Delaware (State or other jurisdiction of incorporation) | 001-32225 (Commission File Number) | 20-0833098 (I.R.S. Employer Identification Number) |
2828 N. Harwood, Suite 1300 Dallas, Texas (Address of principal executive offices) | 75201 (Zip code) |
99.1 | — Press Release of the Partnership issued July 31, 2012 announcing second quarter of 2012 results.* |
99.1 | — Press Release of the Partnership issued July 31, 2012 announcing second quarter of 2012 results.* |
Press Release July 31, 2012 |
• | Revenues from our refined product pipelines were $20.7 million, a decrease of $2.9 million primarily due to the effects of a $4.8 million decrease in previously deferred revenue realized that was partially offset by an increase in refined product shipments. Shipments averaged 158.2 thousand barrels per day (“mbpd”) compared to 142.6 mbpd for the second quarter of 2011. |
• | Revenues from our intermediate pipelines were $6.7 million, an increase of $1.6 million, on shipments averaging 137.1 mbpd compared to 84.2 mbpd for the second quarter of 2011. This includes $1.2 million in revenues attributable to our Tulsa interconnect pipelines that were placed in service in September 2011 and the effects of a $0.1 million increase in previously deferred revenue realized. |
• | Revenues from our crude pipelines were $11.0 million, an increase of $1.4 million, on shipments averaging 168.0 mbpd compared to 160.6 mbpd for the second quarter of 2011. |
• | Revenues from terminal, tankage and loading rack fees were $25.3 million, an increase of $12.6 million compared to the second quarter of 2011. This includes $11.9 million in revenues attributable to our terminal, tankage and loading racks acquired in November 2011 that serve HollyFrontier's El Dorado and Cheyenne refineries. Refined products terminalled in our facilities increased to an average of 316.8 mbpd compared to 225.1 mbpd for the second quarter of 2011. |
• | Revenues from our refined product pipelines were $41.4 million, a decrease of $1.2 million primarily due to the effects of a $7.2 million decrease in previously deferred revenue realized that was partially offset by an increase in refined product shipments. Shipments averaged 159.8 mbpd compared to 134.2 mbpd for the six months ended June 30, 2011. |
• | Revenues from our intermediate pipelines were $13.8 million, an increase of $4.1 million, on shipments averaging 130.3 mbpd compared to 76.5 mbpd for the six months ended June 30, 2011. This includes $2.5 million in revenues attributable to our Tulsa interconnect pipelines and the effects of a $0.6 million increase in previously deferred revenue realized. |
• | Revenues from our crude pipelines were $21.5 million, an increase of $2.6 million, on shipments averaging 160.9 mbpd compared to 148.5 mbpd for the six months ended June 30, 2011. |
• | Revenues from terminal, tankage and loading rack fees were $50.5 million, an increase of $25.8 million compared to the six months ended June 30, 2011. This includes $23.6 million in revenues attributable to our terminal, tankage and loading racks serving HollyFrontier's El Dorado and Cheyenne refineries. Refined products terminalled in our facilities increased to an average of 315.7 mbpd compared to 211.8 mbpd for the six months ended June 30, 2011. |
• | risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored and throughput in our terminals; |
• | the economic viability of HollyFrontier Corporation, Alon USA, Inc. and our other customers; |
• | the demand for refined petroleum products in markets we serve; |
• | our ability to successfully purchase and integrate additional operations in the future; |
• | our ability to complete previously announced or contemplated acquisitions; |
• | the availability and cost of additional debt and equity financing; |
• | the possibility of reductions in production or shutdowns at refineries utilizing our pipeline and terminal facilities; |
• | the effects of current and future government regulations and policies; |
• | our operational efficiency in carrying out routine operations and capital construction projects; |
• | the possibility of terrorist attacks and the consequences of any such attacks; |
• | general economic conditions; |
• | our ability to integrate the operations of the UNEV Pipeline successfully and to realize the anticipated benefits associated with our ownership interest in UNEV Pipeline; and |
• | other financial, operations and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings. |
Three Months Ended June 30, | Change from | ||||||||||
2012 | 2011 | 2011 | |||||||||
(In thousands, except per unit data) | |||||||||||
Revenues | |||||||||||
Pipelines: | |||||||||||
Affiliates – refined product pipelines | $ | 13,271 | $ | 11,689 | $ | 1,582 | |||||
