Plains All American Pipeline, L.P. (NYSE: PAA) and Plains GP
Holdings (NYSE: PAGP) today reported third-quarter 2020 results and
furnished updated 2020 guidance in addition to several other
significant updates, which are highlighted below.
Summary Highlights
- Reported net income for the quarter of $143 million
- Delivered third-quarter 2020 Adjusted EBITDA of $682
million
- Completed the sale of LA Basin Terminals (closed October 15,
2020) for approximately $200 million (brings year-to-date asset
sales proceeds to approximately $450 million)
- Increased full-year 2020 Adjusted EBITDA guidance to +/- $2.585
billion (increase of $85 million, or 3%)
- Provided preliminary estimate for 2021 Adjusted EBITDA of +/-
$2.2 billion (assumes a $50 million contribution from the Supply
& Logistics segment, and is net of the LA Basin Terminals sale
and $600 million or more of additional asset sales targeted in
2021)
- Provided preliminary estimate for 2021 Free Cash Flow after
distributions of roughly $300 million, or $900 million or more when
including the benefit of proceeds from additional asset sales
targeted in 2021
- Announced $500 million Common Equity Repurchase Program
intended to be utilized as an additional method of returning
capital to investors
“We delivered third-quarter results favorable to our
expectations and raised our full-year 2020 guidance, which is now
in-line with our beginning of the year pre-COVID expectations,”
stated Willie Chiang, Chairman and CEO of Plains. “We have
continued to execute across each of our key initiatives: operating
safely and reliably, maximizing Free Cash Flow after distributions,
reducing leverage, minimizing capital investment, optimizing our
assets, streamlining our organization and reducing costs throughout
the business.”
Mr. Chiang continued, “Our current equity valuation does not
reflect the strength of our asset base or the long-term durability
of our business, and we have reached an inflection point where we
expect to generate meaningful levels of Free Cash Flow after
distributions. Given the combination of these factors, today we
announced a $500 million common equity repurchase program to be
used as an additional method of returning capital to investors. In
addition to reducing debt, we believe it is appropriate to allocate
a portion of our Free Cash Flow after distributions to invest in
our equity.”
Plains All American Pipeline
Summary Financial
Information (unaudited)
(in millions, except per unit data)
Three Months Ended
September 30,
%
Nine Months Ended
September 30,
%
GAAP Results
2020
2019
Change
2020
2019
Change
Net income/(loss) attributable to PAA
(1)
$
143
$
449
(68
)
%
$
(2,562
)
$
1,865
(237
)
%
Diluted net income/(loss) per common
unit
$
0.13
$
0.55
(76
)
%
$
(3.72
)
$
2.28
(263
)
%
Diluted weighted average common units
outstanding (2)
728
800
(9
)
%
728
800
(9
)
%
Net cash provided by operating
activities
$
282
$
314
(10
)
%
$
1,256
$
1,778
(29
)
%
Distribution per common unit declared for
the period
$
0.18
$
0.36
(50
)
%
____________________________________
(1)
Reported results for the nine months ended
September 30, 2020 include aggregate non-cash goodwill and asset
impairments and the write-down of certain of our investments in
unconsolidated entities totaling $3.3 billion representing a
nine-month net loss of $4.55 after tax per common unit.
(2)
For the three and nine months ended
September 30, 2019, includes all potentially dilutive securities
(our Series A preferred units and equity-indexed compensation
awards) outstanding during the period. See the “Computation of
Basic and Diluted Net Income/(Loss) Per Common Unit” table attached
hereto for additional information.
Three Months Ended
September 30,
%
Nine Months Ended
September 30,
%
Non-GAAP Results (1)
2020
2019
Change
2020
2019
Change
Adjusted net income attributable to
PAA
$
382
$
430
(11)
%
$
1,070
$
1,546
(31)
%
Diluted adjusted net income per common
unit
$
0.46
$
0.52
(12)
%
$
1.26
$
1.88
(33)
%
Adjusted EBITDA
$
682
$
731
(7)
%
$
2,001
$
2,377
(16)
%
Implied DCF per common unit and common
equivalent unit
$
0.63
$
0.63
—
%
$
1.84
$
2.21
(17)
%
Free cash flow
$
73
$
(79)
**
$
195
$
535
**
Free cash flow after distributions
$
(95)
$
(378)
**
$
(466)
$
(343)
**
____________________________________
**
Indicates that variance as a percentage is
not meaningful.
(1)
See the section of this release entitled
“Non-GAAP Financial Measures and Selected Items Impacting
Comparability” and the tables attached hereto for information
regarding certain selected items that PAA believes impact
comparability of financial results between reporting periods, as
well as for information regarding non-GAAP financial measures (such
as Adjusted EBITDA, Implied DCF, Free Cash Flow and Free Cash Flow
After Distributions) and their reconciliation to the most directly
comparable measures as reported in accordance with GAAP.
Segment Adjusted EBITDA for the third quarter and first nine
months of 2020 and 2019 is presented below:
Summary of
Selected Financial Data by Segment (unaudited)
(in millions)
Segment Adjusted
EBITDA
Transportation
Facilities
Supply and Logistics
Three Months Ended September 30, 2020
$
444
$
176
$
61
Three Months Ended September 30, 2019
$
462
$
173
$
92
Percentage change in Segment Adjusted
EBITDA versus 2019 period
(4)
%
2
%
(34)
%
Segment Adjusted
EBITDA
Transportation
Facilities
Supply and Logistics
Nine Months Ended September 30, 2020
$
1,233
$
560
$
205
Nine Months Ended September 30, 2019
$
1,271
$
529
$
571
Percentage change in Segment Adjusted
EBITDA versus 2019 period
(3)
%
6
%
(64)
%
Third-quarter 2020 Transportation Segment Adjusted EBITDA
decreased 4% versus comparable 2019 results due to reductions in
tariff volumes in multiple regions resulting from lower crude oil
prices, reduced drilling and completion activity and compressed
regional basis differentials, partially offset by the benefit of
minimum volume commitment deficiency payments associated with
second quarter deficiencies.
Third-quarter 2020 Facilities Segment Adjusted EBITDA increased
2% versus comparable 2019 results primarily due to operational cost
savings, increased spot activity at certain of our West Coast crude
oil storage terminals and increased capacity at certain of our
Mid-Continent and Gulf Coast crude oil storage terminals, partially
offset by decreased activity at certain of our rail terminals
resulting from less favorable market conditions and the impact of
asset sales.
Third-quarter 2020 Supply and Logistics Segment Adjusted EBITDA
decreased 34% versus comparable 2019 results due to less favorable
crude oil differentials in both the Permian Basin and Canada,
partially offset by the benefit of contango-based margin
opportunities.
2020 Full-Year Guidance
The table below presents our full-year 2020 financial and
operating guidance:
Financial and
Operating Guidance (unaudited)
(in millions, except volumes, per unit and
per barrel data)
Twelve Months Ended December
31,
2018
2019
2020 (G)
+ / -
Segment Adjusted EBITDA
Transportation
$
1,508
$
1,722
$
1,620
Facilities
711
705
715
Fee-Based
$
2,219
$
2,427
$
2,335
Supply and Logistics
462
803
250
Adjusted other income/(expense), net
3
7
—
Adjusted EBITDA (1)
$
2,684
$
3,237
$
2,585
Interest expense, net of certain non-cash
items (2)
(419)
(407)
(415)
Maintenance capital
(252)
(287)
(215)
Current income tax expense
(66)
(112)
(50)
Other
1
(55)
20
Implied DCF (1)
$
1,948
$
2,376
$
1,925
Preferred unit distributions paid (3)
(161)
(198)
(200)
Implied DCF Available to Common
Unitholders
$
1,787
$
2,178
$
1,725
Implied DCF per Common Unit and Common
Equivalent Unit (1)
$
2.38
$
2.91
$
2.35
Distributions per Common Unit
(4)
$
1.20
$
1.38
$
0.90
Common Unit Distribution Coverage
Ratio
2.05
x
2.17
x
2.63
x
Diluted Adjusted Net Income per Common
Unit (1)
$
1.88
$
2.51
$
1.59
Operating Data
Transportation
Average daily volumes (MBbls/d)
5,889
6,893
6,380
Segment Adjusted EBITDA per barrel
$
0.70
$
0.68
$
0.69
Facilities
Average capacity (MMBbls/Mo)
124
125
124
Segment Adjusted EBITDA per barrel
$
0.48
$
0.47
$
0.48
Supply and Logistics
Average daily volumes (MBbls/d)
1,309
1,369
1,290
Segment Adjusted EBITDA per barrel
$
0.97
$
1.61
$
0.53
Investment Capital
$
1,888
$
1,340
$
950
Fourth-Quarter Adjusted EBITDA as
Percentage of Full Year
35
%
27
%
23
%
____________________________________
(G)
2020 Guidance forecasts are intended to be
+ / - amounts.
