Exhibit
EXHIBIT 99.1
NGL Energy Partners LP Announces First Quarter Fiscal 2019 Financial Results
TULSA, Okla.--(BUSINESS WIRE)--August 7, 2018--NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the “Partnership”) today reported a net loss for the quarter ended June 30, 2018 of $169.3 million, compared to a net loss of $63.7 million for the quarter ended June 30, 2017. The net loss for the current quarter includes a loss on the disposal and impairment of assets of $101.3 million and expenses related to the accrual for the settlement of litigation of $35.0 million.
Highlights for the quarter include:
| |
• | Adjusted EBITDA for the first quarter of Fiscal 2019 was $80.3 million, compared to $38.9 million for the first quarter of Fiscal 2018, an increase of over 106% |
| |
• | Completed the sale of virtually all of our remaining Retail Propane segment to Superior Plus Corp. (“Superior”) for $900 million in gross proceeds (adjusted for working capital) on July 10, 2018 |
| |
• | Confirms Fiscal 2019 Adjusted EBITDA guidance with a target of $450 million remains unchanged |
| |
• | Growth capital expenditures, including $125.9 million in acquisitions of Water Solutions facilities and related assets, and other investments, totaled approximately $193.2 million during the first quarter (excluding Retail Propane segment) |
“Our financial results for the quarter are right in line with our expectations and we anticipate increasingly stronger quarterly results for the remainder of this fiscal year,” stated CEO Mike Krimbill. “Our balance sheet and liquidity are much stronger following the closing of the retail propane sale in July and we are well positioned for the future. Each of our business units is performing well and with the acquisitions we have recently completed in the Water Solutions business, I am confident about our growth opportunities and the execution of our strategic direction.”
Quarterly Results of Operations
The following table summarizes operating income (loss) and Adjusted EBITDA by operating segment for the periods indicated:
|
| | | | | | | | | | | | | | | | |
| | Quarter Ended |
| | June 30, 2018 | | June 30, 2017 |
| | Operating Income (Loss) | | Adjusted EBITDA | | Operating Income (Loss) | | Adjusted EBITDA |
| | (in thousands) |
Crude Oil Logistics | | $ | (99,738 | ) | | $ | 30,441 |
| | $ | 4,357 |
| | $ | 25,836 |
|
Refined Products and Renewables | | 29,022 |
| | 3,763 |
| | 14,496 |
| | (7,799 | ) |
Liquids | | 2,623 |
| | 10,841 |
| | (8,772 | ) | | (1,240 | ) |
Water Solutions | | 969 |
| | 38,597 |
| | (1,154 | ) | | 22,145 |
|
Corporate and Other | | (17,430 | ) | | (8,880 | ) | | (17,726 | ) | | (6,751 | ) |
Discontinued Operations (1) | | — |
| | 5,552 |
| | — |
| | 6,738 |
|
Total | | $ | (84,554 | ) | | $ | 80,314 |
| | $ | (8,799 | ) | | $ | 38,929 |
|
| |
(1) | On July 10, 2018, we completed the sale of virtually all of our remaining Retail Propane segment to Superior for total consideration of $896.5 million in cash after adjusting for estimated working capital. As a result, we have classified the assets, liabilities and redeemable noncontrolling interest as held for sale and the results of operations have been classified as discontinued operations. |
The tables included in this release reconcile operating income (loss) to Adjusted EBITDA, a non-GAAP financial measure, for each of our operating segments.
Crude Oil Logistics
The Partnership’s Crude Oil Logistics segment generated Adjusted EBITDA of $30.4 million during the quarter ended June 30, 2018, compared to Adjusted EBITDA of $25.8 million during the quarter ended June 30, 2017. Results for the first quarter of
Fiscal 2019 improved compared to the same quarter in Fiscal 2018 primarily due to increased volumes on Grand Mesa Pipeline. The Partnership sold a portion of its rights and obligations to ship on certain third-party pipelines during the quarter and recognized a loss of $105.0 million on the transaction while eliminating its future commitments.
