NuStar Energy Reports Earnings Results for Fourth Quarter and Full Year 2012
Quarterly Distribution Remains at $1.095 Per Unit
Transportation Segment Continues to Benefit from NuStar’s Growth
in the Eagle Ford Shale
Expect to Close on Second Phase of TexStar Acquisition in First
Quarter 2013
SAN ANTONIO--(BUSINESS WIRE)--
NuStar Energy L.P. (NYSE: NS) today announced its fourth quarter
distributable cash flow from continuing operations available to limited
partners was $57.1 million, or $0.73 per unit, compared to 2011 fourth
quarter distributable cash flow of $59.5 million, or $0.90 per unit. For
the year ended December 31, 2012, distributable cash flow from
continuing operations available to limited partners was $202.6 million,
or $2.77 per unit, down from the $305.3 million, or $4.70 per unit
earned in 2011.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
from continuing operations were $77.6 million for the fourth quarter of
2012 compared to $91.9 million for the fourth quarter of 2011. For the
year ended December 31, 2012, EBITDA from continuing operations was
$99.1 million, lower than the $476.5 million in 2011.
The company reported a fourth quarter net loss applicable to limited
partners of $21.2 million, or $0.27 per unit, compared to net income
applicable to limited partners of $19.8 million, or $0.30 per unit,
earned in the fourth quarter of 2011. For the year ended December 31,
2012, the company reported a net loss applicable to limited partners of
$263.3 million, or $3.61 per unit, compared to net income applicable to
limited partners of $180.7 million, or $2.78 per unit, in 2011.
The partnership also announced that its board of directors has declared
a fourth quarter 2012 distribution of $1.095 per unit. This fourth
quarter 2012 distribution will be paid on February 14, 2013, to holders
of record as of February 11, 2013. Distributable cash flow available
from continuing operations to limited partners covers the distribution
to the limited partners by 0.67 times for the fourth quarter of 2012 and
0.63 times for the year ended December 31, 2012.
“2012 was a critical transition year for our company as we made a lot of
tough decisions that put NuStar on the right track for the future,” said
Curt Anastasio, Chief Executive Officer and President of NuStar Energy
L.P. and NuStar GP Holdings, LLC. “We implemented a strategic
redirection away from the margin-based asphalt and fuels refining
business in order to focus on growing our storage and transportation
operations through internal growth projects and acquisitions. We are
excited about expanding our presence in the lucrative Eagle Ford Shale
through recently announced transactions and expansion projects in the
region, all of which should have great rates of return. And we believe
that there are many more great opportunities for growth in the U.S.
shale plays that could be transformative for NuStar in the coming years.”
Fourth Quarter and Year-to-Date Adjustments
The fourth quarter 2012 results include $41.5 million, or $0.52 per
unit, of expense items that were not reflected in initial fourth quarter
earnings guidance. Approximately half of these expenses relate to hedge
losses recorded following our decision to sell the San Antonio refinery.
The remaining expense items relate primarily to costs related to
cancelled capital projects, employee benefit expenses associated with
the asphalt joint venture and lease buyout expenses for the company’s
previous corporate office location. Excluding these items and other
adjustments, fourth quarter 2012 adjusted net income applicable to
limited partners would have been $19.5 million, or $0.25 per unit.
In addition to those fourth quarter expense items, results for the year
ended December 31, 2012 included $281.9 million, or $3.82 per unit, of
expense items primarily goodwill and long-lived asset impairments and a
loss resulting from deconsolidating the asphalt joint venture. Excluding
these items and other adjustments, such as the $18.7 million after tax
gain on the second quarter Grace legal settlement, adjusted net income
applicable to limited partners for the year ended December 31, 2012
would have been $53.6 million, or $0.73 per unit.
2012 Segment Results
“Our transportation segment continues to perform better than last year
as we benefit from higher throughputs related to internal growth capital
projects completed in the Eagle Ford Shale over the past several
months,” said Anastasio. “In addition, in December 2012, the segment
began to benefit from incremental crude oil pipeline throughputs from
the crude oil pipeline, gathering and storage assets in the Eagle Ford
Shale region that we acquired from TexStar Midstream Services LP.”
In regard to the 2012 performance of the company’s storage segment
Anastasio said, “While full-year results were higher than 2011’s
results, the increased earnings associated with internal growth projects
completed in 2011 and 2012, primarily at the St. James, Louisiana
terminal, were partially offset by weaker than expected fourth quarter
2012 results in the segment. Cancelled capital project costs, fewer
vessel calls and higher maintenance costs at some of our terminal
facilities caused fourth quarter results to be lower than expected.”
