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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
April 2, 2002
(Date of Earliest Event Reported)
Valero L.P.
(Exact name of registrant as specified in its charter)
Delaware |
001-16417 |
74-2958817 |
||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification Number) |
||
One Valero Place San Antonio, Texas 78212 (210) 370-2000 |
||||
| (Address, including zip code, and telephone number) | ||||
Item 9. Regulation FD Disclosure
Attached materials are to be furnished to and discussed with securities analysts at presentations beginning on April 2, 2002.
- (a)
- Exhibits.
- 99.1
- Presentation materials.
2
Pursuant to the requirements of the Securities Exchange Act of 1934, Valero L.P. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| VALERO L.P. BY: RIVERWALK LOGISTICS, L.P. BY: VALERO GP, LLC |
|||
By: |
/s/ TODD WALKER Its: Secretary |
||
Date: April 2, 2002
- 99.1
- Presentation materials.
SIGNATURES
EXHIBITS
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Management Presentation
April 2002
Safe Harbor Statement
Statements contained in this presentation that state the Partnership's or management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. It is important to note that the Partnership's actual results could differ materially from those projected in such forward-looking statements. Factors that could affect those results include those mentioned in the documents that the Partnership has filed with the Securities and Exchange Commission.
2
Valero LP Recent History
- •
- Originally created by UDS as Shamrock Logistics LP to support growth of pipeline and terminals business
- •
- IPO April 16, 2001 at $24.50 per unit
- •
- Market value at IPO of $470MM; current market capitalization at $750MM
- •
- Ownership Structure
| Common Units |
Units |
% Total |
|
|||||
|---|---|---|---|---|---|---|---|---|
| Public | 5,175,000 | 26.4 | % | |||||
| Valero Energy | 4,424,322 | 22.6 | % | |||||
| Subordinated Units | 9,599,322 | 49.0 | % | 73.6% Valero Energy ownership |
||||
| General Partner Interest | 2.0 | % | ||||||
| Total | 19,198,644 | 100.0 | % | |||||
- •
- Minimum quarterly distributions at $0.60 per unit ($2.40/LP unit/year)
- •
- Yields 6.23% at March 26, 2002 price of $38.50/unit
- •
- Currently at lowest GP split of 2%
- •
- Expect to increase quarterly distribution to $0.65 per unit for Q1 '02 distribution
3
General Partner Promote
| Quarterly Distribution/Unit |
GP |
LP |
|||
|---|---|---|---|---|---|
| Up to $0.60 | 2 | % | 98 | % | |
| Above $0.60 up to $0.66 | 10 | % | 90 | % | |
| Above $0.66 up to $0.90 | 25 | % | 75 | % | |
| Above $0.90 | 50 | % | 50 | % |
4
Valero LP Has Outperformed Peers Since IPO
Relative Price (April 16, 2001 = 100)
- (1)
- Kinder, Enterprise, El Paso, Enbridge, Plains, Teppco, Buckeye, Williams, and No. Border
5
Current Asset Base
- •
- Valero LP's current asset base is focused around three Valero Energy refineries and comprised of three asset types
- •
- Crude oil pipelines, refined product pipelines and refined product terminals
- •
- McKee, TX; Ardmore, OK; and Three Rivers, TX refining systems
- •
- Majority of earnings and cash flow derived from three crude pipelines (40%) and two product pipelines (25%)
- •
- Crude Pipelines
- •
- Wichita Falls to McKee
- •
- Corpus Christi to Three Rivers
- •
- Wasson to Ardmore
- •
- Product Pipelines
- •
- McKee to El Paso
- •
- McKee to Denver
- •
- Product pipelines supply Valero Energy retail and wholesale businesses in growing markets
6
Operations Strategically Integrated with Valero
7
2,845 |
Refined Product Miles |
|
782 |
Crude Oil Miles |
|
18 |
Product Pipelines |
|
11 |
Refined Product Terminals |
|
9 |
Crude Oil Pipelines |
|
4 |
Crude Oil Storage Facilities |
8
Recent Acquisitions
| Asset |
Date Acquired |
Purchase Price |
Projected Annual EBITDA |
||||||
|---|---|---|---|---|---|---|---|---|---|
| Southlake Terminal | July 2001 | $ | 5.6 million | $ | 1.4 million | ||||
Ringgold Crude |
|||||||||
| Storage Facility | Dec 2001 | $ | 5.2 million | $ | 1.2 million | ||||
Wichita Falls |
|||||||||
| Crude Pipeline | |||||||||
| and Storage Facility | Feb 2002 | $ | 64.0 million | $ | 17.0 million | ||||
$ |
74.8 million |
$ |
19.6 million |
||||||
9
Crude Oil Pipelines Access Key Sources
Our pipelines currently supply crude oil to the McKee, Ardmore, and Three Rivers refineries and provide access to Texas, Gulf Coast and foreign crude sources
- (1)
