May 30, 2018 - 4:30 PM EDT
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NGL Energy Partners LP Announces Fourth Quarter and Fiscal 2018 Financial Results and Initiates Fiscal 2019 Guidance

TULSA, Okla.

NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the “Partnership”) today reported net income for the quarter ended March 31, 2018 of $110.9 million, including an $89.3 million gain on the sale of a portion of our Retail Propane segment, compared to net income for the quarter ended March 31, 2017 of $26.5 million. The Partnership reported a net loss for Fiscal 2018 of $69.6 million. NGL also announced earlier today that it has signed a definitive agreement to sell its remaining Retail Propane business to Superior Plus Corp. (“Superior”) (TSX:SPB) for $900 million, which is subject to certain regulatory and other customary closing conditions and is expected to be completed within 60 days.

Highlights for the quarter and fiscal year ended March 31, 2018 include:

  • Completion of the sale of a portion of the Partnership’s Retail Propane segment for $200 million, the sale of its 50% interest in the Glass Mountain Pipeline LLC for $300 million and the sale of a portion of its interest in Sawtooth for $37.6 million, all proceeds from which were used to reduce outstanding debt by fiscal year end
  • Adjusted EBITDA for the fourth quarter of Fiscal 2018 was $155.9 million, compared to $121.2 million for the fourth quarter of Fiscal 2017; Fiscal Year 2018 Adjusted EBITDA totaled $408.3 million
  • Distributable Cash Flow for the fourth quarter of Fiscal 2018 was $98.6 million and totaled $180.0 million for the year
  • Growth capital expenditures, including acquisitions and other investments, totaled approximately $51.4 million during the fourth quarter and approximately $211.9 million for Fiscal 2018, of which approximately $105 million related to investments in our Water Solutions segment, approximately $55 million related to our Crude Logistics segment and $50 million related to Retail Propane

Additionally, the Partnership is initiating its Fiscal 2019 Adjusted EBITDA guidance with a target of $450 million, which assumes:

  • $200-$225 million of Adjusted EBITDA from the Water Solutions segment which the Partnership believes could increase by up to 20% annually for the next three years at current crude oil prices, rig counts, expected volumes and market share in its core basins
  • $145-$155 million of Adjusted EBITDA from the Crude Oil Logistics segment due to increased volumes and margins under minimum volume commitments on Grand Mesa, as well as generally increasing margins across all basins in which we operate
  • No significant changes to the Liquids and Refined Products segments from FY 2018 actual results

“The Partnership has made progress through this year as Crude Oil Logistics and Water Solutions have grown significantly and continue to be supported by increased rig count, higher crude prices and volume growth. Grand Mesa continues to exceed expectations by generating approximately $45 million in gross Adjusted EBITDA for the quarter. Our Water Solutions segment was operating at an annualized Adjusted EBITDA run-rate of approximately $150 million in March and volumes and earnings continue to grow into Fiscal 2019 with an estimated run-rate Adjusted EBITDA in April of approximately $165 million,” stated Mike Krimbill, CEO of NGL Energy Partners LP. “Our Refined Products business has stabilized with better rack margins and manageable line space values. Earlier today, we announced the sale of our remaining Retail Propane business. Retail Propane has been a stable asset for NGL and has grown through bolt-on acquisitions over time. We are making a strategic shift in our business portfolio and the $900 million of proceeds from the sale of this business allow for significant deleveraging of our balance sheet and positions us to focus on, and reinvest in, Crude Logistics and Water Solutions, our two largest growth and highest performing platforms.”

