Buckeye Partners, L.P. (“Buckeye”) (NYSE: BPL) today reported its
financial results for the second quarter of 2019. Net income
attributable to Buckeye was $90.0 million for the second
quarter of 2019 compared to $91.9 million for the second quarter of
2018. Adjusted EBITDA (as defined below) for the second
quarter of 2019 was $214.3 million compared to $254.9 million for
the second quarter of 2018. Buckeye’s second quarter 2019
results were impacted by the sale of the partnership’s equity
interest in VTTI B.V. and the sale of the package of domestic
pipeline and terminal assets (the “Domestic Asset Package”).
These divested assets contributed $43.0 million to second quarter
2018 Adjusted EBITDA.
Net income attributable to Buckeye was $0.58 per
diluted unit for the second quarter of 2019 compared to $0.59 per
diluted unit for the second quarter of 2018. The diluted
weighted average number of units outstanding in the second quarter
of 2019 was 154.7 million compared to 154.0 million in
the second quarter of 2018.
“Buckeye’s second quarter results are indicative
of our ability to consistently deliver value despite challenging
conditions in certain markets in which we operate,” stated Clark C.
Smith, Chairman, President and Chief Executive Officer.
“After adjusting for the divested assets, consolidated Adjusted
EBITDA grew year over year, driven by increased contributions from
our Domestic Pipelines and Terminals and Merchant Services
segments, combined with improved performance from our Buckeye Texas
Partners operations within our Global Marine Terminals
segment. Continued weakness in segregated storage demand
partially offset the strong performance from the remainder of our
businesses” stated Mr. Smith.
Distributable cash flow (as defined below) for
the second quarter of 2019 was $140.0 million compared to
$162.0 million for the second quarter of 2018. Buckeye also
reported distribution coverage of 1.20 times for the second
quarter of 2019.
Transaction Update. Buckeye has
successfully completed certain customary closing conditions related
to the proposed acquisition of Buckeye by entities affiliated with
IFM Global Infrastructure Fund (the "proposed merger") announced on
May 10, 2019. On July 31, 2019, the merger agreement relating to
the proposed merger and the transactions contemplated thereby were
approved by the affirmative vote of the holders of a majority of
the outstanding limited partner units (“LP Units”). In addition, as
previously announced, the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act has expired. We
believe that the proposed merger remains on track to close in the
fourth quarter of 2019. For more information regarding the proposed
merger and the merger agreement, please see our Form 8-K filed with
the SEC on May 10, 2019 and our Schedule 14A filed with the SEC on
June 25, 2019, as supplemented by the Form 8-K we filed with the
SEC on July 22, 2019.
Distribution. Buckeye also announced today
that its general partner declared a cash distribution of $0.75 per
LP Unit for the quarter ended June 30, 2019. The
distribution will be payable on August 19, 2019 to unitholders
of record on August 12, 2019. Buckeye has paid
distributions in each quarter since its formation in 1986.
Conference Call. Due to the pending
proposed merger, Buckeye will not host a conference call in
conjunction with its 2019 second quarter earnings. Interested
parties are invited to access Buckeye’s Form 10-Q for the 2019
second quarter on the Investor Center section of Buckeye’s website
at www.buckeye.com.
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 wholly owned 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 and
dispositions; 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; (x) our ability to integrate acquired assets
with our existing assets and to realize anticipated cost savings
and other efficiencies and benefits; (xi) the risk that the
proposed merger with Hercules Intermediate Holdings LLC may not be
completed in a timely manner or at all; (xii) the possibility that
competing offers or acquisition proposals for Buckeye will be made;
(xiii) the possibility that any or all of the various conditions to
the consummation of the merger may not be satisfied or waived,
including the failure to receive any required regulatory approvals
from any applicable governmental entities (or any conditions,
limitations or restrictions placed on such approvals); (xiv) the
occurrence of any event, change or other circumstance that could
give rise to the termination of the Agreement and Plan of Merger
dated May 10, 2019, between Hercules Intermediate Holdings LLC,
Hercules Merger Sub LLC, Buckeye, Buckeye Pipe Line Services
Company and Buckeye GP LLC (the “Merger Agreement”), including in
circumstances which would require Buckeye to pay a termination fee
or other expenses; (xv) the effect of the pendency of the
transactions contemplated by the Merger Agreement on Buckeye’s
ability to retain and hire key personnel, its ability to maintain
relationships with its customers, suppliers and others with whom it
does business, or its operating results and business generally;
(xvi) risks related to diverting management’s attention from
Buckeye’s ongoing business operations; (xvii) the risk that
Unitholder litigation in connection with the transactions
contemplated by the Merger Agreement may result in significant
costs to defend or resolve; and (xviii) the possibility that
long-term financing for the proposed acquisition may not be
available on favorable terms, or at all; and (xix) the cautionary
discussion of risks and uncertainties detailed in Part I, Item 1A,
“Risk Factors” and Part II, Item 7, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” of
Buckeye’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2018 (as filed with the SEC on February 15,
2019) and other risk factors identified herein or from time to time
in Buckeye’s periodic filings with the SEC. These factors are not
necessarily all of the important factors that could cause actual
results to differ materially from those expressed in any of
Buckeye’s forward-looking statements. Other known or unpredictable
factors could also have material adverse effects on future results.
