Item 2.02 Results of Operations and Financial Condition.
On January 26, 2017, SMLP announced 2017 financial guidance with adjusted EBITDA expected to range from $295.0 million to $315.0 million. SMLP expects to report 2016 adjusted EBITDA that is at or above the top end of the previously announced $270.0 million to $290.0 million range.
SMLP’s 2017 adjusted EBITDA guidance is based on information received to date from its customers. The year-over-year increase is supported by a recent increase in drilling activity across its gathering systems. SMLP expects quarterly adjusted EBITDA to increase throughout 2017, with an annualized fourth quarter adjusted EBITDA run rate between $325.0 million and $345.0 million.
SMLP expects to incur $100.0 million to $150.0 million of capital expenditures in 2017, including maintenance capital expenditures of approximately $15.0 million to $20.0 million. SMLP’s 2017 capital expenditure guidance also includes its anticipated contributions to equity method investees. SMLP expects full year distribution coverage will range from 1.15x to 1.25x. A copy of the press release is attached hereto as Exhibit 99.1.
The information provided pursuant to this Item 2.02, including Exhibit 99.1, is "furnished" and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such section, and shall not be incorporated by reference in any filing made by SMLP under the Exchange Act or the Securities Act of 1933, as amended, except to the extent expressly set forth by specific reference in any such filings.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with accounting principles generally accepted in the United States of America ("GAAP"), SMLP presents certain non-GAAP financial measures. Specifically, SMLP presents adjusted EBITDA and distributable cash flow. We define adjusted EBITDA as net income or loss, plus interest expense, income tax expense, depreciation and amortization, our proportional adjusted EBITDA for equity method investees, adjustments related to MVC shortfall payments, unit-based and noncash compensation, Deferred Purchase Price Obligation expense, impairments and other noncash expenses or losses, less interest income, income tax benefit, income or loss from equity method investees and other noncash income or gains. We define distributable cash flow as adjusted EBITDA plus cash interest received and cash taxes received, less cash interest paid, senior notes interest adjustment, cash taxes paid and maintenance capital expenditures.
We exclude these items because they are considered unusual and not indicative of our ongoing operations. Our definitions of these non-GAAP financial measures may differ from the definitions of similar measures used by other companies. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating SMLP’s financial performance. Furthermore, management believes that these non-GAAP financial measures may provide users with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business. These measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of SMLP’s results as reported under GAAP.
We do not provide the GAAP financial measures of net income or loss or net cash provided by operating activities on a forward-looking basis because we are unable to predict, without unreasonable effort, certain components thereof including, but not limited to, (i) income or loss from equity method investees, (ii) deferred purchase price obligation income or expense and (iii) asset impairments. These items are inherently uncertain and depend on various factors, many of which are beyond our control. As such, any associated estimate and its impact on our GAAP performance and cash flow measures could vary materially based on a variety of acceptable management assumptions.
Item 9.01 Financial Statements and Exhibits.
(d)
Exhibits.
|
|
|
|
Exhibit
Number
|
|
Description
|
99.1
|
|
Press release of Summit Midstream Partners, LP, dated as of January 26, 2017
|