Quarterly Results of Operations

The following table summarizes operating income (loss) and Adjusted EBITDA by operating segment for the periods indicated:

    Quarter Ended
March 31, 2018       March 31, 2017

Operating
Income (Loss)

   

Adjusted
EBITDA

Operating
Income (Loss)

   

Adjusted
EBITDA

(in thousands)
Crude Oil Logistics $ 11,072 $ 31,904 $ 11,352 $ 29,558
Refined Products and Renewables 25,993 25,644 53,181 12,206
Liquids 11,476 14,957 10,160 16,189
Retail Propane 146,672 64,513 38,702 48,869
Water Solutions (14,156 ) 31,766 (18,549 ) 18,212
Corporate and Other   (23,562 )   (12,863 )   (20,392 )   (3,871 )
Total $ 157,495   $ 155,921   $ 74,454   $ 121,163  
 

The tables included in this release reconcile operating income (loss) to Adjusted EBITDA, a non-GAAP financial measure, for each of our operating segments.

Crude Oil Logistics

The Partnership’s Crude Oil Logistics segment generated Adjusted EBITDA of $31.9 million during the quarter ended March 31, 2018, compared to Adjusted EBITDA of $29.6 million during the quarter ended March 31, 2017. Results for the fourth quarter of Fiscal 2018 improved compared to the same quarter in Fiscal 2017 primarily due to increased volumes on Grand Mesa Pipeline, which was partially offset by the sale of our 50% interest in Glass Mountain Pipeline, LLC in December 2017.

The Partnership’s Grand Mesa Pipeline contributed Adjusted EBITDA of approximately $45.5 million during the fourth quarter of Fiscal 2018, an increase of $18.9 million when compared to Adjusted EBITDA of approximately $26.6 million during the same quarter of last year, due to increased volumes related to production growth in the DJ Basin. Physical volumes averaged approximately 103,000 barrels per day and financial volumes averaged approximately 109,000 barrels per day during the quarter ended March 31, 2018.

The remaining divisions of our Crude Oil Logistics segment continued to be impacted by competition and low margins in the majority of the basins across the United States. The Partnership continues to market crude volumes in these basins to support its various pipeline, terminal and transportation assets, at near break-even levels. Additionally, the Crude Oil Logistics segment bears the cost of certain minimum volume commitments on third-party crude oil pipelines in various basins which are currently not profitable.

Refined Products and Renewables

The Partnership’s Refined Products and Renewables segment generated Adjusted EBITDA of $25.6 million during the quarter ended March 31, 2018, compared to Adjusted EBITDA of $12.2 million during the quarter ended March 31, 2017. The results for the quarter ended March 31, 2018 were positively impacted by an increase in inventory valuation as a result of the seasonal motor fuel blend and strong margins at the rack, as well as our ability to reduce our exposure to negative line space values.

Refined product barrels sold during the quarter ended March 31, 2018 totaled approximately 42.8 million barrels, an increase of approximately 5.6 million barrels compared to the same period in the prior year due to an increase in bulk trading volumes. Renewable barrels sold during the quarter ended March 31, 2018 totaled approximately 1.0 million, a decrease of approximately 0.9 million barrels compared to the same period in the prior year.

Liquids

The Partnership’s Liquids segment generated Adjusted EBITDA of $15.0 million during the quarter ended March 31, 2018, compared to Adjusted EBITDA of $16.2 million during the quarter ended March 31, 2017. Total product margin per gallon was $0.031 for the quarter ended March 31, 2018, compared to $0.033 for the quarter ended March 31, 2017. Propane margins were impacted by increased fixed-price contract deliveries against rising inventory values, while butane margins were impacted by higher commodity costs and storage costs due to the oversupplied markets. Additionally, our Liquids segment continues to be impacted by unrecovered railcar fleet costs and excess storage capacity.

Propane volumes increased by approximately 25.9 million gallons, or 5.7%, during the quarter ended March 31, 2018 compared to the quarter ended March 31, 2017. Butane volumes increased by approximately 27.6 million gallons, or 25.4%, during the quarter ended March 31, 2018 compared to the quarter ended March 31, 2017. Other Liquids volumes increased by 16.7 million gallons, or 19.3%, during the quarter ended March 31, 2018 compared to the same period in the prior year. The increase in overall volumes is primarily attributable to a new long-term marketing agreement as well higher demand for propane due to colder winter weather.

