NuStar Energy L.P. (NYSE: NS) today announced that its second quarter 2016 quarterly earnings exceeded consensus estimates and surpassed the partnership’s guidance expectations. The partnership reported net income applicable to limited partners of $40.0 million, or $0.52 per unit, for the second quarter of 2016 and $84.8 million, or $1.09 per unit, for the six months ended June 30, 2016.
Distributable cash flow (DCF) from continuing operations available to limited partners was $92.8 million for the second quarter of 2016, which allowed NuStar to cover its distribution to the limited partners by 1.09 times. For the six months ended June 30, 2016, DCF from continuing operations available to limited partners was $189.8 million, which covered the distribution to the limited partners by 1.11 times.
Second quarter 2016 earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $144.7 million. For the six months ended June 30, 2016, the partnership reported $292.2 million of EBITDA from continuing operations.
As previously announced on July 29, 2016, the second quarter 2016 distribution of $1.095 per unit will be paid on August 12, 2016 to holders of record as of August 9, 2016.
“Strong refined product pipeline throughput volumes, the benefit from 1.1 million barrels of storage leased at our Piney Point, Maryland facility, along with lower than expected operating expenses, contributed to our better than expected second quarter results,” said Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “What’s more significant is that we were able to report these solid results despite throughput revenues only slightly above contract minimums on our South Texas Crude Oil Pipeline System.”
Barron went on to say, “As you can see, we have the right assets to withstand this current downturn in the crude markets and we remain on track to cover the distribution for the full-year due to the continued strength of our core, diversified fee-based operations.”
Second Quarter 2016 Earnings Conference Call Details
A conference call with management is scheduled for 9:00 a.m. CT today, August 2, 2016, to discuss the financial and operational results for the second quarter of 2016. Investors interested in listening to the presentation may call 877/702-5019, passcode 44145456. International callers may access the presentation by dialing 443/863-7314, passcode 44145456. The partnership intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 44145456. International callers may access the playback by calling 404/537-3406, passcode 44145456. The playback will be available until 10:59 p.m. CT on September 2, 2016.
Investors interested in listening to the live presentation or a replay via the internet may access the presentation directly at http://edge.media-server.com/m/p/4iibfou3 or by logging on to NuStar Energy L.P.’s Web site at www.nustarenergy.com.
The presentation 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 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 approximately 8,700 miles of pipeline and 79 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids. The partnership’s combined system has approximately 94 million barrels of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and the United Kingdom. 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 Energy L.P.’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar Energy L.P.’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 Energy L.P., 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, 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.’s and NuStar GP Holdings, LLC’s 2015 annual reports 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.
| 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, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Statement of Income Data: | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Service revenues | $ | 270,403 | $ | 274,581 | $ | 536,969 | $ | 544,554 | ||||||||
| Product sales | 167,401 | 296,030 | 306,538 | 581,001 | ||||||||||||
| Total revenues | 437,804 | 570,611 | 843,507 | 1,125,555 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of product sales | 157,617 | 281,610 | 286,607 | 544,116 | ||||||||||||
