Valero Energy Partners LP (NYSE:VLP) (the “Partnership”) today
reported third quarter 2017 net income attributable to partners of
$58 million, or $0.65 per common limited partner unit, and
EBITDA attributable to the Partnership of $79 million.
The Partnership reported net cash provided by operating activities
of $79 million and distributable cash flow of
$75 million. The distribution coverage ratio for the
third quarter was 1.6x.
“Despite disruptions caused by Hurricane Harvey
at several of Valero’s refineries, VLP’s assets that serve those
refineries ran well during the quarter,” said Joe Gorder, Chairman
and Chief Executive Officer of VLP’s general partner.
Financial Results
Revenues were $109 million for the third quarter
of 2017 compared to $92 million for the third quarter of
2016. Revenues were higher in the third quarter of 2017
compared to the third quarter of 2016 primarily due to
contributions from the Meraux and Three Rivers terminals, which
were acquired in September 2016, and the Red River pipeline
segment, which was acquired in January 2017. Cost of
revenues excluding depreciation expense was $26 million, general
and administrative expenses were $4 million, and depreciation
expense was $12 million, all of which were in line with the third
quarter of 2016.
Liquidity and Financial
PositionAs of September 30, 2017, the Partnership had $836
million of total liquidity consisting of $116 million in cash
and cash equivalents and $720 million available on its revolving
credit facility. Capital expenditures attributable to the
Partnership in the third quarter of 2017 were $9 million,
including $8 million for expansion and $1 million for
maintenance.
The Partnership continues to target
$49 million of capital expenditures for 2017, which includes
$35 million for expansion capital related to growth projects
in the Gulf Coast region. The remaining $14 million is
for maintenance.
On October 19, the board of directors of VLP’s
general partner declared a third quarter 2017 cash distribution of
$0.48 per unit. This distribution represents a
5.5 percent increase from the second quarter of 2017.
Strategic Update
Yesterday, the Partnership announced the
acquisitions of the Port Arthur terminal assets and Parkway
Pipeline LLC from Valero Energy Corporation (NYSE:VLO) (“Valero”)
for total consideration of $508 million. The acquired
operations are expected to contribute a total of approximately
$24 million and $60 million of net income and EBITDA,
respectively, in the first 12 months of operation. Upon
closing, the Partnership plans to enter into separate 10-year
terminaling and transportation agreements with Valero for each
operation that include minimum volume commitments covering
approximately 85 percent of expected throughput. The
transaction is expected to close effective November 1,
2017.
“We are pleased to continue growing VLP’s
footprint in the Gulf Coast region,” said Gorder. “This
transaction, combined with our organic growth projects, and strong
distribution coverage, positions the Partnership well to deliver
its targeted distribution growth without the need for additional
acquisitions.”
The Partnership continues to target annual
distribution growth of 25 percent for 2017 and at least
20 percent for 2018.
Conference Call
The Partnership’s senior management will host a
conference call at 10 a.m. ET today to discuss this earnings
release. A live broadcast of the conference call will be
available on the Partnership’s website at
www.valeroenergypartners.com.
About Valero Energy Partners
LP
Valero Energy Partners LP is a master limited
partnership formed by Valero Energy Corporation to own, operate,
develop and acquire crude oil and refined petroleum products
pipelines, terminals, and other transportation and logistics
assets. With headquarters in San Antonio, the Partnership’s assets
include crude oil and refined petroleum products pipeline and
terminal systems in the Gulf Coast and Mid-Continent regions of the
United States that are integral to the operations of 10 of Valero’s
refineries. Please visit www.valeroenergypartners.com for more
information.
