NGL
$2.31
Ngl Energy Partners LP
($.39)
(14.44%)
Earnings Details
3rd Quarter December 2019
Thursday, February 6, 2020 6:30:00 AM
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Summary

Ngl Energy Partners LP (NGL) Recent Earnings

Ngl Energy Partners LP (NGL) reported 3rd Quarter December 2019 earnings of $0.22 per share on revenue of $2.2 billion. The consensus earnings estimate was $0.19 per share on revenue of $4.7 billion. Revenue fell 65.1% compared to the same quarter a year ago.

NGL Energy Partners LP purchases propane, butane, and other natural gas liquids from refiners, processing plants, producers, and other parties, and sells the product to retailers, refiners, and other participants in the wholesale markets.

Results
Reported Earnings
$0.22
Earnings Whisper
-
Consensus Estimate
$0.19
Reported Revenue
$2.23 Bil
Revenue Estimate
$4.69 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

NGL Energy Partners LP Announces Record Third Quarter Fiscal 2020 Financial Results

TULSA, Okla.--(BUSINESS WIRE)--NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the “Partnership”) today reported income from continuing operations for the quarter ended December 31, 2019 of $49.1 million, compared to income from continuing operations of $97.2 million for the quarter ended December 31, 2018. For the nine months ended December 31, 2019, the Partnership reported income from continuing operations of $42.5 million, compared to a loss from continuing operations of $137.3 million for the nine months ended December 31, 2018.

“Our transformation to a simpler business model with improved predictability of cash flows and reduced volatility in earnings is substantially complete,” stated Mike Krimbill, the Partnership’s CEO. “During this quarter, our Water Solutions segment closed the Hillstone acquisition, which added important long-term acreage dedications and minimum volume commitments with some of the highest quality producers in the Delaware Basin. Additionally, we exited another portion of our Refined Products and Renewables segment, further streamlining our business and reducing working capital debt. Overall, this was a tremendous quarter from an operating standpoint as we transported almost 1.6 million barrels per day of produced water on our systems and 134,000 barrels per day of crude oil on Grand Mesa Pipeline. Our Liquids segment had a particularly strong quarter as we optimized our expanded asset position, which includes 27 terminals and approximately 5,000 rail cars. Our results for the quarter illustrate the benefit of asset diversification across our three primary business units and we look forward to continuing to build each of these businesses in the coming quarters.”

Highlights for the quarter include:

  • Acquisition of Hillstone Environmental Partners, LLC (“Hillstone”) completed on October 31, 2019 for a total purchase price of $642.5 million; acquired assets include the following:
    • Minimum volume commitments and long-term dedications covering over 110,000 contracted acres, including a 20-year Poker Lake acreage dedication with XTO Energy, a 10-year acreage dedication, including first call rights, with a leading independent exploration and production company, and multiple contracts with one of the largest crude oil and natural gas exploration and production companies in the United States;
    • 19 saltwater disposal wells, representing approximately 580,000 barrels per day of permitted disposal capacity;
    • A network of produced water pipelines with approximately 680,000 barrels per day of transportation capacity; and
    • 22 permits to develop another 660,000 barrels per day of disposal capacity
  • Income from continuing operations for the third quarter of Fiscal 2020 of $49.1 million, compared to $97.2 million for the third quarter of Fiscal 2019
  • Adjusted EBITDA from continuing operations for the third quarter of Fiscal 2020 of $200.5 million, compared to $131.3 million for the third quarter of Fiscal 2019
  • Issued 9.00% Class D Preferred Units for gross proceeds of $200.0 million to fund a portion of the Hillstone acquisition

Quarterly Results of Operations

The following table summarizes operating income (loss) and Adjusted EBITDA from continuing operations by operating segment for the periods indicated:

 

 

Quarter Ended

 

 

December 31, 2019

 

December 31, 2018

 

 

Operating Income (Loss)

 

Adjusted EBITDA

 

Operating Income (Loss)

 

Adjusted EBITDA

 

 

(in thousands)

Crude Oil Logistics

 

$

28,696

 

 

$

55,575

 

 

$

32,022

 

 

$

50,693

 

Liquids

 

64,084

 

 

69,129

 

 

21,532

 

 

26,992

 

Water Solutions

 

(583

)

 

62,214

 

 

86,737

 

 

48,250

 

Refined Products and Renewables

 

24,954

 

 

24,082

 

 

20,552

 

 

9,118

 

Corporate and Other

 

(20,756

)

 

(10,489

)

 

(16,394

)

 

(3,728

)

Total

 

$

96,395

 

 

$

200,511

 

 

$

144,449

 

 

$

131,325

 

The tables included in this release reconcile operating income (loss) to Adjusted EBITDA from continuing operations, a non-GAAP financial measure, for each of our operating segments.

Crude Oil Logistics

Results for the third quarter of Fiscal 2020 improved compared to the same quarter in Fiscal 2019 primarily due to increased volumes on our Grand Mesa Pipeline as a result of additional volumes purchased from third parties and increased production in the DJ Basin. During the three months ended December 31, 2019, financial volumes on the Grand Mesa Pipeline averaged approximately 134,000 barrels per day.

