Buckeye Partners, L.P. (“Buckeye”) (NYSE:BPL) today reported its
financial results for the first quarter of 2017. Buckeye
reported net income attributable to Buckeye's unitholders for the
first quarter of 2017 of $123.6 million compared to net income
attributable to Buckeye's unitholders for the first quarter of 2016
of $131.1 million. Adjusted EBITDA (as defined below) for the
first quarter of 2017 was $277.5 million compared to $244.6 million
for the first quarter of 2016.
Net income attributable to Buckeye’s unitholders
was $0.88 per diluted unit for the first quarter of 2017 compared
to $1.01 per diluted unit for the first quarter of 2016. The
diluted weighted average number of units outstanding in the first
quarter of 2017 was 141.0 million compared to 130.1 million in
the first quarter of 2016. The increase in weighted average
number of units outstanding is primarily attributable to the units
issued to fund a portion of the acquisition of a 50% equity
interest in VTTI B.V. (“VTTI”).
“We are pleased to announce another quarter of
improved financial results,” said Clark C. Smith, Chairman,
President and Chief Executive Officer. “Our Global Marine
Terminals segment reported a contribution for the first time from
our recent acquisition of a 50% equity interest in VTTI that closed
early in the first quarter of 2017, which drove our year-over-year
improvement in performance. This segment's legacy assets
continued to benefit from high utilization but were adversely
impacted early in the quarter by operational issues experienced at
our South Texas facility. Our Domestic Pipelines &
Terminals segment saw strong contributions from growth capital
investments that drove higher pipeline transportation and storage
revenues during the period. Our Buckeye Merchant Services
business continues to benefit from effective supply chain
management efforts, driving solid results that were partially
offset by compressed rack margins as a result of
warmer-than-expected weather conditions during the quarter.”
“The first quarter’s performance highlights our
ability to execute and deliver upon capital investment
opportunities, both organic and acquisition related,” continued Mr.
Smith. “Our VTTI investment made a meaningful contribution to
the first quarter results and phase one of our Michigan/Ohio
project moved into a fully operational status, with planned
contributions increasing throughout 2017 as customers ramp up
volumes. We continue to evaluate numerous capital expansion
opportunities and are progressing on our recently announced plans
for our South Texas Gateway Pipeline project, which would be the
largest greenfield project in our company’s history. This
project includes a long-haul pipeline from the Permian Basin to the
company’s hub in Corpus Christi, Texas. This presents an
exciting opportunity for us to position ourselves in one of the
most prolific oil-producing basins in the world.”
Distributable cash flow (as defined below) for
the first quarter of 2017 was $190.7 million compared to
$178.9 million for the first quarter of 2016. Buckeye also
reported distribution coverage of 1.08 times for the first
quarter of 2017.
Cash Distribution. Buckeye also announced
today that its general partner declared a cash distribution of
$1.25 per limited partner unit (“LP Unit”) for the quarter ended
March 31, 2017. The distribution will be payable on
May 22, 2017 to unitholders of record on May 15,
2017. This cash distribution represents a 4.2 percent
increase over the $1.20 per LP Unit distribution declared for the
first quarter of 2016. Buckeye has paid cash distributions in
each quarter since its formation in 1986.
Conference Call. Buckeye will host a
conference call with members of executive management today, May 5,
2017, at 11:00 a.m. Eastern Time. To access the live webcast
of the call, go to http://edge.media-server.com/m/p/4e9m43js ten
minutes prior to its start. Interested parties may
participate in the call by dialing 877-870-9226 and entering the
conference ID 4507526. A replay will be archived and
available at this link through June 5, 2017, and the replay also
may be accessed by dialing 800-585-8367 and entering the conference
ID 4507526.
About Buckeye Partners,
L.P.
Buckeye Partners, L.P. (NYSE:BPL) is a publicly
traded master limited partnership and owns and operates a
diversified network of integrated assets providing midstream
logistic solutions, primarily consisting of the transportation,
storage, processing and marketing of liquid petroleum
products. Buckeye is one of the largest independent liquid
petroleum products pipeline operators in the United States in terms
of volumes delivered, with approximately 6,000 miles of
pipeline. Buckeye also uses its service expertise to operate
and/or maintain third-party pipelines and perform certain
engineering and construction services for its customers.
