American Midstream Partners, LP (NYSE: AMID) (“American
Midstream”, “AMID” or the “Partnership”) today reported financial
results for the three months and nine months ended September 30,
2017.
- Declared twenty-fifth consecutive
quarterly distribution since IPO
- Reallocated $450 million in capital
with several highly accretive transactions
- Expects pro proforma 2018 annualized
Adjusted EBITDA in excess of $300 million
Net income attributable to the Partnership was $55.9 million for
the three months ended September 30, 2017 as compared to net loss
of $9.0 million for the same period in 2016. The increase in net
income was primarily due to gains from sale of the Propane
Marketing and Services segment and from our acquisition of Main
Pass Oil Gathering LLC (“MPOG”), offset by an increase in total
operating and corporate expenses primarily related to non-recurring
transaction and merger related costs, as well as higher interest
expense.
Adjusted EBITDA was $42.3 million for the three months ended
September 30, 2017, up 24% for the same period in 2016.
Distributable Cash Flow (“DCF”) was $22.0 million for the three
months ended September 30, 2017, up 3% compared to the same period
in 2016. The increase is primarily due to higher cash distributions
from our Gulf of Mexico pipeline equity investments and sponsor
support, partially offset by lower cash distributions from Delta
House due to a scheduled rate adjustment from materially increasing
volumes and higher interest expense.
The Partnership maintained a quarterly distribution of $0.4125
per common unit, or $1.65 per common unit on an annualized basis,
representing distribution coverage of approximately 1.0 times. The
third quarter 2017 distribution represents the Partnership’s
twenty-fifth consecutive quarterly distribution since its initial
public offering and will be paid November 14, 2017 to unitholders
of record on November 7, 2017.
Reconciliations of non-GAAP financial measures for gross margin,
Adjusted EBITDA and DCF to Net income (loss) attributable to the
Partnership are provided within this press release.
EXECUTIVE COMMENTARY
“This has been an active quarter for the Partnership with
significant strides in our capital optimization program driven by a
number of transactions, including a greater stake in several
offshore assets and the sale of our Propane segment,” stated Lynn
Bourdon III, President and Chief Executive Officer. “In
approximately twelve months, we turned over 50% of the
Partnership’s assets while redeploying capital at more attractive
multiples to cash flow all while improving our balance sheet.
Through these steps, we are working to create greater long-term
value with a more predictable cash flow profile.”
“In addition, we announced another transformational event with
the proposed acquisition of Southcross, a midstream company with a
strong customer base in high-growth markets and infrastructure
assets in our core areas. This acquisition demonstrates our
disciplined and methodical approach to creating a fully integrated,
larger-scale platform on which we can expand our business
throughout the midstream value chain. In line with our strategic
vision, this acquisition will accelerate the transformation of AMID
into a fully integrated natural gas gathering, processing and
transmission partnership with asset density and full value chain
participation, within the Eagle Ford, the Southeast and
the U.S. Gulf Coast.”
“Going forward, we plan to generate strong returns by continuing
to develop our assets in key basins. The rapid pace at which we are
executing against our capital redeployment plan is expected to
impact our results through the 1st quarter of 2018.”
SEGMENT PERFORMANCE
Gas Gathering and Processing
Segment gross margin was $12.8 million for the three months
ended September 30, 2017, up 1% as compared to the same period in
2016. The increase reflected additional NGL volumes from new
contracts at our East Texas assets attributable to higher producer
activity resulting in a material increase in our truck volumes and
NGL production which increased 105% and 199%, respectively.
Liquid Pipelines and Services
Segment gross margin was $7.8 million for the three months ended
September 30, 2017, up 3% as compared to the same period in 2016.
The segment primarily benefited from an increase in volumes on our
Silver Dollar Pipeline system as the Partnership continue to see
increased activity from several new wells operated by our anchor
producers. Additionally, the Tri-States NGL system benefited from
increased volumes on Delta House and volume from other deepwater
Gulf of Mexico developments that brought additional NGL volumes
onshore.
Natural Gas Transportation Services
Segment gross margin was $5.4 million for the three months ended
September 30, 2017, up 44% as compared to the same period in 2016.
The increase was mostly driven by a 242% increase in volumes and
higher rates on contracts on our MLGT and Midla systems in addition
to positive operating efficiencies from the completion of the
Natchez line.
Offshore Pipelines and Services
Segment gross margin was $29.3 million for the three months
ended September 30, 2017, up 21% as compared to the same period in
2016. The increase was mostly due to a 27% increase in Delta House
volumes and a 32% increase in Okeanos volumes. These increases are
primarily due to new production from third-party platform
expansions and volume increase from Viosca Knoll Gathering
System.
Terminalling Services
Segment gross margin was $8.5 million for the three months ended
September 30, 2017, down 21% as compared to the same period in
2016. The decrease was primarily due to a reduction in storage and
utilization at our Cushing terminal and higher operating expenses.
