JP Energy Partners LP (NYSE:JPEP) (“JP Energy”, “we,” “our,” or
“us”) today announced first quarter 2016 financial and operating
results.
JP Energy reported Adjusted EBITDA of $14.2 million for the
first quarter of 2016, compared to $15.2 million for the first
quarter of 2015, and reported a loss from continuing operations of
$2.7 million for the first quarter of 2016, compared to income from
continuing operations of $1.1 million for the first quarter of
2015. Adjusted EBITDA for the first quarter of 2016 included $1.5
million of corporate overhead support from our general partner.
Distributable Cash Flow was $12.4 million for the first quarter of
2016, resulting in a distribution coverage ratio for the quarter of
approximately 1.0x.
“Our first quarter results were consistent with our previous
guidance and clearly reflect the diversity and performance of our
operations in a challenging market. Our extensive cost reduction
initiatives are also progressing as anticipated.” said J. Patrick
Barley, Chairman, President and Chief Executive Officer of JP
Energy. “We achieved performance that was consistent with guidance
in our NGL and Refined Products Terminals businesses from the
organic expansions and acquisitions made over the last year, which
was partially offset by continued pressures from lower production
and increased competition in our crude oil business, in addition to
the impact of warmer than average weather on our NGL business. We
will continue to focus on our controllable set of cost improvement
initiatives, and we expect to achieve further cost reductions as we
progress throughout the year. We remain committed to maintaining
our strong liquidity position and conservative leverage, providing
us with significant flexibility and financial stability throughout
the year, while also providing access to the necessary capital to
execute on acquisitions if and when we identify attractive
opportunities in the market. Overall, it was a solid quarter for
the partnership, consistent with our guidance, and we are off to a
good start for calendar year 2016.”
Review of Segment Performance
Crude Oil Pipelines and Storage – Adjusted EBITDA for the Crude
Oil Pipelines and Storage segment was $4.8 million for the first
quarter of 2016, compared to $4.9 million for the first quarter of
2015. The slight decline was driven by a decrease in both crude oil
sales and throughput volumes from reduced customer activity and
increased competition in our area of operations, largely offset by
an increase in crude oil sales margin from improved cost
efficiencies on our trucked barrels and lower operating
expenses.
Refined Products Terminals and Storage – Adjusted EBITDA for the
Refined Products Terminals and Storage segment was $2.9 million for
the first quarter of 2016, compared to $2.8 million for the first
quarter of 2015. The slight increase was due to an increase in
refined products sales revenue related to the addition of butane
blending capabilities at our North Little Rock Terminal in the
second quarter of 2015, partially offset by lower terminal and
storage throughput due to a non-recurring increase in volumes in
the prior year quarter attributable to a refinery turn-around in
our area of operations during that period.
NGL Distribution and Sales – Adjusted EBITDA for the NGL
Distribution and Sales segment was $12.3 million for the first
quarter of 2016, compared to $12.0 million for the first quarter of
2015. The increase was driven by higher average NGL and refined
products sales margins from more favorable market conditions, the
acquisition of Southern Propane in May 2015, and lower G&A
expenses, partially offset by lower NGL and refined products
volumes due to warmer than normal temperatures during the
quarter.
Recent Developments
Disposition of Mid-Continent Crude Oil Supply and Logistics
Assets
On February 1, 2016, we sold certain trucking and marketing
assets in the Mid-Continent in connection with JP Development’s
sale of its Great Salt Plains Pipeline assets to a third party.
Total proceeds to JP Energy Partners, including working capital,
was $9.7 million, which has been used to reduce borrowings under
our revolving credit facility. We continue to retain our crude oil
storage operations in Cushing, Oklahoma.
Cash Distributions
On April 25, 2016, JP Energy announced that it would pay on May
13, 2016, to unitholders of record on May 6, 2016, a cash
distribution of $0.3250 per common and subordinated unit for the
three month period ended March 31, 2016.
Earnings Conference Call Information
We will hold a conference call on Tuesday, May 10, 2016, at 8:00
a.m. Central Time (9:00 a.m. Eastern Time) to discuss our first
quarter 2016 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 13635169. The replay will be available until May 24, 2016.
Interested parties may also listen to a simultaneous webcast of
the conference call by logging onto JP Energy’s website at
www.jpenergypartners.com in the Investors section. A replay of the
webcast will also be available for approximately 30 days following
the conference 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) refined products terminals and storage; and (iii) 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.
