Buckeye Partners, L.P. (“Buckeye”) (NYSE: BPL) today reported its
financial results for the first quarter of 2019. Net income
attributable to Buckeye was $80.8 million for the first
quarter of 2019 compared to $112.4 million for the first quarter of
2018. Adjusted EBITDA (as defined below) for the first
quarter of 2019 was $216.4 million compared to $261.7 million for
the first quarter of 2018. Buckeye’s first quarter 2019
results were impacted by the sale of the partnership’s 50% equity
interest in VTTI, which was completed in January 2019, and the sale
of the package of domestic pipeline and terminal assets (the
“Domestic Asset Package”), which closed in December 2018.
Included in the first quarter 2018 results was a $43.6 million
contribution to Adjusted EBITDA from the divested assets.
Net income attributable to Buckeye was $0.52 per
diluted unit for the first quarter of 2019 compared to $0.74 per
diluted unit for the first quarter of 2018. The diluted
weighted average number of units outstanding in the first quarter
of 2019 was 154.5 million compared to 149.5 million in
the first quarter of 2018.
“Our first quarter results demonstrated the
stability of our diversified asset portfolio,” stated Clark C.
Smith, Chairman, President and Chief Executive Officer. “Our
Domestic Pipelines and Terminals segment benefited from higher
average pipeline tariff rates, driven by annual escalations on our
systems, and increased pipeline and terminal throughput volumes,
after adjusting for the Domestic Asset Package sale. Within
our Global Marine Terminals segment, strong performance by our
Buckeye Texas Partners facilities, which benefited from annual fee
escalations and continued operating efficiencies during the
quarter, was partially offset by the continued impact of
challenging market conditions in the segregated storage
market. Our Buckeye Merchant Services segment continued to
generate strong utilization across our portfolio of assets and
again achieved a record contribution to our other segments, while
favorable spreads more than offset weaker rack margins in this
business. Finally, all of our businesses benefited from our
operating and administrative teams’ continued focus on managing
costs across the organization,” stated Mr. Smith.
Distributable cash flow (as defined below) for
the first quarter of 2019 was $144.5 million compared to
$169.2 million for the first quarter of 2018. Buckeye also
reported distribution coverage of 1.24 times for the first
quarter of 2019.
Distribution. Buckeye also announced today
that its general partner declared a cash distribution of $0.75 per
limited partner unit (“LP Unit”) for the quarter ended
March 31, 2019. The distribution will be payable on
May 28, 2019 to unitholders of record on May 20,
2019. Buckeye has paid distributions in each quarter since
its formation in 1986.
Conference Call. Buckeye will host a
conference call with members of executive management today,
May 10, 2019, at 11:00 a.m. Eastern Time. To access the
live webcast of the call, go to
https://edge.media-server.com/m6/p/u6g2ffa9 ten minutes prior
to its start. Interested parties may participate in the call
by dialing 877-870-9226 and entering the conference ID
2636028. A replay will be archived and available at this link
through June 9, 2019, and the replay also may be accessed by
dialing 800-585-8367 and entering the conference ID 2636028.
About Buckeye Partners,
L.P.
Buckeye Partners, L.P. (NYSE: BPL) is a publicly
traded master limited partnership which owns and operates a
diversified global network of integrated assets providing midstream
logistic solutions, primarily consisting of the transportation,
storage, processing and marketing of liquid petroleum
products. Buckeye is one of the largest independent liquid
petroleum products pipeline operators in the United States in terms
of volumes delivered, with approximately 6,000 miles of
pipeline. Buckeye also uses its service expertise to operate
and/or maintain third-party pipelines and terminals and perform
certain engineering and construction services for its
customers. Buckeye’s global terminal network comprises more
than 115 liquid petroleum products terminals with aggregate tank
capacity of over 118 million barrels across our portfolio of
pipelines, inland terminals and marine terminals located primarily
in key petroleum logistics hubs in the East Coast, Midwest and Gulf
Coast regions of the United States as well as in the
Caribbean. Buckeye’s terminal assets facilitate global flows
of crude oil and refined petroleum products, offering its customers
connectivity between supply areas and market centers through some
of the world’s most important bulk liquid storage and blending
hubs. Buckeye’s flagship marine terminal in The Bahamas,
Buckeye Bahamas Hub, is one of the largest marine crude oil and
refined petroleum products storage facilities in the world and
provides an array of logistics and blending services for the global
flow of petroleum products. Buckeye’s Gulf Coast regional
hub, Buckeye Texas Partners, offers world-class marine
terminalling, storage and processing capabilities. Buckeye is
also a wholesale distributor of refined petroleum products in
certain areas served by its pipelines and terminals. More
information concerning Buckeye can be found at www.buckeye.com.