Contacts
Investors:John Locke, Vice President – Investor
Relations, 210-345-3077Karen Ngo, Senior Manager – Investor
Relations, 210-345-4574Tom Mahrer, Manager – Investor Relations,
210-345-1953Media:Lillian Riojas, Director – Media and
Communications, 210-345-5002
Safe-Harbor Statement
This release contains forward-looking statements
within the meaning of federal securities laws. These statements
discuss future expectations, contain projections of results of
operations or of financial condition or state other forward-looking
information. You can identify forward-looking statements by words
such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,”
“project,” “could,” “may,” “should,” “would,” “will” or other
similar expressions that convey the uncertainty of future events or
outcomes. These forward-looking statements are not guarantees of
future performance and are subject to risks, uncertainties and
other factors, some of which are beyond the Partnership’s control
and are difficult to predict. These statements are often based upon
various assumptions, many of which are based, in turn, upon further
assumptions, including examination of historical operating trends
made by the management of the Partnership. Although the Partnership
believes that these assumptions were reasonable when made, because
assumptions are inherently subject to significant uncertainties and
contingencies, which are difficult or impossible to predict and are
beyond its control, the Partnership cannot give assurance that it
will achieve or accomplish these expectations, beliefs or
intentions. When considering these forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements contained in the Partnership’s filings with
the SEC, including the Partnership’s annual reports on Form 10-K,
quarterly reports on Form 10-Q and other reports filed with the SEC
and available on the Partnership’s website at
www.valeroenergypartners.com. These risks could cause the
Partnership’s actual results to differ materially from those
contained in any forward-looking statement.
Use of Non-GAAP Financial
Information
This earnings release includes the terms
“EBITDA,” “distributable cash flow,” and “coverage ratio.”
These terms are supplemental financial measures that are not
defined under United States generally accepted accounting
principles (GAAP). We reconcile these non-GAAP measures to the most
directly comparable GAAP measures in the tables that accompany this
release. In note (n) to the tables that accompany this
release, we disclose the reasons why we believe our use of the
non-GAAP financial measures in this release provides useful
information.
VALERO ENERGY PARTNERS
LPRECONCILIATION OF FORECASTED NET INCOME UNDER
GAAP TO EBITDA(Unaudited, in
Thousands) |
|
|
|
Full Year BeginningNov 1,
2017Port Arthur TerminalAssets and
ParkwayPipeline |
Forecasted net
income |
$ |
24,300 |
Add: Forecasted depreciation expense |
|
24,300 |
Add: Forecasted interest expense |
|
10,900 |
Add: Forecasted income tax expense |
|
100 |
Forecasted
EBITDA |
$ |
