NGL Energy Partners LP Announces Third Quarter Fiscal 2017 Results

  • Revenue for the third quarter of Fiscal 2017 totaled $3.41 billion, compared to revenue for the third quarter of Fiscal 2016 of $2.69 billion; Operating income for the third quarter of Fiscal 2017 totaled $22.6 million, compared to operating income of $82.6 million during the third quarter of Fiscal 2016
  • Adjusted EBITDA for the third quarter of Fiscal 2017 was $120.6 million, compared to Adjusted EBITDA of $113.5 million for the third quarter of Fiscal 2016
  • Distributable Cash Flow for the third quarter of Fiscal 2017 was $85.2 million
  • Grand Mesa Pipeline became fully operational on November 1, 2016
  • Growth capital expenditures and other investments totaled approximately $75 million during the third quarter including expenditures on the Grand Mesa Pipeline project and the acquisition of the Port of Point Comfort crude terminal project
  • Issued $700.0 million of 7.50% Senior Notes due 2023 in October 2016
  • Announced expected distribution growth of 28% over the next year and distribution growth of 10% per year for the following three years

TULSA, Okla.--()--NGL Energy Partners LP (NYSE:NGL) (“NGL” or the “Partnership”) today reported operating income for the quarter ended December 31, 2016 of $22.6 million compared to operating income of $82.6 million in the same quarter last year. Operating income in the quarter ended December 31, 2015, included $8.5 million of operating income from our consolidation of TransMontaigne Partners L.P., which was divested in early 2016. Net income for the quarter ended December 31, 2016 was $1.3 million compared to net income of $51.0 million during the same quarter last year. Adjusted EBITDA was $120.6 million for the quarter ended December 31, 2016, a 6.3% year over year increase when compared to Adjusted EBITDA of $113.5 million during the quarter ended December 31, 2015. Distributable Cash Flow was $85.2 million for the quarter ended December 31, 2016, compared to $71.9 million for the quarter ended December 31, 2015.

“We are excited to be in the positive position we are today with the successful completion of our Grand Mesa Pipeline and the growth in cash flows from this project going forward. In addition, in December 2016 we announced the new crude oil pipeline into the Stack shale play, the purchase of the Port Hudson and Kingfisher terminals at an attractive multiple and the favorable resolution of the contract with a DJ basin shipper,” stated Mike Krimbill, CEO of NGL. “We recently announced our final quarter of the temporary distribution reduction and our expectation for 28% growth in distributions next year and double digit growth over the following three years. We will continue to focus on improving our balance sheet and operating at a target distribution coverage range of 1.3 to 1.5 times over this period. We are as excited as ever about the opportunities in and around our various business segments and look forward to providing significant value to all of our stakeholders.”

Capitalization and Liquidity

In October 2016, the Partnership issued $700.0 million of 7.50% Senior Notes and received net proceeds from the issuance of $687.9 million. The notes mature on November 1, 2023 and net proceeds were used to reduce the outstanding balance on its revolving credit facility. Total liquidity (cash plus available capacity on our revolving credit facility) was in excess of $900 million as of December 31, 2016.

Total long-term debt outstanding, excluding working capital borrowings, was $2,341.0 million at December 31, 2016 compared to $2,294.3 million at March 31, 2016, an increase of $46.7 million. Management expects long-term debt to decrease as cash flow in excess of distributions is used to fund capital expenditures and repay borrowings, primarily in the fourth quarter of our fiscal year. Working capital borrowings totaled $875.5 million at December 31, 2016 compared to $618.5 million at March 31, 2016, an increase of $257.0 million driven by the increase in commodity prices and inventory volumes during the period. Working capital borrowings, which are fully secured by the Partnership’s net working capital, are subject to a monthly borrowing base determination and are excluded from the Partnership’s debt compliance ratios.

