SAN ANTONIO, May 14, 2014 /PRNewswire/ -- Valero Energy
Partners LP (NYSE: VLP, the Partnership), today reported first
quarter 2014 net income of $10.5
million, or $0.18 per limited
partner unit. In the first full quarter of operations since the
initial public offering in December
2013, the Partnership generated earnings before interest,
income taxes, depreciation, and amortization (EBITDA) of
$13.9 million and distributable cash
flow of $13.6 million.
First quarter 2014 transportation and terminaling throughput
revenues were $21.5 million versus
first quarter 2013 revenues of $23.5
million. The decrease was primarily related to lower
throughput volumes in the Memphis
logistics system caused by harsh winter weather, which slowed
product demand and crude oil supply, and unplanned downtime at the
Valero Memphis Refinery. These decreases were partially offset by
higher throughput volumes in the Lucas crude system.
Total operating expenses were $5.8
million, general and administrative expense was $2.6 million, and depreciation expense was
$3.1 million. Combined, these
expenses were $2.6 million greater
than the first quarter of 2013 primarily due to higher planned
maintenance and public company expenses.
As of March 31, 2014, the
Partnership had $384 million in cash
and cash equivalents. Including an undrawn $300 million revolving credit facility, the
Partnership has $684 million of total
liquidity.
"We completed our first full quarter of operations, and we are
excited about our growth prospects," said Chairman and Chief
Executive Officer Joe Gorder.
On April 17, 2014, the Board of
Directors (Board) of the Partnership's general partner declared a
quarterly cash distribution of $0.2125 per unit. Together with the general
partner distributions, the total distribution will be $12.5 million.
Also on April 17, Bill Klesse stepped down from his position as
director and Chairman of the Board, and the Board elected
Joe Gorder, Valero Energy Partners'
Chief Executive Officer, to serve as Chairman. The Board also
elected Lane Riggs to serve as a
director. Mr. Riggs presently serves as Executive Vice
President-Refining Operations and Engineering at Valero.
The Partnership's senior management will host a conference call
at 2 p.m. CT (3 p.m. ET) today to discuss this earnings release
and provide an update on operations. A live broadcast of the
conference call will be available on the Partnership's web site at
www.valeroenergypartners.com.
About Valero Energy Partners LP
Valero Energy Partners
LP is a fee-based, growth-oriented, traditional master limited
partnership formed by Valero Energy Corporation to own, operate,
develop, and acquire crude oil and refined petroleum products
pipelines, terminals, and other transportation and logistics
assets. With headquarters in San
Antonio, the Partnership's assets include crude oil and
refined petroleum products pipeline and terminal systems in the
Gulf Coast and Mid-Continent regions of the United States that are integral to the
operations of Valero's refinery located in Port Arthur, Texas, its McKee refinery located
in Sunray, Texas, and its refinery
located in Memphis, Tennessee.
Contacts
Investors:
John Locke, Executive Director –
Investor Relations, 210-345-3077
Karen Ngo, Manager – Investor
Relations, 210-345-4574
Media:
Bill Day, Vice President –
Communications, 210-345-2928
Safe-Harbor Statement
This release contains
forward-looking statements within the meaning of federal securities
laws. These statements discuss future expectations, contain
projections of results of operations or of financial condition or
state other forward-looking information. You can identify
forward-looking statements by words such as "anticipate,"
"believe," "estimate," "expect," "forecast," "project," "could,"
"may," "should," "would," "will" or other similar expressions that
convey the uncertainty of future events or outcomes. These
forward-looking statements are not guarantees of future performance
and are subject to risks, uncertainties and other factors, some of
which are beyond the Partnership's control and are difficult to
predict. These statements are often based upon various assumptions,
many of which are based, in turn, upon further assumptions,
including examination of historical operating trends made by the
management of the Partnership. Although the Partnership believes
that these assumptions were reasonable when made, because
assumptions are inherently subject to significant uncertainties and
contingencies, which are difficult or impossible to predict and are
beyond its control, the Partnership cannot give assurance that it
will achieve or accomplish these expectations, beliefs or
intentions. When considering these forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements contained in the Partnership's filings with
the U.S. Securities and Exchange Commission, including the Form S-1
and prospectus relating to the initial public offering of the
Partnership's common units and the Partnership's annual report on
Form 10-K for the year ended December 31,
2013. These risks could cause the Partnership's actual
results to differ materially from those contained in any
forward-looking statement.
