 December 2014
Partnership Overview
Exhibit 99.1 |
 Cautionary Statements
2
This presentation may contain forward-looking statements within the meaning of U.S. federal
securities laws. These statements can be identified by the use of forward-looking
terminology including “may,” “believe,” “will,” “expect,” “anticipate,” “estimate,”
“continue,” or other similar words. These statements discuss future expectations, contain
projections of results of operations or of financial condition, or state other
“forward-looking” information. These forward-looking statements involve risks and uncertainties.
When considering these forward-looking statements, you should keep in mind the risk factors and
other cautionary statements in this presentation. The risks noted throughout this presentation
could cause our actual results to differ materially from those contained in any
forward-looking statement.
A forward-looking statement may include a statement of the assumptions or bases underlying the
forward-looking statement. USD Partners LP (“USDP” or the
“Partnership”) believes that it has chosen these assumptions or bases in good faith and that
they are reasonable. You are cautioned not to place undue reliance on any forward-looking
statements. Except as required by law, USDP undertakes no obligation to revise or update
any forward-looking statement. You should also understand that it is not possible to
predict or identify all such factors and should not consider the following list to be a complete statement of all potential
risks and uncertainties:
Changes in general economic conditions; competitive conditions in our industry; actions taken by our
customers and competitors; the supply of, and demand for, crude oil and biofuel rail
terminalling services; our ability to successfully implement our business plan; our ability to
complete growth projects on time and on budget; the price and availability of debt and equity financing;
operating hazards and other risks incidental to handling crude oil and biofuels; natural disasters,
weather-related delays, casualty losses and other matters beyond our control; interest
rates; labor relations; large customer defaults; change in availability and cost of capital;
changes in tax status; the effect of existing and future laws and government regulations; changes in insurance
markets impacting cost and the level and types of coverage available; disruptions due to equipment
interruption or failure at our facilities or third-party facilities on which our business
is dependent; the effects of future litigation; and the factors discussed in the “Risk
Factors” section of the Partnership’s final prospectus in connection with its initial public offering, filed with the Securities and
Exchange Commission on October 10, 2014 (File No. 333-198500) (the “IPO
Prospectus”). |
 1.
Overview of USD Group LLC (“USDG”)
4
2.
Overview of USD Partners LP (“USDP”)
13
3.
Financial Overview
20
Appendix
25
Table of Contents
3 |
 1.
Overview of USD Group LLC (“USDG”) 4 |
 A
pioneer
of
the
hydrocarbon-by-rail
concept,
USDG
has
always
focused
on
providing
sustainable
industry
solutions
USDG has a proven history building and operating unit train-capable terminals
with an aggregate capacity of over 725,000 bpd and has safely and efficiently
handled over 155 million barrels of liquid hydrocarbons Since 2010, USDG has
monetized approximately $700 million of assets to high quality third party MLPs
A Proven Developer and Industry Innovator
5
Terminal Start Dates
Deer Park Terminal, TX
Loading / Storage
Facility
West Colton
Terminal, CA
Ethanol Terminal
Baltimore
Terminal, MD
Ethanol Terminal
St. James Terminal, LA
Crude / Condensate
Terminal
Hardisty
Terminal, Canada
Crude Oil Terminal
Van Hook
Terminal, ND
Crude Oil Terminal
Eagle Ford
Terminal, TX
Crude Oil Terminal
Dallas / Ft. Worth
Terminal, TX
Ethanol Terminal
Niobrara
Terminal, CO
Crude Oil Terminal
Bayport Terminal, TX
Railcar Storage and
Staging Terminal
Lomita
Terminal, CA
Ethanol Terminal
Linden
Terminal, NJ
Ethanol Terminal
2000
2007
2008
2014
2011
2012
2010
2004
2006
Initial Terminal Assets of USDP
Assets Sold to
in December 2012 for ~$500 million¹
Assets Sold to
in January 2010 for ~$195 million
Assets Sold to
in April 2006 for ~$48 million
Legend:
San Antonio
Terminal, TX
Ethanol Terminal
1. Bakersfield Terminal not shown in timeline due to early stage of development, but was included in
sale to Plains All American.
