NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the
“Partnership”) today reported net income for the quarter ended
March 31, 2019 of $43.2 million, including a $107.9 million
gain on the sale of our South Pecos water disposal business,
compared to net income for the quarter ended March 31, 2018 of
$110.9 million, which included an $89.3 million gain on the sale of
a portion of the Partnership’s Retail Propane business. The
Partnership reported net income for Fiscal 2019 of $339.4 million,
compared to a net loss of $69.6 million in Fiscal 2018.
Highlights for the quarter and fiscal year ended March 31,
2019 include:
- Adjusted EBITDA for the fourth
quarter of Fiscal 2019 was $132.2 million, compared to $91.2
million for the fourth quarter of Fiscal 2018, which excludes $64.7
million in Adjusted EBITDA related to the discontinued operations
of the Retail Propane business; Fiscal Year 2019 Adjusted EBITDA
totaled $440.4 million, compared to $408.3 million in Fiscal
2018
- Fiscal 2019 Adjusted EBITDA does not
include potential $23.2 million benefit of biodiesel blenders' tax
credit pending governmental approval
- Completed the sale of our South
Pecos water disposal business for net proceeds of $228.0 million,
all of which were used to reduce outstanding debt by fiscal
year-end
- Redeemed all of our outstanding
5.125% Senior Notes due 2019 in March 2019
- Growth capital expenditures,
including acquisitions and other investments, totaled approximately
$234.2 million during the fourth quarter, of which approximately
$109.9 million related to investments in our Water Solutions
segment, approximately $104.0 million related to our acquisition of
a natural gas liquids terminaling business from DCP Midstream, LP
(“DCP”) and approximately $16.3 million related to terminals
acquired in our Refined Products and Renewables segment
Highlights subsequent to March 31, 2019 include:
- Issued 1,800,000 of 9.625% Class C
Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred
Units for net proceeds of $43.1 million and $450 million of 7.500%
Senior Unsecured Notes Due 2026 for net proceeds of $441.8
million
- Redeemed all $240 million of Class A
Preferred Units at a total cost of $265.1 million plus accrued and
unpaid distributions
- Entered into a definitive agreement
to acquire all of the assets of Mesquite Disposals Unlimited, LLC
(“Mesquite”), which is expected to close in July 2019
“During Fiscal 2019, the Partnership successfully executed on
its plan to focus on its core midstream assets and strengthen its
balance sheet. At March 31, 2019, we reported a compliance Leverage
Ratio of 2.6x, a reduction of approximately 1.8x when compared to
March 31, 2018, while growing our business and our Adjusted EBITDA.
The progress made on the balance sheet in Fiscal 2019 will enable
the Partnership to continue to grow through organic growth projects
and accretive acquisitions, as represented by our recent
announcement of the acquisition of the Mesquite water disposal
system. We are excited about the coming year and expect to continue
to see strong results in our Crude Oil Logistics, Water Solutions
and Liquids businesses,” stated Mike Krimbill, CEO of NGL Energy
Partners LP. “We are continuing to evaluate the prospects around
our Refined Products business and we will make decisions regarding
asset mix that we believe are most beneficial to our
unitholders.”
Additionally, the Partnership is initiating its Fiscal 2020
Adjusted EBITDA guidance with a target of $600 million, which
assumes:
- $290-$320 million of Adjusted EBITDA
from the Water Solutions segment, which includes nine months of
operations from the acquisition of Mesquite
- $190-$210 million of Adjusted EBITDA
from the Crude Oil Logistics segment, driven by increased volumes
and margins under minimum volume commitments on Grand Mesa as well
as generally increasing margins across other basins in which we
operate
- No significant changes to the
combined results of Liquids and Refined Products and Renewables
segments from Fiscal 2019 actual results
Quarterly Results of Operations
The following table summarizes operating income (loss) and
Adjusted EBITDA by operating segment for the periods indicated:
Quarter Ended
March 31, 2019 March 31, 2018
OperatingIncome (Loss)
AdjustedEBITDA
OperatingIncome (Loss)
AdjustedEBITDA
(in thousands) Crude Oil Logistics $ 29,315 $ 51,249 $
11,072 $ 31,904 Refined Products and Renewables (5,736 ) 16,379
25,993 25,644 Liquids (37,823 ) 31,779 11,476 14,957 Water
Solutions 113,049 40,084 (14,156 ) 31,766 Corporate and Other
(16,530 ) (6,921 ) (23,443 ) (13,057 ) Discontinued Operations —
(402 ) — 64,707 Total $ 82,275 $
132,168 $ 10,942 $ 155,921
The tables included in this release reconcile operating income
(loss) to Adjusted EBITDA, a non-GAAP financial measure, for each
of our operating segments.