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VALERO ENERGY
PARTNERS LP
EARNINGS
RELEASE
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
2014
|
2013
|
Statement of
income data (a):
|
|
Operating
revenues – related party
|
$21,531
|
$23,478
|
Costs and
expenses:
|
|
|
Operating expenses (b)
|
5,726
|
4,296
|
General
and administrative expenses (c)
|
2,595
|
1,057
|
Depreciation expense (d)
|
3,058
|
3,469
|
Total
costs and expenses
|
11,379
|
8,822
|
Operating
income
|
10,152
|
14,656
|
Other income,
net (e)
|
648
|
26
|
Interest
expense (f)
|
(228)
|
(55)
|
Income before
income taxes
|
10,572
|
14,627
|
Income tax
expense
|
90
|
107
|
Net
income
|
10,482
|
$14,520
|
Less: General partner's interest in net income
|
210
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|
Limited
partners' interest in net income
|
$10,272
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|
|
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Net income per
limited partner unit (basic and diluted):
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|
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Common
units
|
$0.18
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Subordinated
units
|
$0.18
|
|
|
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|
Weighted-average
number of limited partner units outstanding:
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Common units –
public (basic)
|
17,250
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Common units –
public (diluted)
|
17,252
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Common units –
Valero (basic and diluted)
|
11,540
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Subordinated
units – Valero (basic and diluted)
|
28,790
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VALERO ENERGY
PARTNERS LP
EARNINGS
RELEASE
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
2014
|
2013
|
Operating
highlights:
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|
Pipeline
transportation:
|
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Pipeline
transportation revenues
|
$10,480
|
$14,206
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Pipeline
transportation throughput (BPD) (g)
|
574,512
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591,702
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Average
pipeline transportation revenue per barrel (h)
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$0.20
|
$0.27
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|
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Terminaling:
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Terminaling revenues
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$11,051
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$4,197
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Terminaling throughput (BPD)
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438,836
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132,240
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Average
terminaling revenue per barrel (h)
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$0.28
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$0.35
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Storage
revenues (i)
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$—
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$5,075
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|
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Total
operating revenues – related party
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$21,531
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$23,478
|
|
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Capital
expenditures:
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Maintenance
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$864
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$258
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Expansion
|
—
|
907
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Total
capital expenditures
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864
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1,165
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Less:
Capital expenditures attributable to Predecessor (a)
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—
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1,165
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Capital
expenditures attributable to Partnership
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$864
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$—
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Other financial
information:
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Quarterly
distribution declared per unit
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$0.2125
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n/a
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EBITDA
attributable to Partnership (j)
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$13,858
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n/a
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Distributable
cash flow (j)
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$13,565
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n/a
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Distribution
declared:
|
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Limited
partner units – public
|
$3,667
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n/a
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Limited
partner units – Valero
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8,570
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n/a
|
General
partner units – Valero
|
250
|
n/a
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Total distribution declared
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$12,487
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n/a
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Coverage ratio
(j)
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1.09x
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n/a
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March 31,
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December
31,
|
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2014
|
2013
|
Balance sheet data
(a):
|
|
|
Cash and cash
equivalents
|
$383,859
|
$375,118
|
Total
assets
|
664,321
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656,442
|
Total capital
lease obligations
|
3,788
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4,127
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Partners'
capital
|
649,910
|
641,591
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Working
capital
|
381,031
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372,230
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VALERO ENERGY
PARTNERS LP
EARNINGS
RELEASE
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
2014
|
2013
|
