Full Year Adjusted EBITDA Increased 52%
2015 Adjusted EBITDA Guidance
Initiated at $320 to $360 Million
SemGroup® Corporation (NYSE:SEMG) today announced its financial
results for the three months ended December 31, 2014.
SemGroup's adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA) was $83.2 million
for the fourth quarter 2014, compared to $79.4 million for the
third quarter 2014 and $57.8 million for the fourth quarter 2013,
an increase of approximately 5% over the previous quarter and up
44% year-over-year. Adjusted EBITDA, which is a non-GAAP measure,
is reconciled to net income below.
"SemGroup delivered another quarter of solid results,
consecutively increasing financial performance and dividend payout
to finish 2014 strong," said Carlin Conner, president and chief
executive officer of SemGroup. "We are well positioned for
continued growth with a diverse footprint of assets located in some
of the most active oil and gas basins in the country. As we move
forward in 2015 and beyond, the ability to build and operate
significant midstream systems will be a differentiator and our
track record speaks for itself."
Fourth Quarter 2014 Adjusted EBITDA
Highlights
Compared to the Third Quarter 2014
- Crude Adjusted EBITDA increased $10.2 million
- $11 million increase in marketing margin related to higher
volumes and realized gains on derivatives
- $4 million increase in transportation margin as a result of
higher volumes
- $4 million decrease due to increased expenses, primarily
related to field services operations
- SemGas Adjusted EBITDA increased $1.1 million
- Higher volumes were partially offset by lower commodity price
realizations
- SemCAMS Adjusted EBITDA decreased $7.4 million
- $3 million increase in G&A expense
- $2 million decrease related to lower capital fee
recoveries
- $2 million decrease related to timing of operating expense
recoveries
SemGroup reported revenues for fourth quarter 2014 of $547.2
million with net income attributable to SemGroup of $8.1 million,
or $0.18 per diluted share, compared to revenues of $594.2 million
with a net income attributable to SemGroup of $25.3 million, or
$0.59 per diluted share, for the third quarter 2014. For the fourth
quarter 2013, revenues totaled $457.3 million with a net income
attributable to SemGroup of $3.3 million, or $0.08 per diluted
share.
Full Year 2014 Highlights
- SemGroup invested approximately $356 million in growth
projects
- SemGroup dividends increased by 40%
- Expanded SemGroup's U.S. gas processing position in the
Mississippi Lime play of Northern Oklahoma and accelerated the
implementation of a new 200 mmcf/d plant by nine months to
mid-2015
- Major projects remain on time and on budget
- Completed final drop down of White Cliffs Pipeline to Rose Rock
Midstream
Adjusted EBITDA for the year ended December 31, 2014, totaled
$287.4 million, up 52% from $189.0 million for the year ended
December 31, 2013. For the year ended December 31, 2014 SemGroup
reported revenues of $2.1 billion with a net income attributable to
SemGroup of $29.2 million, or $0.68 per diluted share, compared to
revenues of $1.4 billion with a net income attributable to SemGroup
of $48.1 million, or $1.13 per diluted share, for the year ended
December 31, 2013.
Fourth Quarter 2014 Dividend and Dividend
Guidance
The SemGroup board of directors declared a quarterly cash
dividend to common shareholders of $0.34 per share, resulting in an
annualized distribution of $1.36 per share. This represents a 13%
increase from the previous quarterly dividend of $0.30 and a 40%
increase year-over-year. The dividend will be paid on March 20,
2015 to all common shareholders of record on March 9, 2015. The
company is targeting a dividend growth rate for 2015 of 50% to 60%
year-over-year and an annual growth rate of approximately 30% to
40% over the next three years.
2015 Adjusted EBITDA and Capex Guidance
SemGroup anticipates 2015 consolidated Adjusted EBITDA guidance
of between $320 and $360 million, an increase of approximately 18%
over 2014 results of $287.4 million. The company also expects to
deploy more than $775 million in capital investments in 2015, with
more than 90% allocated to growth projects.
Recent Updates
- On February 13, 2015, Rose Rock closed on the previously
announced agreement to acquire the remaining crude oil assets of
SemGroup, which included the Wattenberg Oil Trunkline System and
SemGroup's 50% interest in the Glass Mountain Pipeline, for a
purchase price of $325 million consisting of cash and 1.75 million
Rose Rock Midstream common LP units.
Rose Rock priced 2.3 million common units representing limited
partner interest at $40.32 per common unit, which included the
underwriters' 30-day option to purchase up to an additional 300,000
common units.