Retail Propane

The Partnership’s Retail Propane segment generated Adjusted EBITDA of $64.5 million during the quarter ended March 31, 2018, compared to Adjusted EBITDA of $48.9 million during the quarter ended March 31, 2017. Propane sold during the quarter ended March 31, 2018 increased by approximately 15.0 million gallons, or 20.9%, compared to the quarter ended March 31, 2017, primarily due to higher demand for propane related to colder winter weather and acquisitions made during the current year and previous year. Distillates sold during the quarter ended March 31, 2018 increased by approximately 0.9 million gallons compared to the quarter ended March 31, 2017. Total product margin per gallon was $1.012 for the quarter ended March 31, 2018, compared to $0.957 for the quarter ended March 31, 2017.

Water Solutions

The Partnership’s Water Solutions segment generated Adjusted EBITDA of $31.8 million during the quarter ended March 31, 2018, compared to Adjusted EBITDA of $18.2 million during the quarter ended March 31, 2017. The Partnership processed approximately 761,000 barrels of wastewater per day during the quarter ended March 31, 2018, a 42% increase compared to approximately 536,000 barrels of wastewater per day during the quarter ended March 31, 2017. Processed water volumes have increased throughout the year as the segment continued to benefit from the increased rig counts in the basins in which it operates, particularly in the Permian Basin. Additional water pipelines brought online in previous quarters also contributed to increased revenues. Revenues from recovered hydrocarbons totaled $21.5 million for the quarter ended March 31, 2018, an increase of $9.7 million over the prior year period, related to an increase in the volume of water processed, an increase of oil percentage in water processed and increased crude oil prices.

Corporate and Other

Adjusted EBITDA for Corporate and Other was $(12.9) million during the quarter ended March 31, 2018, compared to $(3.9) million during the quarter ended March 31, 2017. The decrease was due primarily to increased legal fees of approximately $5.8 million related to certain litigation expenses, including settlement costs of $1.5 million, compared to $1.3 million in legal fees for the same quarter last year. Additionally, the Partnership recognized a one-time workmen’s compensation insurance audit expense of $3.5 million related to policy years 2013 through 2016, the majority of which related to years 2013 and 2014.

Capitalization and Liquidity

Total long-term debt outstanding, excluding working capital borrowings, was $1.713 billion at March 31, 2018 compared to $1.907 billion at December 31, 2017, a decrease of $194.3 million primarily as a result of debt repayment using net proceeds from asset sales. Working capital borrowings totaled $969.5 million at March 31, 2018 compared to $1.015 billion at December 31, 2017, a decrease of $45.0 million driven primarily by decreases in inventory volumes during the quarter. Total liquidity (cash plus available capacity on our revolving credit facility) was approximately $646.0 million as of March 31, 2018.

Fiscal 2019 Guidance

For Fiscal 2019, the Partnership expects to generate Adjusted EBITDA in a range for each of its operating segments as follows:

    FY 2019 Adjusted EBITDA Ranges
Low     High
(in thousands)
Crude Oil Logistics $ 145,000 $ 155,000
Refined Products and Renewables 55,000 80,000
Liquids 55,000 70,000
Water Solutions 200,000 225,000
Corporate and Other (30,000 ) (25,000 )
 

Based on these ranges, management’s target for the Partnership is $450 million of Adjusted EBITDA for Fiscal Year 2019. The Partnership currently expects to invest approximately $250-$275 million on growth capital expenditures during Fiscal 2019, which includes certain acquisitions in the Water Solutions segment that will total approximately $140-$150 million and are expected to close in the first quarter. All of these acquisitions are expected to be funded through proceeds from the recently announced Retail Propane sale, excess cash flow and use of the Partnership's revolving credit facility. The Partnership will continue to target compliance leverage below 3.25x and Distributable Cash Flow coverage is expected to be over 1.3x on a trailing twelve month basis.

