Western Refining Logistics, LP Reports Second Quarter 2014

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News Desk 2018
Western Refining Logistics, LP Reports Second Quarter 2014 Results
  • Significantly increased crude oil gathering and pipeline volumes
  • Generated $14.4 million of distributable cash flow
  • Increased quarterly distribution to $0.3075 per unit

EL PASO, Texas, Aug. 5, 2014 (GLOBE NEWSWIRE) -- Western Refining Logistics, LP (NYSE: WNRL ) reported second quarter 2014 net income of $11.0 million, or $0.24 per common limited partner unit. During this period, EBITDA was $14.9 million and distributable cash flow was $14.4 million.

"We had a good quarter operationally, which allowed us to deliver solid financial results," said Chief Executive Officer and President Jeff Stevens. "We are also pleased with our organic growth, driven largely by the increased crude oil production in the Delaware Basin."

On August 1, 2014, WNRL announced a quarterly distribution of $0.3075 per unit, which is a 3.0% increase compared to the first quarter distribution, and is 7.0% above its minimum quarterly distribution.

As of June 30, 2014, WNRL had cash of $79.4 million, which primarily will be used to fund growth projects such as additional crude gathering lines and storage capacity. The partnership has no outstanding debt and has access to a $300 million revolving credit facility primarily to fund future acquisitions.

Stevens continued, "We continue to invest in the business to capitalize on the strategic location of our assets and their proximity and connection to the Permian and San Juan Basins. We believe our gathering and pipeline volumes will continue to increase, allowing us to grow WNRL and create additional value for our unitholders."

Conference Call Information

On Tuesday, August 5, 2014, at 4:00 p.m. ET, WNRL will hold a webcast and conference call to discuss the reported results and provide an update on partnership operations. The call will be webcast and can be accessed at Western Refining Logistics' website, www.wnrl.com . The call can also be heard by dialing (844) 831-3028 or (315) 625-6887, pass code: 64574917. The audio replay will be available two hours after the end of the call through August 19, 2014 by dialing (855) 859-2056 or (404) 537-3406, pass code: 64574917.

About Western Refining Logistics, LP

Western Refining Logistics, LP is a fee-based, growth-oriented master limited partnership formed by Western Refining, Inc. (NYSE: WNR ) to own, operate, develop and acquire terminals, storage tanks, pipelines and other logistics assets related to the terminalling, transportation and storage of crude oil and refined products. Headquartered in El Paso, Texas, WNRL's assets include approximately 300 miles of pipelines, approximately 7.9 million barrels of active storage capacity and other assets in the Southwest US.

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with U.S. generally accepted accounting principles (GAAP), management utilizes additional non-GAAP measures to facilitate comparisons of past performance. This press release and supporting schedules include the non-GAAP measures earnings before interest, taxes, depreciation and amortization (EBITDA) and Distributable Cash Flow. We believe certain investors and financial analysts use EBITDA and Distributable Cash Flow to evaluate WNRL's financial performance between periods and to compare WNRL's performance to certain competitors. We believe certain investors and financial analysts use Distributable Cash Flow to determine the amount of cash generated from the partnership's operations and available for distribution to its unitholders. These additional financial measures are reconciled from the most directly comparable measures as reported in accordance with GAAP and should be viewed in addition to, and not in lieu of, financial information that we report in accordance with GAAP.

Cautionary Statement on Forward-Looking Statements

This press release contains forward-looking statements covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained herein include statements about: our expectations for our gathering and pipeline volumes and their effect on the growth of WNRL and our creation of value for unitholders; our ability to invest in our business; and sources of funding for future growth projects and acquisitions. These statements are subject to the general risks inherent in WNRL's business. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized, or otherwise materially affect our financial condition, results of operations, and cash flows. Additional information relating to the uncertainties affecting WNRL's business is contained in its filings with the Securities and Exchange Commission. The forward looking statements are only as of the date made, and WNRL does not undertake any obligation to (and expressly disclaims any obligation to) update any forward looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence of unanticipated events.  

Results of Operations

The accompanying consolidated financial information for the three and six months ended June 30, 2013 represent our Predecessor's results of operations while the consolidated financial information for the three and six months ended June 30, 2014 represent the results of operations for WNRL ("Successor"). The following tables set forth WNRL's summary historical financial and operating data for the periods indicated below:

  Three Months Ended Six Months Ended
  June 30, June 30,
  2014 2013 (2) 2014 2013 (2)
  Successor Predecessor Successor Predecessor
  (Unaudited)
  (In thousands, except per unit data)
Revenues:        
Affiliate  $ 34,324  $ 1,007  $ 66,380  $ 1,919
Third-party 657 292 1,358 519
Total revenues 34,981 1,299 67,738 2,438
Operating costs and expenses:        
Operating and maintenance expenses 17,954 18,505 34,089 34,072
General and administrative expenses 2,143 1,149 4,118 2,190
Depreciation and amortization 3,467 2,886 6,711 5,816
Total operating costs and expenses 23,564 22,540 44,918 42,078
Operating income (loss) 11,417  (21,241) 22,820  (39,640)
Other income (expense):        
Interest expense and other financing costs  (227) —  (452) —
Amortization of loan fees  (130) —  (259) —
Other, net — 4 3 6
Net income (loss) before income taxes 11,060  (21,237) 22,112  (39,634)
Provision for income taxes  (85) —  (204) —
Net income (loss)  $ 10,975  $ (21,237)  $ 21,908 $ (39,634)
         