Earnings Conference Call
SemGroup will host a joint conference call with Rose Rock
Midstream®, L.P. (NYSE:RRMS) for investors tomorrow, February 27,
2015, at 11 a.m. ET. The call can be accessed live over the
telephone by dialing 1.888.317.6003, or for international callers,
1.412.317.6061. The pass code for the call is 9662874. Interested
parties may also listen to a simultaneous webcast of the conference
call by logging onto SemGroup's Investor Relations website at
ir.semgroupcorp.com. A replay of the webcast will also be available
for a year following the call at ir.semgroupcorp.com on the
Calendar of Events-Past Events page. The fourth quarter 2014
earnings slide deck will be posted under Presentations.
About SemGroup
Based in Tulsa, OK, SemGroup® Corporation (NYSE:SEMG) is a
publicly traded midstream service company providing the energy
industry the means to move products from the wellhead to the
wholesale marketplace. SemGroup provides diversified services for
end-users and consumers of crude oil, natural gas, natural gas
liquids, refined products and asphalt. Services include purchasing,
selling, processing, transporting, terminalling and storing
energy.
SemGroup uses its Investor Relations website and social media
outlets as channels of distribution of material company
information. Such information is routinely posted and accessible on
our Investor Relations website at ir.semgroupcorp.com, our Twitter
account and LinkedIn account.
Non-GAAP Financial Measures
Adjusted EBITDA is not a generally accepted accounting
principles (GAAP) measure and is not intended to be used in lieu of
a GAAP presentation of net income/loss. Adjusted EBITDA is
presented in this Press Release because SemGroup believes it
provides additional information with respect to its performance.
Adjusted EBITDA represents earnings before interest, taxes,
depreciation and amortization, adjusted for selected items that
SemGroup believes impact the comparability of financial results
between reporting periods. Although SemGroup presents selected
items that it considers in evaluating its performance, you should
also be aware that the items presented do not represent all items
that affect comparability between the periods presented. Variations
in SemGroup's operating results are also caused by changes in
volumes, prices, exchange rates, mechanical interruptions and
numerous other factors. These types of variances are not separately
identified in this Press Release. Because all companies do not use
identical calculations, SemGroup's presentation of Adjusted EBITDA
may be different from similarly titled measures of other companies,
thereby diminishing its utility. Reconciliations of net income
(loss) to Adjusted EBITDA for the periods presented are included in
the tables at the end of this Press Release.
Forward-Looking Statements
Certain matters contained in this Press Release include
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We make these
forward-looking statements in reliance on the safe harbor
protections provided under the Private Securities Litigation Reform
Act of 1995.
All statements, other than statements of historical fact,
included in this Press Release including the prospects of our
industry, our anticipated financial performance, our anticipated
annual dividend growth rate, management's plans and objectives for
future operations, business prospects, outcome of regulatory
proceedings, market conditions and other matters, may constitute
forward-looking statements. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that these expectations will prove
to be correct. These forward-looking statements are subject to
certain known and unknown risks and uncertainties, as well as
assumptions that could cause actual results to differ materially
from those reflected in these forward-looking statements. Factors
that might cause actual results to differ include, but are not
limited to, our ability to generate sufficient cash flow from
operations to enable us to pay our debt obligations or to fund our
other liquidity needs; our ability to comply with the covenants
contained in the instruments governing our indebtedness and to
maintain certain financial ratios required by our credit
facilities; the effect of our debt level on our future financial
and operating flexibility, including our ability to obtain
additional capital; the ability of our subsidiary, Rose Rock
Midstream L.P. (NYSE:RRMS), to make minimum quarterly
distributions; the operations of NGL Energy Partners LP (NYSE:NGL),
which we do not control; any sustained reduction in demand for the
petroleum products we gather, transport, process and store; our
ability to obtain new sources of supply of petroleum products; our
failure to comply with new or existing environmental laws or
regulations or cross border laws or regulations; the possibility
that the construction or acquisition of new assets may not result
in the corresponding anticipated revenue increases; changes in
currency exchange rates; cyber attacks involving our information
systems and related infrastructure; the risks and uncertainties of
doing business outside of the U.S., including political and
economic instability and changes in local governmental laws,
regulations and policies; and the possibility that our hedging
activities may result in losses or may have a negative impact on
our financial results; as well as other risk factors discussed from
time to time in each of our documents and reports filed with the
SEC.