(1)
See the section of this release entitled
“Non-GAAP Financial Measures and Selected Items Impacting
Comparability” and the Non-GAAP Reconciliation tables attached
hereto for information regarding non-GAAP financial measures and,
for the historical 2018 and 2019 periods, their reconciliation to
the most directly comparable measures as reported in accordance
with GAAP. We do not provide a reconciliation of non-GAAP financial
measures to the equivalent GAAP financial measures on a
forward-looking basis as it is impractical to forecast certain
items that we have defined as “Selected Items Impacting
Comparability” without unreasonable effort, due to the uncertainty
and inherent difficulty of predicting the occurrence and financial
impact of and the periods in which such items may be recognized.
Thus, a reconciliation of non-GAAP financial measures to the
equivalent GAAP financial measures could result in disclosure that
could be imprecise or potentially misleading.
(2)
Excludes certain non-cash items impacting
interest expense such as amortization of debt issuance costs and
terminated interest rate swaps.
(3)
Cash distributions paid to our preferred
unitholders during the year presented. Distributions on our Series
A preferred units were paid-in-kind for the February 2018 quarterly
distribution. Distributions on our Series A preferred units have
been paid in cash since the May 2018 quarterly distribution.
Distributions on our Series B preferred units are payable in cash
semi-annually in arrears on May 15 and November 15.
(4)
Cash distributions per common unit paid
during 2018 and 2019. 2020 (G) reflects the annualized distribution
rate of $1.44 per common unit paid in February and the decreased
annualized distribution rate of $0.72 per common unit for the
remainder of the year.
Plains GP Holdings
PAGP owns an indirect non-economic controlling interest in PAA’s
general partner and an indirect limited partner interest in PAA. As
the control entity of PAA, PAGP consolidates PAA’s results into its
financial statements, which is reflected in the condensed
consolidating balance sheet and income statement tables included at
the end of this release. Information regarding PAGP’s distributions
is reflected below:
Q3 2020
Q2 2020
Q3 2019
Distribution per Class A share declared
for the period
$
0.18
$
0.18
$
0.36
Q3 2020 distribution percentage change
from prior periods
—
%
(50)
%
Conference Call
PAA and PAGP will hold a joint conference call at 4:30 p.m. CT
on Monday, November 2, 2020 to discuss the following items:
- PAA’s third-quarter 2020 performance;
- Capitalization and liquidity; and
- Financial and operating guidance.
Conference Call Webcast Instructions
To access the internet webcast, please go to
https://event.webcasts.com/starthere.jsp?ei=1378562&tp_key=8945f97d3b.
Alternatively, the webcast can be accessed on our website
(www.plainsallamerican.com) under Investor Relations (Navigate to:
Investor Relations / either “PAA” or “PAGP” / News & Events /
Quarterly Earnings). Following the live webcast, an audio replay in
MP3 format will be available on our website within two hours after
the end of the call and will be accessible for a period of 365
days. A transcript will also be available after the call at the
above referenced website.
Non-GAAP Financial Measures and Selected Items Impacting
Comparability
To supplement our financial information presented in accordance
with GAAP, management uses additional measures known as “non-GAAP
financial measures” in its evaluation of past performance and
prospects for the future and to assess the amount of cash that is
available for distributions, debt repayments and other general
partnership purposes.
The primary additional measures used by management are earnings
before interest, taxes, depreciation and amortization (including
our proportionate share of depreciation and amortization of
unconsolidated entities), gains and losses on asset sales and asset
impairments, goodwill impairment losses and gains on and
impairments of investments in unconsolidated entities, adjusted for
certain selected items impacting comparability (“Adjusted EBITDA”),
Implied distributable cash flow (“DCF”), Free Cash Flow and Free
Cash Flow After Distributions.
Our definition and calculation of certain non-GAAP financial
measures may not be comparable to similarly-titled measures of
other companies. Adjusted EBITDA, Implied DCF and certain other
non-GAAP financial performance measures are reconciled to Net
Income/(Loss), and Free Cash Flow and Free Cash Flow After
Distributions are reconciled to Net Cash Provided by Operating
Activities, (the most directly comparable measures as reported in
accordance with GAAP) for the historical periods presented in the
tables attached to this release, and should be viewed in addition
to, and not in lieu of, our Condensed Consolidated Financial
Statements and notes thereto. In addition, we encourage you to
visit our website at www.plainsallamerican.com (in particular the
section under “Financial Information” entitled “Non-GAAP
Reconciliations” within the Investor Relations tab), which presents
a reconciliation of our commonly used non-GAAP and supplemental
financial measures.
Performance Measures
Management believes that the presentation of Adjusted EBITDA and
Implied DCF provides useful information to investors regarding our
performance and results of operations because these measures, when
used to supplement related GAAP financial measures, (i) provide
additional information about our core operating performance and
ability to fund distributions to our unitholders through cash
generated by our operations and (ii) provide investors with the
same financial analytical framework upon which management bases
financial, operational, compensation and planning/budgeting
decisions. We also present these and additional non-GAAP financial
measures, including adjusted net income attributable to PAA and
basic and diluted adjusted net income per common unit, as they are
measures that investors, rating agencies and debt holders have
indicated are useful in assessing us and our results of operations.
These non-GAAP measures may exclude, for example, (i) charges for
obligations that are expected to be settled with the issuance of
equity instruments, (ii) gains and losses on derivative instruments
that are related to underlying activities in another period (or the
reversal of such adjustments from a prior period), gains and losses
on derivatives that are related to investing activities (such as
the purchase of linefill) and inventory valuation adjustments, as
applicable, (iii) long-term inventory costing adjustments, (iv)
items that are not indicative of our core operating results and
business outlook and/or (v) other items that we believe should be
excluded in understanding our core operating performance. These
measures may further be adjusted to include amounts related to
deficiencies associated with minimum volume commitments whereby we
have billed the counterparties for their deficiency obligation and
such amounts are recognized as deferred revenue in “Other current
liabilities” on our Condensed Consolidated Financial Statements.
Such amounts are presented net of applicable amounts subsequently
recognized into revenue. Furthermore, the calculation of these
measures contemplates tax effects as a separate reconciling item,
where applicable. We have defined all such items as “selected items
impacting comparability.” Due to the nature of the selected items,
certain selected items impacting comparability may impact certain
non-GAAP financial measures, referred to as adjusted results, but
not impact other non-GAAP financial measures. We do not necessarily
consider all of our selected items impacting comparability to be
non-recurring, infrequent or unusual, but we believe that an
understanding of these selected items impacting comparability is
material to the evaluation of our operating results and
prospects.
Although we present selected items impacting comparability that
management considers in evaluating our performance, you should also
be aware that the items presented do not represent all items that
affect comparability between the periods presented. Variations in
our operating results are also caused by changes in volumes,
prices, exchange rates, mechanical interruptions, acquisitions,
divestitures, investment capital projects and numerous other
factors. These types of variations may not be separately identified
in this release, but will be discussed, as applicable, in
management’s discussion and analysis of operating results in our
Quarterly Report on Form 10-Q.
Liquidity Measures
Management also uses the non-GAAP financial measures Free Cash
Flow and Free Cash Flow After Distributions to assess the amount of
cash that is available for distributions, debt repayments and other
general partnership purposes. Free Cash Flow is defined as Net Cash
Provided by Operating Activities, less Net Cash Used in Investing
Activities, which primarily includes acquisition, investment and
maintenance capital expenditures, investments in unconsolidated
entities and the impact from the purchase and sale of linefill and
base gas, net of proceeds from the sales of assets and further
impacted by distributions to, contributions from and proceeds from
the sale of noncontrolling interests. Free Cash Flow is further
reduced by cash distributions paid to preferred and common
unitholders to arrive at Free Cash Flow After Distributions.