This was partially offset by an increase in throughput revenue at
our refined product terminal as a result of facility enhancements
from growth projects.
CORPORATE
Corporate expenses were $27.1 million for the three months ended
September 30, 2017, up 23% as compared to the same period in 2016.
The increase is primarily related to transaction and merger related
costs associated with corporate development efforts from our
capital optimization plan that is designed to increase our
distributable cash flow and improve our balance sheet. Pro forma
for the transaction and acquisition related costs, third quarter
recurring corporate expenses were approximately $16.7 million, down
2.9% compared to the same period last year.
Interest expense was $17.8 million for the three months ended
September 30, 2017 as compared to $5.8 million for the same period
in 2016. The increase in interest expense is associated with higher
average debt balances from our growth initiatives as well as higher
average interest costs as the Partnership created a more flexible
capital structure from the issuance of $300 million of Senior
unsecured notes.
In conjunction with the merger agreement between AMID and JP
Energy Partners, LP, affiliates of ArcLight Capital Partners, LLC
(“ArcLight”), the majority owner of our general partner, have
committed to providing support of $9.9 million in the third quarter
of 2017 in connection with the $25.0 million support agreement. The
Partnership does not foresee the need for additional support as we
have substantially completed the initial phase of our capital
optimization strategy.
BUSINESS HIGHLIGHTS
During the third quarter, AMID made considerable progress in
executing a strategy of simplifying its businesses and growing
distributable cash flow. Since June 2017, AMID has effectively
reallocated over $450 million in capital in seven highly accretive
transactions while also improving the Partnership’s balance sheet.
In conjunction with AMID’s numerous organic growth projects, the
Partnership is poised for materially higher 2018 Adjusted EBITDA
and distributable cash flow.
Cayenne Joint Venture
On August 8, 2017, the Partnership announced a joint venture
agreement between AMID and Targa Midstream Services
LLC (“Targa”) creating Cayenne Pipeline,
LLC (“Cayenne”). Cayenne will transport Y-grade NGLs from
the Targa-operated Venice Energy Services Company,
LLC gas processing plant (“Venice”) to Enterprise Products’
pipeline at Toca, Louisiana, for delivery to Enterprise
Products’ Norco Fractionator. As part of the Cayenne joint venture,
AMID is contributing an underutilized natural gas pipeline that
will convert into high value, natural gas liquids service. The
project is supported by a 15-year dedication for all NGL production
from Targa’s 750 MMcf/d Venice plant with inlet from six offshore
pipelines in the Gulf of Mexico, including the prolific
deep-water Mississippi Canyon area. The pipeline will
have initial capacity of over 40,000 barrels per day with the
ability to throughput more than 50,000 barrels per day. AMID and
Targa will each have 50% economic interests and 50% voting rights,
respectively, with Targa serving as the operator of the venture.
The costs of conversion and associated construction will be shared
equally by AMID and Targa.
Acquisition of Panther
On August 8, 2017, the Partnership announced the acquisition of
100% of the assets in Panther Asset Management,
LLC (“Panther”) for a total consideration of
approximately $57 million. The consideration consisted of
approximately $39 million cash from borrowings under the
Partnership’s revolving credit facility and common units
representing limited partner interests. The underlying assets
acquired are highly complementary with AMID’s core Gulf
of Mexico assets as a substantial portion of Panther’s cash
flows are generated by AMID joint ventures. Consolidating Main Pass
Oil and Gas and American Panther into the Partnership’s Gulf
of Mexico portfolio continues the strategy of enhancing
its gulf coast asset base, providing its customers with
strong interconnectivity that allow for multiple product delivery
points product delivery; as well as solidly position AMID as a Gulf
of Mexico crude oil pipeline operator.
Closing Sale of Propane Marketing and Services
On September 5, 2017, the Partnership announced the closing of
its previously announced sale of the Partnership’s Propane
Marketing and Services business to SHV Energy
N.V. for $170 million in cash. Through this
transaction, the Partnership has divested 100% of the segment,
including Pinnacle Propane’s 40 service locations; Pinnacle
Propane Express’ cylinder exchange business and related
logistic assets; and the Alliant Gas utility system.
Commences Crude Deliveries Into Dakota Access
Pipeline
On September 25, 2017, the Partnership announced the
commencement of deliveries from the Partnership’s 40,000 barrel per
day Bakken crude oil gathering system near Watford City,
ND into the Dakota Access Pipeline (“DAPL”).
The Partnership’s DAPL interconnect provides optionality to
high-value market alternatives and take-away capabilities for
gathered barrels and volume brought through AMID’s trucking
terminal. The connection is strategically located to give producers
access to DAPL upstream of the delivery and storage hub at Johnsons
Corner.