Readers are cautioned not to place undue reliance on any
forward-looking statements contained in this Press Release, which
reflect management's opinions only as of the date hereof. Except as
required by law, we undertake no obligation to revise or publicly
release the results of any revision to any forward-looking
statements.
Condensed Consolidated Balance
Sheets (in thousands, unaudited) |
|
|
|
|
|
|
December 31, 2014 |
December 31, 2013 |
ASSETS |
|
|
Current assets |
$ 479,280 |
$ 534,014 |
Property, plant and equipment, net |
1,256,825 |
1,105,728 |
Goodwill and other intangible assets |
231,391 |
236,859 |
Equity method investments |
577,920 |
565,124 |
Other noncurrent assets, net |
44,386 |
28,889 |
Total assets |
$ 2,589,802 |
$ 2,470,614 |
LIABILITIES AND OWNERS' EQUITY |
|
|
Current liabilities: |
|
|
Current portion of long-term debt |
$ 40 |
$ 37 |
Other current liabilities |
391,622 |
499,177 |
Total current liabilities |
391,662 |
499,214 |
Long-term debt, excluding current
portion |
767,092 |
615,088 |
Other noncurrent liabilities |
211,611 |
142,449 |
Total liabilities |
1,370,365 |
1,256,751 |
Total owners' equity |
1,219,437 |
1,213,863 |
Total liabilities and owners' equity |
$ 2,589,802 |
$ 2,470,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations (in thousands, except per share amounts,
unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Year Ended |
|
December 31, |
September 30, |
December 31, |
|
2014 |
2013 |
2014 |
2014 |
2013 |
Revenues |
$ 547,237 |
$ 457,328 |
$ 594,235 |
$ 2,122,579 |
$ 1,427,016 |
Expenses: |
|
|
|
|
|
Costs of products sold, exclusive of
depreciation and amortization shown below |
411,655 |
339,468 |
458,063 |
1,623,358 |
1,020,100 |
Operating |
67,034 |
60,772 |
69,377 |
246,613 |
223,585 |
General and administrative |
23,963 |
23,710 |
23,296 |
87,845 |
78,597 |
Depreciation and amortization |
27,498 |
24,846 |
25,200 |
98,397 |
66,409 |
Loss (gain) on disposal of long-lived
assets, net |
11,959 |
(109) |
1,376 |
32,592 |
(239) |
Total expenses |
542,109 |
448,687 |
577,312 |
2,088,805 |
1,388,452 |
Earnings from equity method investments |
15,827 |
12,788 |
14,223 |
64,199 |
52,477 |
Gain on issuance of common units by equity
method investee |
2,121 |
26,873 |
18,772 |
29,020 |
26,873 |
Operating income |
23,076 |
48,302 |
49,918 |
126,993 |
117,914 |
Other expenses (income), net |
(2,196) |
17,646 |
(6,368) |
28,422 |
69,415 |
Income from continuing operations before
income taxes |
25,272 |
30,656 |
56,286 |
98,571 |
48,499 |
Income tax expense (benefit) |
12,569 |
24,051 |
24,090 |
46,513 |
(17,254) |
Income from continuing operations |
12,703 |
6,605 |
32,196 |
52,058 |
65,753 |
Income (loss) from discontinued operations,
net of income taxes |
4 |
(6) |
— |
(1) |
59 |
Net income |
12,707 |
6,599 |
32,196 |
52,057 |
65,812 |
Less: net income attributable to
noncontrolling interests |
4,633 |
3,319 |
6,934 |
22,817 |
17,710 |
Net income attributable to SemGroup
Corporation |
$ 8,074 |
$ 3,280 |
$ 25,262 |
$ 29,240 |
$ 48,102 |
Net income attributable to SemGroup
Corporation |
$ 8,074 |
$ 3,280 |
$ 25,262 |
$ 29,240 |
$ 48,102 |
Other comprehensive income (loss), net of
income taxes |
(17,669) |
2,752 |
(10,331) |
(24,287) |
(1,555) |
Comprehensive income (loss) attributable to
SemGroup Corporation |
$ (9,595) |
$ 6,032 |
$ 14,931 |
$ 4,953 |
$ 46,547 |
Net income per common share: |
|
|
|
|
|
Basic |
$ 0.19 |
$ 0.08 |
$ 0.59 |
$ 0.69 |
$ 1.14 |
Diluted |
$ 0.18 |
$ 0.08 |
$ 0.59 |
$ 0.68 |
$ 1.13 |
Weighted average shares (thousands): |
|