Fourth Quarter Conference Call Information

A conference call to discuss NGL’s results of operations is scheduled for 6:00 pm Eastern Time (5:00 pm Central Time) on Wednesday, May 30, 2018. Analysts, investors, and other interested parties may access the conference call by dialing (800) 291-4083 and providing access code 3866869. An archived audio replay of the conference call will be available for 7 days beginning at 11:30 pm Eastern Time (10:30 pm Central Time) on May 30, 2018, which can be accessed by dialing (855) 859-2056 and providing access code 3866869.

Non-GAAP Financial Measures

NGL defines EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (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, gains and losses on early extinguishment of liabilities, revaluation of investments, equity-based compensation expense, acquisition expense, revaluation of liabilities and other. We also include in Adjusted EBITDA certain inventory valuation adjustments related to our Refined Products and Renewables segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered alternatives to net (loss) income, (loss) income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with 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 NGL’s ability to make quarterly distributions to NGL’s 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 NGL’s 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 NGL’s Refined Products and Renewables segment, for purposes of the 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 NGL’s 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 reconciliation table 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. We include this in Adjusted EBITDA because the unrealized gains and losses associated with derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA.

Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, income tax expense, cash interest expense and other. Maintenance capital expenditures represent capital expenditures necessary to maintain the Partnership’s operating capacity. Distributable Cash Flow is a performance metric used by senior management to compare cash flows generated by the Partnership (excluding growth capital expenditures and prior to the establishment of any retained cash reserves by the Board of Directors) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. This financial measure also is important to investors as an indicator of whether the Partnership is generating cash flow at a level that can sustain, or support an increase in, quarterly distribution rates. Actual distribution amounts are set by the Board of Directors.

Forward-Looking Statements

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 such forward-looking statements are reasonable, NGL cannot assure they 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.

NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or market adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, revaluation of investments, equity-based compensation expense, acquisition expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership’s Adjusted EBITDA, and the Partnership is not able to provide a reconciliation of its Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.

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. NGL completed its initial public offering in May 2011. For further information, visit the Partnership’s website at www.nglenergypartners.com.

       
 
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Consolidated Balance Sheets
(in Thousands, except unit amounts)
(Unaudited)
 
March 31, March 31,
2018 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 26,207 $ 12,264
Accounts receivable-trade, net of allowance for doubtful accounts of $5,347 and $5,234, respectively 1,072,688 800,607
Accounts receivable-affiliates 4,772 6,711
Inventories 564,553 561,432
Prepaid expenses and other current assets   131,538     103,193  
Total current assets 1,799,758 1,484,207
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $443,066 and $375,594, respectively 1,719,947 1,790,273
GOODWILL 1,312,558 1,451,716
INTANGIBLE ASSETS, net of accumulated amortization of $486,456 and $414,605, respectively 1,054,482 1,163,956
INVESTMENTS IN UNCONSOLIDATED ENTITIES 17,236 187,423
LOAN RECEIVABLE-AFFILIATE 1,200 3,200
OTHER NONCURRENT ASSETS   245,941     239,604  
Total assets $ 6,151,122   $ 6,320,379  
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable-trade $ 860,629 $ 658,021
Accounts payable-affiliates 1,254 7,918
Accrued expenses and other payables 230,087 207,125
Advance payments received from customers 21,216 35,944
Current maturities of long-term debt   3,196     29,590  
Total current liabilities 1,116,382 938,598
LONG-TERM DEBT, net of debt issuance costs of $20,645 and $33,458, respectively, and current maturities 2,682,628 2,963,483
OTHER NONCURRENT LIABILITIES 173,514 184,534
COMMITMENTS AND CONTINGENCIES
 
CLASS A 10.75% CONVERTIBLE PREFERRED UNITS, 19,942,169 and 19,942,169 preferred units issued and outstanding, respectively 82,576 63,890
REDEEMABLE NONCONTROLLING INTEREST 9,927 3,072
 
