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Form 8-K NuStar Energy L.P. For: Apr 27

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April 27, 2016 8:47 AM EDT


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
 
 
 
 FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 27, 2016
NuStar Energy L.P.
(Exact name of registrant as specified in its charter)
Delaware
001-16417
74-2956831
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
 
 
 
19003 IH-10 West
San Antonio, Texas 78257
 
 
(Address of principal executive offices)
 
 
 
 
 
(210) 918-2000
 
 
(Registrant’s telephone number, including area code)
 
 
 
 
 
Not applicable
 
 
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 





Item 2.02    Results of Operations and Financial Condition.

On April 27, 2016, NuStar Energy L.P., a Delaware limited partnership, issued a press release announcing financial results for the quarter ended March 31, 2016. A copy of the press release announcing the financial results is furnished with this report as Exhibit 99.1 and is incorporated herein by reference.


Item 9.01    Financial Statements and Exhibits.

(d)     Exhibits.

Exhibit Number
 
Exhibit
 
 
 
Exhibit 99.1
 
Press Release dated April 27, 2016.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
NUSTAR ENERGY L.P.
 
 
 
 
 
 
 
By:
Riverwalk Logistics, L.P.
 
 
its general partner
 
 
 
 
 
 
 
By:
NuStar GP, LLC
 
 
 
its general partner
 
 
 
 
 
Date: April 27, 2016
 
 
By:
/s/ Amy L. Perry
 
 
 
Name:
Amy L. Perry
 
 
 
Title:
Senior Vice President, General Counsel-Corporate & Commercial Law and Corporate Secretary





EXHIBIT INDEX
Exhibit Number
 
Exhibit
 
 
 
Exhibit 99.1
 
Press Release dated April 27, 2016.




Exhibit 99.1
NuStar Energy Covers Distribution by a Strong 1.14x in the First Quarter of 2016
Quarterly Distribution Remains at $1.095 per Unit Marking 60 Consecutive Quarters of Uninterrupted
Distributions Since Inception
Strategic Capital Spending Guidance Reduced by Approximately 50%/Key Growth Projects Maintained
Piney Point, MD facility back in service/Storage Segment Effectively Full
SAN ANTONIO, April 27, 2016 - NuStar Energy L.P. (NYSE: NS) today announced that its first quarter 2016 earnings beat the partnership’s own guidance and consensus estimates, and NuStar achieved a distribution coverage ratio in excess of one-times for the eighth consecutive quarter. The partnership reported net income applicable to limited partners of $44.8 million, or $0.57 per unit.

The partnership reported first quarter 2016 earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations of $147.5 million. First quarter 2016 distributable cash flow (DCF) from continuing operations available to limited partners was $97.0 million, or $1.25 per unit.
 
“We are very pleased with our strong first quarter 2016 results,” said Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “While our quarter-over-quarter results were down largely as a result of an acquisition-related non-cash gain in the first quarter of last year, we fared quite well in face of the sustained low crude price environment. We exceeded our per unit guidance ranges and reported DCF from continuing operations available to limited partners that covered the distribution to the limited partners by a strong 1.14 times.

“NuStar is very fortunate to have geographically diverse assets that are also well-balanced between our storage and pipeline business segments, which has allowed us to weather the tough market challenges very well. For example, we benefited from robust utilization of our storage assets, which are effectively full, as well as strong refined product pipeline throughput volumes during the first quarter of 2016. We are also thrilled to announce our recently signed one-year, 850,000 barrel storage contract at our formerly moth-balled Piney Point, Maryland facility, which should further contribute to our positive storage results for the year,” Barron said.
 
The partnership also announced that its board of directors has declared a first quarter 2016 distribution of $1.095 per unit - marking 60 consecutive quarters of uninterrupted distributions over the past 15 years. The first quarter 2016 distribution will be paid on May 13, 2016 to holders of record as of May 9, 2016.

2016 Earnings Guidance
“Our overall expectations for the remainder of 2016 remain unchanged. We continue to expect 2016 EBITDA guidance in our pipeline segment of $335 to $355 million, 2016 storage segment EBITDA of $310 to $330 million and 2016 EBITDA in our fuels marketing segment to be $15 to $35 million.
“We remain focused on disciplined capital spending,” said Barron. “While our 2016 strategic capital spending has been reduced by approximately 50% to $180 to $200 million, we are moving forward with our best projects with the highest rates of return. These projects are key to our future growth and success, and are being financed with excess cash on our balance sheet and borrowings from our $1.5 billion credit facility. And our reliability capital spending projections remain unchanged at $35 to $45 million.”

