JP Energy Partners LP (NYSE: JPEP) (“JP Energy”, “we,” “our,” or
“us”) today announced financial and operating results for the
second quarter of 2016 and provided updated guidance for 2016.
JP Energy reported a net loss of $2.4 million for the second
quarter of 2016, compared to a net loss of $4.9 million for the
second quarter of 2015, and reported Adjusted EBITDA of $14.9
million for the second quarter of 2016, compared to $7.1 million
for the second quarter of 2015. Adjusted EBITDA for the second
quarter of 2016 included $3.5 million of corporate overhead support
from our general partner. Distributable Cash Flow was $12.1 million
for the second quarter of 2016, resulting in a distribution
coverage ratio for the quarter of 1.0x.
For the six months ended June 30, 2016, JP Energy reported
a net loss of $5.6 million, compared to a net loss of $4.3 million
for the six months ended June 30, 2015, and reported Adjusted
EBITDA of $29.1 million for the first six months of 2016, compared
to $22.2 million for the first six months of 2015. Adjusted EBITDA
for the first half of 2016 included $5.0 million of corporate
overhead support from our general partner. Distributable Cash Flow
was $24.6 million for the first six months of 2016, resulting in a
distribution coverage ratio for the first six months of 2016 of
approximately 1.0x.
“In the second quarter we continued to execute well, furthering
our trend of improving financial performance, including
year-over-year growth in Adjusted EBITDA across all three of our
business segments,” said J. Patrick Barley, Executive Chairman,
President and Chief Executive Officer of JP Energy. “We
continue to improve our efficiency and reduce expenses throughout
our company, resulting in a decline in expenses in each of our
business segments and corporate costs for the first half of the
year, as well as focus on our sales efforts and renewed growth
across all of our operations. Our first half results were
within our range of expectations laid out earlier this year, but
reflect the challenges faced in our operations, particularly for
our NGL segment which was negatively impacted by record warm
weather and a decline in oilfield service related propane volumes.
While we have begun to see an improvement in sentiment and activity
for our crude segment, which is expected to drive increases in
crude oil volumes through the balance of the year, headwinds remain
for our NGL business where we expect further volume and margin
pressure. We continue to believe that the quality and diversity of
our assets, the flexibility of our balance sheet and the support of
our general partner position us well to manage through these
near-term challenges and capitalize on increased activity during
the eventual market recovery.”
Review of Segment Performance
Crude Oil Pipelines and Storage – Adjusted EBITDA for our Crude
Oil Pipelines and Storage segment was $6.9 million for the second
quarter of 2016, compared to $6.5 million for the second quarter of
2015. The slight increase was driven by improved crude oil sales
margins and lower operating expenses partially offset by reduced
crude oil sales and throughput volumes. The increase in crude oil
sales margins is primarily due to improved cost efficiencies on our
trucked barrels.
Refined Products Terminals and Storage – Adjusted EBITDA for our
Refined Products Terminals and Storage segment was $4.0 million for
the second quarter of 2016, compared to $2.5 million for the second
quarter of 2015. The increase was due to an increase in refined
products sales margins related to timing of our sale of butane
blending volumes in the second quarter of 2016, partially offset by
lower terminal throughput.
NGL Distribution and Sales – Adjusted EBITDA for our NGL
Distribution and Sales segment was $6.4 million for the second
quarter of 2016, compared to $4.8 million for the second quarter of
2015. The increase was driven by higher average NGL and refined
products sales margins per gallon from more favorable market
conditions and lower operating and G&A expenses, partially
offset by lower NGL and refined products volumes associated with
oilfield services as a result of lower exploration and production
activity during the quarter.
Cash Distributions
On July 25, 2016, JP Energy announced that it would pay on
August 12, 2016, to unitholders of record on August 5, 2016, a cash
distribution of $0.3250 per common and subordinated unit for the
three month period ended June 30, 2016.
Update to 2016 Full Year Adjusted EBITDA Guidance
We are updating our financial guidance from full year Adjusted
EBITDA in 2016 of $50-$56 million and Distributable Cash Flow of
$39-$45 million to Adjusted EBITDA of $42-$48 million and
Distributable Cash Flow of $32-$38 million, which does not include
the $5 million of corporate overhead support received from our
general partner in the first half of 2016 or any potential future
support. The reduced guidance is primarily attributable to
lower volumes in our NGL Distribution and Sales segment. Our
guidance for full year 2016 growth capital expenditures of $25-$35
million and remaining at or below our long-term target of 3.5-4.0x
debt to EBITDA through 2016 remain unchanged.