Forward-Looking Statements
Except for the historical information contained herein, the
matters discussed in this release consist of forward-looking
statements that involve certain risks and uncertainties that could
cause actual results or outcomes to differ materially from results
or outcomes anticipated in the forward-looking statements. These
risks and uncertainties include, among other things, the
following:
Factors Related Primarily to the COVID-19 Pandemic and Excess
Supply Situation:
- further declines in global crude oil demand and crude oil
prices that correspondingly lead to a significant reduction of
domestic crude oil, natural gas liquids (“NGL”) and natural gas
production (whether due to reduced producer cash flow to fund
drilling activities or the inability of producers to access
capital, or both, the unavailability of pipeline and/or storage
capacity, the shutting-in of production by producers,
government-mandated pro-ration orders, or other factors), which in
turn could result in significant declines in the actual or expected
volume of crude oil and NGL shipped, processed, purchased, stored,
fractionated and/or gathered at or through the use of our assets
and/or the reduction of commercial opportunities that might
otherwise be available to us;
- uncertainty regarding the length of time it will take for the
United States, Canada, and the rest of the world to contain the
spread of the COVID-19 virus to the point where restrictions on
various commercial and economic activities are lifted and the
extent to which consumer demand and demand for crude oil rebound
once such restrictions are lifted;
- uncertainty regarding the future actions of foreign oil
producers such as Saudi Arabia and Russia and the risk that they
take actions that will prolong or exacerbate the current
over-supply of crude oil;
- uncertainty regarding the timing, pace and extent of an
economic recovery in the United States and elsewhere, which in turn
will likely affect demand for crude oil and therefore the demand
for the midstream services we provide and the commercial
opportunities available to us;
- the effect of an overhang of significant amounts of crude oil
inventory stored in the United States and elsewhere and the impact
that such inventory overhang ultimately has on the timing of a
return to market conditions that are more conducive to an increase
in drilling and production activities in the United States and a
resulting increase in demand for the midstream services we
provide;
- the refusal or inability of our customers or counterparties to
perform their obligations under their contracts with us (including
commercial contracts, asset sale agreements and other agreements),
whether justified or not and whether due to financial constraints
(reduced creditworthiness, liquidity issues or insolvency), market
constraints, legal constraints (including governmental orders or
guidance), the exercise of contractual or common law rights that
allegedly excuse their performance (such as force majeure or
similar claims) or other factors;
- our inability to perform our obligations under our contracts,
whether due to non-performance by third parties, including our
customers or counterparties, market constraints, third-party
constraints, legal constraints (including governmental orders or
guidance), or other factors;
- operational difficulties due to physical distancing
restrictions and the additional demands such restrictions may place
on our employees;
- disruptions to futures markets for crude oil, NGL and other
petroleum products, which may impair our ability to execute our
commercial and hedging strategies;
- our inability to reduce capital expenditures to the extent
forecasted, whether due to the incurrence of unexpected or
unplanned expenditures, third-party claims or other factors;
- the inability to complete forecasted asset sale transactions
due to governmental action, litigation, counterparty
non-performance or other factors;
General Factors:
- the effects of competition, including the effects of capacity
overbuild in areas where we operate;
- negative societal sentiment regarding the hydrocarbon energy
industry and the continued development and consumption of
hydrocarbons, which could influence consumer preferences and
governmental or regulatory actions in ways that adversely impact
our business;
- unanticipated changes in crude oil and NGL market structure,
grade differentials and volatility (or lack thereof);
- environmental liabilities or events that are not covered by an
indemnity, insurance or existing reserves;
- fluctuations in refinery capacity in areas supplied by our
mainlines and other factors affecting demand for various grades of
crude oil, NGL and natural gas and resulting changes in pricing
conditions or transportation throughput requirements;
- maintenance of our credit rating and ability to receive open
credit from our suppliers and trade counterparties;
- the occurrence of a natural disaster, catastrophe, terrorist
attack (including eco-terrorist attacks) or other event, including
cyber or other attacks on our electronic and computer systems;
- the successful integration and future performance of acquired
assets or businesses and the successful operation of joint ventures
and joint operating arrangements we enter into from time to time,
whether relating to assets operated by us or by third parties;
- failure to implement or capitalize, or delays in implementing
or capitalizing, on investment capital projects, whether due to
permitting delays, permitting withdrawals or other factors;
- shortages or cost increases of supplies, materials or
labor;
- the impact of current and future laws, rulings, governmental
regulations, accounting standards and statements, and related
interpretations, including legislation or regulatory initiatives
that prohibit, restrict or regulate hydraulic fracturing;
- tightened capital markets or other factors that increase our
cost of capital or limit our ability to obtain debt or equity
financing on satisfactory terms to fund additional acquisitions,
investment capital projects, working capital requirements and the
repayment or refinancing of indebtedness;
- general economic, market or business conditions (both within
the United States and globally and including the potential for a
recession or significant slowdown in economic activity levels) and
the amplification of other risks caused by volatile financial
markets, capital constraints and liquidity concerns;
- the availability of, and our ability to consummate,
divestitures, joint ventures, acquisitions or other strategic
opportunities;
- the currency exchange rate of the Canadian dollar;
- continued creditworthiness of, and performance by, our
counterparties, including financial institutions and trading
companies with which we do business;
- inability to recognize current revenue attributable to
deficiency payments received from customers who fail to ship or
move more than minimum contracted volumes until the related credits
expire or are used;
- non-utilization of our assets and facilities;
- increased costs, or lack of availability, of insurance;
- weather interference with business operations or project
construction, including the impact of extreme weather events or
conditions;
- the effectiveness of our risk management activities;
- fluctuations in the debt and equity markets, including the
price of our units at the time of vesting under our long-term
incentive plans;
- risks related to the development and operation of our assets,
including our ability to satisfy our contractual obligations to our
customers; and
- other factors and uncertainties inherent in the transportation,
storage, terminalling and marketing of crude oil, as well as in the
storage of natural gas and the processing, transportation,
fractionation, storage and marketing of NGL as discussed in the
Partnerships’ filings with the Securities and Exchange
Commission.
PAA is a publicly traded master limited partnership that owns
and operates midstream energy infrastructure and provides logistics
services for crude oil, NGL and natural gas. PAA owns an extensive
network of pipeline transportation, terminalling, storage and
gathering assets in key crude oil and NGL producing basins and
transportation corridors and at major market hubs in the United
States and Canada. On average, PAA handles more than 6 million
barrels per day of crude oil and NGL in its Transportation segment.
PAA is headquartered in Houston, Texas. More information is
available at www.plainsallamerican.com.
PAGP is a publicly traded entity that owns an indirect,
non-economic controlling general partner interest in PAA and an
indirect limited partner interest in PAA, one of the largest energy
infrastructure and logistics companies in North America. PAGP is
headquartered in Houston, Texas. More information is available at
www.plainsallamerican.com.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
REVENUES
$
5,833
$
7,886
$
17,327
$
24,515
COSTS AND EXPENSES
Purchases and related costs
5,107
6,855
15,000
21,218
Field operating costs
254
316
811
983
General and administrative expenses
61
74
201
225
Depreciation and amortization
160
156
493
439
(Gains)/losses on asset sales and asset
impairments, net
(2
)
(7
)
617
(7
)
Goodwill impairment losses
—
—
2,515
—
Total costs and expenses
5,580
7,394
19,637
22,858
OPERATING INCOME/(LOSS)
253
492
(2,310
)
1,657
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated
entities
89
102
280
274
Gain on/(impairment of) investments in
unconsolidated entities, net
(91
)
4
(182
)
271
Interest expense, net
(113
)
(108)
(329
)
(311
)
Other income/(expense), net
5
5
(7
)
23
INCOME/(LOSS) BEFORE TAX
143
495
(2,548
)
1,914
Current income tax expense
(17
)
(19
)
(39
)
(72
)
Deferred income tax (expense)/benefit
20
(22
)
32
30
NET INCOME/(LOSS)
146
454
(2,555
)
1,872
Net income attributable to noncontrolling
interests
(3
)
(5
)
(7
)
(7
)
NET INCOME/(LOSS) ATTRIBUTABLE TO
PAA
$
143
$
449
$
(2,562
)
$
1,865
NET INCOME/(LOSS) PER COMMON
UNIT:
Net income/(loss) allocated to common
unitholders — Basic
$
93
$
399
$
(2,712
)
$
1,710
Basic weighted average common units
outstanding
728
728
728
727
Basic net income/(loss) per common
unit
$
0.13
$
0.55
$
(3.72
)
$
2.35
Net income/(loss) allocated to common
unitholders — Diluted
$
93
$
436
$
(2,712
)
$
1,826
Diluted weighted average common units
outstanding
728
800
728
800
Diluted net income/(loss) per common
unit
$
0.13
$
0.55
$
(3.72
)
$
2.28
NON-GAAP ADJUSTED
RESULTS
(in millions, except per unit data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Adjusted net income attributable to
PAA
$
382
$
430
$
1,070
$
1,546
Diluted adjusted net income per common
unit
$
0.46
$
0.52
$
1.26
$
1.88
Adjusted EBITDA
$
682
$
731
$
2,001
$
2,377
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATED BALANCE SHEET DATA
(in millions)
September 30,
2020
December 31,
2019
ASSETS
Current assets
$
3,405
$
4,612
Property and equipment, net
14,618
15,355
Investments in unconsolidated entities
3,743
3,683
Goodwill
—
2,540
Linefill and base gas
966
981
Long-term operating lease right-of-use
assets, net
395
466
Long-term inventory
120
182
Other long-term assets, net
999
858
Total assets
$
24,246
$
28,677
LIABILITIES AND PARTNERS’
CAPITAL
Current liabilities
$
3,804
$
5,017
Senior notes, net
9,069
8,939
Other long-term debt, net
312
248
Long-term operating lease liabilities
337
387
Other long-term liabilities and deferred
credits
873
891
Total liabilities
14,395
15,482
Partners’ capital excluding noncontrolling
interests
9,706
13,062
Noncontrolling interests
145
133
Total partners’ capital
9,851
13,195
Total liabilities and partners’
capital
$
24,246
$
28,677
DEBT
CAPITALIZATION RATIOS
(in millions)
September 30,
2020
December 31,
2019
Short-term debt
$
790
$
504
Long-term debt
9,381
9,187
Total debt
$
10,171
$
9,691
Long-term debt
$
9,381
$
9,187
Partners’ capital
9,851
13,195
Total book capitalization
$
19,232
$
22,382
Total book capitalization, including
short-term debt
$
20,022
$
22,886
Long-term debt-to-total book
capitalization
49
%
41
%
Total debt-to-total book capitalization,
including short-term debt
51
%
42
%
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
COMPUTATION OF
BASIC AND DILUTED NET INCOME/(LOSS) PER COMMON UNIT
(1)
(in millions, except per unit data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Basic Net Income/(Loss) per Common
Unit
Net income/(loss) attributable to PAA
$
143
$
449
$
(2,562
)
$
1,865
Distributions to Series A preferred
unitholders
(37
)
(37
)
(112
)
(112
)
Distributions to Series B preferred
unitholders
(12
)
(12
)
(37
)
(37
)
Other
(1
)
(1
)
(1
)
(6
)
Net income/(loss) allocated to common
unitholders
$
93
$
399
$
(2,712
)
$
1,710
Basic weighted average common units
outstanding
728
728
728
727
Basic net income/(loss) per common
unit
$
0.13
$
0.55
$
(3.72
)
$
2.35
Diluted Net Income/(Loss) per Common
Unit
Net income/(loss) attributable to PAA
$
143
$
449
$
(2,562
)
$
1,865
Distributions to Series A preferred
unitholders
(37
)
—
(112
)
—
Distributions to Series B preferred
unitholders
(12
)
(12
)
(37
)
(37
)
Other
(1
)
(1
)
(1
)
(2
)
Net income/(loss) allocated to common
unitholders
$
93
$
436
$
(2,712
)
$
1,826
Basic weighted average common units
outstanding
728
728
728
727
Effect of dilutive securities:
Series A preferred units (2)
—
71
—
71
Equity-indexed compensation plan awards
(3)
—
1
—
2
Diluted weighted average common units
outstanding
728
800
728
800
Diluted net income/(loss) per common
unit
$
0.13
$
0.55
$
(3.72
)
$
2.28
____________________________________
(1)
We calculate net income/(loss) allocated
to common unitholders based on the distributions pertaining to the
current period’s net income (whether paid in cash or in-kind).
