JPEP JP Energy Partners LP Common Units Representing Limited Partner Interests (delisted)

JP Energy Partners LP (NYSE:JPEP) (“JP Energy,” “we,” “our,” or “us”) today announced second quarter 2015 financial and operating results.

JP Energy reported Adjusted EBITDA of $7.1 million for the second quarter of 2015, compared to $3.5 million for the second quarter of 2014, and reported a loss from continuing operations of $4.9 million for the second quarter of 2015, compared to a loss from continuing operations of $11.0 million for the second quarter of 2014. Distributable Cash Flow was $4.4 million for the second quarter of 2015.

For the six months ended June 30, 2015, JP Energy reported $22.2 million of Adjusted EBITDA, an 85% increase compared to $12.0 million for the first six months of 2014, and reported a loss from continuing operations of $4.3 million for the first six months of 2015 compared to a loss from continuing operations of $19.2 million for the same period of 2014. Distributable Cash Flow was $18.1 million for the first six months of 2015.

“The benefits of our well-diversified operating platform have been on clear display for the first six months of the year, and during the most recent quarter,” said J. Patrick Barley, Executive Chairman and Chief Executive Officer of JP Energy. “Our second quarter Adjusted EBITDA continued to grow in three of our four segments when compared to our results for the same period last year, highlighting the quality of our assets. We also successfully completed an accretive NGL acquisition during the second quarter, and we announced a strategic interconnection of our Silver Dollar Pipeline system, further enhancing the connectivity and diversity of our Midland Basin pipeline system. We remain committed to maintaining a conservative balance sheet, controlling expenses and executing on the growth initiatives we have invested in over the last couple of years to continue creating value for our unitholders.”

Review of Segment Performance

NGL distribution and sales – Adjusted EBITDA for the NGL Distribution and Sales segment was $4.8 million for the second quarter of 2015, compared to $2.4 million for the second quarter of 2014. The increase was primarily a result of higher average margins from more favorable market conditions, an increase in sales volumes as a result of organic growth in our customer base as well as the acquisition of Southern Propane in May 2015.

Crude oil pipelines and storage – Adjusted EBITDA for the Crude Oil Pipelines and Storage segment was $6.1 million for the second quarter of 2015, compared to $5.2 million for the second quarter of 2014. The increase was primarily due to higher volumes from the expansion of the Silver Dollar Pipeline System in the fourth quarter of 2014.

Crude oil supply and logistics – Adjusted EBITDA for the Crude Oil Supply and Logistics segment was a loss of $0.3 million for the second quarter of 2015, compared to a gain of $1.0 million for the second quarter of 2014. The decrease was primarily due to a $1.2 million decrease in adjusted gross margin, partially offset by higher crude oil sales volumes from the expansions of the Silver Dollar Pipeline System in the fourth quarter of 2014 and new contracts signed in the first half of 2015.

Refined products terminals and storage – Adjusted EBITDA for the Refined Products Terminals and Storage segment was $2.5 million for the second quarter of 2015, compared to $0.3 million for the second quarter of 2014. The increase was primarily due to the $2.7 million one-time charge recorded in the second quarter of 2014.

Recent Developments

On August 4, 2015, Jeremiah J. Ashcroft III, Executive Vice President and Chief Operating Officer of JP Energy GP II LLC, the general partner of JP Energy Partners LP, submitted his resignation effective August 28, 2015. He has accepted the Chief Executive Officer position with another company in the ArcLight portfolio of companies.

In May 2015, we completed our previously announced acquisition of substantially all of the assets of Southern Propane Inc. (“Southern”), a Houston-based industrial and commercial propane distribution and logistics company for approximately $16.3 million after customary closing adjustments. The transaction was funded through the use of borrowings from our revolving credit facility and the issuance of common units.

Cash Distributions

On July 28, 2015, JP Energy announced that it would pay on August 14, 2015, to unitholders of record on August 7, 2015, a cash distribution of $0.3250 per common and subordinated unit for the three month period ended June 30, 2015.

Earnings Conference Call Information

We will hold a conference call on Tuesday, August 11, 2015, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss our second quarter 2015 financial results. The call can be accessed live over the telephone by dialing (877) 407-0784, or for international callers, (201) 689-8560. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers (858) 384-5517. The passcode for the replay is 13614756. The replay will be available until August 25, 2015.

Interested parties may also listen to a simultaneous webcast of the call on our website at www.jpenergypartners.com under the “Investors” section. A replay of the webcast will also be available for approximately 30 days following the call.

