Blueknight Energy Partners, L.P. (“Blueknight” or the
“Partnership”) (Nasdaq: BKEP and BKEPP) today reported its
financial results for the fourth quarter and full year ended
December 31, 2021. Income from continuing operations was
$8.9 million in the fourth quarter of 2021, compared
to $8.4 million for the same period in 2020. Adjusted
earnings before interest, taxes, depreciation and amortization
(“Adjusted EBITDA”) from continuing operations
was $13.9 million in the fourth quarter of
2021 compared to $13.6 million for the same period
in 2020. The year-over-year increase was due to higher asphalt
terminalling services operating margin, excluding depreciation and
amortization, and continued improvements in general and
administrative expense after excluding non-recurring legal and
professional fees.
“Looking back over 2021, I am proud of Blueknight and our team’s
ability to execute the strategy and vision we communicated to our
investors over the course of the year,” commented Andrew Woodward,
Chief Executive Officer. “We achieved a number of milestones across
multiple fronts, namely successfully exiting the crude oil
business, refinancing our credit facility, initiating growth with
two new announced projects, increasing our common unit
distribution, and exceeding our guidance targets. The confidence I
have in our strategy is reinforced by our successful transformation
of the business, recent track record, and improved financial
flexibility.”
FINANCIAL PERFORMANCE
Fourth quarter 2021 total operating margin, excluding
depreciation and amortization, was $16.8 million, up
2% compared to the same period in 2020 as higher fixed-fee,
take-or-pay revenue and favorable operating expenses excluding
utilities offset lower variable throughput revenue based on a
seasonally strong fourth quarter of 2020 in certain operating
regions. General and administrative expense in the fourth quarter
of 2021 was $3.3 million, excluding approximately $0.7 million
in non-recurring legal and professional fees related to the
conflicts committee’s ongoing review of the Ergon buyout offer.
Full year 2021 total operating margin, excluding depreciation
and amortization, was $63.1 million, up 4% compared to the
same period in 2020. Total asphalt volumes increased 2% during 2021
and total revenue increased to $115.4 million, with
approximately 94% categorized as fixed-fee, take-or-pay
revenue after excluding variable cost recovery revenue. Total
variable throughput and other revenue of $5.7 million was
in-line with the same period in 2020. Full year 2021 income from
continuing operations included approximately $2.2 million in
non-recurring other income related to insurance claim
recoveries.
CASH FLOW AND BALANCE SHEET
Fourth quarter 2021 Distributable Cash Flow from continuing
operations was $11.8 million compared
to $11.3 million for the same period in 2020. The
4% increase was attributable to improved business
performance and lower cash interest expense.
The coverage ratio on all distributions was 1.46 times
for the fourth quarter of 2021 versus
1.40 times for the same period in 2020. The coverage
ratio on common unit distributions was 3.00 times for
the fourth quarter of 2021 versus 2.87 times for the
same period in 2020. Net maintenance capital expenditures were
$1.4 million during the fourth quarter of 2021.
Full year 2021 Distributable Cash Flow from continuing
operations was $44.4 million, up 15% compared to $38.8
million for the same period in 2020. The coverage ratio on all
distributions was 1.38 times for the full year
2021 versus 1.20 times for the same period in
2020. The coverage ratio on common unit distributions
was 2.74 times for the full year 2021
versus 1.92 times for the same period in 2020. Net
maintenance capital expenditures were $6.3 million during
2021.
As of December 31, 2021, total debt was $98.0 million,
and the leverage ratio was 1.84 times, versus 3.83
times as of December 31, 2020. Total availability under
the credit facility was $201.4 million at the end of 2021.
As of March 1, 2022, total debt was $110.0 million and
total cash was $1.1 million.
ERGON BUYOUT OFFER
During the fourth quarter of 2021, Ergon Inc., (“Ergon”) filed
an amendment to its Schedule 13D with the Securities and Exchange
Commission disclosing that Ergon made a non-binding proposal to the
Board, pursuant to which Ergon would acquire all the outstanding
common and preferred units of the Partnership not already owned by
Ergon and its affiliates.
The conflicts committee of the Board, which is composed solely
of Blueknight’s three independent directors, has retained
independent financial and legal advisors to assist in their
evaluation and negotiation of the offer, which is still
ongoing.