After adjusting for the appropriate period’s distributions, the
remaining undistributed earnings or excess distributions over
earnings, if any, are allocated to common unitholders and
participating securities in accordance with the contractual terms
of our partnership agreement in effect for the period and as
further prescribed under the two-class method.
(2)
The possible conversion of our Series A
preferred units and the impact of equity-indexed compensation plan
awards was excluded from the calculation of diluted net
income/(loss) per common unit for the three and nine months ended
September 30, 2020 as the effect was antidilutive.
(3)
Our equity-indexed compensation plan
awards that contemplate the issuance of common units are considered
dilutive unless (i) they become vested only upon the satisfaction
of a performance condition and (ii) that performance condition has
yet to be satisfied. Equity-indexed compensation plan awards that
are deemed to be dilutive are reduced by a hypothetical common unit
repurchase based on the remaining unamortized fair value, as
prescribed by the treasury stock method in guidance issued by the
FASB. For the three months ended September 30, 2020, there were no
potentially dilutive equity-indexed compensation plan awards and
for the nine months ended September 30, 2020, the effect of
equity-indexed compensation plan awards was antidilutive.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
SELECTED ITEMS
IMPACTING COMPARABILITY
(in millions)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Selected Items Impacting Comparability:
(1)
Gains/(losses) from derivative activities,
net of inventory valuation adjustments (2)
$
(98)
$
30
$
(203)
$
76
Long-term inventory costing adjustments
(3)
(2)
1
(66)
(3)
Deficiencies under minimum volume
commitments, net (4)
(64)
4
(69)
10
Equity-indexed compensation expense
(5)
(5)
(5)
(13)
(13)
Net gain/(loss) on foreign currency
revaluation (6)
10
5
(11)
(6)
Line 901 incident (7)
—
—
—
(10)
Significant acquisition-related expenses
(8)
—
—
(3)
—
Net gain on early repayment of senior
notes (9)
—
—
3
—
Selected items impacting comparability -
Adjusted EBITDA
$
(159)
$
35
$
(362)
$
54
Losses from derivative activities (2)
—
—
—
(1)
Gain on/(impairment of) investments in
unconsolidated entities, net
(91)
4
(182)
271
Gains/(losses) on asset sales and asset
impairments, net
2
7
(617)
7
Goodwill impairment losses
—
—
(2,515)
—
Tax effect on selected items impacting
comparability
9
(27)
44
(12)
Selected items impacting comparability -
Adjusted net income attributable to PAA
$
(239)
$
19
$
(3,632)
$
319
____________________________________
(1)
Certain of our non-GAAP financial measures
may not be impacted by each of the selected items impacting
comparability.
(2)
We use derivative instruments for risk
management purposes and our related processes include specific
identification of hedging instruments to an underlying hedged
transaction. Although we identify an underlying transaction for
each derivative instrument we enter into, there may not be an
accounting hedge relationship between the instrument and the
underlying transaction. In the course of evaluating our results of
operations, we identify the earnings that were recognized during
the period related to derivative instruments for which the
identified underlying transaction does not occur in the current
period and exclude the related gains and losses in determining
adjusted results. In addition, we exclude gains and losses on
derivatives that are related to investing activities, such as the
purchase of linefill. We also exclude the impact of corresponding
inventory valuation adjustments, as applicable, as well as the
mark-to-market adjustment related to our Preferred Distribution
Rate Reset Option.
(3)
We carry crude oil and NGL inventory
comprised of minimum working inventory requirements in third-party
assets and other working inventory that is needed for our
commercial operations. We consider this inventory necessary to
conduct our operations and we intend to carry this inventory for
the foreseeable future. Therefore, we classify this inventory as
long-term on our balance sheet and do not hedge the inventory with
derivative instruments (similar to linefill in our own assets). We
treat the impact of changes in the average cost of the long-term
inventory (that result from fluctuations in market prices) and
write-downs of such inventory that result from price declines as a
selected item impacting comparability.
(4)
We have certain agreements that require
counterparties to deliver, transport or throughput a minimum volume
over an agreed upon period. Substantially all of such agreements
were entered into with counterparties to economically support the
return on our capital expenditure necessary to construct the
related asset. Some of these agreements include make-up rights if
the minimum volume is not met. We record a receivable from the
counterparty in the period that services are provided or when the
transaction occurs, including amounts for deficiency obligations
from counterparties associated with minimum volume commitments. If
a counterparty has a make-up right associated with a deficiency, we
defer the revenue attributable to the counterparty’s make-up right
and subsequently recognize the revenue at the earlier of when the
deficiency volume is delivered or shipped, when the make-up right
expires or when it is determined that the counterparty’s ability to
utilize the make-up right is remote. We include the impact of
amounts billed to counterparties for their deficiency obligation,
net of applicable amounts subsequently recognized into revenue, as
a selected item impacting comparability. We believe the inclusion
of the contractually committed revenues associated with that period
is meaningful to investors as the related asset has been
constructed, is standing ready to provide the committed service and
the fixed operating costs are included in the current period
results.
(5)
Our total equity-indexed compensation
expense includes expense associated with awards that will or may be
settled in units and awards that will or may be settled in cash.
The awards that will or may be settled in units are included in our
diluted net income per unit calculation when the applicable
performance criteria have been met. We consider the compensation
expense associated with these awards as a selected item impacting
comparability as the dilutive impact of the outstanding awards is
included in our diluted net income per unit calculation and the
majority of the awards are expected to be settled in units. The
portion of compensation expense associated with awards that are
certain to be settled in cash is not considered a selected item
impacting comparability.
(6)
During the periods presented, there were
fluctuations in the value of the Canadian dollar to the U.S.
dollar, resulting in gains and losses that were not related to our
core operating results for the period and were thus classified as a
selected item impacting comparability.
(7)
Includes costs recognized during the
period related to the Line 901 incident that occurred in May 2015,
net of amounts we believe are probable of recovery from
insurance.
(8)
Includes acquisition-related expenses
associated with the Felix Midstream LLC acquisition in February
2020.
