NuStar GP Holdings, LLC Reports Fourth Quarter and Full Year 2012 Earnings Results

Declares Quarterly Distribution of $0.545 per unit

2013 Results Should Benefit from NuStar Energy’s Recent Eagle Ford Asset Acquisition

SAN ANTONIO--()--NuStar GP Holdings, LLC (NYSE: NSH) today announced that distributable cash flow available to unitholders for the fourth quarter of 2012 was $23.3 million, or $0.55 per unit, compared to $21.5 million, or $0.51 per unit, for the fourth quarter of 2011. For the year ended December 31, 2012, distributable cash flow available to unitholders was $90.8 million, or $2.13 per unit, compared to $84.3 million, or $1.98 per unit in 2011.

Fourth quarter 2012 net income was $5.1 million, or $0.12 per unit, compared to $19.0 million, or $0.45 per unit, for the fourth quarter of 2011. For the year ended December 31, 2012, net income was $2.1 million, or $0.05 per unit, compared to $69.6 million, or $1.64 per unit in 2011.

With respect to the quarterly distribution to unitholders for the fourth quarter of 2012, NuStar GP Holdings, LLC announced that its board of directors has declared a distribution of $0.545 per unit. The fourth quarter 2012 distribution will be paid on February 19, 2013, to holders of record as of February 11, 2013.

“Due primarily to the cash flow benefits realized as a result of NuStar Energy L.P. issuing equity during the third quarter of 2012, NuStar GP Holdings, LLC was able to increase its 2012 total distributions by 6.6%. Total 2012 declared distributions of $2.11 per unit were $0.13 per unit higher than the $1.98 per unit distribution declared in 2011,” said Curt Anastasio, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC.

In regard to NuStar GP Holdings, LLC future results Anastasio stated, “NuStar Energy’s recent crude oil asset acquisition and upcoming natural gas liquids asset acquisition from TexStar Midstream Services LP should provide NuStar GP Holdings, LLC with increased net income and distributable cash flow over the next couple of years which should lead to additional future distribution growth.”

A conference call with management is scheduled for 3:00 p.m. ET (2:00 p.m. CT) today, February 1, 2013, to discuss the financial and operational results for the fourth quarter of 2012. Investors interested in listening to the presentation may call 800/622-7620, passcode 84162009. International callers may access the presentation by dialing 706/645-0327, passcode 84162009. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 84162009. International callers may access the playback by calling 404/537-3406, passcode 84162009. A live broadcast of the conference call will also be available on the company’s Web site at www.nustargpholdings.com.

NuStar GP Holdings, LLC is a publicly traded limited liability company that owns the two percent general partner interest, a 13.0 percent limited partner interest and the incentive distribution rights in NuStar Energy L.P., one of the largest independent liquids terminal operators in the nation. NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey. For more information, visit NuStar GP Holdings, LLC’s Web site at www.nustargpholdings.com.

This release serves as qualified notice to nominees under Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note that 100% of NuStar’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals and corporations, as applicable. Nominees, and not NuStar, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding future events. All forward-looking statements are based on the company's beliefs as well as assumptions made by and information currently available to the company. These statements reflect the company's current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P. and NuStar GP Holdings, LLC’s 2011 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.

NuStar GP Holdings, LLC
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)
               
Three Months Ended Year Ended
December 31, December 31,
2012 2011 2012 2011
Statement of Income Data:
Equity in earnings (loss) of NuStar Energy L.P. $ 6,893 $ 12,526 $ (4,578 ) $ 65,783
 
General and administrative expenses (1,031 ) (1,063 ) (3,337 ) (3,298 )
Other (expense) income, net (1,007 ) 7,877 9,801 7,320
Interest expense, net   (182 )   (111 )   (624 )   (570 )
 
Income before income tax benefit (expense) 4,673 19,229 1,262 69,235
Income tax benefit (expense)   452     (199 )   866     401  
Net income $ 5,125   $ 19,030   $ 2,128   $ 69,636  
 
Basic and diluted net income per unit $ 0.12   $ 0.45   $ 0.05   $ 1.64  
 
Equity in Earnings (Loss) of NuStar Energy L.P.:
General partner interest $ (428 ) $ 409 $ (5,356 ) $ 3,703
General partner incentive distribution   10,805     9,816     41,242     36,319  

General partner's interest in (loss) earnings and incentive distributions of NuStar Energy L.P.

