SAN ANTONIO, May 5, 2015 /PRNewswire/ -- Valero Energy
Partners LP (NYSE: VLP, the Partnership), today reported first
quarter 2015 net income attributable to partners of $22.1 million, or $0.37 per common limited partner unit. The
Partnership generated earnings before interest, income taxes,
depreciation, and amortization (EBITDA) of $27.8 million and distributable cash flow of
$27.5 million. VLP's coverage
ratio for the first quarter of 2015 was 1.59x.
"We are executing our accelerated growth strategy," said
Joe Gorder, VLP Chairman and Chief
Executive Officer. "We acquired the Houston and St. Charles terminals and
announced a 31 percent year-over-year increase in the
quarterly distribution per unit."
First quarter 2015 revenues were $41.9
million versus first quarter 2014 revenues of $29.5 million. The increase was
primarily related to the acquisition of the Houston and St. Charles Terminal Services
Business and higher volumes in the Port
Arthur and Memphis
logistics systems.
Operating expenses in the first quarter of 2015 were
$17.9 million, general and
administrative expenses were $3.6
million, and depreciation expense was $7.5 million. Total costs and expenses were
$3.7 million higher in the first
quarter of 2015 compared to the first quarter of 2014, mainly due
to incremental depreciation expense on assets placed into service
in 2014, acquisition costs, and increased administrative and
insurance expenses related to acquired businesses.
Liquidity and Financial Position
As of March 31, 2015, the Partnership had $128 million of total liquidity consisting of
$28 million in cash and cash equivalents and $100 million available on its revolving credit
facility. Capital spending attributable to the Partnership in
the first quarter of 2015 was $1.3 million, including $1.1 million for maintenance and $0.2 million for expansion. For 2015,
capital expenditures attributable to the Partnership are expected
to total $12.5 million, of which
approximately $7 million is for
maintenance.
Strategic Update
Commenting on growth plans, Gorder
said, "With more than two-thirds of Valero's planned
$1 billion of drop downs in 2015 already completed, we're on
track to continue growing distributions."
The Partnership expects to complete another acquisition from its
sponsor in the second half of 2015.
Conference Call
The Partnership's senior management
will host a conference call at 3 p.m.
ET today to discuss this earnings release. 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, 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 several of
Valero's refineries.
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
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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
Partnership's annual reports on Form 10-K and quarterly reports on
Form 10-Q, available on the Partnership's website at
www.valeroenergypartners.com. These risks could cause the
Partnership's actual results to differ materially from those
contained in any forward-looking statement.
Use of Non-GAAP Financial Information
This earnings
release includes the terms "EBITDA," "distributable cash flow," and
"coverage ratio." These terms are supplemental financial
measures that are not defined under United States generally accepted accounting
principles (GAAP). We reconcile these non-GAAP measures to the most
directly comparable GAAP measures in the tables that accompany this
release. In note (k) to the tables that accompany this
release, we disclose the reasons why we believe our use of the
non-GAAP financial measures in this release provides useful
information.