Crude Oil Logistics
The Partnership’s Crude Oil Logistics segment generated Adjusted
EBITDA of $51.2 million during the quarter ended March 31,
2019, compared to Adjusted EBITDA of $31.9 million during the
quarter ended March 31, 2018. Results for the fourth quarter
of Fiscal 2019 improved compared to the same quarter in Fiscal 2018
primarily due to increased volumes on Grand Mesa Pipeline and
improved marketing margins. Financial volumes on Grand Mesa
Pipeline averaged approximately 129,000 barrels per day during the
quarter ended March 31, 2019, compared to approximately
109,000 barrels per day in the same quarter of the prior year.
Refined Products and Renewables
The Partnership’s Refined Products and Renewables segment
generated Adjusted EBITDA of $16.4 million during the quarter ended
March 31, 2019, compared to Adjusted EBITDA of $25.6 million
during the quarter ended March 31, 2018. During Fiscal 2019,
the Partnership incurred certain costs related to the blending of
biodiesel with the expectation of earning biodiesel blending tax
credits. The blenders' tax credit for calendar years 2018 and 2019
has not yet been passed by Congress and therefore the Partnership
has not recognized any of the benefit from the earned credits.
Assuming passage of the blenders' tax credit for calendar years
2018 and 2019, the Partnership would recognize approximately $23.2
million in earnings related to tax credits generated in Fiscal
2019. The Partnership has earned and recognized these credits in
prior years, including $27.2 million in tax credits recognized in
Fiscal 2018.
Refined product barrels sold during the quarter ended
March 31, 2019 totaled approximately 56.7 million barrels, an
increase of approximately 13.9 million barrels compared to the same
period in the prior year due to an increase in bulk sales volumes.
Renewable barrels sold during each of the quarters ended
March 31, 2019 and March 31, 2018 totaled approximately
1.0 million.
Liquids
The Partnership’s Liquids segment generated Adjusted EBITDA of
$31.8 million during the quarter ended March 31, 2019,
compared to Adjusted EBITDA of $15.0 million during the quarter
ended March 31, 2018. This increase was driven by increased
volumes, margins and improved railcar utilization, which was a
result of the Partnership’s efforts to right size its railcar fleet
and to continue to grow its business. Results for the fourth
quarter of Fiscal 2019 also include one month of operations from
the acquisition of DCP’s natural gas liquids terminaling business.
Total product margin per gallon was $0.054 for the quarter ended
March 31, 2019, compared to $0.031 for the quarter ended
March 31, 2018.
Propane volumes decreased by approximately 24.9 million gallons,
or 5.2%, during the quarter ended March 31, 2019 compared to
the quarter ended March 31, 2018. Butane volumes increased by
approximately 28.3 million gallons, or 20.8%, during the quarter
ended March 31, 2019 compared to the quarter ended
March 31, 2018. Other Liquids volumes increased by 22.8
million gallons, or 22.0%, during the quarter ended March 31,
2019 compared to the same period in the prior year. The increase in
overall volumes is primarily attributable to an increase in natural
gas liquids volumes being transported by railcars due to increased
production, our business development efforts, third-party pipeline
infrastructure issues and the acquisition of DCP’s natural gas
liquids terminaling business.
Water Solutions
The Partnership’s Water Solutions segment generated Adjusted
EBITDA of $40.1 million during the quarter ended March 31,
2019, compared to Adjusted EBITDA of $31.8 million during the
quarter ended March 31, 2018. The Partnership processed
approximately 860,000 barrels of wastewater per day during the
quarter ended March 31, 2019, a 13.1% increase when compared
to approximately 761,000 barrels of wastewater per day during the
quarter ended March 31, 2018. The Partnership completed the
sale of its South Pecos water disposal business on February 28,
2019 and the sale of its Bakken assets on November 30, 2018. These
assets averaged approximately 160,000 barrels of processed
wastewater per day in Fiscal 2019 prior to the sales.
Processed water volumes have increased compared to the same
quarter in the prior year as the segment continued to benefit from
increased oil and gas production and rig counts. Revenues from
recovered hydrocarbons totaled $17.0 million for the quarter ended
March 31, 2019, a decrease of $4.5 million from the prior year
period. Revenues from recovered hydrocarbons were negatively
impacted by lower crude oil prices and a lower percentage of skim
oil volumes recovered per wastewater barrel processed. This lower
percentage was due primarily to an increase in wastewater
transported through pipelines (which contains less oil per barrel
of wastewater), as well as operational changes in the DJ Basin.