(9)
Includes net gains recognized in
connection with the repurchase of our outstanding senior notes on
the open market.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
SELECTED ITEMS
IMPACTING COMPARABILITY (continued)
(in millions)
Twelve Months Ended
December 31,
2019
2018
Selected Items Impacting Comparability:
(1)
Gains/(losses) from derivative activities,
net of inventory valuation adjustments (2)
$
(158
)
$
505
Long-term inventory costing adjustments
(3)
20
(21
)
Deficiencies under minimum volume
commitments, net (4)
18
(7
)
Equity-indexed compensation expense
(5)
(17
)
(55
)
Net gain on foreign currency revaluation
(6)
1
1
Line 901 incident (7)
(10
)
—
Selected items impacting comparability -
Adjusted EBITDA
$
(146
)
$
423
Gains/(losses) from derivative activities
(2)
(1
)
4
Gain on investment in unconsolidated
entities
271
200
Gains/(losses) on asset sales and asset
impairments, net
(28
)
114
Tax effect on selected items impacting
comparability
12
(95
)
Selected items impacting comparability -
Adjusted net income attributable to PAA
$
108
$
646
____________________________________ (1)
Certain of our non-GAAP financial measures
may not be impacted by each of the selected items impacting
comparability.
(2)
We use derivative instruments for risk
management purposes and our related processes include specific
identification of hedging instruments to an underlying hedged
transaction. Although we identify an underlying transaction for
each derivative instrument we enter into, there may not be an
accounting hedge relationship between the instrument and the
underlying transaction. In the course of evaluating our results of
operations, we identify the earnings that were recognized during
the period related to derivative instruments for which the
identified underlying transaction does not occur in the current
period and exclude the related gains and losses in determining
adjusted results. In addition, we exclude gains and losses on
derivatives that are related to investing activities, such as the
purchase of linefill. We also exclude the impact of corresponding
inventory valuation adjustments, as applicable, as well as the
mark-to-market adjustment related to our Preferred Distribution
Rate Reset Option.
(3)
We carry crude oil and NGL inventory
comprised of minimum working inventory requirements in third-party
assets and other working inventory that is needed for our
commercial operations. We consider this inventory necessary to
conduct our operations and we intend to carry this inventory for
the foreseeable future. Therefore, we classify this inventory as
long-term on our balance sheet and do not hedge the inventory with
derivative instruments (similar to linefill in our own assets). We
treat the impact of changes in the average cost of the long-term
inventory (that result from fluctuations in market prices) and
write-downs of such inventory that result from price declines as a
selected item impacting comparability.
(4)
We have certain agreements that require
counterparties to deliver, transport or throughput a minimum volume
over an agreed upon period. Substantially all of such agreements
were entered into with counterparties to economically support the
return on our capital expenditure necessary to construct the
related asset. Some of these agreements include make-up rights if
the minimum volume is not met. We record a receivable from the
counterparty in the period that services are provided or when the
transaction occurs, including amounts for deficiency obligations
from counterparties associated with minimum volume commitments. If
a counterparty has a make-up right associated with a deficiency, we
defer the revenue attributable to the counterparty’s make-up right
and subsequently recognize the revenue at the earlier of when the
deficiency volume is delivered or shipped, when the make-up right
expires or when it is determined that the counterparty’s ability to
utilize the make-up right is remote. We include the impact of
amounts billed to counterparties for their deficiency obligation,
net of applicable amounts subsequently recognized into revenue, as
a selected item impacting comparability. We believe the inclusion
of the contractually committed revenues associated with that period
is meaningful to investors as the related asset has been
constructed, is standing ready to provide the committed service and
the fixed operating costs are included in the current period
results.
(5)
Our total equity-indexed compensation
expense includes expense associated with awards that will or may be
settled in units and awards that will or may be settled in cash.
The awards that will or may be settled in units are included in our
diluted net income per unit calculation when the applicable
performance criteria have been met. We consider the compensation
expense associated with these awards as a selected item impacting
comparability as the dilutive impact of the outstanding awards is
included in our diluted net income per unit calculation and the
majority of the awards are expected to be settled in units. The
portion of compensation expense associated with awards that are
certain to be settled in cash is not considered a selected item
impacting comparability.
(6)
During the periods presented, there were
fluctuations in the value of the Canadian dollar to the U.S.
dollar, resulting in gains and losses that were not related to our
core operating results for the period and were thus classified as a
selected item impacting comparability.
(7)
Includes costs recognized during the
period related to the Line 901 incident that occurred in May 2015,
net of amounts we believe are probable of recovery from
insurance.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
COMPUTATION OF
BASIC AND DILUTED ADJUSTED NET INCOME PER COMMON UNIT
(1)
(in millions, except per unit data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Basic Adjusted Net Income per Common
Unit
Net income/(loss) attributable to PAA
$
143
$
449
$
(2,562
)
$
1,865
Selected items impacting comparability -
Adjusted net income attributable to PAA (2)
239
(19
)
3,632
(319
)
Adjusted net income attributable to
PAA
$
382
$
430
$
1,070
$
1,546
Distributions to Series A preferred
unitholders
(37
)
(37
)
(112
)
(112
)
Distributions to Series B preferred
unitholders
(12
)
(12
)
(37
)
(37
)
Other
(2
)
(1
)
(3
)
(4
)
Adjusted net income allocated to common
unitholders
$
331
$
380
$
918
$
1,393
Basic weighted average common units
outstanding
728
728
728
727
Basic adjusted net income per common
unit
$
0.45
$
0.52
$
1.26
$
1.92
Diluted Adjusted Net Income per Common
Unit
Net income/(loss) attributable to PAA
$
143
$
449
$
(2,562
)
$
1,865
Selected items impacting comparability -
Adjusted net income attributable to PAA (2)
239
(19
)
3,632
(319
)
Adjusted net income attributable to
PAA
$
382
$
430
$
1,070
$
1,546
Distributions to Series A preferred
unitholders
(37
)
(37
)
(112
)
—
Distributions to Series B preferred
unitholders
(12
)
(12
)
(37
)
(37
)
Other
(1
)
(1
)
(1
)
(2
)
Adjusted net income allocated to common
unitholders
$
332
$
380
$
920
$
1,507
Basic weighted average common units
outstanding
728
728
728
727
Effect of dilutive securities:
Series A preferred units (3)
—
—
—
71
Equity-indexed compensation plan awards
(4)
—
1
—
2
Diluted weighted average common units
outstanding
728
729
728
800
Diluted adjusted net income per common
unit
$
0.46
$
0.52
$
1.26
$
1.88
____________________________________ (1)
We calculate adjusted net income allocated
to common unitholders based on the distributions pertaining to the
current period’s net income (whether paid in cash or in-kind).
After adjusting for the appropriate period’s distributions, the
remaining undistributed earnings or excess distributions over
earnings, if any, are allocated to the common unitholders and
participating securities in accordance with the contractual terms
of our partnership agreement in effect for the period and as
further prescribed under the two-class method.
(2)
Certain of our non-GAAP financial measures
may not be impacted by each of the selected items impacting
comparability.
(3)
The possible conversion of our Series A
preferred units were excluded from the calculation of diluted net
income per common unit for the three and nine months ended
September 30, 2020 and the three months ended September 30, 2019 as
the effect was antidilutive.
(4)
Our equity-indexed compensation plan
awards that contemplate the issuance of common units are considered
dilutive unless (i) they become vested only upon the satisfaction
of a performance condition and (ii) that performance condition has
yet to be satisfied. Equity-indexed compensation plan awards that
are deemed to be dilutive are reduced by a hypothetical common unit
repurchase based on the remaining unamortized fair value, as
prescribed by the treasury stock method in guidance issued by the
FASB. For the three months ended September 30, 2020, there were no
potentially dilutive equity-indexed compensation plan awards and
for the nine months ended September 30, 2020, the effect of
equity-indexed compensation plan awards was antidilutive.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
NON-GAAP
RECONCILIATIONS
Net Income/(Loss) Per Common Unit to
Adjusted Net Income Per Common Unit Reconciliations:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Basic net income/(loss) per common
unit
$
0.13
$
0.55
$
(3.72
)
$
2.35
Selected items impacting comparability per
common unit (1)
0.32
(0.03
)
4.98
(0.43
)
Basic adjusted net income per common
unit
$
0.45
$
0.52
$
1.26
$
1.92
Diluted net income/(loss) per common
unit
$
0.13
$
0.55
$
(3.72
)
$
2.28
Selected items impacting comparability per
common unit (1)
0.33
(0.03
)
4.98
(0.40
)
Diluted adjusted net income per common
unit
$
0.46
$
0.52
$
1.26
$
1.88
____________________________________
(1)
See the “Selected Items Impacting
Comparability” and the “Computation of Basic and Diluted Adjusted
Net Income/(Loss) Per Common Unit” tables for additional
information.