Additionally, Buckeye is one of the largest independent
terminalling and storage operators in the United States in terms of
capacity available for service. Buckeye’s terminal network
comprises more than 120 liquid petroleum products terminals with
aggregate storage capacity of over 115 million barrels across
our portfolio of pipelines, inland terminals and marine terminals
located primarily in the East Coast, Midwest and Gulf Coast regions
of the United States and in the Caribbean. Buckeye’s network
of marine terminals enables it to facilitate global flows of crude
oil and refined petroleum products, offering its customers
connectivity between supply areas and market centers through some
of the world’s most important bulk storage and blending hubs.
Buckeye’s flagship marine terminal in The Bahamas, Buckeye Bahamas
Hub, is one of the largest marine crude oil and refined petroleum
products storage facilities in the world and provides an array of
logistics and blending services for the global flow of petroleum
products. Buckeye’s Gulf Coast regional hub, Buckeye Texas
Partners, offers world-class marine terminalling, storage and
processing capabilities. Buckeye’s recent acquisition of a
50% equity interest in VTTI B.V. expands its international presence
with premier storage and marine terminalling services for petroleum
products in key global energy hubs, including Northwest Europe, the
United Arab Emirates and Singapore. Buckeye is also a
wholesale distributor of refined petroleum products in areas served
by its pipelines and terminals. More information concerning
Buckeye can be found at www.buckeye.com.
Adjusted EBITDA and distributable cash flow are
measures not defined by accounting principles generally accepted in
the United States of America (“GAAP”). We define Adjusted
EBITDA as earnings before interest expense, income taxes,
depreciation and amortization, further adjusted to exclude certain
non-cash items, such as non-cash compensation expense; transaction,
transition, and integration costs associated with acquisitions;
gains and losses on foreign currency transactions and foreign
currency derivative financial instruments; and certain other
operating expense or income items, reflected in net income, that we
do not believe are indicative of our core operating performance
results and business outlook, such as hurricane-related costs,
gains and losses on property damage recoveries, and gains and
losses on asset sales. We define distributable cash flow as
Adjusted EBITDA less cash interest expense, cash income tax
expense, and maintenance capital expenditures, that are incurred to
maintain the operating, safety, and/or earnings capacity of our
existing assets. These definitions of Adjusted EBITDA and
distributable cash flow are also applied to our proportionate share
in the Adjusted EBITDA and distributable cash flow of significant
equity method investments, such as that in VTTI, B.V. (“VTTI”), and
are not applied to our less significant equity method
investments. The calculation of our proportionate share of
the reconciling items used to derive these VTTI performance metrics
is based upon our 50% equity interest in VTTI, prior to adjustments
related to noncontrolling interests in several of its subsidiaries
and partnerships, which are immaterial. Adjusted EBITDA and
distributable cash flow are non-GAAP financial measures that are
used by our senior management, including our Chief Executive
Officer, to assess the operating performance of our business and
optimize resource allocation. We use Adjusted EBITDA as a
primary measure to: (i) evaluate our consolidated operating
performance and the operating performance of our business segments;
(ii) allocate resources and capital to business segments;
(iii) evaluate the viability of proposed projects; and
(iv) determine overall rates of return on alternative
investment opportunities. We use distributable cash flow as a
performance metric to compare cash-generating performance of
Buckeye from period to period and to compare the cash-generating
performance for specific periods to the cash distributions (if any)
that are expected to be paid to our unitholders.
Distributable cash flow is not intended to be a liquidity
measure.
Buckeye believes that investors benefit from
having access to the same financial measures used by senior
management and that these measures are useful to investors because
they aid in comparing Buckeye’s operating performance with that of
other companies with similar operations. The Adjusted EBITDA
and distributable cash flow data presented by Buckeye may not be
comparable to similarly titled measures at other companies because
these items may be defined differently by other companies.
Please see the attached reconciliations of each of Adjusted EBITDA
and distributable cash flow to net income.
