SemGroup® Corporation (NYSE:SEMG) today announced its financial
results for the three months ended March 31, 2016.
SemGroup reported revenues for the first quarter 2016 of $314.9
million with net loss attributable to SemGroup of $15.3 million, or
$0.35 per diluted share, compared to revenues of $382.5 million
with a net income attributable to SemGroup of $0.7 million, or
$0.02 per diluted share, for the fourth quarter 2015. For the first
quarter 2015, revenues totaled $298.3 million with net income
attributable to SemGroup of $1.5 million, or $0.03 per diluted
share. Included in the first quarter 2016 net loss of $15.3 million
is $52.9 million of non-cash impairment charges related to the
company’s SemGas business and its non-controlling investment in NGL
Energy Partners LP (NGL Energy).
SemGroup's adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA) was $77.7 million
for the first quarter 2016, an increase of approximately 11%
year-over-year as compared to first quarter 2015 results of $70.0
million, a decrease of 2% as compared to fourth quarter 2015
results of $79.3 million. Adjusted EBITDA, which is a
non-GAAP measure, is reconciled to net income below.
"We are off to a solid start for 2016, remaining consistent with
the prior quarter and meeting expectations," said Carlin Conner,
president and chief executive officer of SemGroup. "Maintaining our
conservative price outlook, and considering the sale of all of our
limited partnership units of NGL Energy and their associated
distributions, we expect to be below the midpoint of our 2016
consolidated Adjusted EBITDA guidance. We ended the first quarter
of 2016 with ample liquidity, a strong balance sheet and credit
metrics that are favorable to our targeted levels."
First Quarter 2016 DividendThe SemGroup board
of directors declared a quarterly cash dividend to common
shareholders of $0.45 per share, resulting in an annualized
dividend of $1.80 per share. This represents an increase of
approximately 18% over the dividend of $0.38 per share with respect
to the first quarter of 2015. The dividend will be paid on May 26,
2016 to all common shareholders of record on May 16, 2016.
Recent DevelopmentOn April 27, 2016, the
company sold all of its NGL Energy limited partner units for $60.5
million. We plan to use the proceeds from the sale to pay down
debt. The company maintains its 11.78% interest in NGL Energy's
general partner.
2016 GuidanceSemGroup reaffirms 2016
consolidated Adjusted EBITDA guidance of between $270 and $320
million. Due primarily to the company's recent sale of NGL Energy
limited partner units, the company expects to come in below the
midpoint of its guidance range. The company is on track to deploy
approximately $455 million in capital investments in 2016. The
company expects to maintain its current dividend of $0.45 per share
and dividend coverage of approximately 1.2 times throughout 2016.
Cash Available for Dividends, which is a non-GAAP measure, is
reconciled to its most directly comparable GAAP measure below.
Earnings Conference CallSemGroup will host a
joint conference call with Rose Rock Midstream®, L.P. (NYSE:RRMS)
for investors tomorrow, May 6, 2016, at 11 a.m. ET. The call can be
accessed live over the telephone by dialing 1.855.239.1101,
or for international callers, 1.412.524.4117. Interested parties
may also listen to a simultaneous webcast of the conference call by
logging onto SemGroup's Investor Relations website at
ir.semgroupcorp.com. A replay of the webcast will also be available
for a year following the call at ir.semgroupcorp.com on the
Calendar of Events-Past Events page. The first quarter 2016
earnings slide deck will be posted under Presentations.
About SemGroupBased in Tulsa, OK, SemGroup®
Corporation (NYSE:SEMG) is a publicly traded midstream service
company providing the energy industry the means to move products
from the wellhead to the wholesale marketplace. SemGroup provides
diversified services for end-users and consumers of crude oil,
natural gas, natural gas liquids, refined products and asphalt.
Services include purchasing, selling, processing, transporting,
terminalling and storing energy.
SemGroup uses its Investor Relations website and social media
outlets as channels of distribution of material company
information. Such information is routinely posted and accessible on
our Investor Relations website at ir.semgroupcorp.com, our Twitter
account and LinkedIn account.
Non-GAAP Financial MeasuresSemGroup’s non-GAAP
measures, Adjusted EBITDA and cash available for dividends, are not
GAAP measures and are not intended to be used in lieu of GAAP
presentation of net income (loss), which is the most closely
associated GAAP measure. Adjusted EBITDA represents earnings before
interest, taxes, depreciation and amortization, adjusted for
selected items that SemGroup believes impact the comparability of
financial results between reporting periods. Although SemGroup
presents selected items that it considers in evaluating its
performance, you should also be aware that the items presented do
not represent all items that affect comparability between the
periods presented. Variations in SemGroup’s operating results are
also caused by changes in volumes, prices, exchange rates,
mechanical interruptions and numerous other factors. These types of
variances are not separately identified in this presentation. Cash
available for dividends is based on Adjusted EBITDA, as described
above, adjusted to exclude the earnings of our subsidiary, Rose
Rock Midstream, cash income taxes, cash interest expense and
maintenance capital expenditures and include cash distributions
received from Rose Rock Midstream.