Twelve Months Ended
December 31,
2019
2018
Diluted net income per common unit
$
2.65
$
2.71
Selected items impacting comparability per
common unit (1)
(0.14
)
(0.83
)
Diluted adjusted net income per common
unit
$
2.51
$
1.88
____________________________________
(1)
See the “Selected Items Impacting
Comparability” table for additional information.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
NON-GAAP
RECONCILIATIONS (continued)
(in millions, except per unit and ratio
data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Net Income/(Loss) to Adjusted EBITDA
and Implied DCF Reconciliation
Net Income/(Loss)
$
146
$
454
$
(2,555
)
$
1,872
Interest expense, net
113
108
329
311
Income tax expense/(benefit)
(3
)
41
7
42
Depreciation and amortization
160
156
493
439
(Gains)/losses on asset sales and asset
impairments, net
(2
)
(7
)
617
(7
)
Goodwill impairment losses
—
—
2,515
—
(Gain on)/impairment of investments in
unconsolidated entities, net
91
(4
)
182
(271
)
Depreciation and amortization of
unconsolidated entities (1)
18
18
51
45
Selected items impacting comparability -
Adjusted EBITDA (2)
159
(35
)
362
(54
)
Adjusted EBITDA
$
682
$
731
$
2,001
$
2,377
Interest expense, net of certain non-cash
items (3)
(107
)
(104
)
(313
)
(298
)
Maintenance capital
(53
)
(85
)
(157
)
(204
)
Current income tax expense
(17
)
(19
)
(39
)
(72
)
Distributions from unconsolidated entities
in excess of/(less than) adjusted equity earnings (4)
(1
)
(13
)
7
(12
)
Distributions to noncontrolling interests
(5)
(2
)
(4
)
(6
)
(4
)
Implied DCF
$
502
$
506
$
1,493
$
1,787
Preferred unit distributions paid (6)
(37
)
(37
)
(137
)
(137
)
Implied DCF Available to Common
Unitholders
$
465
$
469
$
1,356
$
1,650
Weighted Average Common Units
Outstanding
728
728
728
727
Weighted Average Common Units and Common
Equivalent Units
799
799
799
798
Implied DCF per Common Unit (7)
$
0.64
$
0.64
$
1.86
$
2.27
Implied DCF per Common Unit and Common
Equivalent Unit (8)
$
0.63
$
0.63
$
1.84
$
2.21
Cash Distribution Paid per Common Unit
$
0.18
$
0.36
$
0.72
$
1.02
Common Unit Cash Distributions (5)
$
131
$
262
$
524
$
741
Common Unit Distribution Coverage
Ratio
3.54
x
1.79
x
2.59
x
2.23
x
Implied DCF Excess
$
334
$
207
$
832
$
909
____________________________________ (1)
Adjustment to add back our proportionate
share of depreciation and amortization expense of unconsolidated
entities.
(2)
Certain of our non-GAAP financial measures
may not be impacted by each of the selected items impacting
comparability.
(3)
Excludes certain non-cash items impacting
interest expense such as amortization of debt issuance costs and
terminated interest rate swaps.
(4)
Comprised of cash distributions received
from unconsolidated entities less equity earnings in unconsolidated
entities (adjusted for our proportionate share of depreciation and
amortization).
(5)
Cash distributions paid during the period
presented.
(6)
Cash distributions paid to our preferred
unitholders during the period presented. The current $0.5250
quarterly ($2.10 annualized) per unit distribution requirement of
our Series A preferred units was paid-in-kind for each quarterly
distribution from their issuance through February 2018.
Distributions on our Series A preferred units have been paid in
cash since the May 2018 quarterly distribution. The current $61.25
per unit annual distribution requirement of our Series B preferred
units, is payable in cash semi-annually in arrears on May 15 and
November 15.
(7)
Implied DCF Available to Common
Unitholders for the period divided by the weighted average common
units outstanding for the period.
(8)
Implied DCF Available to Common
Unitholders for the period, adjusted for Series A preferred unit
cash distributions paid, divided by the weighted average common
units and common equivalent units outstanding for the period. Our
Series A preferred units are convertible into common units,
generally on a one-for-one basis and subject to customary
anti-dilution adjustments, in whole or in part, subject to certain
minimum conversion amounts.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
NON-GAAP
RECONCILIATIONS (continued)
(in millions, except per unit and ratio
data)
Twelve Months Ended
December 31,
2019
2018
Net Income to Adjusted EBITDA and
Implied DCF Reconciliation
Net Income
$
2,180
$
2,216
Interest expense, net
425
431
Income tax expense
66
198
Depreciation and amortization
601
520
(Gains)/losses on asset sales and asset
impairments, net
28
(114
)
Gain on investment in unconsolidated
entities
(271
)
(200
)
Depreciation and amortization of
unconsolidated entities (1)
62
56
Selected items impacting comparability -
Adjusted EBITDA (2)
146
(423
)
Adjusted EBITDA
$
3,237
$
2,684
Interest expense, net of certain non-cash
items (3)
(407
)
(419
)
Maintenance capital
(287
)
(252
)
Current income tax expense
(112
)
(66
)
Distributions from unconsolidated entities
in excess of/(less than) adjusted equity earnings (4)
(49
)
1
Distributions to noncontrolling interests
(5)
(6
)
—
Implied DCF
$
2,376
$
1,948
Preferred unit distributions paid (6)
(198
)
(161
)
Implied DCF Available to Common
Unitholders
$
2,178
$
1,787
Weighted Average Common Units
Outstanding
727
726
Weighted Average Common Units and Common
Equivalent Units
798
797
Implied DCF per Common Unit (7)
$
2.99
$
2.46
Implied DCF per Common Unit and Common
Equivalent Unit (8)
$
2.91
$
2.38
Cash Distribution Paid per Common Unit
$
1.38
$
1.20
Common Unit Cash Distributions (5)
$
1,004
$
871
Common Unit Distribution Coverage
Ratio
2.17
x
2.05
x
Implied DCF Excess
$
1,174
$
916
____________________________________
(1)
Adjustment to add back our proportionate
share of depreciation and amortization expense of unconsolidated
entities.
(2)
Certain of our non-GAAP financial measures
may not be impacted by each of the selected items impacting
comparability.
(3)
Excludes certain non-cash items impacting
interest expense such as amortization of debt issuance costs and
terminated interest rate swaps.
(4)
Comprised of cash distributions received
from unconsolidated entities less equity earnings in unconsolidated
entities (adjusted for our proportionate share of depreciation and
amortization).
(5)
Cash distributions paid during the period
presented.
(6)
Cash distributions paid to our preferred
unitholders during the period presented. The $0.5250 quarterly
($2.10 annualized) per unit distribution requirement of our Series
A preferred units was paid-in-kind for each quarterly distribution
from their issuance through February 2018. Distributions on our
Series A preferred units have been paid in cash since the May 2018
quarterly distribution. The $61.25 per unit annual distribution
requirement of our Series B preferred units, is payable in cash
semi-annually in arrears on May 15 and November 15.
(7)
Implied DCF Available to Common
Unitholders for the period divided by the weighted average common
units outstanding for the period.
(8)
Implied DCF Available to Common
Unitholders for the period, adjusted for Series A preferred unit
cash distributions paid, divided by the weighted average common
units and common equivalent units outstanding for the period. Our
Series A preferred units are convertible into common units,
generally on a one-for-one basis and subject to customary
anti-dilution adjustments, in whole or in part, subject to certain
minimum conversion amounts.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
NON-GAAP
RECONCILIATIONS (continued)
Net Income/(Loss) Per Common Unit to
Implied DCF Per Common Unit and Common Equivalent Unit
Reconciliations:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Basic net income/(loss) per common
unit
$
0.13
$
0.55
$
(3.72
)
$
2.35
Reconciling items per common unit (1)
(2)
0.51
0.09
5.58
(0.08
)
Implied DCF per common unit
$
0.64
$
0.64
$
1.86
$
2.27
Basic net income/(loss) per common
unit
$
0.13
$
0.55
$
(3.72
)
$
2.35
Reconciling items per common unit and
common equivalent unit (1) (3)
0.50
0.08
5.56
(0.14
)
Implied DCF per common unit and common
equivalent unit
$
0.63
$
0.63
$
1.84
$
2.21
Twelve Months Ended
December 31,
2019
2018
Basic net income per common unit
$
2.70
$
2.77
Reconciling items per common unit (1)
(4)
0.29
(0.31)
Implied DCF per common unit
$
2.99
$
2.46
Basic net income per common unit
$
2.70
$
2.77
Reconciling items per common unit and
common equivalent unit (1) (3)
0.21
(0.39)
Implied DCF per common unit and common
equivalent unit
$
2.91
$
2.38
____________________________________
(1)
Represents adjustments to Net Income to
calculate Implied DCF Available to Common Unitholders. See the “Net
Income/(Loss) to Adjusted EBITDA and Implied DCF Reconciliation”
table for additional information.
(2)
Based on weighted average common units
outstanding for the period of 728 million, 728 million, 728 million
and 727 million, respectively.
(3)
Based on weighted average common units
outstanding for the period, as well as weighted average Series A
preferred units outstanding of 71 million for each of the periods
presented.
