News Release
NuStar Energy L.P. Reports Earnings Results for the Second Quarter of 2017
Closed on Acquisition of Permian Crude System, A Leading Crude Oil
Gathering, Transportation and Storage System in the “Core of the Core”
of the
Received Approvals on Three Presidential Permits to Move LPGs and Refined Products Across the Mexico Border
“The second quarter of 2017 was a busy and transformative time for
NuStar,” said
“Given all of this, it is not surprising that for the second quarter of
2017, we reported net income of
“These short-term results were anticipated. However, more importantly, we are on-track with our forward-looking plans that are paving the way for strong future growth – in our earnings, assets and distributions. Drilling in the area has exceeded our initial projections. In terms of rig counts, there are currently 39 rigs running on dedicated and interconnected acreage. This is in excess of the 29 we forecast would be running at the end of 2017. In fact, back in April when we were evaluating the system, we weren’t projecting 39 rigs until the end of 2018,” said Barron.
“Said another way, we did not acquire the Permian Crude System for its 2017 volumes; we acquired the system for its projected volume growth trajectory in 2018 and beyond. So we are very pleased with the progress we have made to date. But this progress would not be possible without the short-term impact we are experiencing in our 2017 earnings results,” Barron concluded.
To finance the acquisition of the Permian Crude System, NuStar closed on
multiple transactions during the second quarter of 2017. On
The partnership announced a second quarter 2017 Series A Preferred Unit
distribution of
Second 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/kcc929bt 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) |
|||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Statement of Income Data: | |||||||||||||||||
Revenues: | |||||||||||||||||
Service revenues | $ | 283,700 | $ | 270,403 | $ | 550,162 | $ | 536,969 | |||||||||
Product sales | 151,788 | 167,401 | 372,756 | 306,538 | |||||||||||||
Total revenues | 435,488 | 437,804 | 922,918 | 843,507 | |||||||||||||
Costs and expenses: | |||||||||||||||||
Cost of product sales | 144,479 | 157,617 | 352,285 | 286,607 | |||||||||||||
Operating expenses | 116,400 | 112,662 | 217,426 | 217,883 | |||||||||||||
General and administrative expenses | 33,604 | 22,657 | 58,199 | 46,442 | |||||||||||||
Depreciation and amortization expense | 67,601 | 53,651 | 124,465 | 106,793 | |||||||||||||
Total costs and expenses | 362,084 | 346,587 | 752,375 | 657,725 | |||||||||||||
Operating income | 73,404 | 91,217 | 170,543 | 185,782 | |||||||||||||
Interest expense, net | (45,612 | ) | (34,229 | ) | (82,026 | ) | (68,352 | ) | |||||||||
Other income (expense), net | 88 | (201 | ) | 228 | (372 | ) | |||||||||||
Income before income tax expense | 27,880 | 56,787 | 88,745 | 117,058 | |||||||||||||
Income tax expense | 1,630 | 4,270 | 4,555 | 7,140 | |||||||||||||
Net income | $ | 26,250 | $ | 52,517 | $ | 84,190 | $ | 109,918 | |||||||||
Net income applicable to common limited partners | $ | 4,364 | $ | 40,018 | $ | 42,816 | $ | 84,818 | |||||||||
Basic and diluted net income per common unit | $ | 0.05 | $ | 0.52 | $ | 0.51 | $ | 1.09 | |||||||||
Basic weighted-average common units outstanding | 90,345,469 | 77,886,219 | 84,526,506 | 77,886,148 | |||||||||||||
Other Data (Note 1): | |||||||||||||||||
EBITDA | $ | 141,093 | $ | 144,667 | $ | 295,236 | $ | 292,203 | |||||||||
DCF available to common limited partners | $ | 60,267 | $ | 92,820 | $ | 149,209 | $ | 189,847 | |||||||||
June 30, | December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2017 | 2016 | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt |
$ |
3,521,939 | $ | 3,205,693 | $ | 3,068,364 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Partners’ equity |
$ |
2,501,049 | $ | 1,489,895 | $ | 1,611,617 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
NuStar Energy L.P. and Subsidiaries Consolidated Financial Information - Continued (Unaudited, Thousands of Dollars, Except Barrel Data) |
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Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Pipeline: | |||||||||||||||||
Refined products pipelines throughput (barrels/day) | 531,529 | 538,996 | 522,820 | 530,134 | |||||||||||||
Crude oil pipelines throughput (barrels/day) | 558,182 | 399,372 | 483,909 | 405,241 | |||||||||||||
Total throughput (barrels/day) | 1,089,711 | 938,368 | 1,006,729 | 935,375 | |||||||||||||