Quarterly Results of Operations

The following table summarizes operating income (loss) by operating segment for the three months ended December 31, 2016 and December 31, 2015 (restated to give effect to correct the recording and re-measuring contingent consideration related to certain acquisitions in its Water Solutions segment) (in thousands):

            As Restated
December 31, 2016 December 31, 2015
Crude Oil Logistics $ (9,163 ) $ 804
Water Solutions (11,898 ) 15,596
Liquids 24,765 32,921
Retail Propane 21,772 14,450
Refined Products and Renewables 8,209 31,702
Corporate and Other (11,128 ) (12,919 )
Total operating income $ 22,557   $ 82,554  
 

The tables included in this release reconcile operating income (loss) to Adjusted EBITDA for each of our operating segments.

Crude Oil Logistics

The Partnership’s Crude Oil Logistics segment generated Adjusted EBITDA of $16.6 million during the quarter ended December 31, 2016, compared to Adjusted EBITDA of $10.5 million during the quarter ended December 31, 2015. The Partnership’s Grand Mesa Pipeline project commenced commercial operations on November 1, 2016 and contributed Adjusted EBITDA of approximately $16.6 million during the current quarter. The Partnership currently anticipates year one Adjusted EBITDA related to this project to be approximately $120 million and year two Adjusted EBITDA to be approximately $150 million based on current contracts. The average contract term on the pipeline is approximately nine years and all contracts are fee-based with volume commitments.

The Crude Oil Logistics segment’s current quarter results were impacted by increased competition due to the continued production decline in the majority of the basins across the United States. The Partnership’s quarterly results were also impacted by the flattening of the contango curve for crude oil during the quarter. The Partnership expects cash flows from this business segment to become more stable with the start-up and completion of the Grand Mesa Pipeline and other crude oil pipeline and terminal projects previously announced.

Refined Products and Renewables

The Partnership’s Refined Products and Renewables segment generated Adjusted EBITDA of $29.8 million during the quarter ended December 31, 2016, compared to Adjusted EBITDA of $29.3 million during the quarter ended December 31, 2015. The seasonal impact from motor fuel blending, which is represented in the gasoline price curve, impacts the value of the segment’s gasoline inventory and the corresponding hedges of that inventory, resulting in lower earnings during fiscal third quarter reporting periods. This also represents a period in which the segment builds inventory volumes on its system. The Partnership has hedges in place for its forecasted year-end inventory, the benefit of which it expects to recognize in the fiscal fourth quarter.

Refined product barrels sold during the quarter ended December 31, 2016 totaled approximately 35.4 million barrels, and increased by approximately 9.3 million barrels compared to the same period in the prior year, as a result of the increase in pipeline capacity rights purchased over the previous nine months, an expansion of our refined products operations, and the continued demand for motor fuels in the current low gasoline price environment. Refined product barrels sold are expected to remain at a similar level through the remainder of Fiscal 2017 as motor fuel demand remains strong in the current price environment. Renewable barrels sold during the quarter ended December 31, 2016 were approximately 1.9 million, compared to approximately 1.5 million during the quarter ended December 31, 2015.

Liquids

The Partnership’s Liquids segment generated Adjusted EBITDA of $26.1 million during the quarter ended December 31, 2016, compared to Adjusted EBITDA of $35.4 million during the quarter ended December 31, 2015. Our wholesale propane operations performed significantly better than in the prior year quarter with a rising propane price and increased weather-related propane demand. Our butane business continues to be negatively impacted by lower margins, railcar costs and increased storage capacity, all of which were forecasted and included in our previously announced guidance. Propane volumes increased by 38.3 million gallons, or 11.0%, during the quarter ended December 31, 2016 when compared to the quarter ended December 31, 2015. Other Liquids volumes increased by 13.7 million gallons, or 6.1%, during the quarter ended December 31, 2016 when compared to the same period in the prior year. Total product margin per gallon was $0.054 for the quarter ended December 31, 2016, compared to $0.085 for the quarter ended December 31, 2015.