These measures may be used periodically by management when
discussing our financial results with investors and analysts and
are presented as management believes they provide additional
information and metrics relative to the performance of our
businesses. These non-GAAP financial measures have important
limitations as analytical tools because they exclude some, but not
all, items that affect the most directly comparable GAAP financial
measures. You should not consider non-GAAP measures in isolation or
as substitutes for analysis of our results as reported under GAAP.
Management compensates for the limitations of our non-GAAP measures
as analytical tools by reviewing the comparable GAAP measures,
understanding the differences between the non-GAAP measure and the
most comparable GAAP measure and incorporating this knowledge into
its decision-making processes. We believe that investors benefit
from having access to the same financial measures that our
management uses in evaluating our operating results. Because all
companies do not use identical calculations, our presentations of
non-GAAP measures may be different from similarly titled measures
of other companies, thereby diminishing their utility.
Forward-Looking StatementsCertain matters
contained in this Press Release include "forward-looking
statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We make these
forward-looking statements in reliance on the safe harbor
protections provided under the Private Securities Litigation Reform
Act of 1995.
All statements, other than statements of historical fact,
included in this Press Release including the prospects of our
industry, our anticipated financial performance, our anticipated
annual dividend growth rate, management's plans and objectives for
future operations, planned capital expenditures, business
prospects, outcome of regulatory proceedings, market conditions and
other matters, may constitute forward-looking statements. Although
we believe that the expectations reflected in these forward-looking
statements are reasonable, we cannot assure you that these
expectations will prove to be correct. These forward-looking
statements are subject to certain known and unknown risks and
uncertainties, as well as assumptions that could cause actual
results to differ materially from those reflected in these
forward-looking statements. Factors that might cause actual results
to differ include, but are not limited to, our ability to generate
sufficient cash flow from operations to enable us to pay our debt
obligations and our current and expected dividends or to fund our
other liquidity needs, the ability of our subsidiary, Rose Rock
Midstream, L.P. (NYSE:RRMS), to generate sufficient cash flow from
operations to provide the level of cash distributions we expect;
any sustained reduction in demand for, or supply of, the petroleum
products we gather, transport, process, market and store; the
effect of our debt level on our future financial and operating
flexibility, including our ability to obtain additional capital on
terms that are favorable to us; our ability to access the debt and
equity markets, which will depend on general market conditions and
the credit ratings for our debt obligations and equity; the loss
of, or a material nonpayment or nonperformance by, any of our key
customers; the amount of cash distributions, capital requirements
and performance of our investments and joint ventures; the amount
of collateral required to be posted from time to time in our
purchase, sale or derivative transactions; the impact of
operational and developmental hazards and unforeseen interruptions;
our ability to obtain new sources of supply of petroleum products;
competition from other midstream energy companies; our ability to
comply with the covenants contained in our credit agreements and
the indentures governing our senior notes, including requirements
under our credit agreements to maintain certain financial ratios;
our ability to renew or replace expiring storage, transportation
and related contracts; the overall forward markets for crude oil,
natural gas and natural gas liquids; the possibility that the
construction or acquisition of new assets may not result in the
corresponding anticipated revenue increases; changes in currency
exchange rates; weather and other natural phenomena, including
climate conditions; a cyber attack involving our information
systems and related infrastructure, or that of our business
associates; the risks and uncertainties of doing business outside
of the U.S., including political and economic instability and
changes in local governmental laws, regulations and policies; costs
of, or changes in, laws and regulations and our failure to comply
with new or existing laws or regulations, particularly with regard
to taxes, safety and protection of the environment; the possibility
that our hedging activities may result in losses or may have a
negative impact on our financial results; general economic, market
and business conditions; as well as other risk factors discussed
from time to time in each of our documents and reports filed with
the SEC.
Readers are cautioned not to place undue reliance on any
forward-looking statements contained in this Press Release, which
reflect management's opinions only as of the date hereof. Except as
required by law, we undertake no obligation to revise or publicly
release the results of any revision to any forward-looking
statements.
