Third Quarter Adjusted EBITDA Increased 30%
Year-Over-Year
Rose Rock Midstream®, L.P. (NYSE:RRMS) today announced its
financial results for the three months and nine months ended
September 30, 2015.
Rose Rock Midstream's Adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA) was $41.9 million
for the third quarter 2015, up 30% as compared to the third quarter
2014 results of $32.2 million, and down 6% from $44.7 million as
compared to the second quarter of 2015.
Year-to-date 2015, Rose Rock reported $128.7 million in Adjusted
EBITDA, a 55% increase as compared to $82.8 million for the same
period last year.
"We’re pleased with the partnership’s solid increase in
year-to-date Adjusted EBITDA, though quarterly results were down
against the headwinds of suppressed commodity prices," said Carlin
Conner, chief executive officer of Rose Rock Midstream’s general
partner. "While this current operating environment poses
challenges, Rose Rock remains diligent in its focus on growth and
value creation. During the quarter, the partnership increased
distributions for the fifteenth consecutive quarter and is well
positioned for future growth."
Adjusted gross margin, which excludes Rose Rock's equity
earnings in White Cliffs Pipeline and Glass Mountain Pipeline, was
$41.3 million for the third quarter 2015, down 4% from $42.8
million for the third quarter 2014, and 15% below the $48.8 million
for the second quarter of 2015. For the nine months ended September
30, 2015, Rose Rock reported Adjusted gross margin of $131.0
million, up 12% from $116.9 million for the same period in 2014.
Adjusted gross margin and Adjusted EBITDA, which are non-GAAP
measures, are reconciled to their most directly comparable GAAP
measures below.
Third quarter 2015 net income attributable to Rose Rock totaled
$16.4 million, compared to $16.5 million for the third quarter 2014
and $17.1 million for the second quarter 2015. For the nine months
ended September 30, 2015, net income attributable to Rose Rock
totaled $48.1 million, compared to $40.1 million for the same
period in 2014.
Rose Rock Midstream's distributable cash flow for the three
months ended September 30, 2015 was $27.6 million. On October 22,
2015, Rose Rock Midstream announced the partnership's quarterly
cash distribution of $0.660 per unit. This marks the fifteenth
consecutive increase in the quarterly cash distribution to RRMS
limited partner unitholders and represents a 15% increase
year-over-year compared to the third quarter 2014 distribution of
$0.575 per unit and a 1.5% increase over the previous quarterly
distribution of $0.650. The distribution will be paid on November
13, 2015 to all unitholders of record on November 3, 2015.
Distributable cash flow, which is a non-GAAP measure, is reconciled
to its most directly comparable GAAP measure below.
2015 GuidanceDue to market conditions, Rose
Rock is revising previously announced 2015 consolidated Adjusted
EBITDA guidance of between $180 and $200 million to a range of $175
to $185 million. The partnership is currently forecasted to spend
approximately $150 million in capital investments in 2015,
decreased from $185 million previously guided. The decrease is
primarily driven by the timing of the capital expenditures. Rose
Rock continues to allocate more than 90% of its capex to growth
projects.
Earnings Conference Call Rose Rock Midstream
will host a joint conference call with SemGroup® Corporation
(NYSE:SEMG) for investors tomorrow, November 6, 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 3528017. Interested parties may also
listen to a simultaneous webcast of the conference call by logging
onto Rose Rock Midstream's Investor Relations website at
ir.rrmidstream.com. A replay of the webcast will also be available
for a year following the call at ir.rrmidstream.com on the Calendar
of Events-Past Events page. The third quarter 2015 earnings slide
deck will be posted under Presentations.
About Rose Rock Midstream Rose Rock
Midstream®, L.P. (NYSE:RRMS) is a growth-oriented Delaware limited
partnership formed by SemGroup® Corporation (NYSE:SEMG) to own,
operate, develop and acquire a diversified portfolio of midstream
energy assets. Headquartered in Tulsa, OK, Rose Rock Midstream
provides crude oil gathering, transportation, storage and marketing
services with the majority of its assets strategically located in
or connected to the Cushing, Oklahoma crude oil marketing hub.
Rose Rock 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.rrmidstream.com, our Twitter
account and LinkedIn account.
Non-GAAP Financial Measures This Press
Release and the accompanying schedules include the non-GAAP
financial measures of Adjusted gross margin, Adjusted EBITDA and
distributable cash flow, which may be used periodically by
management when discussing our financial results with investors and
analysts. The accompanying schedules of this Press Release
provide reconciliations of these non-GAAP financial measures to
their most directly comparable financial measures calculated and
presented in accordance with generally accepted accounting
principles in the United States of America (GAAP). Adjusted
gross margin, Adjusted EBITDA and distributable cash flow are
presented as management believes they provide additional
information and metrics relative to the performance of our
business.
