SAN ANTONIO, Oct. 30, 2015 /PRNewswire/ -- Valero Energy
Partners LP (NYSE: VLP, the "Partnership"), today reported third
quarter 2015 net income attributable to partners of $31.4 million, or $0.51 per common limited partner unit.
The Partnership generated earnings before interest, income taxes,
depreciation, and amortization ("EBITDA") of $43.6 million and distributable cash flow of
$41.9 million. VLP's coverage
ratio for the third quarter of 2015 was 2.08x.
VLP's acquisition of the Corpus Christi Terminal Services
Business from subsidiaries of its sponsor, Valero Energy
Corporation (NYSE: VLO, "Valero"), closed on October 1, 2015. The Partnership expects
this business to contribute toward achieving annual distribution
growth of about 25 percent for the next couple of years.
On October 15, the board of
directors of VLP's general partner declared a third quarter 2015
cash distribution of $0.3075 per
unit. This distribution represents an increase of 5.1 percent
from the second quarter of 2015 and an increase of 28.1 percent
from the third quarter of 2014.
"We exceeded our target to complete $1
billion of acquisitions from Valero in 2015," said
Joe Gorder, Chairman and Chief
Executive Officer of VLP's general partner. "Our distribution
growth plans remain intact."
Financial Results
Third quarter 2015 revenues were $62.0
million, an increase of $28.4
million versus third quarter 2014 revenues. Revenues
generated from the Houston and
St. Charles terminals acquired in March
2015 primarily contributed to the increase.
Operating expenses in the third quarter of 2015 were
$15.0 million, general and
administrative expenses were $3.4
million, and depreciation expense was $10.7 million.
Liquidity and Financial Position
As of September 30, 2015, the
Partnership had $176 million of total
liquidity consisting of $51 million in cash and cash
equivalents and $125 million
available on its revolving credit facility. Capital
expenditures attributable to the Partnership in the third quarter
of 2015 were $1.2 million,
including $0.3 million for
maintenance and $0.9 million for
expansion. For 2015, capital expenditures attributable to the
Partnership are expected to total approximately $12 million, of which $6 million is for
maintenance.
Conference Call
The Partnership's senior management will host a conference call
at 11 a.m. ET today to discuss this
earnings release. A live broadcast of the conference call
will be available on the Partnership's website at
www.valeroenergypartners.com.
About Valero Energy Partners LP
Valero Energy Partners LP is a fee-based master limited
partnership formed by Valero Energy Corporation to own, operate,
develop and acquire crude oil and refined 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 nine of Valero's refineries. Please visit
www.valeroenergypartners.com for more information.
Contacts
Investors:
John Locke, Vice President –
Investor Relations, 210-345-3077
Karen Ngo, Manager – Investor
Relations, 210-345-4574
Media:
Bill Day, Vice President –
Communications, 210-345-2928
To download our investor relations mobile app, which offers
access to SEC filings, press releases, unit quotes, and upcoming
events, please visit Apple's iTunes App
Store for your iPhone and iPad or Google's Play Store for
your Android mobile device.
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 SEC, 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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Statement of