(4)
Based on weighted average common units
outstanding for the period of 727 million and 726 million,
respectively.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
NON-GAAP
RECONCILIATIONS (continued)
(in millions)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Free Cash Flow and Free Cash Flow After
Distributions Reconciliation (1):
Net cash provided by operating
activities
$
282
$
314
$
1,256
$
1,778
Adjustments to reconcile net cash provided
by operating activities to free cash flow:
Net cash used in investing activities
(208
)
(389
)
(1,066
)
$
(1,367
)
Cash contributions from noncontrolling
interests
1
—
11
—
Cash distributions paid to noncontrolling
interests (2)
(2
)
(4
)
(6
)
(4
)
Sale of noncontrolling interest in a
subsidiary
—
—
—
128
Free cash flow
$
73
$
(79)
$
195
$
535
Cash distributions (3)
(168
)
(299
)
(661
)
(878
)
Free cash flow after distributions
$
(95
)
$
(378
)
$
(466
)
$
(343
)
____________________________________ (1)
Management uses the Non-GAAP financial
measures Free Cash Flow and Free Cash Flow After Distributions to
assess the amount of cash that is available for distributions, debt
repayments and other general partnership purposes.
(2)
Cash distributions paid during the period
presented.
(3)
Cash distributions paid to preferred and
common unitholders during the period.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
SELECTED
FINANCIAL DATA BY SEGMENT
(in millions)
Three Months Ended
September 30, 2020
Three Months Ended
September 30, 2019
Transportation
Facilities
Supply and Logistics
Transportation
Facilities
Supply and Logistics
Revenues (1)
$
494
$
271
$
5,537
$
597
$
291
$
7,542
Purchases and related costs (1)
(60
)
(2
)
(5,510
)
(55
)
(3
)
(7,337
)
Field operating costs (1) (2)
(139
)
(73
)
(46
)
(172
)
(92
)
(56
)
Segment general and administrative
expenses (2) (3)
(22
)
(18
)
(21
)
(26
)
(21
)
(27
)
Equity earnings in unconsolidated
entities
87
2
—
102
—
—
Adjustments: (4)
Depreciation and amortization of
unconsolidated entities
17
1
—
18
—
—
(Gains)/losses from derivative activities,
net of inventory valuation adjustments
—
(6
)
94
(1
)
(3
)
(25
)
Long-term inventory costing
adjustments
—
—
2
—
—
(1)
Deficiencies under minimum volume
commitments, net
64
—
—
(4
)
—
—
Equity-indexed compensation expense
3
1
1
3
1
1
Net (gain)/loss on foreign currency
revaluation
—
—
4
—
—
(5
)
Segment Adjusted EBITDA
$
444
$
176
$
61
$
462
$
173
$
92
Maintenance capital
$
34
$
10
$
9
$
42
$
28
$
15
____________________________________ (1)
Includes intersegment amounts.
(2)
Field operating costs and Segment general
and administrative expenses include equity-indexed compensation
expense.
(3)
Segment general and administrative
expenses reflect direct costs attributable to each segment and an
allocation of other expenses to the segments. The proportional
allocations by segment require judgment by management and are based
on the business activities that exist during each period.
(4)
Represents adjustments utilized by our
CODM in the evaluation of segment results. Many of these
adjustments are also considered selected items impacting
comparability when calculating consolidated non-GAAP financial
measures such as Adjusted EBITDA. See the “Selected Items Impacting
Comparability” table for additional discussion.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
SELECTED
FINANCIAL DATA BY SEGMENT
(in millions)
Nine Months Ended
September 30, 2020
Nine Months Ended
September 30, 2019
Transportation
Facilities
Supply and Logistics
Transportation
Facilities
Supply and Logistics
Revenues (1)
$
1,530
$
860
$
16,371
$
1,712
$
880
$
23,480
Purchases and related costs (1)
(184
)
(12
)
(16,227
)
(155
)
(10
)
(22,599
)
Field operating costs (1) (2)
(440
)
(233
)
(149
)
(532
)
(267
)
(195
)
Segment general and administrative
expenses (2) (3)
(73
)
(63
)
(65
)
(80
)
(62
)
(83
)
Equity earnings in unconsolidated
entities
276
4
—
274
—
—
Adjustments: (4)
Depreciation and amortization of
unconsolidated entities
49
2
—
45
—
—
(Gains)/losses from derivative activities,
net of inventory valuation adjustments
—
(5
)
215
1
(15
)
(46
)
Long-term inventory costing
adjustments
—
—
66
—
—
3
Deficiencies under minimum volume
commitments, net
64
5
—
(10)
—
—
Equity-indexed compensation expense
8
2
3
6
3
4
Net (gain)/loss on foreign currency
revaluation
—
—
(9
)
—
—
7
Line 901 incident
—
—
—
10
—
—
Significant acquisition-related
expenses
3
—
—
—
—
—
Segment Adjusted EBITDA
$
1,233
$
560
$
205
$
1,271
$
529
$
571
Maintenance capital
$
98
$
40
$
19
$
110
$
74
$
20
____________________________________ (1)
Includes intersegment amounts.
(2)
Field operating costs and Segment general
and administrative expenses include equity-indexed compensation
expense.
(3)
Segment general and administrative
expenses reflect direct costs attributable to each segment and an
allocation of other expenses to the segments. The proportional
allocations by segment require judgment by management and are based
on the business activities that exist during each period.
(4)
Represents adjustments utilized by our
CODM in the evaluation of segment results. Many of these
adjustments are also considered selected items impacting
comparability when calculating consolidated non-GAAP financial
measures such as Adjusted EBITDA. See the “Selected Items Impacting
Comparability” table for additional discussion.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
OPERATING DATA BY
SEGMENT (1)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Transportation segment (average daily
volumes in thousands of barrels per day):
Tariff activities volumes
Crude oil pipelines (by region):
Permian Basin (2)
4,200
4,852
4,507
4,568
South Texas / Eagle Ford (2)
370
429
383
445
Central (2)
388
538
383
524
Gulf Coast
137
176
133
160
Rocky Mountain (2)
238
284
251
300
Western
232
212
217
196
Canada
303
316
291
319
Crude oil pipelines
5,868
6,807
6,165
6,512
NGL pipelines
180
193
187
195
Tariff activities total volumes
6,048
7,000
6,352
6,707
Trucking volumes
67
81
75
86
Transportation segment total volumes
6,115
7,081
6,427
6,793
Facilities segment (average monthly
volumes):
Liquids storage (average monthly capacity
in millions of barrels) (3)
111
110
110
109
Natural gas storage (average monthly
working capacity in billions of cubic feet)
67
63
66
63
NGL fractionation (average volumes in
thousands of barrels per day)
110
140
129
145
Facilities segment total volumes (average
monthly volumes in millions of barrels) (4)
125
125
125
124
Supply and Logistics segment (average
daily volumes in thousands of barrels per day):
Crude oil lease gathering purchases
1,147
1,146
1,181
1,126
NGL sales
83
124
132
202
Supply and Logistics segment total
volumes
1,230
1,270
1,313
1,328
____________________________________ (1)
Average volumes are calculated as the
total volumes (attributable to our interest) for the period divided
by the number of days or months in the period.
(2)
Region includes volumes (attributable to
our interest) from pipelines owned by unconsolidated entities.
(3)
Includes volumes (attributable to our
interest) from facilities owned by unconsolidated entities.
(4)
Facilities segment total volumes is
calculated as the sum of: (i) liquids storage capacity; (ii)
natural gas storage working capacity divided by 6 to account for
the 6:1 mcf of natural gas to crude Btu equivalent ratio and
further divided by 1,000 to convert to monthly volumes in millions;
and (iii) NGL fractionation volumes multiplied by the number of
days in the period and divided by the number of months in the
period.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
NON-GAAP SEGMENT
RECONCILIATIONS
(in millions)
Fee-based Segment Adjusted EBITDA to
Adjusted EBITDA Reconciliations:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Transportation Segment Adjusted EBITDA
$
444
$
462
$
1,233
$
1,271
Facilities Segment Adjusted EBITDA
176
173
560
529
Fee-based Segment Adjusted EBITDA
$
620
$
635
$
1,793
$
1,800
Supply and Logistics Segment Adjusted
EBITDA
61
92
205
571
Adjusted other income/(expense), net
(1)
1
4
3
6
Adjusted EBITDA (2)
$
682
$
731
$
2,001
$
2,377
Twelve Months Ended
December 31,
2019
2018
Transportation Segment Adjusted EBITDA
$
1,722
$
1,508
Facilities Segment Adjusted EBITDA
705
711
Fee-based Segment Adjusted EBITDA
$
2,427
$
2,219
Supply and Logistics Segment Adjusted
EBITDA
803
462
Adjusted other income/(expense), net
(3)
7
3
Adjusted EBITDA (2)
$
3,237
$
2,684
____________________________________ (1)
Represents “Other income/(expense), net”
as reported on our Condensed Consolidated Statements of Operations,
adjusted for selected items impacting comparability of $(4)
million, $(1) million, $10 million and $(17) million for the three
and nine months ended September 30, 2020 and 2019, respectively.
See the “Selected Items Impacting Comparability” table for
additional information.