The Partnership’s Grand Mesa Pipeline contributed Adjusted EBITDA of approximately $44.7 million during the first quarter of Fiscal 2019, an increase of $14.7 million when compared to Adjusted EBITDA of approximately $30.0 million during the same quarter of last year, due to increased volumes related to production growth in the DJ Basin. Physical volumes averaged approximately 110,000 barrels per day and financial volumes averaged approximately 112,000 barrels per day during the quarter ended June 30, 2018.
Refined Products and Renewables
The Partnership’s Refined Products and Renewables segment generated Adjusted EBITDA of $3.8 million during the quarter ended June 30, 2018, compared to Adjusted EBITDA of $(7.8) million during the quarter ended June 30, 2017. The results for the quarter ended June 30, 2018 were positively impacted by an increase in prices, volumes and product margins of refined products due to stronger demand at our wholesale locations, especially in the Southeast and West Texas.
Refined product barrels sold during the quarter ended June 30, 2018 totaled approximately 52.5 million barrels, an increase of approximately 10.2 million barrels compared to the same period in the prior year due to an increase in bulk sales volumes. Renewable barrels sold during the quarter ended June 30, 2018 totaled approximately 0.9 million, a decrease of approximately 0.8 million barrels compared to the same period in the prior year.
Liquids
The Partnership’s Liquids segment generated Adjusted EBITDA of $10.8 million during the quarter ended June 30, 2018, compared to Adjusted EBITDA of $(1.2) million during the quarter ended June 30, 2017. Total product margin per gallon was $0.031 for the quarter ended June 30, 2018, compared to $0.004 for the quarter ended June 30, 2017, as a result of higher prices, increased demand, higher than anticipated production and increased railcar utilization.
Propane volumes increased by approximately 9.1 million gallons, or 4.0%, during the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017. Butane volumes increased by approximately 21.5 million gallons, or 23.5%, during the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017. Other Liquids volumes increased by approximately 26.4 million gallons, or 29.1%, during the quarter ended June 30, 2018 compared to the same period in the prior year. The increase in overall volumes is primarily attributable to an increase in volume moved by railcars due to third-party pipeline infrastructure issues.
Water Solutions
The Partnership’s Water Solutions segment generated Adjusted EBITDA of $38.6 million during the quarter ended June 30, 2018, compared to Adjusted EBITDA of $22.1 million during the quarter ended June 30, 2017. The Partnership processed approximately 920,000 barrels of wastewater per day during the quarter ended June 30, 2018, a 47.4% increase when compared to approximately 624,000 barrels of wastewater per day during the quarter ended June 30, 2017.
Processed water volumes have increased in each basin in which the Partnership operates as the segment continued to benefit from high crude oil prices, increased rig activity and crude oil production. Revenues from recovered hydrocarbons totaled $20.2 million for the quarter ended June 30, 2018, an increase of $10.3 million over the prior year period, related to an increase in the volume of wastewater processed and increased crude oil prices.
Retail Propane - Discontinued Operations
The Partnership’s Retail Propane segment generated Adjusted EBITDA of $5.6 million during the quarter ended June 30, 2018, compared to Adjusted EBITDA of $6.7 million during the quarter ended June 30, 2017. Propane sold during the quarter ended June 30, 2018 totaled 22.7 million gallons and decreased by approximately 4.5 million gallons, compared to the quarter ended June 30, 2017, primarily due to the sale of a portion of our Retail Propane segment on March 30, 2018. Distillates sold during the quarter ended June 30, 2018 were relatively flat compared to the quarter ended June 30, 2017. Total product margin per gallon was $1.013 for the quarter ended June 30, 2018, compared to $0.976 for the quarter ended June 30, 2017. On July 10, 2018, we completed the sale of virtually all of our remaining Retail Propane segment to Superior for total consideration of $896.5 million in cash after adjusting for estimated working capital. As a result, we have classified the assets, liabilities and redeemable noncontrolling interest as held for sale and the results of operations have been classified as discontinued operations.