Adjusted EBITDA and distributable cash flow are
not measures defined by accounting principles generally accepted in
the United States of America (“GAAP”). We define Adjusted
EBITDA as earnings (losses) before interest expense, income taxes,
depreciation and amortization, further adjusted to exclude certain
non-cash items, such as non-cash compensation expense; transaction,
transition, and integration costs associated with acquisitions;
certain unrealized gains and losses on foreign currency
transactions and foreign currency derivative financial instruments,
as applicable; and certain other operating expense or income items,
reflected in net income, that we do not believe are indicative of
our core operating performance results and business outlook, such
as hurricane-related costs, gains and losses on property damage
recoveries, non-cash impairment charges, and gains and losses on
asset sales. We define distributable cash flow as Adjusted
EBITDA less cash interest expense, cash income tax expense, and
maintenance capital expenditures incurred to maintain the
operating, safety, and/or earnings capacity of our existing assets,
plus or minus realized gains or losses on certain foreign currency
derivative financial instruments, as applicable. These
definitions of Adjusted EBITDA and distributable cash flow are also
applied to our proportionate share in the Adjusted EBITDA of
significant equity method investments, which from January 1, 2017
through September 30, 2018 included VTTI, and are not applied to
our less significant equity method investments. The
calculation of our proportionate share of the reconciling items
used to derive Adjusted EBITDA was based upon our 50% equity
interest in VTTI, prior to adjustments related to noncontrolling
interests in several of its subsidiaries and partnerships, which
were immaterial. Adjusted EBITDA and distributable cash flow
are non-GAAP financial measures that are used by our senior
management, including our Chief Executive Officer, to assess the
operating performance of our business and optimize resource
allocation. We use Adjusted EBITDA as a primary measure to:
(i) evaluate our consolidated operating performance and the
operating performance of our business segments; (ii) allocate
resources and capital to business segments; (iii) evaluate the
viability of proposed projects; and (iv) determine overall
rates of return on alternative investment opportunities. We
use distributable cash flow as a performance metric to compare
cash-generating performance of Buckeye from period to period and to
compare the cash-generating performance for specific periods to the
cash distributions (if any) that are expected to be paid to our
unitholders. Distributable cash flow is not intended to be a
liquidity measure.
We believe that investors benefit from having
access to the same financial measures used by management and that
these measures are useful to investors because they aid in
comparing our operating performance with that of other companies
with similar operations. The Adjusted EBITDA and
distributable cash flow data presented by us may not be comparable
to similarly titled measures at other companies because these items
may be defined differently by other companies. Please see the
attached reconciliations of each of Adjusted EBITDA and
distributable cash flow to net income.
This press release includes forward-looking
statements that we believe to be reasonable as of today’s
date. All statements that express belief, expectation,
estimates or intentions, as well as those that are not statements
of historical facts, are forward-looking statements. Such
statements use forward-looking words such as “proposed,”
“anticipate,” “project,” “potential,” “could,” “should,”
“continue,” “estimate,” “expect,” “may,” “believe,” “will,” “plan,”
“seek,” “outlook” and other similar expressions that are intended
to identify forward-looking statements, although some
forward-looking statements are expressed differently. These
statements discuss future expectations and contain projections.
Specific factors that could cause actual results to differ from
those in the forward-looking statements include, but are not
limited to: (i) changes in federal, state, local and foreign
laws or regulations to which we are subject, including those
governing pipeline tariff rates and those that permit the treatment
of us as a partnership for federal income tax purposes; (ii)
terrorism and other security risks, including cyber risk, adverse
weather conditions, including hurricanes, environmental releases
and natural disasters; (iii) changes in the marketplace for our
products or services, such as increased competition, changes in
product flows, better energy efficiency or general reductions in
demand; (iv) adverse regional, national or international economic
conditions, adverse capital market conditions, and adverse
political developments; (v) shutdowns or interruptions at our
pipeline, terminalling, storage and processing assets or at the
source points for the products we transport, store or sell; (vi)
unanticipated capital expenditures in connection with the
construction, repair or replacement of our assets; (vii) volatility
in the price of liquid petroleum products; (viii) nonpayment or
nonperformance by our customers; (ix) our ability to successfully
complete our organic growth projects and to realize the anticipated
financial benefits; and (x) our ability to integrate acquired
assets with our existing assets and to realize anticipated cost
savings and other efficiencies and benefits. You should read
our filings with the U.S. Securities and Exchange Commission,
including our Annual Report on Form 10-K for the year ended
December 31, 2018, for a more extensive list of factors that could
affect results. We undertake no obligation to revise our
forward-looking statements to reflect events or circumstances
occurring after today’s date except as required by law.
