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

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November 2, 2016 9:37 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): November 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 November 2, 2016, NuStar Energy L.P., a Delaware limited partnership, issued a press release announcing financial results for the quarter ended September 30, 2016. A copy of the press release announcing the financial results is furnished with this report as Exhibit 99.01 and is incorporated herein by reference.


Item 9.01    Financial Statements and Exhibits.

(d)     Exhibits.

Exhibit Number
 
Exhibit
 
 
 
Exhibit 99.01
 
Press Release dated November 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: November 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 99.01
 
Press Release dated November 2, 2016.




Exhibit 99.01
NuStar Energy L.P. Reports Solid Earnings Results for the Third Quarter of 2016
Net Income of $0.49 per Limited Partner Unit Meets Partnership’s Guidance Expectations
Covers Distribution for Tenth Consecutive Quarter and On Track to Cover for Third Consecutive Year
Plan to Close on Terminal Acquisition by End of Fourth Quarter of 2016
Quarterly Distribution Previously Announced at $1.095 per Unit

SAN ANTONIO, November 2, 2016 - NuStar Energy L.P. (NYSE: NS) today announced that the partnership reported net income applicable to limited partners of $38.6 million, or $0.49 per unit, for the third quarter of 2016 and $123.4 million, or $1.58 per unit, for the nine months ended September 30, 2016.

Distributable cash flow (DCF) from continuing operations available to limited partners was $87.6 million for the third quarter of 2016, which allowed NuStar to cover its distribution to the limited partners by 1.02 times. For the nine months ended September 30, 2016, DCF from continuing operations available to limited partners was $277.5 million, which covered the distribution to the limited partners by 1.08 times.

Third quarter 2016 earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $142.3 million. For the nine months ended September 30, 2016, the partnership reported $434.5 million of EBITDA from continuing operations.

As previously announced on October 28, 2016, the third quarter 2016 distribution of $1.095 per unit will be paid on November 14, 2016 to holders of record as of November 8, 2016.

“We continued to benefit from strong refined product pipeline throughput volumes during the third quarter,” said Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “In addition, 1.8 million barrels of recently leased storage at our Piney Point, Maryland facility and higher revenues at some of our terminal locations contributed to solid results from our storage segment.”

Barron went on to say, “These strong results from our base business, in combination with lower than expected operating expenses across all of our businesses during the quarter, allowed us to cover our distribution for the tenth consecutive quarter and we are on track to cover our distribution for a third consecutive year.”

Barron closed by saying, “By the end of the fourth quarter, we plan to close on the 1.15 million barrel terminal acquisition from Martin Midstream Partners L.P. in the Port of Corpus Christi that we announced on October 21, 2016. We are very pleased to make this acquisition that will not only solidify our presence in Corpus Christi, but will also give us the ability to serve a new pipeline as part of our Eagle Ford operations and provide us greater connectivity to domestic and international crude oil and refined products markets.

Third Quarter 2016 Earnings Conference Call Details

A conference call with management is scheduled for 10:00 a.m. CT today, November 2, 2016, to discuss the financial and operational results for the third quarter of 2016. Investors interested in listening to the discussion may dial toll-free 844/889-7787, passcode 94604384. International callers may access the discussion by dialing 661/378-9931, passcode 94604384. The partnership intends to have a playback available following the discussion, which may be accessed by dialing toll-free 855/859-2056, passcode 94604384. International callers may access the playback by dialing 404/537-3406, passcode 94604384. The playback will be available until 1:00 p.m. CT on December 2, 2016.

Investors interested in listening to the live discussion or a replay via the internet may access the discussion directly at http://edge.media-server.com/m/p/m6imjyxv/lan/en or by logging on to NuStar Energy L.P.’s website at www.nustarenergy.com.

The discussion 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 website at www.nustarenergy.com.

-More-



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 website 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 and/or the related conference call will include 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 September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Statement of Income Data:
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Service revenues
$
277,758

 
$
288,574

 
$
814,727

 
$
833,128

Product sales
163,660

 
204,992

 
470,198

 
785,993

Total revenues
441,418

 
493,566

 
1,284,925

 
1,619,121

Costs and expenses:
 
 
 
 
 
 
 
Cost of product sales
155,129

 
193,958

 
441,736

 
738,074

Operating expenses
117,432

 
122,634

 
335,315

 
355,419

General and administrative expenses
26,957

 
23,679

 
73,399

 
75,425

Depreciation and amortization expense
53,946

 
52,301

 
160,739

 
157,523

Total costs and expenses
353,464

 
392,572

 
1,011,189

 
1,326,441

Operating income
87,954

 
100,994

 
273,736

 
292,680

Interest expense, net
(35,022
)
 
(33,448
)
 
(103,374
)
 
(98,309
)
Other income (expense), net
362

 
1,776

 
(10
)
 
61,892

Income from continuing operations before income tax expense
53,294

 
69,322

 
170,352

 
256,263

Income tax expense
2,153

 
4,306

 
9,293

 
9,797

Income from continuing operations
51,141

 
65,016

 
161,059

 
246,466

Income from discontinued operations, net of tax
—

 
—

 
—

 
774

Net income
$
51,141

 
$
65,016

 
$
161,059

 
$
247,240

Net income applicable to limited partners
$
38,592

 
$
52,911

 
$
123,410

 
$
209,881

Basic and diluted net income per unit applicable to
    limited partners:
 
 
 
 
 
 
 
Continuing operations
$
0.49

 
$
0.68

 
$
1.58

 
$
2.68

Discontinued operations
—

 
—

 
—

 
0.01

Total
$
0.49

 
$
0.68

 
$
1.58

 
$
2.69

Basic weighted-average limited partner units outstanding
78,031,053

 
77,886,078

 
77,934,802

 
77,886,078

 
 
