SAN ANTONIO, Feb. 4, 2016 /PRNewswire/ -- Valero Energy
Partners LP (NYSE: VLP, the "Partnership") today reported fourth
quarter 2015 net income attributable to partners of $45 million, or $0.69 per common limited partner unit.
The Partnership generated earnings before interest, income taxes,
depreciation, and amortization ("EBITDA") of $57 million and distributable cash flow of
$53 million. VLP's coverage
ratio for the fourth quarter was 2.33x.
For the year ended December 31,
2015, net income attributable to partners was $132 million, or $2.12 per common limited partner unit.
EBITDA was $171 million and
distributable cash flow was $162
million.
"With solid operations, a strong balance sheet, and a healthy
coverage ratio, VLP is well positioned to achieve our distribution
growth target," said Joe Gorder,
Chairman and Chief Executive Officer of VLP's general
partner.
The Partnership expects to grow distributions at an annual rate
of 25 percent through 2017.
On January 25, the board of
directors of VLP's general partner declared a fourth quarter 2015
cash distribution of $0.32 per
unit. This distribution represents a 4 percent increase from
the third quarter of 2015 and results in a 27 percent annual
increase.
Financial Results
Revenues were $79 million for the
fourth quarter of 2015 and $244
million for 2015. Operating expenses in the fourth
quarter of 2015 were $19 million,
general and administrative expenses were $3
million, and depreciation expense was $9 million. For 2015, operating expenses
were $84 million, general and
administrative expenses were $14
million, and depreciation expense was $38 million. Revenues for the Partnership
were higher in 2015 compared to 2014 primarily due to the
acquisition of the Houston,
St. Charles, and Corpus
Christi terminals in 2015.
Liquidity and Financial Position
In November, VLP expanded its revolving credit facility from
$300 million to $750 million and completed its first equity
offering subsequent to its initial public offering, issuing 4.25
million common units. The offering generated gross proceeds
of $197 million, of which
$185 million was used to pay down a
subordinated loan with Valero Energy Corporation (NYSE: VLO).
As of December 31, 2015, the
Partnership had $656 million of total
liquidity consisting of $81 million in cash and cash
equivalents and $575 million
available on its revolving credit facility. Capital
expenditures attributable to the Partnership in the fourth quarter
of 2015 were $5 million, including $3 million for
expansion and $2 million for maintenance. For 2015,
capital expenditures attributable to the Partnership were
$8 million, including $4 million for expansion and $4 million for
maintenance.
The Partnership expects 2016 capital expenditures to be
approximately $16 million, which
includes $11 million for maintenance
and $5 million for
expansion.
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 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:
Lillian Riojas, Director – Media
Relations and Communications, 210-345-5002
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
December 31,
|
Year Ended
December 31,
|
|
2015
|
2014
|
2015
|
2014
|
Statement of
income data (a):
|
|
|
|
|
Operating revenues –
related party (b)
|
$ 79,456
|
$ 34,182
|
$ 243,624
|
$ 129,180
|
Costs and
expenses:
|
|
|
|
|
Operating expenses
(c)
|
19,312
|
25,285
|
83,681
|
88,200
|
General and
administrative expenses (d)
|
3,322
|
3,089
|
13,758
|
12,921
|
Depreciation expense
(e)
|
9,151
|
8,583
|
38,203