The transaction would be subject to a number of contingencies,
including the approval of the conflicts committee, the approval by
the Partnership’s unitholders, and the satisfaction of any
conditions to the consummation of a transaction set forth in any
definitive agreement concerning the transaction. There can be no
assurance that a definitive agreement will be executed or that any
transaction will materialize.
2022 OUTLOOK
Subsequent to year-end, Blueknight closed its previously
announced asphalt terminal and industrial park acquisition in
January 2022 and received all permitting and regulatory approvals
necessary to proceed with its East Coast organic expansion project
in February 2022.
For 2022 guidance, Blueknight anticipates the following:
- Adjusted EBITDA expected to be approximately 2% higher
year-over-year, excluding any impact from recently announced growth
projects and $2.2 million of non-recurring other income recognized
during 2021
- Recently announced growth projects involving approximately
$15.0 million of initial growth capital funded throughout 2022 and
expected to contribute a combined incremental run-rate EBITDA of
approximately $2.0 million per year upon completion
- Total maintenance capital expenditures expected to be between
$5.5 million and $6.5 million
- Maintaining long-term targets for total leverage of 3.5 times
and coverage of 1.3 times or greater on all distributions
CONFERENCE CALL DETAILS
The Partnership will discuss fourth quarter and full year
2021 results during a conference call tomorrow, Wednesday,
March 9, 2022, at 10:00 a.m. CST (11:00 a.m. EST). The
conference call will be accessible by telephone at 1-855-327-6837.
International participants will be able to access the conference
call at 1-631-891-4304. Participants are requested to dial in five
to ten minutes before the scheduled start time. An audio replay
will be available through the “Investors” section of the
Partnership’s website.
Additional information regarding the Partnership’s results of
operations will be provided in the Partnership’s Annual Report on
Form 10-K for the year ended December 31, 2021, to
be filed with the Securities and Exchange Commission on March 9,
2022.
RESULTS OF OPERATIONS
The following table summarizes the Partnership’s financial
results for the three and twelve months ended December 31,
2020 and 2021 (in thousands, except per unit data):
|
|
Three Months ended December 31, |
|
Twelve Months ended December 31, |
|
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed fee revenue |
|
$ |
24,056 |
|
|
$ |
24,408 |
|
|
$ |
91,879 |
|
|
$ |
97,603 |
|
Variable cost recovery revenue |
|
|
2,928 |
|
|
|
3,408 |
|
|
|
12,664 |
|
|
|
12,066 |
|
Variable throughput and other revenue |
|
|
2,825 |
|
|
|
2,427 |
|
|
|
5,702 |
|
|
|
5,748 |
|
Total revenue |
|
|
29,809 |
|
|
|
30,243 |
|
|
|
110,245 |
|
|
|
115,417 |
|
Operating expenses, excluding depreciation and amortization |
|
|
(13,261 |
) |
|
|
(13,432 |
) |
|
|
(49,396 |
) |
|
|
(52,312 |
) |
Total operating margin,
excluding depreciation and amortization |
|
|
16,548 |
|
|
|
16,811 |
|
|
|
60,849 |
|
|
|
63,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,091 |
|
|
|
2,971 |
|
|
|
13,416 |
|
|
|
11,891 |
|
General and administrative expense |
|
|
3,681 |
|
|
|
3,981 |
|
|
|
14,182 |
|
|
|
13,902 |
|
Loss on disposal of assets |
|
|
316 |
|
|
|
66 |
|
|
|
67 |
|
|
|
195 |
|
Operating income |
|
|
9,460 |
|
|
|
9,793 |
|
|
|
33,184 |
|
|
|
37,117 |
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
199 |
|
|
|
86 |
|
|
|
1,169 |
|
|
|
2,615 |
|
Interest expense |
|
|
(1,248 |
) |
|
|
(948 |
) |
|
|
(5,665 |
) |
|
|
(4,944 |
) |
Provision for income taxes |
|
|
6 |
|
|
|
- |
|
|
|
7 |
|
|
|
(30 |
) |
Income from continuing
operations |
|
|
8,417 |
|
|
|
8,931 |
|
|
|
28,695 |
|
|
|
34,758 |
|
Income (loss) on discontinued operations(1) |
|
|
(37,642 |
) |
|
|
67 |
|
|
|
(42,175 |
) |
|
|
75,772 |
|
Net income (loss) |
|
$ |
(29,225 |
) |
|
$ |
8,998 |
|
|
$ |
(13,480 |
) |
|
$ |
110,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income
