- Revenue for the second quarter of 2018
totaled $55.3 million, compared to $45.4 million in the prior year
second quarter
- Achieved record levels of Consolidated
EBITDA for the second quarter of 2018 that totaled $33.8 million,
compared to $28.8 million in the prior year second quarter
- Increased the quarterly cash
distribution for the eleventh consecutive quarter to $0.795,
reflecting a 7.4% increase over the prior year quarterly
distribution
- Distributable cash flow for the second
quarter of 2018 totaled $21.2 million, with aggregate distributions
of $16.9 million, resulting in quarterly distribution coverage of
1.25x
- Leverage as of June 30, 2018 was
4.41x
TransMontaigne Partners L.P. (NYSE:TLP) (the Partnership,
we, us, our) today announced second quarter 2018 financial and
operating results.
FINANCIAL RESULTS
Revenue for the second quarter of 2018 totaled $55.3 million, an
increase of $9.9 million, or approximately 22%, compared to $45.4
million for the second quarter of 2017. Consolidated EBITDA totaled
$33.8 million for the second quarter of 2018, representing an
increase of $5.0 million, or approximately 17%, compared to $28.8
million for the second quarter of 2017. The improvement compared to
the prior year was primarily attributed to the acquisition of the
West Coast terminals on December 15, 2017 and our Collins Phase I
terminal expansion in our Southeast terminal region coming fully
on-line in June 2017.
An overview of our financial performance for the quarter ended
June 30, 2018 compared to the quarter ended June 30, 2017,
includes:
- Operating income for the quarter ended
June 30, 2018 was approximately $19.0 million compared to $17.3
million for the quarter ended June 30, 2017. Changes in the primary
components of operating income are as follows:
- Revenue increased approximately $9.9
million to $55.3 million due to our December 15, 2017 acquisition
of the West Coast terminals adding approximately $9.4 million to
revenue. In addition there were increases in revenue at our Gulf
Coast and Southeast terminals of approximately $0.8 million and
$1.3 million, respectively, offset by decreases in revenue at our
Midwest, Brownsville and River terminals of approximately $0.1
million $1.3 million and $0.2 million, respectively.
- Direct operating costs and expenses
increased approximately $3.3 million to $19.3 million due to our
acquisition of the West Coast terminals adding approximately $3.5
million to expense. In addition, direct operating costs and
expenses at our River terminals increased approximately $0.3
million, offset by a decrease in direct operating costs and
expenses at our Brownsville terminals of approximately $0.5
million. Direct operating costs and expenses for the Gulf Coast,
Midwest and Southeast terminals were consistent.
- General and administrative expenses
increased approximately $0.5 million to $4.6 million, which is
primarily attributable to the previously announced increase in the
omnibus fee effective as of May 13, 2018.
- Depreciation and amortization expenses
increased approximately $4.4 million to $13.2 million primarily due
to our acquisition of the West Coast terminals.
- Net earnings were $9.5 million for the
quarter ended June 30, 2018 compared to $14.5 million for the
quarter ended June 30, 2017. The decrease was principally due to
the increase in quarterly operating income discussed above, more
than offset by increases in interest expense and amortization of
deferred issuance costs of approximately $5.7 million and $1.0
million, respectively. The increase in these costs is primarily
attributable to financing the acquisition of the West Coast
terminals, the issuance of senior notes in the first quarter of
2018 and increases in LIBOR rates.
- Quarterly net earnings per limited
partner unit was $0.34 per unit for the quarter ended June 30, 2018
compared to $0.70 per unit for the quarter ended June 30,
2017.
- Consolidated EBITDA for the quarter
ended June 30, 2018 was $33.8 million compared to $28.8 million for
the quarter ended June 30, 2017.
- Distributable cash flow for the quarter
ended June 30, 2018 was $21.2 million compared to $24.5 million for
the quarter ended June 30, 2017.
- The distribution declared per limited
partner unit was $0.795 per unit for the quarter ended June 30,
2018 compared to $0.74 per unit for the quarter ended June 30,
2017.
- We paid aggregate distributions of
$16.9 million for the quarter ended June 30, 2018, resulting in a
quarterly distribution coverage ratio of 1.25x.
