SEC Filing | NuStar Energy L.P.

As of May 3, 2024, Sunoco has successfully completed its acquisition of NuStar Energy L.P. Find out more here.

View:

NS 2Q14 8-K

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): July 25, 2014

NuStar Energy L.P.

(Exact name of registrant as specified in its charter)



Delaware	001-16417	74-2956831
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

	19003 IH-10 West San Antonio, Texas 78257
	(Address of principal executive offices)

	(210) 918-2000
	(Registrant’s telephone number, including area code)

	Not applicable
	(Former name or former address, if changed since last report.)

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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results Of Operations And Financial Condition.

On July 25, 2014, NuStar Energy L.P., a Delaware limited partnership, issued a press release announcing financial results for the quarter ended June 30, 2014. A copy of the press release announcing the financial results is furnished with this report as Exhibit 99.1, and is incorporated herein by reference.

The information in this report is being furnished, not filed, pursuant to Item 2.02 of Form 8-K. Accordingly, the information in this report, including the press release, will not be incorporated by reference into any registration statement filed by NuStar Energy L.P. under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

NON-GAAP FINANCIAL MEASURES

The press release announcing the earnings discloses certain financial measures, earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, distributable cash flow (DCF) from continuing operations, and DCF from continuing operations per unit, that are non-GAAP financial measures as defined under SEC rules. The press release furnishes a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. 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. None of EBITDA from continuing operations, DCF from continuing operations or DCF from continuing operations per unit is intended to represent cash flows from operations for the period, nor are they presented as an alternative to net income or income from continuing operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with U.S. generally accepted accounting principles.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.



Exhibit Number		EXHIBIT

Exhibit 99.1		Press Release dated July 25, 2014.

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: July 25, 2014			By:	/s/ Amy L. Perry
			Name:	Amy L. Perry
			Title:	Senior Vice President, General Counsel-Corporate & Commercial Law and Corporate Secretary

EXHIBIT INDEX



Exhibit Number		EXHIBIT

Exhibit 99.1		Press Release dated July 25, 2014.

NS 2Q14 8-K EX99.01

Exhibit 99.1

NuStar Energy Covers Quarterly Distribution for the First Time Since the Third Quarter of 2011

On Track to Cover Distribution for the Full Year 2014

Quarterly Results improved in all Three Operating Segments

17% increase in Quarterly Pipeline Throughput Volumes

SAN ANTONIO, July 25, 2014 - NuStar Energy L.P. (NYSE: NS) today announced second quarter 2014 distributable cash flow from continuing operations available to limited partners of $93.6 million, or $1.20 per unit, compared to 2013 second quarter distributable cash flow from continuing operations available to limited partners of $56.8 million, or $0.73 per unit. For the six months ended June 30, 2014, distributable cash flow from continuing operations available to limited partners was $171.5 million, or $2.20 per unit, compared to $113.9 million, or $1.46 per unit for the six months ended June 30, 2013.

Second quarter earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations was $140.1 million compared to second quarter 2013 EBITDA of $114.3 million. For the six months ended June 30, 2014, EBITDA was $266.8 million, compared to $208.5 million for the six months ended June 30, 2013.

The partnership reported second quarter net income applicable to limited partners of $43.6 million, or $0.56 per unit, compared to $21.6 million, or $0.28 per unit, earned in the second quarter of 2013. For the six months ended June 30, 2014, net income applicable to limited partners was $71.7 million, or $0.92 per unit, compared to net income applicable to limited partners of $34.9 million, or $0.45 per unit, for the six months ended June 30, 2013.

The partnership also announced that its board of directors has declared a second quarter 2014 distribution of $1.095 per unit. The second quarter 2014 distribution will be paid on August 11, 2014, to holders of record as of August 6, 2014. Distributable cash flow from continuing operations available to limited partners covers the distribution to the limited partners by 1.10 times for the second quarter of 2014 and by 1.00 times for the six months ended June 30, 2014.

“All three of our operating segments continued to perform well in the second quarter,” said Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “In May, we completed Phase 1 of our South Texas Crude Oil Pipeline expansion and set a new single-vessel loading record at our Corpus Christi North Beach Terminal, when we loaded over 750,000 barrels. These were significant milestones for us and contributed to improved results in both our pipeline and storage segments.”

Barron went on to say, “Our coverage ratio in the second quarter was our highest since the third quarter of 2011 and was better than we initially projected. Higher than expected throughput volumes in both our pipeline and storage segments, as well as the deferral of some maintenance expenses and reliability capital spending to the back half of 2014 helped drive the coverage ratio to 1.10 times.”

Internal Growth Project Update

Phase 2 of the South Texas Crude Oil Pipeline expansion is expected to come on line during the first quarter of 2015 and will allow for increased throughputs of up to 65,000 barrels per day. NuStar’s 12-inch pipeline between Mont Belvieu and Corpus Christi, Texas began generating distributable cash flow in the second quarter and is expected to be in full NGL service in the second quarter of 2015, at which time it is expected to generate an incremental $23 million in annual EBITDA, based on committed volumes.