Reconciliation of
net income to EBITDA and
distributable cash flow (j):
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Net income
|
$10,482
|
$14,520
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Plus:
|
|
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Depreciation expense
|
3,058
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3,469
|
Interest
expense
|
228
|
55
|
Income
tax expense
|
90
|
107
|
EBITDA
|
13,858
|
18,151
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Less: Predecessor EBITDA prior to IPO on December 16, 2013
(a)
|
—
|
18,151
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EBITDA
attributable to Partnership
|
13,858
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$—
|
Plus:
|
|
|
Adjustments related to minimum throughput commitments
|
32
|
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Projects
prefunded by Valero
|
775
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Less:
|
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|
Cash
interest paid
|
236
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|
Maintenance capital expenditures
|
864
|
|
Distributable cash
flow
|
$13,565
|
|
|
|
|
Reconciliation of
net cash provided by operating activities to EBITDA and
distributable cash flow (j):
|
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Net cash
provided by operating activities
|
$16,322
|
$17,774
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Plus:
|
|
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Change
in current assets and current liabilities
|
(2,771)
|
106
|
Amortization of fair value adjustment to capital lease
obligations
|
90
|
109
|
Amortization of debt issuance costs
|
(82)
|
—
|
Unit-based compensation expense
|
(11)
|
—
|
Interest
expense
|
228
|
55
|
Current
income tax expense
|
82
|
107
|
EBITDA
|
13,858
|
18,151
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Less: Predecessor EBITDA prior to IPO on December 16, 2013
(a)
|
—
|
18,151
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EBITDA attributable
to Partnership
|
13,858
|
$—
|
Plus:
|
|
|
Adjustments related to minimum throughput commitments
|
32
|
|
Projects
prefunded by Valero
|
775
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Less:
|
|
|
Cash
interest paid
|
236
|
|
Maintenance capital expenditures
|
864
|
|
Distributable cash
flow
|
$13,565
|
|
|
|
|
|
Comparison of
ratio of net income attributable to partners
divided by total distribution declared
to coverage ratio (j):
|
|
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Net income
attributable to partners
|
$10,482
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n/a
|
Total
distribution declared
|
$12,487
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n/a
|
Ratio of net
income attributable to partners divided by total distribution declared
|
0.84x
|
n/a
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Coverage ratio:
Distributable cash flow divided by total distribution declared
|
1.09x
|
n/a
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VALERO ENERGY
PARTNERS LP
NOTES TO EARNINGS
RELEASE
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(a)
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On December 16, 2013,
Valero Energy Corporation (Valero) contributed certain crude oil
and refined petroleum products pipelines, terminals, and other
logistics assets (the Contributed Assets) to us and we completed
the initial public offering (IPO) of 17,250,000 of our common units
representing a 29.4 percent limited partner interest in us. Valero
owns the 2 percent general partner interest and the remaining 68.6
percent limited partner interest in us.
The statement of
income data for the three months ended March 31, 2013 reflects
the results of operations of the Contributed Assets. References to
this financial data are made with respect to Valero Energy Partners
LP Predecessor (Predecessor), our predecessor for accounting
purposes. The statement of income data for the three months
ended March 31, 2014 and the balance sheet data as of
March 31, 2014 and December 31, 2013 reflect the results of
operations, assets, liabilities, and partners' capital of Valero
Energy Partners LP (Partnership, we, our, or us).
The Partnership's
results of operations may not be comparable to our Predecessor's
historical results of operations for the reasons described
below:
- Revenues. Our Predecessor
generated revenues by providing fee-based transportation and
terminaling services to Valero and by leasing certain crude oil and
refined petroleum products storage capacity to Valero. Subsequent
to the IPO, we entered into a master transportation services
agreement and a master terminal services agreement with Valero with
respect to our pipelines and terminals. Under these commercial
agreements, the historical storage capacity lease arrangements were
replaced with terminaling throughput fees. In addition, we began
charging a terminaling throughput fee for crude oil delivered to
our Lucas terminal for which we did not historically charge a
throughput fee, and we revised the rates charged for transportation
services provided by certain of our pipelines.
- General and administrative
expenses. Our Predecessor's general and administrative expenses
include direct charges for the management and operation of our
logistics assets and certain expenses allocated by Valero for
general corporate services, such as treasury, accounting, and legal
services. These expenses were charged, or allocated, to our
Predecessor based on the nature of the expenses. Effective with the
IPO, the Partnership pays a fee to Valero for the management of our
operations and general corporate services. In addition, the
Partnership incurs additional incremental general and
administrative expenses as a result of being a separate publicly
traded limited partnership.
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(b)
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The increase in
operating expenses for the three months ended March 31, 2014
compared to the three months ended March 31, 2013 is primarily
due to $719,000 in higher maintenance expenses in 2014 at our
Collierville and Lucas crude systems and our Memphis and Port
Arthur products systems related to pipeline and tank inspection,
cleaning, and repair work for regulatory compliance purposes. In
addition, insurance expense increased $548,000 as a result of us
acquiring our own insurance policies. Prior to being a separate
publicly traded partnership, we were allocated a portion of
Valero's insurance costs.
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(c)
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The increase in
general and administrative expenses for the three months
ended March 31, 2014 compared to the three months ended
March 31, 2013 is due to $928,000 in incremental costs related
to the management fee charged to us by Valero effective with the
IPO and $610,000 of additional incremental costs of being a
separate publicly traded limited partnership.
