Blueknight Reports 29.6 Percent Increase in Distributable Cash Flow and 28.2 Percent Increase in Adjusted EBITDA in the Third Quarter
Blueknight Energy Partners, L.P. (“BKEP” or the “Partnership”)
(NASDAQ:BKEP)(NASDAQ:BKEPP), a midstream energy company providing
integrated services for companies engaged in the production,
distribution and marketing of crude oil, asphalt and other petroleum
products, today announced distributable cash flow of $20.6 million for
the three months ended September 30, 2015, compared to $15.9 million for
the three months ended September 30, 2014, an increase of 29.6%.
Distributable cash flow for the nine months ended September 30, 2015,
was $44.9 million versus $36.7 million for the same period in 2014, an
increase of 22.3%. Distributable cash flow, including a reconciliation
of such measure to net income, is explained in the section of this
release entitled "Non-GAAP Financial Measures.”
BKEP’s adjusted EBITDA was $25.9 million for the third quarter of 2015
compared to $20.2 million for the same period in 2014, an increase of
28.2%. Adjusted EBITDA was $56.0 million for the nine months ended
September 30, 2015, compared to $48.4 million for the same period in
2014, an increase of 15.7%. Adjusted EBITDA, including a reconciliation
of such measure to net income, is explained in the section of this
release entitled “Non-GAAP Financial Measures.”
The Partnership reported net income of $14.0 million on total revenues
of $47.2 million for the three months ended September 30, 2015, versus
net income of $11.3 million on total revenues of $48.4 million for the
same period in 2014. BKEP recorded net income of $23.3 million on total
revenues of $136.1 million for the nine months ended September 30, 2015
compared to net income of $18.8 million on total revenues of $140.6
million for the same period in 2014.
BKEP previously announced a third quarter 2015 cash distribution of
$0.1450 per common unit, a 1.8% increase over the prior quarter’s
distribution and a 7.8% increase over the third quarter 2014
distribution. The Partnership also announced a $0.17875 distribution per
preferred unit payable on November 13, 2015. Distributions will be paid
on all outstanding common and preferred units to unitholders of record
as of the close of business on November 3, 2015. Additional information
regarding the Partnership’s results of operations will be provided in
the Partnership’s Quarterly Report on Form 10-Q for the three months
ended September 30, 2015, to be filed with the Securities and Exchange
Commission on November 5, 2015.
Comments from BKEP CEO Mark Hurley:
“Our company continues to post strong results in a very challenging low
commodity price environment. Increases of 30% in distributable cash flow
and 28% in adjusted EBITDA in the third quarter of 2015 as compared to
the comparable period in 2014 reflects the value of our diversified
asset portfolio. Additionally, our high proportion of contracted cash
flows contributes to our ability to generate consistent operating
margins. The solid performance of our asphalt and crude terminalling
segments offset the more market-driven and volume-sensitive trucking
segment. The asphalt segment benefited from volume throughput increases,
contract renegotiations and the Cheyenne, Wyoming terminal acquisition
in the second quarter. Favorable storage market conditions and our
ability to replace expiring storage rates with increased rates
contributed to another strong performance by our crude terminalling
segment. Challenges continue to exist in our trucking and services
segment because of rate pressures, increased competition for barrels and
an increase in pipeline connected barrels. The decrease in our pipeline
segment operating margin is due to the expiration of an increased tariff
charged from June 2014 through May 2015 and to sales of $2.3 million and
$4.2 million of crude oil related to accumulated pipeline loss
allowances for the three and nine months ended September 30, 2014,
respectively. There were no such sales in 2015. In addition, our
investment in the Pecos River Pipeline contributed another $1.4 million
and $3.3 million of equity earnings to the three and nine months ended
September 30, 2015, respectively, and we recorded a $6.0 million gain on
the sale of an asset related to the settlement of outstanding litigation.
“We continue to develop a number of organic growth projects including
the Knight Warrior Pipeline and the Oklahoma Condensate project, which
we announced earlier this week. However, we may alter our organic growth
approach and lean towards a selective acquisition growth approach in the
face of decreases in drilling and production volumes and increases in
equity yields because of the prolonged low crude commodity prices.