Retail Propane

The Partnership’s Retail Propane segment generated Adjusted EBITDA of $32.4 million during the quarter ended December 31, 2016, compared to Adjusted EBITDA of $23.0 million during the quarter ended December 31, 2015. Propane sold during the quarter ended December 31, 2016 increased by approximately 14.1 million gallons, or 33.3%, when compared to the quarter ended December 31, 2015, primarily due to increased weather-related demand and acquisitions made during previous quarters. Distillates sold during the quarter ended December 31, 2016 increased by less than 0.1 million gallons when compared to the quarter ended December 31, 2015. Total product margin per gallon was $0.906 for the quarter ended December 31, 2016, compared to $0.899 for the quarter ended December 31, 2015.

Water Solutions

The Partnership’s Water Solutions segment generated Adjusted EBITDA of $16.9 million during the quarter ended December 31, 2016, compared to Adjusted EBITDA of $21.6 million during the quarter ended December 31, 2015. Water barrels processed during the quarter ended December 31, 2016 were approximately 47.5 million, compared to approximately 55.6 million during the quarter ended December 31, 2015, as our Water Solutions segment continues to be impacted by the reduction in crude oil drilling, completions and production. Despite these headwinds, volumes for the current quarter were approximately 15% higher than those reported in the first quarter of Fiscal 2017 and approximately 3% higher than those reported in the second quarter of Fiscal 2017 as drilling activity has increased in certain basins. We continued to benefit from the increased rig count in the Permian Basin, which has continued to climb subsequent to this quarter end. Revenues from recovered hydrocarbons decreased by $2.0 million to $6.4 million for the quarter ended December 31, 2016, compared to the quarter ended December 31, 2015, mostly related to the lower realized price for the skim oil.

Corporate and Other

The Adjusted EBITDA for Corporate and Other was a loss of $1.2 million during the quarter ended December 31, 2016, compared to a loss of $6.3 million during the quarter ended December 31, 2015. General and administrative expenses for the quarter ended December 31, 2016 benefited from lower compensation expense and the reversal of certain accruals that were ultimately covered by insurance.

Growth capital expenditures totaled approximately $246.2 million for the nine months ended December 31, 2016, including $96 million related to the Grand Mesa Pipeline project. Acquisitions and other investments totaled approximately $212.4 million, resulting in total capital expenditures related to expansion investments of approximately $416 million fiscal year-to-date. In January 2017, we closed on the acquisition of a natural gas liquids terminal and a natural gas liquids and condensate facility for a combined purchase price of approximately $50 million. Our expectation for growth capital expenditures and investments for Fiscal 2017, including the January acquisition, is approximately $475 million as the majority of capital investments were funded in the first half of the fiscal year.

Third Quarter Conference Call Information

A conference call to discuss NGL’s results of operations is scheduled for 11:00 am Eastern Time (10:00 am Central Time) on Tuesday, February 7, 2017. Analysts, investors, and other interested parties may access the conference call by dialing (800) 291-4083 and providing access code 58491899. An archived audio replay of the conference call will be available for 7 days beginning at 2:00 pm Eastern Time (1:00 pm Central Time) on February 7, 2017, which can be accessed by dialing (855) 859-2056 and providing access code 58491899.

Non-GAAP Financial Measures

NGL defines EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or market adjustments, gains and losses on disposal or impairment of assets, gain on early extinguishment of liabilities, revaluation of investments, equity-based compensation expense, acquisition expense and other. We also include in Adjusted EBITDA certain inventory valuation adjustments related to our Refined Products and Renewables segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered alternatives 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 to investors for evaluating NGL’s ability to make quarterly distributions to NGL’s unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information to investors for evaluating NGL’s financial performance without regard to NGL’s financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.

Other than for NGL’s Refined Products and Renewables segment, for purposes of the Adjusted EBITDA calculation, NGL makes a distinction between realized and unrealized 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 matures or is settled, NGL reverses the previously recorded unrealized gain or loss and record a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of NGL’s Refined Products and Renewables segment. The primary hedging strategy of NGL’s Refined Products and Renewables segment is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges are six months to one year in duration at inception. The “inventory valuation adjustment” row in the reconciliation table reflects the difference between the market value of the inventory of NGL’s Refined Products and Renewables segment at the balance sheet date and its cost. NGL includes this in Adjusted EBITDA because the gains and losses associated with derivative contracts of this segment, which are intended primarily to hedge inventory holding risk, also affect Adjusted EBITDA.

Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures and cash interest expense. Maintenance capital expenditures represent capital expenditures necessary to maintain the Partnership’s operating capacity. Distributable Cash Flow is a performance metric used by senior management to compare cash flows generated by the Partnership (excluding growth capital expenditures and prior to the establishment of any retained cash reserves by the Board of Directors) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. This financial measure also is important to investors as an indicator of whether the Partnership is generating cash flow at a level that can sustain, or support an increase in, quarterly distribution rates. Actual distributions are set by the Board of Directors of NGL’s general partner.

Forward Looking Statements

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 such forward-looking statements are reasonable, NGL cannot assure they 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.

NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or market adjustments, gains and losses on disposal or impairment of assets, equity-based compensation, acquisition-related expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership’s Adjusted EBITDA and the Partnership is not able to provide a reconciliation of the Partnership’s Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.

About NGL Energy Partners LP

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

On May 31, 2016, the Partnership filed its Annual Report on Form 10-K for the year ended March 31, 2016 with the Securities and Exchange Commission. A copy of our Form 10-K can be found on the Partnership’s website at www.nglenergypartners.com. Unitholders may also request, free of charge, a hard copy of our Form 10-K.

         

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(U.S. Dollars in Thousands, except unit amounts)

 
December 31, 2016 March 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 28,927 $ 28,176

Accounts receivable-trade, net of allowance for doubtful accounts of $5,578 and $6,928,
respectively

765,290 521,014
Accounts receivable-affiliates 20,008 15,625
Inventories 613,993 367,806
Prepaid expenses and other current assets 134,485   95,859  

Total current assets

1,562,703 1,028,480

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $348,136 and
$266,491, respectively

1,746,925 1,649,572
GOODWILL 1,462,116 1,315,362

INTANGIBLE ASSETS, net of accumulated amortization of $388,517 and $316,878,
respectively

1,164,749 1,148,890
INVESTMENTS IN UNCONSOLIDATED ENTITIES 187,514 219,550
LOAN RECEIVABLE-AFFILIATE 2,700 22,262
OTHER NONCURRENT ASSETS 251,369   176,039  
Total assets $ 6,378,076   $ 5,560,155  
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable-trade $ 650,886 $ 420,306
Accounts payable-affiliates 22,917 7,193
Accrued expenses and other payables 196,033 214,426
Advance payments received from customers 63,509 56,185
Current maturities of long-term debt 33,501   7,907  
Total current liabilities 966,846 706,017

LONG-TERM DEBT, net of debt issuance costs of $24,574 and $15,500, respectively,
and current maturities

3,216,505 2,912,837
OTHER NONCURRENT LIABILITIES 186,280 247,236
 

CLASS A 10.75% CONVERTIBLE PREFERRED UNITS, 19,942,169 and 0 preferred units
issued and outstanding, respectively

61,170
 
EQUITY:

General partner, representing a 0.1% interest, 109,201 and 104,274 notional units,
respectively

(50,785 ) (50,811 )

Limited partners, representing a 99.9% interest, 109,091,710 and 104,169,573 common units
issued and outstanding, respectively

1,969,113 1,707,326
Accumulated other comprehensive loss (97 ) (157 )
Noncontrolling interests 29,044   37,707  
Total equity 1,947,275   1,694,065  
Total liabilities and equity $ 6,378,076   $ 5,560,155  
                 

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(U.S. Dollars in Thousands, except unit and per unit amounts)