Operating income (loss) is the GAAP measure most directly
comparable to Adjusted gross margin, net income (loss) and cash
provided by (used in) operating activities are the GAAP measures
most directly comparable to Adjusted EBITDA, and net income (loss)
is the GAAP measure most directly comparable to distributable cash
flow. Our non-GAAP financial measures should not be considered as
alternatives to the most directly comparable GAAP financial
measures. These non-GAAP financial measures have important
limitations as analytical tools because they exclude some, but not
all, items that affect the most directly comparable GAAP financial
measures. You should not consider Adjusted gross margin, Adjusted
EBITDA or distributable cash flow in isolation or as substitutes
for analysis of our results as reported under GAAP. Because
Adjusted gross margin, Adjusted EBITDA and distributable cash flow
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.
Management compensates for the limitation of Adjusted gross
margin, Adjusted EBITDA and distributable cash flow as analytical
tools by reviewing the comparable GAAP measures, understanding the
differences between Adjusted gross margin, Adjusted EBITDA and
distributable cash flow, on the one hand, and operating income
(loss), net income (loss) and net cash provided by (used in)
operating activities, on the other hand, and incorporating this
knowledge into its decision-making processes. We believe that
investors benefit from having access to the same financial measures
that our management uses in evaluating our operating results.
Forward-Looking Statements Certain matters
contained in this Press Release include “forward-looking
statements.” All statements, other than statements of
historical fact, included in this Press Release including the
prospects of our industry, our anticipated financial performance,
including distributable cash flow, cash distributions, management's
plans and objectives for future operations, capital investments,
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, insufficient cash from
operations following the establishment of cash reserves and payment
of fees and expenses to pay the minimum quarterly distribution; any
sustained reduction in demand for crude oil in markets served by
our midstream assets; our ability to obtain new sources of supply
of crude oil; the amount of collateral required to be posted from
time to time in our purchase, sale or derivative transactions;
competition from other midstream energy companies; our ability to
comply with the covenants contained in the instruments governing
our indebtedness and to maintain certain financial ratios required
by our credit facility; our ability to access credit and capital
markets; our ability to renew or replace expiring storage,
transportation and related contracts; the loss of or a material
nonpayment or nonperformance by any of our key customers; the
overall forward market for crude oil; the possibility that our
hedging activities may result in losses or may have a negative
impact on our financial results; weather and other natural
phenomena; cyber attacks involving our information systems and
related infrastructure; hazards or operating risks incidental to
the gathering, transporting or storing of crude oil; our failure to
comply with new or existing environmental laws or regulations; and
the possibility that the construction or acquisition of new assets
may not result in the corresponding anticipated revenue increases;
