TransMontaigne Partners L.P. Announces Financial Results for the Quarter Ended September 30, 2012

DENVER--()--TransMontaigne Partners L.P. (NYSE:TLP) today announced its financial results for the quarter ended September 30, 2012.

FINANCIAL RESULTS

An overview of the financial performance for the quarter ended September 30, 2012, as compared to the quarter ended September 30, 2011, includes:

  • Distributable cash flow generated during the quarter ended September 30, 2012 was $15.3 million compared to $13.1 million for the quarter ended September 30, 2011.
  • The distribution declared per limited partner unit was $0.64 per unit for the quarter ended September 30, 2012, as compared to $0.62 per unit for the quarter ended September 30, 2011.
  • Operating income for the quarter ended September 30, 2012 was $10.7 million compared to $8.6 million for the quarter ended September 30, 2011, principally due to the following:
    • Revenue was $38.9 million compared to $37.1 million due to increases in revenue at the Gulf Coast, Midwest, Brownsville and River terminals of approximately $0.8 million, $1.1 million, $0.4 million and $0.1 million, respectively, offset by a decrease in revenue at the Southeast terminals of approximately $0.6 million.
    • Direct operating costs and expenses were $16.2 million compared to $16.5 million due to decreases in direct operating costs and expenses at the River and Southeast terminals of approximately $0.2 million and $0.4 million, respectively, offset by an increase in direct operating costs and expenses at the Gulf Coast terminals of approximately $0.2 million. The direct operating costs and expenses for the Midwest and Brownsville terminals were consistent period over period, respectively.
  • Quarterly net earnings for the quarter ended September 30, 2012 increased to $9.9 million from $7.7 million, and net earnings per limited partner unit - basic for the quarter ended September 30, 2012 increased to $0.59 per unit from $0.46 per unit due principally to the increases in operating income discussed above.

Our terminaling services agreements are structured as either throughput agreements or storage agreements. Most of our throughput agreements contain provisions that require our customers to throughput a minimum volume of product at our facilities over a stipulated period of time, which results in a fixed amount of revenue to be recognized by us. Our storage agreements require our customers to make minimum payments based on the volume of storage capacity made available to the customer under the agreement, which results in a fixed amount of revenue to be recognized by us. We refer to the fixed amount of revenue recognized pursuant to our terminaling services agreements as being “firm commitments.” Revenue recognized in excess of firm commitments and revenue recognized based solely on the volume of product distributed or injected are referred to as “variable.” Our revenue was as follows (in thousands):

           
Three months
ended
September 30,
Nine months
ended
September 30,
2012       2011 2012       2011
Firm Commitments:
Terminaling services fees, net:
External customers $8,300 $7,907 $24,104 $24,839
Affiliates 21,345 20,752 62,788 60,617
Total firm commitments 29,645 28,659 86,892 85,456
Variable:
Terminaling services fees, net:
External customers 562 450 1,985 1,991
Affiliates (40) (73) (100) (129)
Total 522 377 1,885 1,862
Pipeline transportation fees 1,268 1,069 3,994 3,242
Management fees and reimbursed costs 1,531 1,126 4,274 2,709
Other 5,908 5,854 19,104 19,784
Total variable 9,229 8,426 29,257 27,597
Total revenue $38,874 $37,085 $116,149 $113,053
 

The amount of revenue recognized as “firm commitments” based on the remaining contractual terms of the terminaling services agreements that generated “firm commitments” for the nine months ended September 30, 2012 was as follows (in thousands):

     
At
September 30,
2012
Remaining terms on terminaling services agreements that generated “firm commitments”:
Less than 1 year remaining $11,958
1 year or more, but less than 3 years remaining 61,405
3 years or more, but less than 5 years remaining 9,705
5 years or more remaining 3,824
Total firm commitments for the nine months ended September 30, 2012 $86,892
 

RECENT DEVELOPMENTS

As of August 1, 2012 we completed the construction of one million barrels of crude oil storage tankage in Cushing, Oklahoma. As previously disclosed, we have entered into a long-term terminaling services agreement with Morgan Stanley Capital Group for the use of this facility. Under this agreement, Morgan Stanley Capital Group agreed to throughput a volume of crude oil at our Cushing, Oklahoma terminal that will, at the fee schedule contained in the agreement, result in minimum throughput payments to us of approximately $4.3 million for each one-year period following the in-service date of August 1, 2012 through July 31, 2019.

On October 15, 2012, we announced a distribution of $0.64 per unit for the period from July 1, 2012 through September 30, 2012, payable on November 6, 2012 to unitholders of record on October 31, 2012.