This release is intended to be a qualified
notice under Treasury Regulation Section 1.1446-4(b). Brokers
and nominees should treat one hundred percent (100.0%) of Buckeye’s
distributions to non-U.S. investors as being attributable to income
that is effectively connected with a United States trade or
business. Accordingly, Buckeye’s distributions to non-U.S.
investors are subject to federal income tax withholding at the
highest applicable effective tax rate.
BUCKEYE PARTNERS,
L.P.CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per unit
amounts)(Unaudited)
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
Revenue: |
|
|
|
Product sales |
$ |
662,996 |
|
|
$ |
792,187 |
|
Transportation, storage and
other services |
365,976 |
|
|
390,918 |
|
Total revenue |
1,028,972 |
|
|
1,183,105 |
|
|
|
|
|
Costs and
expenses: |
|
|
|
Cost of product sales |
655,107 |
|
|
785,327 |
|
Operating expenses |
152,898 |
|
|
154,868 |
|
Depreciation and
amortization |
63,884 |
|
|
64,138 |
|
General and
administrative |
21,650 |
|
|
23,289 |
|
Other, net |
1,213 |
|
|
(14,030 |
) |
Total costs and expenses |
894,752 |
|
|
1,013,592 |
|
Operating income |
134,220 |
|
|
169,513 |
|
|
|
|
|
Other (expense)
income: |
|
|
|
Earnings from equity
investments |
3,345 |
|
|
7,489 |
|
Interest and debt expense |
(52,168 |
) |
|
(59,105 |
) |
Other expense, net |
(3,839 |
) |
|
(315 |
) |
Total other expense, net |
(52,662 |
) |
|
(51,931 |
) |
|
|
|
|
Income before taxes |
81,558 |
|
|
117,582 |
|
Income tax expense |
(298 |
) |
|
(490 |
) |
Net income |
81,260 |
|
|
117,092 |
|
Less: Net income attributable to noncontrolling
interests |
(498 |
) |
|
(4,719 |
) |
Net income
attributable to Buckeye Partners, L.P. |
$ |
80,762 |
|
|
$ |
112,373 |
|
|
|
|
|
Earnings
per unit attributable to Buckeye Partners, L.P.: |
|
|
Basic |
$ |
0.52 |
|
|
$ |
0.75 |
|
Diluted |
$ |
0.52 |
|
|
$ |
0.74 |
|
|
|
|
|
Weighted average units
outstanding: |
|
|
|
Basic |
153,846 |
|
|
148,904 |
|
Diluted |
154,542 |
|
|
149,532 |
|
|
|
|
|
|
|
BUCKEYE PARTNERS,
L.P.SELECTED FINANCIAL AND OPERATING
DATA(In
thousands)(Unaudited)
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
Revenue: |
|
|
|
Domestic Pipelines & Terminals |
$ |
241,536 |
|
|
$ |
255,435 |
|
Global Marine Terminals |
134,007 |
|
|
144,085 |
|
Merchant Services |
669,515 |
|
|
798,428 |
|
Intersegment |
(16,086 |
) |
|
(14,843 |
) |
Total revenue |
$ |
1,028,972 |
|
|
$ |
1,183,105 |
|
|
|
|
|
Total costs and
expenses: (1) |
|
|
|
Domestic Pipelines & Terminals |
$ |
137,906 |
|
|
$ |
146,224 |
|
Global Marine Terminals |
106,221 |
|
|
85,383 |
|
Merchant Services |
666,711 |
|
|
796,828 |
|
Intersegment |
(16,086 |
) |
|
(14,843 |
) |
Total costs and expenses |
$ |
894,752 |
|
|
$ |
1,013,592 |
|
|
|
|
|
Depreciation and
amortization: |
|
|
|
Domestic Pipelines & Terminals |
$ |
23,114 |
|
|
$ |
23,708 |
|
Global Marine Terminals |
39,742 |
|
|
39,208 |
|
Merchant Services |
1,028 |
|
|
1,222 |
|
Total depreciation and amortization |
$ |
63,884 |
|
|
$ |
64,138 |
|
|
|
|
|
Operating
income: |
|
|
|
Domestic Pipelines & Terminals |
$ |
103,630 |
|
|
$ |
109,211 |
|
Global Marine Terminals |
27,786 |
|
|
58,702 |
|
Merchant Services |
2,804 |
|
|
1,600 |
|
Total operating income |
$ |
134,220 |
|
|
$ |
169,513 |