Liquids

Total product margin per gallon was $0.098 for the quarter ended December 31, 2019, compared to $0.049 for the quarter ended December 31, 2018. This increase was primarily the result of higher propane, butane, and other product margins, driven primarily by strong butane sales and increased propane product margins as our inventory values aligned with reduced commodity prices.

Propane volumes increased by approximately 39.4 million gallons, or 9.2%, during the quarter ended December 31, 2019 compared to the quarter ended December 31, 2018. Butane volumes increased by approximately 74.2 million gallons, or 36.7%, during the quarter ended December 31, 2019 compared to the quarter ended December 31, 2018. Butane volumes were augmented by steady volumes at our Chesapeake, Virginia export terminal. Other Liquids volumes increased by approximately 3.0 million gallons, or 2.3%, during the quarter ended December 31, 2019 compared to the same period in the prior year.

Water Solutions

The Partnership processed approximately 1,585,000 barrels of produced water per day during the quarter ended December 31, 2019, a 58.8% increase when compared to approximately 999,000 barrels of produced water per day during the quarter ended December 31, 2018. Water Solutions revenue increased to $121.6 million for the quarter ended December 31, 2019, a 61.3% increase over the comparable prior year quarter as a result of the increase in volume, which was primarily driven by our acquisition of Mesquite Disposals Unlimited, LLC (“Mesquite”) and Hillstone. These increases were partially offset by the sale of our Bakken and South Pecos water disposal businesses during the fiscal year ended March 31, 2019.

Revenues from recovered hydrocarbons, including the impact from realized skim oil hedges, totaled $17.8 million for the quarter ended December 31, 2019, a decrease of $5.5 million from the prior year period. The decrease was primarily due to realized gains on our derivatives of $1.3 million for the quarter ended December 31, 2019 compared to realized gains of $6.1 million for the quarter ended December 31, 2018, and lower skim oil volumes resulting from the sale of our Bakken and South Pecos water disposal businesses. Additionally, the percentage of recovered hydrocarbons per barrel of produced water processed decreased during the quarter ended December 31, 2019, when compared to the quarter ended December 31, 2018, due to an increase in produced water transported through pipelines (which contains less oil per barrel of produced water) and contract structures that allow producers to keep the skim oil recovered from produced water.

Refined Products and Renewables

The Partnership has announced its intention to divest its refined products marketing business in the mid-continent region of the United States (“Mid-Con”) and its gas blending business in the southeastern and eastern regions of the United States (“Gas Blending”). The Partnership completed the sale of certain Mid-Con assets on January 3, 2020. The Partnership determined that these businesses were no longer core to the Partnership’s strategy. The operations of these businesses have been classified as discontinued operations as the exiting of these businesses, along with the sale of TransMontaigne Product Services, LLC (“TPSL”) on September 30, 2019, represent a strategic shift in the Partnership’s operations and will have a significant effect on its operations and financial results going forward. Certain assets and liabilities have also been classified as held for sale.

The results from the Refined Products and Renewables businesses being retained are included in continuing operations for the quarter ended December 31, 2019. These results were positively impacted by the biodiesel tax credit being reinstated in December 2019 for calendar years 2018 and 2019. The tax credit is now effective through December 31, 2022. The total amount of income recognized in earnings from continuing operations totaled $13.8 million during the quarter ended December 31, 2019. An additional amount of $17.3 million was recognized in discontinued operations.

Refined product barrels sold during the quarter ended December 31, 2019 totaled approximately 7.8 million barrels, which was slightly lower than the same period in the prior year. Renewables barrels sold during the quarter ended December 31, 2019 totaled approximately 0.9 million, which was slightly higher than the same period in the prior year.

Corporate and Other

Corporate and Other expenses primarily increased from the comparable prior year period due to costs related to compensation, consulting services and insurance costs as the Partnership has restructured its operations and completed certain acquisitions during this fiscal year.

Capitalization and Liquidity

On October 30, 2019, the Partnership amended its Credit Agreement to adjust the allocation of the commitments of the lenders to make revolving loans thereunder and amend the covenant package. During the quarter, the Partnership also utilized a portion of the accordion feature under its Credit Agreement, whereby two new lenders and one existing lender committed to provide an additional $150.0 million of commitments in total. The Credit Agreement now provides for up to $1.915 billion in aggregate commitments, consisting of (i) a $641.5 million Working Capital Facility for working capital requirements and other general corporate purposes and (ii) a $1.273 billion Expansion Capital Facility for acquisitions, internal growth projects, other capital expenditures and general corporate purposes. Working capital borrowings totaled $447.0 million at December 31, 2019 compared to $896.0 million at March 31, 2019, a decrease of $449.0 million. Expansion capital borrowings totaled $945.0 million, resulting in approximately $1.392 billion outstanding under the revolving credit facility at December 31, 2019.

Total debt outstanding was $3.073 billion at December 31, 2019 compared to $2.161 billion at March 31, 2019, an increase of $912 million due primarily to the redemption of the Partnership’s Class A Preferred Units, the Mesquite and Hillstone acquisitions and the funding of certain capital expenditures, which was partially offset by a reduction in working capital borrowings using proceeds from the sale of TPSL and decreased activity in the Gas Blending and Mid-Con businesses.