| Operating expenses | 112,662 | 117,138 | 217,883 | 232,785 | ||||||||||||
| General and administrative expenses | 22,657 | 26,693 | 46,442 | 51,746 | ||||||||||||
| Depreciation and amortization expense | 53,651 | 52,765 | 106,793 | 105,222 | ||||||||||||
| Total costs and expenses | 346,587 | 478,206 | 657,725 | 933,869 | ||||||||||||
| Operating income | 91,217 | 92,405 | 185,782 | 191,686 | ||||||||||||
| Interest expense, net | (34,229 | ) | (32,824 | ) | (68,352 | ) | (64,861 | ) | ||||||||
| Other (expense) income, net | (201 | ) | (2,152 | ) | (372 | ) | 60,116 | |||||||||
| Income from continuing operations before income tax expense | 56,787 | 57,429 | 117,058 | 186,941 | ||||||||||||
| Income tax expense | 4,270 | 3,104 | 7,140 | 5,491 | ||||||||||||
| Income from continuing operations | 52,517 | 54,325 | 109,918 | 181,450 | ||||||||||||
Income from discontinued operations, net of tax | — | — | — | 774 | ||||||||||||
| Net income | $ | 52,517 | $ | 54,325 | $ | 109,918 | $ | 182,224 | ||||||||
| Net income applicable to limited partners | $ | 40,018 | $ | 42,434 | $ | 84,818 | $ | 156,970 | ||||||||
Basic and diluted net income per unit applicable to limited partners: | ||||||||||||||||
| Continuing operations | $ | 0.52 | $ | 0.54 | $ | 1.09 | $ | 2.00 | ||||||||
| Discontinued operations | — | — | — | 0.01 | ||||||||||||
| Total | $ | 0.52 | $ | 0.54 | $ | 1.09 | $ | 2.01 | ||||||||
| Basic weighted-average limited partner units outstanding | 77,886,219 | 77,886,078 | 77,886,148 | 77,886,078 | ||||||||||||
| Other Data (Note 1): | ||||||||||||||||
| EBITDA from continuing operations | $ | 144,667 | $ | 143,018 | $ | 292,203 | $ | 357,024 | ||||||||
|
DCF from continuing operations available to
limited partners | $ | 92,820 | $ | 92,166 | $ | 189,847 | $ | 198,920 | ||||||||
| June 30, | December 31, | |||||||||||||||
| 2016 | 2015 | 2015 | ||||||||||||||
| Balance Sheet Data: | ||||||||||||||||
| Total debt | $ | 3,205,693 | $ | 3,120,616 | $ | 3,139,612 | ||||||||||
| Partners’ equity | $ | 1,489,895 | $ | 1,713,073 | $ | 1,609,844 | ||||||||||
| 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, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Pipeline: | ||||||||||||||||
| Refined products pipelines throughput (barrels/day) | 538,996 | 499,333 | 530,134 | 502,838 | ||||||||||||
| Crude oil pipelines throughput (barrels/day) | 399,372 | 468,431 | 405,241 | 487,246 | ||||||||||||
| Total throughput (barrels/day) | 938,368 | 967,764 | 935,375 | 990,084 | ||||||||||||
| Throughput revenues | $ | 121,575 | $ | 122,210 | $ | 240,448 | $ | 246,635 | ||||||||
| Operating expenses | 36,159 | 36,634 | 69,163 | 71,942 | ||||||||||||
| Depreciation and amortization expense | 21,864 | 20,756 | 43,468 | 41,233 | ||||||||||||
Segment operating income | $ | 63,552 | $ | 64,820 | $ | 127,817 | $ | 133,460 | ||||||||
| Storage: | ||||||||||||||||
| Throughput (barrels/day) | 727,857 | 957,452 | 778,092 | 919,075 | ||||||||||||
| Throughput terminal revenues | $ | 28,668 | $ | 34,623 | $ | 58,068 | $ | 66,314 | ||||||||
| Storage terminal revenues | 123,206 | 123,019 | 246,205 | 241,662 | ||||||||||||
| Total revenues | 151,874 | 157,642 | 304,273 | 307,976 | ||||||||||||
| Operating expenses | 71,158 | 74,004 | 137,161 | 146,632 | ||||||||||||
| Depreciation and amortization expense | 29,653 | 29,887 | 59,036 | 59,615 | ||||||||||||
| Segment operating income | $ | 51,063 | $ | 53,751 | $ | 108,076 | $ | 101,729 | ||||||||
| Fuels Marketing: | ||||||||||||||||
| Product sales and other revenue | $ | 169,862 | $ | 297,589 | $ | 310,308 | $ | 584,023 | ||||||||
| Cost of product sales | 160,557 | 285,862 | 293,138 | 552,080 | ||||||||||||
| Gross margin | 9,305 | 11,727 | 17,170 | 31,943 | ||||||||||||
| Operating expenses | 7,913 | 9,077 | 16,551 | 19,368 | ||||||||||||
| Segment operating income | $ | 1,392 | $ | 2,650 | $ | 619 | $ | 12,575 | ||||||||
| Consolidation and Intersegment Eliminations: | ||||||||||||||||
| Revenues | $ | (5,507 | ) | $ | (6,830 | ) | $ | (11,522 | ) | $ | (13,079 | ) | ||||
| Cost of product sales | (2,940 | ) | (4,252 | ) | (6,531 | ) | (7,964 | ) | ||||||||
| Operating expenses | (2,568 | ) | (2,577 | ) | (4,992 | ) | (5,157 | ) | ||||||||