RECENT DEVELOPMENTS
ArcLight buyout offer. On July 9, 2018 the board of
directors of TransMontaigne GP L.L.C. received a non-binding
proposal from affiliates of ArcLight Capital Partners (“ArcLight”),
directed to the conflicts committee of our general partner,
pursuant to which ArcLight would acquire through a subsidiary all
common units of the Partnership that ArcLight and its affiliates do
not already own in exchange for $38.00 per common unit. If
approved, the transaction would be effected through a merger of the
Partnership with a subsidiary of ArcLight.
The transaction, as proposed, is subject to a number of
contingencies, including ArcLight’s completion of due diligence,
the approval of the conflicts committee, the approval by holders of
a majority of the outstanding common units of the Partnership and
the satisfaction of any conditions to the consummation of a
transaction set forth in any definitive agreement concerning the
transaction. There can be no assurance that definitive
documentation will be executed or that any transaction will
materialize.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2018 our total long-term debt was $586.3 million,
excluding $7.8 million of unamortized deferred issuance costs. Our
long-term debt amounts included $286.3 million of outstanding
borrowings on our $850 million revolving credit facility and $300
million of issued senior notes. For the trailing twelve months,
Consolidated EBITDA was $132.9 million, resulting in a debt to
Consolidated EBITDA ratio, or total leverage ratio, of 4.41x.
Consolidated EBITDA is a non-GAAP financial performance measure
used in the calculation of the leverage ratio requirement under our
revolving credit facility. See Attachment B hereto for a
reconciliation of Consolidated EBITDA to net earnings. See also
Attachment C hereto for the calculation of our total leverage ratio
and interest coverage ratio and a reconciliation of Consolidated
EBITDA to Cash flows provided by operating activities.
For the second quarter of 2018, we reported $15.5 million in
total capital expenditures, which consisted of $3.8 million of
maintenance expenditures, $7.4 million in growth spending on our
Collins Phase II expansion project and $4.3 million of various
other expansion project expenditures. As of June 30, 2018 remaining
expenditures for approved expansion projects are estimated to be
approximately $100 million, assuming our Frontera joint venture
does not exercise its rights of first refusal related to our
Brownsville terminaling expansion efforts. Approved expenditures
include the construction costs associated with the expansion of our
Collins, Brownsville and West Coast terminals, as discussed in our
first quarter 2018 earnings release.
QUARTERLY DISTRIBUTION
The Partnership previously announced that it declared a
distribution of $0.795 per unit for the period from April 1, 2018
through June 30, 2018. This $0.01 increase over the previous
quarter reflects the eleventh consecutive increase in the quarterly
distribution and represents annual growth of 7.4% over the prior
year second quarter distribution. This distribution was paid on
August 8, 2018 to unitholders of record on July 31, 2018.
CONFERENCE CALL
On Thursday, August 9, 2018, the Partnership will hold a
conference call for analysts and investors at 10:00 a.m. Eastern
Time to discuss our second quarter results. Hosting the call will
be Fred Boutin, Chief Executive Officer, and Rob Fuller, Chief
Financial Officer. The call can be accessed live over the telephone
by dialing (877) 407-4018, or for international callers (201)
689-8471. A replay will be available shortly after the call and can
be accessed by dialing (844) 512-2921, or for international callers
(412) 317-6671. The passcode for the replay is 13682335. The replay
will be available until August 23, 2018.
Interested parties may also listen to a simultaneous webcast of
the conference call by logging onto TLP’s website at
www.transmontaignepartners.com under the Investor Information
section. A replay of the webcast will also be available until
August 23, 2018.
ABOUT TRANSMONTAIGNE PARTNERS L.P.
TransMontaigne Partners L.P. is a terminaling and transportation
company based in Denver, Colorado with operations in the United
States along the Gulf Coast, in the Midwest, in Houston and
Brownsville, Texas, along the Mississippi and Ohio Rivers, in the
Southeast and on the West Coast. We provide integrated terminaling,
storage, transportation and related services for customers engaged
in the distribution and marketing of light refined petroleum
products, heavy refined petroleum products, crude oil, chemicals,
fertilizers and other liquid products. Light refined products
include gasolines, diesel fuels, heating oil and jet fuels, and
heavy refined products include residual fuel oils and asphalt. We
do not purchase or market products that we handle or transport.
News and additional information about TransMontaigne Partners L.P.
is available on our website: www.transmontaignepartners.com.
FORWARD-LOOKING STATEMENTS
This press release includes statements that may constitute
forward-looking statements made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995.
