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Form 8-K NuStar Energy L.P. For: Aug 02

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August 2, 2016 9:12 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): August 2, 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 August 2, 2016, NuStar Energy L.P., a Delaware limited partnership, issued a press release announcing financial results for the quarter ended June 30, 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 August 2, 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: August 2, 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 August 2, 2016.




Exhibit 99.1
NuStar Energy L.P. Reports Higher than Expected Net Income for the Second Quarter of 2016
Net Income of $0.52 per Limited Partner Unit Exceeds Guidance Range and Consensus Estimates
Quarterly Distribution Previously Announced at $1.095 per Unit

SAN ANTONIO, August 2, 2016 - NuStar Energy L.P. (NYSE: NS) today announced that its second quarter 2016 quarterly earnings exceeded consensus estimates and surpassed the partnership’s guidance expectations. The partnership reported net income applicable to limited partners of $40.0 million, or $0.52 per unit, for the second quarter of 2016 and $84.8 million, or $1.09 per unit, for the six months ended June 30, 2016.

Distributable cash flow (DCF) from continuing operations available to limited partners was $92.8 million for the second quarter of 2016, which allowed NuStar to cover its distribution to the limited partners by 1.09 times. For the six months ended June 30, 2016, DCF from continuing operations available to limited partners was $189.8 million, which covered the distribution to the limited partners by 1.11 times.

Second quarter 2016 earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $144.7 million. For the six months ended June 30, 2016, the partnership reported $292.2 million of EBITDA from continuing operations.

As previously announced on July 29, 2016, the second quarter 2016 distribution of $1.095 per unit will be paid on August 12, 2016 to holders of record as of August 9, 2016.

“Strong refined product pipeline throughput volumes, the benefit from 1.1 million barrels of storage leased at our Piney Point, Maryland facility, along with lower than expected operating expenses, contributed to our better than expected second quarter results,” said Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “What’s more significant is that we were able to report these solid results despite throughput revenues only slightly above contract minimums on our South Texas Crude Oil Pipeline System.”

Barron went on to say, “As you can see, we have the right assets to withstand this current downturn in the crude markets and we remain on track to cover the distribution for the full-year due to the continued strength of our core, diversified fee-based operations,.”

Second Quarter 2016 Earnings Conference Call Details

A conference call with management is scheduled for 9:00 a.m. CT today, August 2, 2016, to discuss the financial and operational results for the second quarter of 2016. Investors interested in listening to the presentation may call 877/702-5019, passcode 44145456. International callers may access the presentation by dialing 443/863-7314, passcode 44145456. The partnership intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 44145456. International callers may access the playback by calling 404/537-3406, passcode 44145456. The playback will be available until 10:59 p.m. CT on September 2, 2016.

Investors interested in listening to the live presentation or a replay via the internet may access the presentation directly at http://edge.media-server.com/m/p/4iibfou3 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 94 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.

-More-




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 June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Statement of Income Data:
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Service revenues
$
270,403

 
$
274,581

 
$
536,969

 
$
544,554

Product sales
167,401

 
296,030

 
306,538

 
581,001

Total revenues
437,804

 
570,611

 
843,507

 
1,125,555

Costs and expenses:
 
 
 
 
 
 
 
Cost of product sales
157,617

 
281,610

 
286,607

 
544,116

Operating expenses
112,662

 
117,138

 
217,883

 
232,785

General and administrative expenses
22,657

 
26,693

 
46,442

 
51,746

Depreciation and amortization expense
53,651

 
52,765

 
106,793

 
105,222

Total costs and expenses
346,587

 
478,206

 
657,725

 
933,869

Operating income
91,217

 
92,405

 
185,782

 
191,686

Interest expense, net
(34,229
)
 
(32,824
)
 
(68,352
)
 
(64,861
)
Other (expense) income, net
(201
)
 
(2,152
)
 
(372
)
 