EQUITY:
General partner, representing a 0.1% interest, 121,594 and 120,300 notional units, respectively (50,819 ) (50,529 )
Limited partners, representing a 99.9% interest, 121,472,725 and 120,179,407 common units issued and outstanding, respectively 1,852,495 2,192,413
Class B preferred limited partners, 8,400,000 and 0 preferred units issued and outstanding, respectively 202,731
Accumulated other comprehensive loss (1,815 ) (1,828 )
Noncontrolling interests   83,503     26,746  
Total equity   2,086,095     2,166,802  
Total liabilities and equity $ 6,151,122   $ 6,320,379  
 
         
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Consolidated Statements of Operations
(in Thousands, except unit and per unit amounts)
(Unaudited)
 
Three Months Ended Year Ended
March 31, March 31,
2018     2017 2018     2017
REVENUES:
Crude Oil Logistics $ 733,131 $ 505,142 $ 2,260,075 $ 1,666,884
Water Solutions 67,116 43,756 229,139 159,601
Liquids 690,034 529,504 2,070,015 1,439,088
Retail Propane 229,595 172,978 521,392 413,109
Refined Products and Renewables 3,394,206 2,596,534 12,200,923 9,342,702
Other   478     165     1,174     844  
Total Revenues 5,114,560 3,848,079 17,282,718 13,022,228
COST OF SALES:
Crude Oil Logistics 690,236 464,428 2,113,747 1,572,015
Water Solutions 6,326 197 19,345 4,068
Liquids 663,208 502,895 1,982,552 1,334,116
Retail Propane 120,924 85,570 269,367 191,589
Refined Products and Renewables 3,369,488 2,545,527 12,150,497 9,219,721
Other   219     100     530     400  
Total Cost of Sales 4,850,401 3,598,717 16,536,038 12,321,909
OPERATING COSTS AND EXPENSES:
Operating 93,572 82,517 330,857 307,925
General and administrative 31,762 28,489 109,451 116,566
Depreciation and amortization 60,285 62,929 252,712 223,205
Gain on disposal or impairment of assets, net (94,071 ) (5,744 ) (105,313 ) (209,177 )
Revaluation of liabilities   15,116     6,717     20,716     6,717  
Operating Income 157,495 74,454 138,257 255,083
OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated entities 694 1,358 7,964 3,084
Revaluation of investments (14,365 )
Interest expense (48,321 ) (45,162 ) (199,570 ) (150,478 )
(Loss) gain on early extinguishment of liabilities, net (722 ) (6,163 ) (23,201 ) 24,727
Other income, net   2,290     1,902     8,403     27,762  
Income (Loss) Before Income Taxes 111,436 26,389 (68,147 ) 145,813
INCOME TAX (EXPENSE) BENEFIT   (524 )   97     (1,458 )   (1,939 )
Net Income (Loss) 110,912 26,486 (69,605 ) 143,874
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (19 ) (741 ) (240 ) (6,832 )
LESS: NET INCOME ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS   (1,291 )       (1,030 )    
NET INCOME (LOSS) ATTRIBUTABLE TO NGL ENERGY PARTNERS LP 109,602 25,745 (70,875 ) 137,042
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS (17,696 ) (9,184 ) (59,697 ) (30,142 )
LESS: NET INCOME ALLOCATED TO GENERAL PARTNER (126 ) (52 ) (5 ) (232 )
LESS: REPURCHASE OF WARRANTS           (349 )    
NET INCOME (LOSS) ALLOCATED TO COMMON UNITHOLDERS $ 91,780   $ 16,509   $ (130,926 ) $ 106,668  
BASIC INCOME (LOSS) PER COMMON UNIT $ 0.76   $ 0.14   $ (1.08 ) $ 0.99  
DILUTED INCOME (LOSS) PER COMMON UNIT $ 0.71   $ 0.14   $ (1.08 ) $ 0.95  
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING   121,271,959     114,131,764     120,991,340     108,091,486  
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING   146,868,349     120,198,802     120,991,340     111,850,621  
 
         
EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION
(Unaudited)
 