2014 Earnings Guidance

“NuStar’s third quarter EPU and EBITDA results as well as our coverage ratio should exceed last year’s third quarter results. Similar to the second quarter, third quarter EBITDA results in our pipeline, storage and fuels marketing segments are all expected to be higher than last year’s third quarter,” said Barron.

“In regard to full year 2014 guidance, we still expect our pipeline segment EBITDA to be $40 to $60 million higher than 2013 and our storage segment adjusted EBITDA to be comparable to 2013. However, we now expect our fuels marketing segment to generate EBITDA in the range of $20 to $30 million. Based on these projections, we expect to cover our distributions for the full year 2014,” Barron said.

-More-

Barron went on to say, “Our 2014 internal growth spending projections have been reduced slightly to reflect the deferral of spending on some of our key growth projects into 2015. Spending is now expected to be in the range of $330 to $350 million, the majority of which will be spent on projects in our pipeline segment.”

Second Quarter 2014 Earnings Conference Call Details

A conference call with management is scheduled for 9:00 a.m. CT today, July 25, 2014, to discuss the financial and operational results for the second quarter of 2014. Investors interested in listening to the presentation may call 800/622-7620, passcode 63499232. International callers may access the presentation by dialing 706/645-0327, passcode 63499232. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 63499232. International callers may access the playback by calling 404/537-3406, passcode 63499232.

Investors interested in listening to the live presentation or a replay via the internet may access the presentation directly by clicking here or by logging on to NuStar Energy L.P.’s Web site at www.nustarenergy.com.

NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar currently has 8,643 miles of pipeline and 84 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids. The partnership’s combined system has approximately 92 million barrels of storage capacity, and 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 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 2013 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.

-30-

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,
	2014			2013			2014			2013
Statement of Income Data:
Revenues:
Service revenues	$	259,562		$	231,451		$	488,900		$	457,210
Product sales	490,183			670,563			1,110,058			1,442,990
Total revenues	749,745			902,014			1,598,958			1,900,200
Costs and expenses:
Cost of product sales	473,755			648,766			1,068,714			1,401,020
Operating expenses	115,537			111,315			221,602			224,832
General and administrative expenses	23,163			19,653			44,019			47,147
Depreciation and amortization expense	47,936			45,308			94,166			86,871
Total costs and expenses	660,391			825,042			1,428,501			1,759,870
Operating income	89,354			76,972			170,457			140,330
Equity in earnings (loss) of joint ventures	3,294			(10,128		)	(1,012		)	(21,271		)
Interest expense, net	(33,122		)	(31,035		)	(67,539		)	(62,026		)
Interest income from related party	—			1,610			1,055			2,732
Other (expense) income, net	(474		)	2,184			3,204			2,528
Income from continuing operations before income tax expense	59,052			39,603			106,165			62,293
Income tax expense	1,865			4,891			5,982			7,982
Income from continuing operations	57,187			34,712			100,183			54,311
(Loss) income from discontinued operations, net of tax (Note 1)	(1,788		)	(1,743		)	(5,147		)	3,062
Net income	$	55,399		$	32,969		$	95,036		$	57,373
Net income applicable to limited partners	$	43,599		$	21,619		$	71,743		$	34,887
Net income (loss) per unit applicable to limited partners:
Continuing operations	$	0.58		$	0.30		$	0.98		$	0.40
Discontinued operations (Note 1)	(0.02		)	(0.02		)	(0.06		)	0.05
Total	$	0.56		$	0.28		$	0.92		$	0.45
Weighted-average limited partner units outstanding	77,886,078			77,886,078			77,886,078			77,886,078

EBITDA from continuing operations (Note 2)	$	140,110		$	114,336		$	266,815		$	208,458
DCF from continuing operations (Note 2)	$	106,321		$	69,565		$	197,033		$	139,451

	June 30,									December 31,
	2014			2013						2013
Balance Sheet Data:
Long-term debt	$	2,726,629		$	2,500,948					$	2,655,553
Partners’ equity	$	1,809,359		$	2,440,266					$	1,903,794
Consolidated debt coverage ratio (Note 3)	4.0x			4.3x						4.4x

NuStar Energy L.P. and Subsidiaries

Consolidated Financial Information - Continued

(Unaudited, Thousands of Dollars, Except Barrel Data)