Affiliates – intermediate pipelines | 6,712 | 5,069 | 1,643 | ||||||||
Affiliates – crude pipelines | 10,993 | 9,624 | 1,369 | ||||||||
30,976 | 26,382 | 4,594 | |||||||||
Third parties – refined product pipelines | 7,452 | 11,906 | (4,454 | ) | |||||||
38,428 | 38,288 | 140 | |||||||||
Terminals, tanks and loading racks: | |||||||||||
Affiliates | 23,248 | 10,757 | 12,491 | ||||||||
Third parties | 2,016 | 1,895 | 121 | ||||||||
25,264 | 12,652 | 12,612 | |||||||||
Total revenues | 63,692 | 50,940 | 12,752 | ||||||||
Operating costs and expenses: | |||||||||||
Operations | 17,923 | 14,366 | 3,557 | ||||||||
Depreciation and amortization | 9,132 | 7,713 | 1,419 | ||||||||
General and administrative | 2,487 | 1,573 | 914 | ||||||||
29,542 | 23,652 | 5,890 | |||||||||
Operating income | 34,150 | 27,288 | 6,862 | ||||||||
Equity in earnings of SLC Pipeline | 794 | 467 | 327 | ||||||||
Interest expense, including amortization | (11,324 | ) | (8,724 | ) | (2,600 | ) | |||||
Loss on early extinguishment of debt | (383 | ) | — | (383 | ) | ||||||
(10,913 | ) | (8,257 | ) | (2,656 | ) | ||||||
Income before income taxes | 23,237 | 19,031 | 4,206 | ||||||||
State income tax expense | (75 | ) | (18 | ) | (57 | ) | |||||
Net income | 23,162 | 19,013 | 4,149 | ||||||||
Less general partner interest in net income, including incentive distributions(1) | 5,917 | 3,847 | 2,070 | ||||||||
Limited partners’ interest in net income | $ | 17,245 | $ | 15,166 | $ | 2,079 | |||||
Limited partners’ earnings per unit – basic and diluted:(1) | $ | 0.63 | $ | 0.69 | $ | (0.06 | ) | ||||
Weighted average limited partners’ units outstanding | 27,361 | 22,079 | 5,282 | ||||||||
EBITDA(2) | $ | 44,076 | $ | 35,468 | $ | 8,608 | |||||
Distributable cash flow(3) | $ | 34,520 | $ | 21,421 | $ | 13,099 |
Volumes (bpd) | ||||||||
Pipelines: | ||||||||
Affiliates – refined product pipelines | 101,886 | 90,984 | 10,902 | |||||
Affiliates – intermediate pipelines | 137,115 | 84,201 | 52,914 | |||||
Affiliates – crude pipelines | 168,047 | 160,648 | 7,399 | |||||
407,048 | 335,833 | 71,215 | ||||||
Third parties – refined product pipelines | 56,297 | 51,627 | 4,670 | |||||
463,345 | 387,460 | 75,885 | ||||||
Terminals and loading racks: | ||||||||
Affiliates | 267,988 | 182,394 | 85,594 | |||||
Third parties | 48,825 | 42,694 | 6,131 | |||||
316,813 | 225,088 | 91,725 | ||||||
Total for pipelines and terminal assets (bpd) | 780,158 | 612,548 | 167,610 |
Six Months Ended June 30, | Change from | ||||||||||
2012 | 2011 | 2011 | |||||||||
(In thousands, except per unit data) | |||||||||||
Revenues | |||||||||||
Pipelines: | |||||||||||
Affiliates – refined product pipelines | $ | 25,628 | $ | 21,547 | $ | 4,081 | |||||
Affiliates – intermediate pipelines | 13,757 | 9,702 | 4,055 | ||||||||
Affiliates – crude pipelines | 21,538 | 18,945 | 2,593 | ||||||||
60,923 | 50,194 | 10,729 | |||||||||
Third parties – refined product pipelines | 15,780 | 21,061 | (5,281 | ) | |||||||
76,703 | 71,255 | 5,448 | |||||||||
Terminals, tanks and loading racks: | |||||||||||
Affiliates | 46,094 | 21,052 | 25,042 | ||||||||
Third parties | 4,410 | 3,650 | 760 | ||||||||
50,504 | 24,702 | 25,802 | |||||||||
Total revenues | 127,207 | 95,957 | 31,250 | ||||||||
Operating costs and expenses: | |||||||||||
Operations | 34,911 | 27,162 | 7,749 | ||||||||
Depreciation and amortization | 19,396 | 15,353 | 4,043 | ||||||||
General and administrative | 4,526 | 2,936 | 1,590 | ||||||||
58,833 | 45,451 | 13,382 | |||||||||
Operating income | 68,374 | 50,506 | 17,868 | ||||||||
Equity in earnings of SLC Pipeline | 1,625 | 1,207 | 418 | ||||||||
Interest expense, including amortization | (21,729 | ) | (17,273 | ) | (4,456 | ) | |||||
Loss on early extinguishment of debt | (2,979 | ) | — | (2,979 | ) | ||||||
Other expense | — | (12 | ) | 12 | |||||||
(23,083 | ) | (16,078 | ) | (7,005 | ) | ||||||
Income before income taxes | 45,291 | 34,428 | 10,863 | ||||||||
State income tax expense | (150 | ) | (246 | ) | 96 | ||||||
Net income | 45,141 | 34,182 | 10,959 | ||||||||
Less general partner interest in net income, including incentive distributions(1) | 11,425 | 7,409 | 4,016 | ||||||||
Limited partners’ interest in net income | $ | 33,716 | $ | 26,773 | $ | 6,943 | |||||
Limited partners’ earnings per unit – basic and diluted:(1) | $ | 1.23 | $ | 1.21 | $ | 0.02 | |||||
Weighted average limited partners’ units outstanding | 27,361 | 22,079 | 5,282 | ||||||||
EBITDA(2) | $ | 89,395 | $ | 67,054 | $ | 22,341 | |||||
Distributable cash flow(3) | $ | 71,075 | $ | 42,193 | $ | 28,882 |
Volumes (bpd) | ||||||||
Pipelines: | ||||||||
Affiliates – refined product pipelines | 99,556 | 84,139 | 15,417 | |||||
Affiliates – intermediate pipelines | 130,341 | 76,452 | 53,889 | |||||