Acquisitions would generate immediate cash flows and could be accretive
to unitholders sooner when compared to organic projects that do not
generate positive cash flows during their development. In the immediate
future, we will continue to develop projects organically, but will take
a more measured pace as we monitor production volumes, pricing and
drilling activities. As exploration and production and midstream
companies accelerate their disposition of assets to raise cash, we will
also consider pursuing those assets that play to our strengths,
particularly in terminalling and storage, pipeline and gathering and
processing. We believe our balance sheet and access to capital positions
us well to take advantage of the opportunities in the current market
environment to execute on potential transactions. We intend to be both
strategic and aggressive in the market.
“Underscoring our focus on delivering consistent value to our
unitholders, I am pleased we were once again able to increase our common
unit distribution to $0.1450 for the quarter, marking the thirteenth
consecutive quarterly increase for the Partnership and representing an
increase of 7.8% over the third quarter of 2014. We will be diligent in
our pursuit of growth opportunities, tightly manage our current business
segments and we will provide excellent service to our customer in the
interest of continuing our strong performance.”
Results of Operations
The following table summarizes the financial results for the three and
nine months ended September 30, 2014 and 2015 (in thousands except per
unit data):
|
|
Three Months
ended
September 30,
|
|
Nine Months
ended
September 30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
|
(unaudited)
|
Service revenue:
|
|
|
|
|
|
|
|
|
Third party revenue
|
|
$
|
38,501
|
|
|
$
|
36,360
|
|
|
$
|
107,935
|
|
|
$
|
104,872
|
|
Related party revenue
|
|
9,857
|
|
|
10,857
|
|
|
32,663
|
|
|
31,275
|
|
Total revenue
|
|
48,358
|
|
|
47,217
|
|
|
140,598
|
|
|
136,147
|
|
Expense:
|
|
|
|
|
|
|
|
|
Operating
|
|
32,295
|
|
|
31,678
|
|
|
102,272
|
|
|
97,446
|
|
General and administrative
|
|
4,267
|
|
|
4,742
|
|
|
13,124
|
|
|
14,386
|
|
Total expense
|
|
36,562
|
|
|
36,420
|
|
|
115,396
|
|
|
111,832
|
|
Gain on sale of assets
|
|
808
|
|
|
6,213
|
|
|
1,780
|
|
|
6,477
|
|
Operating income
|
|
12,604
|
|
|
17,010
|
|
|
26,982
|
|
|
30,792
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Equity earnings in unconsolidated affiliate
|
|
423
|
|
|
1,399
|
|
|
477
|
|
|
3,338
|
|
Interest expense (net of capitalized interest of $84, $80, $244, and
$153, respectively)
|
|
(1,640
|
)
|
|
(4,343
|
)
|
|
(8,325
|
)
|
|
(10,576
|
)
|
Income before income taxes
|
|
11,387
|
|
|
14,066
|
|
|
19,134
|
|
|
23,554
|
|
Provision for income taxes
|
|
116
|
|
|
99
|
|
|
351
|
|
|
296
|
|
Net income
|
|
$
|
11,271
|
|
|
$
|
13,967
|
|
|
$
|
18,783
|
|
|
$
|
23,258
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income for calculation of earnings per unit:
|
|
|
|
|
|
|
|
|
General partner interest in net income
|
|
$
|
247
|
|
|
$
|
376
|
|
|
$
|
437
|
|
|
$
|
720
|
|
Preferred interest in net income
|
|
$
|
5,391
|
|
|
$
|
5,391
|
|
|
$
|
16,173
|
|
|
$
|
16,173
|
|
Income available to limited partners
|
|
$
|
5,633
|
|
|
$
|
8,200
|
|
|
$
|
2,173
|
|
|
$
|
6,365
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common unit
|
|
$
|
0.23
|
|
|
$
|
0.24
|
|
|
$
|
0.09
|
|
|
$
|
0.19
|
|
Diluted net income per common unit
|
|
$
|
0.20
|
|
|
$
|
0.21
|
|
|
$
|
0.09
|
|
|
$
|
0.19
|
|
|
|
|
|
|
|
|
|
|
Weighted average common units outstanding - basic
|
|
23,909
|
|
|
32,947
|
|
|
23,245
|
|
|
32,919
|
|
Weighted average common units outstanding - diluted
|
|
54,927
|
|
|
63,875
|
|
|
23,245
|
|
|
32,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below summarizes our financial results by operating segment
margin for the three and nine months ended September 30, 2014 and 2015
(dollars in thousands):
Operating Results
|
|
Three Months ended September 30,
|
|
Nine Months
ended September 30,
|
|
Favorable/(Unfavorable)
|
|
|
|
Three Months
|
|
Nine Months
|