- 2002 estimated volumes would be 385 MBPD without the throughput reductions in 1Q02
10
Refined Product Pipelines Into Key Markets
Our pipelines currently transport over 80% of all refined products that are moved by pipeline out of the McKee, Ardmore, and Three Rivers refineries and provide access to established markets with growth potential:
- •
- Denver
- •
- El Paso
- •
- Albuquerque
- •
- Mexican border region
11
- (1)
- 2002 estimated volumes would be 307 MBPD without the throughput reductions in 1Q02
12
Product Terminals Strategically Located
Our product terminals are Valero Energy's primary wholesale outlet in its Mid-continent
markets
13
- (1)
- 2002 estimated volumes would be 194 MBPD without the throughput reductions in 1Q02
14
Strategic Plan Summary
- •
- Valero LP is well positioned for growth with a cohesive set of historically stable pipeline and terminal assets that are highly
integrated with Valero Energy's refining system
- •
- The key to maximizing unit price appreciation is high unit distribution growth
- •
- This requires growth primarily through the acquisition of assets that have stable cash flows
- •
- Valero LP has already completed $75 million in acquisitions and plans to make additional accretive acquisitions from Valero
Energy and third parties
- •
- Growing unit distributions quickly should allow Valero LP to maintain an attractive multiple
- •
- Expect to increase quarterly distribution to $0.65 per unit for Q1 '02
- •
- More distribution increases to follow as cash flows increase
15
Achieve Top Tier Growth
- •
- Potential acquisitions of assets from Valero Energy
- •
- $300+ million of asset value identified thus far
- •
- Third-party acquisitions
- •
- Pipelines and terminals that integrate with existing assets
- •
- Logistics assets that extend Valero Energy's marketing reach
- •
- Internally generated growth
- •
- Increase throughputs
- •
- Selectively expand capacity
- •
- Continuously improve operating efficiency
- •
- Maintain a safe and environmentally sound business
16
Potential Assets From Valero Energy
- •
- Examples of near-term "drop-down" candidates
- •
- Southlake Products Pipeline
- •
- Texas City Hydrogen Pipeline
- •
- South Texas Pipeline and Terminal System
- •
- Refinery Crude Tankage
17
Opportunities for Further Growth with Valero
18
Valero LP Less Levered Than Most MLPs
- •
- Currently have $90MM of debt
- •
- Could add $200MM to reach 50% debt to book capitalization
- •
- Low debt and low splits put Valero LP in strong position to make accretive, near-term acquisitions
Net Debt to Book Capitalization(1)
- (1)
- As of 2/12/02 per Lehman Brothers
19
2001 Financial Highlights
(in thousands, except per unit data)
| |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Total |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues |
$ |
23,422 |
$ |
23,637 |
$ |
26,857 |
$ |
24,911 |
$ |
98,827 |
|||||
Operating income |
10,361 |
10,319 |
13,430 |
12,395 |
46,505 |
||||||||||
Net income |
8,786 |
10,356 |
13,771 |
12,960 |
45,873 |
||||||||||
Net income per unit(1) |
0.45 |
0.53 |
0.70 |
0.66 |
2.34 |
||||||||||
Distributable cash flow |
11,279 |
12,509 |
16,479 |
16,210 |
56,477 |
||||||||||
Distributable cash flow per unit |
0.59 |
0.65 |
0.86 |
0.84 |
2.94 |
||||||||||
Cash distributions per unit(2) |
— |
0.50 |
0.60 |
0.60 |
1.70 |
||||||||||
Coverage |
N/A |
1.28x |
1.40x |
1.38x |
N/A |
||||||||||
- (1)
- The net income per unit is based on 19,198,644 units, which was the number of common and subordinated units issued and outstanding from April 16, 2001 (the date of our initial public offering) to December 31, 2001. Net income per unit for the period prior to the IPO has been computed as if the common and subordinated units issued were outstanding effective January 1, 2001. Net income in the net income per unit computation excludes net income applicable to the 2% general partner interest.
- (2)
- Represents cash distributions per unit that were declared since we became a publicly held entity.
20
Strong Financial Position
- •
- Solid Cash Flow Coverage
- •
- Based on First Call earnings estimate for 2002 of $2.71 per unit and cash distributions of $2.60 per LP unit for the year, coverage
would be 1.29x
- •
- Assume same facts, but include $100 million in debt financed acquisitions at 7.5x EBITDA, coverage increases to 1.39x
- •
- Significant acquisition opportunities going forward
- •
- Valero LP committed to growing distributions while maintaining financial stability
21
Net Debt to Book Capitalization(1)