|
|
|
|
Basic |
43,492 |
42,530 |
42,708 |
42,665 |
42,339 |
Diluted |
43,807 |
42,888 |
43,013 |
42,967 |
42,646 |
|
|
|
|
|
|
|
|
|
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|
|
Reconciliation of net income to
Adjusted EBITDA: (in thousands, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Year Ended |
|
December 31, |
September 30, |
December 31, |
|
2014 |
2013 |
2014 |
2014 |
2013 |
Net income |
$ 12,707 |
$ 6,599 |
$ 32,196 |
$ 52,057 |
$ 65,812 |
Add: Interest expense |
14,650 |
9,171 |
14,807 |
49,044 |
25,142 |
Add: Income tax expense (benefit) |
12,569 |
24,051 |
24,090 |
46,513 |
(17,254) |
Add: Depreciation and amortization
expense |
27,498 |
24,846 |
25,200 |
98,397 |
66,409 |
EBITDA |
67,424 |
64,667 |
96,293 |
246,011 |
140,109 |
Selected Non-Cash Items and Other Items
Impacting Comparability |
15,783 |
(6,869) |
(16,868) |
41,430 |
48,909 |
Adjusted EBITDA |
$ 83,207 |
$ 57,798 |
$ 79,425 |
$ 287,441 |
$ 189,018 |
|
|
|
|
|
|
|
|
|
|
|
|
Selected Non-Cash Items and
Other Items Impacting Comparability (in thousands,
unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Year Ended |
|
December 31, |
September 30, |
December 31, |
|
2014 |
2013 |
2014 |
2014 |
2013 |
Loss (gain) on disposal of long-lived assets,
net |
$ 11,959 |
$ (109) |
$ 1,376 |
$ 32,592 |
$ (239) |
Loss (income) from discontinued operations,
net of income taxes |
(4) |
6 |
— |
1 |
(59) |
Foreign currency transaction loss (gain) |
302 |
(660) |
128 |
(86) |
(1,633) |
Remove NGL equity earnings including gain on
issuance of common units |
(387) |
(26,168) |
(14,290) |
(31,363) |
(33,996) |
Remove gain on sale of NGL units |
(7,463) |
— |
(26,748) |
(34,211) |
— |
NGL cash distribution |
5,942 |
4,952 |
6,450 |
23,404 |
18,321 |
Inventory valuation adjustments including
equity method investees |
7,781 |
— |
— |
7,781 |
— |
Mid-America Midstream Gas Services
acquisition cost |
— |
— |
— |
— |
3,600 |
Employee severance expense |
101 |
29 |
90 |
220 |
38 |
Unrealized loss (gain) on derivative
activities |
(1,078) |
785 |
(411) |
(1,734) |
(974) |
Change in fair value of warrants |
(10,076) |
9,406 |
5,550 |
13,423 |
46,434 |
Depreciation and amortization included within
equity earnings |
6,404 |
2,304 |
4,887 |
18,992 |
9,520 |
Bankruptcy related expenses |
317 |
567 |
116 |
1,310 |
567 |
Charitable contributions |
81 |
— |
3,298 |
3,379 |
— |
Recovery of receivables written off at
emergence |
— |
— |
— |
(664) |
— |
Non-cash equity compensation |
1,904 |
2,019 |
2,686 |
8,386 |
7,330 |
Selected Non-Cash Items and Other Items
Impacting Comparability |
$ 15,783 |
$ (6,869) |
$ (16,868) |
$ 41,430 |
$ 48,909 |
|
|
2015 Adjusted EBITDA Guidance
Reconciliation |
|
|
|
(in millions, unaudited) |
|
|
Mid-point |
Net income |
$ 121.5 |
Add: Interest expense |
64.0 |
Add: Income tax expense |
8.0 |
Add: Depreciation and
amortization |
109.0 |
EBITDA |
$ 302.5 |
Selected Non-Cash and Other Items
Impacting Comparability |
37.5 |
Adjusted EBITDA |
$ 340.0 |
|
|
|
|
Selected Non-Cash and Other Items
Impacting Comparability |
|
Depreciation and amortization included
within equity earnings |
25.0 |
Non-cash equity compensation |
12.5 |
Selected Non-Cash and Other Items
Impacting Comparability |
$ 37.5 |
|
|
|
|
(1) Guidance is on a cash basis
for equity investments in NGL, includes fully consolidated Rose
Rock Midstream |
CONTACT: Investor Relations:
Alisa Perkins
918-524-8081
investor.relations@semgroupcorp.com
Media:
Kiley Roberson
918-524-8594
kroberson@semgroupcorp.com
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