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) |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
December 31, |
|
|
2015 |
2014(1) |
|
ASSETS |
|
|
|
Current assets |
$ |
348,645 |
|
$ |
274,769 |
|
|
Property, plant and
equipment, net |
425,820 |
|
396,066 |
|
|
Equity method
investments |
430,168 |
|
269,635 |
|
|
Other noncurrent
assets, net |
68,862 |
|
65,793 |
|
|
Total assets |
$ |
1,273,495 |
|
$ |
1,006,263 |
|
|
|
|
|
|
LIABILITIES AND
PARTNERS' CAPITAL |
|
|
|
Current
liabilities |
$ |
270,452 |
|
$ |
265,682 |
|
|
Long-term debt |
744,468 |
|
432,092 |
|
|
Total liabilities |
1,014,920 |
|
697,774 |
|
|
|
|
|
|
Partners' capital |
258,575 |
|
308,489 |
|
|
Total liabilities and
partners' capital |
$ |
1,273,495 |
|
$ |
1,006,263 |
|
|
|
|
|
|
(1) Prior period financial information has been recast to
reflect the effects of the dropdown of the Wattenberg Oil
Trunkline
Condensed Consolidated Statements of Income |
|
|
|
(in thousands, except
per unit data, unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|
September 30, |
June 30, |
September 30, |
|
2015 |
2014(1) |
2015 |
2015 |
2014(1) |
Revenues, including
revenues from affiliates: |
|
|
|
|
|
Product |
$ |
211,881 |
|
$ |
346,496 |
|
$ |
193,525 |
|
$ |
511,973 |
|
$ |
879,873 |
|
Service |
29,205 |
|
30,360 |
|
29,778 |
|
87,109 |
|
81,653 |
|
Total revenues |
241,086 |
|
376,856 |
|
223,303 |
|
599,082 |
|
961,526 |
|
Expenses, including
expenses from affiliates: |
|
|
|
|
|
Costs of products sold, exclusive
of depreciation and amortization |
195,244 |
|
333,646 |
|
173,133 |
|
464,614 |
|
843,928 |
|
Operating |
19,081 |
|
22,130 |
|
23,656 |
|
63,688 |
|
54,783 |
|
General and administrative |
4,339 |
|
4,444 |
|
6,329 |
|
16,288 |
|
14,382 |
|
Depreciation and amortization |
10,634 |
|
8,395 |
|
10,608 |
|
31,385 |
|
27,153 |
|
Total expenses |
229,298 |
|
368,615 |
|
213,726 |
|
575,975 |
|
940,246 |
|
Earnings from equity
method investments |
17,115 |
|
16,289 |
|
17,683 |
|
55,662 |
|
39,660 |
|
Operating income |
28,903 |
|
24,530 |
|
27,260 |
|
78,769 |
|
60,940 |
|
Other expenses: |
|
|
|
|
|
Interest expense |
12,491 |
|
8,010 |
|
10,197 |
|
30,694 |
|
13,127 |
|
Other income, net |
(9 |
) |
— |
|
(5 |
) |
(14 |
) |
(21 |
) |
Total other expenses, net |
12,482 |
|
8,010 |
|
10,192 |
|
30,680 |
|
13,106 |
|
Net income |
16,421 |
|
16,520 |
|
17,068 |
|
48,089 |
|
47,834 |
|
Less: net income
attributable to noncontrolling interests |
— |
|
— |
|
— |
|
— |
|
7,758 |
|
Net income attributable
to Rose Rock Midstream, L.P. |
$ |
16,421 |
|
$ |
16,520 |
|
$ |
17,068 |
|
$ |
48,089 |
|
$ |
40,076 |
|
Net income allocated to general
partner |
$ |
5,658 |
|
$ |
2,193 |
|
$ |
5,323 |
|
$ |
15,723 |
|
$ |
4,065 |
|
Net income allocated to common
unitholders |
$ |
10,763 |
|
$ |
10,370 |
|
$ |
11,745 |
|
$ |
32,366 |
|
$ |
25,989 |
|
Net income allocated to
subordinated unitholders |
$ |
— |
|
$ |
4,226 |
|
$ |
— |
|
$ |
— |
|
$ |
11,086 |
|
Net loss allocated to Class A
unitholders |
$ |
— |
|
$ |
(269 |
) |
$ |
— |
|
$ |
— |
|
$ |
(1,064 |
) |
Net income
(loss) per limited partner unit: |
|
|
|
|
|
Common unit (basic) |
$ |
0.29 |
|
$ |
0.50 |
|
$ |
0.32 |
|
$ |
0.90 |
|
$ |
1.37 |
|
Common unit (diluted) |
$ |
0.29 |
|
$ |
0.50 |
|
$ |
0.32 |
|
$ |
0.89 |
|
$ |
1.36 |
|
Subordinated unit (basic and
diluted) |
$ |
— |
|
$ |
0.50 |
|
$ |
— |
|
$ |
— |
|
$ |
1.32 |
|
Class A unit (basic and
diluted) |
$ |
— |
|
$ |
(0.07 |
) |
$ |
— |
|
$ |
— |
|
$ |
(0.36 |
) |
Basic weighted
average number of limited partner units outstanding: |
|