The Partnership’s Total Leverage Indebtedness Ratio (as defined in our Credit Agreement) was approximately 5.0x at December 31, 2019. Total liquidity (cash plus available capacity on our revolving credit facility) was approximately $417.9 million as of December 31, 2019.

Fiscal 2020 Guidance Update

For Fiscal 2020, the Partnership expects to generate Adjusted EBITDA from continuing operations in a range for each of its operating segments as follows:

 

 

FY 2020 Adjusted EBITDA Ranges

 

 

Low

 

High

 

 

(in thousands)

Crude Oil Logistics

 

$

215,000

 

 

$

220,000

 

Water Solutions

 

240,000

 

 

250,000

 

Liquids

 

115,000

 

 

120,000

 

Refined Products and Renewables

 

35,000

 

 

40,000

 

Corporate and Other

 

(40,000

)

 

(35,000

)

Total Guidance Range

 

$

565,000

 

 

$

595,000

 

Third Quarter Conference Call Information

A conference call to discuss NGL’s results of operations is scheduled for 10:00 am Central Time on Thursday, February 6, 2020. Analysts, investors, and other interested parties may access the conference call by dialing (800) 291-4083 and providing access code 2980107. An archived audio replay of the conference call will be available for 7 days beginning at 1:00 pm Central Time on February 6, 2020, which can be accessed by dialing (855) 859-2056 and providing access code 4747666.

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, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities, certain legal settlements and other. NGL also includes in Adjusted EBITDA certain inventory valuation adjustments related to its Refined Products and Renewables segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss), income (loss) from continuing operations 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 records 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, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. NGL includes this in Adjusted EBITDA because the unrealized gains and losses associated with derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA.

Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, income tax expense, cash interest expense, preferred unit distributions and other. 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 distribution amounts are set by the Board of Directors.

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, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition 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 its 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 four primary businesses: Crude Oil Logistics, Water Solutions, Liquids, 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.

 

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in Thousands, except unit amounts)

 

 

December 31, 2019

 

March 31, 2019

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

12,008

 

 

$

18,572

 

Accounts receivable-trade, net of allowance for doubtful accounts of $4,055 and $4,016, respectively

947,534

 

 

998,203

 

Accounts receivable-affiliates

12,445

 

 

12,867

 

Inventories

183,738

 

 

136,128

 

Prepaid expenses and other current assets

90,694

 

 

65,918

 

Assets held for sale

95,093

 

 

580,985

 

Total current assets

1,341,512

 

 

1,812,673

 

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $504,731 and $417,457, respectively

2,704,112

 

 

1,828,940

 

GOODWILL

1,307,055

 

 

1,110,456

 

INTANGIBLE ASSETS, net of accumulated amortization of $603,573 and $503,117, respectively

1,600,555

 

 

800,889

 

INVESTMENTS IN UNCONSOLIDATED ENTITIES

22,236

 

 

1,127

 

OPERATING LEASE RIGHT-OF-USE ASSETS

183,141

 

 

 

OTHER NONCURRENT ASSETS

83,944

 

 

113,857

 

ASSETS HELD FOR SALE

 

 

234,551

 

Total assets

$

7,242,555

 

 

$

5,902,493

 

LIABILITIES AND EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable-trade

$

846,767

 

 

$

879,063

 

Accounts payable-affiliates

29,374

 

 

28,469

 

Accrued expenses and other payables

352,848

 

 

107,759

 

Advance payments received from customers

29,993

 

 

8,461

 

Current maturities of long-term debt

4,835

 

 

648

 

Operating lease obligations

57,091

 

 

 

Liabilities held for sale

40,899

 

 

226,753

 

Total current liabilities

1,361,807

 

 

1,251,153

 

LONG-TERM DEBT, net of debt issuance costs of $20,263 and $12,008, respectively, and current maturities

3,068,205

 

 

2,160,133

 

OPERATING LEASE OBLIGATIONS

122,798

 

 

 

OTHER NONCURRENT LIABILITIES

104,060

 

 

63,542

 

NONCURRENT LIABILITIES HELD FOR SALE

 

 

33

 

 

 

 

 

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

 

 

149,814

 

CLASS D 9.00% PREFERRED UNITS, 600,000 and 0 preferred units issued and outstanding, respectively

531,768

 

 

 

 

 

 

 

EQUITY:

 

 

 

General partner, representing a 0.1% interest, 128,477 and 124,633 notional units, respectively

(51,038

)

 

(50,603

)

Limited partners, representing a 99.9% interest, 128,348,906 and 124,508,497 common units issued and outstanding, respectively

1,682,071

 

 

2,067,197

 

Class B preferred limited partners, 12,585,642 and 8,400,000 preferred units issued and outstanding, respectively

305,488

 

 

202,731

 

Class C preferred limited partners, 1,800,000 and 0 preferred units issued and outstanding, respectively

42,905

 

 

 

Accumulated other comprehensive loss

(248

)

 

(255

)

Noncontrolling interests

74,739

 

 

58,748

 

Total equity

2,053,917

 

2,277,818

Total liabilities and equity

$

7,242,555

 