Consequently, all of the forward-looking statements made in this
press release are qualified by these cautionary statements, and
Buckeye cannot assure you that actual results or developments that
it anticipates will be realized or, even if substantially realized,
will have the expected consequences to or effect on Buckeye or its
business or operations.
The forward-looking statements contained in this
press release speak only as of the date hereof. Although the
expectations in the forward-looking statements are based on
Buckeye’s current beliefs and expectations, caution should be taken
not to place undue reliance on any such forward-looking statements
because such statements speak only as of the date hereof. Except as
required by federal and state securities laws, Buckeye undertakes
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or any other reason. All forward-looking statements attributable to
Buckeye or any person acting on Buckeye’s behalf are expressly
qualified in their entirety by the cautionary statements contained
or referred to in this press release and in Buckeye’s future
periodic reports filed with the SEC. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed
in this press release may not occur.
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 June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenue: |
|
|
|
|
|
|
|
Product sales |
$ |
420,573 |
|
|
$ |
556,850 |
|
|
$ |
1,083,569 |
|
|
$ |
1,349,037 |
|
Transportation, storage and other services |
371,129 |
|
|
383,989 |
|
|
737,105 |
|
|
774,907 |
|
Total revenue |
791,702 |
|
|
940,839 |
|
|
1,820,674 |
|
|
2,123,944 |
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of product sales |
416,397 |
|
|
552,399 |
|
|
1,071,504 |
|
|
1,337,726 |
|
Operating expenses |
156,554 |
|
|
156,505 |
|
|
309,452 |
|
|
311,373 |
|
Depreciation and amortization |
65,859 |
|
|
66,569 |
|
|
129,743 |
|
|
130,707 |
|
General and administrative |
18,306 |
|
|
21,792 |
|
|
39,956 |
|
|
45,081 |
|
Other, net |
(3,007 |
) |
|
(2,123 |
) |
|
(1,794 |
) |
|
(16,153 |
) |
Total costs and expenses |
654,109 |
|
|
795,142 |
|
|
1,548,861 |
|
|
1,808,734 |
|
Operating income |
137,593 |
|
|
145,697 |
|
|
271,813 |
|
|
315,210 |
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
Earnings from equity investments |
2,871 |
|
|
8,265 |
|
|
6,216 |
|
|
15,754 |
|
Interest and debt expense |
(49,574 |
) |
|
(59,566 |
) |
|
(101,742 |
) |
|
(118,671 |
) |
Other expense, net |
(78 |
) |
|
(297 |
) |
|
(3,917 |
) |
|
(612 |
) |
Total other expense, net |
(46,781 |
) |
|
(51,598 |
) |
|
(99,443 |
) |
|
(103,529 |
) |
|
|
|
|
|
|
|
|
Income before taxes |
90,812 |
|
|
94,099 |
|
|
172,370 |
|
|
211,681 |
|
Income tax expense |
(297 |
) |
|
(782 |
) |
|
(595 |
) |
|
(1,272 |
) |
Net income |
90,515 |
|
|
93,317 |
|
|
171,775 |
|
|
210,409 |
|
Less: Net income attributable to noncontrolling
interests |
(496 |
) |
|
(1,413 |
) |
|
(994 |
) |
|
(6,132 |
) |
Net income attributable to Buckeye Partners,
L.P. |
$ |
90,019 |
|
|
$ |
91,904 |
|
|
$ |
170,781 |
|
|
$ |
204,277 |
|
|
|
|
|
|