Although the company believes that the expectations reflected in
such forward-looking statements are based on reasonable
assumptions, such statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
projected. Important factors that could cause actual results to
differ materially from the Partnership’s expectations and may
adversely affect its business and results of operations are
disclosed in "Item 1A. Risk Factors" in the Partnership’s Annual
Report on Form 10-K for the year ended December 31, 2017, filed
with the Securities and Exchange Commission on March 15, 2018. The
forward-looking statements speak only as of the date made, and,
other than as may be required by law, the Partnership undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise.
ATTACHMENT ASELECTED FINANCIAL INFORMATION AND RESULTS
OF OPERATIONS
Our terminaling services agreements are structured as either
throughput agreements or storage agreements. Our throughput
agreements contain provisions that require our customers to make
minimum payments, which are based on contractually established
minimum volumes of throughput of the customer’s product at our
facilities over a stipulated period of time. Due to this minimum
payment arrangement, we recognize a fixed amount of revenue from
the customer over a certain period of time, even if the customer
throughputs less than the minimum volume of product during that
period. In addition, if a customer throughputs a volume of product
exceeding the minimum volume, we would recognize additional revenue
on this incremental volume. Our storage agreements require our
customers to make minimum payments based on the volume of storage
capacity available to the customer under the agreement, which
results in a fixed amount of recognized revenue.
We refer to the fixed amount of revenue recognized pursuant to
our terminaling services agreements as being “firm commitments.”
Revenue recognized in excess of firm commitments and revenue
recognized based solely on the volume of product distributed or
injected are referred to as “ancillary.” In addition “ancillary”
revenue also includes fees received from ancillary services
including heating and mixing of stored products, product transfer,
railcar handling, butane blending, proceeds from the sale of
product gains, wharfage and vapor recovery.
The “firm commitments” and “ancillary” revenue included in
terminaling services fees were as follows (in thousands):
Three
months ended Six months ended June 30, June
30, 2018 2017 2018 2017 Terminaling
services fees: Firm commitments $ 42,698 $ 33,669 $ 84,831 $ 65,733
Ancillary 9,680 7,837 20,738 16,517
Total terminaling services fees 52,378 41,506 105,569 82,250
Pipeline transportation fees 794 1,796 1,663 3,512 Management fees
2,172 2,062 4,556 4,452 Total revenue $
55,344 $ 45,364 $ 111,788 $ 90,214
The amount of revenue recognized as “firm commitments” based on
the remaining contractual term of the terminaling services
agreements that generated “firm commitments” for the three months
ended June 30, 2018 was as follows (in thousands):
Remaining terms on terminaling services
agreements that generated “firm commitments”: Less than 1 year
remaining $ 11,206 26% 1 year or more, but less than 3 years
remaining 11,563 27% 3 years or more, but less than 5 years
remaining 17,857 42% 5 years or more remaining 2,072 5%
Total firm commitments for the three months ended June 30, 2018 $
42,698
The following selected financial information is extracted from
our quarterly report on Form 10-Q for the quarter ended June 30,
2018, which was filed on August 9, 2018 with the Securities and
Exchange Commission (in thousands, except per unit amounts):
Three months
ended Six months ended June 30, June 30,
2018 2017 2018 2017
Income Statement
Data
Revenue $ 55,344 $ 45,364 $ 111,788 $ 90,214 Direct operating costs
and expenses (19,275 ) (15,984 ) (39,420 ) (32,495 ) General and
administrative expenses (4,619 ) (4,080 ) (9,600 ) (8,051 )
Earnings from unconsolidated affiliates 2,444 2,120 5,333 4,680
Operating income 19,022 17,274 38,158 32,674 Net earnings 9,460
14,478 21,634 27,432 Net earnings allocable to limited partners
5,588 11,373 13,996 21,484 Net earnings per limited partner
unit—basic $ 0.34 $ 0.70 $ 0.86 $ 1.32
June 30, December 31, 2018 2017
Balance Sheet
Data