Barron concluded by saying, “Based on these projections, we expect to cover our distribution in 2016 for the third consecutive year.

“I believe that our dependable business model, diverse asset base, blue-chip customers, proven strategic direction and fiscal discipline, uniquely position NuStar to continue achieving strong earnings despite the challenging market conditions. I know that I speak for every NuStar employee when I say that we are all 100% committed to covering our distribution and delivering long-term, stable value for our unitholders.”

First Quarter Earnings Conference Call Details
A conference call with management is scheduled for 8:30 a.m. CT today, April 27, 2016, to discuss the financial and operational results for the first quarter of 2016. Investors interested in listening to the presentation may call 877/702-5019, passcode

-More-



84039576. International callers may access the presentation by dialing 443/863-7314, passcode 84039576. The partnership intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 84039576. International callers may access the playback by calling 404/537-3406, passcode 84039576. The playback will be available until 10:59 p.m. CT on May 27, 2016.

Investors interested in listening to the live presentation or a replay via the internet may access the presentation directly by clicking here or by logging on to NuStar Energy L.P.’s Web site at www.nustarenergy.com.

The presentation will disclose certain non-GAAP financial measures. Reconciliations of certain of these non-GAAP financial measures to U.S. GAAP may be found in this press release, with additional reconciliations located on the Financials page of the Investors section of NuStar Energy L.P.’s Web site at www.nustarenergy.com.

NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation.  NuStar currently has approximately 8,700 miles of pipeline and 79 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids.  The partnership’s combined system has approximately 93 million barrels of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and the United Kingdom.  For more information, visit NuStar Energy L.P.'s Web site at www.nustarenergy.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 Energy L.P.’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar Energy L.P.’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 Energy L.P., 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, such as the partnership’s future performance. All forward-looking statements are based on the partnership’s beliefs as well as assumptions made by and information currently available to the partnership. These statements reflect the partnership’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.’s and NuStar GP Holdings, LLC’s 2015 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements.






NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)
 
Three Months Ended March 31,
 
2016
 
2015
Statement of Income Data:
 
 
 
Revenues:
 
 
 
Service revenues
$
266,566

 
$
269,973

Product sales
139,137

 
284,971

Total revenues
405,703

 
554,944

Costs and expenses:
 
 
 
Cost of product sales
128,990

 
262,506

Operating expenses
105,221

 
115,647

General and administrative expenses
23,785

 
25,053

Depreciation and amortization expense
53,142

 
52,457

Total costs and expenses
311,138

 
455,663

Operating income
94,565

 
99,281

Interest expense, net
(34,123
)
 
(32,037
)
Other (expense) income, net
(171
)
 
62,268

Income from continuing operations before income tax expense
60,271

 
129,512

Income tax expense
2,870

 
2,387

Income from continuing operations
57,401

 
127,125

Income from discontinued operations, net of tax
—

 
774

Net income
$
57,401

 
$
127,899

Net income applicable to limited partners
$
44,750

 
$
114,536

Basic and diluted net income per unit applicable to limited partners:
 
 
 
Continuing operations
$
0.57

 
$
1.46

Discontinued operations
—

 
0.01

Total
$
0.57

 
$
1.47

Basic weighted-average limited partner units outstanding
77,886,078

 
77,886,078

 
 
 
 
EBITDA from continuing operations (Note 1)
$
147,536

 
$
214,006

DCF from continuing operations available to limited partners (Note 1)
$
97,027

 
$
106,754

DCF from continuing operations per limited partner unit (Note 1)
$
1.25

 
$
1.37

 
 
 
 
 
March 31,
 
December 31,
 
2016
 
2015
Balance Sheet Data:
 
 
 
 Total debt
$
3,206,650

 
$
3,139,612

 Partners’ equity
$
1,557,652

 
$
1,609,844

 Consolidated debt coverage ratio (Note 2)
4.6x

 
4.5x




NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Barrel Data)
 
Three Months Ended March 31,
 
2016

2015
Pipeline:
 
 
 
Refined products pipelines throughput (barrels/day)
521,272

 
506,381

Crude oil pipelines throughput (barrels/day)
411,109

 
506,272

Total throughput (barrels/day)
932,381

 
1,012,653

Throughput revenues
$
118,873

 
$
124,425

Operating expenses
33,004

 
35,308

Depreciation and amortization expense
21,604

 
20,477

Segment operating income
$
64,265

 
$
68,640

Storage:
 
