 | |||||||||||||||
| Distribution coverage ratio (b) | 2.12x | 2.10x | 2.02x | 2.05x | |||||||||||||||||||
(a)We intend to satisfy the vestings of these 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.
(b)Distribution coverage ratio is calculated by dividing DCF by distributions applicable to common limited partners.
NuStar Energy L.P. and Subsidiaries
Reconciliation of Non-GAAP Financial Information - Continued
(Unaudited, Thousands of Dollars, Except per Unit and Ratio Data)
The following is the reconciliation for the calculation of our Consolidated Debt Coverage Ratio, as defined in our revolving credit agreement (the Revolving Credit Agreement).
| For the Four Quarters Ended September 30, | For the Four Quarters Ended June 30, 2022 | ||||||||||||||||
| 2022 | 2021 | ||||||||||||||||
| Operating income | $ | 381,112 | $ | 239,125 | $ | 190,045 | |||||||||||
| Depreciation and amortization expense | 259,296 | 280,233 | 262,228 | ||||||||||||||
| Goodwill impairment loss | — | 34,060 | 34,060 | ||||||||||||||
| Other impairment losses | 46,122 | 154,908 | 201,030 | ||||||||||||||
| Equity awards (a) | 13,607 | 13,842 | 13,801 | ||||||||||||||
| Pro forma effects of dispositions (b) | (1,613) | (1,802) | (10,077) | ||||||||||||||
| Other | (15) | 7,616 | 481 | ||||||||||||||
| Consolidated EBITDA, as defined in the Revolving Credit Agreement | $ | 698,509 | $ | 727,982 | $ | 691,568 | |||||||||||
| Long-term debt, less current portion of finance leases | $ | 3,068,055 | $ | 3,400,794 | $ | 3,137,275 | |||||||||||
| Finance leases (long-term) | (51,619) | (52,834) | (51,959) | ||||||||||||||
| Net fair value adjustments, unamortized discounts and unamortized debt issuance costs | 34,604 | 39,280 | 35,924 | ||||||||||||||
NuStar Logistics' floating rate subordinated notes | (402,500) | (402,500) | (402,500) | ||||||||||||||
Consolidated Debt, as defined in the Revolving Credit Agreement | $ | 2,648,540 | $ | 2,984,740 | $ | 2,718,740 | |||||||||||
Consolidated Debt Coverage Ratio (Consolidated Debt to Consolidated EBITDA) | 3.79x | 4.10x | 3.93x | ||||||||||||||
(a)This adjustment represents the non-cash expense related to the vestings of equity-based awards with the issuance of our common units.
(b)For the four quarters ended September 30, 2022, this adjustment represents the pro forma effects of the dispositions of the Point Tupper and Eastern U.S. terminals. For the four quarters ended September 30, 2021, this adjustment represents the pro forma effect of the disposition of the Texas City terminals. For the four quarters ended June 30, 2022, this adjustment represents the pro forma effects of the dispositions of the Point Tupper and Eastern U.S. terminals.
The following is a reconciliation of net (loss) income / net (loss) income per common unit to adjusted net income / adjusted net income per common unit, for the applicable periods.
| Three Months Ended September 30, 2021 | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| Net (loss) income / net (loss) income per common unit | $ | (124,933) | $ | (1.48) | $ | 131,144 | $ | 0.18 | $ | (19,293) | $ | (1.18) | |||||||||||||||||||||||
| Goodwill impairment loss | 34,060 | 0.31 | — | — | 34,060 | 0.31 | |||||||||||||||||||||||||||||
| Other impairment losses | 154,908 | 1.41 | 46,122 | 0.42 | 154,908 | 1.41 | |||||||||||||||||||||||||||||
| Gain from insurance recoveries | (9,372) | (0.08) | — | — | (9,372) | (0.08) | |||||||||||||||||||||||||||||
| Gain on sale | — | — | (1,564) | (0.01) | — | — | |||||||||||||||||||||||||||||
| Income tax benefit related to impairment loss | — | — | (1,144) | (0.01) | — | — | |||||||||||||||||||||||||||||
| Adjusted net income / adjusted net income per common unit | $ | 54,663 | $ | 0.16 | $ | 174,558 | $ | 0.58 | $ | 160,303 | $ | 0.46 | |||||||||||||||||||||||
NuStar Energy L.P. and Subsidiaries
Reconciliation of Non-GAAP Financial Information - Continued
(Unaudited, Thousands of Dollars)
The following is a reconciliation of EBITDA to adjusted EBITDA, and for the applicable period, to adjusted EBITDA, excluding the Point Tupper terminal and the Eastern U.S. terminals, which were sold in April 2022 and October 2021, respectively.