$

5,902,493

 
 

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in Thousands, except unit and per unit amounts)

 

 

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

 

2019

 

2018

 

2019

 

2018

REVENUES:

 

 

 

 

 

 

 

 

Crude Oil Logistics

 

$

690,989

 

 

$

751,180

 

 

$

2,048,301

 

 

$

2,395,064

 

Water Solutions

 

121,607

 

 

75,458

 

 

294,639

 

 

231,367

 

Liquids

 

685,625

 

 

749,433

 

 

1,361,781

 

 

1,759,772

 

Refined Products and Renewables

 

728,028

 

 

718,979

 

 

2,197,236

 

 

2,178,734

 

Other

 

280

 

 

319

 

 

799

 

 

1,066

 

Total Revenues

 

2,226,529

 

 

2,295,369

 

 

5,902,756

 

 

6,566,003

 

COST OF SALES:

 

 

 

 

 

 

 

 

Crude Oil Logistics

 

628,443

 

 

685,417

 

 

1,847,382

 

 

2,226,397

 

Water Solutions

 

14,004

 

 

(39,470

)

 

4,701

 

 

(17,309

)

Liquids

 

592,340

 

 

707,187

 

 

1,205,938

 

 

1,668,646

 

Refined Products and Renewables

 

700,248

 

 

695,033

 

 

2,155,247

 

 

2,167,458

 

Other

 

437

 

 

494

 

 

1,337

 

 

1,481

 

Total Cost of Sales

 

1,935,472

 

 

2,048,661

 

 

5,214,605

 

 

6,046,673

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Operating

 

94,412

 

 

60,465

 

 

230,610

 

 

172,219

 

General and administrative

 

29,150

 

 

24,759

 

 

93,400

 

 

86,428

 

Depreciation and amortization

 

73,726

 

 

53,281

 

 

190,593

 

 

157,771

 

(Gain) loss on disposal or impairment of assets, net

 

(12,626

)

 

(36,246

)

 

(10,482

)

 

71,077

 

Revaluation of liabilities

 

10,000

 

 

 

 

10,000

 

 

800

 

Operating Income

 

96,395

 

 

144,449

 

 

174,030

 

 

31,035

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

534

 

 

1,777

 

 

277

 

 

2,375

 

Interest expense

 

(46,920

)

 

(39,151

)

 

(131,814

)

 

(126,776

)

Loss on early extinguishment of liabilities, net

 

 

 

(10,083

)

 

 

 

(10,220

)

Other (expense) income, net

 

(226

)

 

1,187

 

 

967

 

 

(31,415

)

Income (Loss) From Continuing Operations Before Income Taxes

 

49,783

 

 

98,179

 

 

43,460

 

 

(135,001

)

INCOME TAX EXPENSE

 

(677

)

 

(980

)

 

(996

)

 

(2,322

)

Income (Loss) From Continuing Operations

 

49,106

 

 

97,199

 

 

42,464

 

 

(137,323

)

(Loss) Income From Discontinued Operations, net of Tax

 

(6,115

)

 

13,329

 

 

(192,800

)

 

433,501

 

Net Income (Loss)

 

42,991

 

 

110,528

 

 

(150,336

)

 

296,178

 

LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

166

 

 

307

 

 

563

 

 

1,170

 

LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS

 

 

 

 

 

 

 

446

 

NET INCOME (LOSS) ATTRIBUTABLE TO NGL ENERGY PARTNERS LP

 

$

43,157

 

 

$

110,835

 

 

$

(149,773

)

 

$

297,794

 

NET INCOME (LOSS) FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS

 

$

28,895

 

 

$

67,656

 

 

$

(123,792

)

 

$

(209,928

)

NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS

 

$

(6,109

)

 

$

13,316

 

 

$

(192,607

)

 

$

433,513

 

NET INCOME (LOSS) ALLOCATED TO COMMON UNITHOLDERS

 

$

22,786

 

 

$

80,972

 

 

$

(316,399

)

 

$

223,585

 

BASIC INCOME (LOSS) PER COMMON UNIT

 

 

 

 

 

 

 

 

Income (Loss) From Continuing Operations

 

$

0.23

 

 

$

0.54

 

 

$

(0.97

)

 

$

(1.71

)

(Loss) Income From Discontinued Operations, net of Tax

 

$

(0.05

)

 

$

0.11

 

 

$

(1.52

)

 

$

3.53

 

Net Income (Loss)

 

$

0.18

 

 

$

0.65

 

 

$

(2.49

)

 

$

1.82

 

DILUTED INCOME (LOSS) PER COMMON UNIT

 

 

 

 

 

 

 

 

Income (Loss) From Continuing Operations

 

$

0.22

 

 

$

0.53

 

 

$

(0.97

)

 

$

(1.71

)

(Loss) Income From Discontinued Operations, net of Tax

 

$

(0.05

)

 

$

0.11

 

 

$

(1.52

)

 

$

3.53

 

Net Income (Loss)

 

$

0.18

 

 

$

0.64

 

 

$

(2.49

)

 

$

1.82

 

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

128,201,369

 

 

123,892,680

 

 

127,026,510

 

 