Addressing the performance of the asphalt and fuels marketing segment,
Anastasio went on to say, “Due to the third quarter 2012 sale of 50% of
our asphalt operations and the January 1, 2013 sale of our San Antonio
refinery, now reported as discontinued operations, the only operating
results included in this segment in the fourth quarter of 2012 relate to
our fuels marketing operations. The fuels marketing operations generated
a profit during the fourth quarter and are expected to continue to
generate a profit in the future.”
TexStar Acquisition Update
“Integration of the crude oil assets acquired from TexStar in December
has gone well,” said Anastasio. “We plan to close on the acquisition of
TexStar’s natural gas liquid (NGL) assets in the first quarter of 2013.
The purchase price on these NGL assets is expected to be $100 million,
and we plan to spend an additional $330 million of growth capital to
fully integrate and complete construction of some of the assets that we
acquired.”
2013 Outlook
Commenting on the earnings outlook for 2013, Anastasio said, “We expect
the EBITDA results for all three of our segments to improve compared to
last year. Our transportation segment should benefit from two Eagle Ford
internal growth pipeline projects completed in 2012 and the crude oil
assets acquired from TexStar. The storage segment is projected to
continue to benefit from the April 2012 completion of a rail car
offloading project at our St. James, Louisiana terminal and begin to
benefit from the first quarter 2013 completion of a one million barrel
expansion project at our St. Eustatius terminal as well as a seven
hundred thousand barrel storage expansion at our St. James, Louisiana
terminal.”
Anastasio went on to say, “We expect our asphalt and fuels marketing
segment's 2013 results to improve compared to 2012, primarily due to
higher earnings in the bunkering and heavy fuel oil businesses.”
With regard to capital spending projections Anastasio added, “NuStar
expects to spend $600 to $625 million on internal growth projects during
2013, primarily on projects in the Eagle Ford Shale, while our
reliability capital spending should be in the range of $35 to $45
million.”
A conference call with management is scheduled for 3:00 p.m. ET (2:00
p.m. CT) today, February 1, 2013, to discuss the financial and
operational results for the fourth quarter of 2012. Investors interested
in listening to the presentation may call 800/622-7620, passcode
84162009. International callers may access the presentation by dialing
706/645-0327, passcode 84162009. The company intends to have a playback
available following the presentation, which may be accessed by calling
800/585-8367, passcode 84162009. International callers may access the
playback by calling 404/537-3406, passcode 84162009. A live broadcast of
the conference call will also be available on the company’s Web site at www.nustarenergy.com.
NuStar Energy L.P., a publicly traded master limited partnership based
in San Antonio, is one of the largest independent liquids terminal and
pipeline operators in the nation. NuStar currently has 8,573 miles of
pipeline; 87 terminal and storage facilities that store and distribute
crude oil, refined products and specialty liquids; and 50% ownership in
two asphalt refineries with a combined throughput capacity of 104,000
barrels per day. The partnership’s combined system has approximately 96
million barrels of storage capacity, and NuStar has operations in the
United States, Canada, Mexico, the Netherlands, including St. Eustatius
in the Caribbean, the United Kingdom and Turkey. For more information,
visit NuStar Energy L.P.'s Web site at www.nustarenergy.com.
This release serves as qualified notice to nominees under Treasury
Regulation Sections 1.1446-4(b)(4) and (d). Please note that 100% of
NuStar’s distributions to foreign investors are attributable to income
that is effectively connected with a United States trade or business.
Accordingly, all of NuStar’s distributions to foreign investors are
subject to federal income tax withholding at the highest effective tax
rate for individuals and corporations, as applicable. Nominees, and not
NuStar, are treated as the withholding agents responsible for
withholding on the distributions received by them on behalf of foreign
investors.
This press release includes forward-looking statements regarding
future events.All forward-looking statements are based on the
partnership and company's beliefs as well as assumptions made by and
information currently available to the partnership and company.These
statements reflect the partnership and company's current views with
respect to future events and are subject to various risks, uncertainties
and assumptions.These risks, uncertainties and assumptions are
discussed in NuStar Energy L.P. and NuStar GP Holdings, LLC’s 2011
annual reports on Form 10-K and subsequent filings with the Securities
and Exchange Commission.
