Delaware | 001-35172 | 27-3427920 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240-14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c)) |
Title of Each Class | Trading Symbols | Name of Each Exchange on Which Registered | ||
Common units representing Limited Partner Interests | NGL | New York Stock Exchange | ||
Fixed-to-floating rate cumulative redeemable perpetual preferred units | NGL-PB | New York Stock Exchange | ||
Fixed-to-floating rate cumulative redeemable perpetual preferred units | NGL-PC | New York Stock Exchange |
Emerging growth company o |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. | Description | |
99.1 |
NGL ENERGY PARTNERS LP | |||
By: | NGL Energy Holdings LLC, | ||
its general partner | |||
Date: August 8, 2019 | By: | /s/ Robert W. Karlovich III | |
Robert W. Karlovich III | |||
Chief Financial Officer |
• | Adjusted EBITDA for the first quarter of Fiscal 2020 was $86.8 million, which includes an $11.2 million loss related to our Refined Products and Renewables segment for the period, compared to $80.3 million for the first quarter of Fiscal 2019 |
• | Announced the sale of a significant portion of the Partnership’s Refined Products business for approximately $300 million, including equity consideration, inventory and net working capital, based on June 30, 2019 values and subject to actual values at closing |
• | Closed the acquisition of the assets of Mesquite Disposals Unlimited, LLC (“Mesquite”) on July 2, 2019 |
• | Issued 1,800,000 of 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units for net proceeds of $42.6 million and $450 million of 7.500% Senior Notes Due 2026 for net proceeds of $442.1 million |
• | Redeemed all $240 million of Class A Preferred Units at a total cost of $265.1 million plus accrued and unpaid distributions |
• | Growth capital expenditures, including acquisitions and other investments, totaled approximately $214.7 million during the first fiscal quarter of Fiscal 2020, of which approximately $197.9 million related to investments in the Partnership’s Water Solutions segment |
• | Fiscal 2020 Adjusted EBITDA guidance target of $600 million remains unchanged |
Quarter Ended | ||||||||||||||||
June 30, 2019 | June 30, 2018 | |||||||||||||||
Operating Income (Loss) | Adjusted EBITDA | Operating Income (Loss) | Adjusted EBITDA | |||||||||||||
(in thousands) | ||||||||||||||||
Crude Oil Logistics | $ | 33,802 | $ | 52,074 | $ | (99,738 | ) | $ | 30,441 | |||||||
Liquids | 8,484 | 12,413 | 2,623 | 10,841 | ||||||||||||
Water Solutions | 13,689 | 41,089 | 969 | 38,597 | ||||||||||||
Refined Products and Renewables | 5,920 | (11,235 | ) | 29,022 | 3,763 | |||||||||||
Corporate and Other | (15,342 | ) | (7,581 | ) | (17,430 | ) | (8,880 | ) | ||||||||
Discontinued Operations | — | — | — | 5,552 | ||||||||||||
Total | $ | 46,553 | $ | 86,760 | $ | (84,554 | ) | $ | 80,314 |
June 30, 2019 | March 31, 2019 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 27,501 | $ | 18,572 | |||
Accounts receivable-trade, net of allowance for doubtful accounts of $4,653 and $4,366, respectively | 911,982 | 1,162,919 | |||||
Accounts receivable-affiliates | 11,507 | 12,867 | |||||
Inventories | 519,603 | 463,143 | |||||
Prepaid expenses and other current assets | 178,695 | 155,172 | |||||
Total current assets | 1,649,288 | 1,812,673 | |||||
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $442,868 and $420,362, respectively | 2,015,518 | 1,844,493 | |||||
