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Press release from GlobeNewswire (a Nasdaq OMX company)

Buckeye Partners, L.P. Reports 2012 Second Quarter Earnings Results and Declares Cash Distribution

Friday, August 03, 2012

Buckeye Partners, L.P. Reports 2012 Second Quarter Earnings Results and Declares Cash Distribution05:00 EDT Friday, August 03, 2012HOUSTON, Aug. 3, 2012 (GLOBE NEWSWIRE) -- Buckeye Partners, L.P. ("Buckeye") (NYSE:BPL) today reported net income attributable to Buckeye's unitholders for the second quarter of 2012 of $54.4 million, or $0.55 per diluted unit, compared to net income attributable to Buckeye's unitholders for the second quarter of 2011 of $92.0 million, or $1.00 per diluted unit. Buckeye's Adjusted EBITDA (as defined below) for the second quarter of 2012 was $119.9 million compared with Adjusted EBITDA of $117.6 million for the second quarter of 2011. Operating income for the second quarter of 2012 was $81.8 million compared to $85.9 million for the second quarter of 2011. Net income attributable to Buckeye's unitholders for the second quarter of 2011 benefited from a gain of $34.1 million on the sale of a minority equity interest in West Texas LPG Pipeline Limited Partnership. "Improvement in our Adjusted EBITDA over the second quarter of 2011 primarily reflects the successful integration of our pipeline and terminal acquisitions made during 2011," stated Clark C. Smith, President and Chief Executive Officer. "During the quarter, we experienced improving business conditions for our domestic pipelines and terminals as well as in our international operations, though we continue to be challenged in our Energy Services segment as backwardation and continued basis volatility negatively impacted our results. Looking forward, strengthening domestic volumes and increasing demand for storage, both domestically and internationally, are expected to contribute to improved results." Mr. Smith continued, "We are excited to be moving forward with our integration and commercialization plans on our recently completed purchase of the Perth Amboy, New Jersey, marine terminal facility. Our teams are working to transform this facility into a highly-efficient, multi-product storage, blending, and throughput facility with a direct connection to our Linden complex. Another important milestone reached during the second quarter was the execution of a lease agreement with a major international petroleum company for 1.1 million barrels of storage capacity that was placed into service July 1, representing the initial phase of our BORCO expansion." Buckeye also announced today that its general partner declared a cash distribution of $1.0375 per limited partner ("LP") unit for the quarter ended June 30, 2012. Class B unitholders will not receive a distribution of cash, but instead will be issued additional Class B units pursuant to Buckeye's partnership agreement. The distribution will be payable on August 31, 2012 to unitholders of record on August 15, 2012. This cash distribution represents a 2.5% increase over the $1.0125 per LP unit distribution declared for the second quarter of 2011. Buckeye has paid cash distributions in each quarter since its formation in 1986.  Buckeye will host a conference call with members of executive management today, August 3, 2012, at 11:00 a.m. Eastern Time. To access the live webcast of the call, go to http://investor.shareholder.com/media/eventdetail.cfm?eventid=116084&CompanyID=AMDA-QJUY2&e=1&mediaKey=D17492E652916DA0EAD3A8A9634A6324 10 minutes prior to its start. Interested parties may participate in the call by dialing 877-870-9226 and referencing conference ID 99543111.  A replay will be archived and available at this link through September 3, 2012, and the replay also may be accessed by dialing 800-585-8367 and entering conference ID 99543111.  Buckeye Partners, L.P. (NYSE:BPL) is a publicly traded master limited partnership that owns and operates one of the largest independent liquid petroleum products pipeline systems in the United States in terms of volumes delivered, with over 6,000 miles of pipeline.  