60,116

Income from continuing operations before income tax expense
56,787

 
57,429

 
117,058

 
186,941

Income tax expense
4,270

 
3,104

 
7,140

 
5,491

Income from continuing operations
52,517

 
54,325

 
109,918

 
181,450

Income from discontinued operations, net of tax
—

 
—

 
—

 
774

Net income
$
52,517

 
$
54,325

 
$
109,918

 
$
182,224

Net income applicable to limited partners
$
40,018

 
$
42,434

 
$
84,818

 
$
156,970

Basic and diluted net income per unit applicable to
    limited partners:
 
 
 
 
 
 
 
Continuing operations
$
0.52

 
$
0.54

 
$
1.09

 
$
2.00

Discontinued operations
—

 
—

 
—

 
0.01

Total
$
0.52

 
$
0.54

 
$
1.09

 
$
2.01

Basic weighted-average limited partner units outstanding
77,886,219

 
77,886,078

 
77,886,148

 
77,886,078

 
 
 
 
 
 
 
 
Other Data (Note 1):
 
 
 
 
 
 
 
EBITDA from continuing operations
$
144,667

 
$
143,018

 
$
292,203

 
$
357,024

DCF from continuing operations available to
    limited partners
$
92,820

 
$
92,166

 
$
189,847

 
$
198,920

 
 
 
 
 
 
 
 
 
June 30,
 
 
 
December 31,
 
2016
 
2015
 
 
 
2015
Balance Sheet Data:
 
 
 
 
 
 
 
 Total debt
$
3,205,693

 
$
3,120,616

 
 
 
$
3,139,612

 Partners’ equity
$
1,489,895

 
$
1,713,073

 
 
 
$
1,609,844







NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Barrel Data)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016

2015
 
2016
 
2015
Pipeline:
 
 
 
 
 
 
 
Refined products pipelines throughput (barrels/day)
538,996

 
499,333

 
530,134

 
502,838

Crude oil pipelines throughput (barrels/day)
399,372

 
468,431

 
405,241

 
487,246

Total throughput (barrels/day)
938,368

 
967,764

 
935,375

 
990,084

Throughput revenues
$
121,575

 
$
122,210

 
$
240,448

 
$
246,635

Operating expenses
36,159

 
36,634

 
69,163

 
71,942

Depreciation and amortization expense
21,864

 
20,756

 
43,468

 
41,233

Segment operating income
$
63,552

 
$
64,820

 
$
127,817

 
$
133,460

Storage:
 
 
 
 
 
 
 
Throughput (barrels/day)
727,857

 
957,452

 
778,092

 
919,075

Throughput terminal revenues
$
28,668

 
$
34,623

 
$
58,068

 
$
66,314

Storage terminal revenues
123,206

 
123,019

 
246,205

 
241,662

Total revenues
151,874

 
157,642

 
304,273

 
307,976

Operating expenses
71,158

 
74,004

 
137,161

 
146,632

Depreciation and amortization expense
29,653

 
29,887

 
59,036

 
59,615

Segment operating income
$
51,063

 
$
53,751

 
$
108,076

 
$
101,729

Fuels Marketing:
 
 
 
 
 
 
 
Product sales and other revenue
$
169,862

 
$
297,589

 
$
310,308

 
$
584,023

Cost of product sales
160,557

 
285,862

 
293,138

 
552,080

Gross margin
9,305

 
11,727

 
17,170

 
31,943

Operating expenses
7,913

 
9,077

 
16,551

 
19,368

Segment operating income
$
1,392

 
$
2,650

 
$
619

 
$
12,575

Consolidation and Intersegment Eliminations:
 
 
 
 
 
 
 
Revenues
$
(5,507
)
 
$
(6,830
)
 
$
(11,522
)
 
$
(13,079
)
Cost of product sales
(2,940
)
 
(4,252
)
 
(6,531
)
 
(7,964
)
Operating expenses
(2,568
)
 
(2,577
)
 
(4,992
)
 
(5,157
)
Total
$
1

 
$
(1
)
 
$
1

 
$
42

Consolidated Information:
 
 
 
 
 
 
 