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(d)
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The decrease in
depreciation expense for the three months ended March 31, 2014
compared to the three months ended March 31, 2013 is primarily
due to the write-off of the remaining net book value of $306,000 in
2013 associated with a tank at our Lucas crude system that was no
longer in service.
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(e)
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The increase in other
income, net for the three months ended March 31, 2014 compared
to the three months ended March 31, 2013 is primarily due to
interest income (net of bank fees) of $298,000 earned on our cash
and cash equivalents and incremental income of $345,000 from the
sale of scrap metal in the three months ended March 31, 2014.
Prior to the IPO, our Predecessor participated in Valero's
centralized cash management system; therefore, it held no cash or
cash equivalents, and no interest income was allocated to our
Predecessor by Valero.
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(f)
|
The increase in
interest expense for the three months ended March 31, 2014
compared to the three months ended March 31, 2013 is primarily
due to commitment fees and amortization of the debt issuance costs
related to the Partnership's revolving credit facility that was
entered into upon the IPO.
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(g)
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Represents the sum of
volumes transported through each separately tariffed pipeline
segment.
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(h)
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Management uses
average revenue per barrel to evaluate performance and compare
profitability to other companies in the industry. There are a
variety of ways to calculate average revenue per barrel; different
companies may calculate it in different ways. We calculate average
revenue per barrel as revenue divided by throughput for the period.
Throughput can be derived by multiplying the throughput barrels per
day (BPD) by the number of days in the period. Investors and
analysts use this financial measure to help analyze and compare
companies in the industry on the basis of operating performance.
This financial measure should not be considered as an alternative
to revenues presented in accordance with U.S. generally accepted
accounting principles (GAAP).
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(i)
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Prior to the IPO, our
Predecessor leased some of our refined petroleum products and crude
oil storage capacity to Valero. Subsequent to the IPO, under our
commercial agreements with Valero, these storage capacity lease
agreements were replaced with terminaling fees.
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(j)
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We define EBITDA as
net income before income tax expense, interest expense, and
depreciation expense. We define distributable cash flow as EBITDA
less cash payments during the period for interest, income taxes,
and maintenance capital expenditures, plus adjustments related to
minimum throughput commitments and capital projects prefunded by
Valero. We define coverage ratio as the ratio of distributable cash
flow to the total distribution declared.
EBITDA, distributable
cash flow, and coverage ratio are supplemental financial measures
that are not defined under GAAP that management and external users
of our financial statements, such as industry analysts, investors,
lenders, and rating agencies, may use to assess:
- our operating performance as compared
to other publicly traded limited partnerships in the transportation
and logistics industry, without regard to historical cost basis or,
in the case of EBITDA, financing methods;
- the ability of our business to
generate sufficient cash to support our decision 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 EBITDA provides useful information to investors in
assessing our financial condition and results of operations. The
GAAP measures most directly comparable to EBITDA are net income and
net cash provided by operating activities. EBITDA should not be
considered an alternative to net income or net cash provided by
operating activities presented in accordance with GAAP. EBITDA has
important limitations as an analytical tool because it excludes
some, but not all, items that affect net income or net cash
provided by operating activities. EBITDA should not be considered
in isolation or as a substitute for analysis of our results as
reported under GAAP. Additionally, because EBITDA may be defined
differently by other companies in our industry, our definition of
EBITDA may not be comparable to similarly titled measures of other
companies, thereby diminishing its utility.
We use distributable
cash flow to measure whether we have generated from our operations,
or "earned," an amount of cash sufficient to support the payment of
the minimum quarterly distributions. Our partnership agreement
contains the concept of "operating surplus" to determine whether
our operations are generating sufficient cash to support the
distributions that we are paying, as opposed to returning capital
to our partners. Because operating surplus is a cumulative concept
(measured from the IPO date, and compared to cumulative
distributions from the IPO date), we use the term distributable
cash flow to approximate operating surplus on a quarterly or
annual, rather than a cumulative, basis. As a result, distributable
cash flow is not necessarily indicative of the actual cash we have
on hand to distribute or that we are required to
distribute.
We use the coverage
ratio to reflect the relationship between our distributable cash
flow and the total distribution declared. We have also provided the
ratio of net income attributable to partners, the most directly
comparable GAAP measure to distributable cash flow, to the total
distribution declared.
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SOURCE Valero Energy Partners LP