Corporate and Other
Adjusted EBITDA for Corporate and Other was $(8.9) million during the quarter ended June 30, 2018, compared to Adjusted EBITDA of $(6.8) million during the quarter ended June 30, 2017. The decrease was due primarily to increased legal costs related to certain litigation matters.
Capitalization and Liquidity
Total long-term debt outstanding, excluding working capital borrowings, was $1.972 billion at June 30, 2018 compared to $1.710 billion at March 31, 2018, an increase of $261.6 million, primarily as a result of acquisitions and growth capital projects within our Water Solutions segment. Working capital borrowings totaled $1.061 billion at June 30, 2018 compared to $969.5 million at March 31, 2018, an increase of $91.0 million driven primarily by increases in inventory prices during the quarter. Total liquidity (cash plus available capacity on our revolving credit facility) was approximately $324.3 million as of June 30, 2018. The $896.5 million in cash proceeds from the sale of the Retail Propane segment were initially utilized to reduce the outstanding balance on the Partnership’s revolving credit facility on July 10, 2018.
First Quarter Conference Call Information
A conference call to discuss NGL’s results of operations is scheduled for 11:00 am Eastern Time (10:00 am Central Time) on Tuesday, August 7, 2018. Analysts, investors, and other interested parties may access the conference call by dialing (800) 291-4083 and providing access code 8886005. An archived audio replay of the conference call will be available for 7 days beginning at 11:00 am Eastern Time (10:00 am Central Time) on August 8, 2018, which can be accessed by dialing (855) 859-2056 and providing access code 8886005.
Non-GAAP Financial Measures
NGL defines EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or market adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities, certain legal settlements and other. We also include in Adjusted EBITDA certain inventory valuation adjustments related to our Refined Products and Renewables segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered alternatives to net loss, (loss) income from continuing operations before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations. NGL believes that EBITDA provides additional information to investors for evaluating NGL’s ability to make quarterly distributions to NGL’s unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information to investors for evaluating NGL’s financial performance without regard to NGL’s financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.
Other than for NGL’s Refined Products and Renewables segment, for purposes of the Adjusted EBITDA calculation, NGL makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, NGL reverses the previously recorded unrealized gain or loss and record a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of NGL’s Refined Products and Renewables segment. The primary hedging strategy of NGL’s Refined Products and Renewables segment is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges are six months to one year in duration at inception. The “inventory valuation adjustment” row in the reconciliation table reflects the difference between the market value of the inventory of NGL’s Refined Products and Renewables segment at the balance sheet date and its cost. We include this in Adjusted EBITDA because the unrealized gains and losses associated with derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA.
Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, income tax expense, cash interest expense and other. Maintenance capital expenditures represent capital expenditures necessary to maintain the Partnership’s operating capacity. Distributable Cash Flow is a performance metric used by senior management to compare cash flows generated by the Partnership (excluding growth capital expenditures and prior to the establishment of any retained cash
reserves by the Board of Directors) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. This financial measure also is important to investors as an indicator of whether the Partnership is generating cash flow at a level that can sustain, or support an increase in, quarterly distribution rates. Actual distribution amounts are set by the Board of Directors.
Forward Looking Statements
This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes such forward-looking statements are reasonable, NGL cannot assure they will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.
NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or market adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership’s Adjusted EBITDA, and the Partnership is not able to provide a reconciliation of its Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.
About NGL Energy Partners LP
NGL Energy Partners LP is a Delaware limited partnership. NGL owns and operates a vertically integrated energy business with four primary businesses: Crude Oil Logistics, Water Solutions, Liquids, and Refined Products and Renewables. NGL completed its initial public offering in May 2011. For further information, visit the Partnership’s website at www.nglenergypartners.com.
