NGL Energy Partners LP Announces Third Quarter Fiscal 2016 Results
NGL Energy Partners LP (NYSE:NGL) today reported Adjusted EBITDA of $113.5 million for the three months ended December 31, 2015 (exclusive of $0.2 million of advisory and legal costs related to acquisitions) compared to Adjusted EBITDA of $144.8 million for the three months ended December 31, 2014 (exclusive of $0.7 million of advisory and legal costs related to acquisitions and $7.6 million of compensation costs related to the Gavilon and TransMontaigne acquisitions). NGL reported net income of $29.6 million for the three months ended December 31, 2015, compared to a net loss of $5.3 million for the three months ended December 31, 2014.
For the nine months ended December 31, 2015, NGL reported Adjusted EBITDA of $270.1 million (exclusive of $0.9 million of advisory and legal costs related to acquisitions), compared to Adjusted EBITDA of $258.3 million during the nine months ended December 31, 2014 (exclusive of $5.0 million of advisory and legal costs related to acquisitions and $15.3 million of compensation costs related to the Gavilon and TransMontaigne acquisitions). NGL reported a net loss of $33.1 million for the nine months ended December 31, 2015, compared to a net loss of $61.1 million for the nine months ended December 31, 2014.
Since December 1, 2015 NGL has achieved two major initiatives:
- Reached an agreement with Saddlehorn Pipeline Company, LLC to combine NGL’s Grand Mesa project with the Saddlehorn Pipeline project. This reduced our capital expenditure requirements by approximately $200 million.
- Sold TransMontaigne GP LLC on February 1, 2016 and reduced indebtedness by approximately $350 million with the cash proceeds. As a result, NGL will deconsolidate the TransMontaigne Partners LP (“TLP”) financials from the NGL financials going forward and indebtedness will decrease by an additional $248 million (TLP Revolving Credit Facility) in future SEC filings.
With respect to capital expenditures anticipated for the next 18 months, we reiterate our guidance of $350 million of which only $250 million is currently committed.
NGL is adjusting the EBITDA guidance for Fiscal Year 2016 to $450 million from our previous guidance of $500 million. This is driven by the continued decline of the price of crude oil, which has impacted the value of the recovered hydrocarbon revenue in our water solutions business.
Comparing Fiscal 2016 third quarter to the same quarter a year ago:
- Water Solutions increased volumes nearly 20% while disposal fees per barrel declined about 5%.
- Liquids volumes declined 6% due to warm weather while margins doubled.
- Retail Propane margins increased 4.5% while volumes declined 12% as a result of warm weather.
- Refined Products volumes are up 31% while margins declined about 2 cents per gallon.
- Crude Oil Logistics results were comparable to the prior year. The decline in marketing volumes was offset by increased utilization of Cushing storage.
NGL defines EBITDA as net income (loss) attributable to parent equity, plus interest expense, income tax provision (benefit), and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or market adjustments, gains and losses on disposal or impairment of assets, and equity-based compensation expense. NGL also includes in Adjusted EBITDA certain inventory valuation adjustments related to its refined products and renewables segment, as described below. EBITDA and Adjusted EBITDA should not be considered alternatives to net income, income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with accounting principles generally accepted in the United States (“GAAP”) as those items are used to measure operating performance, liquidity or the ability to service debt obligations. NGL believes that EBITDA provides additional information to investors for evaluating its ability to make quarterly distributions to its unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information to investors for evaluating NGL’s financial performance without regard to financing methods, capital structure, and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA and Adjusted EBITDA or similarly titled measures used by other entities.
Other than for its refined products and renewables segment, for purposes of its Adjusted EBITDA calculation, NGL makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, NGL reverses the previously recorded unrealized gain or loss and records a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of its refined products and renewables segment. The primary hedging strategy of NGL’s refined products and renewables segment is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges are six months to one year in duration at inception. The “inventory valuation adjustment” row in the table below reflects the excess of the market value of the inventory of the refined products and renewables segment at the balance sheet date over its cost. NGL adds this to Adjusted EBITDA because the gains and losses associated with derivative contracts of this segment, which are intended primarily to hedge inventory holding risk, also impact Adjusted EBITDA.
This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes its expectations as reflected in the forward-looking statements are reasonable, NGL can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s annual report on Form 10-K, quarterly reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.