This press release includes forward-looking
statements that we believe to be reasonable as of today’s
date. Such statements are identified by use of the words
“anticipates,” “believes,” “estimates,” “expects,” “intends,”
“plans,” “predicts,” “projects,” “should,” and similar
expressions. Actual results may differ significantly because
of risks and uncertainties that are difficult to predict and that
may be beyond our control. Among the forward-looking
statements set forth in this press release are statements regarding
our expectation of increasing quarterly distributions in the
future. These statements are subject to, among other risks,
(i) changes in federal, state, local, and foreign laws or
regulations to which we are subject, including those governing
pipeline tariff rates and those that permit the treatment of us as
a partnership for federal income tax purposes, (ii) terrorism and
other security risks, including cyber risk, adverse weather
conditions, including hurricanes, environmental releases, and
natural disasters, (iii) changes in the marketplace for our
products or services, such as increased competition, changes in
product flows, better energy efficiency, or general reductions in
demand, (iv) adverse regional, national, or international economic
conditions, adverse capital market conditions, and adverse
political developments, (v) shutdowns or interruptions at our
pipeline, terminalling, storage, and processing assets or at the
source points for the products we transport, store, or sell, (vi)
unanticipated capital expenditures in connection with the
construction, repair, or replacement of our assets, (vii)
volatility in the price of liquid petroleum products, (viii)
nonpayment or nonperformance by our customers, (ix) our ability to
integrate acquired assets with our existing assets and to realize
anticipated cost savings and other efficiencies and benefits, (x)
our ability to realize the expected benefits of our investment in
VTTI and (xi) our ability to successfully complete our organic
growth projects and to realize the anticipated financial
benefits. You should read our filings with the U.S.
Securities and Exchange Commission, including our Annual Report on
Form 10-K for the year ended December 31, 2016, for a more
extensive list of factors that could affect results. We
undertake no obligation to revise our forward-looking statements to
reflect events or circumstances occurring after today’s date except
as required by law.
This release is intended to be a qualified
notice under Treasury Regulation Section 1.1446-4(b). Brokers
and nominees should treat one hundred percent (100.0%) of Buckeye’s
distributions to non-U.S. investors as being attributable to income
that is effectively connected with a United States trade or
business. Accordingly, Buckeye’s distributions to non-U.S.
investors are subject to federal income tax withholding at the
highest applicable effective tax rate.
BUCKEYE PARTNERS,
L.P.CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per unit
amounts)(Unaudited) |
|
|
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
Revenue: |
|
|
|
Product
sales |
$ |
565,420 |
|
|
$ |
384,762 |
|
Transportation, storage and other services |
403,853 |
|
|
395,832 |
|
Total
revenue |
969,273 |
|
|
780,594 |
|
|
|
|
|
Costs and expenses: |
|
|
|
Cost of
product sales |
548,050 |
|
|
368,644 |
|
Operating
expenses |
161,968 |
|
|
149,086 |
|
Depreciation and amortization |
65,488 |
|
|
61,426 |
|
General
and administrative |
21,737 |
|
|
21,231 |
|
Total
costs and expenses |
797,243 |
|
|
600,387 |
|
Operating
income |
172,030 |
|
|
180,207 |
|
|
|
|
|
Other income (expense): |
|
|
|
Earnings
from equity investments |
10,358 |
|
|
3,088 |
|
Interest
and debt expense |
(55,885 |
) |
|
(47,783 |
) |
Other
income |
28 |
|
|
80 |
|
Total
other expense, net |
(45,499 |
) |
|
(44,615 |
) |
Income
before taxes |
126,531 |
|
|
135,592 |
|
Income
tax expense |
(222 |
) |
|
(615 |
) |
Net
income |
126,309 |
|
|
134,977 |
|
Less: Net income attributable to noncontrolling
interests |
(2,733 |
) |
|
(3,864 |
) |
Net income attributable to Buckeye Partners,
L.P. |
$ |
123,576 |
|
|
$ |
131,113 |
|
|
|
|
|