NGL Energy Partners LP
Trey Karlovich, 918-481-1119
Chief Financial Officer and Executive Vice President
Trey.Karlovich@nglep.com
or
Linda Bridges, 918-481-1119
Senior Vice President - Finance and Treasurer
Linda.Bridges@nglep.com
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in Thousands, except unit amounts)
|
| | | | | | | |
| June 30, 2018 | | March 31, 2018 |
ASSETS | | | |
CURRENT ASSETS: | | | |
Cash and cash equivalents | $ | 13,682 |
| | $ | 22,094 |
|
Accounts receivable-trade, net of allowance for doubtful accounts of $4,385 and $4,201, respectively | 1,096,596 |
| | 1,026,764 |
|
Accounts receivable-affiliates | 8,824 |
| | 4,772 |
|
Inventories | 600,486 |
| | 551,303 |
|
Prepaid expenses and other current assets | 135,097 |
| | 128,742 |
|
Assets held for sale | 515,012 |
| | 517,604 |
|
Total current assets | 2,369,697 |
| | 2,251,279 |
|
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $365,782 and $343,345, respectively | 1,604,498 |
| | 1,518,607 |
|
GOODWILL | 1,262,971 |
| | 1,204,607 |
|
INTANGIBLE ASSETS, net of accumulated amortization of $452,314 and $433,565, respectively | 907,540 |
| | 913,154 |
|
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 1,995 |
| | 17,236 |
|
LOAN RECEIVABLE-AFFILIATE | 2,135 |
| | 1,200 |
|
OTHER NONCURRENT ASSETS | 175,138 |
| | 245,039 |
|
Total assets | $ | 6,323,974 |
| | $ | 6,151,122 |
|
LIABILITIES AND EQUITY | | | |
CURRENT LIABILITIES AND REDEEMABLE NONCONTROLLING INTEREST: | | | |
Accounts payable-trade | $ | 836,233 |
| | $ | 852,839 |
|
Accounts payable-affiliates | 24,874 |
| | 1,254 |
|
Accrued expenses and other payables | 225,617 |
| | 223,504 |
|
Advance payments received from customers | 21,871 |
| | 8,374 |
|
Current maturities of long-term debt | 646 |
| | 646 |
|
Liabilities and redeemable noncontrolling interest held for sale | 55,824 |
| | 42,580 |
|
Total current liabilities and redeemable noncontrolling interest | 1,165,065 |
| | 1,129,197 |
|
LONG-TERM DEBT, net of debt issuance costs of $19,340 and $20,645, respectively, and current maturities | 3,032,383 |
| | 2,679,740 |
|
OTHER NONCURRENT LIABILITIES | 63,539 |
| | 173,514 |
|
| | | |
CLASS A 10.75% CONVERTIBLE PREFERRED UNITS, 19,942,169 and 19,942,169 preferred units issued and outstanding, respectively | 91,559 |
| | 82,576 |
|
| | | |
EQUITY: | | | |
General partner, representing a 0.1% interest, 121,874 and 121,594 notional units, respectively | (50,919 | ) | | (50,819 | ) |
Limited partners, representing a 99.9% interest, 121,752,514 and 121,472,725 common units issued and outstanding, respectively | 1,740,410 |
| | 1,852,495 |
|
Class B preferred limited partners, 8,400,000 and 8,400,000 preferred units issued and outstanding, respectively | 202,731 |
| | 202,731 |
|
Accumulated other comprehensive loss | (257 | ) | | (1,815 | ) |
Noncontrolling interests | 79,463 |
| | 83,503 |
|
Total equity | 1,971,428 |
| | 2,086,095 |
|
Total liabilities and equity | $ | 6,323,974 |
| | $ | 6,151,122 |
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, except unit and per unit amounts)
|
| | | | | | | | |