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit Data and Per Unit
Data)
Three Months Ended
Year Ended
December 31,
December 31,
2012
2011
2012
2011
Statement of Income Data (Note 1):
Revenues:
Services revenues
$
233,653
$
220,980
$
880,097
$
834,809
Product sales
751,114
1,603,425
5,075,579
5,437,006
Total revenues
984,767
1,824,405
5,955,676
6,271,815
Costs and expenses:
Cost of product sales
718,208
1,567,793
4,930,174
5,175,710
Operating expenses
141,116
138,035
542,764
524,654
General and administrative expenses
29,502
33,538
104,756
103,050
Depreciation and amortization expense
39,483
43,210
165,021
166,589
Asset impairment loss
-
-
249,646
-
Goodwill impairment loss
-
-
22,132
-
Gain on legal settlement
-
-
(28,738
)
-
Total costs and expenses
928,309
1,782,576
5,985,755
5,970,003
Operating income (loss)
56,458
41,829
(30,079
)
301,812
Equity in (loss) earnings of joint ventures
(13,194
)
4,461
(9,378
)
11,458
Interest expense, net
(21,552
)
(20,339
)
(89,670
)
(81,727
)
Other (expense) income, net
(5,119
)
2,401
(26,511
)
(3,343
)
Income (loss) from continuing operations
before income tax expense
16,593
28,352
(155,638
)
228,200
Income tax expense
2,176
3,568
22,494
16,713
Income (loss) from continuing operations
14,417
24,784
(178,132
)
211,487
(Loss) income from discontinued operations, net of income tax
(25,440
)
5,415
(49,105
)
10,114
Net (loss) income
$
(11,023
)
$
30,199
$
(227,237
)
$
221,601
Net (loss) income applicable to limited partners
$
(21,212
)
$
19,782
$
(263,325
)
$
180,714
Net income (loss) per unit applicable to limited partners:
Continuing operations
$
0.05
$
0.22
$
(2.95
)
$
2.63
Discontinued operations
(0.32
)
0.08
(0.66
)
0.15
Total
$
(0.27
)
$
0.30
$
(3.61
)
$
2.78
Weighted average limited partner units outstanding
77,886,078
66,226,386
72,957,417
65,018,301
EBITDA from continuing operations (Note 2)
$
77,628
$
91,901
$
99,053
$
476,516
Distributable cash flow from continuing operations (Note 2)
$
69,500
$
71,140
$
251,029
$
348,649
December 31,
2012
2011
Balance Sheet Data:
Debt, including current portion (a)
$
2,411,004
$
2,293,030
Partners' equity (b)
2,584,995
2,864,335
Debt-to-capitalization ratio (a) / ((a)+(b))
48.3
%
44.5
%
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Barrel Data)
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Notes:
1.
The results of operations for the San Antonio Refinery and related
assets have been reported as discontinued operations for all periods
presented.
2.
NuStar Energy L.P. utilizes two financial measures, EBITDA from
continuing operations and distributable cash flow from continuing
operations, which are not defined in United States generally
accepted accounting principles. Management uses these financial
measures because they are widely accepted financial indicators used
by investors to compare partnership performance. In addition,
management believes that these measures provide investors an
enhanced perspective of the operating performance of the
partnership's assets and the cash that the business is generating.
Neither EBITDA from continuing operations nor distributable cash
flow from continuing operations are intended to represent cash flows
for the period, nor are they presented as an alternative to net
income from continuing operations. They should not be considered in
isolation or as substitutes for a measure of performance prepared in
accordance with United States generally accepted accounting
principles.
The following is a reconciliation of income (loss) from continuing
operations to EBITDA from continuing operations and distributable
cash flow from continuing operations:
Three Months Ended
Year Ended
December 31,
December 31,
2012
2011
2012
2011
Income (loss) from continuing operations
$
14,417
$
24,784
$
(178,132
)
$
211,487
Plus interest expense, net
21,552
20,339
89,670
81,727
Plus income tax expense
2,176
3,568
22,494
16,713
Plus depreciation and amortization expense
39,483
43,210
165,021
166,589
EBITDA from continuing operations
77,628
91,901
99,053
476,516
Less equity in loss (earnings) of joint ventures
13,194
(4,461
)
9,378
(11,458
)
Less interest expense, net
(21,552
)
(20,339
)
(89,670
)
(81,727
)
Less reliability capital expenditures
(15,180
)
(6,147
)
(33,572
)
(44,339
)
Less income tax expense
(2,176
)
(3,568
)
(22,494
)
(16,713
)
Plus distributions from joint venture
-
4,977
6,364
14,374
Plus other non-cash items (a)
13,304
-
287,981
5,093
Mark-to-market impact on hedge transactions (b)
4,282
8,777
(6,011
)
3,653
Contingent loss adjustment
-
-
-
3,250
Distributable cash flow from continuing operations
69,500
71,140
251,029
348,649
Distributable cash flow from continuing operations
attributable to noncontrolling interest
(344
)
53
(300
)
441
Distributable cash flow from continuing operations
available to general partner
12,766
11,598
48,728
42,956
Distributable cash flow from continuing operations
available to limited partners
$
57,078
$
59,489
$
202,601
$
305,252
Distributable cash flow from continuing operations
per limited partner unit
$
0.73
$
0.90
$
2.77
$
4.70
(a)
Other non-cash items for the year ended December 31, 2012 consist of
(i) $271.8 million of long-lived asset impairment charges mainly
related to our asphalt operations, including fixed assets, goodwill
and intangible assets, (ii) a $21.6 million loss associated with the
sale of 50% of our asphalt operations on September 28, 2012, (iii)
$13.3 million in costs written off due to cancelled capital projects
and leasehold improvements associated with the termination of the
lease of our previous corporate headquarters building and (iv) an
$18.7 million gain, net of tax, resulting from a legal settlement.