 
As Restated(1) As Restated(1)
Three Months Ended December 31, Nine Months Ended December 31,
2016 2015 2016 2015
REVENUES:
Crude Oil Logistics $ 385,906 $ 519,425 $ 1,161,742 $ 2,854,787
Water Solutions 40,359 45,438 115,845 147,225
Liquids 470,275 353,527 909,584 861,504
Retail Propane 128,654 100,145 240,131 217,798
Refined Products and Renewables 2,381,283 1,666,471 6,746,168 5,335,356
Other 164     679      
Total Revenues 3,406,641 2,685,006 9,174,149 9,416,670
COST OF SALES:
Crude Oil Logistics 361,839 495,529 1,107,587 2,770,240
Water Solutions 477 (3,128 ) 3,871 (8,088 )
Liquids 430,946 300,766 831,221 754,157
Retail Propane 60,508 45,974 106,019 96,417
Refined Products and Renewables 2,374,175 1,594,359 6,674,194 5,149,151
Other 77     300      
Total Cost of Sales 3,228,022 2,433,500 8,723,192 8,761,877
OPERATING COSTS AND EXPENSES:
Operating 76,981 104,721 225,408 307,941
General and administrative 18,280 23,035 88,077 114,814
Depreciation and amortization 60,767 59,180 160,276 175,772
Loss (gain) on disposal or impairment of assets, net 34 1,328 (203,433 ) 3,040
Revaluation of liabilities   (19,312 )   (46,416 )
Operating Income 22,557 82,554 180,629 99,642
OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated entities 1,279 2,858 1,726 14,008
Revaluation of investments (14,365 )
Interest expense (41,436 ) (36,176 ) (105,316 ) (98,549 )
Gain on early extinguishment of liabilities 30,890
Other income, net 20,007   2,161   25,860   2,941  
Income Before Income Taxes 2,407 51,397 119,424 18,042
INCOME TAX (EXPENSE) BENEFIT (1,114 ) (402 ) (2,036 ) 1,846  
Net Income 1,293 50,995 117,388 19,888

LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS

(317 ) (6,838 ) (6,091 ) (14,685 )
NET INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP 976 44,157 111,297 5,203
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS (8,906 ) (20,958 )
LESS: NET INCOME ALLOCATED TO GENERAL PARTNER (22 ) (16,239 ) (180 ) (47,798 )
NET (LOSS) INCOME ALLOCATED TO COMMON UNITHOLDERS $ (7,952 ) $ 27,918   $ 90,159   $ (42,595 )
BASIC (LOSS) INCOME PER COMMON UNIT $ (0.07 ) $ 0.27   $ 0.85   $ (0.41 )
DILUTED (LOSS) INCOME PER COMMON UNIT $ (0.07 ) $ 0.22   $ 0.82   $ (0.41 )
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING 107,966,901   105,338,200   106,114,668   104,808,649  
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING 107,966,901   106,194,547   109,554,928   104,808,649  
                                   

(1) As reported in our 2016 Annual Report on Form 10-K, we restated our condensed consolidated statements of operations for the three months and nine months ended December 31, 2015 to reduce operating expenses by $21.4 million and $52.9 million, respectively, to correct the recording and re-measuring contingent consideration related to certain acquisitions in its Water Solutions segment.

                 

EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION

(Unaudited)

 

The following table reconciles NGL’s net income to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow:

 
As Restated As Restated
Three Months Ended December 31, Nine Months Ended December 31,
2016 2015 2016 2015
(in thousands)
Net income $ 1,293 $ 50,995 $ 117,388 $ 19,888
Less: Net income attributable to noncontrolling interests (317 ) (6,838 ) (6,091 ) (14,685 )
Net income attributable to NGL Energy Partners LP 976 44,157 111,297 5,203
Interest expense 41,486 34,740 105,283 92,908
Income tax expense (benefit) 1,114 384 2,036 (1,900 )
Depreciation and amortization 64,644   55,261   171,746   162,728  
EBITDA 108,220 134,542 390,362 258,939
Net unrealized gains on derivatives (3,957 ) (1,748 ) (737 ) (4,494 )
Inventory valuation adjustment (1) 7,859 (16,524 ) 40,552 2,831
Lower of cost or market adjustments 731 13,251 839 7,325
Loss (gain) on disposal or impairment of assets, net 35 1,343 (203,469 ) 3,056
Gain on early extinguishment of liabilities (30,890 )
Revaluation of investments 14,365
Equity-based compensation expense (2) 6,865 3,032 39,859 52,712
Acquisition expense (3) 378 239 1,539 871
Other (4) 472   (20,676 ) 7,381   (51,166 )
Adjusted EBITDA 120,603 113,459 259,801 270,074
Cash interest expense 30,233 32,722 89,102 90,217
Maintenance capital expenditures (5) 5,205   8,840   17,901   27,746  
Distributable Cash Flow $ 85,165   $ 71,897   $ 152,798   $ 152,111  
                                           