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
Domestic Pipelines & Terminals |
$ |
135,893 |
|
|
$ |
140,651 |
|
Global Marine Terminals |
75,507 |
|
|
117,418 |
|
Merchant Services |
4,998 |
|
|
3,655 |
|
Total Adjusted EBITDA |
$ |
216,398 |
|
|
$ |
261,724 |
|
|
|
|
|
Capital
expenditures: (2) |
|
|
|
Domestic Pipelines & Terminals |
$ |
80,869 |
|
|
$ |
62,841 |
|
Global Marine Terminals |
22,534 |
|
|
54,057 |
|
Merchant Services |
— |
|
|
18 |
|
Total capital expenditures |
$ |
103,403 |
|
|
$ |
116,916 |
|
|
|
|
|
Summary of capital
expenditures: (2) |
|
|
|
Maintenance capital expenditures |
$ |
23,351 |
|
|
$ |
28,200 |
|
Expansion and cost reduction |
80,052 |
|
|
88,716 |
|
Total capital expenditures |
$ |
103,403 |
|
|
$ |
116,916 |
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
Key Balance Sheet Information: |
|
|
|
Cash and cash equivalents |
$ |
1,516 |
|
|
$ |
1,830 |
|
Long-term debt, including current portion (3) |
3,683,013 |
|
|
4,536,715 |
|
_______________________________
(1) Includes depreciation and amortization. (2) Amounts
exclude the impact of changes in accruals for capital
expenditures. On an accrual basis, capital expenditure
additions to property, plant and equipment were $82.4 million and
$118.9 million for the three months ended March 31, 2019 and
2018, respectively. (3) Excludes $137.6 million and
$177.7 million of borrowings under the Credit Facility used to
finance the Buckeye Merchant Services Companies’ current working
capital needs as of March 31, 2019 and December 31, 2018,
respectively.
BUCKEYE PARTNERS,
L.P.SELECTED FINANCIAL AND OPERATING DATA -
Continued(Unaudited)
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
Domestic
Pipelines & Terminals(average bpd in
thousands): |
|
|
|
Pipelines: |
|
|
|
Gasoline |
735.7 |
|
|
732.5 |
|
Jet fuel(1) |
246.3 |
|
|
240.2 |
|
Middle distillates (2) |
366.6 |
|
|
357.2 |
|
Other products (3) |
9.8 |
|
|
12.5 |
|
Total throughput (3) |
1,358.4 |
|
|
1,342.4 |
|
Terminals: |
|
|
|
Throughput (4)(5) |
1,277.9 |
|
|
1,259.3 |
|
|
|
|
|
Pipeline average tariff (cents/bbl) (6) |
97.6 |
|
|
93.5 |
|
|
|
|
|
Global Marine
Terminals (percent of capacity): |
|
|
|
Average capacity utilization rate (7) |
77 |
% |
|
88 |
% |
|
|
|
|
Merchant Services (in
millions of gallons): |
|
|
|
Sales volumes |
356.5 |
|
|
396.0 |
|
|
|
|
|
|
|
_________________________
(1) Excludes 113.0 bpd of jet fuel for the three months ended
March 31, 2018, related to the DPTS asset package divested on
December 17, 2018. (2) Includes diesel fuel and heating oil.
(3) Includes liquefied petroleum gas, intermediate petroleum
products and crude oil. (4) Includes the throughput of two
underground propane storage caverns. (5) Excludes 55.8 bpd of
total terminal throughput for the three months ended March 31, 2018
related to the DPTS asset package divested on December 17, 2018.
(6) Pipeline average tariff for the three months ended March
31, 2018 has been adjusted to remove the effects of the DPTS asset
package divested on December 17, 2018. (7) Represents the
ratio of contracted capacity to capacity available to be
contracted. Based on total capacity (i.e., including out of
service capacity), average capacity utilization rates are
approximately 75% and 83% for the three months ended March 31,
2019 and 2018, respectively.