LIQUIDITY AND CAPITAL RESOURCES

TransMontaigne Partners also released the following statements regarding its current liquidity and capital resources:

  • Our primary liquidity needs are to fund our working capital requirements, distributions to unitholders, approved capital projects and approved future expansion, development and acquisition opportunities. As a result of Morgan Stanley's October 2011 decision not to approve any "significant" acquisition or investment that we may propose for the foreseeable future, we anticipate that Morgan Stanley's decision will significantly constrain our ability to grow our business as we have previously disclosed we were seeking to do. We cannot currently predict how Morgan Stanley's decision and any such regulatory developments will otherwise affect Morgan Stanley's commodities business or the growth or development of our business, our financial condition or results of operations, or how significant any such effects could be. Further discussion of Morgan Stanley’s current position with respect to approval of any proposed acquisitions and investments and the potential impact of such decision is set forth under the captions “Item 1.A. Risk Factors” and “Regulatory Matters” in Item 7 of our Annual Report on Form 10-K/A, Amendment No. 1, filed on May 3, 2012.
  • We anticipate an increase in our repairs and maintenance expenses during the fourth quarter of 2012 across our terminaling and transportation facilities. We believe that we will be able to generate sufficient cash from operations in the future to fund our working capital requirements and our distributions to unitholders.
  • We expect to initially fund our approved capital projects and our approved future expansion, development and acquisition opportunities, if any, with additional borrowings under our amended and restated senior secured credit facility, or credit facility. After initially funding expenditures for approved capital projects and approved future expansion, development and acquisition opportunities, if any, with borrowings under our credit facility, we may raise funds through additional equity offerings and debt financings, which may include the issuance of senior unsecured notes. The proceeds of such equity offerings and debt financings may then be used to reduce our outstanding borrowings under our credit facility.
  • Our credit facility provides for a maximum borrowing line of credit equal to $250 million. At our request, subject to the approval of the administrative agent and the receipt of additional commitments from one or more lenders, the maximum borrowings under the credit facility can be increased by up to an additional $100 million. The terms of the credit facility also permit us to issue senior unsecured notes. The credit facility became effective March 9, 2011 and expires on March 9, 2016. At September 30, 2012, our outstanding borrowings were $102 million.
  • Management and the board of directors of our general partner have approved capital projects with estimated completion dates that extend through 2013. At September 30, 2012, the remaining capital expenditures to complete the approved capital projects are estimated to range from $3 million to $5 million. We expect to fund our capital expenditures with additional borrowings under our credit facility.

Attachment A contains additional selected financial information and results of operations and Attachment B contains a computation of our distributable cash flow.

CONFERENCE CALL

TransMontaigne Partners L.P. previously announced that it has scheduled a conference call for Tuesday, November 6, 2012 at 11:00 a.m. (ET) regarding the above information. Analysts, investors and other interested parties are invited to listen to management’s presentation of the Company’s results and supplemental financial information by accessing the call as follows:

(800) 288-8975
Ask for:
TransMontaigne Partners

A playback of the conference call will be available from 1:00 p.m. (ET) on Tuesday, November 6, 2012 until 11:59 p.m. (ET) on Tuesday, November 13, 2012 by calling:

USA: (800) 475-6701
International: (320) 365-3844
Access Code: 270089

 

ATTACHMENT A

SELECTED FINANCIAL INFORMATION AND RESULTS OF OPERATIONS

 

The following selected financial information is extracted from the Company’s Quarterly Report on Form 10-Q for the three
months ended September 30, 2012, which was filed on November 6, 2012 with the Securities and Exchange Commission (in
thousands, except per unit amounts):

 

Three Months Ended

September 30,
2012

September 30,
2011

Income Statement Data

Revenue $38,874

$37,085

Direct operating costs and expenses (16,170)

(16,490)

Direct general and administrative expenses (1,204)

(1,060)

Operating income 10,700

8,625

Net earnings 9,853

7,666

Net earnings allocable to limited partners 8,525

6,659

Net earnings per limited partner unit—basic $0.59

$0.46

 

September 30,
2012

December 31,
2011

Balance Sheet Data

Property, plant and equipment, net

$428,082

$431,782

Investment in joint venture

25,836

25,875

Goodwill

8,739

8,716

Total assets

492,249

514,104

Long-term debt

102,000

120,000

Partners’ equity

352,432

351,876

 

Selected results of operations data for each of the quarters in the years ended December 31, 2012 and 2011 are summarized below (in thousands):

    Three months ended       Year ending
December 31,
2012
   
March 31,
2012
      June 30,
2012
      September 30,
2012
      December 31,
2012
Revenue $38,833 $38,442 $38,874 $— $116,149
Direct operating costs and expenses (13,969) (16,184) (16,170) (46,323)
Direct general and administrative expenses (3,188) 785 (1,204) (3,607)
Allocated general and administrative expenses (2,695) (2,695) (2,695) (8,085)
Allocated insurance expense (897) (898) (897) (2,692)
Reimbursement of bonus awards (313) (312) (313) (938)
Depreciation and amortization (6,930) (6,940) (7,112) (20,982)
Gain on disposition of assets
Equity in earnings of joint venture 107 328 217 652
Operating income 10,948 12,526 10,700 34,174
Other expenses, net (806) (872) (847) (2,525)
Net earnings $10,142 $11,654 $9,853 $— $31,649
 