|
 Independent, Third Party Provider of Logistics Solutions
Focused on industry solutions / macro solutions
Aligned with our customers
Proven Operator with Extensive Track Record
Among the first companies to successfully develop hydrocarbon-by-rail
terminals Longstanding relationships with companies in both railroad and
energy industries Financial Flexibility
Significant
“dry
powder”
to
pursue
third
party
acquisitions
and
/
or
organic
growth
projects
Strategic partnership with Energy Capital Partners (“ECP”) provides
increased liquidity, financial flexibility and access to additional
resources Strong Safety Record
Loaded
or
handled
over
155
million
barrels
of
liquid
hydrocarbons
with
no
reportable
spills
1
Key Competitive Advantages
1. As defined by the U.S. Department of Transportation Pipeline and Hazardous
Materials Safety Administration. 6
Nationally recognized by National Safety Council, Burlington Northern Santa Fe
Railway and Canadian Pacific Railway for outstanding safety record
–
All
USDG
facilities
meet
or
exceed
all
current
government
safety
regulations
–
Deep understanding of capital intensive and highly engineered projects
|
 Industry Dynamics
U.S. and Canadian crude oil production has increased
significantly in recent years
Increased crude oil production will lead to
logistics infrastructure opportunities across multiple
products, including:
Compelling Industry Dynamics
7
Crude Oil Flows to U.S. Refining Centers
North America Rail Network
North America Crude Oil Pipeline Network
Source: Canadian Association of Petroleum Producers, U.S. Energy Information Administration,
Association of American Railroads.
Infrastructure and logistic services opportunities will arise,
including additional rail terminals, storage, blending, diluent
recovery, trucking and gathering systems
–
Refined petroleum products
–
Natural gas liquids (“NGLs”)
–
Frac sand
–
Biofuels |
 USDG
believes there are substantial opportunities in the U.S. and Canada for both origination and destination
terminals for crude oil, refined products and NGLs
Current
regional
imbalances
have
created
multiple
unit
train
per
day
crude-by-rail
terminal
opportunities
Significant Rail-Related Energy Opportunities
8
Western Canada Origination
~1.8 MMBpd expected increase
in oil sands production over
the next 10 years
East Coast Destination
Substantial refining
capacity plus potential
ability to export overseas
West Coast Destination
Substantial refining
capacity plus potential
ability to export overseas
Gulf Coast Destination
1.5 MMBpd of heavy crude imports
from Mexico and Venezuela could
potentially be displaced with crude
oil from Canada
Source: Canadian Association of Petroleum Producers, U.S. Energy Information Administration,
Association of American Railroads.
Note: Heavy crude oil imports from Mexico and Venezuela per the EIA. Average monthly data from January
2014 to December 5, 2014 shown.
|
 Rail
enables a number of advantages for both producers / shippers and refiners
Sustainable Advantages of Rail
9
Rail is a Long-Term, Sustainable Energy Infrastructure Solution
North American Rail Carloads of Petroleum and Petroleum Products
Have Doubled
Since Early 2011
Ability to offer tailored
takeaway capacity
–
Accessible for small
and mid-sized
producers and early
stage production areas
Increased ability to
expand capacity
Source: Association of American Railroads (U.S. Monthly Rail Traffic Data for
Petroleum and Petroleum Products Carloads). Cost
Speed
Scalability
Market Optionality
Shorter development
time
~1 year vs.
multiple years for
pipeline
Faster deployment
of infrastructure
–
Significant rail
infrastructure
already in-place
–
Fewer right-of-way,
permitting and
regulatory issues
or constraints
Option to reach
markets with best
netbacks and margins
on shorter notice
–
Ability to choose
destination once train
is loaded
–
Faster physical
delivery of product
9 days from Western
Canada to the Gulf
Coast vs. 30 –
45 days
via pipeline
Preserves ability to
export crude oil
Less capital required
Reduced shipper
commitments
3 –
7
years vs. 10+ years for
pipelines
Reduced financial
commitments
Lower
fixed costs / minimal “no
flow”
financial risk
Reduced cost of
feedstock
Access to
domestic feedstock vs.