Throughput revenues | $ | 126,740 | $ | 121,575 | $ | 247,980 | $ | 240,448 | |||||||||
Operating expenses | 40,197 | 36,159 | 73,271 | 69,163 | |||||||||||||
Depreciation and amortization expense | 33,675 | 21,864 | 56,813 | 43,468 | |||||||||||||
Segment operating income | $ | 52,868 | $ | 63,552 | $ | 117,896 | $ | 127,817 | |||||||||
Storage: | |||||||||||||||||
Throughput (barrels/day) (Note 2) | 337,518 | 727,857 | 326,327 | 778,092 | |||||||||||||
Throughput terminal revenues | $ | 22,122 | $ | 28,668 | $ | 42,812 | $ | 58,068 | |||||||||
Storage terminal revenues | 136,437 | 123,206 | 263,178 | 246,205 | |||||||||||||
Total revenues | 158,559 | 151,874 | 305,990 | 304,273 | |||||||||||||
Operating expenses | 70,783 | 71,158 | 132,922 | 137,161 | |||||||||||||
Depreciation and amortization expense | 31,727 | 29,653 | 63,260 | 59,036 | |||||||||||||
Segment operating income | $ | 56,049 | $ | 51,063 | $ | 109,808 | $ | 108,076 | |||||||||
Fuels Marketing: | |||||||||||||||||
Product sales and other revenue | $ | 153,918 | $ | 169,862 | $ | 376,620 | $ | 310,308 | |||||||||
Cost of product sales | 147,013 | 160,557 | 357,612 | 293,138 | |||||||||||||
Gross margin | 6,905 | 9,305 | 19,008 | 17,170 | |||||||||||||
Operating expenses | 6,616 | 7,913 | 13,579 | 16,551 | |||||||||||||
Segment operating income | $ | 289 | $ | 1,392 | $ | 5,429 | $ | 619 | |||||||||
Consolidation and Intersegment Eliminations: | |||||||||||||||||
Revenues | $ | (3,729 | ) | $ | (5,507 | ) | $ | (7,672 | ) | $ | (11,522 | ) | |||||
Cost of product sales | (2,534 | ) | (2,940 | ) | (5,327 | ) | (6,531 | ) | |||||||||
Operating expenses | (1,196 | ) | (2,568 | ) | (2,346 | ) | (4,992 | ) | |||||||||
Total | $ | 1 | $ | 1 | $ | 1 | $ | 1 | |||||||||
Consolidated Information: | |||||||||||||||||
Revenues | $ | 435,488 | $ | 437,804 | $ | 922,918 | $ | 843,507 | |||||||||
Cost of product sales | 144,479 | 157,617 | 352,285 | 286,607 | |||||||||||||
Operating expenses | 116,400 | 112,662 | 217,426 | 217,883 | |||||||||||||
Depreciation and amortization expense | 65,402 | 51,517 | 120,073 | 102,504 | |||||||||||||
Segment operating income | 109,207 | 116,008 | 233,134 | 236,513 | |||||||||||||
General and administrative expenses | 33,604 | 22,657 | 58,199 | 46,442 | |||||||||||||
Other depreciation and amortization expense | 2,199 | 2,134 | 4,392 | 4,289 | |||||||||||||
Consolidated operating income | $ | 73,404 | $ | 91,217 | $ | 170,543 | $ | 185,782 | |||||||||
NuStar Energy L.P. and Subsidiaries |
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 one of the factors in its determination of the company-wide bonus and the vesting of performance units awarded to management. 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 June 30, | Six Months Ended June 30, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Net income | $ | 26,250 | $ | 52,517 | $ | 84,190 | $ | 109,918 | ||||||||||
Interest expense, net | 45,612 | 34,229 | 82,026 | 68,352 | ||||||||||||||
Income tax expense | 1,630 | 4,270 | 4,555 | 7,140 | ||||||||||||||
Depreciation and amortization expense | 67,601 | 53,651 | 124,465 | 106,793 | ||||||||||||||
EBITDA | 141,093 | 144,667 | 295,236 | 292,203 | ||||||||||||||
Interest expense, net | (45,612 | ) | (34,229 | ) | (82,026 | ) | (68,352 | ) | ||||||||||
Reliability capital expenditures | (10,380 | ) | (11,305 | ) | (15,402 | ) | (17,322 | ) | ||||||||||
Income tax expense | (1,630 | ) | (4,270 | ) | (4,555 | ) | (7,140 | ) | ||||||||||
Mark-to-market impact of hedge transactions (a) | (563 | ) | 5,762 | (3,149 | ) | 10,446 | ||||||||||||
Unit-based compensation (b) | 1,618 | 1,122 | 3,706 | 2,208 | ||||||||||||||
Preferred unit distributions | (9,950 | ) | — | (14,763 | ) | — | ||||||||||||
Other items (c) | (1,095 | ) | 3,839 | (1,369 | ) | 3,336 | ||||||||||||
DCF | $ | 73,481 | $ | 105,586 | $ | 177,678 | $ | 215,379 | ||||||||||
Less DCF available to general partner | 13,214 | 12,766 | 28,469 | 25,532 | ||||||||||||||
DCF available to common limited partners | $ | 60,267 | $ | 92,820 | $ | 149,209 | $ | 189,847 | ||||||||||
Distributions applicable to common limited partners | $ | 101,869 | $ | 85,285 | $ | 203,782 | $ | 170,570 | ||||||||||
Distribution coverage ratio (d) |
0.59 |
x |
1.09 |
x |
0.73 |
x |
1.11 |
x |
||||||||||
(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) |
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. |
|
(2) Throughputs for the three and six months ended
View source version on businesswire.com: http://www.businesswire.com/news/home/20170728005145/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