122,609,625

 

DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

129,358,590

 

 

125,959,751

 

 

127,026,510

 

 

122,609,625

  

 
 

EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION

(Unaudited)

 

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

 

 

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

(in thousands)

Net income (loss)

 

$

42,991

 

 

$

110,528

 

 

$

(150,336

)

 

$

296,178

 

Less: Net loss attributable to noncontrolling interests

 

166

 

 

307

 

 

563

 

 

1,170

 

Less: Net loss attributable to redeemable noncontrolling interests

 

 

 

 

 

 

 

446

 

Net income (loss) attributable to NGL Energy Partners LP

 

43,157

 

 

110,835

 

 

(149,773

)

 

297,794

 

Interest expense

 

46,946

 

 

39,151

 

 

131,969

 

 

126,930

 

Income tax expense

 

676

 

 

988

 

 

1,015

 

 

2,454

 

Depreciation and amortization

 

72,939

 

 

54,153

 

 

191,049

 

 

169,235

 

EBITDA

 

163,718

 

 

205,127

 

 

174,260

 

 

596,413

 

Net unrealized losses (gains) on derivatives

 

16,787

 

 

(47,909

)

 

7,851

 

 

(30,849

)

Inventory valuation adjustment (1)

 

(370

)

 

(61,665

)

 

(25,555

)

 

(60,497

)

Lower of cost or market adjustments

 

(646

)

 

48,198

 

 

(2,465

)

 

47,785

 

(Gain) loss on disposal or impairment of assets, net

 

(4,837

)

 

(36,507

)

 

171,757

 

 

(337,925

)

Loss on early extinguishment of liabilities, net

 

 

 

10,083

 

 

 

 

10,220

 

Equity-based compensation expense (2)

 

2,213

 

 

7,845

 

 

27,209

 

 

32,575

 

Acquisition expense (3)

 

11,419

 

 

5,155

 

 

18,595

 

 

9,270

 

Revaluation of liabilities (4)

 

10,000

 

 

 

 

10,000

 

 

800

 

Gavilon legal matter settlement (5)

 

 

 

(212

)

 

 

 

34,788

 

Other (6)

 

4,026

 

 

2,475

 

 

10,681

 

 

5,694

 

Adjusted EBITDA

 

$

202,310

 

 

$

132,590

 

 

$

392,333

 

 

$

308,274

 

Adjusted EBITDA - Discontinued Operations

 

$

1,799

 

 

$

1,265

 

 

$

(35,362

)

 

$

3,839

 

Adjusted EBITDA - Continuing Operations

 

$

200,511

 

 

$

131,325

 

 

$

427,695

 

 

$

304,435

 

Less: Cash interest expense (7)

 

43,919

 

 

36,922

 

 

124,406

 

 

119,644

 

Less: Income tax expense

 

676

 

 

982

 

 

995

 

 

2,322

 

Less: Maintenance capital expenditures

 

16,964

 

 

9,521

 

 

50,354

 

 

33,457

 

Less: Preferred unit distributions

 

12,612

 

 

11,174

 

 

31,484

 

 

33,522

 

Less: Other (8)

 

515

 

 

237

 

 

642

 

 

546

 

Distributable Cash Flow - Continuing Operations

 

$

125,825

 

 

$

72,489

 

 

$

219,814

 

 

$

114,944

 

(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, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. See “Non-GAAP Financial Measures” 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 unaudited condensed consolidated financial statements included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2019. 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 unaudited condensed consolidated financial statements only include expenses associated with equity-based awards that have been formally granted.

(3)

Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions, including Mesquite and Hillstone, along with amounts accrued related to the LCT Capital, LLC legal matter (as discussed in the footnotes to our unaudited condensed consolidated financial statements included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2019), partially offset by reimbursement for certain legal costs incurred in prior periods.

(4)

Amounts for the three months and nine months ended December 31, 2019 represent the non-cash valuation adjustment of our contingent consideration liability issued by us as part of our acquisition of Mesquite (as discussed in the footnotes to our unaudited condensed consolidated financial statements included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2019). Amount for the nine months ended December 31, 2018 represents 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)

Represents the accrual for the estimated cost of the settlement of the Gavilon legal matter (as discussed in the footnotes to our unaudited condensed consolidated financial statements included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2019). We have excluded this amount from Adjusted EBITDA as it relates to transactions that occurred prior to our acquisition of Gavilon LLC in December 2013.

(6)

Amounts for the three months and nine months ended December 31, 2019 and 2018 represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations.

(7)

Amounts represent interest expense payable in cash for the period presented, excluding changes in the accrued interest balance.

(8)

Amounts represents cash paid to settle asset retirement obligations.