The following table reconciles NGL’s net income (loss) to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow:
 
Three Months Ended Year Ended
March 31, March 31,
2018     2017 2018     2017
(in thousands)
Net income (loss) $ 110,912 $ 26,486 $ (69,605 ) $ 143,874
Less: Net income attributable to noncontrolling interests (19 ) (741 ) (240 ) (6,832 )
Less: Net income attributable to redeemable noncontrolling interests   (1,291 )       (1,030 )    
Net income (loss) attributable to NGL Energy Partners LP 109,602 25,745 (70,875 ) 137,042
Interest expense 48,356 45,221 199,747 150,504
Income tax expense (benefit) 524 (97 ) 1,458 1,939
Depreciation and amortization   62,011     66,837     266,525     238,583  
EBITDA 220,493 137,706 396,855 528,068
Net unrealized (gains) losses on derivatives (968 ) (2,601 ) 15,883 (3,338 )
Inventory valuation adjustment (1) 4,594 (33,184 ) 11,033 7,368
Lower of cost or market adjustments 102 (2,122 ) 399 (1,283 )
Gain on disposal or impairment of assets, net (94,072 ) (5,744 ) (105,313 ) (209,213 )
Loss (gain) on early extinguishment of liabilities, net 722 6,163 23,201 (24,727 )
Revaluation of investments 14,365
Equity-based compensation expense (2) 8,127 13,243 35,241 53,102
Acquisition expense (3) 131 232 263 1,771
Revaluation of liabilities (4) 15,007 12,761 20,607 12,761
Other (5)   1,785     (5,291 )   10,081     2,443  
Adjusted EBITDA 155,921 121,163 408,250 381,317
Less: Cash interest expense (6) 45,785 45,462 188,543 142,258
Less: Income tax expense (benefit) 524 (97 ) 1,458 1,939
Less: Maintenance capital expenditures 11,036 8,172 37,713 26,073
Less: Other (7)           549     19  
Distributable Cash Flow $ 98,576   $ 67,626   $ 179,987   $ 211,028  

____________

(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. See “Non-GAAP Financial Measures” section 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 consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended March 31, 2018. 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 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, 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) Amounts for the quarter ended March 31, 2018 and year ended March 31, 2017 represent non-cash operating expenses related to our Grand Mesa Pipeline and accretion expense for asset retirement obligations. The amount for the year ended March 31, 2018 represents non-cash operating expenses related to our Grand Mesa Pipeline, an adjustment to inventory related to prior periods and accretion expense for asset retirement obligations. The amount for the quarter ended March 31, 2017 represents non-cash operating expenses related to our Grand Mesa Pipeline, adjustments for noncontrolling interests and accretion expense for asset retirement obligations.
 
(6) Amount represents interest expense payable in cash for the period presented, excluding changes in the accrued interest balance.
 
(7) Amount represents cash paid to settle asset retirement obligations.
 
   

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

 
Three Months Ended March 31, 2018
Crude Oil
Logistics
    Water
Solutions
    Liquids     Retail
Propane
   

Refined
Products
and
Renewables

   

Corporate
and
Other

    Consolidated
(in thousands)
Operating income (loss) $ 11,072 $ (14,156 ) $ 11,476 $ 146,672 $ 25,993 $ (23,562 ) $ 157,495
Depreciation and amortization 18,502 24,776 6,219 9,487 323 978 60,285
Amortization recorded to cost of sales 84 71 1,348 1,503
Net unrealized losses (gains) on derivatives 293 2,168 (3,340 ) (89 ) (968 )
Inventory valuation adjustment 4,594 4,594
Lower of cost or market adjustments 504 (402 ) 102
(Gain) loss on disposal or impairment of assets, net (103 ) 3,749 1 (90,213 ) (7,513 ) 8 (94,071 )
Equity-based compensation expense 8,127 8,127
Acquisition expense 131 131
Other income, net 436 1 5 275 118 1,455 2,290
Adjusted EBITDA attributable to unconsolidated entities 154 (69 ) 1,183 1,268
Adjusted EBITDA attributable to noncontrolling interest (118 ) (1,509 ) (1,627 )
Revaluation of liabilities 15,007 15,007
Other   1,620     185     21     (41 )           1,785  
Adjusted EBITDA $ 31,904   $ 31,766   $ 14,957   $ 64,513   $ 25,644   $ (12,863 ) $ 155,921  
 