Earnings Conference Call Information
We will hold a conference call on Tuesday, August 9, 2016, at
8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss our
second quarter 2016 financial results. The call can be accessed
live over the telephone by dialing (877) 407-0784, or for
international callers, (201) 689-8560. A replay will be available
shortly after the call and can be accessed by dialing (877)
870-5176, or for international callers (858) 384-5517. The passcode
for the replay is 13642197. The replay will be available until
August 23, 2016.
Interested parties may also listen to a simultaneous webcast of
the conference call by logging onto JP Energy’s website at
www.jpenergypartners.com in the Investors section. A replay of the
webcast will also be available for approximately 30 days following
the conference call.
About JP Energy Partners LP
JP Energy Partners LP (JPEP) is a publicly traded,
growth-oriented limited partnership that owns, operates, develops
and acquires a diversified portfolio of midstream energy assets.
Our operations currently consist of: (i) crude oil pipelines and
storage; (ii) refined products terminals and storage; and (iii) NGL
distribution and sales, which together provide midstream
infrastructure solutions for the growing supply of crude oil,
refined products and NGLs in the United States. To learn more,
please visit our website at www.jpenergypartners.com.
Use of Non-GAAP Financial Measures
Adjusted EBITDA, distributable cash flow and adjusted gross
margin are supplemental, non-GAAP financial measures used by
management and by external users of our financial statements, such
as investors and commercial banks, to assess:
- our operating performance as compared
to those of other companies in the midstream sector, without regard
to financing methods, historical cost basis or capital
structure;
- the ability of our assets to generate
sufficient cash flow to make distributions to our unitholders;
- our ability to incur and service debt
and fund capital expenditures; and
- the viability of acquisitions and other
capital expenditure projects and the returns on investment of
various investment opportunities.
We believe that the presentation of Adjusted EBITDA,
distributable cash flow and adjusted gross margin provides
information useful to investors in assessing our financial
condition and results of operations. The GAAP measures most
directly comparable to Adjusted EBITDA and distributable cash flow
are net income (loss) and cash flow from operating activities,
respectively, and the GAAP measure most directly comparable to
adjusted gross margin is operating income (loss). These non-GAAP
measures should not be considered as alternatives to the most
directly comparable GAAP financial measure. Each of these non-GAAP
financial measures exclude some, but not all, items that affect the
most directly comparable GAAP financial measure. Because Adjusted
EBITDA, distributable cash flow and adjusted gross margin may be
defined differently by other companies in the our industry, our
definitions of these non-GAAP financial measures may not be
comparable to similarly titled measures of other companies, thereby
diminishing their utility.
We define Adjusted EBITDA as net income (loss) plus (minus)
interest expense (income), income tax expense (benefit),
depreciation and amortization expense, asset impairments, (gains)
losses on asset sales, certain non-cash charges such as non-cash
equity compensation, non-cash vacation expense, non-cash (gains)
losses on commodity derivative contracts (total (gain) loss on
commodity derivatives less net cash flow associated with commodity
derivatives settled during the period) and selected (gains) charges
and transaction costs that are unusual or non-recurring. We define
distributable cash flow as Adjusted EBITDA plus proceeds from the
sale of assets, less net cash interest paid, income taxes paid and
maintenance capital expenditures. We define adjusted gross margin
as total revenues minus cost of sales, excluding depreciation and
amortization, and certain non-cash charges such as non-cash
vacation expense and non-cash gains (losses) on derivative
contracts (total gain (losses) on commodity derivatives less net
cash flow associated with commodity derivatives settled during the
period).