income data (a):
|
|
|
|
|
|
|
Operating revenues –
related party (b)
|
|
$
|
62,037
|
|
|
$
|
33,666
|
|
|
$
|
164,168
|
|
|
$
|
94,998
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Operating expenses
(c)
|
|
15,042
|
|
|
17,510
|
|
|
47,280
|
|
|
50,062
|
|
General and
administrative expenses (d)
|
|
3,444
|
|
|
3,133
|
|
|
10,169
|
|
|
9,591
|
|
Depreciation expense
(e)
|
|
10,684
|
|
|
7,178
|
|
|
25,887
|
|
|
19,226
|
|
Total costs and
expenses
|
|
29,170
|
|
|
27,821
|
|
|
83,336
|
|
|
78,879
|
|
Operating
income
|
|
32,867
|
|
|
5,845
|
|
|
80,832
|
|
|
16,119
|
|
Other income, net
(f)
|
|
29
|
|
|
156
|
|
|
166
|
|
|
1,315
|
|
Interest and debt
expense, net of capitalized interest (g)
|
|
(1,353)
|
|
|
(214)
|
|
|
(3,365)
|
|
|
(663)
|
|
Income before income
taxes
|
|
31,543
|
|
|
5,787
|
|
|
77,633
|
|
|
16,771
|
|
Income tax expense
(benefit) (h)
|
|
115
|
|
|
129
|
|
|
(62)
|
|
|
436
|
|
Net income
|
|
31,428
|
|
|
5,658
|
|
|
77,695
|
|
|
16,335
|
|
Less: Net loss
attributable to Predecessor
|
|
—
|
|
|
(11,885)
|
|
|
(9,516)
|
|
|
(23,890)
|
|
Net income
attributable to partners
|
|
31,428
|
|
|
17,543
|
|
|
87,211
|
|
|
40,225
|
|
Less: General
partner's interest in net income
|
|
1,612
|
|
|
351
|
|
|
3,821
|
|
|
805
|
|
Limited partners'
interest in net income
|
|
$
|
29,816
|
|
|
$
|
17,192
|
|
|
$
|
83,390
|
|
|
$
|
39,420
|
|
|
|
|
|
|
|
|
|
|
Net income per
limited partner unit(basic
and diluted):
|
|
|
|
|
|
|
|
|
Common units
|
|
$
|
0.51
|
|
|
$
|
0.30
|
|
|
$
|
1.43
|
|
|
$
|
0.68
|
|
Subordinated
units
|
|
$
|
0.49
|
|
|
$
|
0.30
|
|
|
$
|
1.40
|
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
|
Common units – public
(basic)
|
|
17,250
|
|
|
17,250
|
|
|
17,250
|
|
|
17,250
|
|
Common units – public
(diluted)
|
|
17,250
|
|
|
17,251
|
|
|
17,250
|
|
|
17,251
|
|
Common units – Valero
(basic and diluted)
|
|
13,448
|
|
|
11,540
|
|
|
13,029
|
|
|
11,540
|
|
Subordinated units –
Valero (basic and diluted)
|
|
28,790
|
|
|
28,790
|
|
|
28,790
|
|
|
28,790
|
|
|
See Notes to Earnings
Release.
|
VALERO ENERGY
PARTNERS LP
|
EARNINGS
RELEASE
|
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
|
(Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Operating
highlights (a):
|
|
|
|
|
|
|
Pipeline
transportation:
|
|
|
|
|
|
|
|
|
Pipeline transportation
revenues (b)
|
|
$
|
21,322
|
|
|
$
|
20,602
|
|
|
$
|
61,164
|
|
|
$
|
51,842
|
|
Pipeline transportation
throughput (BPD) (i)
|
|
960,410
|
|
|
955,285
|
|
|
964,380
|
|
|
879,192
|
|
Average pipeline
transportation revenue per barrel (j)
|
|
$
|
0.24
|
|
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
$
|
0.22
|
|
Terminaling:
|
|
|
|
|
|
|
|
|
Terminaling revenues
(b)
|
|
$
|
40,580
|
|
|
$
|
12,827
|
|
|
$
|
102,599
|
|
|
$
|
42,343
|
|
Terminaling throughput
(BPD)
|
|
1,335,659
|
|
|
479,923
|
|
|
1,176,216
|
|
|
560,139
|
|
Average terminaling
revenue per barrel (j)
|
|
$
|
0.33
|
|
|
$
|
0.29
|
|
|
$
|
0.32
|
|
|
$
|
0.28
|
|
Storage
revenues
|
|
$
|
135
|
|
|
$
|
237
|
|
|
$
|
405
|
|
|
$
|
813
|
|
Total operating
revenues – related party
|
|
$
|
62,037
|
|
|
$
|
33,666
|
|
|
$
|
164,168
|
|
|
$
|
94,998
|
|
Capital
expenditures (a):
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
326
|
|
|
$
|
3,870
|
|
|
$
|
4,549
|
|
|
$
|
12,218
|
|
Expansion
|
|