(in thousands)
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
Operating margin, excluding depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asphalt services operating margin
|
|
$
|
12,075
|
|
|
$
|
15,481
|
|
|
$
|
30,027
|
|
|
$
|
36,754
|
|
|
$
|
3,406
|
|
|
28
|
%
|
|
$
|
6,727
|
|
|
22
|
%
|
Crude oil terminalling and storage operating margin
|
|
3,949
|
|
|
5,240
|
|
|
14,766
|
|
|
14,191
|
|
|
1,291
|
|
|
33
|
%
|
|
(575
|
)
|
|
(4
|
)%
|
Crude oil pipeline services operating margin
|
|
5,520
|
|
|
1,040
|
|
|
7,773
|
|
|
5,809
|
|
|
(4,480
|
)
|
|
(81
|
)%
|
|
(1,964
|
)
|
|
(25
|
)%
|
Crude oil trucking and producer field services operating margin
|
|
1,090
|
|
|
536
|
|
|
5,102
|
|
|
2,088
|
|
|
(554
|
)
|
|
(51
|
)%
|
|
(3,014
|
)
|
|
(59
|
)%
|
Total operating margin, excluding depreciation and amortization
|
|
$
|
22,634
|
|
|
$
|
22,297
|
|
|
$
|
57,668
|
|
|
$
|
58,842
|
|
|
$
|
(337
|
)
|
|
(1
|
)%
|
|
$
|
1,174
|
|
|
2
|
%
|
Non-GAAP Financial Measures
This press release contains the non-GAAP financial measures of adjusted
EBITDA, distributable cash flow and total operating margin, excluding
depreciation and amortization. Adjusted EBITDA is defined as earnings
before interest, income taxes, depreciation, amortization, non-cash
equity-based compensation and gains related to investments.
Distributable cash flow is defined as adjusted EBITDA, plus or minus
cash proceeds from sale of investments, cash paid for interest,
maintenance capital expenditures, and cash paid for taxes. The use of
adjusted EBITDA, distributable cash flow and total operating margin,
excluding depreciation and amortization, should not be considered as
alternatives to GAAP measures such as operating income, net income or
cash flows from operating activities. Adjusted EBITDA, distributable
cash flow and total operating margin, excluding depreciation and
amortization are presented because the Partnership believes they provide
additional information with respect to its business activities and are
used as supplemental financial measures by management and external users
of the Partnership’s financial statements, such as investors, commercial
banks and others, to assess, among other things, the Partnership’s
operating performance and return on capital as compared to those of
other companies in the midstream energy sector, without regard to
financing or capital structure.
The following table presents a reconciliation of adjusted EBITDA and
distributable cash flow to net income for the periods shown (dollars in
thousands):
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
Net income
|
|
$
|
11,271
|
|
|
$
|
13,967
|
|
|
$
|
18,783
|
|
|
$
|
23,258
|
|
Interest expense
|
|
1,640
|
|
|
4,343
|
|
|
8,325
|
|
|
10,576
|
|
Gain related to investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(267
|
)
|
Income taxes
|
|
116
|
|
|
99
|
|
|
351
|
|
|
296
|
|
Depreciation and amortization
|
|
6,571
|
|
|
6,758
|
|
|
19,342
|
|
|
20,141
|
|
Non-cash equity-based compensation
|
|
590
|
|
|
727
|
|
|
1,632
|
|
|
2,002
|
|
Adjusted EBITDA
|
|
$
|
20,188
|
|
|
$
|
25,893
|
|
|
$
|
48,433
|
|
|
$
|
56,006
|
|
Cash proceeds from sale of investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,346
|
|
Cash paid for interest
|
|
(2,511
|
)
|
|
(2,521
|
)
|
|
(6,809
|
)
|
|
(7,346
|
)
|
Cash paid for taxes
|
|
(9
|
)
|
|
(9
|
)
|
|
(522
|
)
|
|
(393
|
)
|
Maintenance capital expenditures, net of reimbursable expenditures
|
|
(1,809
|
)
|
|
(2,747
|
)
|
|
(4,389
|
)
|
|
(5,673
|
)
|
Distributable cash flow
|
|
$
|
15,859
|
|
|
$
|
20,616
|
|
|
$
|
36,713
|
|
|
$
|
44,940
|
|
|
|
|
|
|
|
|
|
|
Distribution declared (1)
|
|
$
|
10,113
|
|
|
$
|
10,599
|
|
|
$
|
27,499
|
|
|
$
|
31,421
|
|
Distribution coverage ratio
|
|
1.6
|
|
|
1.9
|
|
|
1.3
|
|
|
1.4
|
|
__________________
|
(1) Inclusive of preferred and common unit declared cash
distributions
|
|
The following table presents a reconciliation of total operating margin,
excluding depreciation and amortization to operating income for the
periods shown (dollars in thousands):
Operating Results
|
|
Three Months
ended September 30,