Condensed Consolidated Balance Sheets(in
thousands, unaudited)
|
March 31, 2016 |
December 31, 2015 |
ASSETS |
|
|
Current assets |
$ |
449,102 |
|
$ |
480,381 |
|
Property, plant and
equipment, net |
1,629,751 |
|
1,566,821 |
|
Goodwill and other
intangible assets |
194,504 |
|
210,255 |
|
Equity method
investments |
503,914 |
|
551,078 |
|
Other noncurrent assets,
net |
24,561 |
|
45,374 |
|
Total assets |
$ |
2,801,832 |
|
$ |
2,853,909 |
|
LIABILITIES AND OWNERS'
EQUITY |
|
|
Current liabilities: |
|
|
Current portion of long-term
debt |
$ |
27 |
|
$ |
31 |
|
Other current liabilities |
316,699 |
|
376,996 |
|
Total current
liabilities |
316,726 |
|
377,027 |
|
Long-term debt, excluding
current portion |
1,122,588 |
|
1,057,816 |
|
Other noncurrent
liabilities |
204,150 |
|
222,710 |
|
Total liabilities |
1,643,464 |
|
1,657,553 |
|
Total owners' equity |
1,158,368 |
|
1,196,356 |
|
Total liabilities and
owners' equity |
$ |
2,801,832 |
|
$ |
2,853,909 |
|
|
|
|
Condensed Consolidated Statements of
Operations(in thousands, except per share amounts,
unaudited)
|
Three Months Ended |
|
March 31, |
December 31, |
|
2016 |
2015 |
2015 |
Revenues |
$ |
314,851 |
|
$ |
298,310 |
|
$ |
382,493 |
|
Expenses: |
|
|
|
Costs of products sold, exclusive
of depreciation and amortization shown below |
196,947 |
|
192,072 |
|
268,680 |
|
Operating |
50,192 |
|
53,090 |
|
57,286 |
|
General and administrative |
21,060 |
|
32,310 |
|
19,094 |
|
Depreciation and amortization |
24,047 |
|
23,734 |
|
26,452 |
|
Loss on disposal or impairment,
net |
13,307 |
|
1,058 |
|
9,993 |
|
Total expenses |
305,553 |
|
302,264 |
|
381,505 |
|
Earnings from equity
method investments |
23,071 |
|
20,559 |
|
20,687 |
|
Gain (loss) on issuance of
common units by equity method investee |
(41 |
) |
— |
|
352 |
|
Operating income |
32,328 |
|
16,605 |
|
22,027 |
|
Other expenses, net |
59,981 |
|
6,087 |
|
19,082 |
|
Income (loss) from
continuing operations before income taxes |
(27,653 |
) |
10,518 |
|
2,945 |
|
Income tax expense
(benefit) |
(21,407 |
) |
4,742 |
|
3,921 |
|
Income (loss) from
continuing operations |
(6,246 |
) |
5,776 |
|
(976 |
) |
Loss from discontinued
operations, net of income taxes |
(2 |
) |
— |
|
(1 |
) |
Net income (loss) |
(6,248 |
) |
5,776 |
|
(977 |
) |
Less: net income (loss)
attributable to noncontrolling interests |
9,020 |
|
4,310 |
|
(1,661 |
) |
Net income (loss)
attributable to SemGroup Corporation |
$ |
(15,268 |
) |
$ |
1,466 |
|
$ |
684 |
|
Net income (loss)
attributable to SemGroup Corporation |
$ |
(15,268 |
) |
$ |
1,466 |
|
$ |
684 |
|
Other comprehensive loss,
net of income taxes |
(4,109 |
) |
(9,060 |
) |
(7,671 |
) |
Comprehensive loss
attributable to SemGroup Corporation |
$ |
(19,377 |
) |
$ |
(7,594 |
) |
$ |
(6,987 |
) |
Net income (loss) per
common share: |
|
|
|
Basic |
$ |
(0.35 |
) |
$ |
0.03 |
|
$ |
0.02 |
|
Diluted |
$ |
(0.35 |
) |
$ |
0.03 |
|
$ |
0.02 |
|
Weighted average shares
(thousands): |
|
|
|
Basic |
43,870 |
|
43,717 |
|
43,824 |
|
Diluted |
43,870 |
|
43,940 |
|
43,971 |
|
Reconciliation of net income to Adjusted
EBITDA:(in thousands, unaudited)
|
Three Months Ended |
|
March 31, |
December 31, |
|
2016 |
2015 |
2015 |
Net income (loss) |
$ |
(6,248 |
) |
$ |
5,776 |
|
$ |
(977 |
) |
Add: Interest expense |
18,935 |
|
14,591 |
|
19,092 |
|
Add: Income tax expense
(benefit) |
(21,407 |
) |
4,742 |
|
3,921 |
|
Add: Depreciation and amortization
expense |
24,047 |
|
23,734 |
|
26,452 |
|
EBITDA |
15,327 |
|
48,843 |
|
48,488 |
|