Three months ended Year ending
December 31,
2011
March 31,
2011
June 30,
2011
September 30,
2011
      December 31,
2011
Revenue $39,136 $36,832 $37,085 $39,239 $152,292
Direct operating costs and expenses (14,577) (17,636) (16,490) (15,795) (64,498)
Direct general and administrative expenses (1,365) (815) (1,060) (1,463) (4,703)
Allocated general and administrative expenses (2,616) (2,617) (2,616) (2,617) (10,466)
Allocated insurance expense (823) (822) (823) (822) (3,290)
Reimbursement of bonus awards (313) (312) (313) (312) (1,250)
Depreciation and amortization (7,138) (6,722) (6,873) (6,921) (27,654)
Gain on disposition of assets 9,576 9,576
Equity in earnings (loss) of joint venture 233 (285) 165 113
Operating income 12,304 17,717 8,625 11,474 50,120
Other expenses, net (978) (689) (959) (974) (3,600)
Net earnings $11,326 $17,028 $7,666 $10,500 $46,520
 
       

ATTACHMENT B

DISTRIBUTABLE CASH FLOW

 

The following summarizes our distributable cash flow for the periods indicated (in thousands):

 

July 1, 2012
through
September 30,
2012

January 1, 2012
through
September 30,
2012

 
Net earnings $9,853 $31,649
Depreciation and amortization 7,112 20,982
Amounts due under long-term terminaling services agreements, net 179 447
Amortization of deferred revenue—projects (1,173) (3,451)
Payments received upon completion of projects, (reserve)/reversal 696 1,733
Deferred equity-based compensation 114 321
Distributions paid to holders of restricted phantom units (12) (61)
Cash paid for purchase of common units (276) (391)
Equity in earnings of joint venture (217) (652)
Distributions received from joint venture 361 1,192
Maintenance capital expenditures (1,296) (3,932)
“Distributable cash flow” generated during the period $15,341 $47,837
 

Actual distribution for the period on all common units and the general partner
   interest including incentive distribution rights

$10,596 $31,498
 

Distributable cash flow is not a computation based upon generally accepted accounting principles. The amounts included in the computation of our distributable cash flow are derived from amounts separately presented in our consolidated financial statements, notes thereto and “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Quarterly Report on Form 10-Q for the three months ended September 30, 2012, which was filed with the Securities and Exchange Commission on November 6, 2012. Distributable cash flow should not be considered in isolation or as an alternative to net earnings or operating income, as an indication of our operating performance, or as an alternative to cash flows from operating activities as a measure of liquidity. Distributable cash flow is not necessarily comparable to similarly titled measures of other companies. Distributable cash flow is presented here because it is a widely accepted financial indicator used to compare partnership performance. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets, the cash we are generating and our ability to make distributions to our unitholders and our general partner.

About TransMontaigne Partners L.P.

TransMontaigne Partners L.P. is a terminaling and transportation company based in Denver, Colorado with operations primarily in the United States along the Gulf Coast, in the Midwest, in Brownsville, Texas, along the Mississippi and Ohio Rivers, and in the Southeast. We provide integrated terminaling, storage, transportation and related services for customers engaged in the distribution and marketing of light refined petroleum products, heavy refined petroleum products, crude oil, chemicals, fertilizers and other liquid products. Light refined products include gasolines, diesel fuels, heating oil and jet fuels; heavy refined products include residual fuel oils and asphalt. We do not purchase or market products that we handle or transport. News and additional information about TransMontaigne Partners L.P. is available on our website: www.transmontaignepartners.com.

Forward-Looking Statements

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Although the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Important factors that could cause actual results to differ materially from the company’s expectations and may adversely affect its business and results of operations are disclosed in "Item 1A. Risk Factors" in the company’s Annual Report on Form 10-K/A, Amendment No. 1, for the year ended December 31, 2011, filed with the Securities and Exchange Commission on May 3, 2012.

Contacts

TransMontaigne Partners L.P.
Charles L. Dunlap, CEO, 303-626-8200
or
Gregory J. Pound, COO, 303-626-8200
or
Frederick W. Boutin, CFO, 303-626-8200

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Contacts

TransMontaigne Partners L.P.
Charles L. Dunlap, CEO, 303-626-8200
or
Gregory J. Pound, COO, 303-626-8200
or
Frederick W. Boutin, CFO, 303-626-8200