higher priced imports |
 Hardisty Crude Oil Hub: The Cushing of Canada
10
Hardisty Crude Oil Storage Hub
USD’s Hardisty
Rail Terminal
Changes in Crude Oil Flows
Gibson has Over 5 MMbbls of Storage at the Hardisty Hub
with an Additional 2 MMbbls of Storage Under Construction
Source: Gibson Energy Inc., U.S. Energy Information Administration.
|
 Hardisty Phase II
Selected Growth Opportunities
11
Expand the Hardisty Rail Terminal to accommodate one additional 120-railcar
unit train per day Targeting bitumen from Western Canada
Endeavor to seek multi-year, take-or-pay agreements with new or
existing customers Targeting
2017 to commence operations, barring any unanticipated financing, permitting,
construction or other hurdles
–
Seeking multi-year, take-or-pay agreements with new or existing
customers –
Targeting
late
2015
/
early
2016
to
commence
operations,
barring
any
unanticipated
financing,
permitting,
construction or other hurdles
–
Expect similar operating cash flow profile to Hardisty I with additional cost and
design efficiencies Hardisty Phase III
Expand the Hardisty Rail Terminal to accommodate two additional 120-railcar
unit trains per day Targeting heavy crude from Western Canada
Currently in process of contracting, designing, engineering and permitting Hardisty
Phase II |
 On
September
22
nd
,
USDG
announced
the
successful
closing
of
a
partnership
with
Energy
Capital
Partners,
an
energy infrastructure-focused private equity firm with over $13 billion in
capital commitments As part of this transaction, ECP purchased a meaningful
equity interest in USDG, who utilized the resulting proceeds to realign its
shareholder base, fund several existing growth projects and strengthen its balance sheet to allow for
additional flexibility to pursue its goal of providing rail-related energy
infrastructure solutions Energy Capital Partners (“ECP”)
Overview 12
Renewable Generation
Environmental Infrastructure
Energy Services
ECP has extensive midstream and MLP experience. For example, funds affiliated with
ECP have invested a significant
amount
of
capital
in
Summit
Midstream
Partners,
LLC,
Summit
Midstream
Partners,
LP’s
majority
owner
and its general partner.
–
ECP
has
indicated
an
intention
to
invest
over
$1.0
billion
of
additional
equity
capital
in
USDG,
subject
to
market
and
other
conditions
Fossil Generation
Midstream Oil and Gas |
 2.
Overview of USD Partners LP (“USDP”) 13
|
 Hardisty Phases
II & III
USDP: Partnership Structure & Overview
14
USD Group LLC
(USDG)
USD Partners GP LLC
(GP & IDRs)
Public Unitholders
Hardisty Rail
Terminal (Phase I)
San Antonio
Rail Terminal
West Colton
Rail Terminal
Railcar
Fleet Services
100%
Ownership
Interest
100% Ownership Interest
Assets Remaining at USDG
2.0% GP
Interest & IDRs
USD Partners LP
(the Partnership)
NYSE: USDP
Other
Strategic Projects
Energy Capital
Partners
USD Holdings LLC
& Management
Goldman Sachs
54.1% LP Interest
(Common Units and
Subordinated Units)
43.9%
LP
Interest
2
Ethanol (Destination)
20,000 Bpd design
capacity
100% fee-based
1. 172,629 bpd = 2 trains loaded per day * 120 railcars per train * approximately
720 barrels per railcar. 2. Includes 250,000 Class A Units (~1% of total
units) beneficially owned by certain management team members subject to certain vesting and other conversion requirements.