VALERO ENERGY
PARTNERS LP
|
EARNINGS
RELEASE
|
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2015
|
|
2014
|
Statement of
income data (a):
|
|
|
Operating revenues –
related party (b)
|
|
$
|
41,886
|
|
|
$
|
29,489
|
|
Costs and
expenses:
|
|
|
|
|
Operating expenses
(c)
|
|
17,864
|
|
|
16,237
|
|
General and
administrative expenses (d)
|
|
3,565
|
|
|
3,097
|
|
Depreciation expense
(e)
|
|
7,488
|
|
|
5,916
|
|
Total costs and
expenses
|
|
28,917
|
|
|
25,250
|
|
Operating
income
|
|
12,969
|
|
|
4,239
|
|
Other income, net
(f)
|
|
111
|
|
|
666
|
|
Interest and debt
expense, net of capitalized interest (g)
|
|
(601)
|
|
|
(228)
|
|
Income before income
taxes
|
|
12,479
|
|
|
4,677
|
|
Income tax expense
(benefit) (h)
|
|
(126)
|
|
|
157
|
|
Net income
|
|
12,605
|
|
|
4,520
|
|
Less: Net loss attributable to Predecessor
|
|
(9,516)
|
|
|
(5,962)
|
|
Net income
attributable to partners
|
|
22,121
|
|
|
10,482
|
|
Less: General partner's interest in net income
|
|
852
|
|
|
210
|
|
Limited partners'
interest in net income
|
|
$
|
21,269
|
|
|
$
|
10,272
|
|
|
|
|
|
|
Net income per
limited partner unit (basic
and diluted):
|
|
|
|
|
Common
units
|
|
$
|
0.37
|
|
|
$
|
0.18
|
|
Subordinated
units
|
|
$
|
0.36
|
|
|
$
|
0.18
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
Common units – public
(basic)
|
|
17,250
|
|
|
17,250
|
|
Common units – public
(diluted)
|
|
17,250
|
|
|
17,252
|
|
Common units – Valero
(basic and diluted)
|
|
12,176
|
|
|
11,540
|
|
Subordinated units –
Valero (basic and diluted)
|
|
28,790
|
|
|
28,790
|
|
|
See Notes to Earnings
Release on Table Page 6.
|
VALERO ENERGY
PARTNERS LP
|
EARNINGS
RELEASE
|
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2015
|
|
2014
|
Operating
highlights (a):
|
|
|
Pipeline
transportation:
|
|
|
|
|
Pipeline
transportation revenues (b)
|
|
$
|
19,875
|
|
|
$
|
15,234
|
|
Pipeline
transportation throughput (BPD) (i)
|
|
979,821
|
|
|
810,352
|
|
Average
pipeline transportation revenue per barrel (j)
|
|
$
|
0.23
|
|
|
$
|
0.21
|
|
Terminaling:
|
|
|
|
|
Terminaling revenues (b)
|
|
$
|
21,876
|
|
|
$
|
13,967
|
|
Terminaling throughput (BPD)
|
|
807,429
|
|
|
568,856
|
|
Average
terminaling revenue per barrel (j)
|
|
$
|
0.30
|
|
|
$
|
0.27
|
|
Storage
revenues
|
|
$
|
135
|
|
|
$
|
288
|
|
Total
operating revenues – related party
|
|
$
|
41,886
|
|
|
$
|
29,489
|
|
Capital
expenditures (a):
|
|
|
|
|
Maintenance
|
|
$
|
3,360
|
|
|
$
|
3,778
|
|
Expansion
|
|
1,618
|
|
|
18,698
|
|
Total
capital expenditures
|
|
4,978
|
|
|
22,476
|
|
Less:
Capital expenditures attributable to Predecessor
|
|
3,693
|
|
|
21,612
|
|
Capital expenditures
attributable to Partnership
|
|
$
|
1,285
|
|
|
$
|
864
|
|
Other financial
information:
|
|
|
|
|
Distribution declared
per unit
|
|
$
|
0.2775
|
|
|
$
|
0.2125
|
|
EBITDA attributable
to Partnership (k)
|
|
$
|
27,810
|
|
|
$
|
13,858
|
|
Distributable cash
flow (k)
|
|
$
|
27,452
|
|
|
$
|
13,565
|
|
Distribution
declared:
|
|
|
|
|
Limited
partner units – public
|
|
$
|
4,790
|
|
|
$
|
3,667
|
|
Limited
partner units – Valero
|
|
11,721
|
|
|
8,570
|
|
General
partner units – Valero
|
|
755
|
|
|
250
|
|
Total
distribution declared
|
|
$
|
17,266
|
|
|
$
|
12,487
|
|
Coverage ratio
(k)
|
|
1.59x
|
|
|
1.09x
|
|
|
|
|
|
|
|
|
March 31,
|
|
December
31,
|
|
|
2015
|
|
2014
|
Balance sheet data
(a):
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
27,710
|
|
|
$
|
236,579
|
|
Total
assets
|
|
690,848
|
|
|
891,764
|
|
Current portion of
debt and capital lease obligations
|
|
1,241
|
|
|
1,200
|
|
Debt and capital
lease obligations, less current portion
|
|
361,103
|
|
|
1,519
|
|
Total debt and
capital lease obligations
|
|
362,344
|
|
|
2,719
|
|
Partners'
capital
|
|
321,280
|
|
|
880,910
|
|
Working
capital
|
|
37,997
|
|
|
238,365
|
|
|
See Notes to Earnings
Release on Table Page 6.