| Three Months Ended September 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| EBITDA | $ | 178,432 | $ | (2,728) | |||||||
| Goodwill impairment loss | — | 34,060 | |||||||||
| Other impairment losses | — | 154,908 | |||||||||
| Gain from insurance recoveries | — | (9,372) | |||||||||
| Gain on sale | — | — | |||||||||
| Adjusted EBITDA | $ | 178,432 | $ | 176,868 | |||||||
| Divested assets: | |||||||||||
| Operating loss | $ | (124,855) | |||||||||
| Depreciation and amortization expense | 3,516 | ||||||||||
| Other expense, net | (682) | ||||||||||
| EBITDA of divested assets | (122,021) | ||||||||||
| Goodwill and other impairment losses | 129,771 | ||||||||||
| Adjusted EBITDA of divested assets | $ | 7,750 | |||||||||
| Adjusted EBITDA, excluding divested assets | $ | 169,118 | |||||||||
The following is a reconciliation of EBITDA to adjusted EBITDA.
| Nine Months Ended September 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| EBITDA | $ | 480,790 | $ | 355,802 | |||||||
| Goodwill impairment loss | — | 34,060 | |||||||||
| Other impairment losses | 46,122 | 154,908 | |||||||||
| Gain from insurance recoveries | — | (9,372) | |||||||||
| Gain on sale | (1,564) | — | |||||||||
| Adjusted EBITDA | $ | 525,348 | $ | 535,398 | |||||||
The following is a reconciliation of projected net income to EBITDA and adjusted EBITDA.
| Projected for the Year Ended December 31, 2022 | |||||
| Net income | $ 193,000 - 206,000 | ||||
| Interest expense, net | 205,000 - 215,000 | ||||
| Income tax expense | 2,500 - 4,500 | ||||
| Depreciation and amortization expense | 255,000 - 260,000 | ||||
| EBITDA | 655,500 - 685,500 | ||||
| Gain on sale | (1,600) | ||||
| Impairment loss | 46,100 | ||||
| Adjusted EBITDA | $ 700,000 - 730,000 | ||||
NuStar Energy L.P. and Subsidiaries
Reconciliation of Non-GAAP Financial Information - Continued
(Unaudited, Thousands of Dollars)
The following are reconciliations for our reported segments of operating income (loss) to segment EBITDA, adjusted segment EBITDA, and for the applicable segment, to adjusted segment EBITDA, excluding the Eastern U.S. terminals and Point Tupper terminal, which were sold in October 2021 and April 2022, respectively.
| Three Months Ended September 30, 2022 | |||||||||||||||||
| Pipeline | Storage | Fuels Marketing | |||||||||||||||
| Operating income | $ | 110,365 | $ | 22,609 | $ | 8,519 | |||||||||||
| Depreciation and amortization expense | 44,806 | 18,334 | — | ||||||||||||||
| Segment EBITDA | $ | 155,171 | $ | 40,943 | $ | 8,519 | |||||||||||
| Three Months Ended September 30, 2021 | |||||||||||||||||
| Pipeline | Storage | Fuels Marketing | |||||||||||||||
| Operating income (loss) | $ | 40,201 | $ | (91,089) | $ | 949 | |||||||||||
| Depreciation and amortization expense | 45,506 | 20,620 | — | ||||||||||||||
| Segment EBITDA | 85,707 | (70,469) | 949 | ||||||||||||||
| Impairment losses | 59,197 | 129,771 | — | ||||||||||||||
| Adjusted segment EBITDA | $ | 144,904 | $ | 59,302 | $ | 949 | |||||||||||
| Divested assets: | |||||||||||||||||
| Operating loss | $ | (124,825) | |||||||||||||||
| Depreciation and amortization expense | 3,516 | ||||||||||||||||
| Segment EBITDA of divested assets | (121,309) | ||||||||||||||||
| Impairment losses | 129,771 | ||||||||||||||||
| Adjusted segment EBITDA of divested assets | $ | 8,462 | |||||||||||||||
| Adjusted segment EBITDA, excluding divested assets | $ | 50,840 | |||||||||||||||