| | Three Months Ended June 30, |
| | 2018 | | 2017 |
REVENUES: | | | | |
Crude Oil Logistics | | $ | 783,830 |
| | $ | 504,915 |
|
Water Solutions | | 76,145 |
| | 46,967 |
|
Liquids | | 459,897 |
| | 294,025 |
|
Refined Products and Renewables | | 4,524,407 |
| | 2,884,637 |
|
Other | | 155 |
| | 161 |
|
Total Revenues | | 5,844,434 |
| | 3,730,705 |
|
COST OF SALES: | | | | |
Crude Oil Logistics | | 748,245 |
| | 469,470 |
|
Water Solutions | | 14,269 |
| | 153 |
|
Liquids | | 440,515 |
| | 287,285 |
|
Refined Products and Renewables | | 4,492,858 |
| | 2,871,702 |
|
Other | | 269 |
| | 73 |
|
Total Cost of Sales | | 5,696,156 |
| | 3,628,683 |
|
OPERATING COSTS AND EXPENSES: | | | | |
Operating | | 56,262 |
| | 47,836 |
|
General and administrative | | 22,390 |
| | 22,385 |
|
Depreciation and amortization | | 52,045 |
| | 52,417 |
|
Loss (gain) on disposal or impairment of assets, net | | 101,335 |
| | (11,817 | ) |
Revaluation of liabilities | | 800 |
| | — |
|
Operating Loss | | (84,554 | ) | | (8,799 | ) |
OTHER INCOME (EXPENSE): | | | | |
Equity in earnings of unconsolidated entities | | 104 |
| | 1,816 |
|
Interest expense | | (46,268 | ) | | (49,104 | ) |
Loss on early extinguishment of liabilities, net | | (137 | ) | | (3,281 | ) |
Other (expense) income, net | | (33,742 | ) | | 1,775 |
|
Loss From Continuing Operations Before Income Taxes | | (164,597 | ) | | (57,593 | ) |
INCOME TAX EXPENSE | | (651 | ) | | (456 | ) |
Loss From Continuing Operations | | (165,248 | ) | | (58,049 | ) |
Loss From Discontinued Operations, net of Tax | | (4,041 | ) | | (5,658 | ) |
Net Loss | | (169,289 | ) | | (63,707 | ) |
LESS: NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | 345 |
| | (52 | ) |
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS | | 398 |
| | 397 |
|
NET LOSS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP | | $ | (168,546 | ) | | $ | (63,362 | ) |
| | | | |
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS | | $ | (184,909 | ) | | $ | (68,099 | ) |
NET LOSS FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS | | $ | (3,639 | ) | | $ | (5,256 | ) |
NET LOSS ALLOCATED TO COMMON UNITHOLDERS | | $ | (188,548 | ) | | $ | (73,355 | ) |
BASIC LOSS PER COMMON UNIT | | | | |
Loss From Continuing Operations | | $ | (1.52 | ) | | $ | (0.56 | ) |
Loss From Discontinued Operations, net of Tax | | (0.03 | ) | | (0.05 | ) |
Net Loss | | $ | (1.55 | ) | | $ | (0.61 | ) |
DILUTED LOSS PER COMMON UNIT | | | | |
Loss From Continuing Operations | | $ | (1.52 | ) | | $ | (0.56 | ) |
Loss From Discontinued Operations, net of Tax | | (0.03 | ) | | (0.05 | ) |
Net Loss | | $ | (1.55 | ) | | $ | (0.61 | ) |
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | | 121,544,421 |
| | 120,535,909 |
|
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | | 121,544,421 |
| | 120,535,909 |
|
EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION
(Unaudited)
The following table reconciles NGL’s net loss to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow:
|
| | | | | | | |
| Three Months Ended June 30, |
| 2018 | | 2017 |
| (in thousands) |