 

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

 

 

Three Months Ended December 31, 2019

 

Crude Oil
Logistics

 

Water
Solutions

 

Liquids

 

Refined
Products
and
Renewables

 

Corporate
and
Other

 

Continuing Operations

 

Discontinued Operations (TPSL, Mid-Con, Gas Blending)

 

Consolidated

 

(in thousands)

Operating income (loss)

$

28,696

 

 

$

(583

)

 

$

64,084

 

 

$

24,954

 

 

$

(20,756

)

 

$

96,395

 

 

$

 

 

$

96,395

 

Depreciation and amortization

17,950

 

 

48,074

 

 

6,811

 

 

132

 

 

759

 

 

73,726

 

 

 

 

73,726

 

Amortization recorded to cost of sales

 

 

 

 

21

 

 

65

 

 

 

 

86

 

 

 

 

86

 

Net unrealized losses (gains) on derivatives

6,060

 

 

11,924

 

 

(1,197

)

 

 

 

 

 

16,787

 

 

 

 

16,787

 

Inventory valuation adjustment

 

 

 

 

 

 

(2,099

)

 

 

 

(2,099

)

 

 

 

(2,099

)

Lower of cost or market adjustments

 

 

 

 

 

 

(18

)

 

 

 

(18

)

 

 

 

(18

)

Gain on disposal or impairment of assets, net

(182

)

 

(12,176

)

 

(26

)

 

 

 

(242

)

 

(12,626

)

 

 

 

(12,626

)

Equity-based compensation expense

 

 

 

 

 

 

 

 

2,213

 

 

2,213

 

 

 

 

2,213

 

Acquisition expense

 

 

3,967

 

 

 

 

 

 

7,452

 

 

11,419

 

 

 

 

11,419

 

Other income (expense), net

64

 

 

(450

)

 

17

 

 

24

 

 

119

 

 

(226

)

 

 

 

(226

)

Adjusted EBITDA attributable to unconsolidated entities

 

 

685

 

 

17

 

 

 

 

(34

)

 

668

 

 

 

 

668

 

Adjusted EBITDA attributable to noncontrolling interest

 

 

(203

)

 

(616

)

 

 

 

 

 

(819

)

 

 

 

(819

)

Revaluation of liabilities

 

 

10,000

 

 

 

 

 

 

 

 

10,000

 

 

 

 

10,000

 

Intersegment transactions (1)

 

 

 

 

 

 

979

 

 

 

 

979

 

 

 

 

979

 

Other

2,987

 

 

976

 

 

18

 

 

45

 

 

 

 

4,026

 

 

 

 

4,026

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

1,799

 

 

1,799

 

Adjusted EBITDA

$

55,575

 

 

$

62,214

 

 

$

69,129

 

 

$

24,082

 

 

$

(10,489

)

 

$

200,511

 

 

$

1,799

 

 

$

202,310

 

 

Three Months Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

 

Crude Oil
Logistics

 

Water
Solutions

 

Liquids

 

Refined
Products
and
Renewables

 

Corporate
and
Other

 

Continuing Operations

 

TPSL, Mid-Con, Gas Blending

 

Retail Propane

 

Consolidated

 

(in thousands)

Operating income (loss)

$

32,022

 

 

$

86,737

 

 

$

21,532

 

 

$

20,552

 

 

$

(16,394

)

 

$

144,449

 

 

$

 

 

$

 

 

$

144,449

 

Depreciation and amortization

18,387

 

 

27,561

 

 

6,412

 

 

168

 

 

753

 

 

53,281

 

 

 

 

 

 

53,281

 

Amortization recorded to cost of sales

 

 

 

 

37

 

 

64

 

 

 

 

101

 

 

 

 

 

 

101

 

Net unrealized gains on derivatives

(13,165

)

 

(34,114

)

 

(630

)

 

 

 

 

 

(47,909

)

 

 

 

 

 

(47,909

)

Inventory valuation adjustment

 

 

 

 

 

 

(2,881

)

 

 

 

(2,881

)

 

 

 

 

 

(2,881

)

Lower of cost or market adjustments

11,446

 

 

 

 

 

 

1,572

 

 

 

 

13,018

 

 

 

 

 

 

13,018

 

Gain on disposal or impairment of assets, net

(75

)

 

(36,171

)

 

 

 

 

 

 

 

(36,246

)

 

 

 

 

 

(36,246

)

Equity-based compensation expense

 

 

 

 

 

 

 

 

7,845

 

 

7,845

 

 

 

 

 

 

7,845

 

Acquisition expense

 

 

3,459

 

 

 

 

 

 

1,696

 

 

5,155

 

 

 

 

 

 

5,155

 

Other income (expense), net

3

 

 

(1,134

)

 

19

 

 

(285

)

 

2,584

 

 

1,187

 

 

 

 

 

 

1,187

 

Adjusted EBITDA attributable to unconsolidated entities

 

 

1,845

 

 

 

 

 

 

 

 

1,845

 

 

 

 

 

 

1,845

 

Adjusted EBITDA attributable to noncontrolling interest

 

 

(33

)

 

(394

)

 

 

 

 

 

(427

)

 

 

 

 

 

(427

)

Gavilon legal matter settlement

 

 

 

 

 

 

 

 

(212

)

 

(212

)

 

 

 

 

 

(212

)

Intersegment transactions (1)

 

 

 

 

 

 

(10,359

)

 

 

 

(10,359

)

 

 

 

 

 

(10,359

)

Other

2,075

 

 

100

 

 

16

 

 

287

 

 

 

 

2,478

 

 

 

 

 

 

2,478

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

1,423

 

 

(158

)

 

1,265

 