About JP Energy Partners LP

JP Energy Partners LP (JPEP) is a publicly traded, growth-oriented limited partnership that owns, operates, develops and acquires a diversified portfolio of midstream energy assets. Our operations currently consist of: (i) crude oil pipelines and storage; (ii) crude oil supply and logistics; (iii) refined products terminals and storage; and (iv) NGL distribution and sales, which together provide midstream infrastructure solutions for the growing supply of crude oil, refined products and NGLs in the United States. To learn more, please visit our website at www.jpenergypartners.com.

Form 10-K Filing

JP Energy Partners LP previously filed with the Securities and Exchange Commission (the “SEC”) its Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “Form 10-K”) on March 11, 2015. An electronic copy of the Form 10-K (including these financial statements) is available on JPE’s website at www.jpenergypartners.com under the “Investors” section, and also may be obtained through the SEC’s website at www.sec.gov. Interested parties also may receive a hard copy of the Form 10-K and these financial statements free of charge upon request to the secretary of our general partner at our principal executive offices. Our principal executive offices are located at 600 East Las Colinas Blvd Suite 2000, Irving, Texas 75039, and our telephone number is (866) 912-3714.

Use of Non-GAAP Financial Measures

Adjusted EBITDA, distributable cash flow and adjusted gross margin are supplemental, non-GAAP financial measures used by management and by external users of our financial statements, such as investors and commercial banks, to assess:

• our operating performance as compared to those of other companies in the midstream sector, without regard to financing methods, historical cost basis or capital structure;
• the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;
• our ability to incur and service debt and fund capital expenditures; and
• the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

We believe that the presentation of Adjusted EBITDA, distributable cash flow and adjusted gross margin provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA and distributable cash flow are net income (loss) and cash flow from operating activities, respectively, and the GAAP measure most directly comparable to adjusted gross margin is operating income (loss). These non-GAAP measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures exclude some, but not all, items that affect the most directly comparable GAAP financial measure. Because Adjusted EBITDA, distributable cash flow and adjusted gross margin may be defined differently by other companies in the 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.

We define Adjusted EBITDA as net income (loss) plus (minus) interest expense (income), income tax expense (benefit), depreciation and amortization expense, asset impairments, (gains) losses on asset sales, certain non-cash charges such as non-cash equity compensation, non-cash vacation expense, non-cash (gains) losses on commodity derivative contracts (total (gain) loss on commodity derivatives less net cash flow associated with commodity derivatives settled during the period) and selected (gains) charges and transaction costs that are unusual or non-recurring. We define distributable cash flow as Adjusted EBITDA plus proceeds from the sale of assets, less net cash interest paid, income taxes paid and maintenance capital expenditures. We define adjusted gross margin as total revenues minus cost of sales, excluding depreciation and amortization, and certain non-cash charges such as non-cash vacation expense and non-cash gains (losses) on derivative contracts (total gain (losses) on commodity derivatives less net cash flow associated with commodity derivatives settled during the period).

Forward-Looking Statements

Disclosures in this press release contain “forward-looking statements.” The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to the price of, and the demand for, crude oil, refined products and NGLs in the markets we serve; the volumes of crude oil that we gather, transport and store, the throughput volumes at our refined products terminals and our NGL sales volumes; the fees we receive for the crude oil, refined products and NGL volumes we handle; pressures from our competitors, some of which may have significantly greater resources than us; the cost of propane that we buy for resale, including due to disruptions in its supply, and whether we are able to pass along cost increases to our customers; competitive pressures from other energy sources such as natural gas, which could reduce existing demand for propane; the risk of contract cancellation, non-renewal or failure to perform by our customers, and our inability to replace such contracts and/or customers; leaks or releases of hydrocarbons into the environment that result in significant costs and liabilities; the level of our operating, maintenance and general and administrative expenses; regulatory action affecting our existing contracts, our operating costs or our operating flexibility; failure to secure or maintain contracts with our largest customers, or non-performance of any of those customers under the applicable contract; competitive conditions in our industry; changes in the long-term supply of and demand for oil and natural gas; volatility of fuel prices; actions taken by our customers, competitors and third-party operators; our ability to complete growth projects on time and on budget; inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change; environmental hazards; industrial accidents; changes in laws and regulations (or the interpretation thereof) related to the transportation, storage or terminaling of crude oil and refined products or the distribution and sales of NGLs; fires, explosions or other accidents; the effects of future litigation; and other factors discussed from time to time in each of our documents and reports filed with the Securities and Exchange Commission. Any forward-looking statement applies only as of the date on which such statement is made and we do not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

 

JP ENERGY PARTNERS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

      June 30,   December 31, 2015 2014 ASSETS (in thousands, except unit data)   Current assets Cash and cash equivalents $ 2,421 $ 3,325 Restricted cash 600 600 Accounts receivable, net 94,274 108,725 Receivables from related parties 8,389 10,548 Inventory 30,142 20,826 Prepaid expenses and other current assets   10,106   4,915 Total Current Assets   145,932   148,939   Non-current assets