Buckeye also owns approximately 100 liquid petroleum products terminals with aggregate storage capacity of approximately 69 million barrels, operates and/or maintains approximately 2,800 miles of pipeline under agreements with major oil and chemical companies, owns a high-performance natural gas storage facility in Northern California, and markets liquid petroleum products in certain regions served by its pipeline and terminal operations.  Buckeye's flagship marine terminal in The Bahamas, BORCO, is one of the largest crude oil and petroleum products storage facilities in the world, serving the international markets as a premier global logistics hub.  More information concerning Buckeye can be found at www.buckeye.com. Adjusted EBITDA and distributable cash flow are measures not defined by GAAP. Adjusted EBITDA is the primary measure used by our senior management, including our Chief Executive Officer, to (i) evaluate our consolidated operating performance and the operating performance of our business segments, (ii) allocate resources and capital to business segments, (iii) evaluate the viability of proposed projects, and (iv) determine overall rates of return on alternative investment opportunities. Distributable cash flow is another measure used by our senior management to provide a clearer picture of Buckeye's cash available for distribution to its unitholders. Adjusted EBITDA and distributable cash flow eliminate (i) non-cash expenses, including, but not limited to, depreciation and amortization expense resulting from the significant capital investments we make in our businesses and from intangible assets recognized in business combinations, (ii) charges for obligations expected to be settled with the issuance of equity instruments, and (iii) items that are not indicative of our core operating performance results and business outlook. Buckeye believes that investors benefit from having access to the same financial measures used by senior management and that these measures are useful to investors because they aid in comparing Buckeye's operating performance with that of other companies with similar operations. The Adjusted EBITDA and distributable cash flow data presented by Buckeye may not be comparable to similarly titled measures at other companies because these items may be defined differently by other companies. Please see the attached reconciliations of each of Adjusted EBITDA and distributable cash flow to net income.  This press release includes forward-looking statements that we believe to be reasonable as of today's date. Such statements are identified by use of the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "should," and similar expressions. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and that may be beyond our control. Among them are (i) changes in federal, state, local, and foreign laws or regulations to which we are subject, including those governing pipeline tariff rates and those that permit the treatment of us as a partnership for federal income tax purposes, (ii) terrorism, adverse weather conditions, including hurricanes, environmental releases, and natural disasters, (iii) changes in the marketplace for our products or services, such as increased competition, better energy efficiency, or general reductions in demand, (iv) adverse regional, national, or international economic conditions, adverse capital market conditions, and adverse political developments, (v) shutdowns or interruptions at our pipeline, terminal, and storage assets or at the source points for the products we transport, store, or sell, (vi) unanticipated capital expenditures in connection with the construction, repair, or replacement of our assets, (vii) volatility in the price of refined petroleum products and the value of natural gas storage services, (viii) nonpayment or nonperformance by our customers, (ix) our ability to integrate acquired assets, including the Perth Amboy facility, with our existing assets and to realize anticipated cost savings and other efficiencies and benefits, including anticipated benefits from the planned expansion and modernization of the Perth Amboy facility, and (x) an unfavorable outcome with respect to the order issued by the Federal Energy Regulatory Commission ("FERC") on March 30, 2012 regarding the methodology used by Buckeye Pipe Line Company, L.P. to set tariff rates on its pipeline system and related proceedings before FERC. You should read our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2011 and our most recently filed Quarterly Report on Form 10-Q, for a more extensive list of factors that could affect results. We undertake no obligation to revise our forward-looking statements to reflect events or circumstances occurring after today's date.  