EX-99.2 4 exhibit992-proformafin.htm EXHIBIT 99.2 Exhibit


Exhibit 99.2

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

Introduction

On September 30, 2019, NGL Energy Partners LP (“the Partnership”) sold TransMontaigne Product Services, LLC (“TPSL”) and associated assets to Trajectory Acquisition Company LLC (“Trajectory”) for total consideration of $275.5 million less estimated expenses of approximately $5.0 million. TPSL comprised a portion of the Partnership’s Refined Products and Renewables segment.

The following sets forth the unaudited pro forma condensed consolidated balance sheet of the Partnership as of June 30, 2019 and the unaudited pro forma condensed consolidated statements of operations for the three months ended June 30, 2019 and the years ended March 31, 2019, 2018 and 2017. The unaudited pro forma condensed consolidated balance sheet gives pro forma effect only for the sale of TPSL as if it had occurred on June 30, 2019. The unaudited pro forma condensed consolidated statements of operations give pro forma effect for the sale of TPSL as if it had occurred on April 1, 2016.

These unaudited pro forma condensed consolidated financial statements have been derived from the Partnership’s historical consolidated financial statements, which are included in its Annual Report on Form 10-K for the year ended March 31, 2019 and Quarterly Report on Form 10-Q for the three months ended June 30, 2019. These unaudited condensed consolidated financial statements should be read in conjunction with the Partnership’s historical financial statements and related notes thereto.

The following unaudited pro forma condensed consolidated financial statements are based on certain assumptions and do not purport to be indicative of the results that actually would have been achieved if the transaction described above had occurred on the dates indicated. Moreover, the accompanying unaudited pro forma condensed consolidated financial statements do not project the Partnership’s results of operations for any future date or period.





NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of June 30, 2019
(U.S. Dollars in Thousands)
 
Historical NGL Energy Partners LP (As Reported)
 
Pro Forma Adjustments
 
Pro Forma NGL Energy Partners LP Continuing Operations
ASSETS
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
Cash and cash equivalents
$
27,501

 
$
275,470

(A)
$
27,501

 
 
 
(5,000
)
(A)
 
 
 
 
(270,470
)
(B)
 
Accounts receivable-trade, net
911,982

 
(121,543
)
(C)
790,439

Accounts receivable-affiliates
11,507

 
—

 
11,507

Inventories
519,603

 
(212,111
)
(C)
307,492

Prepaid expenses and other current assets
178,695

 
(15,704
)
(C)
162,991

Total current assets
1,649,288

 
(349,358
)
 
1,299,930

PROPERTY, PLANT AND EQUIPMENT, net
2,015,518

 
(15,185
)
(C)
2,000,333

GOODWILL
1,153,029

 
(32,712
)
(C)
1,120,317

INTANGIBLE ASSETS, net
931,709

 
(136,074
)
(C)
795,635

INVESTMENTS IN UNCONSOLIDATED ENTITIES
1,585

 
—

 
1,585

OPERATING LEASE RIGHT-OF-USE ASSETS
518,035

 
(308,117
)
(C)
209,918

OTHER NONCURRENT ASSETS
125,741

 
(46,871
)
(C)
78,870

Total assets
$
6,394,905

 
$
(888,317
)
 
$
5,506,588

LIABILITIES AND EQUITY
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
Accounts payable-trade
$
814,141

 
$
(77,352
)
(C)
$
736,789

Accounts payable-affiliates
23,071

 
—

 
23,071

Accrued expenses and other payables
214,243

 
(51,041
)
(C)
163,202

Advance payments received from customers
28,313

 
(460
)
(C)
27,853

Current maturities of long-term debt
649

 
—

 
649

Operating lease obligations
77,021

 
(7,526
)
(C)
69,495

Total current liabilities
1,157,438

 
(136,379
)
 
1,021,059

LONG-TERM DEBT, net of debt issuance costs and current maturities
2,586,954

 
(270,470
)
(B)
2,316,484

 
 
 
—

 
 
 
 
 
—

 
 
OPERATING LEASE OBLIGATIONS
439,083

 
(300,591
)
(C)
138,492

OTHER NONCURRENT LIABILITIES
61,165

 
—

 
61,165

COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
 
 
 
 
 
EQUITY:
 
 
 
 
 
General partner, representing a 0.1% interest
(50,773
)
 
(181
)
(D)
(50,954
)
Limited partners, representing a 99.9% interest
1,897,407

 
(180,696
)
(D)
1,716,711

Class B preferred limited partners
202,731

 
—

 
202,731

Class C preferred limited partners
42,638

 
 
 
42,638

Accumulated other comprehensive loss
(218
)
 
—

 
(218
)
Noncontrolling interests
58,480

 
—

 
58,480

Total equity
2,150,265

 
(180,877
)
 
1,969,388

Total liabilities and equity
$
6,394,905

 
$
(888,317
)
 
$
5,506,588


See accompanying notes to the unaudited pro forma condensed consolidated financial statements.




NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the three months ended June 30, 2019
(U.S. dollars in thousands, except unit and per unit amounts)
 
Historical NGL Energy Partners LP (As Reported)
 
Pro Forma Adjustments
 
Pro Forma NGL Energy Partners LP Continuing Operations
 
 
 
 
 
 
REVENUES
$
6,637,891

 
$
(1,471,466
)
(E)
$
5,166,425

 
 
 
 
 
 
COST OF SALES
6,453,467

 
(1,458,501
)
(E)
4,994,966

 
 
 
 
 
 
OPERATING COSTS AND EXPENSES:
 
 
 
 
 
Operating
64,267

 
(2,171
)
(E)
62,096

General and administrative
20,363

 
(21
)
(E)
20,342

Depreciation and amortization
54,208

 
(454
)
(E)
53,754

Gain on disposal or impairment of assets, net
(967
)
 
—

 
(967
)
Operating Income
46,553

 
(10,319
)
 
36,234

 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
Equity in earnings of unconsolidated entities
8

 
—

 
8

Interest expense
(39,908
)
 
14

(E)
(37,007
)
 
 
 
2,887

(F)
 
Other income, net
1,075

 
(66
)
(E)
1,009

Income From Continuing Operations Before Income Taxes
7,728

 
(7,484
)
 
244

 
 
 
 
 
 
INCOME TAX BENEFIT
311

 
10

(E)
321

Income From Continuing Operations
8,039

 
(7,474
)
 
565

LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
268

 
—

 
268

NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP
8,307

 
(7,474
)
 
833

LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS
(129,460
)
 
—

 
(129,460
)
LESS: CONTINUING OPERATIONS NET LOSS ALLOCATED TO GENERAL PARTNER
85

 
8

(G)
93

NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS
$
(121,068
)
 
$
(7,466
)
 
$
(128,534
)
BASIC AND DILUTED LOSS PER COMMON UNIT
$
(0.96
)
 
 
 
$
(1.02
)
BASIC AND DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
125,886,738

 
 
 
125,886,738


See accompanying notes to the unaudited pro forma condensed consolidated financial statements.






NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended March 31, 2019
(U.S. dollars in thousands, except unit and per unit amounts)
 
Historical NGL Energy Partners LP (As Reported)
 
Pro Forma Adjustments
 
Pro Forma NGL Energy Partners LP Continuing Operations
 
 
 
 
 
 
REVENUES
$
24,016,907

 
$
(6,196,287
)
(E)
$
17,820,620

 
 
 
 
 
 
COST OF SALES
23,284,917

 
(6,122,642
)
(E)
17,162,275

 
 
 
 
 
 
OPERATING COSTS AND EXPENSES:
 
 
 
 
 
Operating
240,684

 
(7,371
)
(E)
233,313

General and administrative
107,534

 
(127
)
(E)
107,407

Depreciation and amortization
212,860

 
(887
)
(E)
211,973

Loss on disposal or impairment of assets, net
34,296

 
—

 
34,296

Revaluation of liabilities
(5,373
)
 
—

 
(5,373
)
Operating Income
141,989

 
(65,260
)
 
76,729

 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
Equity in earnings of unconsolidated entities
2,533

 
—

 
2,533

Interest expense
(164,726
)
 
1

(E)
(153,176
)
 
 
 
11,549

(F)
 
Loss on early extinguishment of liabilities, net
(12,340
)
 
—

 
(12,340
)
Other expense, net
(29,946
)
 
(468
)
(E)
(30,414
)
Loss From Continuing Operations Before Income Taxes
(62,490
)
 
(54,178
)
 
(116,668
)
 
 
 
 
 
 
INCOME TAX EXPENSE
(1,234
)
 
1

(E)
(1,233
)
Net Loss From Continuing Operations
(63,724
)
 
