NGL Energy Partners LP Announces Third Quarter Results and Filing of Form 10-Q

TULSA, Okla.--()--NGL Energy Partners LP (NYSE:NGL) today reported Adjusted EBITDA of $85.0 million for the three months ended December 31, 2013 (exclusive of $5.1 million of costs related to acquisitions), compared to Adjusted EBITDA of $74.0 million during the three months ended December 31, 2012 (exclusive of $0.8 million of costs related to acquisitions). NGL reported net income of $24.1 million for the three months ended December 31, 2013, compared to net income of $40.5 million for the three months ended December 31, 2012. Net income per limited partner common unit for the three months ended December 31, 2013 was $0.27, compared to net income per limited partner common unit of $0.75 for the three months ended December 31, 2012.

For the nine months ended December 31, 2013, NGL reported Adjusted EBITDA of $154.5 million (exclusive of $6.5 million of costs related to acquisitions), compared to an Adjusted EBITDA of $98.3 million during the nine months ended December 31, 2012 (exclusive of $5.2 million of costs related to acquisitions). NGL reported net income of $5.6 million for the nine months ended December 31, 2013, compared to net income of $25.8 million for the nine months ended December 31, 2012. Net loss per limited partner common unit was $(0.03) for the nine months ended December 31, 2013 and net income per limited partner common unit was $0.53 for the nine months ended December 31, 2012.

NGL’s recent activities included the following:

  • The acquisition of the diversified midstream energy business of Gavilon, LLC in December 2013;
  • Amendments to NGL’s revolving credit facility in November and December 2013 that expanded the capacity to $1.721 billion, extended the maturity date to late 2018, and reduced the interest rate;
  • The sale of $240 million of common units in a private placement in December 2013;
  • The sale of $450 million of senior unsecured notes in a private placement in October 2013;
  • The continuation of internal growth initiatives, with $83.3 million of organic growth capital spending during the nine months ended December 31, 2013, primarily to expand water solutions and natural gas liquids terminal capabilities; and
  • Declaring a distribution of $0.53125 per limited partner unit ($2.125 on an annualized basis) in January 2014. This distribution represents a 3.9% increase over the previous quarter and a 14.9% increase over the same quarter of the prior fiscal year.

NGL also announced that it has filed its quarterly report on Form 10-Q for its fiscal quarter ended December 31, 2013 with the Securities and Exchange Commission. NGL has posted a copy of the Form 10-Q on its website at www.nglenergypartners.com.

A conference call to discuss NGL's results of operations is scheduled for 3:00pm Eastern Time (2:00pm Central Time) on February 11, 2014. Analysts, investors, and other interested parties may access the conference call by dialing (877) 546-5019 and providing access code 27969660. An archived audio replay of the conference call will be available for 7 days beginning at 7:00pm Eastern Time (6:00pm Central Time) on February 11, 2014 and can be accessed by dialing (888) 286-8010 and providing access code 25990037.

NGL defines EBITDA as net income (loss) attributable to parent equity, plus income taxes, interest expense and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding the unrealized gain or loss on derivative contracts, the gain or loss on the disposal of assets, and share-based compensation expenses. For purposes of its Adjusted EBITDA calculation, NGL draws a distinction between unrealized gains and losses on derivatives and realized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract is settled, NGL reverses the previously-recorded unrealized gain or loss and records a realized gain or loss. The realized gain or loss is equal to the amount received or paid on the contract. NGL acquired Gavilon, LLC in December 2013 and is still in the process of developing procedures to calculate unrealized gains and losses for the Gavilon, LLC operations in the same way NGL calculates them for its other operations. The unrealized gain or loss reported in the table below excludes any unrealized gains or losses related to Gavilon, LLC other than $2.6 million of unrealized losses associated with certain specifically identifiable derivative contracts.

EBITDA and Adjusted EBITDA should not be considered an alternative to net income, income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP as those items are used to measure operating performance, liquidity or the ability to service debt obligations. NGL believes that EBITDA provides additional information for evaluating its ability to make quarterly distributions to its unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information for evaluating its financial performance without regard to its financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA and Adjusted EBITDA or similarly titled measures used by other entities. A reconciliation of Adjusted EBITDA to net income attributable to parent equity is shown below.