|
VALERO ENERGY
PARTNERS LP
|
EARNINGS
RELEASE
|
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2015
|
|
2014
|
Reconciliation of
net income to EBITDA and distributable cash flow
(a)(k):
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
12,605
|
|
|
$
|
4,520
|
|
Plus:
|
|
|
|
|
Depreciation
expense
|
|
7,488
|
|
|
5,916
|
|
Interest and debt
expense, net of capitalized interest
|
|
601
|
|
|
228
|
|
Income tax expense
(benefit)
|
|
(126)
|
|
|
157
|
|
EBITDA
|
|
20,568
|
|
|
10,821
|
|
Less: EBITDA attributable to Predecessor
|
|
(7,242)
|
|
|
(3,037)
|
|
EBITDA attributable
to Partnership
|
|
27,810
|
|
|
13,858
|
|
Plus:
|
|
|
|
|
Adjustments related
to minimum throughput commitments
|
|
(20)
|
|
|
32
|
|
Projects prefunded by
Valero
|
|
589
|
|
|
775
|
|
Other
|
|
384
|
|
|
—
|
|
Less:
|
|
|
|
|
Cash interest
paid
|
|
172
|
|
|
236
|
|
Maintenance capital
expenditures
|
|
1,139
|
|
|
864
|
|
Distributable cash
flow
|
|
$
|
27,452
|
|
|
$
|
13,565
|
|
Reconciliation of
net cash provided by operating activities to EBITDA and
distributable cash flow (a)(k):
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
12,507
|
|
|
$
|
13,178
|
|
Plus:
|
|
|
|
|
Changes in current
assets and current liabilities
|
|
7,755
|
|
|
(2,771)
|
|
Changes in deferred
charges and credits and other operating activities, net
|
|
(418)
|
|
|
73
|
|
Interest and debt
expense, net of capitalized interest
|
|
601
|
|
|
228
|
|
Current income tax
expense
|
|
123
|
|
|
113
|
|
EBITDA
|
|
20,568
|
|
|
10,821
|
|
Less: EBITDA attributable to Predecessor
|
|
(7,242)
|
|
|
(3,037)
|
|
EBITDA attributable
to Partnership
|
|
27,810
|
|
|
13,858
|
|
Plus:
|
|
|
|
|
Adjustments related
to minimum throughput commitments
|
|
(20)
|
|
|
32
|
|
Projects prefunded by
Valero
|
|
589
|
|
|
775
|
|
Other
|
|
384
|
|
|
—
|
|
Less:
|
|
|
|
|
Cash interest
paid
|
|
172
|
|
|
236
|
|
Maintenance capital
expenditures
|
|
1,139
|
|
|
864
|
|
Distributable cash
flow
|
|
$
|
27,452
|
|
|
$
|
13,565
|
|
|
See Notes to Earnings
Release on Table Page 6.
|
VALERO ENERGY
PARTNERS LP
|
EARNINGS
RELEASE
|
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2015
|
|
2014
|
Comparison of
ratio of net income attributable to partners divided by total
distribution declared to coverage ratio (k):
|
|
|
|
|
Net income
attributable to partners
|
|
$
|
22,121
|
|
|
$
|
10,482
|
|
Total distribution
declared
|
|
$
|
17,266
|
|
|
$
|
12,487
|
|
Ratio of net income
attributable to partners divided by total distribution
declared
|
|
1.28x
|
|
|
0.84x
|
|
Coverage ratio:
Distributable cash flow divided by total distribution
declared
|
|
1.59x
|
|
|
1.09x
|
|
The following tables present our consolidated statements of
income for the three months ended March 31,
2015 and 2014, giving effect to the acquisition of the
Houston and St. Charles Terminal
Services Business for periods prior to March 1, 2015 and the
acquisition of the Texas Crude Systems Business for periods prior
to July 1, 2014. See Note (a) of Notes to Earnings
Release for a discussion of the basis of this presentation.