|
30,098
|
Total costs and
expenses
|
31,785
|
36,957
|
135,642
|
131,219
|
Operating income
(loss)
|
47,671
|
(2,775)
|
107,982
|
(2,039)
|
Other income, net
(f)
|
57
|
189
|
223
|
1,504
|
Interest and debt
expense, net of capitalized interest (g)
|
(2,748)
|
(209)
|
(6,113)
|
(872)
|
Income (loss) before
income taxes
|
44,980
|
(2,795)
|
102,092
|
(1,407)
|
Income tax expense
(h)
|
313
|
112
|
251
|
548
|
Net income
(loss)
|
44,667
|
(2,907)
|
101,841
|
(1,955)
|
Less: Net loss
attributable to Predecessor
|
—
|
(21,963)
|
(30,037)
|
(61,236)
|
Net income
attributable to partners
|
44,667
|
19,056
|
131,878
|
59,281
|
Less: General
partner's interest in net income
|
2,248
|
574
|
6,069
|
1,379
|
Limited partners'
interest in net income
|
$ 42,419
|
$ 18,482
|
$ 125,809
|
$ 57,902
|
Net income per
limited partner unit
(basic and
diluted):
|
|
|
|
|
Common
units
|
$ 0.69
|
$ 0.32
|
$ 2.12
|
$ 1.01
|
Subordinated
units
|
$ 0.66
|
$ 0.32
|
$ 2.07
|
$ 1.01
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
Common units – public
(basic)
|
19,005
|
17,250
|
17,692
|
17,250
|
Common units – public
(diluted)
|
19,005
|
17,251
|
17,692
|
17,251
|
Common units – Valero
(basic and diluted)
|
15,019
|
11,540
|
13,530
|
11,540
|
Subordinated units –
Valero (basic and diluted)
|
28,790
|
28,790
|
28,790
|
28,790
|
VALERO ENERGY
PARTNERS LP
EARNINGS RELEASE
(In Thousands, Except per Unit Amounts, per Barrel Amounts, and
Ratios)
(Unaudited)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2015
|
2014
|
|
2015
|
2014
|
Operating
highlights (a):
|
|
|
|
|
|
Pipeline
transportation:
|
|
|
|
|
|
Pipeline
transportation revenues (b)
|
$
20,271
|
$
20,895
|
|
$
81,435
|
$
72,737
|
Pipeline
transportation throughput (BPD) (i)
|
906,870
|
993,861
|
|
949,884
|
908,095
|
Average pipeline
transportation revenue per barrel (j)
|
$
0.24
|
$
0.23
|
|
$
0.23
|
$
0.22
|
Terminaling:
|
|
|
|
|
|
Terminaling revenues
(b)
|
$
59,050
|
$
13,152
|
|
$
161,649
|
$
55,495
|
Terminaling throughput
(BPD)
|
1,827,623
|
500,612
|
|
1,340,407
|
545,135
|
Average terminaling
revenue per barrel (j)
|
$
0.35
|
$
0.29
|
|
$
0.33
|
$
0.28
|
Storage
revenues
|
$
135
|
$
135
|
|
$
540
|
$
948
|
Total operating
revenues – related party
|
$
79,456
|
$
34,182
|
|
$
243,624
|
$
129,180
|
Capital
expenditures (a):
|
|
|
|
|
|
Maintenance
|
$
1,621
|
$
9,981
|
|
$
9,490
|
$
28,315
|
Expansion
|
3,303
|
17,906
|
|
21,479
|
75,637
|
Total capital
expenditures
|
4,924
|
27,887
|
|
30,969
|
103,952
|
Less: Capital
expenditures attributable to Predecessor
|
—
|
23,942
|
|
22,492
|
93,758
|
Capital expenditures
attributable to Partnership
|
$
4,924
|
$
3,945
|
|
$
8,477
|
$
10,194
|
Other financial
information:
|
|
|
|
|
|
Distribution declared
per unit
|
$
0.3200
|
$
0.2660
|
|
$
1.1975
|
$
0.9410
|
EBITDA attributable to
Partnership (k)
|
$
56,879
|
$
23,741
|
|
$
171,006
|
$
75,368
|
Distributable cash
flow (k)
|
$
52,861
|
$
22,606
|
|
$
162,244
|
$
72,952
|
Distribution
declared:
|
|
|
|
|
|
Limited partner units
– public
|
$
6,883
|
$
4,591
|
|
$
22,028
|
$
16,238
|
Limited partner units
– Valero
|
14,019
|
10,727
|
|
51,566
|
37,950
|
General partner units
– Valero
|
1,809
|
511
|
|
5,003
|
1,304
|
Total distribution
declared
|
$
22,711
|
$
15,829
|
|
$
78,597
|
$
55,492
|
Coverage ratio
(k)
|
2.33x
|
1.43x
|
|
2.06x
|
1.31x
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
|
2015
|
2014
|
Balance sheet data
(a):
|
|
|
|
|
|
Total
assets
|
|
|
|
850,107
|
975,953
|
Current portion of
debt and capital lease obligations