Property, plant and equipment, net $ 656,761 $ 655,053 Investments
in unconsolidated affiliates 231,767 233,181 Goodwill 9,428 9,428
Customer relationships, net 45,751 47,136 Total assets 974,822
987,003 Long-term debt 578,523 593,200 Partners’ equity 355,028
364,217
Selected results of operations data for each of the quarters in
the years ended December 31, 2018 and 2017 are summarized
below (in thousands):
Three months ended Year ending March 31,
June 30, September 30, December 31,
December 31, 2018 2018 2018 2018
2018 Revenue $ 56,444 $ 55,344 $ — $ — $ 111,788 Direct
operating costs and expenses (20,145 ) (19,275 ) — — (39,420 )
General and administrative expenses (4,981 ) (4,619 ) — — (9,600 )
Insurance expenses (1,246 ) (1,271 ) — — (2,517 ) Equity-based
compensation expense (2,017 ) (441 ) — — (2,458 ) Depreciation and
amortization (11,808 ) (13,160 ) — — (24,968 ) Earnings from
unconsolidated affiliates 2,889 2,444
— — 5,333 Operating income 19,136
19,022 — — 38,158 Interest expense (6,461 ) (8,273 ) — — (14,734 )
Amortization of deferred issuance costs (501 ) (1,289
) — — (1,790 ) Net earnings $ 12,174 $
9,460 $ — $ — $ 21,634
Three months ended
Year ended March 31, June 30, September
30, December 31, December 31, 2017
2017 2017 2017 2017 Revenue $ 44,850 $
45,364 $ 45,449 $ 47,609 $ 183,272 Direct operating costs and
expenses (16,511 ) (15,984 ) (17,719 ) (17,486 ) (67,700 ) General
and administrative expenses (3,971 ) (4,080 ) (5,247 ) (6,135 )
(19,433 ) Insurance expenses (1,006 ) (1,002 ) (999 ) (1,057 )
(4,064 ) Equity-based compensation expense (1,817 ) (352 ) (544 )
(286 ) (2,999 ) Depreciation and amortization (8,705 ) (8,792 )
(8,882 ) (9,581 ) (35,960 ) Earnings from unconsolidated affiliates
2,560 2,120 1,884
507 7,071 Operating income 15,400 17,274
13,942 13,571 60,187 Interest expense (2,152 ) (2,525 ) (2,656 )
(3,140 ) (10,473 ) Amortization of deferred issuance costs
(294 ) (271 ) (320 ) (336 ) (1,221 )
Net earnings $ 12,954 $ 14,478 $ 10,966 $
10,095 $ 48,493
ATTACHMENT BDISTRIBUTABLE CASH FLOW
The following summarizes our distributable cash flow for the
period indicated (in thousands):
April 1, 2018 January 1,
2018 through through June 30, 2018 June
30, 2018 Net earnings $ 9,460 $ 21,634 Depreciation and
amortization 13,160 24,968 Earnings from unconsolidated affiliates
(2,444 ) (5,333 ) Distributions from unconsolidated affiliates
3,971 7,161 Equity-based compensation expense 441 2,458 Settlement
of tax withholdings on equity-based compensation (317 ) (658 )
Interest expense 8,273 14,734 Amortization of deferred issuance
costs 1,289 1,790 Consolidated EBITDA
(1) (2) 33,833 66,754 Interest expense (8,273 ) (14,734 )
Unrealized loss on derivative instruments 85 127 Amortization of
deferred issuance costs (1,289 ) (1,790 ) Amounts due under
long-term terminaling services agreements, net 176 204 Project
amortization of deferred revenue under GAAP (875 ) (1,062 ) Project
amortization of deferred revenue for DCF 1,270 1,852 Capitalized
maintenance (3,775 ) (7,164 ) “Distributable cash
flow”, or DCF, generated during the period (2) $ 21,152 $
44,187 Actual distribution for the period on all
common units and the general partner interest including incentive
distribution rights $ 16,918 $ 33,489 Distribution
coverage ratio (2) 1.25x 1.32x (1) Reflects
the calculation of Consolidated EBITDA in accordance with the
definition for such financial metric in our revolving credit
facility. (2) Consolidated EBITDA, Distributable cash flow and the
distribution coverage ratio are not computations based upon
generally accepted accounting principles. The amounts included in
the computations of our distributable cash flow and Consolidated
EBITDA are derived from amounts separately presented in our
consolidated financial statements, notes thereto and “Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations” in our quarterly report on Form 10-Q for the
quarter ended June 30, 2018, which was filed with the Securities
and Exchange Commission on August 9, 2018. Distributable cash flow
and Consolidated EBITDA should not be considered in isolation or as
an alternative to net earnings or operating income, as an
indication of our operating performance, or as an alternative to
cash flows from operating activities as a measure of liquidity.