| Total | $ | 1 | $ | (1 | ) | $ | 1 | $ | 42 | |||||||
| Consolidated Information: | ||||||||||||||||
| Revenues | $ | 437,804 | $ | 570,611 | $ | 843,507 | $ | 1,125,555 | ||||||||
| Cost of product sales | 157,617 | 281,610 | 286,607 | 544,116 | ||||||||||||
| Operating expenses | 112,662 | 117,138 | 217,883 | 232,785 | ||||||||||||
| Depreciation and amortization expense | 51,517 | 50,643 | 102,504 | 100,848 | ||||||||||||
| Segment operating income | 116,008 | 121,220 | 236,513 | 247,806 | ||||||||||||
| General and administrative expenses | 22,657 | 26,693 | 46,442 | 51,746 | ||||||||||||
| Other depreciation and amortization expense | 2,134 | 2,122 | 4,289 | 4,374 | ||||||||||||
| Consolidated operating income | $ | 91,217 | $ | 92,405 | $ | 185,782 | $ | 191,686 | ||||||||
NuStar Energy L.P. and Subsidiaries | ||
Consolidated Financial Information - Continued | ||
(Unaudited, Thousands of Dollars, Except Ratio Data) | ||
Notes: | ||
(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 and (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. | |
| 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 the metric for determining the company-wide bonus and the vesting of performance units awarded to management as our board of directors believes DCF appropriately aligns management’s interest with our unitholders’ interest in increasing distributions in a prudent manner. 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, or for any period presented reflecting discontinued operations, income from continuing operations. 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 our non-GAAP financial measures: | ||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Income from continuing operations | $ | 52,517 | $ | 54,325 | $ | 109,918 | $ | 181,450 | ||||||||
| Interest expense, net | 34,229 | 32,824 | 68,352 | 64,861 | ||||||||||||
| Income tax expense | 4,270 | 3,104 | 7,140 | 5,491 | ||||||||||||
| Depreciation and amortization expense | 53,651 | 52,765 | 106,793 | 105,222 | ||||||||||||
| EBITDA from continuing operations | 144,667 | 143,018 | 292,203 | 357,024 | ||||||||||||
| Interest expense, net | (34,229 | ) | (32,824 | ) | (68,352 | ) | (64,861 | ) | ||||||||
| Reliability capital expenditures | (11,305 | ) | (6,029 | ) | (17,322 | ) | (12,827 | ) | ||||||||
| Income tax expense | (4,270 | ) | (3,104 | ) | (7,140 | ) | (5,491 | ) | ||||||||
| Distributions from joint venture | — | — | — | 2,500 | ||||||||||||
| Mark-to-market impact of hedge transactions (a) | 5,762 | 1,440 | 10,446 | 321 | ||||||||||||
| Unit-based compensation (b) | 1,122 | — | 2,208 | — | ||||||||||||
| Other items (c) | 3,839 | 2,431 | 3,336 | (52,214 | ) | |||||||||||
| DCF from continuing operations | $ | 105,586 | $ | 104,932 | $ | 215,379 | $ | 224,452 | ||||||||
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 | $ | 92,820 | $ | 92,166 | $ | 189,847 | $ | 198,920 | ||||||||
Distributions applicable to limited partners | $ | 85,285 | $ | 85,285 | $ | 170,570 | $ | 170,570 | ||||||||
| Distribution coverage ratio (d) | 1.09x | 1.08x | 1.11x | 1.16x | ||||||||||||
| (a) | 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. | |
| (b) | In connection with the employee transfer from NuStar GP, LLC on March 1, 2016, we assumed obligations related to awards issued under a long-term incentive plan, and we intend to satisfy the vestings of equity-based awards with the issuance of our 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 consist of (i) adjustments for throughput deficiency payments and construction reimbursements for all periods presented and (ii) in 2015, a $56.3 million non-cash gain associated with the Linden terminal acquisition on January 2, 2015. | |
| (d) | Distribution coverage ratio is calculated by dividing DCF from continuing operations available to limited partners by distributions applicable to limited partners. | |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160802005710/en/
Contacts:
Investors, Chris Russell,
Treasurer and Vice President Investor Relations
Investor Relations:
210-918-3507
or
Media, Mary Rose Brown, Executive Vice
President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com