Adjusted EBITDA

$

50,693

 

 

$

48,250

 

 

$

26,992

 

 

$

9,118

 

 

$

(3,728

)

 

$

131,325

 

 

$

1,423

 

 

$

(158

)

 

$

132,590

 

 

Nine Months Ended December 31, 2019

 

Crude Oil
Logistics

 

Water
Solutions

 

Liquids

 

Refined
Products
and
Renewables

 

Corporate
and
Other

 

Continuing Operations

 

Discontinued Operations (TPSL, Mid-Con, Gas Blending)

 

Consolidated

 

(in thousands)

Operating income (loss)

$

101,018

 

 

$

34,380

 

 

$

80,965

 

 

$

32,242

 

 

$

(74,575

)

 

$

174,030

 

 

$

 

 

$

174,030

 

Depreciation and amortization

53,228

 

 

114,066

 

 

20,651

 

 

383

 

 

2,265

 

 

190,593

 

 

 

 

190,593

 

Amortization recorded to cost of sales

 

 

 

 

67

 

 

195

 

 

 

 

262

 

 

 

 

262

 

Net unrealized losses on derivatives

76

 

 

5,887

 

 

1,888

 

 

 

 

 

 

7,851

 

 

 

 

7,851

 

Inventory valuation adjustment

 

 

 

 

 

 

(264

)

 

 

 

(264

)

 

 

 

(264

)

Lower of cost or market adjustments

 

 

 

 

(1,508

)

 

19

 

 

 

 

(1,489

)

 

 

 

(1,489

)

Gain on disposal or impairment of assets, net

(1,428

)

 

(9,021

)

 

(33

)

 

 

 

 

 

(10,482

)

 

 

 

(10,482

)

Equity-based compensation expense

 

 

 

 

 

 

 

 

27,209

 

 

27,209

 

 

 

 

27,209

 

Acquisition expense

 

 

3,987

 

 

 

 

 

 

14,608

 

 

18,595

 

 

 

 

18,595

 

Other income (expense), net

103

 

 

(452

)

 

61

 

 

(20

)

 

1,275

 

 

967

 

 

 

 

967

 

Adjusted EBITDA attributable to unconsolidated entities

 

 

685

 

 

(5

)

 

 

 

(170

)

 

510

 

 

 

 

510

 

Adjusted EBITDA attributable to noncontrolling interest

 

 

(597

)

 

(1,296

)

 

 

 

 

 

(1,893

)

 

 

 

(1,893

)

Revaluation of liabilities

 

 

10,000

 

 

 

 

 

 

 

 

10,000

 

 

 

 

10,000

 

Intersegment transactions (1)

 

 

 

 

 

 

1,125

 

 

 

 

1,125

 

 

 

 

1,125

 

Other

9,284

 

 

1,247

 

 

53

 

 

97

 

 

 

 

10,681

 

 

 

 

10,681

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

(35,362

)

 

(35,362

)

Adjusted EBITDA

$

162,281

 

 

$

160,182

 

 

$

100,843

 

 

$

33,777

 

 

$

(29,388

)

 

$

427,695

 

 

$

(35,362

)

 

$

392,333

 

Nine Months Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations

 

 

 

Crude Oil
Logistics

 

Water
Solutions

 

Liquids

 

Refined
Products
and
Renewables

 

Corporate
and
Other

 

Continuing Operations

 

TPSL, Mid-Con, Gas Blending

 

Retail Propane

 

Consolidated

 

(in thousands)

Operating (loss) income

$

(36,694

)

 

$

97,476

 

 

$

34,913

 

 

$

4,516

 

 

$

(69,176

)

 

$

31,035

 

 

$

 

 

$

 

 

$

31,035

 

Depreciation and amortization

56,486

 

 

79,212

 

 

19,339

 

 

504

 

 

2,230

 

 

157,771

 

 

 

 

 

 

157,771

 

Amortization recorded to cost of sales

80

 

 

 

 

110

 

 

195

 

 

 

 

385

 

 

 

 

 

 

385

 

Net unrealized (gains) losses on derivatives

(11,895

)

 

(23,216

)

 

4,183

 

 

 

 

 

 

(30,928

)

 

 

 

 

 

(30,928

)

Inventory valuation adjustment

 

 

 

 

 

 

(2,592

)

 

 

 

(2,592

)

 

 

 

 

 

(2,592

)

Lower of cost or market adjustments

11,446

 

 

 

 

(504

)

 

1,583

 

 

 

 

12,525

 

 

 

 

 

 

12,525

 

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

105,186

 

 

(32,966

)

 

994

 

 

(3,026

)

 

889

 

 

71,077

 

 

 

 

 

 

71,077

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

32,575

 

 

32,575

 

 

 

 

 

 

32,575

 

Acquisition expense

 

 

3,459

 

 

161

 

 

 

 

5,696

 

 

9,316

 

 

 

 

 

 

9,316

 

Other income (expense), net

26

 

 

(1,504

)

 

63

 

 

(343

)

 

(29,657

)

 

(31,415

)

 

 

 

 

 

(31,415

)

Adjusted EBITDA attributable to unconsolidated entities

 

 

2,214

 

 