Affiliates – crude pipelines | 160,855 | 148,520 | 12,335 | |||||
390,752 | 309,111 | 81,641 | ||||||
Third parties – refined product pipelines | 60,292 | 50,086 | 10,206 | |||||
451,044 | 359,197 | 91,847 | ||||||
Terminals and loading racks: | ||||||||
Affiliates | 265,109 | 170,230 | 94,879 | |||||
Third parties | 50,604 | 41,532 | 9,072 | |||||
315,713 | 211,762 | 103,951 | ||||||
Total for pipelines and terminal assets (bpd) | 766,757 | 570,959 | 195,798 |
(1) | Net income is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. Net income allocated to the general partner includes incentive distributions declared subsequent to quarter end. General partner incentive distributions were $5.6 million and $3.5 million for the three months ended June 30, 2012 and 2011, respectively, and $10.7 million and $6.9 million for the six months ended June 30, 2012 and 2011, respectively. Net income attributable to the limited partners |
(2) | Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income plus (i) interest expense, net of interest income, (ii) state income tax and (iii) depreciation and amortization. EBITDA is not a calculation based upon GAAP. However, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income, as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA also is used by our management for internal analysis and as a basis for compliance with financial covenants. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands) | |||||||||||||||
Net income | $ | 23,162 | $ | 19,013 | $ | 45,141 | $ | 34,182 | |||||||
Add (subtract): | |||||||||||||||
Interest expense | 9,547 | 8,419 | 18,307 | 16,678 | |||||||||||
Amortization of discount and deferred debt charges | 1,777 | 305 | 3,422 | 595 | |||||||||||
Loss on early extinguishment of debt | 383 | — | 2,979 | — | |||||||||||
State income tax | 75 | 18 | 150 | 246 | |||||||||||
Depreciation and amortization | 9,132 | 7,713 | 19,396 | 15,353 | |||||||||||
EBITDA | $ | 44,076 | $ | 35,468 | $ | 89,395 | $ | 67,054 |
(3) | Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts separately presented in our consolidated financial statements, with the exception of billed crude revenue settlement and maintenance capital expenditures. Distributable cash flow should not be considered in isolation or as an alternative to net income or operating income, as an indication of our operating performance, or as an alternative to operating cash flow as a measure of liquidity. Distributable cash flow is not necessarily comparable to similarly titled measures of other companies. Distributable cash flow is presented here because it is a widely accepted financial indicator used by investors to compare partnership performance. It also is used by management for internal analysis and our performance units. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In thousands) | |||||||||||||||
Net income | $ | 23,162 | $ | 19,013 | $ | 45,141 | $ | 34,182 | |||||||
Add (subtract): | |||||||||||||||
Depreciation and amortization | 9,132 | 7,713 | 19,396 | 15,353 | |||||||||||
Amortization of discount and deferred debt issuance costs | 1,777 | 305 | 3,422 | 595 | |||||||||||
Loss on early extinguishment of debt | 383 | — | 2,979 | — | |||||||||||
Billed crude revenue settlement | 917 | — | 1,835 | — | |||||||||||
Increase (decrease) in deferred revenue | 163 | (4,014 | ) | (429 | ) | (5,118 | ) | ||||||||
Maintenance capital expenditures* | (1,292 | ) | (1,904 | ) | (1,599 | ) | (3,133 | ) | |||||||
Other non-cash adjustments | 278 | 308 | 330 | 314 | |||||||||||
Distributable cash flow | $ | 34,520 | $ | 21,421 | $ | 71,075 | $ | 42,193 |
* | Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, and safety and to address environmental regulations. |
June 30, | December 31, | ||||||
2012 | 2011 | ||||||
(In thousands) | |||||||
Balance Sheet Data | |||||||
Cash and cash equivalents | $ | 4,216 | $ | 3,269 | |||
Working capital | $ | 10,351 | $ | 12,293 | |||
Total assets | $ | 959,698 | $ | 966,956 | |||
Long-term debt | $ | 613,195 | $ | 605,888 | |||
Total equity(4) | $ | 312,864 | $ | 329,377 |
(4) | As a master limited partnership, we distribute our available cash, which historically has exceeded our net income because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in partners’ equity since our regular quarterly distributions have exceeded our quarterly net income. Additionally, if the assets contributed and acquired from HollyFrontier while we were a consolidated variable interest entity of HollyFrontier had been acquired from third parties, our acquisition cost in excess of HollyFrontier’s basis in the transferred assets of $295.6 million (as of June 30, 2012) would have been recorded as increases to our properties and equipment and intangible assets instead of decreases to partners’ equity. |