|
|
Three Months Ended
March 31, 2015
|
|
|
Valero Energy
Partners LP
|
|
Houston and St.
Charles Terminal Services Business (January 1, 2015 to February 28,
2015)
|
|
Valero Energy
Partners LP (Currently Reported)
|
Operating revenues –
related party (b)
|
|
$
|
41,886
|
|
|
$
|
—
|
|
|
$
|
41,886
|
|
Costs and
expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
10,669
|
|
|
7,195
|
|
|
17,864
|
|
General and
administrative expenses
|
|
3,518
|
|
|
47
|
|
|
3,565
|
|
Depreciation
expense
|
|
5,214
|
|
|
2,274
|
|
|
7,488
|
|
Total costs and
expenses
|
|
19,401
|
|
|
9,516
|
|
|
28,917
|
|
Operating income
(loss)
|
|
22,485
|
|
|
(9,516)
|
|
|
12,969
|
|
Other income,
net
|
|
111
|
|
|
—
|
|
|
111
|
|
Interest and debt
expense, net of capitalized interest
|
|
(601)
|
|
|
—
|
|
|
(601)
|
|
Income (loss) before
income taxes
|
|
21,995
|
|
|
(9,516)
|
|
|
12,479
|
|
Income tax
benefit
|
|
(126)
|
|
|
—
|
|
|
(126)
|
|
Net income
(loss)
|
|
22,121
|
|
|
(9,516)
|
|
|
12,605
|
|
Less: Net loss
attributable to Predecessor
|
|
—
|
|
|
(9,516)
|
|
|
(9,516)
|
|
Net income
attributable to partners
|
|
$
|
22,121
|
|
|
$
|
—
|
|
|
$
|
22,121
|
|
|
See Notes to Earnings
Release on Table Page 6.
|
VALERO ENERGY
PARTNERS LP
|
EARNINGS
RELEASE
|
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31, 2014
|
|
|
Valero Energy
Partners LP (Previously Reported)
|
|
Texas Crude
Systems Business
(January 1, 2014
to March 31, 2014)
|
|
Houston and St.
Charles Terminal Services Business
(January 1, 2014
to March 31, 2014)
|
|
Valero Energy
Partners LP (Currently Reported)
|
Operating revenues –
related party (b)
|
|
$
|
21,531
|
|
|
$
|
7,958
|
|
|
$
|
—
|
|
|
$
|
29,489
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
5,726
|
|
|
1,902
|
|
|
8,609
|
|
|
16,237
|
|
General and
administrative expenses
|
|
2,595
|
|
|
437
|
|
|
65
|
|
|
3,097
|
|
Depreciation
expense
|
|
3,058
|
|
|
843
|
|
|
2,015
|
|
|
5,916
|
|
Total costs and
expenses
|
|
11,379
|
|
|
3,182
|
|
|
10,689
|
|
|
25,250
|
|
Operating income
(loss)
|
|
10,152
|
|
|
4,776
|
|
|
(10,689)
|
|
|
4,239
|
|
Other income,
net
|
|
648
|
|
|
18
|
|
|
—
|
|
|
666
|
|
Interest and debt
expense, net of capitalized interest
|
|
(228)
|
|
|
—
|
|
|
—
|
|
|
(228)
|
|
Income (loss) before
income taxes
|
|
10,572
|
|
|
4,794
|
|
|
(10,689)
|
|
|
4,677
|
|
Income tax
expense
|
|
90
|
|
|
67
|
|
|
—
|
|
|
157
|
|
Net income
(loss)
|
|
10,482
|
|
|
4,727
|
|
|
(10,689)
|
|
|
4,520
|
|
Less: Net income
(loss) attributable to Predecessor
|
|
—
|
|
|
4,727
|
|
|
(10,689)
|
|
|
(5,962)
|
|
Net income
attributable to partners
|
|
$
|
10,482
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,482
|
|
The following table presents our balance sheet data as of
December 31, 2014, giving effect to
the acquisition of the Houston and
St. Charles Terminal Services Business. See Note (a) of
Notes to Earnings Release for a discussion of the basis of
this presentation.