(54,177
)
 
(117,901
)
LESS: CONTINUING OPERATIONS NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
20,206

 
—

 
20,206

NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP
(43,518
)
 
(54,177
)
 
(97,695
)
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS
(111,936
)
 
—

 
(111,936
)
LESS: CONTINUING OPERATIONS NET LOSS ALLOCATED TO GENERAL PARTNER
17

 
54

(G)
71

NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS
$
(155,437
)
 
$
(54,123
)
 
$
(209,560
)
BASIC AND DILUTED LOSS FROM CONTINUING OPERATIONS PER COMMON UNIT
$
(1.26
)
 
 
 
$
(1.70
)
BASIC AND DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
123,017,064

 
 
 
123,017,064


See accompanying notes to the unaudited pro forma condensed consolidated financial statements.





NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended March 31, 2018
(U.S. dollars in thousands, except unit and per unit amounts)
 
Historical NGL Energy Partners LP (As Reported)
 
Pro Forma Adjustments
 
Pro Forma NGL Energy Partners LP Continuing Operations
 
 
 
 
 
 
REVENUES
$
16,907,296

 
$
(6,536,524
)
(E)
$
10,370,772

 
 
 
 
 
 
COST OF SALES
16,412,641

 
(6,709,772
)
(E)
9,702,869

 
 
 
 
 
 
OPERATING COSTS AND EXPENSES:
 
 
 
 
 
Operating
201,068

 
(6,972
)
(E)
194,096

General and administrative
98,129

 
(150
)
(E)
97,979

Depreciation and amortization
209,020

 
(622
)
(E)
208,398

(Gain) loss on disposal or impairment of assets, net
(17,104
)
 
(14
)
(E)
(17,118
)
Revaluation of liabilities
20,716

 
—

 
20,716

Operating (Loss) Income
(17,174
)
 
181,006

 
163,832

 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
Equity in earnings of unconsolidated entities
7,539

 
—

 
7,539

Interest expense
(199,148
)
 
(2
)
(E)
(199,150
)
Loss on early extinguishment of liabilities, net
(23,201
)
 
—

 
(23,201
)
Other income, net
6,953

 
(601
)
(E)
6,352

Loss From Continuing Operations Before Income Taxes
(225,031
)
 
180,403

 
(44,628
)
 
 
 
 
 
 
INCOME TAX EXPENSE
(1,354
)
 
1

(E)
(1,353
)
Net Loss From Continuing Operations
(226,385
)
 
180,404

 
(45,981
)
LESS: CONTINUING OPERATIONS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(240
)
 
—

 
(240
)
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP
(226,625
)
 
180,404

 
(46,221
)
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS
(59,697
)
 
—

 
(59,697
)
LESS: CONTINUING OPERATIONS NET LOSS (INCOME) ALLOCATED TO GENERAL PARTNER
150

 
(180
)
(G)
(30
)
LESS: REPURCHASE OF WARRANTS
(349
)
 
—

 
(349
)
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS
$
(286,521
)
 
$
180,224

 
$
(106,297
)
BASIC AND DILUTED LOSS FROM CONTINUING OPERATIONS PER COMMON UNIT
$
(2.37
)
 
 
 
$
(0.88
)
BASIC AND DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
120,991,340

 
 
 
120,991,340


See accompanying notes to the unaudited pro forma condensed consolidated financial statements.





NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended March 31, 2017
(U.S. dollars in thousands, except unit and per unit amounts)
 
Historical NGL Energy Partners LP (As Reported)
 
Pro Forma Adjustments
 
Pro Forma NGL Energy Partners LP Continuing Operations
 
 
 
 
 
 
REVENUES
$
12,707,203

 
$
(5,229,681
)
(E)
$
7,477,522

 
 
 
 
 
 
COST OF SALES
12,228,404

 
(5,231,227
)
(E)
6,997,177

 
 
 
 
 
 
OPERATING COSTS AND EXPENSES:
 
 
 
 
 
Operating
189,003

 
(15,380
)
(E)
173,623

General and administrative
105,805

 
(4,966
)
(E)
100,839

Depreciation and amortization
180,239

 
(626
)
(E)
179,613

(Gain) loss on disposal or impairment of assets, net
(208,890
)
 
(92
)
(E)
(208,982
)
Revaluation of liabilities
6,717

 
—

 
6,717

Operating Income
205,925

 
22,610

 
228,535

 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
Equity in earnings of unconsolidated entities
3,830