|
|
|
Earnings
per unit attributable to Buckeye Partners, L.P.: |
|
|
|
|
|
|
Basic |
$ |
0.58 |
|
|
$ |
0.59 |
|
|
$ |
1.10 |
|
|
$ |
1.34 |
|
Diluted |
$ |
0.58 |
|
|
$ |
0.59 |
|
|
$ |
1.09 |
|
|
$ |
1.33 |
|
|
|
|
|
|
|
|
|
Weighted average units outstanding: |
|
|
|
|
|
|
|
Basic |
153,918 |
|
|
153,258 |
|
|
153,882 |
|
|
151,093 |
|
Diluted |
154,742 |
|
|
153,989 |
|
|
154,639 |
|
|
151,770 |
|
BUCKEYE PARTNERS,
L.P.SELECTED FINANCIAL AND OPERATING
DATA(In
thousands)(Unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenue: |
|
|
|
|
|
|
|
Domestic Pipelines & Terminals |
$ |
243,581 |
|
|
$ |
249,880 |
|
|
$ |
485,117 |
|
|
$ |
505,315 |
|
Global Marine Terminals |
134,357 |
|
|
143,143 |
|
|
268,364 |
|
|
287,228 |
|
Merchant Services |
425,768 |
|
|
561,613 |
|
|
1,095,283 |
|
|
1,360,041 |
|
Intersegment |
(12,004 |
) |
|
(13,797 |
) |
|
(28,090 |
) |
|
(28,640 |
) |
Total revenue |
$ |
791,702 |
|
|
$ |
940,839 |
|
|
$ |
1,820,674 |
|
|
$ |
2,123,944 |
|
|
|
|
|
|
|
|
|
Total costs and
expenses: (1) |
|
|
|
|
|
|
|
Domestic Pipelines & Terminals |
$ |
146,951 |
|
|
$ |
146,252 |
|
|
$ |
284,857 |
|
|
$ |
292,476 |
|
Global Marine Terminals |
96,869 |
|
|
97,934 |
|
|
203,090 |
|
|
183,317 |
|
Merchant Services |
422,293 |
|
|
564,753 |
|
|
1,089,004 |
|
|
1,361,581 |
|
Intersegment |
(12,004 |
) |
|
(13,797 |
) |
|
(28,090 |
) |
|
(28,640 |
) |
Total costs and expenses |
$ |
654,109 |
|
|
$ |
795,142 |
|
|
$ |
1,548,861 |
|
|
$ |
1,808,734 |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization: |
|
|
|
|
|
|
|
Domestic Pipelines & Terminals |
$ |
25,030 |
|
|
$ |
24,542 |
|
|
$ |
48,144 |
|
|
$ |
48,250 |
|
Global Marine Terminals |
39,781 |
|
|
40,821 |
|
|
79,523 |
|
|
80,029 |
|
Merchant Services |
1,048 |
|
|
1,206 |
|
|
2,076 |
|
|
2,428 |
|
Total depreciation and amortization |
$ |
65,859 |
|
|
$ |
66,569 |
|
|
$ |
129,743 |
|
|
$ |
130,707 |
|
|
|
|
|
|
|
|
|
Operating
income: |
|
|
|
|
|
|
|
Domestic Pipelines & Terminals |
$ |
96,630 |
|
|
$ |
103,628 |
|
|
$ |
200,260 |
|
|
$ |
212,839 |
|
Global Marine Terminals |
37,488 |
|
|
45,209 |
|
|
65,274 |
|
|
103,911 |
|
Merchant Services |
3,475 |
|
|
(3,140 |
) |
|
6,279 |
|
|
(1,540 |
) |
Total operating income |
$ |
137,593 |
|
|
$ |
145,697 |
|
|
$ |
271,813 |
|
|
$ |
315,210 |
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
Domestic Pipelines & Terminals |
$ |
133,082 |
|
|
$ |
135,321 |
|
|
$ |
268,975 |
|
|
$ |
275,972 |
|
Global Marine Terminals |
76,156 |
|
|
120,728 |
|
|
151,663 |
|
|
238,146 |
|
Merchant Services |
5,105 |
|
|
(1,196 |
) |
|
10,103 |
|
|
2,459 |
|
Total Adjusted EBITDA |
$ |
214,343 |
|
|
$ |
254,853 |
|
|
$ |
430,741 |
|
|
$ |
516,577 |
|
|
|
|
|
|
|
|
|
Capital
expenditures: (2) |
|
|
|
|
|
|
|
Domestic Pipelines & Terminals |
$ |
65,834 |
|
|
$ |
89,658 |
|
|
$ |
146,703 |
|
|
$ |
152,499 |
|
Global Marine Terminals |
21,929 |
|
|
43,461 |
|
|
44,463 |
|
|
97,518 |
|
Merchant Services |
— |
|
|
— |
|
|
— |
|
|
18 |
|
Total capital expenditures |
$ |
87,763 |
|
|
$ |
133,119 |
|
|
$ |
191,166 |
|
|
$ |
250,035 |
|
|
|