Property, plant and equipment, net

282,992 262,148 Goodwill 254,559 248,721 Intangible assets, net 146,123 148,311 Deferred financing costs and other assets, net   4,656   5,054 Total Non-Current Assets   688,330   664,234 Total Assets $ 834,262 $ 813,173   LIABILITIES AND PARTNERS' CAPITAL   Current liabilities Accounts payable $ 83,349 $ 88,052 Accrued liabilities 33,087 28,971 Capital leases and short-term debt 133 229 Customer deposits and advances 2,526 5,050 Current portion of long-term debt   401   383 Total Current Liabilities 119,496 122,685   Non-current liabilities Long-term debt 130,997 84,125 Other long-term liabilities   3,978   5,683 Total Liabilities   254,471   212,493   Commitments and Contingencies   Partners' capital General partner interest 2,604 -

Common units (22,119,170 and 21,852,219 units authorized as of June 30,2015 and December 31, 2014 respectively; 18,466,309 and 18,209,519 unitsissued and outstanding as of June 30, 2015 and December 31, 2014,respectively)

305,698 315,630  

Subordinated units (18,197,249 units authorized; 18,148,898 and 18,197,249units issued and outstanding as of June 30, 2015 and December 31, 2014,respectively)

  271,489   285,050   Total Partners' Capital   579,791   600,680 Total Liabilities and Partners' Capital $ 834,262 $ 813,173    

JP ENERGY PARTNERS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

      Three Months Ended June 30,   Six Months Ended June 30, 2015   2014 2015   2014 (in thousands, except unit and per unit data) REVENUES: Crude oil sales $ 288,520 $ 389,401 $ 520,437 $ 730,406 Gathering, transportation and storage fees 6,929 7,698 13,880 15,795 NGL and refined product sales 38,070 43,297 92,255 107,098 Refined products terminals and storage fees 3,068 3,005 6,176 5,668 Other revenues   3,900     3,746     7,025     6,850   Total revenues   340,487     447,147     639,773     865,817     COSTS AND EXPENSES: Cost of sales, excluding depreciation and amortization 301,858 415,304 556,748 798,193 Operating expense 17,946 19,113 34,557 35,266 General and administrative 10,981 11,251 25,456 23,879 Depreciation and amortization 12,086 10,071 23,425 20,165 Loss on disposal of assets, net   1,279     305     1,409     661   Total costs and expenses   344,150     456,044     641,595     878,164     OPERATING LOSS (3,663 ) (8,897 ) (1,822 ) (12,347 )   OTHER INCOME (EXPENSE) Interest expense (1,382 ) (2,292 ) (2,555 ) (5,551 ) Loss on extinguishment of debt - - - (1,634 ) Other income, net   337     396     356     504     LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (4,708 ) (10,793 ) (4,021 ) (19,028 )   Income tax expense (229 ) (213 ) (251 ) (156 )         LOSS FROM CONTINUING OPERATIONS (4,937 ) (11,006 ) (4,272 ) (19,184 )   DISCONTINUED OPERATIONS Net loss from discontinued operations - (9,203 ) - (9,608 )         NET LOSS $ (4,937 ) $ (20,209 ) $ (4,272 ) $ (28,792 )   Basic and diluted loss per unit Net loss allocated to common units $ (2,419 ) $ (2,069 ) Weighted average number of common units outstanding 18,356,902 18,281,786 Basic and diluted loss per common unit $ (0.13 ) $ (0.11 )   Net loss allocated to subordinated units $ (2,518 ) $ (2,203 ) Weighted average number of subordinated units outstanding 18,149,629 18,167,625 Basic and diluted loss per subordinated unit $ (0.14 ) $ (0.12 )   Distribution declared per common and subordinated unit $ 0.325 $ 0.65    

JP ENERGY PARTNERS LP

NON-GAAP RECONCILIATIONS

(Unaudited)

                Three months ended June 30,   Six months ended June 30, 2015   2014 2015   2014 (in thousands) Segment Adjusted EBITDA Crude oil pipelines and storage $ 6,129 $ 5,178 $ 11,605 $ 10,146 Crude oil supply and logistics (312 ) 963 1,671 1,658 Refined products terminals and storage 2,518 288 5,340 5,141 NGL distribution and sales 4,843 2,394 16,941 7,646 Discontinued operations - 904 - 983 Corporate and other   (6,120 )   (6,187 )   (13,310 )   (13,536 ) Total Adjusted EBITDA 7,058 3,540 22,247 12,038 Depreciation and amortization (12,086 ) (10,071 ) (23,425 ) (20,165 ) Interest expense (1,382 ) (2,292 ) (2,555 ) (5,551 ) Loss on extinguishment of debt - - - (1,634 ) Income tax expense (229 ) (213 ) (251 ) (156 ) Loss on disposal of assets, net (1,279 ) (305 ) (1,409 ) (661 ) Unit-based compensation (121 ) (302 ) (552 ) (584 ) Total gain (loss) on commodity derivatives (5,691 ) (103 ) (4,920 ) 32