Forward-Looking Statements
Disclosures in this press release contain
“forward-looking statements.” The words “believe,” “expect,”
“anticipate,” “plan,” “intend,” “foresee,” “should,” “would,”
“could” or other similar expressions are intended to identify
forward-looking statements, which are generally not historical in
nature. These forward-looking statements are based on our current
expectations and beliefs concerning future developments and their
potential effect on us. While management believes that these
forward-looking statements are reasonable as and when made, there
can be no assurance that future developments affecting us will be
those that we anticipate. All comments concerning our expectations
for future revenues and operating results are based on our
forecasts for our existing operations and do not include the
potential impact of any future acquisitions. Our forward-looking
statements involve significant risks and uncertainties (some of
which are beyond our control) and assumptions that could cause
actual results to differ materially from our historical experience
and our present expectations or projections. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to the
price of, demand for and production of, crude oil, refined products
and NGLs in the markets we serve; the volumes of crude oil that we
gather, transport and store, the throughput volumes at our refined
products terminals and our NGL sales volumes; the fees we receive
for the crude oil, refined products and NGL volumes we handle;
pressures from our competitors, some of which may have
significantly greater resources than us; the cost of propane that
we buy for resale, including due to disruptions in its supply, and
whether we are able to pass along cost increases to our customers;
competitive pressures from other energy sources such as natural
gas, which could reduce existing demand for propane; the risk of
contract cancellation, non-renewal or failure to perform by our
customers, and our inability to replace such contracts and/or
customers; leaks or releases of hydrocarbons into the environment
that result in significant costs and liabilities; the level of our
operating, maintenance and general and administrative expenses;
regulatory action affecting our existing contracts, our operating
costs or our operating flexibility; failure to secure or maintain
contracts with our largest customers, or non-performance of any of
those customers under the applicable contract; competitive
conditions in our industry; changes in the long-term supply or
production of and demand for oil and natural gas; volatility of
fuel prices; actions taken by our customers, competitors and
third-party operators; our ability to complete growth projects on
time and on budget; inclement or hazardous weather conditions,
including flooding, and the physical impacts of climate change;
environmental hazards; industrial accidents; changes in laws and
regulations (or the interpretation thereof) related to the
transportation, storage or terminaling of crude oil and refined
products or the distribution and sales of NGLs; fires, explosions
or other accidents; the effects of future litigation; the amount of
corporate overhead support provided by our general partner, if any,
and other factors discussed from time to time in each of our
documents and reports filed with the Securities and Exchange
Commission. Any forward-looking statement applies only as of the
date on which such statement is made and we do not intend to
correct or update any forward-looking statement, whether as a
result of new information, future events or otherwise, except as
required by law.
JP ENERGY PARTNERS LP
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30, 2016
December 31, 2015
(in thousands, except unit data) ASSETS Current
assets Cash and cash equivalents $ 1,287 $ 1,987 Accounts
receivable, net 45,655 60,519 Receivables from related parties 694
8,624 Inventory 9,053 4,786 Prepaid expenses and other current
assets 6,153 4,168 Current assets of discontinued operations held
for sale — 2,730 Total Current Assets 62,842
82,814
Non-current assets Property, plant and
equipment, net 285,308 291,454 Goodwill 216,692 216,692 Intangible
assets, net 126,283 134,432 Deferred financing costs and other
assets, net 2,734 3,223 Noncurrent assets of discontinued
operations held for sale — 6,644 Total Non-Current