|
|
|
|
Common units |
36,792 |
|
20,574 |
|
36,790 |
|
36,136 |
|
19,029 |
|
Subordinated units |
— |
|
8,390 |
|
— |
|
— |
|
8,390 |
|
Class A units |
— |
|
3,750 |
|
— |
|
— |
|
2,953 |
|
Diluted
weighted average number of limited partner units
outstanding: |
|
|
|
|
|
Common units |
36,831 |
|
20,646 |
|
36,839 |
|
36,179 |
|
19,088 |
|
Subordinated units |
— |
|
8,390 |
|
— |
|
— |
|
8,390 |
|
Class A units |
— |
|
3,750 |
|
— |
|
— |
|
2,953 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Prior period financial information has been recast to
reflect the effects of the dropdown of the Wattenberg Oil
Trunkline
Non-GAAP
Reconciliations |
|
|
|
|
|
|
|
|
|
|
|
(in thousands,
unaudited) |
Three Months Ended |
Nine Months Ended |
|
September 30, |
June 30, |
September 30, |
|
2015 |
2014(1) |
2015 |
2015 |
2014(1) |
Reconciliation
of operating income to Adjusted gross margin: |
|
|
|
|
|
Operating income |
$ |
28,903 |
|
$ |
24,530 |
|
$ |
27,260 |
|
$ |
78,769 |
|
$ |
60,940 |
|
Add: |
|
|
|
|
|
Operating expense |
19,081 |
|
22,130 |
|
23,656 |
|
63,688 |
|
54,783 |
|
General and administrative
expense |
4,339 |
|
4,444 |
|
6,329 |
|
16,288 |
|
14,382 |
|
Depreciation and amortization
expense |
10,634 |
|
8,395 |
|
10,608 |
|
31,385 |
|
27,153 |
|
Less: |
|
|
|
|
|
Earnings from equity method
investments |
17,115 |
|
16,289 |
|
17,683 |
|
55,662 |
|
39,660 |
|
Non-cash unrealized gain on
derivatives, net |
4,546 |
|
411 |
|
1,415 |
|
3,430 |
|
656 |
|
Adjusted gross
margin |
$ |
41,296 |
|
$ |
42,799 |
|
$ |
48,755 |
|
$ |
131,038 |
|
$ |
116,942 |
|
|
|
|
|
|
|
Reconciliation
of net income to Adjusted EBITDA: |
|
|
|
|
|
Net income |
$ |
16,421 |
|
$ |
16,520 |
|
$ |
17,068 |
|
$ |
48,089 |
|
$ |
47,834 |
|
Add: |
|
|
|
|
|
Interest expense |
12,491 |
|
8,010 |
|
10,197 |
|
30,694 |
|
13,127 |
|
Depreciation and amortization
expense |
10,634 |
|
8,395 |
|
10,608 |
|
31,385 |
|
27,153 |
|
Cash distributions from equity
method investments |
23,602 |
|
17,029 |
|
25,560 |
|
75,227 |
|
45,081 |
|
Inventory valuation adjustment |
— |
|
— |
|
48 |
|
1,235 |
|
— |
|
Non-cash equity compensation |
358 |
|
315 |
|
357 |
|
1,013 |
|
705 |
|
Loss (gain) on disposal of
long-lived assets, net |
27 |
|
291 |
|
(22 |
) |
157 |
|
230 |
|
Less: |
|
|
|
|
|
Earnings from equity method
investments |
17,115 |
|
16,289 |
|
17,683 |
|
55,662 |
|
39,660 |
|
White Cliffs cash distributions
attributable to noncontrolling interests |
— |
|
1,658 |
|
— |
|
— |
|
11,008 |
|
Impact from derivative
instruments: |
|
|
|
|
|
Total gain (loss) on derivatives,
net |
6,036 |
|
4,047 |
|
(2,202 |
) |
3,190 |
|
1,298 |
|
Total realized loss (gain) (cash
flow) on derivatives, net |
(1,490 |
) |
(3,636 |
) |
3,617 |
|
240 |
|
(642 |
) |
Non-cash unrealized gain on
derivatives, net |
4,546 |
|
411 |
|
1,415 |
|
3,430 |
|
656 |
|
Adjusted EBITDA |
$ |
41,872 |
|
$ |
32,202 |
|
$ |
44,718 |
|
$ |
128,708 |
|
$ |
82,806 |
|
|
|
|
|
|
|
Reconciliation
of net cash provided by operating activities to Adjusted
EBITDA: |
|
|
|
|
|
Net cash provided by
operating activities |
$ |
32,431 |
|
$ |
21,152 |
|
$ |
26,941 |
|
$ |
52,302 |
|
$ |
46,270 |
|
Less: |
|
|
|
|
|
Changes in operating assets and
liabilities, net |
8,710 |
|
(4,441 |
) |
(386 |
) |
(28,184 |
) |
(29,999 |
) |
White Cliffs cash distributions
attributable to noncontrolling interests |
— |
|
1,658 |
|
— |
|
— |
|
11,008 |
|
Add: |
|
|
|
|
|
Interest expense, excluding
amortization of debt issuance costs |
11,664 |
|
7,527 |
|
9,515 |
|
28,658 |
|
12,124 |