3,799 railcar fleet
100% take-or-pay
Ethanol (Destination)
13,000 Bpd design
capacity
100% fee-based
Crude Oil (Origination)
172,629 Bpd design
capacity
100% take-or-pay contracts
1 |
 USDG has an extensive history as a proven developer of hydrocarbon-by-rail
facilities ECP involvement at the USDG level strengthens our Sponsor’s
financial position, providing a source of potential capital for third party
acquisitions and development projects
USDP: Investment Highlights
15
Relationship with
Our Sponsor
Strategically Located Assets
Stable and Predictable
Cash Flows
Multiple Growth Levers
Located near critical supply and demand centers
Hardisty Rail Terminal is the only crude-by-rail terminal with unit train
capabilities located in the Hardisty hub, one of the major crude oil supply
centers in North America San Antonio and West Colton rail terminals are the
closest ethanol terminals to key gasoline blending terminals in their areas
of operation 100% of our terminal revenue is fee-based and ~83% is from
investment grade counterparties or their subsidiaries
Substantially all rail terminalling capacity at our Hardisty Rail Terminal is
contracted under multi-year, take-or-pay agreements with
inflation-based rate escalators and automatic renewal provisions
Pursue drop downs from our Sponsor
Pursue organic growth initiatives that complement, optimize or improve the
profitability of our assets
Pursue acquisitions of energy-related rail terminals and high quality,
complementary midstream
infrastructure
from
third
parties
(with
or
without
our
Sponsor)
Financial Flexibility
Conservative
leverage
(1.1x
net
debt
to
NTM
Adjusted
EBITDA)
and
$58.9
million
of
cash on the balance sheet¹
Access to debt and equity capital markets provides significant financial
flexibility to effectively execute growth strategy
1. Based on USDP balance sheet as of 10/31/2014 and the Partnership’s estimated Adjusted EBITDA
for the 12 month period ending September 30, 2015 included in the IPO Prospectus.
Adjusted EBITDA is a non-GAAP financial measure. For a discussion of
EBITDA and the most comparable measures calculated in accordance with GAAP, see the Appendix.
|
 Strategically Located Assets: Hardisty Rail Terminal
16
Overview of the Hardisty Rail Terminal
Origination terminal that commenced operations on June 30, 2014
Only unit train capable crude-by-rail terminal located at the Hardisty hub,
the primary location for storing and originating crude oil from
Alberta’s Crude Oil Basin Receives inbound deliveries via direct
pipeline connection to the Gibson Energy Inc. (“Gibson”) Hardisty storage terminal
Connected
to
CP
Railroad’s
North
Main
Line,
which
offers
connectivity
to
all
key
refining
markets
in
North
America
Ability to load up to two 120-railcar unit trains per day
Hardisty Rail Terminal
Located within Close Proximity to the Hardisty Hub
Hardisty Hub
Source: Gibson Energy Inc. (Hardisty hub operational storage capacity
figures). –
Fixed loading rack with 30 railcar loading positions
–
Unit train staging area
–
Loop tracks capable of holding 5 unit trains simultaneously
–
Gibson has over 5 MMbbls of storage at the Hardisty hub, with an additional 2
MMbbls of storage under construction –
Provides
access
to
most
major
pipeline
systems
in
the
Hardisty
complex |
 West Colton
Rail Terminal
Blending
Facilities
Strategically Located Assets: Ethanol Destination Terminals
17
Infrastructure Needs Addressed by Our Ethanol Destination Terminals
Fragmented production
Pipelines disadvantaged and trucks uneconomical
Significant regional imbalances
Regulatory pressures regarding gasoline blending
Overview of the West Colton Rail Terminal
Unit train-capable destination terminal that transloads
ethanol received by rail from regional and other producers at