Assets 631,017 652,445 Total Assets $ 693,859 $
735,259
LIABILITIES AND PARTNERS’ CAPITAL Current
liabilities Accounts payable $ 34,134 $ 45,933 Payables to
related parties 98 — Accrued liabilities 15,982 15,260 Capital
leases and short-term debt 41 107 Customer deposits and advances
2,580 3,742 Current portion of long-term debt 1,134 454 Current
liabilities of discontinued operations held for sale —
640 Total Current Liabilities 53,969 66,136
Non-current liabilities Long-term debt 158,000 162,740 Other
long-term liabilities 1,795 1,463 Total Liabilities
213,764 230,339 Commitments and Contingencies
Partners’ capital General Partner 9,568 5,568 Common
units (22,119,170 units authorized; 18,529,541 and 18,465,320 units
issued and outstanding as of June 30, 2016 and December 31, 2015,
respectively) 252,368 266,691 Subordinated units (18,197,249 units
authorized; 18,124,560 and 18,127,678 units issued and outstanding
as of June 30, 2016 and December 31, 2015, respectively)
218,159 232,661 Total Partners’ Capital 480,095
504,920 Total Liabilities and Partners’ Capital $ 693,859 $
735,259
JP ENERGY PARTNERS LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three Months Ended June 30,
Six Months Ended June 30, 2016
2015 2016 2015
(in thousands, except unit and per unit data)
REVENUES Crude oil sales $ 82,242 $ 147,497 $ 123,388 $
253,452 Gathering, transportation and storage fees 4,952 6,647
10,781 13,593 Gathering, transportation and storage fees - related
parties 814 280 1,845 280 NGL and refined product sales 36,020
38,071 78,767 92,255 NGL and refined product sales - related
parties — — 244 — Refined products terminals and storage fees 3,352
3,068 6,450 6,176 Other revenues 3,389 3,885
6,785 6,983 Total revenues
130,769 199,448 228,260
372,739
COSTS AND EXPENSES Cost of
sales, excluding depreciation and amortization 93,580 162,398
150,740 292,314 Operating expense 16,159 17,649 32,489 33,902
General and administrative 9,441 10,815 20,648 24,876 Depreciation
and amortization 11,629 11,518 23,165 22,281 Loss on disposal of
assets, net 558 1,272 1,690
1,385 Total costs and expenses 131,367
203,652 228,732 374,758
OPERATING LOSS (598 ) (4,204 ) (472 ) (2,019 )
OTHER INCOME (EXPENSE) Interest expense (2,103 )
(1,382 ) (4,533 ) (2,497 ) Other income, net 496
336 527 360
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (2,205 )
(5,250 ) (4,478 ) (4,156 ) Income tax expense (160 )
(229 ) (576 ) (251 )
LOSS FROM
CONTINUING OPERATIONS (2,365 ) (5,479 ) (5,054 ) (4,407 )
DISCONTINUED OPERATIONS Net income (loss) from
discontinued operations — 542 (539 ) 135
NET LOSS $ (2,365 ) $ (4,937 ) $ (5,593 ) $ (4,272 )
Basic and diluted loss per unit Net loss from
continuing operations allocated to common units $ (1,133 ) $ (2,692
) $ (2,452 ) $ (2,137 ) Net loss allocated to common units (1,133 )
(2,419 ) (2,724 ) (2,069 ) Weighted average number of common units
outstanding - basic 18,528,554 18,356,902 18,497,417 18,281,786
Weighted average number of common units outstanding - diluted
18,528,554 18,816,263 18,497,417 18,520,300 Basic and diluted net
loss from continuing operations per common unit $ (0.06 ) $ (0.15 )
$ (0.13 ) $ (0.12 ) Basic and diluted net loss per common unit
(0.06 ) (0.13 ) (0.15 ) (0.11 ) Net loss from continuing
operations allocated to subordinated units $ (1,232 ) $ (2,787 ) $
(2,602 ) $ (2,270 ) Net loss allocated to subordinated units (1,232
) (2,518 ) (2,869 ) (2,203 ) Weighted average number of
subordinated units outstanding - basic and diluted $ 18,124,817 $
18,149,629 $ 18,125,697 $ 18,167,625 Basic and diluted net loss
from continuing operations per subordinated unit (0.07 ) (0.15 )
(0.14 ) (0.12 ) Basic and diluted net loss per subordinated unit
(0.07 ) (0.14 ) (0.16 ) (0.12 ) Distributions declared per
common and subordinated unit $ 0.325 $ 0.325 $ 0.65 $ 0.65
JP ENERGY PARTNERS LP NON-GAAP
RECONCILIATIONS (Unaudited) Three
Months Ended June 30, Six Months Ended June 30,
2016 2015 2016
2015 (in thousands) Segment
Adjusted EBITDA Crude oil pipelines and storage $ 6,917 $ 6,547 $
11,731 $ 11,430 Refined products terminals and storage 4,047 2,518
6,905 5,340 NGL distribution and sales 6,369 4,828 18,658 16,852
Discontinued operations — (715 ) (371 ) 1,935 Corporate and other
(2,452 ) (6,120 ) (7,860 ) (13,310 )
Total Adjusted EBITDA 14,881 7,058 29,063 22,247 Depreciation and