(loss) for calculation of earnings per unit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General partner interest in net income (loss) |
|
$ |
(462 |
) |
|
$ |
142 |
|
|
$ |
(213 |
) |
|
$ |
1,751 |
|
Preferred interest in net income |
|
$ |
6,279 |
|
|
$ |
6,150 |
|
|
$ |
25,115 |
|
|
$ |
24,824 |
|
Net income (loss) available to limited partners |
|
$ |
(35,042 |
) |
|
$ |
2,706 |
|
|
$ |
(38,382 |
) |
|
$ |
83,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) from discontinued operations
per common unit |
|
$ |
(0.87 |
) |
|
$ |
- |
|
|
$ |
(0.98 |
) |
|
$ |
1.74 |
|
Basic and diluted net income from continuing operations per common
unit |
|
|
0.05 |
|
|
|
0.06 |
|
|
|
0.07 |
|
|
|
0.22 |
|
Basic and diluted net income
(loss) per common unit |
|
$ |
(0.82 |
) |
|
$ |
0.06 |
|
|
$ |
(0.91 |
) |
|
$ |
1.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common units
outstanding - basic and diluted |
|
|
41,199 |
|
|
|
41,523 |
|
|
|
41,104 |
|
|
|
41,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On December 21, 2020, Blueknight announced it had entered into
multiple definitive agreements to sell its (i) crude oil
terminalling, (ii) crude oil pipeline, and (iii) crude oil trucking
segments. The sales of these segments closed in the first quarter
of 2021. As such, these segments are presented as discontinued
operations in the Partnership’s financial statements. |
Non-GAAP Financial Measures
This press release contains the non-GAAP financial measures of
Adjusted EBITDA from continuing operations, Distributable Cash Flow
from continuing operations, and total operating margin, excluding
depreciation and amortization. Adjusted EBITDA from continuing
operations is defined as earnings before interest, income taxes,
depreciation and amortization, non-cash equity-based compensation,
asset impairment charges, gains and losses on asset disposals, and
other select items which management feels decreases the
comparability of results among periods. Distributable Cash Flow
from continuing operations is defined as Adjusted EBITDA from
continuing operations minus cash paid for interest, cash paid for
taxes, and maintenance capital expenditures. Operating margin,
excluding depreciation and amortization is defined as revenues from
related parties and external customers less operating expenses,
excluding depreciation and amortization. The use of Adjusted EBITDA
from continuing operations, Distributable Cash Flow from continuing
operations and operating margin, excluding depreciation and
amortization should not be considered as alternatives to GAAP
measures such as operating income, net income or cash flows from
operating activities. Adjusted EBITDA from continuing operations,
Distributable Cash Flow from continuing operations and
operating margin, excluding depreciation and amortization are
presented because the Partnership believes they provide additional
information with respect to its business activities and are used as
supplemental financial measures by management and external users of
the Partnership’s financial statements, such as investors,
commercial banks and others to assess, among other things, the
Partnership’s 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.
Reconciliations of operating margin, excluding depreciation and
amortization to its most directly comparable GAAP measure is
included in the results of operations table above. Where references
are pro forma, forward-looking, preliminary, or prospective in
nature, and not based on historical fact, this press release does
not provide a reconciliation. The Partnership could not provide
such a reconciliation without unreasonable efforts because such
Adjusted EBITDA numbers are estimations, approximations, and/or
ranges. In addition, it would be difficult for the Partnership to
present a detailed reconciliation due to many unknown variables
possibly affecting the reconciliation. For the same reasons, the
Partnership is unable to address the probable significance of the
unavailable information, which could be material to future
results.