|
|
|
|
913
|
1,200
|
Debt and capital lease
obligations, less current portion
|
|
|
|
545,246
|
1,519
|
Total debt and capital
lease obligations
|
|
|
|
546,159
|
2,719
|
Partners'
capital
|
|
|
|
290,153
|
965,099
|
Working
capital
|
|
|
|
86,231
|
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 December 31,
|
Year
Ended December 31
|
|
2015
|
2014
|
2015
|
2014
|
Reconciliation of
net income (loss) to EBITDA and distributable cash flow
(a)(k):
|
|
|
|
|
Net income
(loss)
|
$ 44,667
|
$
(2,907)
|
$ 101,841
|
$
(1,955)
|
Plus:
|
|
|
|
|
Depreciation
expense
|
9,151
|
8,583
|
38,203
|
30,098
|
Interest and debt
expense, net of capitalized interest
|
2,748
|
209
|
6,113
|
872
|
Income tax
expense
|
313
|
112
|
251
|
548
|
EBITDA
|
56,879
|
5,997
|
146,408
|
29,563
|
Less: EBITDA
attributable to Predecessor
|
—
|
(17,744)
|
(24,598)
|
(45,805)
|
EBITDA attributable to
Partnership
|
56,879
|
23,741
|
171,006
|
75,368
|
Plus:
|
|
|
|
|
Adjustments related to
minimum throughput commitments
|
18
|
(164)
|
22
|
108
|
Projects prefunded by
Valero
|
—
|
865
|
589
|
2,911
|
Other
|
—
|
—
|
384
|
—
|
Less:
|
|
|
|
|
Cash interest
paid
|
2,415
|
213
|
5,367
|
899
|
Income taxes
paid
|
—
|
—
|
441
|
9
|
Maintenance capital
expenditures
|
1,621
|
1,623
|
3,949
|
4,527
|
Distributable cash
flow
|
$ 52,861
|
$ 22,606
|
$ 162,244
|
$ 72,952
|
Reconciliation of net cash provided by
operating activities to EBITDA and distributable cash flow
(a)(k):
|
|
|
|
|
Net cash provided by
operating activities
|
$ 47,584
|
$
6,303
|
$ 129,108
|
$ 26,834
|
Plus:
|
|
|
|
|
Changes in current
assets and current liabilities
|
4,330
|
(617)
|
8,973
|
1,318
|
Changes in deferred
charges and credits and other operating activities, net
|
2,076
|
(10)
|
1,735
|
34
|
Interest and debt
expense, net of capitalized interest
|
2,748
|
209
|
6,113
|
872
|
Current income tax
expense
|
141
|
112
|
479
|
505
|
EBITDA
|
56,879
|
5,997
|
146,408
|
29,563
|
Less: EBITDA
attributable to Predecessor
|
—
|
(17,744)
|
(24,598)
|
(45,805)
|
EBITDA attributable to
Partnership
|
56,879
|
23,741
|
171,006
|
75,368
|
Plus:
|
Adjustments related to minimum throughput
commitments
|
18
|
(164)
|
22
|
108
|
Projects prefunded by
Valero
|
—
|
865
|
589
|
2,911
|
Other
|
—
|
—
|
384
|
—
|
Less:
|
|
|
|
|
Cash interest
paid
|
2,415
|
213
|
5,367
|
899
|
Income taxes
paid
|
—
|
—
|
441
|
9
|
Maintenance capital
expenditures
|
1,621
|
1,623
|
3,949
|
4,527
|
Distributable cash
flow
|
$ 52,861
|
$ 22,606
|
$ 162,244
|
$ 72,952
|
|
|
|
|
|
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
December 31,
|
Year Ended
December 31
|
|
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
|
$ 44,667
|
$ 19,056
|
$ 131,878
|
$ 59,281
|
Total distribution
declared
|
$ 22,711
|
$ 15,829
|
$ 78,597
|
$ 55,492
|
Ratio of net income attributable to partners divided
by total distribution declared
|
1.97x
|
1.20x
|
1.68x
|
1.07x
|
Coverage ratio:
Distributable cash flow divided by total distribution
declared
|
2.33x
|
1.43x
|
2.06x
|
1.31x
|
The following tables present our consolidated statements of
income for the three months and year ended December 31, 2014. To the extent necessary,
financial results have been adjusted for the acquisitions of the
Houston and St. Charles Terminal
Services Business and the Corpus Christi Terminal Services Business
for the periods prior to March 1,
2015 and October 1, 2015,
respectively. See Note (a) of Notes to Earnings Release for a
discussion of the basis of this presentation.