 

 

476

 

 

 

 

2,690

 

 

 

 

 

 

2,690

 

Adjusted EBITDA attributable to noncontrolling interest

 

 

(119

)

 

(945

)

 

 

 

 

 

(1,064

)

 

 

 

 

 

(1,064

)

Revaluation of liabilities

 

 

800

 

 

 

 

 

 

 

 

800

 

 

 

 

 

 

800

 

Gavilon legal matter settlement

 

 

 

 

 

 

 

 

34,788

 

 

34,788

 

 

 

 

 

 

34,788

 

Intersegment transactions (1)

 

 

 

 

 

 

11,778

 

 

 

 

11,778

 

 

 

 

 

 

11,778

 

Other

4,976

 

 

304

 

 

49

 

 

365

 

 

 

 

5,694

 

 

 

 

 

 

5,694

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

(1,028

)

 

4,867

 

 

3,839

 

Adjusted EBITDA

$

129,611

 

 

$

125,660

 

 

$

58,363

 

 

$

13,456

 

 

$

(22,655

)

 

$

304,435

 

 

$

(1,028

)

 

$

4,867

 

 

$

308,274

 

(1)

Amount reflects the intersegment transactions between the continuing businesses within the Refined Products and Renewables segment and TPSL, Mid-Con and Gas Blending that are eliminated in consolidation.

 

OPERATIONAL DATA

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2018

 

(in thousands, except per day amounts)

Crude Oil Logistics:

 

 

 

 

 

 

 

Crude oil sold (barrels)

11,217

 

 

12,333

 

 

32,929

 

 

35,449

 

Crude oil transported on owned pipelines (barrels)

12,202

 

 

11,820

 

 

34,913

 

 

31,385

 

Crude oil storage capacity - owned and leased (barrels) (1)

 

 

 

 

5,362

 

 

5,362

 

Crude oil inventory (barrels) (1)

 

 

 

 

866

 

 

1,204

 

 

 

 

 

 

 

 

 

Water Solutions:

 

 

 

 

 

 

 

Produced water processed (barrels per day)

 

 

 

 

 

 

 

Northern Delaware Basin (2)

845,817

 

 

36,147

 

 

788,630

 

 

14,719

 

Permian Basin

325,061

 

 

461,722

 

 

323,217

 

 

455,211

 

Eagle Ford Basin

242,238

 

 

282,070

 

 

263,064

 

 

277,431

 

DJ Basin

162,456

 

 

177,412

 

 

167,178

 

 

159,980

 

Other Basins

9,813

 

 

41,173

 

 

10,976

 

 

68,209

 

Total

1,585,385

 

 

998,524

 

 

1,553,065

 

 

975,550

 

Solids processed (barrels per day)

6,132

 

 

7,284

 

 

5,779

 

 

6,728

 

Skim oil sold (barrels per day)

3,429

 

 

3,609

 

 

3,124

 

 

3,516

 

 

 

 

 

 

 

 

 

Liquids:

 

 

 

 

 

 

 

Propane sold (gallons)

468,332

 

 

428,961

 

 

975,782

 

 

929,401

 

Butane sold (gallons)

276,046

 

 

201,891

 

 

588,694

 

 

446,340

 

Other products sold (gallons)

133,392

 

 

130,362

 

 

377,264

 

 

372,282

 

Liquids storage capacity - owned and leased (gallons) (1)

 

 

 

 

397,343

 

 

399,757

 

Propane inventory (gallons) (1)

 

 

 

 

123,265

 

 

120,239

 

Butane inventory (gallons) (1)

 

 

 

 

50,867

 

 

34,488

 

Other products inventory (gallons) (1)

 

 

 

 

15,858

 

 

8,367

 

 

 

 

 

 

 

 

 

Refined Products and Renewables (continuing operations):

 

 

 

 

 

 

 

Gasoline sold (barrels)

2,994

 

 

3,031

 

 

8,978

 

 

8,129

 

Diesel sold (barrels)

4,790

 

 

4,818

 

 

14,365

 

 

14,045

 

Ethanol sold (barrels)

640

 

 

592

 

 

1,773

 

 

1,757

 

Biodiesel sold (barrels)

210

 

 

237

 

 

568

 

 

815

 

Refined Products and Renewables storage capacity - leased (barrels) (1)

 

 

 

 

189

 

 

73

 

Diesel inventory (barrels) (1)

 

 

 

 

124

 

 

162

 

Ethanol inventory (barrels) (1)

 

 

 

 

40

 

 

592

 

Biodiesel inventory (barrels) (1)

 

 

 

 

134

 

 

100

 

(1)

Information is presented as of December 31, 2019 and December 31, 2018, respectively.

(2)

Barrels per day of wastewater processed by the assets acquired in the Mesquite and Hillstone transaction are calculated by the number of days in which we owned the assets for the periods presented.

 

NGL Energy Partners LP
Trey Karlovich, 918-481-1119
Chief Financial Officer and Executive Vice President
Trey.Karlovich@nglep.com
or
Linda Bridges, 918-481-1119
Senior Vice President - Finance and Treasurer
Linda.Bridges@nglep.com

Source: NGL Energy Partners LP