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Pipeline:
Refined products pipelines throughput (barrels/day)	521,391			459,663			497,315			465,446
Crude oil pipelines throughput (barrels/day)	427,122			350,850			393,457			351,021
Total throughput (barrels/day)	948,513			810,513			890,772			816,467
Throughput revenues	$	117,798		$	96,976		$	220,757		$	190,253
Operating expenses	38,072			29,101			69,689			66,507
Depreciation and amortization expense	19,490			16,648			37,842			32,638
Segment operating income	$	60,236		$	51,227		$	113,226		$	91,108
Storage:
Throughput (barrels/day)	894,194			813,345			857,967			741,872
Throughput revenues	$	31,216		$	26,626		$	58,686		$	48,987
Storage lease revenues	113,770			116,053			218,866			235,369
Total revenues	144,986			142,679			277,552			284,356
Operating expenses	69,091			72,212			134,358			136,865
Depreciation and amortization expense	25,888			26,055			51,180			49,123
Segment operating income	$	50,007		$	44,412		$	92,014		$	98,368
Fuels Marketing:
Product sales and other revenue	$	493,651		$	670,604		$	1,114,622		$	1,443,612
Cost of product sales	477,830			654,202			1,077,305			1,412,934
Gross margin	15,821			16,402			37,317			30,678
Operating expenses	10,996			12,964			22,927			28,826
Depreciation and amortization expense	4			6			11			13
Segment operating income	$	4,821		$	3,432		$	14,379		$	1,839
Consolidation and Intersegment Eliminations:
Revenues	$	(6,690	)	$	(8,245	)	$	(13,973	)	$	(18,021	)
Cost of product sales	(4,075		)	(5,436		)	(8,591		)	(11,914		)
Operating expenses	(2,622		)	(2,962		)	(5,372		)	(7,366		)
Total	$	7		$	153		$	(10	)	$	1,259
Consolidated Information:
Revenues	$	749,745		$	902,014		$	1,598,958		$	1,900,200
Cost of product sales	473,755			648,766			1,068,714			1,401,020
Operating expenses	115,537			111,315			221,602			224,832
Depreciation and amortization expense	45,382			42,709			89,033			81,774
Segment operating income	115,071			99,224			219,609			192,574
General and administrative expenses	23,163			19,653			44,019			47,147
Other depreciation and amortization expense	2,554			2,599			5,133			5,097
Consolidated operating income	$	89,354		$	76,972		$	170,457		$	140,330

NuStar Energy L.P. and Subsidiaries

Consolidated Financial Information - Continued

(Unaudited, Thousands of Dollars, Except Per Unit Data)

Notes:


(1)	The results of operations for the following have been reported as discontinued operations for all periods presented: (i) the San Antonio Refinery and related assets, which we sold on January 1, 2013, and (ii) certain storage assets that were classified as “Assets held for sale” on the consolidated balance sheet as of December 31, 2013.

(2)

NuStar Energy L.P. utilizes financial measures, earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, distributable cash flow (DCF) from continuing operations and DCF from continuing operations per unit, which are not defined in U.S. 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. None of EBITDA from continuing operations, DCF from continuing operations or DCF from continuing operations per unit are intended to represent cash flows from operations for the period, nor are they presented as an alternative to net income or income from continuing operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with U.S. generally accepted accounting principles.

The following is a reconciliation of income from continuing operations to EBITDA from continuing operations and DCF from continuing operations:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Income from continuing operations	$	57,187		$	34,712		$	100,183		$	54,311
Plus interest expense, net and interest income from related party	33,122			29,425			66,484			59,294
Plus income tax expense	1,865			4,891			5,982			7,982
Plus depreciation and amortization expense	47,936			45,308			94,166			86,871
EBITDA from continuing operations	140,110			114,336			266,815			208,458
Equity in (earnings) loss of joint ventures	(3,294		)	10,128			1,012			21,271
Interest expense, net and interest income from related party	(33,122		)	(29,425		)	(66,484		)	(59,294		)
Reliability capital expenditures	(7,239		)	(10,987		)	(11,998		)	(16,464		)
Income tax expense	(1,865		)	(4,891		)	(5,982		)	(7,982		)
Distributions from joint ventures	728			—			3,094			4,652
Other items (a)	4,311			(6,500		)	3,869			(6,500		)
Mark-to-market impact of hedge transactions (b)	6,692			(3,096		)	6,707			(4,690		)
DCF from continuing operations	$	106,321		$	69,565		$	197,033		$	139,451

Less DCF from continuing operations available to general partner	12,766			12,766			25,532			25,532
DCF from continuing operations available to limited partners	$	93,555		$	56,799		$	171,501		$	113,919

DCF from continuing operations per limited partner unit	$	1.20		$	0.73		$	2.20		$	1.46


(a)	For 2014, other items consist of a net increase in deferred revenue associated with throughput deficiency payments and construction reimbursements. For 2013, other items consist of a $6.5 million reduction of the contingent consideration recorded in association with an acquisition.


(b)	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.


(3)	The consolidated debt coverage ratio is calculated as consolidated indebtedness to consolidated EBITDA, as defined in our $1.5 billion five-year revolving credit agreement.