 
—

 
3,830

Revaluation of investments
(14,365
)
 
—

 
(14,365
)
Interest expense
(149,994
)
 
393

(E)
(149,601
)
Gain on early extinguishment of liabilities, net
24,727

 
—

 
24,727

Other income, net
26,612

 
(192
)
(E)
26,420

Income From Continuing Operations Before Income Taxes
96,735

 
22,811

 
119,546

 
 
 
 
 
 
INCOME TAX EXPENSE
(1,933
)
 
—

 
(1,933
)
Net Income From Continuing Operations
94,802

 
22,811

 
117,613

LESS: CONTINUING OPERATIONS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(6,832
)
 
—

 
(6,832
)
NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP
87,970

 
22,811

 
110,781

LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS
(30,142
)
 
—

 
(30,142
)
LESS: CONTINUING OPERATIONS NET INCOME ALLOCATED TO GENERAL PARTNER
(183
)
 
(22
)
(G)
(205
)
NET INCOME FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS
$
57,645

 
$
22,789

 
$
80,434

BASIC INCOME FROM CONTINUING OPERATIONS PER COMMON UNIT
$
0.53

 
 
 
$
0.74

DILUTED INCOME FROM CONTINUING OPERATIONS PER COMMON UNIT
$
0.52

 
 
 
$
0.72

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
108,091,486

 
 
 
108,091,486

DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
111,850,621

 
 
 
111,850,621


See accompanying notes to the unaudited pro forma condensed consolidated financial statements.





NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 - Basis of Presentation

See “Introduction” for more information regarding the basis of presentation for these unaudited pro forma condensed consolidated financial statements.

Note 2 - Pro Forma Adjustments

The unaudited pro forma condensed consolidated financial statements reflect the impact of the following pro forma adjustments:

A.
Represents the net cash proceeds received from Trajectory at closing from the sale of TPSL for total consideration of $275.5 million, less estimated expenses of approximately $5 million.
B.
The Partnership’s use of net proceeds from the consideration received from Trajectory to repay a portion of the outstanding debt under the revolving credit facility as of June 30, 2019, which bears interest primarily based on a LIBOR rate plus the applicable margin.
C.
Represents the removal of assets and liabilities of the discontinued operations from the balance sheet.
D.
Represents the non-recurring pro forma loss on sale that would have been recorded if the Partnership had completed the sale of TPSL on June 30, 2019.
E.
Amounts reflect the pro forma effect of eliminating the results of operations of TPSL for the three months ended June 30, 2019 and the years ended March 31, 2019, 2018 and 2017 from the presentation of continuing operations in the unaudited pro forma condensed consolidated statements of operations.
F.
The reduction of interest expense from the net repayment of outstanding borrowings under the revolving credit facility as a result of the sale of TPSL. As the pro forma statements of operations assume that the transaction closed on April 1, 2016, the Partnership calculated the reduction by using $270.5 million and an assumed interest rate of 4.27%, the interest rate on the Partnership's revolving credit facility as of June 30, 2019. A change of 0.125% in the assumed interest rate would result in an adjustment of interest expense, on an annual basis, of approximately $0.3 million.
G.
Represents our general partner’s interest in the pro forma adjustment.

Note 3 - Earnings per Unit

Basic earnings per unit is computed by dividing the net income (loss) by the weighted average number of units outstanding during a period. To determine net income (loss) allocated to each class of ownership, the Partnership first allocates net income (loss) in accordance with the amount of distributions made for the quarter by each class of units, if any. The remaining net income is allocated to each class of units in proportion to the weighted average number of units of such class outstanding for a period, as compared to the weighted average number of units outstanding for all classes for the period, with the exception of net losses. Net losses are allocated only to the common units.

Note 4 - Intercompany Transactions

Intercompany transactions have been eliminated within the consolidation in accordance with generally accepted accounting principles. The following are the intercompany transactions that were eliminated from TPSL for the periods presented:

 
Three Months Ended June 30,
 
Years Ended March 31,
 
2019
 
2019
 
2018
 
2017
 
(in thousands)
 
 
 
 
 
 
 
 
Intercompany Revenue
$
62,419

 
$
277,356

 
$
243,796

 
$
146,143

 
 
 
 
 
 
 
 
Intercompay Cost of Sales
$
72,663

 
$
318,549

 
$
32,336

 
$
38,838