    Three Months Ended March 31, 2017
Crude Oil
Logistics
    Water
Solutions
    Liquids     Retail
Propane
   

Refined
Products
and
Renewables

   

Corporate
and
Other

    Consolidated
(in thousands)
Operating income (loss) $ 11,352 $ (18,549 ) $ 10,160 $ 38,702 $ 53,181 $ (20,392 ) $ 74,454
Depreciation and amortization 19,648 25,045 5,848 11,195 325 868 62,929
Amortization recorded to cost of sales 100 196 1,434 1,730
Net unrealized (gains) losses on derivatives (2,464 ) 50 (23 ) (164 ) (2,601 )
Inventory valuation adjustment (33,184 ) (33,184 )
Lower of cost or market adjustments (2,122 ) (2,122 )
(Gain) loss on disposal or impairment of assets, net (3,913 ) 6,398 (17 ) (191 ) (8,024 ) 3 (5,744 )
Equity-based compensation expense 13,243 13,243
Acquisition expense 232 232
Other income (expense), net 177 (785 ) 6 165 164 2,175 1,902
Adjusted EBITDA attributable to unconsolidated entities 3,938 115 (39 ) 432 4,446
Adjusted EBITDA attributable to noncontrolling interest (6,912 ) (799 ) (7,711 )
Revaluation of liabilities 12,761 12,761
Other   720     89     19                 828  
Adjusted EBITDA $ 29,558   $ 18,212   $ 16,189   $ 48,869   $ 12,206   $ (3,871 ) $ 121,163  
 
    Year Ended March 31, 2018
Crude Oil
Logistics
    Water
Solutions
    Liquids     Retail
Propane
   

Refined
Products
and
Renewables

   

Corporate
and
Other

    Consolidated
(in thousands)
Operating income (loss) $ 122,904 $ (24,231 ) $ (93,113 ) $ 155,550 $ 56,740 $ (79,593 ) $ 138,257
Depreciation and amortization 80,387 98,623 24,937 43,692 1,294 3,779 252,712
Amortization recorded to cost of sales 338 282 5,479 6,099
Net unrealized losses (gains) on derivatives 2,766 13,694 (577 ) 15,883
Inventory valuation adjustment 11,033 11,033
Lower of cost or market adjustments 504 (105 ) 399
(Gain) loss on disposal or impairment of assets, net (111,393 ) 6,863 117,516 (88,209 ) (30,098 ) 8 (105,313 )
Equity-based compensation expense 35,241 35,241
Acquisition expense 263 263
Other income, net 535 211 105 555 604 6,393 8,403
Adjusted EBITDA attributable to unconsolidated entities 11,507 579 822 4,308 17,216
Adjusted EBITDA attributable to noncontrolling interest (737 ) (1,894 ) (2,631 )
Revaluation of liabilities 20,607 20,607
Other   10,617     461     85     (1,082 )           10,081  
Adjusted EBITDA $ 117,661   $ 116,070   $ 49,739   $ 109,434   $ 49,255   $ (33,909 ) $ 408,250  
 
    Year Ended March 31, 2017
Crude Oil
Logistics
    Water
Solutions
    Liquids     Retail
Propane
   

Refined
Products
and
Renewables

   