|
|
December 31,
2014
|
|
|
Valero Energy
Partners LP (Previously Reported)
|
|
Houston and St.
Charles Terminal Services Business
|
|
Valero Energy
Partners LP (Currently Reported)
|
Cash and cash
equivalents
|
|
$
|
236,579
|
|
|
$
|
—
|
|
|
$
|
236,579
|
|
Total
assets
|
|
596,073
|
|
|
295,691
|
|
|
891,764
|
|
Current portion of
debt and capital lease obligations
|
|
1,200
|
|
|
—
|
|
|
1,200
|
|
Debt and capital
lease obligations, less current portion
|
|
1,519
|
|
|
—
|
|
|
1,519
|
|
Total debt and
capital lease obligations
|
|
2,719
|
|
|
—
|
|
|
2,719
|
|
Partners'
capital
|
|
585,219
|
|
|
295,691
|
|
|
880,910
|
|
Working
capital
|
|
238,365
|
|
|
—
|
|
|
238,365
|
|
|
See Notes to Earnings
Release on Table Page 6.
|
VALERO ENERGY
PARTNERS LP
|
NOTES TO EARNINGS
RELEASE
|
|
|
(a)
|
References to the
"Partnership," "we," "us," or "our" refer to Valero Energy Partners
LP, one or more of its subsidiaries, or all of them taken as a
whole for periods after December 16, 2013, the date the Partnership
completed its initial public offering (IPO). For periods prior to
the IPO and periods prior to the Acquisitions (defined below),
those terms refer to Valero Energy Partners LP Predecessor, our
Predecessor for accounting purposes. References in these notes to
"Valero" may refer to Valero Energy Corporation, one or more of its
subsidiaries, or all of them taken as a whole, other than Valero
Energy Partners LP, any of its subsidiaries, or its general
partner.
|
|
|
|
Effective March 1,
2015, we acquired the Houston and St. Charles Terminal Services
Business from Valero (the Houston and St. Charles Terminal
Acquisition) for total consideration of $671.2 million consisting
of (i) cash of $571.2 million and (ii) the issuance of 1,908,100
common units representing limited partner interests in us and
38,941 general partner units representing general partner interests
in us to our general partner having an aggregate value,
collectively, of $100.0 million. We funded the cash distribution to
Valero with $211.2 million of our cash on hand, $200.0 million of
borrowings under our revolving credit facility, and $160.0 million
of proceeds from a subordinated credit agreement with Valero. We
began receiving fees for services provided by this business
commencing on March 1, 2015.
|
|
|
|
Effective July 1,
2014, we acquired the Texas Crude Systems Business from Valero (the
Texas Crude Systems Acquisition) for total cash consideration of
$154.0 million, and we began receiving fees for services provided
by this business commencing on July 1, 2014.
|
|
|
|
The Texas Crude
Systems Acquisition and the Houston and St. Charles Terminal
Acquisition (collectively, the Acquisitions) were each accounted
for as transfers of a business between entities under the common
control of Valero. As entities under the common control of Valero,
we recorded the Acquisitions on our balance sheet at Valero's
carrying value rather than fair value. Transfers between entities
under common control are accounted for as though the transfer
occurred as of the beginning of the period of transfer, and prior
period financial statements and financial information are
retrospectively adjusted to furnish comparative information.