59,600 |
VALERO ENERGY PARTNERS
LPEARNINGS RELEASE
TABLES(thousands of dollars, except per unit
amounts)(unaudited) |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Statement of
income data (a): |
|
|
|
|
|
Operating
revenues – related party (b) |
$ |
109,340 |
|
|
$ |
92,040 |
|
|
$ |
325,701 |
|
|
$ |
258,471 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of
revenues (excluding depreciation expense reflected
below) (c) |
26,478 |
|
|
24,089 |
|
|
77,078 |
|
|
72,461 |
|
Depreciation expense (d) |
12,113 |
|
|
11,319 |
|
|
36,393 |
|
|
34,652 |
|
Other
operating expenses (e) |
537 |
|
|
— |
|
|
537 |
|
|
— |
|
General
and administrative expenses (f) |
3,865 |
|
|
4,094 |
|
|
11,558 |
|
|
12,174 |
|
Total
costs and expenses |
42,993 |
|
|
39,502 |
|
|
125,566 |
|
|
119,287 |
|
Operating
income |
66,347 |
|
|
52,538 |
|
|
200,135 |
|
|
139,184 |
|
Other
income, net |
300 |
|
|
76 |
|
|
546 |
|
|
210 |
|
Interest
and debt expense, net of capitalized interest (g) |
(8,747 |
) |
|
(3,672 |
) |
|
(25,587 |
) |
|
(9,582 |
) |
Income
before income taxes |
57,900 |
|
|
48,942 |
|
|
175,094 |
|
|
129,812 |
|
Income
tax expense |
311 |
|
|
235 |
|
|
925 |
|
|
780 |
|
Net
income |
57,589 |
|
|
48,707 |
|
|
174,169 |
|
|
129,032 |
|
Less: Net loss attributable to Predecessor |
— |
|
|
(3,002 |
) |
|
— |
|
|
(15,422 |
) |
Net
income attributable to partners |
57,589 |
|
|
51,709 |
|
|
174,169 |
|
|
144,454 |
|
Less: General partner’s interest in net income |
13,037 |
|
|
6,634 |
|
|
33,923 |
|
|
15,351 |
|
Limited
partners’ interest in net income |
$ |
44,552 |
|
|
$ |
45,075 |
|
|
$ |
140,246 |
|
|
$ |
129,103 |
|
|
|
|
|
|
|
|
|
Net income per limited partner unit (basic and
diluted): |
|
|
|
|
|
|
|
Common
units |
$ |
0.65 |
|
|
$ |
0.77 |
|
|
$ |
2.06 |
|
|
$ |
2.08 |
|
Subordinated units (h) |
$ |
— |
|
|
$ |
0.29 |
|
|
$ |
— |
|
|
$ |
1.73 |
|
|
|
|
|
|
|
|
|
Weighted-average limited partner units
outstanding (basic and diluted) (in
thousands): |
|
|
|
|
|
|
|
Common
units – public |
22,476 |
|
|
21,504 |
|
|
22,310 |
|
|
21,502 |
|
Common
units – Valero |
45,687 |
|
|
32,395 |
|
|
45,687 |
|
|
21,095 |
|
Subordinated units – Valero (h) |
— |
|
|
12,517 |
|
|
— |
|
|
23,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Earnings Release Tables. |
VALERO ENERGY PARTNERS
LPEARNINGS RELEASE
TABLES(thousands of dollars, except per unit and
per barrel amounts)(unaudited) |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Operating
highlights (a): |
|
|
|
|
|
Pipeline
transportation: |
|
|
|
|
|
|
|
Pipeline
transportation revenues (b) |
$ |
23,042 |
|
|
$ |
18,371 |
|
|
$ |
71,076 |
|
|
$ |
57,934 |
|
Pipeline
transportation throughput (BPD) (i) |
859,473 |
|
|
778,369 |
|
|
941,289 |
|
|
849,015 |
|
Average
pipeline transportation revenue per
barrel (j) (k) |
$ |
0.29 |
|
|
$ |
0.26 |
|
|
$ |
0.28 |
|
|
$ |
0.25 |
|
Terminaling: |
|
|
|
|
|
|
|
Terminaling revenues (b) |
$ |
85,157 |
|
|
$ |
73,534 |
|
|
$ |
252,460 |
|
|
$ |
200,132 |
|
Terminaling throughput (BPD) (l) |
2,693,788 |
|
|