The following table presents a reconciliation of Adjusted EBITDA
from continuing operations and Distributable Cash Flow from
continuing operations to income from continuing operations for
the periods shown (in thousands, except ratios):
|
|
Three Months ended December 31, |
|
Twelve Months ended December 31, |
|
|
2020 |
|
2021 |
|
2020 |
|
2021 |
Income from continuing operations |
|
$ |
8,417 |
|
|
$ |
8,931 |
|
|
$ |
28,695 |
|
|
$ |
34,758 |
|
Interest expense |
|
|
1,248 |
|
|
|
948 |
|
|
|
5,665 |
|
|
|
4,944 |
|
Income taxes |
|
|
(6 |
) |
|
|
- |
|
|
|
(7 |
) |
|
|
30 |
|
Depreciation and non-cash amortization |
|
|
3,091 |
|
|
|
2,968 |
|
|
|
13,416 |
|
|
|
11,878 |
|
Non-cash equity-based compensation |
|
|
150 |
|
|
|
302 |
|
|
|
801 |
|
|
|
863 |
|
Loss on disposal of assets |
|
|
316 |
|
|
|
66 |
|
|
|
67 |
|
|
|
195 |
|
Other |
|
|
356 |
|
|
|
684 |
|
|
|
1,053 |
|
|
|
1,492 |
|
Adjusted EBITDA from
continuing operations |
|
$ |
13,572 |
|
|
$ |
13,899 |
|
|
$ |
49,690 |
|
|
$ |
54,160 |
|
Cash paid for interest |
|
|
(1,042 |
) |
|
|
(730 |
) |
|
|
(4,689 |
) |
|
|
(3,401 |
) |
Cash paid for income taxes |
|
|
18 |
|
|
|
10 |
|
|
|
(20 |
) |
|
|
(30 |
) |
Maintenance capital expenditures, net of reimbursable
expenditures |
|
|
(1,208 |
) |
|
|
(1,357 |
) |
|
|
(6,176 |
) |
|
|
(6,282 |
) |
Distributable cash flow from
continuing operations |
|
$ |
11,340 |
|
|
$ |
11,822 |
|
|
$ |
38,805 |
|
|
$ |
44,447 |
|
Less: Distributions declared on preferred units |
|
|
(6,379 |
) |
|
|
(6,249 |
) |
|
|
(25,518 |
) |
|
|
(25,008 |
) |
Distributable cash flow
available for common unit distributions |
|
$ |
4,961 |
|
|
$ |
5,573 |
|
|
$ |
13,287 |
|
|
$ |
19,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared on common units |
|
$ |
1,727 |
|
|
$ |
1,856 |
|
|
$ |
6,914 |
|
|
$ |
7,105 |
|
Distributions declared on preferred units |
|
|
6,379 |
|
|
|
6,249 |
|
|
|
25,518 |
|
|
|
25,008 |
|
Total Distributions
declared |
|
$ |
8,106 |
|
|
$ |
8,105 |
|
|
$ |
32,432 |
|
|
$ |
32,113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coverage ratio - common unit
distribution |
|
|
2.87 |
|
|
|
3.00 |
|
|
|
1.92 |
|
|
|
2.74 |
|
Coverage ratio - all
distributions |
|
|
1.40 |
|
|
|
1.46 |
|
|
|
1.20 |
|
|
|
1.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Looking Statements
This release includes forward-looking statements. Statements
included in this release that are not historical facts (including,
without limitation, any statements about future financial and
operating results, guidance, projected or forecasted financial
results, objectives, project timing, expectations and intentions
and other statements that are not historical facts) are
forward-looking statements. Such forward-looking statements are
subject to various risks and uncertainties. These risks and
uncertainties include, among other things, uncertainties relating
to the Partnership’s debt levels and restrictions in its credit
agreement, its exposure to the credit risk of our third-party
customers, the Partnership’s future cash flows and operations,
future market conditions, current and future governmental
regulation, future taxation and other factors discussed in the
Partnership’s filings with the Securities and Exchange Commission.
If any of these risks or uncertainties materializes, or should
underlying assumptions prove incorrect, actual results or outcomes
may vary materially from those expected. The Partnership undertakes
no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
About Blueknight
Blueknight (Nasdaq: BKEP and BKEPP) is a publicly traded master
limited partnership that owns the largest independent asphalt
terminalling network in the country. Operations include
9.0 million barrels of liquid asphalt storage capacity across
54 terminals and 26 states throughout the U.S. Blueknight is
focused on providing integrated terminalling solutions for
tomorrow’s infrastructure and transportation end markets. More
information is available at www.bkep.com.
Investor Relations Contact:
Matthew Lewis, Chief Financial Officer(918)
237-4032investor@bkep.com
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