Accordingly, the statement of income data and operating highlights
and capital expenditures data have been retrospectively adjusted to
include the historical results of operations of the Texas Crude
Systems Business for periods presented prior to July 1, 2014 and
the historical results of operations of the Houston and St. Charles
Terminal Services Business for periods presented prior to March 1,
2015. In addition, the balance sheet data as of December 31, 2014
has been retrospectively adjusted to include the assets and
liabilities of the Houston and St. Charles Terminal Services
Business.
|
|
|
(b)
|
Operating revenues
include amounts attributable to our Predecessor. Prior to being
acquired by us, the Texas Crude Systems Business generated revenues
by providing fee-based transportation and terminaling services to
Valero, but the Houston and St. Charles Terminal Services Business
did not charge Valero for services provided and did not generate
revenues. Effective with the date of each of the Acquisitions, we
entered into additional schedules to our commercial agreements with
Valero with respect to the services we provide to Valero using the
assets of the acquired businesses. This resulted in (i) changes to
pipeline and terminaling throughput fees previously charged to
Valero by the Texas Crude Systems Business and (ii) the recognition
of terminaling revenues by the Houston and St. Charles Terminal
Services Business.
|
|
|
(c)
|
The increase in
operating expenses for the three months ended March 31, 2015
compared to the three months ended March 31, 2014 was due primarily
to an increase in waste handling costs of $802,000 at the St.
Charles terminal. In addition, insurance expense increased $331,000
as a result of the assets of the acquired businesses being covered
under our own insurance policies. Prior to the Acquisitions, our
Predecessor was allocated a portion of Valero's insurance
costs.
|
|
|
(d)
|
The increase in
general and administrative expenses for the three months ended
March 31, 2015 compared to the three months ended March 31, 2014
was due primarily to $546,000 in costs related to the acquisition
of the Houston and St. Charles Terminal Services
Business.
|
|
|
(e)
|
The increase in
depreciation expense for the three months ended March 31, 2015
compared to the three months ended March 31, 2014 was due primarily
to the effect of assets placed in service during 2014, including
the expansion of the St. Charles terminal, the interconnection with
TransCanada's Cushing Marketlink pipeline, and the expansion of the
Three Rivers crude system.
|
|
|
(f)
|
The decrease in
"other income, net" for the three months ended March 31, 2015
compared to the three months ended March 31, 2014 was due primarily
to a decrease in scrap metal sales of $365,000 and a decrease in
interest income (net of bank fees) of $190,000 attributable to a
reduced cash balance during the three months ended March 31,
2015.
|
|
|
(g)
|
The increase in
"interest and debt expense, net of capitalized interest" for the
three months ended March 31, 2015 compared to the three months
ended March 31, 2014 was due primarily to $240,000 and $190,000 in
interest expense incurred on borrowings of $200.0 million under our
revolving credit facility and $160.0 million under a subordinated
credit agreement with Valero, respectively, in connection with the
acquisition of the Houston and St. Charles Terminal Services
Business.
|
|
|
(h)
|
Our income tax
expense (benefit) is associated with the Texas margin tax. During
the three months ended March 31, 2015, we reduced our deferred
income tax liabilities due to a reduction in the relative amount of
revenue we generate in Texas compared to our total revenue. This
reduction was a result of the acquisition of the Houston and St.
Charles Terminal Services Business (which includes operations in
Louisiana).
|
|
|
(i)
|
Represents the sum of
volumes transported through each separately tariffed pipeline
segment.
|
|
|
(j)
|
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).
|
|
|
(k)
|
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, capital projects prefunded by
Valero, and certain other items. 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. They may be used by management and
external users of our financial statements, such as industry
analysts, investors, lenders, and rating agencies, to:
|
|
|
|
•
|
describe our
expectation of forecasted earnings;
|
|
•
|
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;
|
|
•
|
assess the ability of
our business to generate sufficient cash to support our decision to
make distributions to our unitholders;
|
|
•
|
assess our ability to
incur and service debt and fund capital expenditures;
and
|
|
•
|
assess 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