Drop Down of Incremental Interest in Delta House
On October 2, 2017, the Partnership announced the acquisition
and closing of an additional 15.5% equity interest in Delta House,
a fee-based, semi-submersible floating production and processing
system from affiliates of ArcLight Capital Partners, LLC, for
total consideration of approximately $125.4 million.
Post-closing, the Partnership and ArcLight will directly and
indirectly own a 35.7% and 23.3% interest in Delta House,
respectively. The purchase of additional Delta House interests is
immediately accretive to Adjusted EBITDA and distributable cash
flow.
Drop Down of Incremental Interest in Destin
On October 30, 2017, the Partnership announced the acquisition
and closing of an additional 17.0 % equity interest in the Destin
Pipeline (“Destin”) from affiliates of ArcLight, which
controls the general partner of the Partnership, for a total
consideration of approximately $30 million. Post-closing, the
Partnership owns a 66.67% interest in Destin. The purchase of the
additional interest in Destin is accretive to Adjusted EBITDA and
distributable cash flow. Additional interest in Destin is an
extension of the Partnership’s commitment to reallocating capital
in a portfolio of interconnected, complementary assets with
predictable cash flows.
Announcement of Southcross Acquisition
On November 1, 2017, the Partnership announced it has signed an
agreement to acquire certain assets of Southcross Holdings,
LP, and has proposed to merge Southcross Energy Partners,
L.P. (NYSE: SXE) (collectively, with Southcross
Holdings referred to as “Southcross”) into a wholly owned
subsidiary of AMID in two separate transactions valued at
approximately $815 million, including the repayment of net
debt. As a result of the transactions, the pro forma partnership
with an enterprise value of $3 billion is expected to
generate annualized 2018 Adjusted EBITDA in excess of $300
million. The acquisition of Southcross reinforces AMID’s primary
strategic objective of creating operational focus within a defined
core asset footprint in high-growth U.S. basins.
Drop Down of Trans-Union
On November 6, 2017, the Partnership announced the purchase of
Trans-Union which is immediately accretive to Adjusted EBITDA and
distributable cash flow. This drop down represents an attractive
commercial and strategic investment that will deliver long-term
returns. Trans-Union is anchored with long term take-or-pay
agreements, consisting of approximately 91% of Trans-Union’s
FERC-regulated capacity through investment grade utilities. In
addition, these assets are complementary to AMID’s existing
transmission portfolio and development within the Southeast, with
proximity to the Midla system, as well as offering potential
bolt-on acquisition opportunities. This drop down demonstrates
ArcLight’s continued support of the Partnership.
CAPITAL MANAGEMENT
As of September 30, 2017, the Partnership had approximately $1.1
billion of total debt outstanding, comprised of $709.7 million
outstanding under its revolving credit facility with approximately
$190.0 million of borrowings available, $293.0 million outstanding
under its 8.50% senior unsecured notes and $55.2 million
outstanding under its 3.77% non-recourse Senior secured notes. The
Partnership had leverage of approximately 4.9 times. For the three
months ended September 30, 2017, capital expenditures totaled $21.0
million, including $2.4 million of maintenance capital
expenditures.
On October 2, 2017, the Partnership repurchased all of its
Series D Preferred units. For the third quarter 2017, distributions
for the Partnership’s Series A and C Preferred Units will be paid
$2.9 million cash and $5.1 million in-kind. All Preferred Units
will be paid consistent with the common limited partner units of
$0.4125 per unit.
RISK MANAGEMENT
The Partnership periodically enters into risk management
contracts to minimize the impact of commodity price changes
associated with natural gas, natural gas liquids, crude oil and
interest rates. In order to mitigate the impact of rising interest
rates on floating rate debt, the Partnership has entered into $650
million in interest rate swaps at an average rate of LIBOR plus 130
basis points extending from 2017 through 2022.
CONFERENCE CALL INFORMATION
The Partnership will host a conference call at 10:00 AM Eastern
Time on Wednesday, November 8, 2017 to discuss these results.
The call will be webcast and archived on the Partnership’s website
for a limited time.
Date: Wednesday, November 8, 2017
Time: 10:00 AM ET / 9:00 AM CT
Dial-In Numbers: (844) 579-6824 (Domestic toll-free)
(763) 488-9145 (International)
Conference ID: 9489529
Webcast URL: www.AmericanMidstream.com under Investor
Relations
Non-GAAP Financial Measures
This press release and the accompanying tables include
supplemental non-GAAP financial measures, including “Adjusted
EBITDA,” “Gross Margin,” “Operating Margin,” “Segment Operating
Margin,” and “Distributable Cash Flow.” The tables included in this
press release include reconciliations of these supplemental
non-GAAP financial measures to the nearest comparable GAAP
financial measures. In addition, a “Note About Non-GAAP Financial
Measures” is set forth in a later section in this press
release.