GOODWILL | 1,153,029 | 1,145,861 | |||||
INTANGIBLE ASSETS, net of accumulated amortization of $555,307 and $524,257, respectively | 931,709 | 938,335 | |||||
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 1,585 | 1,127 | |||||
OPERATING LEASE RIGHT-OF-USE ASSETS | 518,035 | — | |||||
OTHER NONCURRENT ASSETS | 125,741 | 160,004 | |||||
Total assets | $ | 6,394,905 | $ | 5,902,493 | |||
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable-trade | $ | 814,141 | $ | 964,665 | |||
Accounts payable-affiliates | 23,071 | 28,469 | |||||
Accrued expenses and other payables | 214,243 | 248,450 | |||||
Advance payments received from customers | 28,313 | 8,921 | |||||
Current maturities of long-term debt | 649 | 648 | |||||
Operating lease obligations | 77,021 | — | |||||
Total current liabilities | 1,157,438 | 1,251,153 | |||||
LONG-TERM DEBT, net of debt issuance costs of $19,025 and $12,008, respectively, and current maturities | 2,586,954 | 2,160,133 | |||||
OPERATING LEASE OBLIGATIONS | 439,083 | — | |||||
OTHER NONCURRENT LIABILITIES | 61,165 | 63,575 | |||||
CLASS A 10.75% CONVERTIBLE PREFERRED UNITS, 0 and 19,942,169 preferred units issued and outstanding, respectively | — | 149,814 | |||||
EQUITY: | |||||||
General partner, representing a 0.1% interest, 126,093 and 124,633 notional units, respectively | (50,773 | ) | (50,603 | ) | |||
Limited partners, representing a 99.9% interest, 125,966,868 and 124,508,497 common units issued and outstanding, respectively | 1,897,407 | 2,067,197 | |||||
Class B preferred limited partners, 8,400,000 and 8,400,000 preferred units issued and outstanding, respectively | 202,731 | 202,731 | |||||
Class C preferred limited partners, 1,800,000 and 0 preferred units issued and outstanding, respectively | 42,638 | — | |||||
Accumulated other comprehensive loss | (218 | ) | (255 | ) | |||
Noncontrolling interests | 58,480 | 58,748 | |||||
Total equity | 2,150,265 | 2,277,818 | |||||
Total liabilities and equity | $ | 6,394,905 | $ | 5,902,493 |
Three Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
REVENUES: | ||||||||
Crude Oil Logistics | $ | 716,160 | $ | 783,830 | ||||
Water Solutions | 71,783 | 76,145 | ||||||
Liquids | 347,647 | 459,897 | ||||||
Refined Products and Renewables | 5,502,046 | 4,524,407 | ||||||
Other | 255 | 155 | ||||||
Total Revenues | 6,637,891 | 5,844,434 | ||||||
COST OF SALES: | ||||||||
Crude Oil Logistics | 649,240 | 748,245 | ||||||
Water Solutions | (2,807 | ) | 14,269 | |||||
Liquids | 317,352 | 440,515 | ||||||
Refined Products and Renewables | 5,489,217 | 4,492,858 | ||||||
Other | 465 | 269 | ||||||
Total Cost of Sales | 6,453,467 | 5,696,156 | ||||||
OPERATING COSTS AND EXPENSES: | ||||||||
Operating | 64,267 | 56,262 | ||||||
General and administrative | 20,363 | 22,390 | ||||||
Depreciation and amortization | 54,208 | 52,045 | ||||||
(Gain) loss on disposal or impairment of assets, net | (967 | ) | 101,335 | |||||
Revaluation of liabilities | — | 800 | ||||||
Operating Income (Loss) | 46,553 | (84,554 | ) | |||||
OTHER INCOME (EXPENSE): | ||||||||
Equity in earnings of unconsolidated entities | 8 | 219 | ||||||
Interest expense | (39,908 | ) | (46,268 | ) | ||||
Loss on early extinguishment of liabilities, net | — | (137 | ) | |||||
Other income (expense), net | 1,075 | (33,742 | ) | |||||
Income (Loss) From Continuing Operations Before Income Taxes | 7,728 | (164,482 | ) | |||||
INCOME TAX BENEFIT (EXPENSE) | 311 | (651 | ) | |||||