amortization (11,629 ) (11,518 ) (23,165 ) (22,281 ) Interest
expense (2,103 ) (1,382 ) (4,533 ) (2,497 ) Income tax expense (160
) (229 ) (576 ) (251 ) Loss on disposal of assets, net (558 )
(1,272 ) (1,690 ) (1,385 ) Unit-based compensation (383 ) (97 )
(942 ) (503 ) Total loss on commodity derivatives (601 ) (1,254 )
(736 ) (1,119 ) Net cash payments for commodity derivatives settled
during the period 144 2,835 532 6,027 Non-cash inventory costing
adjustment 973 — 1,126 — Corporate overhead support from general
partner (3,500 ) — (5,000 ) — Transaction costs and other 571 (335
) 496 (2,710 ) Discontinued operations — 1,257
(168 ) (1,800 ) Net loss $ (2,365 ) $ (4,937 )
$ (5,593 ) $ (4,272 )
Three Months Ended
June 30, Six Months Ended June 30, 2016
2015 2016
2015 (in thousands) Segment Adjusted gross
margin Crude oil pipelines and storage $ 9,612 $ 9,820 $ 17,528 $
18,151 Refined products terminals and storage 4,746 3,411 8,450
7,044 NGL distribution and sales 22,315 22,238
50,620 50,523 Total Adjusted
gross margin 36,673 35,469 76,598 75,718 Operating expenses (16,159
) (17,649 ) (32,489 ) (33,902 ) General and administrative (9,441 )
(10,815 ) (20,648 ) (24,876 ) Depreciation and amortization (11,629
) (11,518 ) (23,165 ) (22,281 ) Loss on disposal of assets, net
(558 ) (1,272 ) (1,690 ) (1,385 ) Total loss from commodity
derivative contracts (601 ) (1,254 ) (736 ) (1,119 ) Net cash
payments for commodity derivatives settled during the period 144
2,835 532 6,027 Non-cash inventory costing adjustment 973 — 1,126 —
Other non-cash items — — —
(201 ) Operating loss $ (598 ) $ (4,204 ) $ (472 ) $
(2,019 )
JP ENERGY PARTNERS LP
NON-GAAP RECONCILIATIONS (Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2016 2015
2016 2015 (in thousands)
Net cash provided by operating activities $ 9,933 $
15,882 $ 30,984 $ 19,322 Depreciation and amortization (11,629 )
(12,086 ) (23,376 ) (23,425 ) Derivative valuation changes (933 )
(406 ) (1,482 ) 3,602 Amortization of deferred financing costs (245
) (228 ) (482 ) (455 ) Unit-based compensation (383 ) (121 ) (942 )
(552 ) Loss on disposal of assets (558 ) (1,279 ) (1,576 ) (1,409 )
Bad debt expense 55 (225 ) 61 (692 ) Corporate overhead support
from general partner (1,500 ) — (4,000 ) — Other non-cash items 464
257 423 186 Changes in assets and liabilities 2,431
(6,731 ) (5,203 ) (849 )
Net loss $
(2,365 ) $ (4,937 ) $ (5,593 ) $ (4,272 ) Depreciation and
amortization 11,629 11,518 23,165 22,281 Interest expense 2,103
1,382 4,533 2,497 Income tax expense 160 229 576 251 Loss on
disposal of assets, net 558 1,272 1,690 1,385 Unit-based
compensation 383 97 942 503 Total loss on commodity derivatives 601
1,254 736 1,119 Net cash payments for commodity derivatives settled
during the period (144 ) (2,835 ) (532 ) (6,027 ) Non-cash
inventory costing adjustment (973 ) — (1,126 ) — Corporate overhead
support from general partner 3,500 — 5,000 — Transaction costs and
other (571 ) 335 (496 ) 2,710 Discontinued operations —
(1,257 ) 168 1,800
Adjusted EBITDA $ 14,881 $ 7,058 $ 29,063 $ 22,247 Less:
Cash interest paid, net of interest income 1,200 1,084 2,531 1,971
Cash taxes paid 650 450 650 450 Maintenance capital expenditures,
net 890 1,087 1,309
1,726
Distributable cash flow $ 12,141 $ 4,437
$ 24,573 $ 18,100 Less: Distributions 12,108
12,045 24,223 24,011
Amount
in excess of (less than) distributions $ 33 $ (7,608 ) $
350 $ (5,911 )
Distribution coverage 1.00x 0.37x
1.01x 0.75x
JP ENERGY PARTNERS
LP SUPPLEMENTAL OPERATIONAL DATA (Unaudited)
Three Months Ended June 30, Segment
Key Operational Data 2016 2015
Change Crude oil pipelines and storage Crude oil
pipeline throughput (Bbls/d) (1) 25,219 29,541 (4,322 ) Crude oil
pipelines and storage Crude oil sales (Bbls/d) 25,400 33,349 (7,949
) Refined products terminals and storage Terminal and storage
throughput (Bbls/d) 58,655 61,073 (2,418 ) NGL distribution and
sales NGL and refined product sales (Mgal/d) 164 180 (16 )
(1) Represents the average daily throughput volume in our
crude oil pipelines operations. The volumes in our crude oil
storage operations have no effect on operations as we receive a set
fee per month that does not fluctuate with the volume of crude oil
stored.
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JP Energy Partners LPInvestor Relations,
866-912-3714investorrelations@jpep.com
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