About American Midstream Partners, LP
American Midstream Partners, LP is a growth-oriented
limited partnership formed to provide critical midstream
infrastructure that links producers of natural gas, crude oil,
NGLs, condensate and specialty chemicals to end-use markets.
American Midstream’s assets are strategically located in some of
the most prolific onshore and offshore basins in the Permian, Eagle
Ford, East Texas, Bakken and Gulf Coast. American
Midstream owns or has an ownership interest in approximately
4,000 miles of interstate and intrastate pipelines, as well as
ownership in gas processing plants, fractionation facilities, an
offshore semisubmersible floating production system with nameplate
processing capacity of 100,000 Bbl/d of crude oil and 240 MMcf/d of
natural gas; and terminal sites with approximately 6.7 million Bbls
of storage capacity. For more information about American Midstream
Partners, LP, visit www.americanmidstream.com.
Forward-Looking Statements
This press release includes forward-looking statements. These
statements relate to, among other things, projections of 2017
financial performance, consummation of transactions, operational
volumetrics and improvements, growth projects, distributions, cash
flows and capital expenditures. We have used the words
“anticipate,” “believe,” “could,” “estimate,” “expect,” “guidance,”
“intend,” “may,” “plan,” “predict,” “project,” “should,” “will,”
“potential,” and similar terms and phrases to identify
forward-looking statements in this press release. Although we
believe the assumptions upon which these forward-looking statements
are based are reasonable, any of these assumptions could prove to
be inaccurate and the forward-looking statements based on these
assumptions could be incorrect. These forward-looking statements
reflect our intentions, plans, expectations, assumptions and
beliefs about future events and are subject to risks, uncertainties
and other factors, many of which are outside our control.
Additional risks include the following: the ability to obtain
requisite regulatory and unitholder approval and the satisfaction
of the other conditions to the consummation of the proposed
transaction, the ability of American Midstream to successfully
integrate SXE’s operations and employees and realize anticipated
synergies and cost savings, actions by third parties, the potential
impact of the announcement or consummation of the proposed
transaction on relationships, including with employees, suppliers,
customers, competitors and credit rating agencies, and the ability
to achieve revenue and other financial growth, and volatility in
the price of oil, natural gas, and natural gas liquids and the
credit market. Actual results and trends in the future may differ
materially from those suggested or implied by the forward-looking
statements depending on a variety of factors which are described in
greater detail in our filings with the Securities and Exchange
Commission (“SEC”). See our “Risk Factors” and other disclosures
included in our Annual Report on Form 10-K for the year ended
December 31, 2016, as filed with the SEC on March 28, 2017 and in
our other filings with the SEC. All future written and oral
forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the
previous statements. The forward-looking statements herein speak as
of the date of this press release. We undertake no obligation to
update any information contained herein or to publicly release the
results of any revisions to any forward-looking statements that may
be made to reflect events or circumstances that occur, or that we
become aware of, after the date of this press release.
Additional Information and Where to Find it
This communication relates to a proposed business combination
between AMID and SXE. In connection with the proposed transaction,
AMID and/or SXE expect to file a proxy statement/prospectus and
other documents with the Securities and Exchange Commission
(“SEC”).
WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
Any definitive proxy statement(s) (if and when available) will
be mailed to unitholders of SXE. Investors and security holders
will be able to obtain these materials (if and when they are
available) free of charge at the SEC’s website, www.sec.gov. In addition, copies of any documents
filed with the SEC may be obtained free of charge from
SXE’s internet website for investors at http://investors.southcrossenergy.com, and from
AMID’s investor relations website at http://www.americanmidstream.com/investorrelations.
Investors and security holders may also read and copy any reports,
statements and other information filed by AMID and SXE with
the SEC at the SEC public reference room
at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 or visit the SEC’s
website for further information on its public reference room.
No Offer or Solicitation
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities, or a solicitation
of any vote or approval, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Participation in the Solicitation of Votes
American Midstream and Southcross Energy and
their respective directors and executive officers may be considered
participants in the solicitation of proxies in connection with the
proposed transaction. Information regarding Southcross Energy’s
directors and executive officers is available in its Annual Report
on Form 10-K for the year ended December 31, 2016, filed with
the SEC on March 9, 2017. Information regarding
American Midstream’s directors and executive officers is available
in its Annual Report on Form 10-K for the year ended December
31, 2016, filed with the SEC on March 28, 2017.
Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement/prospectus and other relevant materials to be
filed with the SEC when they become available.