Corporate
and
Other

    Consolidated
(in thousands)
Operating (loss) income $ (17,475 ) $ 44,587 $ 43,252 $ 49,255 $ 222,546 $ (87,082 ) $ 255,083
Depreciation and amortization 54,144 101,758 19,163 42,966 1,562 3,612 223,205
Amortization recorded to cost of sales 384 781 5,663 6,828
Net unrealized (gains) losses on derivatives (1,513 ) (2,088 ) 216 47 (3,338 )
Inventory valuation adjustment 7,368 7,368
Lower of cost or market adjustments (1,283 ) (1,283 )
Loss (gain) on disposal or impairment of assets, net 10,704 (85,560 ) 92 (287 ) (134,125 ) (1 ) (209,177 )
Equity-based compensation expense 53,102 53,102
Acquisition expense 1,771 1,771
Other (expense) income, net (412 ) 739 73 504 19,263 7,595 27,762
Adjusted EBITDA attributable to unconsolidated entities 11,589 106 (427 ) 3,975 15,243
Adjusted EBITDA attributable to noncontrolling interest (9,210 ) (1,241 ) (10,451 )
Revaluation of liabilities 12,761 12,761
Other   1,996     368     79                 2,443  
Adjusted EBITDA $ 59,417   $ 63,461   $ 63,656   $ 90,817   $ 124,969   $ (21,003 ) $ 381,317  
 
         
OPERATIONAL DATA
(Unaudited)
 
Three Months Ended Year Ended
March 31, March 31,
2018     2017 2018     2017
(in thousands, except per day amounts)
Crude Oil Logistics:
Crude oil sold (barrels) 11,038 9,374 39,626 34,212
Crude oil transported on owned pipelines (barrels) 9,278 4,755 33,454 6,365
Crude oil storage capacity - owned and leased (barrels) (1) 6,159 7,024
Crude oil inventory (barrels) (1) 1,219 2,844
 
Water Solutions:
Wastewater processed (barrels per day)
Eagle Ford Basin 257,148 211,448 235,713 208,649
Permian Basin 317,480 192,456 289,360 184,702
DJ Basin 112,594 85,845 113,771 68,253
Other Basins 73,300 46,254 68,466 40,185
Total 760,522 536,003 707,310 501,789
Solids processed (barrels per day) 6,594 4,319 5,662 3,056
Skim oil sold (barrels per day) 4,071 2,827 3,210 1,989
 
Liquids:
Propane sold (gallons) 479,454 453,586 1,361,173 1,267,076
Butane sold (gallons) 136,310 108,728 544,750 456,586
Other products sold (gallons) 103,649 86,914 400,405 343,365
Liquids storage capacity - owned and leased (gallons) (1) 438,968 358,537
Propane inventory (gallons) (1) 48,928 48,351
Butane inventory (gallons) (1) 15,385 9,438
Other products inventory (gallons) (1) 5,822 6,426
 
Retail Propane:
Propane sold (gallons) 86,657 71,666 204,145 177,599
Distillates sold (gallons) 13,403 12,496 30,491 30,001
Propane inventory (gallons) (1) 7,526 8,180
Distillates inventory (gallons) (1) 1,051 1,148
 
Refined Products and Renewables:
Gasoline sold (barrels) 30,550 25,727 108,427 91,004
Diesel sold (barrels) 12,228 11,402 56,020 49,817
Ethanol sold (barrels) 546 1,414 3,438 4,605
Biodiesel sold (barrels) 407 465 2,079 2,413
Refined Products and Renewables storage capacity - leased (barrels) (1) 9,911 9,419
Gasoline inventory (barrels) (1) 3,367 2,993
Diesel inventory (barrels) (1) 1,419 1,464
Ethanol inventory (barrels) (1) 701 727
Biodiesel inventory (barrels) (1) 261 471

____________

(1)   Information is presented as of March 31, 2018 and March 31, 2017, respectively, in the year-to-date columns above.
 

NGL Energy Partners LP
Trey Karlovich, 918-481-1119
Chief Financial Officer and Executive Vice President
[email protected]
or
Linda Bridges, 918-481-1119
Senior Vice President - Finance and Treasurer
[email protected]


Source: Business Wire (May 30, 2018 - 4:30 PM EDT)

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