868
|
|
|
8,729
|
|
|
2,697
|
|
|
42,582
|
|
Total capital
expenditures
|
|
1,194
|
|
|
12,599
|
|
|
7,246
|
|
|
54,800
|
|
Less: Capital
expenditures attributable to Predecessor
|
|
—
|
|
|
9,574
|
|
|
3,693
|
|
|
48,551
|
|
Capital expenditures
attributable to Partnership
|
|
$
|
1,194
|
|
|
$
|
3,025
|
|
|
$
|
3,553
|
|
|
$
|
6,249
|
|
Other financial
information:
|
|
|
|
|
|
|
|
|
Distribution declared
per unit
|
|
$
|
0.3075
|
|
|
$
|
0.2400
|
|
|
$
|
0.8775
|
|
|
$
|
0.6750
|
|
EBITDA attributable
to Partnership (k)
|
|
$
|
43,580
|
|
|
$
|
22,204
|
|
|
$
|
114,127
|
|
|
$
|
51,627
|
|
Distributable cash
flow (k)
|
|
$
|
41,880
|
|
|
$
|
21,131
|
|
|
$
|
109,383
|
|
|
$
|
50,346
|
|
Distribution
declared:
|
|
|
|
|
|
|
|
|
Limited partner units –
public
|
|
$
|
5,307
|
|
|
$
|
4,141
|
|
|
$
|
15,145
|
|
|
$
|
11,647
|
|
Limited partner units –
Valero
|
|
13,471
|
|
|
9,679
|
|
|
37,547
|
|
|
27,223
|
|
General partner units –
Valero
|
|
1,386
|
|
|
282
|
|
|
3,194
|
|
|
793
|
|
Total distribution
declared
|
|
$
|
20,164
|
|
|
$
|
14,102
|
|
|
$
|
55,886
|
|
|
$
|
39,663
|
|
Coverage ratio
(k)
|
|
2.08x
|
|
|
1.50x
|
|
|
1.96x
|
|
|
1.27x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
|
|
2015
|
|
2014
|
Balance sheet data
(a):
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
|
$
|
50,563
|
|
|
$
|
236,579
|
|
Total
assets
|
|
|
|
|
|
706,188
|
|
|
891,764
|
|
Current portion of
debt and capital lease obligations
|
|
|
|
|
|
1,183
|
|
|
1,200
|
|
Debt and capital
lease obligations, less current portion
|
|
|
|
|
|
335,381
|
|
|
1,519
|
|
Total debt and
capital lease obligations
|
|
|
|
|
|
336,564
|
|
|
2,719
|
|
Partners'
capital
|
|
|
|
|
|
360,389
|
|
|
880,910
|
|
Working
capital
|
|
|
|
|
|
55,866
|
|
|
238,365
|
|
|
See Notes to Earnings
Release.
|
VALERO ENERGY
PARTNERS LP
|
EARNINGS
RELEASE
|
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
|
(Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Reconciliation of
net income to EBITDA and distributable cash flow
(a)(k):
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
31,428
|
|
|
$
|
5,658
|
|
|
$
|
77,695
|
|
|
$
|
16,335
|
|
Plus:
|
|
|
|
|
|
|
|
|
Depreciation
expense
|
|
10,684
|
|
|
7,178
|
|
|
25,887
|
|
|
19,226
|
|
Interest and debt
expense, net of capitalized interest
|
|
1,353
|
|
|
214
|
|
|
3,365
|
|
|
663
|
|
Income tax expense
(benefit)
|
|
115
|
|
|
129
|
|
|
(62)
|
|
|
436
|
|
EBITDA
|
|
43,580
|
|
|
13,179
|
|
|
106,885
|
|
|
36,660
|
|
Less: EBITDA
attributable to Predecessor
|
|
—
|
|
|
(9,025)
|
|
|
(7,242)
|
|
|
(14,967)
|
|
EBITDA attributable
to Partnership
|
|
43,580
|
|
|
22,204
|
|
|
114,127
|
|
|
51,627
|
|
Plus:
|
|
|
|
|
|
|
|
|
Adjustments related to
minimum throughput commitments
|
|
—
|
|
|
(235)
|
|
|
4
|
|
|
272
|
|
Projects prefunded by
Valero
|
|
—
|
|
|
418
|
|
|
589
|
|
|
2,046
|
|
Other
|
|
—
|
|
|
—
|
|
|
384
|
|
|
—
|
|
Less:
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
1,374
|
|
|
221
|
|
|
2,952
|
|
|
686
|
|
Income taxes
paid
|
|
—
|
|
|
—
|
|
|
441
|
|
|
9
|
|
Maintenance capital
expenditures
|
|
326
|
|
|
1,035
|
|
|
2,328
|
|
|
2,904
|
|
Distributable cash
flow
|
|
$
|
41,880
|
|
|
$
|
21,131
|
|
|
$
|
109,383
|
|
|
$
|
50,346
|
|
Reconciliation of
net cash provided by operating activities to EBITDA and
distributable cash flow (a)(k):
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
43,419
|