Net cash (receipts) payments for commodity derivativessettled during the period

5,222 45 8,415 (588 ) Non-cash inventory costing adjustment 3,906 - 991 - Transaction costs and other (335 ) (401 ) (2,813 ) (932 ) Discontinued operations   -     (10,107 )   -     (10,591 ) Net loss $ (4,937 ) $ (20,209 ) $ (4,272 ) $ (28,792 )               Three months ended June 30,   Six months ended June 30, 2015   2014 2015   2014 (in thousands) Segment Adjusted gross margin Crude oil pipelines and storage $ 7,331 $ 6,271 $ 13,998 $ 12,367 Crude oil supply and logistics 2,197 3,404 7,190 6,474 Refined products terminals and storage 3,411 3,944 7,044 9,806 NGL distribution and sales   22,253     18,463     50,611     39,906   Total Adjusted gross margin 35,192 32,082 78,843 68,553 Operating expenses (17,946 ) (19,113 ) (34,557 ) (35,266 ) General and administrative (10,981 ) (11,251 ) (25,456 ) (23,879 ) Depreciation and amortization (12,086 ) (10,071 ) (23,425 ) (20,165 ) Loss on disposal of assets, net (1,279 ) (305 ) (1,409 ) (661 ) Total gain (loss) on commodity derivatives (5,691 ) (103 ) (4,920 ) 32

Net cash (receipts) payments for commodity derivativessettled during the period

5,222 45 8,415 (588 ) Non-cash inventory costing adjustment 3,906 - 991 - Other non-cash items   -     (181 )   (304 )   (373 ) Operating loss $ (3,663 ) $ (8,897 ) $ (1,822 ) $ (12,347 )    

JP ENERGY PARTNERS

NON-GAAP RECONCILIATION (CONTINUED)

(Unaudited)

   

Three monthsended June 30,2015

   

Six monthsended June 30,2015

  (in thousands) Net cash provided by operating activities $ 15,882 $ 19,322   Depreciation and amortization (12,086 ) (23,425 ) Derivative valuation changes (406 ) 3,602 Amortization of deferred financing costs (228 ) (455 ) Unit-based compensation (121 ) (552 ) Loss on disposal of assets (1,279 ) (1,409 ) Bad debt expense (225 ) (692 ) Other non-cash items 257 186 Changes in assets and liabilities   (6,731 )   (849 ) Net loss $ (4,937 ) $ (4,272 ) Depreciation and amortization 12,086 23,425 Interest expense 1,382 2,555 Income tax expense 229 251 Loss on disposal of assets, net 1,279 1,409 Unit-based compensation 121 552 Total gain on commodity derivatives 5,691 4,920

Net cash receipts (payments) for commodityderivatives settled during the period

(5,222 ) (8,415 ) Non-cash inventory costing adjustment (3,906 ) (991 ) Transaction costs and other   335     2,813   Adjusted EBITDA $ 7,058 $ 22,247 Less: Cash interest paid, net of interest income 1,084 1,971 Cash taxes paid 450 450 Maintenance capital expenditures 1,738 2,727 Plus: Proceeds from the sale of assets   651     1,001   Distributable cash flow $ 4,437 $ 18,100 Less: Distributions   12,045     24,011   Amount in excess of (less than) distributions $ (7,608 ) $ (5,911 ) Distribution coverage

0.37

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0.75

x

   

JP ENERGY PARTNERS

SUPPLEMENTAL OPERATIONAL DATA

(Unaudited)

      Three months ended June 30, Segment Key Operational Data 2015   2014   Change   Crude oil pipelines and storage

Crude oil pipeline throughput (Bbls/d)1

29,541 21,158 8,383 Crude oil supply and logistics Crude oil sales (Bbls/d) 70,605 41,476 29,129 Refined products terminals and storage Terminal and storage throughput (Bbls/d) 61,073 66,814 (5,741 ) NGL distribution and sales NGL and refined product sales (Mgal/d) 180 165 15 1)   Represents the average daily throughput volume in our crude oil pipelines operations. The volumes in our crude oil storage operations have no effect on operations as we receive a set fee per month that does not fluctuate with the volume of crude oil stored.

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JP Energy Partners LPInvestor Relations, 866-912-3714investorrelations@jpep.com