On May 14, 2019, the Partnership announced it had executed a
definitive agreement to acquire all of the assets of Mesquite for
$892.5 million. The assets consist of a fully interconnected
produced water pipeline transportation and disposal system in Eddy
and Lea Counties, New Mexico, and Loving County, Texas. At
closing, the Mesquite system will have 35 saltwater disposal wells
in total, representing over 1 million barrels per day of disposal
capacity expected by the end of calendar year 2019. The majority of
volumes on Mesquite’s system are contracted under long-term acreage
dedications and minimum volume commitments. Additionally,
approximately 95% of the current system volumes are delivered via
pipeline. The transaction is expected to close in July 2019
and is included in the Partnership’s Fiscal 2020 guidance.
Corporate and Other
Adjusted EBITDA for Corporate and Other was $(6.9) million
during the quarter ended March 31, 2019, compared to $(13.1)
million during the quarter ended March 31, 2018. The reduction
in costs was due primarily to the sale of our retail propane
business and lower legal costs related to certain litigation
matters that were resolved or litigated in prior periods.
Capitalization and Liquidity
Total debt outstanding, excluding working capital borrowings,
was $1.264 billion at March 31, 2019 compared to $1.710
billion at March 31, 2018, a decrease of $446.1 million. The
Partnership’s Leverage Ratio (as defined in our Credit Agreement)
is now approximately 2.63x. On March 15, 2019, we redeemed all of
our outstanding 5.125% Senior Notes due 2019 using proceeds from
our South Pecos sale and borrowings under our revolving credit
facility.
Working capital borrowings totaled $896.0 million at
March 31, 2019 compared to $969.5 million at March 31,
2018, a decrease of $73.5 million. Total liquidity (cash plus
available capacity on our revolving credit facility) was
approximately $469.2 million as of March 31, 2019.
Subsequent to March 31, 2019, the Partnership issued 1,800,000
of 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable
Perpetual Preferred Units for net proceeds of $43.1 million and
issued $450 million of 7.500% Senior Unsecured Notes Due 2026 for
net proceeds of $441.8 million. Net proceeds from the issuances
were used to repay indebtedness under its revolving credit
facility, a portion of which was re-borrowed to redeem all $240
million of its Class A Preferred Units at a total cost of $265.1
million, plus accrued and unpaid distributions.
Fiscal 2020 Guidance
For Fiscal 2020, the Partnership expects to generate Adjusted
EBITDA in a range for each of its operating segments as
follows:
FY 2020 Adjusted
EBITDA Ranges Low High (in
thousands) Crude Oil Logistics $ 190,000 $ 210,000 Refined
Products and Renewables $ 40,000 $ 60,000 Liquids $ 75,000 $ 90,000
Water Solutions $ 290,000 $ 320,000 Corporate and Other $ (30,000 )
$ (30,000 )
Based on these ranges, management’s Adjusted EBITDA target for
the Partnership is $600 million for Fiscal 2020. The Partnership
currently expects to invest approximately $1.2 billion to $1.3
billion on acquisitions and growth capital expenditures during
Fiscal 2020, which includes approximately $970 million for the
acquisition of Mesquite and certain other transactions in the Water
Solutions segment that have already closed. The Partnership will
continue to target a compliance Leverage Ratio below 3.25x and
distribution coverage on common units over 1.3x on a trailing
twelve month basis.
Fourth Quarter Conference Call Information
A conference call to discuss NGL’s results of operations is
scheduled for 10:00 am Central Time on Thursday, May 30,
2019. Analysts, investors, and other interested parties may access
the conference call by dialing (800) 291-4083 and providing
access code 7847108. An archived audio replay of the conference
call will be available for 7 days beginning at 10:00 am Central
Time on May 31, 2019, which can be accessed by dialing
(855) 859-2056 and providing access code 7847108.
Non-GAAP Financial Measures
NGL defines EBITDA as net income (loss) attributable to NGL
Energy Partners LP, plus interest expense, income tax expense
(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, gains and losses on
early extinguishment of liabilities, equity-based compensation
expense, acquisition expense, revaluation of liabilities, certain
legal settlements and other. We also include in Adjusted EBITDA
certain inventory valuation adjustments related to our Refined
Products and Renewables segment, as discussed below. EBITDA and
Adjusted EBITDA should not be considered alternatives to net income
(loss), (loss) income from continuing operations before income
taxes, cash flows from operating activities, or any other measure
of financial performance calculated in accordance with 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 NGL’s
ability to make quarterly distributions to NGL’s 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 NGL’s
financing methods, capital structure and historical cost basis.
Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not
be comparable to EBITDA, Adjusted EBITDA, or similarly titled
measures used by other entities.