|
|
|
|
|
|
Summary of capital
expenditures: (2) |
|
|
|
|
|
|
|
Maintenance capital expenditures |
$ |
28,080 |
|
|
$ |
28,566 |
|
|
$ |
51,431 |
|
|
$ |
56,766 |
|
Expansion and cost reduction |
59,683 |
|
|
104,553 |
|
|
139,735 |
|
|
193,269 |
|
Total capital expenditures |
$ |
87,763 |
|
|
$ |
133,119 |
|
|
$ |
191,166 |
|
|
$ |
250,035 |
|
|
June 30, |
|
December 31, |
|
2019 |
|
2018 |
Key Balance Sheet Information: |
|
|
|
Cash and cash equivalents |
$ |
6,291 |
|
|
$ |
1,830 |
|
Long-term debt, including current portion (3) |
$ |
3,730,161 |
|
|
$ |
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 $81.2 million and
$133.6 million for the three months ended June 30, 2019 and
2018, respectively, and $163.6 million and $252.2 million for the
six months ended June 30, 2019 and 2018, respectively. |
(3) |
Excludes $109.8 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
June 30, 2019 and December 31, 2018, respectively. |
BUCKEYE PARTNERS,
L.P.SELECTED FINANCIAL AND OPERATING DATA -
Continued(Unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Domestic
Pipelines & Terminals(average bpd in
thousands): |
|
|
|
|
|
|
|
Pipelines: |
|
|
|
|
|
|
|
Gasoline |
790.1 |
|
|
804.2 |
|
|
763.0 |
|
|
768.3 |
|
Jet fuel(1) |
268.9 |
|
|
271.1 |
|
|
257.7 |
|
|
255.8 |
|
Middle distillates (2) |
318.1 |
|
|
299.9 |
|
|
342.2 |
|
|
328.6 |
|
Other products (3) |
18.5 |
|
|
14.7 |
|
|
14.2 |
|
|
13.6 |
|
Total throughput |
1,395.6 |
|
|
1,389.9 |
|
|
1,377.1 |
|
|
1,366.3 |
|
Terminals: |
|
|
|
|
|
|
|
Throughput (4)(5) |
1,315.2 |
|
|
1,285.5 |
|
|
1,298.1 |
|
|
1,270.3 |
|
|
|
|
|
|
|
|
|
Pipeline average tariff (cents/bbl) (6) |
91.9 |
|
|
90.1 |
|
|
94.5 |
|
|
91.5 |
|
|
|
|
|
|
|
|
|
Global Marine
Terminals (percent of capacity): |
|
|
|
|
|
|
|
Average capacity utilization rate (7) |
79 |
% |
|
85 |
% |
|
78 |
% |
|
87 |
% |
|
|
|
|
|
|
|
|
Merchant Services (in
millions of gallons): |
|
|
|
|
|
|
|
Sales volumes |
210.6 |
|
|
263.1 |
|
|
567.1 |
|
|
659.1 |
|
_________________________
(1) |
Excludes 108.1 bpd and 110.5 bpd of jet fuel for the three and six
months ended June 30, 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 59.3 bpd and 57.5 bpd of total terminal throughput for the
three and six months ended June 30, 2018 related to the DPTS asset
package divested on December 17, 2018. |
(6) |
Pipeline average tariff for the three and six months ended June 30,
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 76% and 81% for the three months ended June 30,
2019 and 2018, respectively, and approximately 76% and 82% for the
six months ended June 30, 2019 and 2018, respectively. |
BUCKEYE PARTNERS,
L.P.SELECTED FINANCIAL AND OPERATING
DATANon-GAAP Reconciliations(In
thousands, except coverage
ratio)(Unaudited)
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income |
|
$ |
90,515 |
|
|
$ |
93,317 |
|
|
$ |
171,775 |
|
|
$ |
210,409 |
|
Less: |
Net income attributable to
noncontrolling interests |
|
(496 |
) |
|
(1,413 |
) |
|
(994 |
) |
|
(6,132 |
) |
Net income
attributable to Buckeye Partners, L.P. |
90,019 |
|
