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Press release from Business Wire

NuStar Energy L.P. Reports Record Fourth Quarter 2010 Distributable Cash Flow and EBITDA

<p class='bwalignc'> <i><b>2010 Full Year Results Top Consensus Estimates</b></i> </p> <p class='bwalignc'> <i><b>Internal Growth Projects Expected to Lead to Improved Results in 2011</b></i> </p>

Monday, January 31, 2011

NuStar Energy L.P. Reports Record Fourth Quarter 2010 Distributable Cash Flow and EBITDA08:51 EST Monday, January 31, 2011 SAN ANTONIO (Business Wire) -- NuStar Energy L.P. (NYSE: NS) today announced its highest ever fourth quarter distributable cash flow available to limited partners of $66.7 million, or $1.03 per unit, compared to 2009 fourth quarter distributable cash flow of $57.0 million, or $0.99 per unit. For the year ended December 31, 2010, distributable cash flow available to limited partners was $280.7 million, or $4.43 per unit, compared to $311.4 million, or $5.66 per unit in 2009. Fourth quarter earnings before interest, taxes, depreciation and amortization (EBITDA) were $113.6 million, also the highest ever for the fourth quarter, and exceeded fourth quarter 2009 EBITDA of $91.9 million. For the year ended December 31, 2010, EBITDA was $482.8 million compared to $460.5 million in 2009. NuStar Energy L.P. reported fourth quarter net income applicable to limited partners of $41.9 million, or $0.65 per unit, compared to $28.8 million, or $0.50 per unit, earned in the fourth quarter of 2009. For the year ended December 31, 2010, net income applicable to limited partners was $200.9 million, or $3.19 per unit, compared to $191.7 million, or $3.47 per unit in 2009. The partnership also announced that its board of directors has declared a fourth quarter 2010 distribution of $1.075 per unit. The fourth quarter 2010 distribution will be paid on February 14, 2011, to holders of record as of February 8, 2011. For 2010, NuStar Energy L.P. declared a distribution of $4.28 per unit, which was $0.035 per unit or approximately 1% higher than the $4.245 per unit distribution declared in 2009. Distributable cash flow available to limited partners covers the distribution to the limited partners by 0.96 times for the fourth quarter of 2010 and 1.04 times for the year ended December 31, 2010. “Our record fourth quarter 2010 distributable cash flow and EBITDA were primarily the result of strong performances in our storage segment and asphalt and fuels marketing segments,” said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC. “Increased storage rates at some of our terminal facilities in the storage segment and strong results in our asphalt, heavy fuels and bunker fuels operations within the asphalt and fuels marketing segment contributed to our record fourth quarter.” “In addition, all three of our business segments generated higher operating income and EBITDA for the year ended December 31, 2010 when compared to 2009,” said Anastasio. “Increased throughputs, excluding the effect of the second quarter 2009 sale of the Ardmore-Wynnewood pipeline in Oklahoma and the Trans-Texas pipeline, and higher-year-over year pipeline tariffs contributed to improved transportation segment results. Storage segment results benefited from the completion of some internal growth projects, increased storage rates at some of our terminal facilities and the May 2010 Mobile County, Alabama storage terminal acquisition.” Anastasio added, “Increasing our marketing presence in our heavy fuels and bunker fuels operations contributed to improved 2010 results in the asphalt and fuels marketing segment. Revenue enhancement initiatives implemented by asphalt refining and marketing operations personnel also contributed to the segment's improved performance.” First Quarter 2011 Outlook “For the first quarter of 2011, we are projecting total EBITDA to be in the range of $80 to $100 million. Our storage segment EBITDA is expected to be $5 to $10 million higher than last year's first quarter due primarily to the incremental EBITDA generated by the May 2010 Mobile County, Alabama storage terminal acquisition and the internal growth project completed at our St. Eustatius terminal facility in 2010. EBITDA in our transportation and asphalt and fuels marketing segments should be comparable to the first quarter of 2010,” said Anastasio. Full-Year 2011 Outlook Commenting on the full-year outlook for the fee-based storage and transportation business segments, Anastasio said, “We expect incremental EBITDA in our storage segment to be $30 to $40 million higher than 2010. EBITDA from internal growth projects completed at our