About NGL Energy Partners LP
NGL Energy Partners LP is a Delaware limited partnership. NGL owns and operates a vertically integrated energy business with five primary businesses: crude oil logistics, water solutions, liquids, retail propane, and refined products and renewables. For further information, visit the Partnership's website at www.nglenergypartners.com.
|NGL ENERGY PARTNERS LP AND SUBSIDIARIES|
|Unaudited Condensed Consolidated Balance Sheets|
|(U.S. Dollars in Thousands, except unit amounts)|
|December 31,||March 31,|
|Cash and cash equivalents||$||25,179||$||41,303|
Accounts receivable–trade, net of allowance for doubtful accounts of $6,270 and $4,367, respectively
|Prepaid expenses and other current assets||117,476||120,855|
|Assets held for sale||87,383||-|
|Total current assets||1,229,559||1,645,344|
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $305,233 and $202,959, respectively
INTANGIBLE ASSETS, net of accumulated amortization of $305,891 and $220,517, respectively
|INVESTMENTS IN UNCONSOLIDATED ENTITIES||467,559||472,673|
|OTHER NONCURRENT ASSETS||106,086||112,837|
|LIABILITIES AND EQUITY|
|Accrued expenses and other payables||193,295||195,116|
|Advance payments received from customers||73,662||54,234|
|Current maturities of long-term debt||7,600||4,472|
|Total current liabilities||796,908||1,112,996|
|LONG-TERM DEBT, net of current maturities||3,323,492||2,745,299|
|OTHER NONCURRENT LIABILITIES||13,232||16,086|
|COMMITMENTS AND CONTINGENCIES (NOTE 11)|
|General partner, representing a 0.1% interest, 105,489 and 103,899 notional units, respectively||(34,431||)||(37,021||)|
Limited partners, representing a 99.9% interest, 105,383,639 and 103,794,870 common units issued and outstanding, respectively
|Accumulated other comprehensive loss||(148||)||(109||)|
|Total liabilities and equity||$||6,564,471||$||6,547,501|
|NGL ENERGY PARTNERS LP AND SUBSIDIARIES|
|Unaudited Condensed Consolidated Statements of Operations|
|(U.S. Dollars in Thousands, except unit and per unit amounts)|
|Three Months Ended December 31,||Nine Months Ended December 31,|
|Crude oil logistics||$||519,425||$||1,694,881||$||2,854,787||$||5,735,307|
|Refined products and renewables||1,666,471||1,983,444||5,335,356||5,708,161|
|COST OF SALES:|
|Crude oil logistics||495,529||1,697,374||2,770,240||5,678,725|
|Refined products and renewables||1,594,359||1,905,021||5,149,151||5,570,185|
|Total Cost of Sales||2,433,500||4,311,668||8,761,877||13,025,186|
|OPERATING COSTS AND EXPENSES:|
|General and administrative||23,035||44,230||114,814||113,742|
|Depreciation and amortization||59,180||50,335||175,772||139,809|
Loss on disposal or impairment of assets, net
|OTHER INCOME (EXPENSE):|
|Equity in earnings of unconsolidated entities||2,858||1,242||14,008||7,504|
|Other income, net||2,161||3,371||2,941||2,363|
|Income (Loss) Before Income Taxes||30,023||(7,359||)||(34,903||)||(64,035||)|
|INCOME TAX (EXPENSE) BENEFIT||(402||)||2,090||1,846||2,977|
|Net Income (Loss)||29,621||(5,269||)||(33,057||)||(61,058||)|
LESS: NET INCOME ALLOCATED TO GENERAL PARTNER
|LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS||(6,140||)||(5,649||)||(12,906||)||(9,059||)|
NET LOSS ALLOCATED TO LIMITED PARTNERS
BASIC INCOME (LOSS) PER COMMON UNIT
DILUTED INCOME (LOSS) PER COMMON UNIT
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
ADJUSTED EBITDA RECONCILIATION
The following table reconciles net loss attributable to parent equity to our EBITDA and Adjusted EBITDA, each of which are non-GAAP financial measures:
Three Months Ended December 31,
Nine Months Ended December 31,
|Net income (loss)||$||29,621||$||(5,269||)||$||(33,057||)||$||(61,058||)|
|Less Net income attributable to noncontrolling interests||(6,140||)||(5,649||)||(12,906||)||(9,059||)|
|Net income (loss) attributable to parent equity||23,481||(10,918||)||(45,963||)||(70,117||)|
|Income tax expense (benefit)||384||(2,099||)||(1,900||)||(2,997||)|
|Depreciation and amortization||55,261||51,065||162,728||143,781|
|Net unrealized gains on derivatives||(1,748||)||(4,724||)||(4,494||)||(13,414||)|
|Inventory valuation adjustment||(16,524||)||-||2,831||-|
|Lower of cost or market adjustments||13,251||29,399||7,325||32,236|
|Loss on disposal or impairment of assets, net||1,343||30,072||3,056||34,680|
|Equity-based compensation expense||3,032||14,870||52,712||36,529|