Net income per limited partner unit:        
Common - basic  $ 0.24    $ 0.48  
Common - diluted 0.24   0.48  
Subordinated - basic and diluted 0.24   0.48  
         
Weighted average limited partner units outstanding:        
Common - basic 22,811   22,811  
Common - diluted 22,861   22,838  
Subordinated - basic and diluted 22,811   22,811  
         
  Three Months Ended Six Months Ended
  June 30, June 30,
  2014 2013 (2) 2014 2013 (2)
  Successor Predecessor Successor Predecessor
  (Unaudited)
  (In thousands, except per barrel data)
Key Operating Statistics        
Pipeline and gathering (bpd):        
Mainline movements:        
Permian/Delaware Basin system 24,196 — 19,794 —
Four Corners system (3) 35,837 38,790 38,412 37,411
Gathering (truck offloading):        
Permian/Delaware Basin system 26,178 6,589 24,182 4,569
Four Corners system 11,188 8,240 11,293 7,211
Pipeline Storage (barrels or bbls) (2) 578,167 566,449 578,167 566,449
Terminalling, transportation and storage (bpd):        
Shipments into and out of storage (includes asphalt) 406,881 377,968 373,918 338,155
Terminal storage (bbls) (2) 7,355,432 7,037,084 7,355,432 7,037,084
         
Cash Flow Data        
Net cash provided by (used in):        
Operating activities  $ 12,789  $ (19,068)  $ 28,625  $ (36,083)
Investing activities  (2,773)  (13,680)  (8,677)  (36,069)
Financing activities  (13,572) 32,748  (24,553) 72,152
Other Data        
EBITDA (1)  $ 14,884  $ (18,351)  $ 29,534  $ (33,818)
Capital expenditures: 2,773 13,680 8,677 36,069
Balance Sheet Data (at end of period)        
Cash and cash equivalents      $ 79,395 $ —
Property, plant and equipment, net     147,808 164,783
Total assets     244,729 165,254
Total liabilities     13,377 2,963
Division equity     — 162,291
Partners' capital     231,352 —
Total liabilities, division equity and partners' capital     244,729 165,254

(1) We define EBITDA as earnings before interest expense and other financing costs, provision for income taxes and depreciation and amortization. We define Distributable Cash Flow as EBITDA plus the change in deferred revenues, less net cash interest paid, income taxes paid and maintenance capital expenditures.

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

  • EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
     
  • EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;
     
  • EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and
     
  • EBITDA, as we calculate it, may differ from the EBITDA calculations of our affiliates or other companies in our industry, thereby limiting its usefulness as a comparative measure.

EBITDA and Distributable Cash Flow are used as supplemental financial measures by management and by external users of our financial statements, such as investors and commercial banks, to assess:

  • our operating performance as compared to those of other companies in the midstream energy industry, without regard to financial methods, historical cost basis or capital structure;
     
  • the ability of our assets to generate sufficient cash to make distributions to our unitholders;
     
  • our ability to incur and service debt and fund capital expenditures; and
     
  • the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

Distributable Cash Flow is also a quantitative standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is, in part, measured by its yield. Yield is based on the amount of cash distributions a partnership can pay to a unitholder.

We believe that the presentation of these non-GAAP measures provides useful information to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to EBITDA and Distributable Cash Flow is net income (loss). These non-GAAP measures should not be considered as alternatives to net income (loss) or any other measure of financial performance presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income (loss). These non-GAAP measures may vary from those of other companies. As a result, EBITDA and Distributable Cash Flow as presented herein may not be comparable to similarly titled measures of other companies.

The following table reconciles net income (loss) to EBITDA for the periods presented and Distributable Cash Flow for three and six months ended June 30, 2014:

  Three Months Ended Six Months Ended
  June 30, June 30,
  2014 2013 2014 2013
  Successor Predecessor Successor Predecessor
  (In thousands)
Net income (loss)  $ 10,975  $ (21,237)  $ 21,908  $ (39,634)
Interest expense and other financing costs 227 — 452 —
Amortization of loan fees 130 — 259 —
Provision for income taxes 85 — 204 —
Depreciation and amortization 3,467 2,886 6,711 5,816
EBITDA 14,884  $ (18,351) 29,534  $ (33,818)
         
Change in deferred revenues 637   2,574  
Cash interest paid  (228)    (453)  
Income taxes paid —   —  
Maintenance capital expenditures  (932)    (2,191)  
Distributable cash flow  $ 14,361    $ 29,464  
         
Minimum quarterly distribution  $ 13,116    $ 26,232  

(2) Prior to the initial public offering, our assets were a part of the integrated operations of Western, and the Predecessor generally recognized only the costs and did not record revenue associated with the transportation, terminalling or storage services provided to Western on an intercompany basis. Accordingly, the revenues in the Predecessor's historical combined financial statements relate only to amounts received from third parties for these services and minimum amounts required to be recorded for Western for local tax purposes. Following the closing of the initial public offering, our revenues were generated by existing third-party contracts and from the commercial agreements with Western.

(3) Some barrels of crude oil in route to Western's Gallup Refinery are transported on more than one of our mainlines. Mainline movements for the Four Corners system include each barrel transported on each mainline.

Investor and Analyst Contact: Michelle Clemente (602) 286-1533 Jeffrey S. Beyersdorfer (602) 286-1530 Media Contact: Gary W. Hanson (602) 286-1777

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