Other than for NGL’s Refined Products and Renewables segment,
for purposes of the 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 NGL’s 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 reconciliation table
reflects the difference between the market value of the inventory
of NGL’s Refined Products and Renewables segment at the balance
sheet date and its cost, adjusted for the impact of seasonal market
movements related to our base inventory and the related hedge. NGL
includes this in Adjusted EBITDA because the unrealized gains and
losses associated with derivative contracts associated with the
inventory of this segment, which are intended primarily to hedge
inventory holding risk and are included in net income, also affect
Adjusted EBITDA.
Distributable Cash Flow is defined as Adjusted EBITDA minus
maintenance capital expenditures, income tax expense, cash interest
expense and other. Maintenance capital expenditures represent
capital expenditures necessary to maintain the Partnership’s
operating capacity. Distributable Cash Flow is a performance metric
used by senior management to compare cash flows generated by the
Partnership (excluding growth capital expenditures and prior to the
establishment of any retained cash reserves by the Board of
Directors) to the cash distributions expected to be paid to
unitholders. Using this metric, management can quickly compute the
coverage ratio of estimated cash flows to planned cash
distributions. This financial measure also is important to
investors as an indicator of whether the Partnership is generating
cash flow at a level that can sustain, or support an increase in,
quarterly distribution rates. Actual distribution amounts are set
by the Board of Directors.
Forward Looking Statements
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 such forward-looking statements
are reasonable, NGL cannot assure they 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.
NGL provides Adjusted EBITDA guidance that does not include
certain charges and costs, which in future periods are generally
expected to be similar to the kinds of charges and costs excluded
from Adjusted EBITDA in prior periods, such as income taxes,
interest and other non-operating items, depreciation and
amortization, net unrealized gains and losses on derivatives, lower
of cost or market adjustments, gains and losses on disposal or
impairment of assets, gains and losses on early extinguishment of
liabilities, equity-based compensation expense, acquisition
expense, revaluation of liabilities and items that are unusual in
nature or infrequently occurring. The exclusion of these charges
and costs in future periods will have a significant impact on the
Partnership’s Adjusted EBITDA, and the Partnership is not able to
provide a reconciliation of its Adjusted EBITDA guidance to net
income (loss) without unreasonable efforts due to the uncertainty
and variability of the nature and amount of these future charges
and costs and the Partnership believes that such reconciliation, if
possible, would imply a degree of precision that would be
potentially confusing or misleading to investors.
About NGL Energy Partners LP
NGL Energy Partners LP is a Delaware limited partnership. NGL
owns and operates a vertically integrated energy business with four
primary businesses: Crude Oil Logistics, Water Solutions, Liquids,
and Refined Products and Renewables. NGL completed its initial
public offering in May 2011. For further information, visit
the Partnership’s website at www.nglenergypartners.com.
NGL ENERGY PARTNERS LP AND
SUBSIDIARIES
Consolidated Balance Sheets
(in Thousands, except unit
amounts)
(Unaudited)
March 31, 2019 2018
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 18,572 $
22,094 Accounts receivable-trade, net of allowance for doubtful
accounts of $4,366 and $4,201, respectively 1,162,919 1,026,764
Accounts receivable-affiliates 12,867 4,772 Inventories 463,143
551,303 Prepaid expenses and other current assets 155,172 128,742
Assets held for sale — 517,604 Total current assets
1,812,673 2,251,279 PROPERTY, PLANT AND EQUIPMENT, net of
accumulated depreciation of $420,362 and $343,345, respectively
1,844,493 1,518,607 GOODWILL 1,145,861 1,204,607 INTANGIBLE ASSETS,
net of accumulated amortization of $524,257 and $433,565,
respectively 938,335 913,154 INVESTMENTS IN UNCONSOLIDATED ENTITIES
1,127 17,236 LOAN RECEIVABLE-AFFILIATE — 1,200 OTHER NONCURRENT
ASSETS 160,004 245,039 Total assets $ 5,902,493
$ 6,151,122
LIABILITIES AND EQUITY CURRENT