|
|
$
|
10,326
|
|
|
$
|
98,880
|
|
|
$
|
33,625
|
|
Plus:
|
|
|
|
|
|
|
|
|
Changes in current
assets and current liabilities
|
|
(1,430)
|
|
|
2,515
|
|
|
4,643
|
|
|
1,935
|
|
Changes in deferred
charges and credits and other operating activities, net
|
|
118
|
|
|
(10)
|
|
|
(341)
|
|
|
44
|
|
Interest and debt
expense, net of capitalized interest
|
|
1,353
|
|
|
214
|
|
|
3,365
|
|
|
663
|
|
Current income tax
expense
|
|
120
|
|
|
134
|
|
|
338
|
|
|
393
|
|
EBITDA
|
|
43,580
|
|
|
13,179
|
|
|
106,885
|
|
|
36,660
|
|
Less: EBITDA
attributable to Predecessor
|
|
—
|
|
|
(9,025)
|
|
|
(7,242)
|
|
|
(14,967)
|
|
EBITDA attributable
to Partnership
|
|
43,580
|
|
|
22,204
|
|
|
114,127
|
|
|
51,627
|
|
Plus:
|
|
|
|
|
|
|
|
|
Adjustments related to
minimum throughput commitments
|
|
—
|
|
|
(235)
|
|
|
4
|
|
|
272
|
|
Projects prefunded by
Valero
|
|
—
|
|
|
418
|
|
|
589
|
|
|
2,046
|
|
Other
|
|
—
|
|
|
—
|
|
|
384
|
|
|
—
|
|
Less:
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
1,374
|
|
|
221
|
|
|
2,952
|
|
|
686
|
|
Income taxes
paid
|
|
—
|
|
|
—
|
|
|
441
|
|
|
9
|
|
Maintenance capital
expenditures
|
|
326
|
|
|
1,035
|
|
|
2,328
|
|
|
2,904
|
|
Distributable cash
flow
|
|
$
|
41,880
|
|
|
$
|
21,131
|
|
|
$
|
109,383
|
|
|
$
|
50,346
|
|
|
See Notes to Earnings
Release.
|
VALERO ENERGY
PARTNERS LP
|
EARNINGS
RELEASE
|
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
|
(Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2015
|
|
2014
|
|
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
|
|
$
|
31,428
|
|
|
$
|
17,543
|
|
|
$
|
87,211
|
|
|
$
|
40,225
|
|
Total distribution
declared
|
|
$
|
20,164
|
|
|
$
|
14,102
|
|
|
$
|
55,886
|
|
|
$
|
39,663
|
|
Ratio of net income
attributable to partners divided by total distribution
declared
|
|
1.56x
|
|
|
1.24x
|
|
|
1.56x
|
|
|
1.01x
|
|
Coverage ratio:
Distributable cash flow divided by total distribution
declared
|
|
2.08x
|
|
|
1.50x
|
|
|
1.96x
|
|
|
1.27x
|
|
The following tables present our consolidated statements of
income for the nine months ended September
30, 2015 and the three and nine months ended September 30, 2014, giving effect to the
acquisition of the Houston and
St. Charles Terminal Services Business for periods prior to
March 1, 2015. See Note (a) of Notes to Earnings Release
for a discussion of the basis of this presentation.
|
|
Nine Months Ended
September 30, 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)
|
|
$
|
164,168
|
|
|
$
|
—
|
|
|
$
|
164,168
|
|
Costs and
expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
40,085
|
|
|
7,195
|
|
|
47,280
|
|
General and
administrative expenses
|
|
10,122
|
|
|
47
|
|
|
10,169
|
|
Depreciation
expense
|
|
23,613
|
|
|
2,274
|
|
|
25,887
|
|
Total costs and
expenses
|
|
73,820
|
|
|
9,516
|
|
|
83,336
|
|
Operating income
(loss)
|
|
90,348
|
|
|
(9,516)
|
|
|
80,832
|
|
Other income,
net
|
|
166
|
|
|
—
|
|
|
166
|
|
Interest and debt
expense, net of capitalized interest
|
|
(3,365)
|
|
|
—
|
|
|
(3,365)
|
|
Income (loss) before
income taxes
|
|
87,149
|
|
|
(9,516)
|
|
|
77,633
|
|
Income tax
benefit
|
|
(62)
|
|
|
—
|
|
|
(62)
|
|
Net income
(loss)
|
|
87,211
|
|
|
(9,516)
|
|
|
77,695
|
|
Less: Net loss
attributable to Predecessor
|
|
—
|
|
|
(9,516)
|
|
|
(9,516)
|
|
Net income
attributable to partners
|
|
$
|
87,211
|
|
|
$
|
—
|
|
|
$
|
87,211
|
|
|
See Notes to Earnings
Release.