Earnings per unit attributable to Buckeye Partners,
L.P.: |
|
|
Basic |
$ |
0.88 |
|
|
$ |
1.01 |
|
Diluted |
$ |
0.88 |
|
|
$ |
1.01 |
|
|
|
|
|
Weighted average units outstanding: |
|
|
|
Basic |
140,377 |
|
|
129,703 |
|
Diluted |
140,998 |
|
|
130,129 |
|
BUCKEYE PARTNERS,
L.P.SELECTED FINANCIAL AND OPERATING
DATA(In
thousands)(Unaudited) |
|
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
Revenue: |
|
|
|
Domestic
Pipelines & Terminals |
$ |
253,512 |
|
|
$ |
237,953 |
|
Global
Marine Terminals |
164,476 |
|
|
170,064 |
|
Merchant
Services |
571,126 |
|
|
389,737 |
|
Intersegment |
(19,841 |
) |
|
(17,160 |
) |
Total
revenue |
$ |
969,273 |
|
|
$ |
780,594 |
|
|
|
|
|
Total costs and
expenses: (1) |
|
|
|
Domestic
Pipelines & Terminals |
$ |
144,647 |
|
|
$ |
135,914 |
|
Global
Marine Terminals |
106,692 |
|
|
99,657 |
|
Merchant
Services |
565,745 |
|
|
381,976 |
|
Intersegment |
(19,841 |
) |
|
(17,160 |
) |
Total
costs and expenses |
$ |
797,243 |
|
|
$ |
600,387 |
|
|
|
|
|
Depreciation
and amortization: |
|
|
|
Domestic
Pipelines & Terminals |
$ |
23,386 |
|
|
$ |
19,953 |
|
Global
Marine Terminals |
40,806 |
|
|
40,307 |
|
Merchant
Services |
1,296 |
|
|
1,166 |
|
Total
depreciation and amortization |
$ |
65,488 |
|
|
$ |
61,426 |
|
|
|
|
|
Operating
income: |
|
|
|
Domestic
Pipelines & Terminals |
$ |
108,865 |
|
|
$ |
102,039 |
|
Global
Marine Terminals |
57,784 |
|
|
70,407 |
|
Merchant
Services |
5,381 |
|
|
7,761 |
|
Total
operating income |
$ |
172,030 |
|
|
$ |
180,207 |
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
Domestic
Pipelines & Terminals |
$ |
139,443 |
|
|
$ |
128,481 |
|
Global
Marine Terminals |
130,631 |
|
|
106,623 |
|
Merchant
Services |
7,435 |
|
|
9,522 |
|
Adjusted
EBITDA |
$ |
277,509 |
|
|
$ |
244,626 |
|
|
|
|
|
Capital
expenditures: (2) |
|
|
|
Domestic
Pipelines & Terminals |
$ |
58,435 |
|
|
$ |
55,550 |
|
Global
Marine Terminals |
39,817 |
|
|
56,763 |
|
Merchant
Services |
— |
|
|
32 |
|
Total
capital expenditures |
$ |
98,252 |
|
|
$ |
112,345 |
|
|
|
|
|
Summary of
capital expenditures: (2) |
|
|
|
Maintenance capital expenditures |
$ |
32,586 |
|
|
$ |
21,566 |
|
Expansion
and cost reduction |
65,666 |
|
|
90,779 |
|
Total
capital expenditures |
$ |
98,252 |
|
|
$ |
112,345 |
|
|
March 31, |
|
December 31, |
|
2017 |
|
2016 |
Key Balance Sheet Information: |
|
|
|
Cash and
cash equivalents |
$ |
4,873 |
|
|
$ |
640,340 |
|
Long-term
debt, total (3) |
4,561,032 |
|
|
4,217,695 |
|
_______________________________
(1) Includes depreciation and amortization.(2) Amounts exclude
the impact of accruals. On an accrual basis, the additions to
property, plant and equipment related to expansion and cost
reduction projects were $56.2 million and $77.6 million for the
three months ended March 31, 2017 and 2016, respectively.(3)
Includes long-term debt portion of the Buckeye Partners, L.P.
Credit Facility of $342.2 million as of March 31, 2017.
BUCKEYE PARTNERS, L.P.SELECTED
FINANCIAL AND OPERATING DATA -
Continued(Unaudited) |
|
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
Domestic
Pipelines & Terminals (average bpd in
thousands): |
|
|
|
Pipelines: |
|
|
|
Gasoline |
703.1 |
|
|
697.0 |
|
Jet
fuel |
355.0 |
|
|
347.3 |
|
Middle
distillates (1) |
329.4 |
|
|
314.2 |
|
Other
products (2) |
21.2 |
|
|
12.3 |
|
Total throughput |
1,408.7 |
|
|
1,370.8 |
|
Terminals: |
|
|
|
Throughput (3) |
1,183.8 |
|
|
1,176.0 |
|
|
|
|
|
Pipeline
average tariff (cents/bbl) |
90.0 |
|
|
84.2 |
|
|
|
|
|
Global Marine
Terminals (percent of capacity): |
|
|
|
Average
capacity utilization rate (4) |
99 |
% |
|
99 |
% |
|
|
|
|
Merchant
Services (in millions of gallons): |
|
|
|
Sales
volumes |
349.1 |
|
|
352.9 |
|
_________________________(1) Includes diesel fuel and heating
oil.(2) Includes liquefied petroleum gas, intermediate petroleum
products and crude oil.(3) Includes throughput of two underground
propane storage caverns.(4) Represents the ratio of contracted
capacity to capacity available to be contracted. Based on
total capacity (i.e., including out of service capacity), average
capacity utilization rates are approximately 96% and 91% for the
three months ended March 31, 2017 and 2016, respectively.
