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 November 9, 2015 - 4:40 PM EST
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NGL Energy Partners LP Announces Second Quarter Fiscal 2016 Results

NGL Energy Partners LP (NYSE:NGL) today reported Adjusted EBITDA of $67.6 million for the three months ended September 30, 2015 (exclusive of $0.6 million of advisory and legal costs related to acquisitions) compared to Adjusted EBITDA of $70.4 million for the three months ended September 30, 2014 (exclusive of $3.2 million of advisory and legal costs related to acquisitions and $5.0 million of severance/compensation costs related to the Gavilon and TransMontaigne acquisitions). NGL reported a net loss of $24.2 million for the three months ended September 30, 2015, compared to a net loss of $15.9 million for the three months ended September 30, 2014.

For the six months ended September 30, 2015, NGL reported Adjusted EBITDA of $156.6 million (exclusive of $0.6 million of advisory and legal costs related to acquisitions), compared to Adjusted EBITDA of $113.5 million during the six months ended September 30, 2014 (exclusive of $4.3 million of advisory and legal costs related to acquisitions and $7.7 million of severance/retention costs related to the Gavilon and TransMontaigne acquisitions). NGL reported a net loss of $62.7 million for the six months ended September 30, 2015, compared to a net loss of $55.8 million for the six months ended September 30, 2014.

“NGL delivered another solid quarter in an overall challenged energy environment growing our EBITDA year to date by approximately 40% over the previous year. We are focused on completing our previously announced organic projects, originating additional such projects, and increasing the partnership’s fee-based cash flows to two-thirds by fiscal 2018,” said Mike Krimbill, CEO of NGL Energy Partners.

A conference call to discuss NGL's results of operations is scheduled for 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Tuesday, November 10, 2015. Analysts, investors, and other interested parties may access the conference call by dialing (855) 436-2710 and providing access code 70634807. An archived audio replay of the conference call will be available for 7 days beginning at 7:00 p.m. Eastern Time (6:00 p.m. Central Time) on November 10, 2015 and can be accessed by dialing (855) 859-2056 and providing access code 70634807. A presentation of the results will be posted before the conference call at NGL’s Investor Relations website at www.nglenergypartners.com/investor-relations/presentations/.

NGL defines EBITDA as net income (loss) attributable to parent equity, plus interest expense, income tax provision (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, and equity-based compensation expense. NGL also includes in Adjusted EBITDA certain inventory valuation adjustments related to its refined products and renewables segment, as described below. EBITDA and Adjusted EBITDA should not be considered alternatives to net income, income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with accounting principles generally accepted in the United States (“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 its ability to make quarterly distributions to its 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 its 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 its refined products and renewables segment, for purposes of its 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 records a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of its 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 table below reflects the excess of the market value of the inventory of the refined products and renewables segment at the balance sheet date over its cost. NGL adds this to Adjusted EBITDA because the gains and losses associated with derivative contracts of this segment, which are intended primarily to hedge inventory holding risk, also impact Adjusted EBITDA.

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 its expectations as reflected in the forward-looking statements are reasonable, NGL can give no assurance that such expectations 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.

About NGL Energy Partners LP

NGL Energy Partners LP is a Delaware limited partnership. NGL owns and operates a vertically integrated energy business with five primary businesses: crude oil logistics, water solutions, liquids, retail propane, and refined products and renewables. For further information, visit the Partnership's website at www.nglenergypartners.com.

   
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(U.S. Dollars in Thousands, except unit amounts)
 
September 30, March 31,
  2015     2015  
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 30,053 $ 41,303
Accounts receivable–trade, net of allowance for doubtful accounts of $5,995
and $4,367, respectively 712,025 1,024,226
Accounts receivable–affiliates 6,345 17,198
Inventories 408,374 441,762
Prepaid expenses and other current assets   120,122     120,855  
Total current assets 1,276,919 1,645,344
 
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of
$270,332 and $202,959, respectively 1,845,112 1,617,389
GOODWILL 1,490,928 1,402,761
INTANGIBLE ASSETS, net of accumulated amortization of $274,823 and $220,517,
respectively 1,231,192 1,288,343
INVESTMENTS IN UNCONSOLIDATED ENTITIES 473,239 472,673
LOAN RECEIVABLE–AFFILIATE 23,775 8,154
OTHER NONCURRENT ASSETS   108,672     112,837  
Total assets $ 6,449,837   $ 6,547,501  
 
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable–trade $ 568,523 $ 833,380
Accounts payable–affiliates 18,794 25,794
Accrued expenses and other payables 164,433 195,116
Advance payments received from customers 96,380 54,234
Current maturities of long-term debt   4,040     4,472  
Total current liabilities 852,170 1,112,996
 
LONG-TERM DEBT, net of current maturities 3,093,694 2,745,299
OTHER NONCURRENT LIABILITIES 17,679 16,086
 