Net loss | $ | (169,289 | ) | | $ | (63,707 | ) |
Less: Net loss (income) attributable to noncontrolling interests | 345 |
| | (52 | ) |
Less: Net loss attributable to redeemable noncontrolling interests | 398 |
| | 397 |
|
Net loss attributable to NGL Energy Partners LP | (168,546 | ) | | (63,362 | ) |
Interest expense | 46,412 |
| | 49,278 |
|
Income tax expense | 651 |
| | 459 |
|
Depreciation and amortization | 61,575 |
| | 68,063 |
|
EBITDA | (59,908 | ) | | 54,438 |
|
Net unrealized losses (gains) on derivatives | 18,953 |
| | (2,001 | ) |
Inventory valuation adjustment (1) | (24,602 | ) | | (19,182 | ) |
Lower of cost or market adjustments | (413 | ) | | 4,078 |
|
Loss (gain) on disposal or impairment of assets, net | 101,343 |
| | (11,213 | ) |
Loss on early extinguishment of liabilities, net | 137 |
| | 3,281 |
|
Equity-based compensation expense (2) | 5,511 |
| | 8,821 |
|
Acquisition expense (3) | 1,252 |
| | (318 | ) |
Revaluation of liabilities (4) | 800 |
| | — |
|
Gavilon legal matter settlement (5) | 35,000 |
| | — |
|
Other (6) | 2,241 |
| | 1,025 |
|
Adjusted EBITDA | 80,314 |
| | 38,929 |
|
Less: Cash interest expense (7) | 43,840 |
| | 46,371 |
|
Less: Income tax expense | 651 |
| | 459 |
|
Less: Maintenance capital expenditures | 12,390 |
| | 6,527 |
|
Distributable Cash Flow | $ | 23,433 |
| | $ | (14,428 | ) |
| |
(1) | Amount reflects the difference between the market value of the inventory of NGL’s Refined Products and Renewables segment at the balance sheet date and its cost. See “Non-GAAP Financial Measures” section above for a further discussion. |
| |
(2) | Equity-based compensation expense in the table above may differ from equity-based compensation expense reported in the footnotes to our unaudited condensed consolidated financial statements included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018. Amounts reported in the table above include expense accruals for bonuses expected to be paid in common units, whereas the amounts reported in the footnotes to our unaudited condensed consolidated financial statements only include expenses associated with equity-based awards that have been formally granted. |
| |
(3) | Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions, partially offset by reimbursement for certain legal costs incurred in prior periods. |
| |
(4) | Amounts represent the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment. |
| |
(5) | Represents the accrual for the estimated cost of the settlement of the Gavilon legal matter (see the footnotes to our unaudited condensed consolidated financial statements included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018). We have excluded this amount from Adjusted EBITDA as it relates to transactions that occurred prior to our acquisition of Gavilon LLC in December 2013. |
| |
(6) | Amount for the three months ended June 30, 2018 represents non-cash operating expenses related to our Grand Mesa Pipeline, certain expenses related to discontinued operations, unrealized loss on marketable securities and accretion expense for asset retirement obligations. Amount for the three months ended June 30, 2017 represents non-cash operating expenses related to our Grand Mesa Pipeline and accretion expense for asset retirement obligations. |