|
Distributions from equity method
investments in excess of equity in earnings |
6,487 |
|
740 |
|
7,876 |
|
19,564 |
|
5,421 |
|
Adjusted EBITDA |
$ |
41,872 |
|
$ |
32,202 |
|
$ |
44,718 |
|
$ |
128,708 |
|
$ |
82,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Prior period financial information has been recast to
reflect the effects of the dropdown of the Wattenberg Oil
Trunkline
Non-GAAP
Reconciliations (Continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands,
unaudited) |
Three Months Ended |
Nine Months Ended |
|
September 30, |
June 30, |
September 30, |
|
2015 |
|
2014(2) |
2015 |
2015 |
2014(2) |
Reconciliation
of net income to distributable cash flow: |
|
|
|
|
|
|
Net income |
$ |
16,421 |
|
|
$ |
16,520 |
|
$ |
17,068 |
|
$ |
48,089 |
|
$ |
47,834 |
|
Add: |
|
|
|
|
|
|
Interest expense |
12,491 |
|
|
8,010 |
|
10,197 |
|
30,694 |
|
13,127 |
|
Depreciation and amortization
expense |
10,634 |
|
|
8,395 |
|
10,608 |
|
31,385 |
|
27,153 |
|
EBITDA |
39,546 |
|
|
32,925 |
|
37,873 |
|
110,168 |
|
88,114 |
|
Add: |
|
|
|
|
|
|
Loss (gain) on disposal of
long-lived assets, net |
27 |
|
|
291 |
|
(22 |
) |
157 |
|
230 |
|
Cash distributions from equity
method investments |
23,602 |
|
|
17,029 |
|
25,560 |
|
75,227 |
|
45,081 |
|
Inventory valuation adjustment |
— |
|
|
— |
|
48 |
|
1,235 |
|
— |
|
Non-cash equity compensation |
358 |
|
|
315 |
|
357 |
1,013 |
|
705 |
|
Less: |
|
|
|
|
|
|
Earnings from equity method
investments |
17,115 |
|
|
16,289 |
|
17,683 |
|
55,662 |
|
39,660 |
|
White Cliffs cash distributions
attributable to noncontrolling interests |
— |
|
|
1,658 |
|
— |
|
— |
|
11,008 |
|
Non-cash unrealized gain on
derivatives, net |
4,546 |
|
|
411 |
|
1,415 |
|
3,430 |
|
656 |
|
Adjusted EBITDA |
$ |
41,872 |
|
|
$ |
32,202 |
|
$ |
44,718 |
|
$ |
128,708 |
|
$ |
82,806 |
|
Less: |
|
|
|
|
|
|
Cash interest expense |
11,364 |
|
|
7,502 |
|
9,764 |
|
28,582 |
|
12,049 |
|
Maintenance capital
expenditures |
2,892 |
|
|
1,850 |
|
4,855 |
|
8,674 |
|
4,236 |
|
Distributable cash
flow |
$ |
27,616 |
|
|
$ |
22,850 |
|
$ |
30,099 |
|
$ |
91,452 |
|
$ |
66,521 |
|
|
|
|
|
|
|
|
Distribution
declared |
$ |
30,221 |
|
|
(1 |
) |
$ |
18,866 |
|
$ |
29,483 |
|
$ |
88,083 |
|
$ |
49,487 |
|
|
|
|
|
|
|
|
Distribution coverage
ratio |
0.91x |
|
1.21x |
1.02x |
1.04x |
1.34x |
|
|
|
|
|
|
|
(1) The distribution declared October 22, 2015 represents $0.66
per unit, or $2.64 per unit on an annualized basis. This is a 1.5%
increase over the prior quarter.(2) Prior period financial
information has been recast to reflect the effects of the dropdown
of the Wattenberg Oil Trunkline
2015 Adjusted
EBITDA Guidance Reconciliation |
|
|
|
(millions,
unaudited) |
|
|
Mid-point |
Net income |
$ |
70.3 |
|
Add: Interest expense |
43.0 |
|
Add: Depreciation and
amortization |
42.0 |
|
EBITDA |
$ |
155.3 |
|
Non-Cash and Other
Adjustments |
24.7 |
|
Adjusted EBITDA |
$ |
180.0 |
|
|
|
Less: |
|
Cash interest expense |
40.0 |
|
Maintenance capital
expenditures |
10.0 |
|
Distributable cash
flow |
$ |
130.0 |
|
|
|
Non-Cash and
Other Adjustments |
|
Earnings from equity
method investments |
$ |
(77.0 |
) |
Distributions from
equity method investments |
99.0 |
|
Inventory valuation
adjustment |
1.2 |
|
Non-cash equity
compensation |
1.5 |
|
Non-Cash and Other Adjustments |
$ |
24.7 |
|
|
|
Contacts:
Investor Relations:
Alisa Perkins
918-524-8081
roserockir@rrmidstream.com
Media:
Kiley Roberson
918-524-8594
kroberson@rrmidstream.com
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