This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of Buckeye's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business.  Accordingly, Buckeye's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.BUCKEYE PARTNERS, L.P.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per unit amounts)(Unaudited)       Three Months EndedSix Months Ended June 30,June 30, 2012201120122011Revenue:         Product sales  $ 745,863  $ 853,706  $ 1,773,751  $ 1,891,262 Transportation and other services 236,777 223,386 468,328 438,366 Total revenue 982,640 1,077,092 2,242,079 2,329,628          Costs and expenses:         Cost of product sales and natural gas storage services 747,155 854,341 1,778,640 1,892,303 Operating expenses 101,466 89,869 199,021 170,133 Depreciation and amortization 34,325 29,756 67,352 55,997 General and administrative 17,877 17,191 34,852 32,697 Total costs and expenses 900,823 991,157 2,079,865 2,151,130           Operating income 81,817 85,935 162,214 178,498          Other income (expense):         Earnings from equity investments 1,786 2,034 3,734 5,381 Gain on sale of equity investment -- 34,112 -- 34,112 Interest and debt expense (27,612) (28,596) (56,422) (57,093) Other income (expense) 35 107 (33) 507 Total other income (expense), net (25,791) 7,657 (52,721) (17,093)           Net income 56,026 93,592 109,493 161,405 Less: Net income attributable to noncontrolling interests (1,647) (1,571) (3,155) (2,891)          Net income attributable to Buckeye Partners, L.P.  $ 54,379  $ 92,021  $ 106,338  $ 158,514         Earnings per unit:         Basic  $ 0.56  $ 1.00  $ 1.10  $ 1.81 Diluted  $ 0.55  $ 1.00  $ 1.10  $ 1.80         Weighted average units outstanding:         Basic 97,818 91,743 96,524 87,728 Diluted 98,109 92,088 96,834 88,042  BUCKEYE PARTNERS, L.P.SELECTED FINANCIAL AND OPERATING DATA(In thousands)(Unaudited)            Three Months EndedSix Months Ended  June 30,June 30,  2012201120122011Revenue:         Pipelines & Terminals  $ 167,312  $ 149,110  $ 333,240  $ 293,316 International Operations 50,428 52,990  100,663.00 98,065 Natural Gas Storage 16,469 14,085 26,680 33,689 Energy Services 746,821 864,125 1,777,247 1,915,437 Development & Logistics 13,152 10,580 25,617 20,171 Intersegment (11,542) (13,798) (21,368) (31,050) Total revenue  $ 982,640  $ 1,077,092  $ 2,242,079  $ 2,329,628          Total costs and expenses: (1)         Pipelines & Terminals  $ 97,192  $ 81,318  $ 193,885  $ 154,197 International Operations 32,656 33,018 62,045 59,364 Natural Gas Storage 20,018 19,703 34,495 39,707 Energy Services 752,348 861,867 1,790,553 1,911,912 Development & Logistics 10,151 9,049 20,255 17,000 Intersegment (11,542) (13,798) (21,368) (31,050) Total costs and expenses  $ 900,823  $ 991,157  $ 2,079,865  $ 2,151,130          Depreciation and amortization:         Pipelines & Terminals  $ 15,311  $ 13,214  $ 31,096  $ 25,775 International Operations 15,386 13,036 28,902 23,431 Natural Gas Storage 1,899 1,803 3,775 3,519 Energy Services 1,238 1,280 2,594 2,515 Development & Logistics 491 423 985 757 Total depreciation and amortization  $ 34,325  $ 29,756  $ 67,352  $ 55,997          Operating income (loss):         Pipelines & Terminals  $ 70,120  $ 67,792  $ 139,355  $ 139,119 International Operations 17,772 19,972 38,618 38,701 Natural Gas Storage (3,549) (5,618) (7,815) (6,018) Energy Services (5,527) 2,258 (13,306) 3,525 Development & Logistics 3,001 1,531 5,362 3,171 Total operating income  $ 81,817  $ 85,935  $ 162,214  $ 178,498          Adjusted EBITDA:         Pipelines & Terminals  $ 89,598  $ 84,113  $ 177,830  $ 174,233 International Operations 30,591 30,646 62,257 56,153 Natural Gas Storage (388) (2,612) (1,656) (160) Energy Services (3,206) 3,841 (9,378) 6,600 Development & Logistics 3,337 1,643 5,866 3,044 Adjusted EBITDA  $ 119,932  $ 117,631  $ 234,919  $ 239,870          Capital additions: (2)         