(b)
Distributable cash flow from continuing operations excludes the
impact of unrealized mark-to-market gains and losses that arise from
valuing certain derivative contracts, as well as the associated
hedged inventory. The gain or loss associated with these contracts
is realized in distributable cash flow from continuing operations
when the contracts are settled.
NuStar Energy, L.P., San Antonio Investors, Chris Russell, Vice
President Investor Relations: 210-918-3507 or Media, Mary
Rose Brown, Executive Vice President, Corporate Communications:
210-918-2314 Web site: http://www.nustarenergy.com
Press Release $NS NuStar Energy L.P.
Quarterly Distribution Remains at $1.095 Per Unit
Transportation Segment Continues to Benefit from NuStar’s Growth in the Eagle Ford Shale
Expect to Close on Second Phase of TexStar Acquisition in First Quarter 2013
SAN ANTONIO--(BUSINESS WIRE)-- NuStar Energy L.P. (NYSE: NS) today announced its fourth quarter distributable cash flow from continuing operations available to limited partners was $57.1 million, or $0.73 per unit, compared to 2011 fourth quarter distributable cash flow of $59.5 million, or $0.90 per unit. For the year ended December 31, 2012, distributable cash flow from continuing operations available to limited partners was $202.6 million, or $2.77 per unit, down from the $305.3 million, or $4.70 per unit earned in 2011.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $77.6 million for the fourth quarter of 2012 compared to $91.9 million for the fourth quarter of 2011. For the year ended December 31, 2012, EBITDA from continuing operations was $99.1 million, lower than the $476.5 million in 2011.
The company reported a fourth quarter net loss applicable to limited partners of $21.2 million, or $0.27 per unit, compared to net income applicable to limited partners of $19.8 million, or $0.30 per unit, earned in the fourth quarter of 2011. For the year ended December 31, 2012, the company reported a net loss applicable to limited partners of $263.3 million, or $3.61 per unit, compared to net income applicable to limited partners of $180.7 million, or $2.78 per unit, in 2011.
The partnership also announced that its board of directors has declared a fourth quarter 2012 distribution of $1.095 per unit. This fourth quarter 2012 distribution will be paid on February 14, 2013, to holders of record as of February 11, 2013. Distributable cash flow available from continuing operations to limited partners covers the distribution to the limited partners by 0.67 times for the fourth quarter of 2012 and 0.63 times for the year ended December 31, 2012.
“2012 was a critical transition year for our company as we made a lot of tough decisions that put NuStar on the right track for the future,” said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC. “We implemented a strategic redirection away from the margin-based asphalt and fuels refining business in order to focus on growing our storage and transportation operations through internal growth projects and acquisitions. We are excited about expanding our presence in the lucrative Eagle Ford Shale through recently announced transactions and expansion projects in the region, all of which should have great rates of return. And we believe that there are many more great opportunities for growth in the U.S. shale plays that could be transformative for NuStar in the coming years.”
Fourth Quarter and Year-to-Date Adjustments
The fourth quarter 2012 results include $41.5 million, or $0.52 per unit, of expense items that were not reflected in initial fourth quarter earnings guidance. Approximately half of these expenses relate to hedge losses recorded following our decision to sell the San Antonio refinery. The remaining expense items relate primarily to costs related to cancelled capital projects, employee benefit expenses associated with the asphalt joint venture and lease buyout expenses for the company’s previous corporate office location. Excluding these items and other adjustments, fourth quarter 2012 adjusted net income applicable to limited partners would have been $19.5 million, or $0.25 per unit.