LIABILITIES AND REDEEMABLE NONCONTROLLING INTEREST: Accounts
payable-trade $ 964,665 $ 852,839 Accounts payable-affiliates
28,469 1,254 Accrued expenses and other payables 248,450 223,504
Advance payments received from customers 8,921 8,374 Current
maturities of long-term debt 648 646 Liabilities and redeemable
noncontrolling interest held for sale — 42,580 Total
current liabilities and redeemable noncontrolling interest
1,251,153 1,129,197 LONG-TERM DEBT, net of debt issuance costs of
$12,008 and $20,645, respectively, and current maturities 2,160,133
2,679,740 OTHER NONCURRENT LIABILITIES 63,575 173,514 CLASS
A 10.75% CONVERTIBLE PREFERRED UNITS, 19,942,169 and 19,942,169
preferred units issued and outstanding, respectively 149,814 82,576
EQUITY: General partner, representing a 0.1% interest,
124,633 and 121,594 notional units, respectively (50,603 ) (50,819
) Limited partners, representing a 99.9% interest, 124,508,497 and
121,472,725 common units issued and outstanding, respectively
2,067,197 1,852,495 Class B preferred limited partners, 8,400,000
and 8,400,000 preferred units issued and outstanding, respectively
202,731 202,731 Accumulated other comprehensive loss (255 ) (1,815
) Noncontrolling interests 58,748 83,503 Total equity
2,277,818 2,086,095 Total liabilities and equity $
5,902,493 $ 6,151,122
NGL ENERGY PARTNERS LP AND
SUBSIDIARIES
Consolidated Statements of
Operations
(in Thousands, except unit and per unit
amounts)
(Unaudited)
Three Months Ended Year Ended March 31,
March 31, 2019 2018 2019
2018 REVENUES: Crude Oil Logistics $ 741,571 $
733,131 $ 3,136,635 $ 2,260,075 Water Solutions 70,319 67,116
301,686 229,139 Liquids 655,269 751,201 2,415,041 2,215,985 Refined
Products and Renewables 3,673,564 3,394,206 18,162,183 12,200,923
Other 296 478 1,362 1,174 Total
Revenues 5,141,019 4,946,132 24,016,907 16,907,296 COST OF SALES:
Crude Oil Logistics 676,259 690,236 2,902,656 2,113,747 Water
Solutions 6,522 6,326 (10,787 ) 19,345 Liquids 609,063 724,375
2,277,709 2,128,522 Refined Products and Renewables 3,672,558
3,369,488 18,113,410 12,150,497 Other 448 219 1,929
530 Total Cost of Sales 4,964,850 4,790,644
23,284,917 16,412,641 OPERATING COSTS AND EXPENSES: Operating
61,221 54,300 240,684 201,068 General and administrative 20,996
28,190 107,534 98,129 Depreciation and amortization 54,631 50,798
212,860 209,020 (Gain) loss on disposal or impairment of assets,
net (36,781 ) (3,858 ) 34,296 (17,104 ) Revaluation of liabilities
(6,173 ) 15,116 (5,373 ) 20,716 Operating Income
(Loss) 82,275 10,942 141,989 (17,174 ) OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated entities 158 862 2,533 7,539
Interest expense (37,949 ) (48,230 ) (164,726 ) (199,148 ) Loss on
early extinguishment of liabilities, net (2,120 ) (722 ) (12,340 )
(23,201 ) Other income (expense), net 1,060 1,702
(29,946 ) 6,953 Income (Loss) From Continuing Operations
Before Income Taxes 43,424 (35,446 ) (62,490 ) (225,031 ) INCOME
TAX BENEFIT (EXPENSE) 1,088 (485 ) (1,234 ) (1,354 ) Income
(Loss) From Continuing Operations 44,512 (35,931 ) (63,724 )
(226,385 ) (Loss) Income From Discontinued Operations, net of Tax
(1,295 ) 146,843 403,119 156,780 Net Income
(Loss) 43,217 110,912 339,395 (69,605 ) LESS: NET LOSS (INCOME)
ATTRIBUTABLE TO NONCONTROLLING INTERESTS 19,036 (19 ) 20,206 (240 )
LESS: NET (INCOME) LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING
INTERESTS — (1,291 ) 446 (1,030 ) NET INCOME (LOSS)
ATTRIBUTABLE TO NGL ENERGY PARTNERS LP $ 62,253 $ 109,602
$ 360,047 $ (70,875 ) NET INCOME (LOSS) FROM
CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS $ 25,433
$ (53,628 ) $ (155,437 ) $ (286,521 ) NET (LOSS) INCOME FROM
DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS $ (1,294 )
$ 145,408 $ 403,161 $ 155,595 NET INCOME
(LOSS) ALLOCATED TO COMMON UNITHOLDERS $ 24,139 $ 91,780
$ 247,724 $ (130,926 ) BASIC INCOME (LOSS) PER COMMON
UNIT Income (Loss) From Continuing Operations $ 0.21 $ (0.44
) $ (1.26 ) $ (2.37 ) (Loss) Income From Discontinued Operations,
net of Tax $ (0.01 ) $ 1.20 $ 3.28 $ 1.29 Net
Income (Loss) $ 0.20 $ 0.76 $ 2.01 $ (1.08 )
DILUTED INCOME (LOSS) PER COMMON UNIT Income (Loss) From Continuing
Operations $ 0.20 $ (0.28 ) $ (1.26 ) $ (2.37 ) (Loss)
Income From Discontinued Operations, net of Tax $ (0.01 ) $ 0.99
$ 3.28 $ 1.29 Net Income (Loss) $ 0.19
$ 0.71 $ 2.01 $ (1.08 ) BASIC WEIGHTED AVERAGE COMMON
UNITS OUTSTANDING 124,262,014 121,271,959 123,017,064
120,991,340 DILUTED WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING 126,926,589 146,868,349 123,017,064
120,991,340
EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE
CASH FLOW RECONCILIATION
(Unaudited)
The following table reconciles NGL’s net
income (loss) to NGL’s EBITDA, Adjusted EBITDA and Distributable
Cash Flow:
Three Months Ended Year Ended March 31,
March 31, 2019 2018 2019
2018 (in thousands) Net income (loss) $
43,217 $ 110,912 $ 339,395 $ (69,605 ) Less: Net loss (income)
attributable to noncontrolling interests 19,036 (19 ) 20,206 (240 )
Less: Net (income) loss attributable to redeemable noncontrolling
interests — (1,291 ) 446 (1,030 ) Net income (loss)
attributable to NGL Energy Partners LP 62,253 109,602 360,047
(70,875 ) Interest expense 37,949 48,356 164,879 199,747 Income tax
expense (232 ) 524 2,222 1,458 Depreciation and amortization 55,312
62,011 224,547 266,525 EBITDA 155,282
220,493 751,695 396,855 Net unrealized losses (gains) on
derivatives 13,553 (968 ) (17,296 ) 15,883 Inventory valuation
adjustment (1) 55,294 4,594 (5,203 ) 11,033 Lower of cost or market
adjustments (45,090 ) 102 2,695 399 Gain on disposal or impairment
of assets, net (55,629 ) (94,072 ) (393,554 ) (105,313 ) Loss on
early extinguishment of liabilities, net 2,120 722 12,340 23,201
Equity-based compensation expense (2) 8,792 8,127 41,367 35,241
Acquisition expense (3) 510 131 9,780 263 Revaluation of
liabilities (4) (6,173 ) 15,007 (5,373 ) 20,607 Gavilon legal
matter settlement (5) — — 34,788 — Other (6) 3,509 1,785
9,203 10,081 Adjusted EBITDA 132,168 155,921
440,442 408,250 Less: Cash interest expense (7) 35,836 45,785
155,490 188,543 Less: Income tax (benefit) expense (232 ) 524 2,222
1,458 Less: Maintenance capital expenditures 11,967 11,036 49,177
37,713 Less: Other (8) — — 546 549
Distributable Cash Flow $ 84,597 $ 98,576 $ 233,007
$ 179,987
______________
(1) Amount reflects the difference between the market value
of the inventory of NGL’s Refined Products and Renewables segment
at the balance sheet date and its cost, adjusted for the impact of
seasonal market movements related to our base inventory and the
related hedge. See “Non-GAAP Financial Measures” section above for
a further discussion. (2) Equity-based compensation expense
in the table above may differ from equity-based compensation
expense reported in the footnotes to our consolidated financial
statements included in the Partnership’s Annual Report on Form 10-K
for the year ended March 31, 2019. Amounts reported in the table
above include expense accruals for bonuses expected to be paid in
common units, whereas the amounts reported in the footnotes to our
consolidated financial statements only include expenses associated
with equity-based awards that have been formally granted.
(3) Amounts represent expenses we incurred related to legal and
advisory costs associated with acquisitions, including amounts
accrued related to the LCT Capital, LLC legal matter (as discussed
in the footnotes to our consolidated financial statements included
in the Partnership’s Annual Report on Form 10-K for the year ended
March 31, 2019), partially offset by reimbursement for certain
legal costs incurred in prior periods. (4) Amounts represent
the non-cash valuation adjustment of contingent consideration
liabilities, offset by the cash payments, related to royalty
agreements acquired as part of acquisitions in our Water Solutions
segment. (5) Represents the accrual for the estimated cost
of the settlement of the Gavilon legal matter (see the footnotes to
our consolidated financial statements included in the Partnership’s
Annual Report on Form 10-K for the year ended March 31, 2019). We
have excluded this amount from Adjusted EBITDA as it relates to
transactions that occurred prior to our acquisition of Gavilon LLC
in December 2013. (6) Amounts for the quarter and year ended
March 31, 2019 represent non-cash operating expenses related to our
Grand Mesa Pipeline, unrealized losses on marketable securities and
accretion expense for asset retirement obligations. The amount for
the quarter ended March 31, 2018 represents non-cash operating
expenses related to our Grand Mesa Pipeline and accretion expense
for asset retirement obligations. The amount for the year ended
March 31, 2018 represents non-cash operating expenses related to
our Grand Mesa Pipeline, an adjustment to inventory related to
prior periods and accretion expense for asset retirement
obligations. (7) Amount represents interest expense payable
in cash for the period presented, excluding changes in the accrued
interest balance. (8) Amount represents cash paid to settle
asset retirement obligations.