(2)
See the “Net Income/(Loss) to Adjusted
EBITDA and Implied DCF Reconciliation” table for reconciliation to
Net Income/(Loss).
(3)
Represents “Other income/(expense), net”
as reported on our Condensed Consolidated Statements of Operations,
adjusted for selected items impacting comparability of $(17)
million and $10 million for the twelve months ended December 31,
2019 and 2018, respectively.
PLAINS GP HOLDINGS AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions, except per share data)
Three Months Ended
September 30, 2020
Three Months Ended
September 30, 2019
Consolidating
Consolidating
PAA
Adjustments (1)
PAGP
PAA
Adjustments (1)
PAGP
REVENUES
$
5,833
$
—
$
5,833
$
7,886
$
—
$
7,886
COSTS AND EXPENSES
Purchases and related costs
5,107
—
5,107
6,855
—
6,855
Field operating costs
254
—
254
316
—
316
General and administrative expenses
61
1
62
74
1
75
Depreciation and amortization
160
1
161
156
1
157
(Gains)/losses on asset sales and asset
impairments, net
(2
)
—
(2
)
(7
)
—
(7
)
Goodwill impairment losses
—
—
—
—
—
—
Total costs and expenses
5,580
2
5,582
7,394
2
7,396
OPERATING INCOME
253
(2
)
251
492
(2
)
490
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated
entities
89
—
89
102
—
102
Gain on/(impairment of) investments in
unconsolidated entities, net
(91
)
—
(91
)
4
—
4
Interest expense, net
(113
)
—
(113
)
(108
)
—
(108
)
Other income, net
5
—
5
5
—
5
INCOME BEFORE TAX
143
(2
)
141
495
(2
)
493
Current income tax expense
(17
)
—
(17
)
(19
)
—
(19
)
Deferred income tax (expense)/benefit
20
(5
)
15
(22
)
(21
)
(43
)
NET INCOME
146
(7
)
139
454
(23
)
431
Net income attributable to noncontrolling
interests
(3
)
(119
)
(122
)
(5
)
(356
)
(361
)
NET INCOME ATTRIBUTABLE TO PAGP
$
143
$
(126
)
$
17
$
449
$
(379
)
$
70
BASIC NET INCOME PER CLASS A
SHARE
$
0.09
$
0.41
DILUTED NET INCOME PER CLASS A
SHARE
$
0.09
$
0.41
BASIC WEIGHTED AVERAGE CLASS A SHARES
OUTSTANDING
186
168
DILUTED WEIGHTED AVERAGE CLASS A SHARES
OUTSTANDING
186
168
____________________________________ (1)
Represents the aggregate consolidating
adjustments necessary to produce consolidated financial statements
for PAGP.
PLAINS GP HOLDINGS AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions, except per share data)
Nine Months Ended
September 30, 2020
Nine Months Ended
September 30, 2019
Consolidating
Consolidating
PAA
Adjustments (1)
PAGP
PAA
Adjustments (1)
PAGP
REVENUES
$
17,327
$
—
$
17,327
$
24,515
$
—
$
24,515
COSTS AND EXPENSES
Purchases and related costs
15,000
—
15,000
21,218
—
21,218
Field operating costs
811
—
811
983
—
983
General and administrative expenses
201
5
206
225
4
229
Depreciation and amortization
493
2
495
439
2
441
(Gains)/losses on asset sales and asset
impairments, net
617
—
617
(7
)
—
(7
)
Goodwill impairment losses
2,515
—
2,515
—
—
—
Total costs and expenses
19,637
7
19,644
22,858
6
22,864
OPERATING INCOME/(LOSS)
(2,310
)
(7
)
(2,317
)
1,657
(6
)
1,651
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated
entities
280
—
280
274
—
274
Gain on/(impairment of) investments in
unconsolidated entities, net
(182
)
—
(182
)
271
—
271
Interest expense, net
(329
)
—
(329
)
(311
)
—
(311
)
Other income/(expense), net
(7
)
—
(7
)
23
—
23
INCOME/(LOSS) BEFORE TAX
(2,548)
(7)
(2,555)
1,914
(6)
1,908
Current income tax expense
(39)
—
(39)
(72)
—
(72)
Deferred income tax (expense)/benefit
32
145
177
30
(95)
(65)
NET INCOME/(LOSS)
(2,555
)
138
(2,417
)
1,872
(101
)
1,771
Net (income)/loss attributable to
noncontrolling interests
(7
)
1,876
1,869
(7
)
(1,481
)
(1,488
)
NET INCOME/(LOSS) ATTRIBUTABLE TO
PAGP
$
(2,562
)
$
2,014
$
(548
)
$
1,865
$
(1,582
)
$
283
BASIC NET INCOME/(LOSS) PER CLASS A
SHARE
$
(2.97
)
$
1.73
DILUTED NET INCOME/(LOSS) PER CLASS A
SHARE
$
(2.97
)
$
1.72
BASIC WEIGHTED AVERAGE CLASS A SHARES
OUTSTANDING
184
163
DILUTED WEIGHTED AVERAGE CLASS A SHARES
OUTSTANDING
184
165
____________________________________
(1)
Represents the aggregate consolidating
adjustments necessary to produce consolidated financial statements
for PAGP.
PLAINS GP HOLDINGS AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATING BALANCE SHEET DATA
(in millions)
September 30, 2020
December 31, 2019
Consolidating
Consolidating
PAA
Adjustments (1)
PAGP
PAA
Adjustments (1)
PAGP
ASSETS
Current assets
$
3,405
$
2
$
3,407
$
4,612
$
2
$
4,614
Property and equipment, net
14,618
9
14,627
15,355
12
15,367
Investments in unconsolidated entities
3,743
—
3,743
3,683
—
3,683
Goodwill
—
—
—
2,540
—
2,540
Deferred tax asset
—
1,438
1,438
—
1,280
1,280
Linefill and base gas
966
—
966
981
—
981
Long-term operating lease right-of-use
assets, net
395
—
395
466
—
466
Long-term inventory
120
—
120
182
—
182
Other long-term assets, net
999
(2
)
997
858
(2
)
856
Total assets
$
24,246
$
1,447
$
25,693
$
28,677
$
1,292
$
29,969
LIABILITIES AND PARTNERS’
CAPITAL
Current liabilities
$
3,804
$
1
$
3,805
$
5,017
$
2
$
5,019
Senior notes, net
9,069
—
9,069
8,939
—
8,939
Other long-term debt, net
312
—
312
248
—
248
Long-term operating lease liabilities
337
—
337
387
—
387
Other long-term liabilities and deferred
credits
873
—
873
891
—
891
Total liabilities
$
14,395
$
1
$
14,396
$
15,482
$
2
$
15,484
Partners’ capital excluding noncontrolling
interests
9,706
(8,234
)
1,472
13,062
(10,907
)
2,155
Noncontrolling interests
145
9,680
9,825
133
12,197
12,330
Total partners’ capital
9,851
1,446
11,297
13,195
1,290
14,485
Total liabilities and partners’
capital
$
24,246
$
1,447
$
25,693
$
28,677
$
1,292
$
29,969
____________________________________ (1)
Represents the aggregate consolidating
adjustments necessary to produce consolidated financial statements
for PAGP.
PLAINS GP HOLDINGS AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
COMPUTATION OF
BASIC AND DILUTED NET INCOME/(LOSS) PER CLASS A
SHARE
(in millions, except per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Basic Net Income/(Loss) per Class A
Share
Net income/(loss) attributable to PAGP
$
17
$
70
$
(548
)
$
283
Basic weighted average Class A shares
outstanding
186
168
184
163
Basic net income/(loss) per Class A
share
$
0.09
$
0.41
$
(2.97
)
$
1.73
Diluted Net Income/(Loss) per Class A
Share
Net income/(loss) attributable to PAGP
$
17
$
70
$
(548
)
$
283
Incremental net income attributable to
PAGP resulting from assumed exchange of AAP Management Units
—
—
—
1
Net income/(loss) attributable to PAGP
including incremental net income from assumed exchange of AAP
Management Units
$
17
$
70
$
(548
)
$
284
Basic weighted average Class A shares
outstanding
186
168
184
163
Dilutive shares resulting from assumed
exchange of AAP Management Units
—
—
—
2
Diluted weighted average Class A shares
outstanding
186
168
184
165
Diluted net income/(loss) per Class A
share (1)
$
0.09
$
0.41
$
(2.97
)
$
1.72
____________________________________
(1)
For the three and nine months ended
September 30, 2020 and 2019, the possible exchange of any AAP units
would not have had a dilutive effect on basic net income/(loss) per
Class A share. For the three months ended September 30, 2020 and
2019 and the nine months ended September 30, 2020, the possible
exchange of AAP Management units would not have had a dilutive
effect on basic net income/(loss) per Class A share.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201102005979/en/
Roy Lamoreaux Vice President, Investor Relations, Communications
and Government Relations (866) 809-1291 Brett Magill Director,
Investor Relations (866) 809-1291
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