|
VALERO ENERGY
PARTNERS LP
|
EARNINGS
RELEASE
|
(In Thousands,
Except per Unit Amounts, per Barrel Amounts, and
Ratios)
|
(Unaudited)
|
|
|
|
Three Months Ended
September 30, 2014
|
|
|
Valero
Energy
Partners
LP
(Previously
Reported)
|
|
Houston
and
St. Charles
Terminal
Services
Business
(July 1,
2014
to September 30,
2014)
|
|
Valero
Energy
Partners
LP
(Currently
Reported)
|
Operating revenues –
related party (b)
|
|
$
|
33,666
|
|
|
$
|
—
|
|
|
$
|
33,666
|
|
Costs and
expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
8,553
|
|
|
8,957
|
|
|
17,510
|
|
General and
administrative expenses
|
|
3,065
|
|
|
68
|
|
|
3,133
|
|
Depreciation
expense
|
|
4,318
|
|
|
2,860
|
|
|
7,178
|
|
Total costs and
expenses
|
|
15,936
|
|
|
11,885
|
|
|
27,821
|
|
Operating income
(loss)
|
|
17,730
|
|
|
(11,885)
|
|
|
5,845
|
|
Other income,
net
|
|
156
|
|
|
—
|
|
|
156
|
|
Interest and debt
expense, net of capitalized interest
|
|
(214)
|
|
|
—
|
|
|
(214)
|
|
Income (loss) before
income taxes
|
|
17,672
|
|
|
(11,885)
|
|
|
5,787
|
|
Income tax
expense
|
|
129
|
|
|
—
|
|
|
129
|
|
Net income
(loss)
|
|
17,543
|
|
|
(11,885)
|
|
|
5,658
|
|
Less: Net loss
attributable to Predecessor
|
|
—
|
|
|
(11,885)
|
|
|
(11,885)
|
|
Net income
attributable to partners
|
|
$
|
17,543
|
|
|
$
|
—
|
|
|
$
|
17,543
|
|
|
|
|
Nine Months Ended
September 30, 2014
|
|
|
Valero Energy
Partners LP
(Previously
Reported)
|
|
Houston
and
St. Charles
Terminal
Services
Business
(January 1,
2014
to September 30,
2014)
|
|
Valero
Energy
Partners
LP
(Currently
Reported)
|
Operating revenues –
related party (b)
|
|
$
|
94,998
|
|
|
$
|
—
|
|
|
$
|
94,998
|
|
Costs and
expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
24,027
|
|
|
26,035
|
|
|
50,062
|
|
General and
administrative expenses
|
|
9,392
|
|
|
199
|
|
|
9,591
|
|
Depreciation
expense
|
|
12,087
|
|
|
7,139
|
|
|
19,226
|
|
Total costs and
expenses
|
|
45,506
|
|
|
33,373
|
|
|
78,879
|
|
Operating income
(loss)
|
|
49,492
|
|
|
(33,373)
|
|
|
16,119
|
|
Other income,
net
|
|
1,315
|
|
|
—
|
|
|
1,315
|
|
Interest and debt
expense, net of capitalized interest
|
|
(663)
|
|
|
—
|
|
|
(663)
|
|
Income (loss) before
income taxes
|
|
50,144
|
|
|
(33,373)
|
|
|
16,771
|
|
Income tax
expense
|
|
436
|
|
|
—
|
|
|
436
|
|
Net income
(loss)
|
|
49,708
|
|
|
(33,373)
|
|
|
16,335
|
|
Less: Net income
(loss) attributable to Predecessor
|
|
9,483
|
|
|
(33,373)
|
|
|
(23,890)
|
|
Net income
attributable to partners
|
|
$
|
40,225
|
|
|
$
|
—
|
|
|
$
|
40,225
|
|
|
See Notes to Earnings
Release.
|
VALERO ENERGY
PARTNERS LP
|
NOTES TO EARNINGS
RELEASE
|
|
|
(a)
|
References to
"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 effective dates of subsequent acquisitions from Valero,
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 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 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, and 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 for total cash consideration of $154.0 million, and
began receiving fees for services provided by this business
commencing on July 1, 2014.
|
|
|
|
The above-mentioned
acquisitions were each accounted for as transfers of a business
between entities under the common control of Valero. 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 acquired businesses for
periods prior to their dates of acquisition.