ADJUSTED EBITDA RECONCILIATION BY
SEGMENT
Three Months Ended March 31, 2019
Crude OilLogistics
WaterSolutions
Liquids
RefinedProducts and
Renewables
Corporateand
Other
DiscontinuedOperations
Consolidated (in thousands) Operating
income (loss) $ 29,315 $ 113,049 $ (37,823 ) $ (5,736 ) $ (16,530 )
$ — $ 82,275 Depreciation and amortization 17,679 28,950 6,658 556
788 — 54,631 Amortization recorded to cost of sales — — 37 1,348 —
— 1,385 Net unrealized losses (gains) on derivatives 10,170 7,695
(4,312 ) — — — 13,553 Inventory valuation adjustment — — — 55,294 —
— 55,294 Lower of cost or market adjustments (11,446 ) — 1,508
(35,152 ) — — (45,090 ) Loss (gain) on disposal or impairment of
assets, net 2,238 (105,238 ) 66,219 — — — (36,781 ) Equity-based
compensation expense — — — — 8,792 — 8,792 Acquisition expense — 31
— — 480 — 511 Other (expense) income, net (5 ) 1,503 5 8 (451 ) —
1,060 Adjusted EBITDA attributable to unconsolidated entities — 182
6 (1 ) — — 187 Adjusted EBITDA attributable to noncontrolling
interest — (47 ) (536 ) — — — (583 ) Revaluation of liabilities —
(6,173 ) — — — — (6,173 ) Other 3,298 132 17 62 — — 3,509
Discontinued operations — — — — —
(402 ) (402 ) Adjusted EBITDA $ 51,249 $ 40,084
$ 31,779 $ 16,379 $ (6,921 ) $ (402 ) $
132,168
Three Months Ended March 31,
2018 Crude OilLogistics
WaterSolutions Liquids
RefinedProducts and Renewables
Corporateand Other
DiscontinuedOperations
Consolidated (in thousands) Operating income (loss) $
11,072 $ (14,156 ) $ 11,476 $ 25,993 $ (23,443 ) $ — $ 10,942
Depreciation and amortization 18,502 24,776 6,219 323 978 — 50,798
Amortization recorded to cost of sales 84 — 71 1,348 — — 1,503 Net
unrealized losses (gains) on derivatives 293 2,168 (3,340 ) — — —
(879 ) Inventory valuation adjustment — — — 4,594 — — 4,594 Lower
of cost or market adjustments — — 504 (402 ) — — 102 (Gain) loss on
disposal or impairment of assets, net (103 ) 3,749 1 (7,513 ) 8 —
(3,858 ) Equity-based compensation expense — — — — 8,127 — 8,127
Acquisition expense — — — — 131 — 131 Other income, net 436 1 5 118
1,142 — 1,702 Adjusted EBITDA attributable to unconsolidated
entities — 154 — 1,183 — — 1,337 Adjusted EBITDA attributable to
noncontrolling interest — (118 ) — — — — (118 ) Revaluation of
liabilities — 15,007 — — — — 15,007 Other 1,620 185 21 — — — 1,826
Discontinued operations — — — — —
64,707 64,707
Adjusted EBITDA
$ 31,904 $ 31,766 $ 14,957 $ 25,644 $
(13,057 ) $ 64,707 $ 155,921
Year
Ended March 31, 2019 Crude OilLogistics
WaterSolutions Liquids
RefinedProducts and Renewables
Corporateand Other
DiscontinuedOperations
Consolidated (in thousands) Operating (loss) income $
(7,379 ) $ 210,525 $ (2,910 ) $ 27,459 $ (85,706 ) $ — $ 141,989
Depreciation and amortization 74,165 108,162 25,997 1,518 3,018 —
212,860 Amortization recorded to cost of sales 80 — 147 5,392 — —
5,619 Net unrealized gains on derivatives (1,725 ) (15,521 ) (129 )
— — — (17,375 ) Inventory valuation adjustment — — — (5,203 ) — —
(5,203 ) Lower of cost or market adjustments — — 1,004 1,691 — —
2,695 Loss (gain) on disposal or impairment of assets, net 107,424
(138,204 ) 67,213 (3,026 ) 889 — 34,296 Equity-based compensation
expense — — — — 41,367 — 41,367 Acquisition expense — 3,490 161 —
6,176 — 9,827 Other income (expense), net 21 (1 ) 68 74 (30,108 ) —
(29,946 ) Adjusted EBITDA attributable to unconsolidated entities —
2,396 6 475 — — 2,877 Adjusted EBITDA attributable to
noncontrolling interest — (166 ) (1,481 ) — — — (1,647 )
Revaluation of liabilities — (5,373 ) — — — — (5,373 ) Gavilon