BUCKEYE PARTNERS, L.P.SELECTED
FINANCIAL AND OPERATING DATANon-GAAP
Reconciliations(In thousands, except coverage
ratio)(Unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
2017 |
|
2016 |
Net
income |
$ |
126,309 |
|
|
$ |
134,977 |
|
Less: |
Net income attributable
to noncontrolling interests |
(2,733 |
) |
|
(3,864 |
) |
Net income
attributable to Buckeye Partners, L.P. |
123,576 |
|
|
131,113 |
|
Add: |
Interest and debt
expense |
55,885 |
|
|
47,783 |
|
|
Income tax expense |
222 |
|
|
615 |
|
|
Depreciation and
amortization (1) |
65,488 |
|
|
61,426 |
|
|
Non-cash unit-based
compensation expense |
8,678 |
|
|
6,335 |
|
|
Acquisition and
transition expense (2) |
1,029 |
|
|
122 |
|
|
Hurricane-related costs
(3) |
2,403 |
|
|
— |
|
|
Proportionate share of
Adjusted EBITDA for the equity method investment in VTTI (4) |
28,617 |
|
|
— |
|
Less: |
Amortization of
unfavorable storage contracts (5) |
— |
|
|
(2,768 |
) |
|
Earnings from the
equity method investment in VTTI (4) |
(8,389 |
) |
|
— |
|
Adjusted
EBITDA |
$ |
277,509 |
|
|
$ |
244,626 |
|
Less: |
Interest and debt
expense, excluding amortization of deferred financing costs, debt
discounts and other |
(51,524 |
) |
|
(43,573 |
) |
|
Income tax expense,
excluding non-cash taxes |
(222 |
) |
|
(617 |
) |
|
Maintenance capital
expenditures |
(32,586 |
) |
|
(21,566 |
) |
|
Proportionate share of
VTTI’s interest expense, current income tax expense and maintenance
capital expenditures (4) |
(8,018 |
) |
|
— |
|
Add: |
Hurricane-related
maintenance capital expenditures |
5,550 |
|
|
— |
|
Distributable cash flow |
$ |
190,709 |
|
|
$ |
178,870 |
|
|
|
|
|
|
Distributions for coverage ratio (6) |
$ |
176,708 |
|
|
$ |
157,238 |
|
|
|
|
|
|
Coverage
ratio |
1.08 |
|
|
1.14 |
|
_________________________
(1) Includes 100% of the depreciation and amortization expense
of $17.5 million and $16.8 million for Buckeye Texas Partners LLC
for the three months ended March 31, 2017 and 2016,
respectively.(2) Represents transaction, internal and third-party
costs related to asset acquisition and integration.(3) Represents
operating expenses incurred at our BBH facility as a result of
Hurricane Matthew, which occurred in October 2016.(4) Due to the
significance of our equity method investment in VTTI B.V. (“VTTI”),
effective January 1, 2017, we applied the definitions of Adjusted
EBITDA and distributable cash flow, covered in our description of
non-GAAP financial measures, with respect to our proportionate
share of VTTI’s Adjusted EBITDA and distributable cash flow.
The calculation of our proportionate share of the reconciling items
used to derive these VTTI performance metrics is based upon our 50%
equity interest in VTTI, prior to adjustments related to
noncontrolling interests in several of its subsidiaries and
partnerships, which are immaterial.(5) Represents amortization of
negative fair value allocated to certain unfavorable storage
contracts acquired in connection with the BBH acquisition.(6)
Represents cash distributions declared for LP Units outstanding as
of each respective period. Amount for 2017 reflects estimated
cash distributions for LP Units for the quarter ended
March 31, 2017.
Contact:
Kevin J. Goodwin
Vice President & Treasurer
irelations@buckeye.com
(800) 422-2825
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