|
Three Months Ended
December 31, 2014
|
|
Valero Energy
Partners LP (Previously Reported)
|
Houston
and
St. Charles
Terminal
Services
Business
(September 1, 2014
to December 31,
2014)
|
Corpus Christi
Terminal Services Business
(September 1, 2014
to December 31,
2014)
|
Valero Energy
Partners LP (Currently Reported)
|
Operating revenues –
related party (b)
|
$
34,182
|
$
—
|
$
—
|
$
34,182
|
Costs and
expenses:
|
|
|
|
|
Operating
expenses
|
7,692
|
12,753
|
4,840
|
25,285
|
General and
administrative expenses
|
2,938
|
68
|
83
|
3,089
|
Depreciation
expense
|
4,364
|
3,363
|
856
|
8,583
|
Total costs and
expenses
|
14,994
|
16,184
|
5,779
|
36,957
|
Operating income
(loss)
|
19,188
|
(16,184)
|
(5,779)
|
(2,775)
|
Other income,
net
|
189
|
—
|
—
|
189
|
Interest and debt
expense, net of capitalized interest
|
(209)
|
—
|
—
|
(209)
|
Income (loss) before
income taxes
|
19,168
|
(16,184)
|
(5,779)
|
(2,795)
|
Income tax
expense
|
112
|
—
|
—
|
112
|
Net income
(loss)
|
19,056
|
(16,184)
|
(5,779)
|
(2,907)
|
Less: Net loss attributable to
Predecessor
|
—
|
(16,184)
|
(5,779)
|
(21,963)
|
Net income
attributable to partners
|
$
19,056
|
$
—
|
$
—
|
$
19,056
|
|
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)
|
|
|
Year Ended
December 31, 2014
|
|
Valero
Energy Partners LP (Previously Reported)
|
Corpus Christi
Terminal Services Business
(January 1, 2014
to
December 31,
2014)
|
Valero Energy
Partners LP (Currently Reported)
|
Operating revenues –
related party (b)
|
$
129,180
|
$
—
|
$
129,180
|
Costs and
expenses:
|
|
|
|
Operating
expenses
|
70,507
|
17,693
|
88,200
|
General and
administrative expenses
|
12,597
|
324
|
12,921
|
Depreciation
expense
|
26,953
|
3,145
|
30,098
|
Total costs and
expenses
|
110,057
|
21,162
|
131,219
|
Operating income
(loss)
|
19,123
|
(21,162)
|
(2,039)
|
Other income,
net
|
1,504
|
—
|
1,504
|
Interest and debt
expense, net of capitalized interest
|
(872)
|
—
|
(872)
|
Income (loss) before
income taxes
|
19,755
|
(21,162)
|
(1,407)
|
Income tax
expense
|
548
|
—
|
548
|
Net income
(loss)
|
19,207
|
(21,162)
|
(1,955)
|
Less: Net loss
attributable to Predecessor
|
(40,074)
|
(21,162)
|
(61,236)
|
Net income
attributable to partners
|
$
59,281
|
$
—
|
$
59,281
|
The following table presents our balance sheet data as of
December 31, 2014, giving effect to
the acquisition of the Corpus Christi 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)
|
Corpus Christi
Terminal Services Business
|
Valero Energy
Partners LP (Currently Reported)
|
Cash and cash
equivalents
|
$
236,579
|
$
—
|
$
236,579
|
Total
assets
|
891,764
|
84,189
|
975,953
|
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
|
880,910
|
84,189
|
965,099
|
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
"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 businesses that we acquired 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 October 1,
2015, we acquired the Corpus Christi Terminal Services Business
from Valero for total consideration of $465.0 million consisting of
(i) cash of $395.0 million and (ii) the issuance of 1,570,513
common units representing limited partner interests in us and
32,051 general partner units representing general partner interests
in us having an aggregate value, collectively, of $70.0 million. We
funded the cash distribution to Valero with proceeds from a
subordinated credit agreement with Valero, and began receiving fees
for services provided by this business commencing on October 1,
2015.
|
|
|
|
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
and the Corpus Christi 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 December 31, 2015
compared to the three months ended December 31, 2014 was due
primarily to lower maintenance expense of $5.1 million at the St.