This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes its expectations as reflected in the forward-looking statements are reasonable, NGL can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s annual report on Form 10-K, quarterly reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

About NGL Energy Partners LP

NGL Energy Partners LP is a Delaware limited partnership. NGL owns and operates a vertically integrated energy business with four primary businesses: NGL-Water Solutions, NGL-Crude Logistics, NGL-Liquids and Retail. NGL completed its initial public offering in May 2011. For further information visit the Partnership's website at www.nglenergypartners.com.

       
 
NGL ENERGY PARTNERS LP
Unaudited Condensed Consolidated Balance Sheets
At December 31, 2013 and March 31, 2013
(U.S. Dollars in Thousands, except unit amounts)
 
December 31, March 31,
2013 2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,901 $ 11,561

Accounts receivable - trade, net of allowance for doubtful accounts of $2,881 and $1,760, respectively

1,099,833 562,889
Accounts receivable - affiliates 6,375 22,883
Inventories 443,171 126,895
Prepaid expenses and other current assets   96,719     37,891  
Total current assets 1,654,999 762,119
 

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $90,655 and $50,127, respectively

806,437 516,937
GOODWILL 1,037,237 563,146

INTANGIBLE ASSETS, net of accumulated amortization of $91,121 and $44,155, respectively

713,974 442,603
INVESTMENTS IN UNCONSOLIDATED ENTITIES 248,376 -
OTHER NONCURRENT ASSETS   15,955     6,542  
Total assets $ 4,476,978   $ 2,291,347  
 
LIABILITIES AND PARTNERS’ EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 1,152,530 $ 535,687
Accrued expenses and other payables 141,950 85,703
Advance payments received from customers 62,045 22,372
Accounts payable - affiliates 18,077 6,900
Current maturities of long-term debt   7,799     8,626  
Total current liabilities 1,382,401 659,288
 
LONG-TERM DEBT, net of current maturities 1,517,519 740,436
OTHER NONCURRENT LIABILITIES 39,471 2,205
 
COMMITMENTS AND CONTINGENCIES
 
PARTNERS’ EQUITY
General Partner — 0.1% interest; 79,406 and 53,676 notional units outstanding at
December 31, 2013 and March 31, 2013, respectively (46,781 ) (50,497 )
Limited Partners — 99.9% interest —
Common units — 73,407,732 and 47,703,313 units outstanding at
December 31, 2013 and March 31, 2013, respectively 1,574,842 920,998

Subordinated units — 5,919,346 units outstanding at December 31, 2013 and March 31, 2013

2,444 13,153
Accumulated other comprehensive income (loss) (106 ) 24
Noncontrolling interests   7,188     5,740  
Total partners’ equity   1,537,587     889,418  
Total liabilities and partners’ equity $ 4,476,978   $ 2,291,347  
     
 
NGL ENERGY PARTNERS LP
Unaudited Condensed Consolidated Statements of Operations
For the Three Months and Nine Months Ended December 31, 2013 and 2012
(U.S. Dollars in Thousands, except unit and per unit amounts)
 
Three Months Ended Nine Months Ended
December 31, December 31,
2013   2012 2013   2012
REVENUES:
Crude oil logistics $ 1,316,060 $ 677,985 $ 3,260,862 $ 1,462,523
Water solutions 41,772 22,806 96,475 40,557
Natural gas liquids logistics 800,917 508,131 1,646,750 1,050,116
Retail propane 161,537 127,905 293,134 244,116
Other   423,159     1,381     426,118     2,842  
Total Revenues   2,743,445     1,338,208     5,723,339     2,800,154  
 
COST OF SALES:
Crude oil logistics 1,300,911 654,976 3,202,265 1,425,546
Water solutions 2,571 1,499 6,936 4,169
Natural gas liquids logistics 745,894 470,621 1,555,539 982,949
Retail propane 105,394 77,449 181,956 144,556
Other   421,259     -     421,259     -  
Total Cost of Sales   2,576,029     1,204,545     5,367,955     2,557,220  
 