 
 
Throughput (barrels/day)
828,327

 
880,271

Throughput revenues
$
29,400

 
$
31,691

Storage lease revenues
122,999

 
118,643

Total revenues
152,399

 
150,334

Operating expenses
66,003

 
72,628

Depreciation and amortization expense
29,383

 
29,728

Segment operating income
$
57,013

 
$
47,978

Fuels Marketing:
 
 
 
Product sales and other revenue
$
140,446

 
$
286,434

Cost of product sales
132,581

 
266,218

Gross margin
7,865

 
20,216

Operating expenses
8,638

 
10,291

Segment operating (loss) income
$
(773
)
 
$
9,925

Consolidation and Intersegment Eliminations:
 
 
 
Revenues
$
(6,015
)
 
$
(6,249
)
Cost of product sales
(3,591
)
 
(3,712
)
Operating expenses
(2,424
)
 
(2,580
)
Total
$
—

 
$
43

Consolidated Information:
 
 
 
Revenues
$
405,703

 
$
554,944

Cost of product sales
128,990

 
262,506

Operating expenses
105,221

 
115,647

Depreciation and amortization expense
50,987

 
50,205

Segment operating income
120,505

 
126,586

General and administrative expenses
23,785

 
25,053

Other depreciation and amortization expense
2,155

 
2,252

Consolidated operating income
$
94,565

 
$
99,281



NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Notes:
(1)
NuStar Energy L.P. utilizes financial measures, such as earnings before interest, taxes, depreciation and amortization (EBITDA) and distributable cash flow (DCF), which are not defined in U.S. generally accepted accounting principles (GAAP). Management uses these financial measures because (i) they are widely accepted financial indicators used by investors to compare partnership performance and/or (ii) they provide investors an enhanced perspective of the operating performance of the partnership’s assets and the cash the business is generating. None of these financial measures are presented as an alternative to net income or income from continuing operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with GAAP. For purposes of segment reporting, we do not allocate general and administrative expenses to our reported operating segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the segment reconciliations exclude any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure.
The following is a reconciliation of income from continuing operations to EBITDA from continuing operations and DCF from continuing operations:
 
Three Months Ended March 31,
 
2016
 
2015
Income from continuing operations
$
57,401

 
$
127,125

Plus interest expense, net
34,123

 
32,037

Plus income tax expense
2,870

 
2,387

Plus depreciation and amortization expense
53,142

 
52,457

EBITDA from continuing operations
147,536

 
214,006

Interest expense, net
(34,123
)
 
(32,037
)
Reliability capital expenditures
(6,017
)
 
(6,798
)
Income tax expense
(2,870
)
 
(2,387
)
Distributions from joint venture
—

 
2,500

Mark-to-market impact of hedge transactions (a)
4,684

 
(1,119
)
Unit-based compensation
1,086

 
—

Other items (b)
(503
)
 
(54,645
)
DCF from continuing operations
$
109,793

 
$
119,520

 
 
 
 
Less DCF from continuing operations available to general partner
12,766

 
12,766

DCF from continuing operations available to limited partners
$
97,027

 
$
106,754

 
 
 
 
DCF from continuing operations per limited partner unit
$
1.25

 
$
1.37

(a)
DCF from continuing operations excludes the impact of unrealized mark-to-market gains and losses that arise from valuing certain derivative contracts, as well as the associated hedged inventory. The gain or loss associated with these contracts is realized in DCF from continuing operations when the contracts are settled.
(b)
Other items consist of (i) the net change in deferred revenue associated with throughput deficiency payments and construction reimbursements for all periods presented and (ii) in 2015, a $56.3 million non-cash gain associated with the Linden terminal acquisition on January 2, 2015.



NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Notes (continued):
 
 
The following are reconciliations of projected operating income to projected EBITDA for our reported segments:
 
Year Ended December 31, 2016
 
Pipeline
 
Storage
 
Fuels Marketing
Projected operating income
$ 250,000 - 265,000
 
$ 195,000 - 210,000
 
$ 15,000 - 35,000

Plus projected depreciation and amortization expense
          85,000 - 90,000
 
      115,000 - 120,000
 
—

Projected EBITDA
$ 335,000 - 355,000
 
$ 310,000 - 330,000
 
$ 15,000 - 35,000


(2)
The consolidated debt coverage ratio is calculated as consolidated debt to consolidated EBITDA, each as defined in our $1.5 billion five-year revolving credit agreement.


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