|
|
|
(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 acquisition, 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 changes to
pipeline and terminaling throughput fees previously charged to
Valero for services provided by certain assets and new charges for
terminaling services provided by other assets.
|
|
|
(c)
|
The decrease in
operating expenses for the three months ended September 30,
2015 compared to the three months ended September 30, 2014 was
due primarily to lower maintenance expense of $2.9 million at the
St. Charles terminal and the Lucas crude system. The decrease in
maintenance expense was partially offset by an increase in
insurance expense of $596,000 as a result of the acquired assets
being covered under our own insurance policies. Prior to the
acquisition, our Predecessor was allocated a portion of Valero's
insurance costs.
|
|
|
|
The decrease in
operating expenses for the nine months ended September 30,
2015 compared to the nine months ended September 30, 2014 was
due primarily to lower maintenance expense of $5.2 million at the
St. Charles and Houston terminals and the Lucas crude system. The
decrease in maintenance expense was partially offset by an increase
in insurance expense of $1.7 million as a result of the acquired
assets being covered under our own insurance policies. Prior to the
acquisition, our Predecessor was allocated a portion of Valero's
insurance costs. Additionally, salaries, wages, and benefits for
seconded employees increased $686,000 during the nine months ended
September 30, 2015 due to the annual merit increase and higher
incentive compensation.
|
|
|
(d)
|
The increase in
general and administrative expenses for the three months ended
September 30, 2015 compared to the three months ended
September 30, 2014 was due primarily to higher transaction
costs (legal and investment advisor fees) of $274,000 associated
with the acquisition of businesses from Valero. During the three
months ended September 30, 2015, we incurred transaction costs of
$423,000 in connection with the October 1, 2015 acquisition of the
Corpus Christi Terminal Services Business. During the three months
ended September 30, 2014, we incurred $149,000 in transactions
costs in connection with the July 1, 2014 acquisition of the Texas
Crude Systems Business.
|
|
|
|
The increase in
general and administrative expenses for the nine months ended
September 30, 2015 compared to the nine months ended
September 30, 2014 was due primarily to higher transaction
costs of $512,000 associated with the acquisition of businesses
from Valero. In 2015, we incurred transaction costs of $546,000 in
connection with the March 1, 2015 acquisition of the Houston
and St. Charles Terminal Services Business and $423,000 in
connection with the October 1, 2015 acquisition of the Corpus
Christi Terminal Services Business. In 2014, we incurred $457,000
in connection with the July 1, 2014 acquisition of the Texas Crude
Systems Business.
|
|
|
(e)
|
The increase in
depreciation expense for the three months ended September 30,
2015 compared to the three months ended September 30,
2014 was due primarily to $2.8 million in accelerated depreciation
related to the retirement of certain assets in the McKee Crude
System during the three months ended September 30, 2015.
|
|
|
|
The increase in
depreciation expense for the nine months ended September 30,
2015 compared to the nine months ended September 30, 2014 was
due primarily to the $2.8 million in accelerated depreciation
discussed above, as well as additional depreciation expense
associated with assets placed into service in the latter part of
2014, including the expansion of our St. Charles and Houston
terminals and Three Rivers crude system and the interconnection
with TransCanada's Cushing Marketlink pipeline at our Lucas crude
system.
|
|
|
(f)
|
The decrease in
"other income, net" for the three and nine months ended
September 30, 2015 compared to the three and nine months ended
September 30, 2014 was due primarily to a decrease in interest
income (net of bank fees) of $127,000 and $545,000, respectively,
attributable to a reduced cash balance during the three and nine
months ended September 30, 2015. In addition, scrap metal
sales decreased $409,000 and right-of-way fees decreased $141,000
during the nine months ended September 30, 2015 compared to the
nine months ended September 30, 2014.
|
|
|
(g)
|
The increase in
"interest and debt expense, net of capitalized interest" for the
three and nine months ended September 30, 2015 compared to the
three and nine months ended September 30, 2014 was due
primarily to interest expense incurred on borrowings under our
revolving credit facility and under the subordinated credit
agreement with Valero as discussed in Note (a). Interest expense on
this indebtedness was $1.2 million and $3.0 million for the three
and nine months ended September 30, 2015,
respectively.
|
|
|
(h)
|
Our income tax
expense (benefit) is associated with the Texas margin tax. During
the nine months ended September 30, 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). In addition, in June 2015, the
Texas margin tax rate was reduced from 1 percent to
0.75 percent.
|
|
|
(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