 
 
 
 
 
 
Other Data (Note 1):
 
 
 
 
 
 
 
EBITDA from continuing operations
$
142,262

 
$
155,071

 
$
434,465

 
$
512,095

DCF from continuing operations available to
    limited partners
$
87,613

 
$
89,360

 
$
277,460

 
$
288,280

 
 
 
 
 
 
 
 
 
September 30,
 
 
 
December 31,
 
2016
 
2015
 
 
 
2015
Balance Sheet Data:
 
 
 
 
 
 
 
 Total debt
$
3,160,049

 
$
3,151,359

 
 
 
$
3,139,612

 Partners’ equity
$
1,469,993

 
$
1,653,900

 
 
 
$
1,609,844




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

2015
 
2016
 
2015
Pipeline:
 
 
 
 
 
 
 
Refined products pipelines throughput (barrels/day)
536,509

 
531,034

 
532,275

 
512,340

Crude oil pipelines throughput (barrels/day)
384,359

 
477,537

 
398,229

 
483,974

Total throughput (barrels/day)
920,868

 
1,008,571

 
930,504

 
996,314

Throughput revenues
$
122,481

 
$
131,395

 
$
362,929

 
$
378,030

Operating expenses
41,331

 
41,199

 
110,494

 
113,141

Depreciation and amortization expense
22,228

 
21,660

 
65,696

 
62,893

Segment operating income
$
58,922

 
$
68,536

 
$
186,739

 
$
201,996

Storage:
 
 
 
 
 
 
 
Throughput (barrels/day)
810,470

 
872,877

 
788,963

 
903,506

Throughput terminal revenues
$
30,239

 
$
32,051

 
$
88,307

 
$
98,365

Storage terminal revenues
127,528

 
130,052

 
373,733

 
371,714

Total revenues
157,767

 
162,103

 
462,040

 
470,079

Operating expenses
69,722

 
73,505

 
206,883

 
220,137

Depreciation and amortization expense
29,625

 
28,612

 
88,661

 
88,227

Segment operating income
$
58,420

 
$
59,986

 
$
166,496

 
$
161,715

Fuels Marketing:
 
 
 
 
 
 
 
Product sales and other revenue
$
166,191

 
$
206,696

 
$
476,499

 
$
790,719

Cost of product sales
157,567

 
198,006

 
450,705

 
750,086

Gross margin
8,624

 
8,690

 
25,794

 
40,633

Operating expenses
8,961

 
10,509

 
25,512

 
29,877

Segment operating (loss) income
$
(337
)
 
$
(1,819
)
 
$
282

 
$
10,756

Consolidation and Intersegment Eliminations:
 
 
 
 
 
 
 
Revenues
$
(5,021
)
 
$
(6,628
)
 
$
(16,543
)
 
$
(19,707
)
Cost of product sales
(2,438
)
 
(4,048
)
 
(8,969
)
 
(12,012
)
Operating expenses
(2,582
)
 
(2,579
)
 
(7,574
)
 
(7,736
)
Total
$
(1
)
 
$
(1
)
 
$
—

 
$
41

Consolidated Information:
 
 
 
 
 
 
 
Revenues
$
441,418

 
$
493,566

 
$
1,284,925

 
$
1,619,121

Cost of product sales
155,129

 
193,958

 
441,736

 
738,074

Operating expenses
117,432

 
122,634

 
335,315

 
355,419

Depreciation and amortization expense
51,853

 
50,272

 
154,357

 
151,120

Segment operating income
117,004

 
126,702

 
353,517

 
374,508

General and administrative expenses
26,957

 
23,679

 
73,399

 
75,425

Other depreciation and amortization expense
2,093

 
2,029

 
6,382

 
6,403

Consolidated operating income
$
87,954

 
$
100,994

 
$
273,736

 
$
292,680



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 September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Income from continuing operations
$
51,141

 
$
65,016

 
$
161,059

 
$
246,466

Interest expense, net
35,022

 
33,448

 
103,374

 
98,309

Income tax expense
2,153

 
4,306

 
9,293

 
9,797

Depreciation and amortization expense
53,946

 
52,301

 
160,739

 
157,523

EBITDA from continuing operations
142,262

 
155,071

 
434,465

 
512,095

Interest expense, net
(35,022
)
 
(33,448
)
 
(103,374
)
 
(98,309
)
Reliability capital expenditures
(8,512
)
 
(9,239
)
 
(25,834
)
 
(22,066
)
Income tax expense
(2,153
)
 
(4,306
)
 
(9,293
)
 
(9,797
)
Distributions from joint venture
—

 
—

 
—

 
2,500

Mark-to-market impact of hedge transactions (a)
(3,954
)
 
(4,852
)
 
6,492

 
(4,531
)
Unit-based compensation (b)
1,291

 
—

 
3,499

 
—

Other items (c)
6,567

 
(1,100
)
 
9,903

 
(53,314
)
DCF from continuing operations
$
100,479

 
$
102,126

 
$
315,858

 
$
326,578

Less DCF from continuing operations available to
    general partner
12,866

 
12,766

 
38,398

 
38,298

DCF from continuing operations available to
    limited partners
$
87,613

 
$
89,360

 
$
277,460

 
$
288,280

 
 
 
 
 
 
 
 
Distributions applicable to limited partners
$
85,943

 
$
85,285

 
$
256,513

 
$
255,855

Distribution coverage ratio (d)
1.02x

 
1.05x

 
1.08x

 
1.13x

(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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