American Midstream Partners, LP and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Unaudited, in thousands except unit
amounts)
September 30, 2017
December 31, 2016
Assets Cash and cash equivalents $ 6,739 $ 5,666 Property,
plant and equipment, net 1,140,826 1,066,608 Intangible assets, net
194,456 205,071 Investments in unconsolidated affiliates 334,026
291,987 Other assets, net 347,160 643,230 Assets of discontinued
operations — 136,759 Total assets $ 2,023,207
$ 2,349,321
Liabilities, Equity and Partners’ Capital
Current portion of long-term debt $ 1,234 $ 5,438 3.77% Senior
secured notes (Non-recourse) 55,186 55,979 8.50% Senior unsecured
notes 293,007 291,309 Revolving credit facility 709,652 888,250
Other liabilities, net 175,675 174,607 Liabilities of discontinued
operations — 14,491 Convertible preferred units 343,579 334,090
Partners’ capital General Partner interests (953 thousand and 680
thousand units issued and outstanding as of September 30, 2017 and
December 31, 2016, respectively) (86,224 ) (47,645 ) Limited
Partner interests (52,850 thousand and 51,351 thousand units issued
and outstanding as of September 30, 2017 and December 31, 2016,
respectively) 517,081 616,087 Accumulated other comprehensive
income (loss) 2 (40 ) Noncontrolling interests 14,015 16,755
Total liabilities, equity and partners’ capital $ 2,023,207
$ 2,349,321
American Midstream Partners, LP and
Subsidiaries
Consolidated Statements of
Operations
(Unaudited, in thousands, except for
per unit amounts)
Three months ended September
30,
Nine months ended September
30,
2017 2016 2017 2016
Revenue $ 162,887 $ 159,579 $ 488,431 $ 415,082 Gain (loss) on
commodity derivatives, net (597 ) 324 (33 ) (1,929 )
Total revenue 162,290 159,903 488,398
413,153 Operating expenses: Purchases of natural gas, NGLs
and condensate 112,398 107,249 342,886 270,712 Direct operating
expenses 20,705 17,571 56,819 53,872 Corporate expenses 27,083
22,103 84,570 60,945 Depreciation, amortization and accretion
expense 26,781 22,668 78,834 65,937 (Gain) loss on sale of assets,
net (4,061 ) 36 (4,064 ) 297 Total operating
expenses 182,906 169,627 559,045
451,763 Operating loss (20,616 ) (9,724 ) (70,647 ) (38,610
) Other income (expense), net: Interest expense (17,759 ) (5,830 )
(51,037 ) (24,723 ) Other (expense) income, net 34,085 (1 ) 32,248
245 Earnings in unconsolidated affiliates 16,827 10,468
49,781 29,513 Income (loss) from
continuing operations before income taxes 12,537 (5,087 ) (39,655 )
(33,575 ) Income tax expense (731 ) (401 ) (2,611 ) (1,839 )
Income (loss) from continuing operations 11,806 (5,488 ) (42,266 )
(35,414 ) Income (loss) from discontinued operations, including
gain on disposition 44,696 (2,310 ) 42,185
7,532 Net income (loss) 56,502 (7,798 ) (81 ) (27,882 )
Less: Net income attributable to noncontrolling interests 621
1,241 3,386 2,192 Net income
(loss) attributable to the Partnership $ 55,881 $ (9,039 ) $
(3,467 ) $ (30,074 )
General Partner's interest in net income (loss) $ 697 $ (31
) $ (98 ) $ (235 ) Limited Partners' interest in net income
(loss) $ 55,184 $ (9,008 ) $ (3,369 ) $ (29,839 )
Distribution declared per common unit $ 0.4125 $ 0.4125 $
1.2375 $ 1.2975 Limited Partners’ net loss per common unit: Basic
and diluted: Income (loss) from continuing operations $ 0.05 $
(0.29 ) $ (1.36 ) $ (1.14 ) Income (loss) from discontinued
operations 0.86 (0.05 ) 0.81 0.15 Net
income (loss) $ 0.91 $ (0.34 ) $ (0.55 ) $ (0.99 )
Weighted average number of common units outstanding: Basic and
diluted 52,013 51,310 52,013 51,310
American Midstream Partners, LP and
Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(Unaudited, in thousands)
Nine months ended September 30,
2017 2016 Cash flows from operating
activities Net loss $ (81 ) $ (27,882 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and accretion expense 88,700 78,168 Gain
on acquisition (32,383 ) — (Gain) loss on sale of assets and
discontinued operations (50,580 ) 2,247 Unrealized loss on
derivatives contracts, net 2,818 1,803 Changes in operating assets
and liabilities, net of effects of assets acquired and liabilities
assumed 14,894 29,723 Net cash provided by operating
activities 23,368 84,059
Cash flows from
investing activities Acquisitions, net of cash acquired and