Distributable cash flow and Consolidated EBITDA are not necessarily
comparable to similarly titled measures of other companies.
Distributable cash flow and Consolidated EBITDA are presented here
because they are widely accepted financial indicators used to
compare partnership performance. Further, Consolidated EBITDA is
calculated consistent with the provisions of our credit facility
and is a financial performance measure used in the calculation of
our leverage and interest coverage ratio requirements. We believe
that these measures provide investors an enhanced perspective of
the operating performance of our assets, the cash we are generating
and our ability to make distributions to our unitholders and our
general partner.
ATTACHMENT CCREDIT FACILITY FINANCIAL
COVENANTS
The primary financial covenants contained in our revolving
credit facility are (i) a total leverage ratio test (not to
exceed 5.25 to 1.0), (ii) a senior secured leverage ratio test
(not to exceed 3.75 to 1.0), and (iii) a minimum interest
coverage ratio test (not less than 2.75 to 1.0). These financial
covenants are based on a non-GAAP, defined financial performance
measure within our revolving credit facility known as “Consolidated
EBITDA.” The following provides the calculation of “total leverage
ratio”, “senior secured leverage ratio” and “interest coverage
ratio” as such terms are used in our revolving credit facility for
certain financial covenants (in thousands, except ratios):
Twelve months Three months ended ended
September 30, December 31, March 31, June
30, June 30, 2017 2017 2018
2018 2018 Financial performance covenant
tests: Consolidated EBITDA (1) $ 25,381 $ 26,963 $ 32,921 $
33,833 $ 119,098 Permitted Acquisition credit (2) 7,000 5,900 — —
12,900 Material Project credit (3) — —
— 854 854 Consolidated
EBITDA for the leverage ratios (1) $ 32,381 $ 32,863
$ 32,921 $ 34,687 $ 132,852 Revolving credit
facility debt 286,300 6.125% senior notes due in 2026 300,000
Consolidated funded indebtedness $ 586,300
Senior
secured leverage ratio 2.16 x Total leverage
ratio 4.41 x Consolidated EBITDA for the interest
coverage ratio (1) $ 25,381 $ 26,963 $ 32,921 $ 33,833 $ 119,098
Consolidated interest expense (1) (4) $ 2,591 $ 3,217 $ 6,419 $
8,188 $ 20,415
Interest coverage ratio 5.83 x
Reconciliation of consolidated EBITDA to cash flows provided by
operating activities: Consolidated EBITDA for the total
leverage ratio (1) $ 32,381 $ 32,863 $ 32,921 $ 34,687 $ 132,852
Permitted Acquisition credit (2) (7,000 ) (5,900 ) — — (12,900 )
Material Project credit (3) — — — (854 ) (854 ) Interest expense
(2,656 ) (3,140 ) (6,461 ) (8,273 ) (20,530 ) Unrealized loss
(gain) on derivative instruments 65 (77 ) 42 85 115 Amortization of
deferred revenue (170 ) (122 ) (187 ) (149 ) (628 ) Settlement of
tax withholdings on equity-based compensation 304 — 341 317 962
Change in operating assets and liabilities 4,477
(3,709 ) (2,262 ) 9,656 8,162
Cash flows provided by operating activities $ 27,401
$ 19,915 $ 24,394 $ 35,469 $ 107,179
(1) Reflects the calculation of Consolidated EBITDA and
Consolidated interest expense in accordance with the definition for
such financial metrics in our revolving credit facility. (2)
Reflects a proforma credit of $7.0 million per quarter relating to
the acquisition of the West Coast terminals, which qualified as a
“Permitted Acquisition” under the terms of our revolving credit
facility. For the three months ended December 31, 2017, the $7.0
million credit was reduced by approximately $1.1 million, which is
the amount of actual Consolidated EBITDA we recognized during the
period relating to the West Coast terminals following the
acquisition on December 15, 2017. (3) Reflects percentage of
completion proforma credit related to expansion projects that
qualify as a “Material Project” under the terms of our revolving
credit facility. (4) Consolidated interest expense, used in the
calculation of the interest coverage ratio, excludes unrealized
gains and losses recognized on our derivative instruments.
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version on businesswire.com: https://www.businesswire.com/news/home/20180809005390/en/
TransMontaigne Partners L.P.Frederick W. Boutin,
303-626-8200Chief Executive OfficerorRobert T. Fuller,
303-626-8200Chief Financial Officer
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