Selected Non-Cash Items
and Other Items Impacting Comparability |
62,340 |
|
21,139 |
|
30,837 |
|
Adjusted EBITDA |
$ |
77,667 |
|
$ |
69,982 |
|
$ |
79,325 |
|
Selected Non-Cash Items andOther Items
Impacting Comparability(in thousands, unaudited)
|
Three Months Ended |
|
March 31, |
December 31, |
|
2016 |
2015 |
2015 |
Loss on disposal or
impairment, net |
$ |
13,307 |
|
$ |
1,058 |
|
$ |
9,993 |
|
Loss from discontinued
operations, net of income taxes |
2 |
|
— |
|
1 |
|
Foreign currency
transaction loss (gain) |
1,469 |
|
(519 |
) |
132 |
|
Remove NGL equity losses
(earnings) including gain on issuance of common units |
(2,191 |
) |
305 |
|
(346 |
) |
Remove loss (gain) on
impairment or sale of NGL units |
39,764 |
|
(7,894 |
) |
— |
|
NGL cash distribution |
4,873 |
|
5,015 |
|
4,839 |
|
M&A transaction
related costs |
— |
|
10,000 |
|
— |
|
Inventory valuation
adjustments including equity method investees |
— |
|
1,187 |
|
1,810 |
|
Employee severance
expense |
259 |
|
— |
|
48 |
|
Unrealized loss (gain) on
derivative activities |
(4,548 |
) |
2,645 |
|
5,330 |
|
Depreciation and
amortization included within equity earnings |
6,539 |
|
6,376 |
|
6,173 |
|
Bankruptcy related
expenses |
— |
|
189 |
|
— |
|
Non-cash equity
compensation |
2,866 |
|
2,777 |
|
2,857 |
|
Selected Non-Cash Items
and Other Items Impacting Comparability |
$ |
62,340 |
|
$ |
21,139 |
|
$ |
30,837 |
|
2016 Adjusted
EBITDA Guidance Reconciliation(1) |
|
|
|
|
|
(in millions,
unaudited) |
|
|
|
Mid-point |
|
Net income |
$ |
34.0 |
|
|
Add: Interest expense |
83.0 |
|
|
Add: Income tax expense |
10.0 |
|
|
Add: Depreciation and
amortization |
126.0 |
|
|
EBITDA |
$ |
253.0 |
|
|
Selected Non-Cash and Other Items
Impacting Comparability |
42.0 |
|
|
Adjusted EBITDA |
$ |
295.0 |
|
|
|
|
|
|
|
|
Selected
Non-Cash and Other Items Impacting Comparability |
|
|
Depreciation and
amortization included within equity earnings |
$ |
28.0 |
|
|
Non-cash equity
compensation |
14.0 |
|
|
Selected Non-Cash and Other Items
Impacting Comparability |
$ |
42.0 |
|
|
|
|
|
(1)
Adjusted EBITDA guidance is on a cash basis for equity investments
in NGL EnergyPartners LP, and includes fully consolidated Rose
Rock Midstream |
2016 Cash
Available for Dividends Guidance Reconciliation(2) |
|
|
|
|
|
(in millions,
unaudited) |
|
|
|
Mid-point |
|
Net income |
$ |
34.0 |
|
|
Add: Interest expense |
83.0 |
|
|
Add: Income tax expense |
10.0 |
|
|
Add: Depreciation and
amortization |
126.0 |
|
|
EBITDA |
$ |
253.0 |
|
|
Selected Non-Cash and Other Items
Impacting Comparability |
(63.0 |
) |
|
SemGroup Stand-alone
Adjusted EBITDA |
$ |
190.0 |
|
|
|
|
|
Less: Cash interest expense |
29.0 |
|
|
Less: Cash paid for income
taxes |
10.0 |
|
|
Less: Maintenance capital
expenditures |
45.0 |
|
|
Cash available for
dividends |
$ |
106.0 |
|
|
|
|
|
Expected dividends
declared |
$ |
79.0 |
|
|
|
|
|
Coverage |
1.3 |
x |
|
|
|
|
Selected
Non-Cash and Other Items Impacting Comparability |
|
|
Rose Rock EBITDA |
$ |
(148.5 |
) |
|
Rose Rock distributions
received, net of General Partner support |
74.5 |
|
|
Non-cash equity
compensation |
11.0 |
|
|
Selected Non-Cash and Other Items
Impacting Comparability |
$ |
(63.0 |
) |
|
|
(2) Cash
available for dividends guidance is on a cash basis for equity
investments in NGL Energy Partners LP |
|
Contacts:
Investor Relations:
Alisa Perkins
918-524-8081
investor.relations@semgroupcorp.com
Media:
Kiley Roberson
918-524-8594
kroberson@semgroupcorp.com
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