2,394,292 |
|
|
2,760,000 |
|
|
2,131,113 |
|
Average
terminaling revenue per barrel (j) |
$ |
0.34 |
|
|
$ |
0.33 |
|
|
$ |
0.34 |
|
|
$ |
0.34 |
|
Storage
and other revenues (m) |
$ |
1,141 |
|
|
$ |
135 |
|
|
$ |
2,165 |
|
|
$ |
405 |
|
Total
operating revenues – related party |
$ |
109,340 |
|
|
$ |
92,040 |
|
|
$ |
325,701 |
|
|
$ |
258,471 |
|
Capital
expenditures (a): |
|
|
|
|
|
|
|
Maintenance |
$ |
921 |
|
|
$ |
3,352 |
|
|
$ |
4,294 |
|
|
$ |
9,063 |
|
Expansion |
8,136 |
|
|
953 |
|
|
20,003 |
|
|
6,848 |
|
Total
capital expenditures |
9,057 |
|
|
4,305 |
|
|
24,297 |
|
|
15,911 |
|
Less:
Capital expenditures attributable to Predecessor |
— |
|
|
1,113 |
|
|
— |
|
|
3,394 |
|
Capital
expenditures attributable to Partnership |
$ |
9,057 |
|
|
$ |
3,192 |
|
|
$ |
24,297 |
|
|
$ |
12,517 |
|
Other financial
information: |
|
|
|
|
|
|
|
Net cash
provided by operating activities |
$ |
78,837 |
|
|
$ |
61,528 |
|
|
$ |
219,819 |
|
|
$ |
162,212 |
|
Distributable cash flow (n) |
$ |
74,732 |
|
|
$ |
61,750 |
|
|
$ |
211,209 |
|
|
$ |
171,695 |
|
Distribution declared per unit |
$ |
0.4800 |
|
|
$ |
0.3850 |
|
|
$ |
1.3625 |
|
|
$ |
1.0900 |
|
Distribution declared: |
|
|
|
|
|
|
|
Limited
partner units – public |
$ |
10,794 |
|
|
$ |
8,341 |
|
|
$ |
30,635 |
|
|
$ |
23,510 |
|
Limited
partner units – Valero |
21,930 |
|
|
17,590 |
|
|
62,249 |
|
|
48,989 |
|
General
partner units – Valero |
12,796 |
|
|
6,244 |
|
|
32,790 |
|
|
14,196 |
|
Total
distribution declared |
$ |
45,520 |
|
|
$ |
32,175 |
|
|
$ |
125,674 |
|
|
$ |
86,695 |
|
Distribution coverage ratio: Distributable cash flow divided
by total distribution declared (n) |
1.64x |
|
1.92x |
|
1.68x |
|
1.98x |
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
|
2017 |
|
2016 |
Balance sheet
data: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
|
|
$ |
115,755 |
|
|
$ |
71,491 |
|
Total
assets |
|
|
|
|
1,110,150 |
|
|
979,257 |
|
Debt (no current portion) |
|
|
|
895,177 |
|
|
895,355 |
|
Partners’
capital |
|
|
|
|
177,184 |
|
|
55,824 |
|
Working
capital |
|
|
|
|
116,656 |
|
|
84,688 |
|
|
|
|
|
|
|
|
|
|
|
See Notes to Earnings Release Tables. |
VALERO ENERGY PARTNERS
LPEARNINGS RELEASE
TABLESRECONCILIATION OF NON-GAAP MEASURES TO MOST
COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP
(n)(thousands of
dollars)(unaudited) |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation
of net income to EBITDA and distributable cash
flow (a) (n): |
|
|
|
|
|
|
|
Net
income |
$ |
57,589 |
|
|
$ |
48,707 |
|
|
$ |
174,169 |
|
|
$ |
129,032 |
|
Plus: |
|
|
|
|
|
|
|
Depreciation expense |
12,113 |
|
|
11,319 |
|
|
36,393 |
|
|
34,652 |
|
Interest
and debt expense, net of capitalized interest |
8,747 |
|
|
3,672 |
|
|
25,587 |
|
|
9,582 |
|
Income
tax expense |
311 |
|
|
235 |
|
|
925 |
|
|
780 |
|
EBITDA |
78,760 |
|
|
63,933 |
|
|
237,074 |
|
|
174,046 |
|
Less: EBITDA attributable to Predecessor |
— |
|
|
(2,395 |
) |
|
— |
|
|
(11,492 |
) |
EBITDA
attributable to Partnership |
78,760 |
|
|
66,328 |
|
|
237,074 |
|
|
185,538 |