settlements (71,383 ) (2,676 ) Investments in unconsolidated
affiliates (49,828 ) (114,007 ) Additions to property, plant and
equipment (65,026 ) (85,652 ) Proceeds from sale of business and
assets, net of cash on hand 167,979 11,761 Restricted cash 302,736
(43,691 ) Other cash flows from investing activities, net 8,333
33,284 Net cash provided by (used in) investing
activities 292,811 (200,981 )
Cash flows from
financing activities Proceeds from issuance of common units,
net of offering costs — 2,910 Proceeds from 3.77% Senior secured
Notes — 60,000 Payments on 3.77% Senior secured Notes (1,351 ) —
Unitholder distributions for common control transactions (75,572 )
— Borrowings on credit agreement 367,809 317,243 Payments on credit
agreement (546,408 ) (172,650 ) Other cash flow from financing
activities, net (59,584 ) (85,921 ) Net cash provided by (used in)
financing activities (315,106 ) 121,582 Net increase
in cash and cash equivalents 1,073 4,660
Cash and cash
equivalents Beginning of period 5,666 1,987 End
of period $ 6,739 $ 6,647
American Midstream Partners, LP and
Subsidiaries
Reconciliation of Net income (loss)
attributable to the Partnership to
Adjusted EBITDA and Distributable Cash
Flow
(Unaudited, in thousands)
Three months ended September
30,
Nine months ended September
30,
2017 2016 2017 2016
Reconciliation of Net income (loss) attributable to the
Partnership to Adjusted EBITDA: Net income (loss)
attributable to the Partnership $ 55,881 $ (9,039 ) $ (3,467 )
$ (30,074 ) Add: Depreciation, amortization and accretion expense
26,685 22,668 78,173 65,937 Interest expense 14,959 5,014 43,769
22,395 Debt issuance costs 119 2,512 2,235 3,987 Unrealized (gain)
loss on derivatives, net 324 (3,175 ) 2,384 2,431 Non-cash equity
compensation expense 845 1,234 6,077 4,285 Transaction expenses
10,470 4,983 31,155 9,145 Income tax expense 731 401 2,611 1,839
Distributions from unconsolidated affiliates 20,582 22,720 58,976
62,797 General Partner contribution 9,870 — 34,614 5,000 Deduct:
Earnings in unconsolidated affiliates 16,827 10,468 49,781 29,513
Discontinued operations 44,789 2,323 36,464 (7,561 ) Gain on
revaluation of equity interest 32,383 — 32,383 — Other, net 91 409
257 355 Gain (loss) on sale of assets, net 4,061 (36 ) 4,064
(297 )
Adjusted EBITDA $ 42,315
$ 34,154 $ 133,578
$ 125,732 Deduct: Interest expense
14,970 7,109 43,559 13,117 Maintenance capital 2,449 1,974 6,570
3,843 Series A, C and D Cash Payment 2,870 3,751
16,311 3,751
Distributable Cash Flow
$ 22,026 $ 21,320
$ 67,138 $ 105,021
Limited Partner Distributions 22,058
24,874 68,361 76,656 Distribution
Coverage 1.0 x 0.9 x 1.0
x 1.4 x
American Midstream Partners, LP and
Subsidiaries
Reconciliation of Total Gross Margin to
Net income (loss) attributable to the Partnership
(Unaudited, in thousands)
Three months ended September
30,
Nine months ended September
30,
2017 2016 2017 2016
Reconciliation of Segment Gross Margin to Net income (loss)
attributable to the Partnership Gas Gathering and Processing
Services $ 12,761 $ 12,627 $ 36,663 $ 37,586 Liquid Pipelines and
Services 7,808 7,600 21,209 23,829 Natural Gas Transportation
Services 5,356 3,709 17,106 13,115 Offshore pipelines and services
29,312 24,126 80,738 57,947 Terminalling Services 8,509
10,731 30,429 31,760
Total Segment Gross
margin 63,746 58,793 186,145
164,237 Less: Direct operating expenses 17,274 14,695
47,316 45,999
Total Operating margin
46,472 44,098 138,829 118,238 Plus:
Gain (loss) on commodity derivatives, net (597 ) 324 (33 ) (1,929 )
Less: Corporate Expenses 27,083 22,103 84,570 60,945 Depreciation,
amortization and accretion expense 26,781 22,668 78,834 65,937 Gain
(loss) on sale of assets, net (4,061 ) 36 (4,064 ) 297 Interest
expense 17,759 5,830 51,037 24,723 Other income (expense), net
(34,085 ) 1 (32,248 ) (245 ) Other, net (139 ) (1,129 ) 322 (1,773
) Income tax expense 731 401 2,611 1,839 (Income) loss from
discontinued operations, including gain on sale of disposition
(44,696 ) 2,310 (42,185 ) (7,532 ) Net income attributable to
noncontrolling interest 621 1,241 3,386 2,192
Net income (loss) attributable to the Partnership
$ 55,881 $ (9,039 )
$ (3,467 ) $ (30,074 )
American Midstream Partners, LP and
Subsidiaries
Segment Financial and Operating
Data
(Unaudited, in thousands, except for