|
91,904 |
|
|
170,781 |
|
|
204,277 |
|
Add: |
Interest and debt expense |
|
49,574 |
|
|
59,566 |
|
|
101,742 |
|
|
118,671 |
|
|
Income tax expense |
|
297 |
|
|
782 |
|
|
595 |
|
|
1,272 |
|
|
Depreciation and amortization
(1) |
|
65,859 |
|
|
66,569 |
|
|
129,743 |
|
|
130,707 |
|
|
Non-cash unit-based
compensation expense |
|
5,781 |
|
|
7,976 |
|
|
15,698 |
|
|
16,666 |
|
|
Acquisition, dispositions, and
transition expense (2) |
|
5,783 |
|
|
141 |
|
|
9,866 |
|
|
423 |
|
|
Non-cash impairment on
disposals of long-lived assets |
|
911 |
|
|
— |
|
|
3,106 |
|
|
— |
|
|
Proportionate share of
Adjusted EBITDA for the equity method investment in VTTI (3) |
|
— |
|
|
34,640 |
|
|
— |
|
|
69,180 |
|
|
Loss on early extinguishment
of debt (4) |
|
— |
|
|
— |
|
|
4,020 |
|
|
— |
|
Less: |
Gains on property damage
recoveries (5) |
|
— |
|
|
(450 |
) |
|
— |
|
|
(14,535 |
) |
|
Hurricane-related costs, net
of recoveries (6) |
|
(3,881 |
) |
|
(1,393 |
) |
|
(4,810 |
) |
|
(812 |
) |
|
Earnings from the equity
method investment in VTTI (3) |
|
— |
|
|
(4,882 |
) |
|
— |
|
|
(9,272 |
) |
Adjusted
EBITDA |
|
$ |
214,343 |
|
|
$ |
254,853 |
|
|
$ |
430,741 |
|
|
$ |
516,577 |
|
Less: |
Interest and debt expense,
excluding amortization of deferred financing costs, debt discounts,
debt retirement costs, and interest rate swap settlements and
amortization |
|
(45,982 |
) |
|
(55,638 |
) |
|
(94,528 |
) |
|
(110,843 |
) |
|
Income tax expense, excluding
non-cash taxes |
|
(297 |
) |
|
(687 |
) |
|
(595 |
) |
|
(1,088 |
) |
|
Maintenance capital
expenditures |
|
(28,080 |
) |
|
(28,566 |
) |
|
(51,431 |
) |
|
(56,766 |
) |
|
Proportionate share of VTTI’s
interest expense, current income tax expense, realized foreign
currency derivative gains and losses, and maintenance capital
expenditures (3) |
|
— |
|
|
(9,139 |
) |
|
— |
|
|
(19,975 |
) |
Add: |
Hurricane-related maintenance
capital expenditures |
|
9 |
|
|
1,164 |
|
|
304 |
|
|
3,262 |
|
Distributable cash
flow |
|
$ |
139,993 |
|
|
$ |
161,987 |
|
|
$ |
284,491 |
|
|
$ |
331,167 |
|
|
|
|
|
|
|
|
|
|
|
Distributions for
coverage ratio (7) |
|
$ |
116,307 |
|
|
$ |
186,757 |
|
|
$ |
232,582 |
|
|
$ |
373,516 |
|
|
|
|
|
|
|
|
|
|
|
Coverage
ratio |
|
1.20 |
|
|
0.87 |
|
|
1.22 |
|
|
0.89 |
|
_________________________
(1) |
Includes 100% of the depreciation and amortization expense of $18.2
million and $36.0 million for Buckeye Texas for the three and six
months ended June 30, 2018, respectively. |
(2) |
Represents transaction, internal and third-party costs related to
the Merger, asset acquisition, dispositions, and integration. |
(3) |
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. |
(4) |
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. |
(5) |
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. |
(6) |
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. |
(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 June 30,
2019. |
Contact: |
Kevin J. GoodwinVice President &
Treasurerirelations@buckeye.com(800) 422-2825 |
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