| |
(7) | Amounts represent interest expense payable in cash for the period presented, excluding changes in the accrued interest balance. |
ADJUSTED EBITDA RECONCILIATION BY SEGMENT
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2018 |
| | Crude Oil
Logistics | | Water
Solutions | | Liquids | | Refined
Products
and
Renewables | | Corporate
and
Other | | Discontinued Operations | | Consolidated |
| | (in thousands) |
Operating (loss) income | | $ | (99,738 | ) | | $ | 969 |
| | $ | 2,623 |
| | $ | 29,022 |
| | $ | (17,430 | ) | | $ | — |
| | $ | (84,554 | ) |
Depreciation and amortization | | 19,229 |
| | 25,309 |
| | 6,468 |
| | 321 |
| | 718 |
| | — |
| | 52,045 |
|
Amortization recorded to cost of sales | | 80 |
| | — |
| | 37 |
| | 1,348 |
| | — |
| | — |
| | 1,465 |
|
Net unrealized losses on derivatives | | 7,412 |
| | 9,110 |
| | 2,337 |
| | — |
| | — |
| | — |
| | 18,859 |
|
Inventory valuation adjustment | | — |
| | — |
| | — |
| | (24,602 | ) | | — |
| | — |
| | (24,602 | ) |
Lower of cost or market adjustments | | — |
| | — |
| | (504 | ) | | 91 |
| | — |
| | — |
| | (413 | ) |
Loss (gain) on disposal or impairment of assets, net | | 101,894 |
| | 2,475 |
| | (10 | ) | | (3,026 | ) | | 2 |
| | — |
| | 101,335 |
|
Equity-based compensation expense | | — |
| | — |
| | — |
| | — |
| | 5,511 |
| | — |
| | 5,511 |
|
Acquisition expense | | — |
| | — |
| | 160 |
| | — |
| | 1,136 |
| | — |
| | 1,296 |
|
Other income (expense), net | | 14 |
| | — |
| | 35 |
| | (17 | ) | | (33,774 | ) | | — |
| | (33,742 | ) |
Adjusted EBITDA attributable to unconsolidated entities | | — |
| | (54 | ) | | — |
| | 476 |
| | (43 | ) | | — |
| | 379 |
|
Adjusted EBITDA attributable to noncontrolling interest | | — |
| | (112 | ) | | (322 | ) | | — |
| | — |
| | — |
| | (434 | ) |
Revaluation of liabilities | | — |
| | 800 |
| | — |
| | — |
| | — |
| | — |
| | 800 |
|
Gavilon legal matter settlement | | — |
| | — |
| | — |
| | — |
| | 35,000 |
| | — |
| | 35,000 |
|
Other | | 1,550 |
| | 100 |
| | 17 |
| | 150 |
| | — |
| | — |
| | 1,817 |
|
Discontinued operations | | — |
| | — |
| | — |
| | — |
| | — |
| | 5,552 |
| | 5,552 |
|
Adjusted EBITDA | | $ | 30,441 |
| | $ | 38,597 |
| | $ | 10,841 |
| | $ | 3,763 |
| | $ | (8,880 | ) | | $ | 5,552 |
| | $ | 80,314 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2017 |
| | Crude Oil
Logistics | | Water
Solutions | | Liquids | | Refined
Products
and
Renewables | | Corporate
and
Other | | Discontinued Operations | | Consolidated |
| | (in thousands) |
Operating income (loss) | | $ | 4,357 |
| | $ | (1,154 | ) | | $ | (8,772 | ) | | $ | 14,496 |
| | $ | (17,726 | ) | | $ | — |
| | $ | (8,799 | ) |
Depreciation and amortization | | 20,835 |
| | 24,008 |
| | 6,330 |
| | 324 |
| | 920 |
| | — |
| | 52,417 |
|
Amortization recorded to cost of sales | | 85 |
| | — |
| | 70 |
| | 1,430 |
| | — |
| | — |
| | 1,585 |
|
Net unrealized gains on derivatives | | (659 | ) | | — |
| | (1,369 | ) | | — |