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; the amount of corporate overhead support provided by
our general partner, if any 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
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31, 2016
2015 ASSETS (in thousands, except unit data)
Current assets Cash and cash equivalents $ 1,539 $
1,987 Accounts receivable, net 39,155 60,519 Receivables from
related parties 771 8,624 Inventory 9,368 4,786 Prepaid expenses
and other current assets 8,639 4,168 Current assets of discontinued
operations held for sale - 2,730 Total Current Assets
59,472 82,814
Non-current assets
Property, plant and equipment, net 287,883 291,454 Goodwill 216,692
216,692 Intangible assets, net 130,343 134,432 Deferred financing
costs and other assets, net 2,990 3,223 Noncurrent assets of
discontinued operations held for sale - 6,644 Total
Non-Current Assets 637,908 652,445 Total Assets $
697,380 $ 735,259
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities Accounts payable $ 33,237 $
45,933 Payables to related parties 49 - Accrued liabilities 15,755
15,260 Capital leases and short-term debt 67 107 Customer deposits
and advances 2,609 3,742 Current portion of long-term debt 1,121
454 Current liabilities of discontinued operations held for sale
- 640 Total Current Liabilities 52,838 66,136
Non-current liabilities Long-term debt 150,000 162,740 Other
long-term liabilities 1,773 1,463 Total Liabilities
204,611 230,339 Commitments and Contingencies
Partners' capital General partner interest 8,068
5,568 Common units (22,119,170 units authorized; 18,467,032 and
18,465,320 units issued and outstanding as of March 31, 2016 and
December 31, 2015, respectively) 259,480 266,691 Subordinated units
(18,197,249 units authorized; 18,126,511 and 18,127,678 units
issued and outstanding as of March 31, 2016 and December 31, 2015,
respectively) 225,221 232,661 Total Partners' Capital
492,769 504,920 Total Liabilities and Partners'
Capital $ 697,380 $ 735,259
JP ENERGY PARTNERS
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended March 31,
2016 2015 (in
thousands, except unit and per unit data) REVENUES:
Crude oil sales $ 41,146 $ 105,955 Gathering, transportation and
storage fees 5,829 6,947 Gathering, transportation and storage fees
- related parties 1,031 - NGL and refined product sales 42,747
54,185 NGL and refined product sales - related parties 244 -
Refined products terminals and storage fees 3,098 3,108 Other
revenues 3,396 3,096 Total revenues
97,491 173,291
COSTS AND
EXPENSES: Cost of sales, excluding depreciation and
amortization 57,160 129,916 Operating expense 16,330 16,253 General
and administrative 11,207 14,061 Depreciation and amortization
11,536 10,763 Loss on disposal of assets, net 1,132
113 Total costs and expenses 97,365
171,106
OPERATING INCOME 126 2,185
OTHER INCOME (EXPENSE) Interest expense (2,430 )
(1,116 ) Other income, net 31 25
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(2,273 ) 1,094 Income tax expense (416 ) (22 )
(LOSS) INCOME FROM CONTINUING OPERATIONS (2,689 ) 1,072
DISCONTINUED OPERATIONS Net loss from discontinued
operations (539 ) (407 )
NET (LOSS) INCOME $
(3,228 ) $ 665
Basic and diluted (loss) income per
unit Net (loss) income from continuing operations allocated to
common units $ (1,318 ) $ 546 Net (loss) income allocated to common
units $ (1,590 ) $ 342 Weighted average number of common units
outstanding - basic 18,466,280 18,206,669 Weighted average number
of common units outstanding - diluted 18,466,280 18,224,336 Basic
and diluted net (loss) income from continuing operations per common
unit $ (0.07 ) $ 0.03 Basic and diluted net (loss) income per
common unit $ (0.09 ) $ 0.02 Net (loss) income from
continuing operations allocated to subordinated units $ (1,371 ) $
526 Net (loss) income allocated to subordinated units $ (1,638 ) $
323 Weighted average number of subordinated units outstanding -
basic and diluted 18,126,576 18,185,621 Basic and diluted net
(loss) income from continuing operations per subordinated unit $
(0.08 ) $ 0.03 Basic and diluted net (loss) income per subordinated
unit $ (0.09 ) $ 0.02 Distribution declared per common and
subordinated unit $ 0.325 $ 0.325
JP ENERGY PARTNERS LP
CONSOLIDATED STATEMENTS OF DISCONTINUED
OPERATIONS
(Unaudited)
Three Months Ended March 31,
December 31, September 30, June
30, March 31, 2016
2015 2015 2015
2015 (in thousands)
REVENUES:
Crude oil sales $ 11,493 $ 57,797 $ 104,933 $ 141,024 $ 125,962