a max rate of 13,000 Bpd
Located within one mile of the gasoline blending
terminals
that
supply
the
greater
San
Bernardino
and
Riverside County-Inland Empire region of Southern
California and the only rail terminal within a 10-mile radius of
the gasoline blending terminals
Overview of the San Antonio Rail Terminal
Unit train-capable destination terminal that transloads
ethanol received by rail from Midwestern producers at a max
rate of 20,000 Bpd
Located within five miles of San Antonio’s gasoline
blending terminals
and the only ethanol rail terminal within
a 20-mile radius of the gasoline blending terminals
San Antonio
Rail Terminal
Blending
Facilities
Blending
Facilities
Blending
Facilities
Blending
Facilities
Blending
Facilities
20 railcar offloading positions and 3 truck loading positions
20 railcar offloading positions and 3 truck loading positions
|
 USDP’s ability to provide railcars gives customers additional incentives to
commit to USDP’s terminals, as end customers can find it difficult to
procure railcars themselves without the economies of scale and relationships
with railcar providers
USDP has entered into master fleet services agreements with a number of its rail
terminal customers for the use of its leased railcars on a fee-based,
take-or-pay basis for periods ranging from 5 to 9 years A Strategic
Asset: Our Railcar Fleet 18
Total Railcars (as of 09/30/14)
Currently Available for Service
In Production or on Order
Coiled and Insulated
General Purpose
Constructed in 2013 and 2014
3,799
2,919
2,108
66%
800
1,691
As of September 30, 2014, the weighted-average remaining contract life of
railcars dedicated to Hardisty rail terminal was 6.7 years; the
weighted-average contract life of the entire fleet was 5.3 years |
 USDG is committed to safe, efficient and reliable operations that comply with
environmental and safety regulations
All USDG facilities meet or exceed all government safety regulations and are in
compliance with all recently enacted orders regarding the movement of
crude-by-rail USDG has been nationally recognized by the National
Safety Council, Burlington Northern Santa Fe Railway, and
Canadian
Pacific
Railways,
among
others,
for
its
outstanding
safety
record
Since inception, USDG has loaded and / or handled over 155 MMbbls of liquid
hydrocarbons with no reportable spills as defined by the U.S. Department of
Transportation (DOT) Pipeline and Hazardous Materials Safety Administration
(PHMSA) Strong Safety Record
19
Organization
Time Period
Recognition
National Safety Council
2006–2014
(Nine Consecutive Years)
Superior Safety
Performance Award
Canadian Pacific Railways
2013
Safe Shipper Award
Burlington Northern
Santa Fe Railway
2011–2012
(Two Consecutive Years)
Stewardship Award |
 3.
Financial Overview 20 |
 Stable and Predictable Cash Flows: Fee-Based Contracts
21
Estimated Adjusted EBITDA by Contract Type
Terminalling Customers
Note: Adjusted EBITDA is a non-GAAP measure. Charts represent breakout of
the Partnership’s estimated Adjusted EBITDA for the twelve month period ending September 30, 2015 included in
the IPO Prospectus.
Take-or-Pay
94%
Other Fee-Based
6%
6 out of 8 are subsidiaries of investment grade customers
No single customer represents more than 18% of estimated Adjusted EBITDA
J. Aron &
Company
Estimated Adjusted EBITDA by Asset
Hardisty Crude
Terminal
85%
USD
Rail
9%
Ethanol Terminals
6%
Our
fee-based
contracts
provide
stable
and
predictable
cash
flows
with
94%
from
take-or-pay |
 Financial Flexibility
Financial Flexibility: Positioned to Pursue Growth
22
Debt and Liquidity
1.
Calculated based on Total Debt and Net Debt divided by the Partnership’s
estimated Adjusted EBITDA for the twelve month period ending September 30, 2015 included in the IPO
Prospectus.