BUCKEYE PARTNERS,
L.P.SELECTED FINANCIAL AND OPERATING
DATANon-GAAP Reconciliations(In
thousands, except coverage
ratio)(Unaudited)
|
|
|
Three Months Ended March 31, |
|
|
|
2019 |
|
2018 |
Net income |
|
$ |
81,260 |
|
|
$ |
117,092 |
|
Less: |
Net income attributable to
noncontrolling interests |
|
(498 |
) |
|
(4,719 |
) |
Net income
attributable to Buckeye Partners, L.P. |
80,762 |
|
|
112,373 |
|
Add: |
Interest and debt expense |
|
52,168 |
|
|
59,105 |
|
|
Income tax expense |
|
298 |
|
|
490 |
|
|
Depreciation and amortization
(1) |
|
63,884 |
|
|
64,138 |
|
|
Non-cash unit-based
compensation expense |
|
9,917 |
|
|
8,690 |
|
|
Acquisition, dispositions, and
transition expense (2) |
|
4,083 |
|
|
282 |
|
|
Hurricane-related costs, net
of recoveries (3) |
|
(929 |
) |
|
581 |
|
|
Non-cash impairment on
disposals of long-lived assets |
|
2,195 |
|
|
— |
|
|
Proportionate share of
Adjusted EBITDA for the equity method investment in VTTI (4) |
|
— |
|
|
34,540 |
|
|
Earnings from the equity
method investment in VTTI (4) |
|
— |
|
|
(4,390 |
) |
|
Loss on early extinguishment
of debt (5) |
|
4,020 |
|
|
— |
|
Less: |
Gains on property damage
recoveries (6) |
|
— |
|
|
(14,085 |
) |
Adjusted
EBITDA |
|
$ |
216,398 |
|
|
$ |
261,724 |
|
Less: |
Interest and debt expense,
excluding amortization of deferred financing costs, debt discounts,
debt retirement costs, interest rate swap settlements and
amortization, and other |
|
(48,546 |
) |
|
(55,205 |
) |
|
Income tax expense, excluding
non-cash taxes |
|
(298 |
) |
|
(401 |
) |
|
Maintenance capital
expenditures |
|
(23,351 |
) |
|
(28,200 |
) |
|
Proportionate share of VTTI’s
interest expense, current income tax expense, realized foreign
currency derivative gains and losses, and maintenance capital
expenditures (4) |
|
— |
|
|
(10,836 |
) |
Add: |
Hurricane-related maintenance
capital expenditures |
|
295 |
|
|
2,098 |
|
Distributable cash
flow |
|
$ |
144,498 |
|
|
$ |
169,180 |
|
|
|
|
|
|
|
Distributions for
coverage ratio (7) |
|
$ |
116,319 |
|
|
$ |
186,755 |
|
|
|
|
|
|
|
Coverage
ratio |
|
1.24 |
|
|
0.91 |
|
|
|
|
|
|
|
|
_________________________
(1) Includes 100% of the depreciation and amortization expense
of $17.8 million for Buckeye Texas Partners LLC (“Buckeye Texas”)
for the three months ended March 31, 2018. (2) Represents
transaction, internal and third-party costs related to asset
acquisition, dispositions, and integration. (3) Represents
costs incurred at our BBH facility in the Bahamas, Yabucoa Terminal
in Puerto Rico, Corpus Christi facilities in Texas, and certain
terminals in Florida, as a result of hurricanes, which occurred in
2017 and 2016, including operating expenses and write-offs of
damaged long-lived assets net of insurance recoveries. (4) Due
to the significance of our equity method investment in VTTI,
effective January 1, 2017 through September 30, 2018, we applied
the definition of Adjusted EBITDA and distributable cash flow,
covered in our description of non-GAAP financial measures, with
respect to our proportionate share of VTTI’s Adjusted EBITDA and
distributable cash flow. The calculation of our proportionate
share of the reconciling items used to derive these VTTI
performance metrics was based upon our 50% equity interest in VTTI,
prior to adjustments related to noncontrolling interests in several
of its subsidiaries and partnerships, which were immaterial.
(5) Represents the loss on early extinguishment of the $275.0
million principal amount outstanding under our 5.500% notes and
$250.0 million variable-rate Term Loan. (6) Represents
gains on recoveries of property damages caused by third parties,
which primarily related to a settlement in connection with a 2012
vessel allision with a jetty at our BBH facility in the Bahamas.
(7) Represents cash distributions declared for LP Units and
for distribution equivalent rights with respect to certain
unit-based compensation awards (“DERs”) outstanding as of each
respective period. Amount for 2019 reflects estimated cash
distributions for LP Units and DERs for the quarter ended
March 31, 2019.
Contact:Kevin J. GoodwinVice President &
Treasurerirelations@buckeye.com (800) 422-2825
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