operating and pricing data)
Three months ended September
30,
Nine months ended September
30,
2017 2016 2017
2016 Segment Financial and Operating Data:
Gas Gathering and Processing Services
segment
Financial data: Segment gross margin $ 12,761 $ 12,627 $ 36,663 $
37,586 Less: Direct operating expenses 8,655 7,856
24,766 25,344 Segment operating margin
$ 4,106 $ 4,771 $ 11,897 $ 12,242
Operating data: Average throughput (MMcf/d) 201.0 211.0 205.0 218.0
Average plant inlet volume (MMcf/d) 94.9 103.7 100.0 103.0 Average
gross NGL production (Mgal/d) 324.3 181.7 340.0 240.0 Average gross
condensate production (Mgal/d) 57.5 87.1 73.0 81.0
Liquid
Pipelines and Services segment Financial data: Segment gross
margin $ 7,808 $ 7,600 $ 21,209 $ 23,829 Less: Direct operating
expenses 2,438 2,617 7,137 8,186
Segment operating margin $ 5,370 $ 4,983
$ 14,072 $ 15,643 Distributions:
Tri-States/Wilprise $ 2,018 $ 1,418 $ 5,036 $ 2,510 Operating data:
Average Tri-States/Wilprise throughput (MBbls/d) 85.6 63.4 87.1
73.4 Average Other Liquid Pipelines throughput (MBbls/d) 35.4 30.4
33.8 31.1
Natural Gas Transportation Services segment
Financial data: Segment gross margin $ 5,356 $ 3,709 $ 17,106 $
13,115 Less: Direct operating expenses 2,240 1,324
5,403 4,515 Segment operating margin $ 3,116 $
2,385 $ 11,703 $ 8,600 Operating data: Average
throughput (MMcf/d) 423.0 517.0 407.0 461.0
Offshore
Pipelines and Services segment Financial data: Segment gross
margin $ 29,312 $ 24,126 $ 80,738 $ 57,947 Less: Direct operating
expenses 3,940 2,898 10,010 7,954
Segment operating margin $ 25,372 $ 21,228 $ 70,728
$ 49,993 Distributions: Destin/Okeanos $ 7,882 $
6,752 $ 26,667 $ 15,383 Delta House 10,283 13,753 26,173 42,113
Other 400 797 1,100 2,792
Total
$ 18,565 $ 21,302 $ 53,940 $ 60,288
Operating data: AMID Average throughput (MMcf/d) 257.0 467.0 328.0
464.0 Average Destin/Okeanos throughput (MDth/d) 1,106.5 1,146.3
1,114.4 1,190.0 Average Delta House throughput (MBOE/d) 122.8 96.4
113.8 94.6 Average Other throughput (MBbls/d) 13.2 25.4 20.2 29.8
Terminalling Services segment Financial data: Segment
revenue $ 13,087 $ 14,443 $ 47,544 $ 46,216 Less: Cost of Sales
1,146 836 7,612 6,583 Direct operating expenses 3,432 2,876
9,503 7,873 Segment operating margin $ 8,509
$ 10,731 $ 30,429 $ 31,760 Operating
data: Contracted Capacity (Bbls) 4,759,978 5,224,067 5,066,337
4,920,533 Design Capacity (Bbls) * 5,400,800 5,342,467 5,400,800
5,098,022 Storage utilization 88.1 % 97.8 % 93.8 % 96.5 %
Terminalling and Storage throughput (Bbls/d) 60,002 55,675 59,005
58,073 * Excludes our Cushing Facility
Appendix A
Note About Non-GAAP Financial Measures
Gross margin, segment gross margin, operating margin and
Adjusted EBITDA are performance measures that are non-GAAP
financial measures. Each has important limitations as an analytical
tool because they exclude some, but not all, items that affect the
most directly comparable GAAP financial measures. Management
compensates for the limitations of these non-GAAP measures as
analytical tools by reviewing the comparable GAAP measures,
understanding the differences between the measures and
incorporating these data points into management’s decision-making
process.
You should not consider gross margin, operating margin, or
Adjusted EBITDA in isolation or as a substitute for, or more
meaningful than analysis of, our results as reported under GAAP.
Gross margin, operating margin and Adjusted EBITDA may be defined
differently by other companies in 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.
Adjusted EBITDA is a supplemental non-GAAP financial measure
used by our management and external users of our financial
statements, such as investors, commercial banks, research analysts
and others, to assess: the financial performance of our assets
without regard to financing methods, capital structure or
historical cost basis; the ability of our assets to generate cash
flow to make cash distributions to our unitholders and our General
Partner; our operating performance and return on capital as
compared to those of other companies in the midstream energy
sector, without regard to financing or capital structure; and the
attractiveness of capital projects and acquisitions and the overall
rates of return on alternative investment opportunities.