Income (Loss) From Continuing Operations | 8,039 | (165,133 | ) | |||||
Loss From Discontinued Operations, net of Tax | — | (4,156 | ) | |||||
Net Income (Loss) | 8,039 | (169,289 | ) | |||||
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 268 | 345 | ||||||
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS | — | 398 | ||||||
NET INCOME (LOSS) ATTRIBUTABLE TO NGL ENERGY PARTNERS LP | $ | 8,307 | $ | (168,546 | ) | |||
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS | $ | (121,068 | ) | $ | (184,794 | ) | ||
NET LOSS FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS | $ | — | $ | (3,754 | ) | |||
NET LOSS ALLOCATED TO COMMON UNITHOLDERS | $ | (121,068 | ) | $ | (188,548 | ) | ||
BASIC LOSS PER COMMON UNIT | ||||||||
Loss From Continuing Operations | $ | (0.96 | ) | $ | (1.52 | ) | ||
Loss From Discontinued Operations, net of Tax | — | (0.03 | ) | |||||
Net Loss | $ | (0.96 | ) | $ | (1.55 | ) | ||
DILUTED LOSS PER COMMON UNIT | ||||||||
Loss From Continuing Operations | $ | (0.96 | ) | $ | (1.52 | ) | ||
Loss From Discontinued Operations, net of Tax | — | (0.03 | ) | |||||
Net Loss | $ | (0.96 | ) | $ | (1.55 | ) | ||
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 125,886,738 | 121,544,421 | ||||||
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 125,886,738 | 121,544,421 |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Net income (loss) | $ | 8,039 | $ | (169,289 | ) | ||
Less: Net loss attributable to noncontrolling interests | 268 | 345 | |||||
Less: Net loss attributable to redeemable noncontrolling interests | — | 398 | |||||
Net income (loss) attributable to NGL Energy Partners LP | 8,307 | (168,546 | ) | ||||
Interest expense | 39,910 | 46,412 | |||||
Income tax (benefit) expense | (311 | ) | 651 | ||||
Depreciation and amortization | 54,844 | 61,575 | |||||
EBITDA | 102,750 | (59,908 | ) | ||||
Net unrealized (gains) losses on derivatives | (3,474 | ) | 18,953 | ||||
Inventory valuation adjustment (1) | (19,746 | ) | (24,602 | ) | |||
Lower of cost or market adjustments | (918 | ) | (413 | ) | |||
(Gain) loss on disposal or impairment of assets, net | (967 | ) | 101,343 | ||||
Loss on early extinguishment of liabilities, net | — | 137 | |||||
Equity-based compensation expense (2) | 3,701 | 5,511 | |||||
Acquisition expense (3) | 2,091 | 1,252 | |||||
Revaluation of liabilities (4) | — | 800 | |||||
Gavilon legal matter settlement (5) | — | 35,000 | |||||
Other (6) | 3,323 | 2,241 | |||||
Adjusted EBITDA | 86,760 | 80,314 | |||||
Less: Cash interest expense (7) | 37,775 | 43,840 | |||||
Less: Income tax (benefit) expense | (311 | ) | 651 | ||||
Less: Maintenance capital expenditures | 16,929 | 12,390 | |||||
Distributable Cash Flow | $ | 32,367 | $ | 23,433 |
(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, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. See “Non-GAAP Financial Measures” 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, 2019. 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, including amounts accrued related to the LCT Capital, LLC legal matter (as discussed 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, 2019), 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, 2019). 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, 2019 represents non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations. 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. |
(7) | Amounts represent interest expense payable in cash for the period presented, excluding changes in the accrued interest balance. |