|
|
Nine Months
ended September 30,
|
|
Favorable/(Unfavorable)
|
|
|
|
Three Months
|
|
Nine Months
|
(in thousands)
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
$
|
|
%
|
|
$
|
|
%
|
Total operating margin, excluding depreciation and amortization
|
|
$
|
22,634
|
|
|
$
|
22,297
|
|
|
$
|
57,668
|
|
|
$
|
58,842
|
|
|
$
|
(337
|
)
|
|
(1
|
)%
|
|
$
|
1,174
|
|
|
2
|
%
|
Depreciation and amortization
|
|
(6,571
|
)
|
|
(6,758
|
)
|
|
(19,342
|
)
|
|
(20,141
|
)
|
|
(187
|
)
|
|
3
|
%
|
|
(799
|
)
|
|
4
|
%
|
General and administrative expense
|
|
(4,267
|
)
|
|
(4,742
|
)
|
|
(13,124
|
)
|
|
(14,386
|
)
|
|
(475
|
)
|
|
11
|
%
|
|
(1,262
|
)
|
|
10
|
%
|
Gain on sale of assets
|
|
808
|
|
|
6,213
|
|
|
1,780
|
|
|
6,477
|
|
|
5,405
|
|
|
669
|
%
|
|
4,697
|
|
|
264
|
%
|
Operating income
|
|
$
|
12,604
|
|
|
$
|
17,010
|
|
|
$
|
26,982
|
|
|
$
|
30,792
|
|
|
$
|
4,406
|
|
|
35
|
%
|
|
$
|
3,810
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Conference Call
The Partnership will discuss third quarter 2015 results during a
conference call on Thursday, November 5, 2015 at 1:00 p.m. CST (2:00
p.m. EST). The conference call will be accessible through the Investors
Section of the Partnership’s Website at http://investor.bkep.com/presentations
or by telephone at 1-877-300-8521. International participants will be
able to connect to the conference by calling 1-412-317-6026.
Participants should dial in five to ten minutes prior to the scheduled
start time. An audio replay will be available on the Website for 30
days, and a recording will be available by phone for 15 days. The replay
will be available by calling 1-877-870-5176 in the U.S. or
1-858-384-5517 from international locations. The passcode for both is
10070272.
Forward-Looking Statements
This release includes forward-looking statements. Statements included in
this release that are not historical facts (including, without
limitation, any statements about future financial and operating results,
guidance, projected or forecasted financial results, objectives, project
timing, expectations and intentions and other statements that are not
historical facts) are forward-looking statements. Such forward-looking
statements are subject to various risks and uncertainties. These risks
and uncertainties include, among other things, uncertainties relating to
the Partnership’s debt levels and restrictions in its credit facility,
its exposure to the credit risk of our third-party customers, the
Partnership’s future cash flows and operations, future market
conditions, current and future governmental regulation, future taxation
and other factors discussed in the Partnership’s filings with the
Securities and Exchange Commission. If any of these risks or
uncertainties materializes, or should underlying assumptions prove
incorrect, actual results or outcomes may vary materially from those
expected. The Partnership undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
About Blueknight Energy Partners, L.P.
BKEP owns and operates a diversified portfolio of complementary
midstream energy assets consisting of approximately 7.7 million barrels
of crude oil storage located in Oklahoma and Texas, approximately 6.6
million barrels of which are located at the Cushing Oklahoma
Interchange, approximately 976 miles of crude oil pipeline located
primarily in Oklahoma and Texas, approximately 240 crude oil
transportation and oilfield services vehicles deployed in Kansas,
Colorado, New Mexico, Oklahoma and Texas and approximately 7.3 million
barrels of combined asphalt product and residual fuel oil storage
located at 43 terminals in 22 states. BKEP provides integrated services
for companies engaged in the production, distribution and marketing of
crude oil, asphalt and other petroleum products. BKEP is headquartered
in Oklahoma City, Oklahoma. For more information, visit the
Partnership’s Web site at www.bkep.com.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151104006761/en/ Copyright Business Wire 2015
Source: Business Wire
(November 4, 2015 - 4:30 PM EST)
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