Gathering, transportation and storage fees - 6 4 2 4 Other revenues
2 5 5 13 29
Total revenues 11,495 57,808
104,942 141,039 125,995
COSTS AND EXPENSES:
Cost of sales, excluding depreciation and amortization 11,687
57,457 104,995 139,460 124,974 Operating expense 172 394 354 296
358 General and administrative 31 141 139 166 421 Depreciation and
amortization 211 568 568 569 576 Impairment of goodwill and assets
held for sale - 12,909 - - - (Gain) loss on disposal of assets, net
(114 ) 126 (31 ) 7 17
Total costs and expenses 11,987 71,595
106,025 140,498 126,346
OPERATING (LOSS) INCOME
(492 ) (13,787 ) (1,083 ) 541 (351 )
OTHER INCOME (EXPENSE)
Interest expense (47 ) (75 ) (164 ) - (57 ) Other income, net
- 23 - 1 1
(LOSS) INCOME FROM DISCONTINUED
OPERATIONS BEFORE INCOME TAXES
(539 ) (13,839 ) (1,247 ) 542 (407 ) Income tax expense - -
- - -
NET (LOSS) INCOME FROM DISCONTINUED
OPERATIONS
$ (539 ) $ (13,839 ) $ (1,247 ) $ 542 $ (407 )
JP ENERGY PARTNERS LP
NON-GAAP RECONCILIATIONS
(Unaudited)
Three months ended March 31,
2016 2015 (in
thousands)
Segment Adjusted EBITDA
Crude oil pipelines and storage $ 4,813 $ 4,881 Refined products
terminals and storage 2,858 2,822 NGL distribution and sales 12,289
12,025 Discontinued operations (371 ) 2,650 Corporate and other
(5,408 ) (7,189 )
Total Adjusted EBITDA
14,181 15,189 Depreciation and amortization (11,536 ) (10,763 )
Interest expense (2,430 ) (1,116 ) Income tax expense (416 ) (22 )
Loss on disposal of assets, net (1,132 ) (113 ) Unit-based
compensation (559 ) (406 ) Total (loss) gain on commodity
derivatives (135 ) 135 Net cash payments for commodity derivatives
settled during the period 388 3,192 Non-cash inventory costing
adjustment 153 - Corporate overhead support from general partner
(1,500 ) - Transaction costs and other (74 ) (2,374 ) Discontinued
operations (168 ) (3,057 )
Net (loss) income
$ (3,228 ) $ 665
Three months ended
March 31, 2016 2015
(in thousands)
Segment Adjusted gross margin
Crude oil pipelines and storage $ 7,915 $ 8,330 Refined products
terminals and storage 3,705 3,632 NGL distribution and sales
28,305 28,286
Total Adjusted gross margin
39,925 40,248 Operating expenses (16,330 ) (16,253 ) General and
administrative (11,207 ) (14,061 ) Depreciation and amortization
(11,536 ) (10,763 ) Loss on disposal of assets, net (1,132 ) (113 )
Total (loss) gain on commodity derivatives (135 ) 135 Net cash
payments for commodity derivatives settled during the period 388
3,192 Non-cash inventory costing adjustment 153 - Other non-cash
items - (200 )
Operating Income
$ 126 $ 2,185
JP ENERGY PARTNERS LP
NON-GAAP RECONCILIATIONS
(Unaudited)
Three months ended March 31, 2016
2015 (in thousands)
Net cash provided by operating
activities
$ 21,051 $ 3,440 Depreciation and amortization (11,747 ) (11,339 )
Derivative valuation changes (549 ) 4,008 Amortization of deferred
financing costs (237 ) (227 ) Unit-based compensation (559 ) (431 )
Loss on disposal of assets (1,018 ) (130 ) Bad debt expense 6 (467
) Other non-cash items (2,541 ) (71 ) Changes in assets and
liabilities (7,634 ) 5,882
Net (loss) income
$ (3,228 ) $ 665 Depreciation and amortization 11,536 10,763
Interest expense 2,430 1,116 Income tax expense 416 22 Loss on
disposal of assets, net 1,132 113 Unit-based compensation 559 406
Total gain (loss) on commodity derivatives 135 (135 ) Net cash
payments for commodity derivatives settled during the period (388 )
(3,192 ) Non-cash inventory costing adjustment (153 ) - Corporate
overhead support from general partner 1,500 - Transaction costs and
other 74 2,374 Discontinued operations 168
3,057
Adjusted EBITDA $ 14,181 $ 15,189 Less: Cash
interest paid, net of interest income 1,331 887 Maintenance capital
expenditures, net 419 618
Distributable cash flow $ 12,431 $ 13,684 Less:
Distributions 12,115 11,966
Amount
in excess of distributions $ 316 $ 1,718
Distribution coverage 1.03x 1.14x
JP ENERGY PARTNERS
SUPPLEMENTAL OPERATIONAL DATA
(Unaudited)
Three months ended March 31,
Segment Key Operational Data 2016
2015 Change Crude oil pipelines and
storage Crude oil pipeline throughput (Bbls/d) (1) 25,158 28,329
(3,171) Crude oil pipelines and storage Crude oil sales (Bbls/d)
18,384 29,785 (11,401) Refined products terminals and storage
Terminal and storage throughput (Bbls/d) 58,639 63,787 (5,148) NGL
distribution and sales NGL and refined product sales (Mgal/d) 237
274 (37)
__________
(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
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