|
Plus: |
|
|
|
|
|
|
|
Adjustments related to minimum throughput commitments |
(15 |
) |
|
865 |
|
|
(1,740 |
) |
|
1,100 |
|
Less: |
|
|
|
|
|
|
|
Cash
interest paid |
3,092 |
|
|
3,204 |
|
|
19,136 |
|
|
8,688 |
|
Income
taxes paid |
— |
|
|
— |
|
|
695 |
|
|
496 |
|
Maintenance capital expenditures attributable to
Partnership |
921 |
|
|
2,239 |
|
|
4,294 |
|
|
5,759 |
|
Distributable cash flow |
$ |
74,732 |
|
|
$ |
61,750 |
|
|
$ |
211,209 |
|
|
$ |
171,695 |
|
|
See Notes to Earnings Release Tables. |
VALERO ENERGY PARTNERS
LPEARNINGS RELEASE
TABLESRECONCILIATION OF NON-GAAP MEASURES TO MOST
COMPARABLE AMOUNTSREPORTED UNDER U.S. GAAP
(n)(thousands of
dollars)(unaudited) |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation
of net cash provided by operating activities to EBITDA
and distributable cash flow (a) (n): |
|
|
|
|
|
|
|
Net cash
provided by operating activities |
$ |
78,837 |
|
|
$ |
61,528 |
|
|
$ |
219,819 |
|
|
$ |
162,212 |
|
Plus: |
|
|
|
|
|
|
|
Changes
in current assets and current liabilities |
(8,722 |
) |
|
(1,263 |
) |
|
(7,988 |
) |
|
2,179 |
|
Changes
in deferred charges and credits and other operating
activities, net |
(324 |
) |
|
(157 |
) |
|
(1,016 |
) |
|
(406 |
) |
Interest
and debt expense, net of capitalized interest |
8,747 |
|
|
3,672 |
|
|
25,587 |
|
|
9,582 |
|
Current
income tax expense |
222 |
|
|
153 |
|
|
672 |
|
|
479 |
|
EBITDA |
78,760 |
|
|
63,933 |
|
|
237,074 |
|
|
174,046 |
|
Less: EBITDA attributable to Predecessor |
— |
|
|
(2,395 |
) |
|
— |
|
|
(11,492 |
) |
EBITDA
attributable to Partnership |
78,760 |
|
|
66,328 |
|
|
237,074 |
|
|
185,538 |
|
Plus: |
|
|
|
|
|
|
|
Adjustments related to minimum throughput commitments |
(15 |
) |
|
865 |
|
|
(1,740 |
) |
|
1,100 |
|
Less: |
|
|
|
|
|
|
|
Cash
interest paid |
3,092 |
|
|
3,204 |
|
|
19,136 |
|
|
8,688 |
|
Income
taxes paid |
— |
|
|
— |
|
|
695 |
|
|
496 |
|
Maintenance capital expenditures attributable to
Partnership |
921 |
|
|
2,239 |
|
|
4,294 |
|
|
5,759 |
|
Distributable cash flow |
$ |
74,732 |
|
|
$ |
61,750 |
|
|
$ |
211,209 |
|
|
$ |
171,695 |
|
|
See Notes to Earnings Release Tables. |
|
|
|
|
VALERO ENERGY PARTNERS LPNOTES TO EARNINGS
RELEASE TABLES |
|
|
|
|
|
|
(a) |
|
|
References to “Partnership,” “we,” “us,” or “our” refer to Valero
Energy Partners LP, one or more of its subsidiaries, or all of them
taken as a whole. For businesses that we acquired from Valero,
those terms refer to Valero Energy Partners LP Predecessor, our
Predecessor for accounting purposes for periods prior to their
dates of acquisition. References in these notes to “Valero” may
refer to Valero Energy Corporation, one or more of its
subsidiaries, or all of them taken as a whole, other than Valero
Energy Partners LP, any of its subsidiaries, or its general
partner. |
|
|
|
|
|
|
|
|
|
We acquired the
following businesses from Valero in 2016: |
|
|
|
|
|
|
|
|
|
- On September 1, 2016, we acquired the Meraux and Three
Rivers Terminal Services Business for total consideration of
$325.0 million.