| | — |
| | — |
| | (2,028 | ) |
Inventory valuation adjustment | | — |
| | — |
| | — |
| | (19,182 | ) | | — |
| | — |
| | (19,182 | ) |
Lower of cost or market adjustments | | — |
| | — |
| | 2,476 |
| | 1,602 |
| | — |
| | — |
| | 4,078 |
|
Gain on disposal or impairment of assets, net | | (3,559 | ) | | (730 | ) | | — |
| | (7,528 | ) | | — |
| | — |
| | (11,817 | ) |
Equity-based compensation expense | | — |
| | — |
| | — |
| | — |
| | 8,821 |
| | — |
| | 8,821 |
|
Acquisition expense | | — |
| | — |
| | — |
| | — |
| | (318 | ) | | — |
| | (318 | ) |
Other income, net | | 44 |
| | 18 |
| | 4 |
| | 168 |
| | 1,541 |
| | — |
| | 1,775 |
|
Adjusted EBITDA attributable to unconsolidated entities | | 3,822 |
| | 154 |
| | — |
| | 891 |
| | 11 |
| | — |
| | 4,878 |
|
Adjusted EBITDA attributable to noncontrolling interest | | — |
| | (244 | ) | | — |
| | — |
| | — |
| | — |
| | (244 | ) |
Other | | 911 |
| | 93 |
| | 21 |
| | — |
| | — |
| | — |
| | 1,025 |
|
Discontinued operations | | — |
| | — |
| | — |
| | — |
| | — |
| | 6,738 |
| | 6,738 |
|
Adjusted EBITDA | | $ | 25,836 |
| | $ | 22,145 |
| | $ | (1,240 | ) | | $ | (7,799 | ) | | $ | (6,751 | ) | | $ | 6,738 |
| | $ | 38,929 |
|
OPERATIONAL DATA
(Unaudited)
|
| | | | | |
| Three Months Ended |
| June 30, |
| 2018 | | 2017 |
| (in thousands, except per day amounts) |
Crude Oil Logistics: | | | |
Crude oil sold (barrels) | 11,225 |
| | 10,020 |
|
Crude oil transported on owned pipelines (barrels) | 9,987 |
| | 6,766 |
|
Crude oil storage capacity - owned and leased (barrels) (1) | 6,371 |
| | 6,454 |
|
Crude oil inventory (barrels) (1) | 1,164 |
| | 1,778 |
|
| | | |
Water Solutions: | | | |
Wastewater processed (barrels per day) | | | |
Eagle Ford Basin | 279,184 |
| | 220,579 |
|
Permian Basin | 421,535 |
| | 232,105 |
|
DJ Basin | 136,115 |
| | 112,437 |
|
Other Basins | 83,038 |
| | 58,979 |
|
Total | 919,872 |
| | 624,100 |
|
Solids processed (barrels per day) | 5,899 |
| | 4,168 |
|
Skim oil sold (barrels per day) | 3,615 |
| | 2,525 |
|
| | | |
Liquids: | | | |
Propane sold (gallons) | 233,786 |
| | 224,733 |
|
Butane sold (gallons) | 113,025 |
| | 91,517 |
|
Other products sold (gallons) | 116,985 |
| | 90,611 |
|
Liquids storage capacity - owned and leased (gallons) (1) | 438,968 |
| | 453,971 |
|
Propane inventory (gallons) (1) | 62,816 |
| | 94,488 |
|
Butane inventory (gallons) (1) | 54,577 |
| | 76,047 |
|
Other products inventory (gallons) (1) | 6,357 |
| | 6,977 |
|
| | | |
Refined Products and Renewables: | | | |
Gasoline sold (barrels) | 40,738 |
| | 28,516 |
|
Diesel sold (barrels) | 11,777 |
| | 13,798 |
|
Ethanol sold (barrels) | 544 |
| | 1,014 |
|
Biodiesel sold (barrels) | 328 |
| | 627 |
|
Refined Products and Renewables storage capacity - leased (barrels) (1) | 9,523 |
| | 9,225 |
|
Gasoline inventory (barrels) (1) | 3,323 |
| | 2,748 |
|
Diesel inventory (barrels) (1) | 965 |
| | 1,973 |
|
Ethanol inventory (barrels) (1) | 714 |
| | 586 |
|
Biodiesel inventory (barrels) (1) | 165 |
| | 255 |
|
| |
(1) | Information is presented as of June 30, 2018 and June 30, 2017, respectively. |