In addition to those fourth quarter expense items, results for the year ended December 31, 2012 included $281.9 million, or $3.82 per unit, of expense items primarily goodwill and long-lived asset impairments and a loss resulting from deconsolidating the asphalt joint venture. Excluding these items and other adjustments, such as the $18.7 million after tax gain on the second quarter Grace legal settlement, adjusted net income applicable to limited partners for the year ended December 31, 2012 would have been $53.6 million, or $0.73 per unit.
2012 Segment Results
“Our transportation segment continues to perform better than last year as we benefit from higher throughputs related to internal growth capital projects completed in the Eagle Ford Shale over the past several months,” said Anastasio. “In addition, in December 2012, the segment began to benefit from incremental crude oil pipeline throughputs from the crude oil pipeline, gathering and storage assets in the Eagle Ford Shale region that we acquired from TexStar Midstream Services LP.”
In regard to the 2012 performance of the company’s storage segment Anastasio said, “While full-year results were higher than 2011’s results, the increased earnings associated with internal growth projects completed in 2011 and 2012, primarily at the St. James, Louisiana terminal, were partially offset by weaker than expected fourth quarter 2012 results in the segment. Cancelled capital project costs, fewer vessel calls and higher maintenance costs at some of our terminal facilities caused fourth quarter results to be lower than expected.”
Addressing the performance of the asphalt and fuels marketing segment, Anastasio went on to say, “Due to the third quarter 2012 sale of 50% of our asphalt operations and the January 1, 2013 sale of our San Antonio refinery, now reported as discontinued operations, the only operating results included in this segment in the fourth quarter of 2012 relate to our fuels marketing operations. The fuels marketing operations generated a profit during the fourth quarter and are expected to continue to generate a profit in the future.”
TexStar Acquisition Update
“Integration of the crude oil assets acquired from TexStar in December has gone well,” said Anastasio. “We plan to close on the acquisition of TexStar’s natural gas liquid (NGL) assets in the first quarter of 2013. The purchase price on these NGL assets is expected to be $100 million, and we plan to spend an additional $330 million of growth capital to fully integrate and complete construction of some of the assets that we acquired.”
2013 Outlook
Commenting on the earnings outlook for 2013, Anastasio said, “We expect the EBITDA results for all three of our segments to improve compared to last year. Our transportation segment should benefit from two Eagle Ford internal growth pipeline projects completed in 2012 and the crude oil assets acquired from TexStar. The storage segment is projected to continue to benefit from the April 2012 completion of a rail car offloading project at our St. James, Louisiana terminal and begin to benefit from the first quarter 2013 completion of a one million barrel expansion project at our St. Eustatius terminal as well as a seven hundred thousand barrel storage expansion at our St. James, Louisiana terminal.”
Anastasio went on to say, “We expect our asphalt and fuels marketing segment's 2013 results to improve compared to 2012, primarily due to higher earnings in the bunkering and heavy fuel oil businesses.”
With regard to capital spending projections Anastasio added, “NuStar expects to spend $600 to $625 million on internal growth projects during 2013, primarily on projects in the Eagle Ford Shale, while our reliability capital spending should be in the range of $35 to $45 million.”
A conference call with management is scheduled for 3:00 p.m. ET (2:00 p.m. CT) today, February 1, 2013, to discuss the financial and operational results for the fourth quarter of 2012. Investors interested in listening to the presentation may call 800/622-7620, passcode 84162009. International callers may access the presentation by dialing 706/645-0327, passcode 84162009. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 84162009. International callers may access the playback by calling 404/537-3406, passcode 84162009. A live broadcast of the conference call will also be available on the company’s Web site at www.nustarenergy.com.
NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar currently has 8,573 miles of pipeline; 87 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; and 50% ownership in two asphalt refineries with a combined throughput capacity of 104,000 barrels per day. The partnership’s combined system has approximately 96 million barrels of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey. For more information, visit NuStar Energy L.P.'s Web site at www.nustarenergy.com.
This release serves as qualified notice to nominees under Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note that 100% of NuStar’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals and corporations, as applicable. Nominees, and not NuStar, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements regarding future events. All forward-looking statements are based on the partnership and company's beliefs as well as assumptions made by and information currently available to the partnership and company. These statements reflect the partnership and company's current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P. and NuStar GP Holdings, LLC’s 2011 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.
NuStar Energy, L.P., San Antonio
Investors, Chris Russell, Vice President
Investor Relations: 210-918-3507
or
Media, Mary Rose Brown, Executive Vice President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com
Source: NuStar Energy L.P.