($ in millions)
As of 10/31/2014
Cash and Cash Equivalents
$58.9
Revolving Credit Facility Capacity
200.0
Less: Funded Borrowings
0.0
Available Liquidity
$258.9
Borrowings on Revolver
$0.0
Term Loan
100.1
Total Debt
$100.1
Net Debt
41.2
Total Debt / Estimated NTM Adjusted EBITDA¹
2.6x
Net Debt / Estimated NTM Adjusted EBITDA¹
1.1x
In connection with the IPO, USDP entered into a $300 million senior secured credit
agreement consisting of a $100 million term loan (drawn in Canadian dollars)
and a $200 million revolving credit facility (undrawn) Revolving credit
facility capacity will expand to $300 million as the term loan is repaid
Revolving credit facility capacity can be further increased by $100 million
As
of
10/31/2014,
the
Partnership
had
$58.9
million
of
cash
on
the
balance
sheet
to
fund
potential
future
growth
initiatives
and
for
general partnership purposes |
 Strategic Flexibility: Multiple Growth Levers
23
Pursue Drop Down Acquisitions from USDG
USDG has a strong track record of developing high-quality assets that align
with USDP’s vision and strategy Two
identified
potential
drop
downs
from
USDG:
Hardisty
Phase
II
and
Hardisty
Phase
III
–
USDG
is
in
the
process
of
designing,
engineering,
permitting
and
is
currently
negotiating
contracts
with
third parties with respect to Hardisty Phase II
Pursue
Third
Party
Acquisitions
with
Stable
and
Predictable
Cash
Flows
USDP intends to acquire energy-related rail terminals and high-quality,
complementary midstream infrastructure assets from third parties
–
Acquisitions will be pursued jointly with, or independently from, USDG
Pursue Organic Growth Initiatives
USDP will analyze and pursue operational efficiencies that complement, optimize or
improve the profitability of its assets
–
Currently in the process of seeking permits to construct a pipeline directly from
the West Colton Rail Terminal to Kinder Morgan, Inc.’s gasoline
blending terminals, which may result in additional cash flow and
long-term volume commitments
Expect to Achieve Mid-Teens Distribution Growth CAGR over the Next 5 Years
|
 Investment Highlights
24
Strategically Located Assets
Stable and Predictable Cash Flows
Financial Flexibility
Multiple Growth Levers
Relationship with USDG / ECP |
 Appendix
25 |
 Total Quarterly
Distribution Per Unit Target Amount
Marginal % Interest in Distributions
Unitholders
General Partner
Minimum Quarterly Distribution
$0.287500
98%
2%
First Target Distribution
> $0.287500
$0.330625
98%
2%
Second Target Distribution
> $0.330625
$0.359375
85%
15%
Third Target Distribution
> $0.359375
$0.431250
75%
25%
Thereafter
> $0.431250
50%
50%
Additional Unit Information
26
Subordinated LP Units
Number of Units / % of Total
10,463,545 subordinated units / 49.0% of total units outstanding
Subordination Period
Subordinated units will convert in 5 separate equal tranches beginning no earlier
than January 1, 2015 assuming distributions equal or exceed the MDQ for the
prior 4 quarter period, there are no arrearages owed on common units, and
the adjusted operating surplus generated during the prior 4 quarter period
equals or exceeds the MDQ on all common, Class A, subordinated and GP units on a
fully diluted basis
A tranche of subordinated units will not convert more than once per year
Class A Units
Number of Units / % of Total
250,000 Class A units / 1.2% of total units outstanding
Summary Terms
Maximum number of common units into which Class A units could convert is
406,250 Vest in 4 equal annual installments beginning no earlier than
January 1, 2015 Upon
vesting,
units
are
convertible
into
common
units
based
on
a
factor
that
will
be
tied
to
the
level
of
distribution growth for the applicable year
–
If USDP does not grow its distributions per unit, then Class A units will be
forfeited –
Conversion factor will not exceed 1.25x for the first tranche, 1.5x for the
second, 1.75x for the third and 2.0x for the final tranche
|
 Increased oil sands production creates need for sustainable
takeaway solution
A faster, scalable solution to growing production
Sustainability
of
Rail:
Western
Canada
Producer
Perspective
27
Expected Growth in Western Canadian Oil Sands Production
Typical Time to Market: Hardisty to U.S. Gulf Coast
7% CAGR Through 2020
5% CAGR Through 2030
~9 days
~30–45 days
Source: Canadian Association of Petroleum Producers (2014 Canadian Crude Oil
Production Forecast). 0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Actual
Projected
0
5
10
15
20
25
30
35
40
Rail
Pipeline
–
Ability to choose destination once train is loaded, maximizing
netbacks and margins
–
Rail solution preserves quality of heavy barrel and ability to
export from Gulf Coast
–
Only a portion of rail transportation costs require
long-term commitments (railroads are typically contracted
on a spot basis)
–
Pipeline customers bear greater risks of changes in
regional differentials
–
Lower “no-flow”
financial risk
–
Utilizes existing infrastructure and rights-of-way
–
~1 year development time vs. multiple years for pipeline
–
Faster physical delivery to attractive end markets
–
Accessible to small and mid-sized producers and early stage
production areas
Offers increased flexibility and market optionality
Reduced shipper commitments / risk
~4x Longer
Market Exposure
7% CAGR Through 2020
5% CAGR Through 2030 |
 Provides access to cheaper domestic crude feedstock
to displace more expensive heavy imports
Sustainability of Rail: U.S. Gulf Coast Refiner Perspective
28
Volumes of Imported Heavy Crude into the U.S.