We define Adjusted EBITDA as net income (loss) attributable to
the Partnership, plus depreciation, amortization and accretion
expense, interest expense, debt issuance costs, unrealized (gains)
losses on derivatives, non-cash charges such as non-cash equity
compensation expense, and charges that are unusual such as
transaction expenses primarily associated with our acquisitions
(such as JPE, Viosca Knoll, Delta House and Panther), income tax
expense, distributions from unconsolidated affiliates and general
partner’s contribution, less earnings in unconsolidated affiliates,
discontinued operations, gains (losses) that are unusual such as
gain on revaluation of equity interest, other, net, and gain (loss)
on sale of assets, net.
In this release, we present projected Adjusted EBITDA guidance
for 2018. We are unable to project net income (loss) attributable
to the Partnership to provide the related reconciliations of
projected Adjusted EBITDA to the most comparable financial measure
calculated in accordance with GAAP, because the impact of changes
in distributions from unconsolidated affiliates, operating assets
and liabilities, the volume and timing of payments received and
utilized from our customers are out of our control and cannot be
reasonably predicted. We provide a range for the forecast of
Adjusted EBITDA to allow for the variability in gain (loss) on sale
of assets, timing of cash receipts and disbursements, customer
utilization of our assets, interest expense and the impact on the
related reconciling items, many of which interplay with each other.
Therefore, the reconciliation of Adjusted EBITDA to projected net
income (loss) attributable to the Partnership is not available
without unreasonable effort.”
DCF is a significant performance metric used by us and by
external users of the Partnership’s financial statements, such as
investors, commercial banks and research analysts, to compare basic
cash flows generated by us to the cash distributions we expect to
pay the Partnership’s unitholders. Using this metric, management
and external users of the Partnership’s financial statements can
quickly compute the coverage ratio of estimated cash flows to
planned cash distributions. DCF is also an important financial
measure for the Partnership’s unitholders since it serves as an
indicator of the Partnership’s success in providing a cash return
on investment. Specifically, this financial measure may indicate to
investors whether we are generating cash flow at a level that can
sustain or support an increase in the Partnership’s quarterly
distribution rates. DCF is also a quantitative standard used
throughout the investment community with respect to publicly traded
partnerships and limited liability companies because the value of a
unit of such an entity is generally determined by the unit’s yield
(which in turn is based on the amount of cash distributions the
entity pays to a unitholder). DCF will not reflect changes in
working capital balances.
We define DCF as Adjusted EBITDA, less interest expense,
normalized maintenance capital expenditures, and distributions
related to the Series A, Series C, and Series D convertible
preferred units. The GAAP financial measure most comparable to DCF
is Net income (loss) attributable to the Partnership.
Segment gross margin and gross margin are metrics that we use to
evaluate our performance.
We define segment gross margin in our Gas Gathering and
Processing Services segment as total revenue plus unconsolidated
affiliate earnings less unrealized gains or plus unrealized losses
on commodity derivatives, construction and operating management
agreement income and the cost of natural gas, and NGLs and
condensate purchased.
We define segment gross margin in our Liquid Pipelines and
Services segment as total revenue plus unconsolidated affiliate
earnings less unrealized gains or plus unrealized losses on
commodity derivatives and the cost of crude oil purchased in
connection with fixed-margin arrangements. Substantially all of our
gross margin in this segment is fee-based or fixed-margin, with
little to no direct commodity price risk.
We define segment gross margin in our Natural Gas Transportation
Services segment as total revenue plus unconsolidated affiliate
earnings less the cost of natural gas purchased in connection with
fixed-margin arrangements. Substantially all of our gross margin in
this segment is fee-based or fixed-margin, with little to no direct
commodity price risk.
We define segment gross margin in our Offshore Pipelines and
Services segment as total revenue plus unconsolidated affiliate
earnings less the cost of natural gas purchased in connection with
fixed-margin arrangements. Substantially all of our gross margin in
this segment is fee-based or fixed-margin, with little to no direct
commodity price risk.
We define segment gross margin in our Terminalling Services
segment as total revenue less direct operating expense which
includes direct labor, general materials and supplies and direct
overhead.
Gross margin is a supplemental non-GAAP financial measure that
we use to evaluate our performance. We define gross margin as the
sum of the segment gross margins for our Gas Gathering and
Processing Services, Liquid Pipelines and Services, Natural Gas
Transportation Services, Offshore Pipelines and Services and
Terminalling Services segments. The GAAP measure most directly
comparable to gross margin is Net income (loss) attributable to the
Partnership.
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version on businesswire.com: http://www.businesswire.com/news/home/20171108005681/en/
American Midstream Partners, LPInvestor
ContactMark Buscovich,
346-241-3467mbuscovich@americanmidstream.com
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