(1) Amount reflects the difference between the market value of the inventory of NGL’s Refined Products and Renewables segment at the balance sheet date and its cost. See “Non-GAAP Financial Measures” section above for a further discussion.

(2) Equity-based compensation expense in the table above may differ from equity-based compensation expense reported in the footnotes to our condensed consolidated financial statements included in the Quarterly Report on Form 10-Q. Amounts reported in the table above include expense accruals for bonuses expected to be paid in common units, whereas the amounts reported in the footnotes to our condensed consolidated financial statements only include expenses associated with equity-based awards that have been formally granted.

(3) During the three months and nine months ended December 31, 2016 and 2015, we incurred expenses related to legal and advisory costs associated with acquisitions.

(4) The amount for the three months ended December 31, 2016 represents non-cash operating expenses related to our Grand Mesa Pipeline project. The amount for the nine months ended December 31, 2016 represents non-cash operating expenses related to our Grand Mesa Pipeline project and also includes adjustments related to noncontrolling interests. Amounts for the three months and nine months ended December 31, 2015 represent the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment.

(5) Excludes TLP maintenance capital expenditures of $4.3 million and $11.4 million, respectively, during the three months and nine months ended December 31, 2015.

     

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

 
Three Months Ended December 31, 2016

Crude Oil
Logistics

   

Water
Solutions

    Liquids    

Retail
Propane

   

Refined
Products
and
Renewables

   

Corporate
and
Other

    Consolidated
(in thousands)
Operating (loss) income $ (9,163 ) $ (11,898 ) $ 24,765 $ 21,772 $ 8,209 $ (11,128 ) $ 22,557
Depreciation and amortization 16,503 27,150 4,441 11,379 404 890 60,767
Amortization recorded to cost of sales 100 195 1,458 1,753

Net unrealized losses (gains) on
derivatives

732 (1,304 ) (3,387 ) 2 (3,957 )
Inventory valuation adjustment 7,859 7,859
Lower of cost or market adjustments 731 731

Loss (gain) on disposal or impairment
of assets, net

4,655 2,323 60 (62 ) (6,941 ) (1 ) 34
Equity-based compensation expense 6,865 6,865
Acquisition expense (2 ) 380 378
Other income, net 721 1,214 4 19 16,220 1,829 20,007

Adjusted EBITDA attributable to
unconsolidated entities

2,577 54 (111 ) 1,867 4,387

Adjusted EBITDA attributable to
noncontrolling interest

(667 ) (583 ) (1,250 )
Other 472             472  
Adjusted EBITDA $ 16,597   $ 16,872   $ 26,078   $ 32,414   $ 29,807   $ (1,165 ) $ 120,603  
     
As Restated
Three Months Ended December 31, 2015
Crude Oil
Logistics
    Water
Solutions
    Liquids     Retail
Propane
   

Refined
Products
and
Renewables

   

Corporate
and
Other

    Consolidated
(in thousands)
Operating income (loss) $ 804 $ 15,596 $ 32,921 $ 14,450 $ 31,702 $ (12,919 ) $ 82,554
Depreciation and amortization 10,041 23,644 3,537 9,096 11,493 1,369 59,180
Amortization recorded to cost of sales 62 261 1,378 1,701

Net unrealized (gains) losses on
derivatives

(3,928 ) 3,732 (1,423 ) (129 ) (1,748 )
Inventory valuation adjustment (16,524 ) (16,524 )
Lower of cost or market adjustments 13,251 13,251