Landed Cost of Imported Refinery Crude Inputs
Refinery Crude Oil Input Quality
Source: U.S. Energy Information Administration.
Note: “Landed Cost”
= The dollar per barrel price of crude oil at the port of discharge. Includes
charges associated with the purchase, transportation, and insuring of a cargo from the purchase
point to the port of discharge. Does not include charges incurred at the discharge
port (e.g., import tariffs or fees, wharfage charges, and demurrage).
1.
Notated
2014YTD
figures
represent
a
simple
average
of
monthly
weighted
averages
through
September
(latest
available
as
of
December
18,
2014).
Imported
heavy
crude
volumes
include
data through December 5, 2014.
Lower
API
~1.5 million bpd of
Displacement Opportunity
15
20
25
30
35
East Coast
(PADD1)
Midwest
(PADD2)
Gulf Coast
(PADD3)
TX Gulf
Coast
Rockies
(PADD4)
West Coast
(PADD5)
2012
2013
2014YTD¹
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
2010
2011
2012
2013
2014
Canada
Venezuela + Mexico
$84
$84
$87
$102
$99
$94
$102
$99
$94
$-
$20
$40
$60
$80
$100
$120
2012
2013
2014YTD¹
Canada
Mexico
Venezula
–
Opportunity for blending to optimize feedstock
–
Maximizes margins (reducing costs associated
with diluents)
–
Improves product distribution
Preserves the quality of a heavy barrel
–
~$87/bbl average landed cost from Canada vs.
~$94/bbl from Mexico and Venezuela¹
–
Strong demand for heavy crude oil (lower API) in
U.S. Gulf Coast |
 Non-GAAP Measures
29
We define Adjusted EBITDA as net income before the following items: depreciation and amortization,
interest and other income, interest and other expense, gains and losses on derivative
contracts, foreign currency transaction gains and losses, unrecovered reimbursable freight
costs, income and withholding taxes, non-cash compensation expense related to our equity
compensation programs, discontinued operations and adjustments related to deferred revenue associated
with minimum volume commitments. Adjusted EBITDA is used as both a supplemental financial performance
measure by management and by external users of our financial statements, such as investors and
commercial banks. Our management and external users use Adjusted EBITDA in a number of ways to assess our combined
financial and operating performance, and we believe this measure is helpful to management and
external users in identifying trends in our performance. Adjusted EBITDA helps management
identify controllable expenses and make decisions designed to help us meet our current
financial goals and optimize our financial performance, while neutralizing the impact of capital
structure on results. Accordingly, we believe this metric measures our financial performance based on
operational factors that management can impact in the short-term, namely our cost structure
and expenses. We believe that the presentation of Adjusted EBITDA provides information useful to investors in
assessing our financial condition and results of operations. The GAAP measures most directly
comparable to Adjusted EBITDA are net income attributable to us and cash flow from operating
activities. Adjusted EBITDA should not be considered an alternative to Net income attributable,
Cash flow from operating activities or any other measure of financial performance or liquidity
presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect Net
income, and these measures may vary among other companies. As a result, Adjusted EBITDA may not
be comparable to similarly titled measures of other companies.
For a reconciliation of our estimated Adjusted EBITDA for the twelve months ending September 30, 2015
to our estimated net income for the twelve months ending September 30, 2015, please see page 75
of the IPO Prospectus. |