COMMITMENTS AND CONTINGENCIES
 
EQUITY:
General partner, representing a 0.1% interest, 105,269 and 103,899 notional units, respectively (34,380 ) (37,021 )
Limited partners, representing a 99.9% interest, 105,164,071 and 103,794,870 common units
issued and outstanding, respectively 1,976,663 2,162,924
Accumulated other comprehensive loss (136 ) (109 )
Noncontrolling interests   544,147     547,326  
Total equity   2,486,294     2,673,120  
Total liabilities and equity $ 6,449,837   $ 6,547,501  
   
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(U.S. Dollars in Thousands, except unit and per unit amounts)
 
Three Months Ended September 30, Six Months Ended September 30,
  2015       2014   2015       2014  
REVENUES:
Crude oil logistics $ 1,007,578 $ 2,111,143 $ 2,335,362 $ 4,040,426
Water solutions 47,494 52,719 101,787 100,033
Liquids 258,992 539,753 507,977 1,014,910
Retail propane 53,206 68,358 117,653 146,260
Refined products and renewables 1,825,925 2,607,220 3,668,885 3,724,717
Other   -     1,333     -     2,794  
Total Revenues   3,193,195     5,380,526     6,731,664     9,029,140  
 
COST OF SALES:
Crude oil logistics 982,719 2,083,712 2,274,711 3,981,351
Water solutions (8,567 ) (9,439 ) (4,960 ) 1,134
Liquids 221,115 514,064 453,391 976,080
Retail propane 20,879 39,894 50,443 87,418
Refined products and renewables 1,789,680 2,550,851 3,554,792 3,665,164
Other   -     383     -     2,371  
Total Cost of Sales   3,005,826     5,179,465     6,328,377     8,713,518  
 
OPERATING COSTS AND EXPENSES:
Operating 99,773 97,419 207,687 164,855
General and administrative 29,298 41,639 91,779 69,512
Depreciation and amortization 56,761 50,099 116,592 89,474
Loss on disposal or impairment of assets, net   1,291     4,134     1,712     4,566  
Operating Income (Loss) 246 7,770 (14,483 ) (12,785 )
 
OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated entities 2,432 3,697 11,150 6,262
Interest expense (31,571 ) (28,651 ) (62,373 ) (49,145 )
Other income (expense), net   1,955     (617 )   780     (1,008 )

Loss Before Income Taxes

(26,938 ) (17,801 ) (64,926 ) (56,676 )
 
INCOME TAX BENEFIT   2,786     1,922     2,248     887  
 
Net Loss (24,152 ) (15,879 ) (62,678 ) (55,789 )
 
LESS: NET INCOME ALLOCATED TO GENERAL PARTNER (16,166 ) (11,056 ) (31,525 ) (20,437 )
 
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   (2,891 )   (3,345 )   (6,766 )   (3,410 )
 
NET LOSS ALLOCATED TO LIMITED PARTNERS $ (43,209 ) $ (30,280 ) $ (100,969 ) $ (79,636 )
 
BASIC AND DILUTED LOSS PER COMMON UNIT $ (0.41 ) $ (0.34 ) $ (0.97 ) $ (0.93 )
 
BASIC AND DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING   105,189,463     88,331,653     104,542,427     81,267,742  
   
ADJUSTED EBITDA RECONCILIATION
 
The following table reconciles net loss to our EBITDA and Adjusted EBITDA, each of which are non-GAAP financial measures:
 
 
Three Months Ended September 30, Six Months Ended September 30,
  2015       2014     2015       2014  
(in thousands)
Net loss $ (24,152 ) $ (15,879 ) $ (62,678 ) $ (55,789 )
Net income attributable to noncontrolling interests   (2,891 )   (3,345 )   (6,766 )   (3,410 )
Net loss attributable to parent equity (27,043 ) (19,224 ) (69,444 ) (59,199 )
Interest expense 29,520 27,929 58,168 48,446
Income tax benefit (2,805 ) (1,933 ) (2,284 ) (898 )
Depreciation and amortization   53,299     48,366     107,467     92,716  
EBITDA 52,971 55,138 93,907 81,065
Net unrealized gains on derivatives (6,286 ) (13,700 ) (2,746 ) (8,690 )
Inventory valuation adjustment 9,197 - 19,355 -
Lower of cost or market adjustments 414 2,837 (5,926 ) 2,837
Loss on disposal or impairment of assets, net 1,294 4,150 1,713 4,608
Equity-based compensation expense   9,448     13,745     49,680     21,659  
Adjusted EBITDA $ 67,038   $ 62,170   $ 155,983   $ 101,479  

NGL Energy Partners LP
Atanas H. Atanasov, 918-481-1119
Chief Financial Officer and Treasurer
atanas.atanasov@nglep.com


Source: Business Wire (November 9, 2015 - 4:40 PM EST)

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