10,377 10,225 35,886 40,022
Limited partner interest in (loss) earnings of NuStar Energy L.P. (2,763 ) 3,022 (37,580 ) 28,645

Amortization of step-up in basis related to NuStar Energy L.P.'s assets and liabilities

  (721 )   (721 )   (2,884 )   (2,884 )
Equity in earnings (loss) of NuStar Energy L.P. $ 6,893   $ 12,526   $ (4,578 ) $ 65,783  
 
 
Distributable Cash Flow (Note 1):
Cash distributions from NuStar Energy L.P. associated with:
General partner interest $ 1,961 $ 1,782 $ 7,486 $ 6,630
General partner incentive distribution 10,805 9,816 41,242 36,326
Limited partner interest - common units   11,344     11,292     45,152     44,842  
Total cash distributions expected from NuStar Energy L.P. 24,110 22,890 93,880 87,798
Deduct expenses of NuStar GP Holdings, LLC:
General and administrative expenses (1,031 ) (1,063 ) (3,337 ) (3,298 )
Income tax benefit (expense) 452 (199 ) 866 401
Interest expense, net   (182 )   (111 )   (624 )   (570 )
Distributable cash flow $ 23,349   $ 21,517   $ 90,785   $ 84,331  
 
Weighted average number of common units outstanding 42,581,848 42,550,358 42,576,858 42,546,096
 
Distributable cash flow per unit $ 0.548   $ 0.506   $ 2.131   $ 1.982  
 

Cash distributions to be paid to the unitholders of NuStar GP Holdings, LLC:

Distribution per unit $ 0.545   $ 0.510   $ 2.110   $ 1.980  
 
Total distribution $ 23,223   $ 21,708   $ 89,860   $ 84,252  
 
 
NuStar GP Holdings, LLC
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars)
   
Notes:
 
1. NuStar GP Holdings, LLC utilizes distributable cash flow as a financial measure, which is not defined in United States generally accepted accounting principles. Management uses this financial measure because it is a widely accepted financial indicator used by investors to compare general partner performance. In addition, management believes that this measure provides investors an enhanced perspective of the ability to make a minimum quarterly distribution. Distributable cash flow is not intended to represent cash flows for the period, nor is it presented as an alternative to net income. It should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with United States generally accepted accounting principles.
 
The following is a reconciliation of net income to distributable cash flow and net cash (used in) provided by operating activities:
 
        Three Months Ended       Year Ended
December 31, December 31,
2012     2011 2012     2011
Net income $ 5,125 $ 19,030 $ 2,128 $ 69,636
Less equity in (earnings) loss of NuStar Energy L.P. (6,893 ) (12,526 ) 4,578 (65,783 )
Plus cash distributions expected from NuStar Energy L.P. 24,110 22,890 93,880 87,798
Other (income) expense, net   1,007     (7,877 )   (9,801 )   (7,320 )
Distributable cash flow 23,349 21,517 90,785 84,331
Less cash distributions expected from NuStar Energy L.P. (24,110 ) (22,890 ) (93,880 ) (87,798 )
Distributions of equity in earnings of NuStar Energy L.P. - 12,526 - 65,783
Net effect of changes in operating accounts   (1,966 )   215     5,640     2,014  
Net cash (used in) provided by operating activities $ (2,727 ) $ 11,368   $ 2,545   $ 64,330  

Contacts

NuStar Energy, L.P., San Antonio
Investors, Chris Russell, Vice President
Investor Relations: 210-918-3507
or
Media, Mary Rose Brown, Executive Vice President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com

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Contacts

NuStar Energy, L.P., San Antonio
Investors, Chris Russell, Vice President
Investor Relations: 210-918-3507
or
Media, Mary Rose Brown, Executive Vice President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com