Loss (gain) on disposal or impairment
of assets, net

1,115 213 5 (4 ) (1 ) 1,328
Equity-based compensation expense 277 2,973 3,250
Acquisition expense 239 239
Other (expense) income, net (672 ) 569 72 113 61 2,018 2,161

Adjusted EBITDA attributable to
unconsolidated entities

3,102 (352 ) (202 ) 3,547 6,095

Adjusted EBITDA attributable to
noncontrolling interest

(459 ) (305 ) (15,890 ) (16,654 )
Other   (21,374 )         (21,374 )
Adjusted EBITDA $ 10,524   $ 21,569   $ 35,373   $ 23,019   $ 29,294   $ (6,320 ) $ 113,459  
     
Nine Months Ended December 31, 2016

Crude Oil
Logistics

   

Water
Solutions

    Liquids    

Retail
Propane

   

Refined
Products
and
Renewables

   

Corporate
and
Other

    Consolidated
(in thousands)
Operating (loss) income $ (28,827 ) $ 63,136 $ 33,092 $ 10,553 $ 169,365 $ (66,690 ) $ 180,629
Depreciation and amortization 34,496 76,713 13,315 31,771 1,237 2,744 160,276
Amortization recorded to cost of sales 284 585 4,229 5,098

Net unrealized losses (gains) on
derivatives

951 (2,138 ) 239 211 (737 )
Inventory valuation adjustment 40,552 40,552
Lower of cost or market adjustments 839 839

Loss (gain) on disposal or impairment
of assets, net

14,617 (91,958 ) 109 (96 ) (126,101 ) (4 ) (203,433 )
Equity-based compensation expense 39,859 39,859
Acquisition expense 1,539 1,539
Other (expense) income, net (589 ) 1,524 67 339 19,099 5,420 25,860

Adjusted EBITDA attributable to
unconsolidated entities

7,651 (9 ) (388 ) 3,543 10,797

Adjusted EBITDA attributable to
noncontrolling interest

(2,298 ) (442 ) (2,740 )
Other 1,262             1,262  
Adjusted EBITDA $ 29,845   $ 44,970   $ 47,407   $ 41,948   $ 112,763   $ (17,132 ) $ 259,801  
     
As Restated
Nine Months Ended December 31, 2015
Crude Oil
Logistics
    Water
Solutions
    Liquids     Retail
Propane
   

Refined
Products
and
Renewables

   

Corporate
and
Other

    Consolidated
(in thousands)
Operating income (loss) $ 12,689 $ 44,300 $ 52,820 $ 11,985 $ 59,478 $ (81,630 ) $ 99,642
Depreciation and amortization 30,096 66,906 11,286 26,711 36,820 3,953 175,772
Amortization recorded to cost of sales 187 783 4,132 5,102

Net unrealized (gains) losses on
derivatives

(3,214 ) 1,274 (2,163 ) (391 ) (4,494 )
Inventory valuation adjustment 2,831 2,831
Lower of cost or market adjustments (1,211 ) 8,536 7,325

Loss (gain) on disposal or impairment
of assets, net

2,115 923 (185 ) 108 79 3,040
Equity-based compensation expense 862 52,529 53,391
Acquisition expense 7 864 871
Other (expense) income, net (6,432 ) 1,352 279 614 444 6,684 2,941

Adjusted EBITDA attributable to
unconsolidated entities

10,394 (611 ) (387 ) 13,983 23,379

Adjusted EBITDA attributable to
noncontrolling interest

(1,392 ) (279 ) (45,110 ) (46,781 )
Other   (52,945 )         (52,945 )
Adjusted EBITDA $ 44,624   $ 59,807   $ 62,820   $ 38,368   $ 82,055   $ (17,600 ) $ 270,074  

Contacts

NGL Energy Partners LP
Trey Karlovich, 918-481-1119
Chief Financial Officer and Executive Vice President
Trey.Karlovich@nglep.com

Release Summary

NGL Energy Partners LP Announces Third Quarter Fiscal 2017 Results

Contacts

NGL Energy Partners LP
Trey Karlovich, 918-481-1119
Chief Financial Officer and Executive Vice President
Trey.Karlovich@nglep.com