St. James, LA and St. Eustatius terminal facilities in 2010 and 2011 should be the major contributors to the increases in storage segment EBITDA. We expect EBITDA in our transportation segment to be $5 to $10 million lower due to reduced throughputs caused by the refinery turnaround activity of our customers and changing market conditions.” In regard to the margin-based asphalt and fuels marketing segment, Anastasio added, “We expect slightly improving asphalt margins in 2011 as well as improved earnings in our fuels marketing operations to cause EBITDA in this segment to be higher than the $111 million of EBITDA earned in 2010.” A conference call with management is scheduled for 3:00 p.m. ET (2:00 p.m. CT) today, January 31, 2011, to discuss the financial and operational results for the fourth quarter of 2010. Investors interested in listening to the presentation may call 800/622-7620, passcode 33425793. International callers may access the presentation by dialing 706/645-0327, passcode 33425793. The company intends to have a playback available following the presentation, which may be accessed by calling 800/642-1687, passcode 33425793. A live broadcast of the conference call will also be available on the company's Web site at www.nustarenergy.com. NuStar Energy L.P. is a publicly traded, limited partnership based in San Antonio, with 8,417 miles of pipeline; 88 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; and two asphalt refineries with a combined throughput capacity of 104,000 barrels per day. The partnership's combined system has over 93 million barrels of storage capacity. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, NuStar has operations in the United States, Canada, Mexico, the Netherlands and the United Kingdom. For more information, visit NuStar Energy L.P.'s Web site at www.nustarenergy.com. This release serves as qualified notice to nominees under Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note that 100% of NuStar's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar'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, 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 StatementsThis press release includes forward-looking statements regarding future events.All forward-looking statements are based on the partnership and company's beliefs as well as assumptions made by and information currently available to the partnership and company.These statements reflect the partnership and company'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. and NuStar GP Holdings, LLC's 2009 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.NuStar Energy L.P. and SubsidiariesConsolidated Financial Information(Unaudited, Thousands of Dollars, Except Unit Data and Per Unit Data)                   Three Months EndedYear EndedDecember 31,December 31,2010200920102009Statement of Income Data: Revenues: Services revenues $ 205,542 $ 196,216 $ 791,314 $ 745,349 Product sales   988,670     786,562     3,611,747     3,110,522   Total revenues 1,194,212 982,778 4,403,061 3,855,871   Costs and expenses: Cost of product sales 927,678 744,663 3,350,429 2,883,187 Operating expenses 123,004 126,875 486,032 458,892 General and administrative expenses 33,917 27,204 110,241 94,733 Depreciation and amortization expense   39,149     37,420     153,802     145,743   Total costs and expenses   1,123,748     936,162     4,100,504     3,582,555   Operating income 70,464 46,616 302,557 273,316 Equity in earnings of joint venture 2,929 1,917 10,500 9,615 Interest expense, net (20,221 ) (18,858 ) (78,280 ) (79,384 ) Other income, net   1,052     5,976     15,934     31,859   Income before income tax expense (benefit) 54,224 35,651 250,711 235,406 Income tax expense (benefit)   2,689     (1,694 )   11,741     10,531   Net income $ 51,535   $ 37,345   $ 238,970   $ 224,875     Net income applicable to limited partners $ 41,936   $ 28,800   $ 200,886   $ 191,665     Net income per unit applicable to limited partners: $ 0.65   $ 0.50   $ 3.19   $ 3.47     Weighted average limited partner units outstanding 64,610,549 57,523,049 62,946,987 55,232,467   EBITDA (Note 1) $ 113,594 $ 91,929 $ 482,793 $ 460,533   Distributable cash flow (Note 1) $ 76,854 $ 66,218 $ 320,226 $ 345,510       December 31,December 31,20102009Balance Sheet Data: Debt, including current portion (a) $ 2,137,080 $ 1,849,763 Partners' equity (b) 2,702,700 2,484,968 Debt-to-capitalization ratio (a) / ((a)+(b)) 44.2 % 42.7 %   NuStar Energy L.P. and SubsidiariesConsolidated Financial Information - Continued(Unaudited, Thousands of Dollars, Except Barrel Data)                   Three Months EndedYear EndedDecember 