|
|
|
|
|
|
|
|
|
|
- On April 1, 2016, we acquired the McKee Terminal Services
Business for total consideration of $240.0 million.
|
|
|
|
|
|
|
|
|
|
Each
acquisition was accounted for as the transfer of a business between
entities under the common control of Valero. Accordingly, the
statement of income data, operating highlights, and capital
expenditures data have been retrospectively adjusted to include the
historical results of operations of the acquired businesses for
periods prior to their dates of acquisition. |
|
|
|
|
|
|
(b) |
|
|
The
increase in operating revenues in the three and nine months ended
September 30, 2017 compared to the three and nine months ended
September 30, 2016 was due primarily to the following: |
|
|
|
|
|
|
|
|
|
- Incremental terminaling throughput from acquired
businesses. We generated incremental revenues of
$10.0 million and $46.7 million, respectively, by the
acquired businesses described in Note (a). Prior to being
acquired by us, the businesses described in Note (a) did not
charge Valero for services provided and did not generate revenues.
Effective with the date of each acquisition, we entered into
additional schedules to our commercial agreements with Valero with
respect to the services we provide to Valero using the assets of
the acquired businesses. This resulted in new charges for
terminaling services provided by these assets.
|
|
|
|
|
|
|
|
|
|
- Incremental operating revenues at Red River crude
system. We generated incremental revenues of $2.6 million
and $7.2 million, respectively, on our Red River crude system.
Effective January 18, 2017, we acquired a 40 percent
undivided interest in (i) the newly constructed Hewitt segment
of Plains All American L.P.’s Red River pipeline,
(ii) two 150,000 shell barrel capacity tanks located at Hewitt
Station, and (iii) a pipeline connection from Hewitt Station
to Wasson Station (collectively, the Red River crude system).
|
|
|
|
|
|
|
|
|
|
- Higher throughput volumes. We experienced a 10 percent
increase in volumes transported through our other pipeline systems
in the third quarter of 2017 compared to the third quarter of 2016.
The increase in volumes had a favorable impact to our operating
revenues of $1.8 million in the third quarter of 2017. In
addition, we experienced a 7 percent increase in volumes handled at
our other terminals in the first nine months of 2017 compared to
the first nine months of 2016. The increase in volumes had a
favorable impact to our operating revenues of $8.0 million in
the first nine months of 2017.
|
|
|
|
|
|
|
(c) |
|
|
The
increase in “cost of revenues (excluding depreciation expense
reflected below)” in the three and nine months ended
September 30, 2017 compared to the three and nine months ended
September 30, 2016 was due primarily to incremental expenses
of $570,000 and $1.5 million, respectively, related to our Red
River crude system and $735,000 and $1.3 million,
respectively, related to the rail loading facility at our
St. Charles terminal, which was placed in service in the
second quarter of 2017. In addition, we incurred higher maintenance
expenses of $879,000 in each period at our Houston and
St. Charles terminals due primarily to inspection
activity. |
|
|
|
|
|
|
(d) |
|
|
The
increase in depreciation expense in the three and nine months ended
September 30, 2017 compared to the three and nine months ended
September 30, 2016 was due primarily to depreciation expense
recognized on the assets that compose our Red River crude system,
which was acquired in the first quarter of 2017. |
|
|
|
|
|
|
(e) |
|
|
Other
operating expenses reflects costs incurred (net of insurance
proceeds) as a result of damages caused by Hurricane Harvey
primarily at our Houston terminal and Port Arthur products system
in the three and nine months ended September 30, 2017. |
|
|
|
|
|
|
(f) |
|
|
The
decrease in general and administrative expenses in the three months
ended September 30, 2017 compared to the three months ended
September 30, 2016 was due primarily to acquisition costs
(legal and investment advisor fees) of $418,000 incurred in
connection with our acquisition of the Meraux and Three Rivers
terminals in September 2016. The decrease in acquisition costs
in the 2017 period was partially offset by higher public company
costs of $114,000. |
|
|
|
|
|
|
|
|
|
The
decrease in general and administrative expenses in the nine months
ended September 30, 2017 compared to the nine months ended
September 30, 2016 was due primarily to acquisition costs of
$805,000 incurred in 2016 in connection with our acquisitions of
the businesses described in Note (a). The decrease in acquisition
costs in the 2017 period was partially offset by incremental costs
of $204,000 related to the management fee charged to us by Valero
in connection with the acquired businesses and higher public
company costs of $135,000. |
|
|
|
|
|
|
(g) |
|
|
The
increase in “interest and debt expense, net of capitalized
interest” in the three and nine months ended September 30,
2017 compared to the three and nine months ended September 30,
2016 was due primarily to the following: |
|
|
|
|
|
|
|
|
|
- Incremental borrowings in connection with the 2016
acquisitions. In connection with the acquisitions described in
Note (a), we borrowed $349.0 million under our revolving
credit agreement. Interest expense on the incremental borrowings
was approximately $481,000 and $3.8 million in the three and
nine months ended September 30, 2017, respectively.