legal matter settlement — — — — 34,788 — 34,788 Other 8,274 436 66
427 — — 9,203 Discontinued operations — — — —
— 4,465 4,465 Adjusted EBITDA $ 180,860
$ 165,744 $ 90,142 $ 28,807 $ (29,576 )
$ 4,465 $ 440,442
Year Ended March
31, 2018 Crude OilLogistics
WaterSolutions Liquids
RefinedProducts and Renewables
Corporateand Other
DiscontinuedOperations
Consolidated (in thousands) Operating income (loss) $
122,904 $ (24,231 ) $ (93,113 ) $ 56,740 $ (79,474 ) $ — $ (17,174
) Depreciation and amortization 80,387 98,623 24,937 1,294 3,779 —
209,020 Amortization recorded to cost of sales 338 — 282 5,479 — —
6,099 Net unrealized losses (gains) on derivatives 2,766 13,694
(577 ) — — — 15,883 Inventory valuation adjustment — — — 11,033 — —
11,033 Lower of cost or market adjustments — — 504 (105 ) — — 399
(Gain) loss on disposal or impairment of assets, net (111,393 )
6,863 117,516 (30,098 ) 8 — (17,104 ) Equity-based compensation
expense — — — — 35,241 — 35,241 Acquisition expense — — — — 263 —
263 Other income, net 535 211 105 604 5,498 — 6,953 Adjusted EBITDA
attributable to unconsolidated entities 11,507 579 — 4,308 — —
16,394 Adjusted EBITDA attributable to noncontrolling interest —
(737 ) — — — — (737 ) Revaluation of liabilities — 20,607 — — — —
20,607 Other 10,617 461 85 — — — 11,163 Discontinued operations —
— — — — 110,210 110,210
Adjusted EBITDA $ 117,661 $ 116,070 $ 49,739
$ 49,255 $ (34,685 ) $ 110,210 $ 408,250
OPERATIONAL DATA
(Unaudited)
Three Months Ended Year Ended March 31,
March 31, 2019 2018 2019
2018 (in thousands, except per day
amounts) Crude Oil Logistics: Crude oil sold (barrels)
12,917 11,038 48,366 39,626 Crude oil transported on owned
pipelines (barrels) 11,179 9,278 42,564 33,454 Crude oil storage
capacity - owned and leased (barrels) (1) 5,232 6,159 Crude oil
inventory (barrels) (1) 827 1,219
Water Solutions:
Wastewater processed (barrels per day) Permian Basin 435,562
317,480 461,456 289,360 Eagle Ford Basin 250,735 257,148 270,849
235,713 DJ Basin 164,159 112,594 161,010 113,771 Other Basins 9,767
73,300 53,799 68,466 Total 860,223
760,522 947,114 707,310 Solids processed (barrels per
day) 7,654 6,594 6,957 5,662 Skim oil sold (barrels per day) 3,723
4,071 3,567 3,210
Liquids: Propane sold (gallons)
454,585 479,454 1,383,986 1,361,173 Butane sold (gallons) 164,628
136,310 610,968 544,750 Other products sold (gallons) 126,469
103,649 498,751 400,405 Liquids storage capacity - owned and leased
(gallons) (1) 397,343 438,968 Propane inventory (gallons) (1)
44,757 48,928 Butane inventory (gallons) (1) 21,677 15,385 Other
products inventory (gallons) (1) 9,158 5,822
Refined
Products and Renewables: Gasoline sold (barrels) 42,788 30,550
173,475 108,427 Diesel sold (barrels) 13,897 12,228 53,662 56,020
Ethanol sold (barrels) 796 546 2,553 3,438 Biodiesel sold (barrels)
176 407 991 2,079 Refined Products and Renewables storage capacity
- leased (barrels) (1) 9,745 9,911 Gasoline inventory (barrels) (1)
2,807 3,367 Diesel inventory (barrels) (1) 1,258 1,419 Ethanol
inventory (barrels) (1) 1,640 701 Biodiesel inventory (barrels) (1)
310 261
________________
(1) Information is presented as of March 31, 2019 and March
31, 2018, respectively, in the year-to-date columns above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190530005259/en/
NGL Energy Partners LPTrey Karlovich, 918-481-1119Chief
Financial Officer and Executive Vice
PresidentTrey.Karlovich@nglep.comorLinda Bridges,
918-481-1119Senior Vice President - Finance and
TreasurerLinda.Bridges@nglep.com
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