Pipelines & Terminals  $ 34,709  $ 19,883  $ 72,106  $ 34,512 International Operations 38,506 38,692 73,499 60,395 Natural Gas Storage 203 3,339 1,729 4,821 Energy Services 203 514 487 690 Development & Logistics 66 -- 179 43 Total capital additions  $ 73,687  $ 62,428  $ 148,000  $ 100,461          Summary of capital additions: (2)         Maintenance capital expenditures  $ 10,765  $ 12,293  $ 23,875  $ 19,766 Expansion and cost reduction 62,922 50,135 124,125 80,695 Total capital additions  $ 73,687  $ 62,428  $ 148,000  $ 100,461                  Key Balance Sheet information:    June 30, 2012December 31, 2011 Cash and cash equivalents      $ 558  $ 12,986 Long-term debt, total (3)     2,279,909 2,393,574                     (1) Includes depreciation and amortization. (2) Amounts exclude accruals for capital expenditures. (3) Includes long-term debt portion of Buckeye Partners, L.P. Credit Facility of $210.0 million and $324.0 million as of June 30, 2012 and December 31, 2011, respectively.  BUCKEYE PARTNERS, L.P.SELECTED FINANCIAL AND OPERATING DATA - Continued(Unaudited)            Three Months EndedSix Months Ended  June 30,June 30,  2012201120122011           Pipelines & Terminals (average bpd in thousands):         Pipelines:         Gasoline 724.9 668.4 693.7 640.3 Jet fuel 342.9 348.1 337.7 337.3 Middle distillates (1) 297.9 277.1 318.9 314.9 Other products (2) 31.3 32.0 25.9 27.3 Total pipelines throughput 1,397.0 1,325.6 1,376.2 1,319.8 Terminals:         Products throughput (3) 900.5 625.6 876.8 581.0           Pipeline Average Tariff (cents/bbl) 82.7 77.3 80.7 75.5           Energy Services (in millions of gallons):         Sales volumes 258.5 281.9 603.3 663.4           (1)  Includes diesel fuel, heating oil and kerosene. (2)  Includes liquefied petroleum gas. (3)  Amounts include throughput volumes at terminals acquired from BP Products North America Inc. and its affiliates and ExxonMobil Corporation on June 1, 2011 and July 19, 2011, respectively.  BUCKEYE PARTNERS, L.P.SELECTED FINANCIAL AND OPERATING DATANon-GAAP Reconciliations(In thousands, except per unit amounts and coverage ratio)(Unaudited)            Three Months EndedSix Months Ended  June 30,June 30,  2012201120122011 Net income  $ 56,026  $ 93,592  $ 109,493  $ 161,405 Less: Net income attributable to noncontrolling interests (1,647) (1,571) (3,155) (2,891) Net income attributable to Buckeye Partners, L.P. 54,379 92,021 106,338 158,514 Add: Interest and debt expense 27,612 28,596 56,422 57,093 Income tax expense (benefit) 329 (17) 666 (193) Depreciation and amortization 34,325 29,756 67,352 55,997 Non-cash deferred lease expense 975 1,031 1,950 2,061 Non-cash unit-based compensation expense 5,061 2,752 7,688 4,838 Less: Amortization of unfavorable storage contracts (1) (2,749) (2,396) (5,497) (4,328) Gain on sale of equity investment -- (34,112) -- (34,112) Adjusted EBITDA  $ 119,932  $ 117,631  $ 234,919  $ 239,870 Less: Interest and debt expense, excluding amortization of deferred financing costs and debt discounts (26,767) (27,438) (54,684) (54,832) Income tax (expense) benefit (329) 17 (666) 193 Maintenance capital expenditures (10,765) (12,293) (23,875) (19,766) Distributable cash flow  $ 82,071  $ 77,917  $ 155,694  $ 165,465           Distributions for Coverage Ratio (2)  $ 94,054  $ 87,235  $ 188,104  $ 173,385           Coverage Ratio 0.87 0.89 0.83 0.95           (1) Represents the amortization of the negative fair values allocated to certain unfavorable storage contracts acquired in connection with the BORCO acquisition. (2) Represents cash distributions declared for limited partner units ("LP units") outstanding at the end of each respective period. Amounts for 2012 reflect actual cash distributions paid on LP units for the quarter ended March 31, 2012 and estimated cash distributions for the quarter ended June 30, 2012. Distributions with respect to the 7,445,999 Class B Units outstanding on the record date for the quarter ending March 31, 2012 and the 7,605,510 Class B units expected to be outstanding on the record date for the quarter ended June 30, 2012 are paid in additional Class B units rather than in cash.CONTACT: Kevin J. Goodwin Senior Director, Investor Relations Irelations@buckeye.com (800) 422-2825