Charles and Corpus Christi terminals. Additionally, waste handling
costs at the St. Charles terminal decreased $1.6 million during the
three months ended December 31, 2015. The decrease in these
expenses was partially offset by an increase in insurance expense
of $1.0 million as a result of the acquired assets being covered
under our own insurance policies. Prior to the acquisitions, our
Predecessor was allocated a portion of Valero's insurance
costs.
|
|
|
|
The decrease in
operating expenses for the year ended December 31, 2015 compared to
the year ended December 31, 2014 was due primarily to lower
maintenance expense of $8.8 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
$2.7 million as a result of the acquired assets being covered under
our own insurance policies. Prior to the acquisitions, our
Predecessor was allocated a portion of Valero's insurance costs.
Additionally, salaries, wages, benefits, and incentive compensation
for seconded employees increased $941,000 during the year ended
December 31, 2015 due to the annual merit increase.
|
|
|
(d)
|
The increase in
general and administrative expenses for the three months ended
December 31, 2015 compared to the three months ended December 31,
2014 was due primarily to incremental costs of $333,000 related to
the management fee charged to us by Valero as a result of
additional administrative services provided to us in connection
with our acquisitions of the Houston and St. Charles Terminal
Services Business and the Corpus Christi Terminal Services
Business, partially offset by a decrease of $116,000 in costs
related to being a separate publicly traded limited
partnership.
|
|
|
|
The increase in
general and administrative expenses for the year ended December 31,
2015 compared to the year ended December 31, 2014 was due primarily
to incremental costs of $620,000 related to the management fee
charged to us by Valero as a result of additional administrative
services provided to us in connection with our acquisitions of the
Houston and St. Charles Terminal Services Business and the Corpus
Christi Terminal Services Business, and higher transaction costs of
$527,000 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 $438,000 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. These
increases were offset by a decrease of $313,000 in costs related to
being a separate publicly traded limited partnership.
|
|
|
(e)
|
The increase in
depreciation expense for the three months ended December 31, 2015
compared to the three months ended December 31, 2014 was due
primarily to additional depreciation expense associated with assets
placed into service in 2015, including the expansion of our Houston
and Corpus Christi terminals.
|
|
|
|
The increase in
depreciation expense for the year ended December 31, 2015 compared
to the year ended December 31, 2014 was due primarily to the $2.8
million in accelerated depreciation related to the retirement of
certain assets in the McKee Crude System, as well as additional
depreciation expense associated with assets placed into service in
the latter part of 2014 and beginning of 2015, including the
expansion of our Houston, St. Charles, and Corpus Christi
terminals.
|
|
|
(f)
|
The decrease in
"other income, net" for the three months and year ended December
31, 2015 compared to the three months and year ended December 31,
2014 was due primarily to a decrease in interest income (net of
bank fees) of $106,000 and $651,000, respectively, attributable to
a reduced cash balance during the three months and year ended
December 31, 2015. In addition, scrap metal sales decreased
$436,000 and right-of-way fees decreased $141,000 during the year
ended December 31, 2015 compared to the year ended December 31,
2014.
|
|
|
(g)
|
The increase in
"interest and debt expense, net of capitalized interest" for the
three months and year ended December 31, 2015 compared to the three
months and year ended December 31, 2014 was due primarily to
interest expense incurred on borrowings under our revolving credit
facility and under the subordinated credit agreements with Valero
as discussed in Note (a). Interest expense on this indebtedness was
$2.5 million and $5.5 million for the three months and year ended
December 31, 2015, respectively.
|
|
|
(h)
|
Our income tax
expense is associated with the Texas margin tax. The decrease in
income tax expense for the year ended December 31, 2015 compared to
the year ended December 31, 2014 was due primarily to a decrease in
our deferred income tax liabilities resulting from 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.
|
|
|
|
The variation in the
customary relationship between income tax expense and income before
income taxes for the year ended December 31, 2014 was due to the
impact of retrospectively adjusting our results of operations to
include the $61 million net loss attributable to the acquired
businesses for periods prior to their dates of
acquisition.
|
|
|
(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 our initial public offering (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.
|
|
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|
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