 
OPERATING COSTS AND EXPENSES:
Operating 69,261 50,518 174,075 113,287
General and administrative 21,492 14,175 54,258 34,578
Depreciation and amortization   35,494     18,747     83,279     41,335  
Operating Income 41,169 50,223 43,772 53,734
 
OTHER INCOME (EXPENSE):
Interest expense (16,745 ) (9,762 ) (38,427 ) (22,254 )
Loss on early extinguishment of debt - - - (5,769 )
Other, net   154     261     623     919  
Income Before Income Taxes 24,578 40,722 5,968 26,630
 
INCOME TAX PROVISION   (526 )   (245 )   (356 )   (781 )
 
Net Income 24,052 40,477 5,612 25,849
 
Net Income Allocated to General Partner (4,260 ) (942 ) (8,399 ) (1,731 )
 
Net Income Attributable to Noncontrolling Interests (154 ) (301 ) (288 ) (250 )
 
Net Income (Loss) Attributable to Parent Equity        
Allocated to Limited Partners $ 19,638   $ 39,234   $ (3,075 ) $ 23,868  
 
Basic and Diluted Income (Loss) per Common Unit $ 0.27   $ 0.75   $ (0.03 ) $ 0.53  
 
Basic and Diluted Income (Loss) per Subordinated Unit $ 0.23   $ 0.75   $ (0.22 ) $ 0.51  
 
Basic and Diluted Weighted Average Units Outstanding:
Common   67,941,726     46,364,381     58,222,924     39,288,012  
Subordinated   5,919,346     5,919,346     5,919,346     5,919,346  
 
 

OPERATIONAL DATA

The following table summarizes the volume of product sold and wastewater delivered for the three and nine months ended December 31, 2013 and 2012. Gallons sold by the natural gas liquids logistics segment shown in the table below include sales to the retail segment.

       
Three Months Ended Nine Months Ended
December 31, December 31,
Segment 2013   2012 2013   2012
(in thousands)
Crude oil logistics
Crude oil sold (barrels) 13,466 7,461 32,001 15,922
 
Water solutions
Water delivered (barrels) 18,255 9,818 44,753 16,593
 
Natural gas liquids logistics
Propane sold (gallons) 410,286 275,598 721,120 532,353
Other products sold (gallons) 207,473 161,258 581,195 370,365
 
Retail propane
Propane sold (gallons) 50,623 42,122 94,615 81,449
Distillates sold (gallons) 10,442 8,818 18,618 15,091
 
 

ADJUSTED EBITDA RECONCILIATION

The following table reconciles net income attributable to parent equity to EBITDA and Adjusted EBITDA, each of which are non-GAAP financial measures, for the periods indicated:

       
Three Months Ended Nine Months Ended
December 31, December 31,
2013   2012 2013   2012
(in thousands)
EBITDA:
Net income attributable to parent equity $ 23,898 $ 40,176 $ 5,324 $ 25,599
Provision (benefit) for income taxes 526 245 356 781
Interest expense 16,745 9,762 38,427 22,254
Loss on early extinguishment of debt - - - 5,769
Depreciation and amortization expense   36,251     20,494     85,199   44,607  
EBITDA 77,420 70,677 129,306 99,010
Unrealized (gain) loss on derivative contracts (1,954 ) 159 1,791 (11,246 )
Loss (gain) on disposal of assets 340 (11 ) 2,503 (34 )
Share-based compensation expense   4,078     2,365     14,370   5,322  
Adjusted EBITDA $ 79,884   $ 73,190   $ 147,970 $ 93,052  

Contacts

NGL Energy Partners LP
Atanas H. Atanasov, 918-481-1119
Chief Financial Officer and Treasurer
atanas.atanasov@nglep.com

Release Summary

NGL Energy Partners LP Announces Third Quarter Results and Filing of Form 10-Q

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Contacts

NGL Energy Partners LP
Atanas H. Atanasov, 918-481-1119
Chief Financial Officer and Treasurer
atanas.atanasov@nglep.com