|
|
|
|
|
|
|
|
|
|
- Incremental interest expense incurred on the senior
notes. In December 2016, we issued $500.0 million of
4.375% senior notes due December 2026. We used the proceeds of
the senior notes to repay $494.0 million of outstanding
borrowings under our revolving credit facility. The interest rate
on these senior notes is higher than our revolving credit facility,
thereby increasing the effective interest rate in 2017. Incremental
interest expense resulting from these senior notes was
approximately $2.0 million and $6.8 million in the three
and nine months ended September 30, 2017, respectively.
|
|
|
|
|
|
|
|
|
|
- Higher interest rates in 2017. We incurred additional
interest of $1.9 million and $4.1 million in the three
and nine months ended September 30, 2017, respectively, on
borrowings that have variable interest rates and were outstanding
during 2016 and 2017.
|
|
|
|
|
|
|
(h) |
|
|
The
requirements under our partnership agreement for the conversion of
all of our outstanding subordinated units into common units were
satisfied upon the payment of our quarterly cash distribution on
August 9, 2016. Therefore, effective August 10, 2016, all
of our subordinated units, which were owned by Valero, were
converted on a one-for-one basis into common units. The conversion
of the subordinated units does not impact the amount of cash
distributions paid or the total number of outstanding units. The
subordinated units were only allocated earnings generated by us
through the conversion date. |
|
|
|
|
|
|
(i) |
|
|
Represents the sum of volumes transported through each separately
tariffed pipeline segment divided by the number of days in the
period. The increase in pipeline transportation throughput in the
three and nine months ended September 30, 2017 compared to the
three and nine months ended September 30, 2016 was due
primarily to the effect from lower volumes at our Lucas crude
system and Port Arthur products system in the 2016 periods that
resulted from Valero’s maintenance activities at its Port Arthur
refinery in 2016, as well as new volumes at our Red River crude
system, which was acquired in the first quarter of 2017. |
|
|
|
|
|
|
(j) |
|
|
Management uses average revenue per barrel to evaluate operating
and financial performance and compare results to other companies in
the industry. There are a variety of ways to calculate average
revenue per barrel; different companies may calculate it in
different ways. We calculate average revenue per barrel as revenue
divided by throughput for the period. Throughput is derived by
multiplying the throughput barrels per day (BPD) by the
number of days in the period. Investors and analysts use this
financial measure to help analyze and compare companies in the
industry on the basis of operating performance. |
|
|
|
|
|
|
(k) |
|
|
Average pipeline transportation revenue per barrel was higher in
the three and nine months ended September 30, 2017
compared to the three and nine months ended September 30, 2016
due primarily to higher pipeline transportation revenue per barrel
generated by our Red River crude system, which was acquired in the
first quarter of 2017. |
|
|
|
|
|
|
(l) |
|
|
Represents the sum of throughput volumes at each of our terminals
divided by the number of days in the period. The increase in
terminaling throughput in the three and nine months ended
September 30, 2017 compared to the three and nine months ended
September 30, 2016 was due primarily to incremental throughput
volumes attributed to the businesses we acquired in 2016, which are
described in Note (a). |
|
|
|
|
|
|
(m) |
|
|
Storage and other revenues was higher in the three and nine months
ended September 30, 2017 compared to the three and nine months
ended September 30, 2016 due primarily to revenues generated
by the rail loading facility at our St. Charles terminal,
which was placed in service in the second quarter of 2017. |
|
|
|
|
|
|
(n) |
|
|
Defined terms are as
follows: |
|
|
|
|
- EBITDA is defined as net income less
income tax expense, interest expense, and depreciation
expense.