31,December 31,2010200920102009   Segment Data:Storage: Throughput (barrels/day) 677,736 667,655 669,435 667,169 Throughput revenues $ 19,520 $ 18,705 $ 75,605 $ 78,353 Storage lease revenues   113,740     108,519     444,233     409,219   Total revenues 133,260 127,224 519,838 487,572 Operating expenses 65,634 68,645 263,820 245,439 Depreciation and amortization expense   20,067     18,416     77,071     70,888   Segment operating income $ 47,559   $ 40,163   $ 178,947   $ 171,245     Transportation: Refined products pipelines throughput (barrels/day) 531,626 566,694 529,946 573,778 Crude oil pipelines throughput (barrels/day)   342,417     357,392     371,726     351,888   Total throughput (barrels/day) 874,043 924,086 901,672 925,666 Revenues $ 83,255 $ 80,919 $ 316,072 $ 302,070 Operating expenses 28,100 28,817 116,884 111,673 Depreciation and amortization expense   12,588     12,627     50,617     50,528   Segment operating income $ 42,567   $ 39,475   $ 148,571   $ 139,869     Asphalt and fuels marketing: Product sales $ 989,896 $ 786,562 $ 3,615,890 $ 3,110,522 Cost of product sales   933,151     749,007     3,371,854     2,899,457   Gross margin 56,745 37,555 244,036 211,065 Operating expenses 35,994 37,297 132,918 130,973 Depreciation and amortization expense   5,003     4,927     20,257     19,463   Segment operating income $ 15,748   $ (4,669 ) $ 90,861   $ 60,629     Consolidation and intersegment eliminations: Revenues $ (12,199 ) $ (11,927 ) $ (48,739 ) $ (44,293 ) Cost of product sales (5,473 ) (4,344 ) (21,425 ) (16,270 ) Operating expenses   (6,724 )   (7,884 )   (27,590 )   (29,193 ) Total $ (2 ) $ 301   $ 276   $ 1,170     Consolidated Information: Revenues $ 1,194,212 $ 982,778 $ 4,403,061 $ 3,855,871 Cost of product sales 927,678 744,663 3,350,429 2,883,187 Operating expenses 123,004 126,875 486,032 458,892 Depreciation and amortization expense   37,658     35,970     147,945     140,879   Segment operating income 105,872 75,270 418,655 372,913 General and administrative expenses 33,917 27,204 110,241 94,733 Other depreciation and amortization expense   1,491     1,450     5,857     4,864   Consolidated operating income $ 70,464   $ 46,616   $ 302,557   $ 273,316     NuStar Energy L.P. and SubsidiariesConsolidated Financial Information - Continued(Unaudited, Thousands of Dollars, Except Per Unit Data)                       Notes: 1. NuStar Energy L.P. utilizes two financial measures, EBITDA and distributable cash flow, which are not defined in United States generally accepted accounting principles. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare partnership performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the partnership's assets and the cash that the business is generating. Neither EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.   The following is a reconciliation of net income to EBITDA and distributable cash flow:   Three Months EndedYear EndedDecember 31,December 31,2010200920102009   Net income $ 51,535 $ 37,345 $ 238,970 $ 224,875 Plus interest expense, net 20,221 18,858 78,280 79,384 Plus income tax expense (benefit) 2,689 (1,694 ) 11,741 10,531 Plus depreciation and amortization expense   39,149     37,420     153,802     145,743   EBITDA 113,594 91,929 482,793 460,533 Less equity earnings from joint ventures (2,929 ) (1,917 ) (10,500 ) (9,615 ) Less interest expense, net (20,221 ) (18,858 ) (78,280 ) (79,384 ) Less reliability capital expenditures (15,704 ) (12,248 ) (54,031 ) (45,163 ) Less income tax (expense) benefit (2,689 ) 1,694 (11,741 ) (10,531 ) Plus distributions from joint venture 2,125 2,950 9,625 9,700 Mark-to-market impact on hedge transactions (a)   2,678     2,668     (17,640 )   19,970   Distributable cash flow 76,854 66,218 320,226 345,510   General partner's interest in distributable cash flow   (10,160 )   (9,266 )   (39,531 )   (34,142 ) Limited partners' interest in distributable cash flow $ 66,694   $ 56,952   $ 280,695   $ 311,368     Distributable cash flow per limited partner unit $ 1.03 $ 0.99 $ 4.43 $ 5.66   (a) Distributable cash flow excludes the impact of unrealized mark-to-market gains and losses which arise from valuing certain derivative contracts that hedge a portion of our inventory but do not qualify for hedge accounting treatment. The gain or loss associated with these contracts is realized in distributable cash flow when the contracts are settled. NuStar Energy, L.P., San AntonioInvestors, Chris Russell, Vice PresidentInvestor Relations: 210-918-3507orMedia, Mary Rose Brown, Senior Vice President,Corporate Communications: 210-918-2314Web site: http://www.nustarenergy.com