Three Months Ended June 30, 2019 | ||||||||||||||||||||||||
Crude Oil Logistics | Water Solutions | Liquids | Refined Products and Renewables | Corporate and Other | Consolidated | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Operating income (loss) | $ | 33,802 | $ | 13,689 | $ | 8,484 | $ | 5,920 | $ | (15,342 | ) | $ | 46,553 | |||||||||||
Depreciation and amortization | 17,585 | 28,071 | 7,229 | 580 | 743 | 54,208 | ||||||||||||||||||
Amortization recorded to cost of sales | — | — | 23 | 1,348 | — | 1,371 | ||||||||||||||||||
Net unrealized gains on derivatives | (1,858 | ) | (167 | ) | (1,449 | ) | — | — | (3,474 | ) | ||||||||||||||
Inventory valuation adjustment | — | — | — | (19,746 | ) | — | (19,746 | ) | ||||||||||||||||
Lower of cost or market adjustments | — | — | (1,508 | ) | 590 | — | (918 | ) | ||||||||||||||||
(Gain) loss on disposal or impairment of assets, net | (616 | ) | (589 | ) | (3 | ) | — | 241 | (967 | ) | ||||||||||||||
Equity-based compensation expense | — | — | — | — | 3,701 | 3,701 | ||||||||||||||||||
Acquisition expense | — | 20 | — | — | 2,071 | 2,091 | ||||||||||||||||||
Other (expense) income, net | (4 | ) | — | 12 | 73 | 994 | 1,075 | |||||||||||||||||
Adjusted EBITDA attributable to unconsolidated entities | — | — | 4 | — | 11 | 15 | ||||||||||||||||||
Adjusted EBITDA attributable to noncontrolling interest | — | (75 | ) | (397 | ) | — | — | (472 | ) | |||||||||||||||
Other | 3,165 | 140 | 18 | — | — | 3,323 | ||||||||||||||||||
Adjusted EBITDA | $ | 52,074 | $ | 41,089 | $ | 12,413 | $ | (11,235 | ) | $ | (7,581 | ) | $ | 86,760 |
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, | |||||
2019 | 2018 | ||||
(in thousands, except per day amounts) | |||||
Crude Oil Logistics: | |||||
Crude oil sold (barrels) | 11,291 | 11,225 | |||
Crude oil transported on owned pipelines (barrels) | 11,789 | 9,987 | |||
Crude oil storage capacity - owned and leased (barrels) (1) | 5,232 | 6,371 | |||
Crude oil inventory (barrels) (1) | 1,125 | 1,164 | |||
Water Solutions: | |||||
Wastewater processed (barrels per day) | |||||
Permian Basin | 399,629 | 421,535 | |||
Eagle Ford Basin | 267,244 | 279,184 | |||
DJ Basin | 169,620 | 136,115 | |||
Other Basins | 12,394 | 83,038 | |||
Total | 848,887 | 919,872 | |||
Solids processed (barrels per day) | 5,442 | 5,899 | |||
Skim oil sold (barrels per day) | 2,860 | 3,615 | |||
Liquids: | |||||
Propane sold (gallons) | 245,267 | 233,786 | |||
Butane sold (gallons) | 142,479 | 113,025 | |||
Other products sold (gallons) | 119,258 | 116,985 | |||
Liquids storage capacity - owned and leased (gallons) (1) | 397,343 | 438,968 | |||
Propane inventory (gallons) (1) | 76,012 | 62,816 | |||
Butane inventory (gallons) (1) | 53,219 | 54,577 | |||
Other products inventory (gallons) (1) | 8,363 | 6,357 | |||
Refined Products and Renewables: | |||||
Gasoline sold (barrels) | 54,400 | 40,738 | |||
Diesel sold (barrels) | 13,837 | 11,777 | |||
Ethanol sold (barrels) | 679 | 544 | |||
Biodiesel sold (barrels) | 163 | 328 | |||
Refined Products and Renewables storage capacity - leased (barrels) (1) | 9,845 | 9,523 | |||
Gasoline inventory (barrels) (1) | 2,383 | 3,323 | |||
Diesel inventory (barrels) (1) | 1,857 | 965 | |||
Ethanol inventory (barrels) (1) | 1,796 | 714 | |||
Biodiesel inventory (barrels) (1) | 224 | 165 |
(1) | Information is presented as of June 30, 2019 and June 30, 2018, respectively. |