Revenues
$
437,804

 
$
570,611

 
$
843,507

 
$
1,125,555

Cost of product sales
157,617

 
281,610

 
286,607

 
544,116

Operating expenses
112,662

 
117,138

 
217,883

 
232,785

Depreciation and amortization expense
51,517

 
50,643

 
102,504

 
100,848

Segment operating income
116,008

 
121,220

 
236,513

 
247,806

General and administrative expenses
22,657

 
26,693

 
46,442

 
51,746

Other depreciation and amortization expense
2,134

 
2,122

 
4,289

 
4,374

Consolidated operating income
$
91,217

 
$
92,405

 
$
185,782

 
$
191,686






NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio Data)
Notes:
(1)
NuStar Energy L.P. utilizes financial measures, such as earnings before interest, taxes, depreciation and amortization (EBITDA), distributable cash flow (DCF) and distribution coverage ratio, which are not defined in U.S. generally accepted accounting principles (GAAP). Management believes these financial measures provide useful information to investors and other external users of our financial information because (i) they provide additional information about the operating performance of the partnership’s assets and the cash the business is generating and (ii) investors and other external users of our financial statements benefit from having access to the same financial measures being utilized by management and our board of directors when making financial, operational, compensation and planning decisions.
Our board of directors and management use EBITDA and/or DCF when assessing the following: (i) the performance of our assets, (ii) the viability of potential projects, (iii) our ability to fund distributions, (iv) our ability to fund capital expenditures and (v) our ability to service debt. In addition, our board of directors uses a distribution coverage ratio, which is calculated based on DCF, as the metric for determining the company-wide bonus and the vesting of performance units awarded to management as our board of directors believes DCF appropriately aligns management’s interest with our unitholders’ interest in increasing distributions in a prudent manner. DCF is a widely accepted financial indicator used by the master limited partnership (MLP) investment community to compare partnership performance. DCF is used by the MLP investment community, in part, because the value of a partnership unit is partially based on its yield, and its yield is based on the cash distributions a partnership can pay its unitholders.
None of these financial measures are presented as an alternative to net income, or for any period presented reflecting discontinued operations, income from continuing operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with GAAP. The following is a reconciliation of our non-GAAP financial measures:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Income from continuing operations
$
52,517

 
$
54,325

 
$
109,918

 
$
181,450

Interest expense, net
34,229

 
32,824

 
68,352

 
64,861

Income tax expense
4,270

 
3,104

 
7,140

 
5,491

Depreciation and amortization expense
53,651

 
52,765

 
106,793

 
105,222

EBITDA from continuing operations
144,667

 
143,018

 
292,203

 
357,024

Interest expense, net
(34,229
)
 
(32,824
)
 
(68,352
)
 
(64,861
)
Reliability capital expenditures
(11,305
)
 
(6,029
)
 
(17,322
)
 
(12,827
)
Income tax expense
(4,270
)
 
(3,104
)
 
(7,140
)
 
(5,491
)
Distributions from joint venture
—

 
—

 
—

 
2,500

Mark-to-market impact of hedge transactions (a)
5,762

 
1,440

 
10,446

 
321

Unit-based compensation (b)
1,122

 
—

 
2,208

 
—

Other items (c)
3,839

 
2,431

 
3,336

 
(52,214
)
DCF from continuing operations
$
105,586

 
$
104,932

 
$
215,379

 
$
224,452

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

 
12,766

 
25,532

 
25,532

DCF from continuing operations available to
    limited partners
$
92,820

 
$
92,166

 
$
189,847

 
$
198,920

 
 
 
 
 
 
 
 
Distributions applicable to limited partners
$
85,285

 
$
85,285

 
$
170,570

 
$
170,570

Distribution coverage ratio (d)
1.09x

 
1.08x

 
1.11x

 
1.16x

(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)
In connection with the employee transfer from NuStar GP, LLC on March 1, 2016, we assumed obligations related to awards issued under a long-term incentive plan, and we intend to satisfy the vestings of equity-based awards with the issuance of our units. As such, the expenses related to these awards are considered non-cash and added back to DCF. Certain awards include distribution equivalent rights (DERs). Payments made in connection with DERs are deducted from DCF.
(c)
Other items consist of (i) adjustments for 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.
(d)
Distribution coverage ratio is calculated by dividing DCF from continuing operations available to limited partners by distributions applicable to limited partners.


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