- Distributable cash flow is defined as EBITDA
less (i) EBITDA attributable to Predecessor and cash payments
during the period for interest, income taxes, and maintenance
capital expenditures; plus (ii) adjustments related to minimum
throughput commitments and certain other items.
- Distribution coverage ratio is defined as the
ratio of distributable cash flow to the total distribution
declared.
|
|
|
|
|
|
|
|
|
|
These
terms are not defined under United States (U.S.) generally
accepted accounting principles (GAAP) and are considered
non-GAAP measures. Management has defined these terms and believes
that the presentation of the associated measures is useful to
external users of our financial statements, such as industry
analysts, investors, lenders, and rating agencies, to: |
|
|
|
|
|
|
|
|
|
- describe our expectation of forecasted earnings;
- assess our operating performance as compared to other publicly
traded limited partnerships in the transportation and logistics
industry, without regard to historical cost basis or, in the case
of EBITDA, financing methods;
- assess the ability of our business to generate sufficient cash
to support our decision to make distributions to our
unitholders;
- assess our ability to incur and service debt and fund capital
expenditures; and
- assess the viability of acquisitions and other capital
expenditure projects and the returns on investment of various
investment opportunities.
|
|
|
|
|
|
|
|
|
|
We
believe that the presentation of EBITDA provides useful information
to investors in assessing our financial condition and results of
operations. The U.S. GAAP measures most directly comparable to
EBITDA are net income and net cash provided by operating
activities. EBITDA should not be considered an alternative to net
income or net cash provided by operating activities presented in
accordance with U.S. GAAP. EBITDA has important limitations as
an analytical tool because it excludes some, but not all, items
that affect net income or net cash provided by operating
activities. EBITDA should not be considered in isolation or as a
substitute for analysis of our results as reported under
U.S. GAAP. Additionally, because EBITDA may be defined
differently by other companies in our industry, our definition of
EBITDA may not be comparable to similarly titled measures of other
companies, thereby diminishing its utility. |
|
|
|
|
|
|
|
|
|
We
use distributable cash flow to measure whether we have generated
from our operations, or “earned,” an amount of cash sufficient to
support the payment of the minimum quarterly distributions. Our
partnership agreement contains the concept of “operating surplus”
to determine whether our operations are generating sufficient cash
to support the distributions that we are paying, as opposed to
returning capital to our partners. Because operating surplus is a
cumulative concept (measured from our initial public
offering (IPO) date and compared to cumulative distributions
from the IPO date), we use distributable cash flow to approximate
operating surplus on a quarterly or annual, rather than a
cumulative, basis. As a result, distributable cash flow is not
necessarily indicative of the actual cash we have on hand to
distribute or that we are required to distribute. |
|
|
|
|
|
|
|
|
|
We
use the distribution coverage ratio to reflect the relationship
between our distributable cash flow and the total distribution
declared. |
|
|
|
|
|
|
Valero Energy (NYSE:VLO)
Historical Stock Chart
From Sep 2024 to Oct 2024
Valero Energy (NYSE:VLO)
Historical Stock Chart
From Oct 2023 to Oct 2024