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Press release from GlobeNewswire (a Nasdaq OMX company)

Buckeye Partners, L.P. Reports 2012 Fourth Quarter and Full Year Earnings Results and Declares Cash Distribution

Friday, February 08, 2013

Buckeye Partners, L.P. Reports 2012 Fourth Quarter and Full Year Earnings Results and Declares Cash Distribution05:30 EST Friday, February 08, 2013HOUSTON, Feb. 8, 2013 (GLOBE NEWSWIRE) -- Buckeye Partners, L.P. ("Buckeye") (NYSE:BPL) today reported its financial results for the fourth quarter and full year 2012. Buckeye reported net income attributable to Buckeye's unitholders for the fourth quarter of 2012 of $94.9 million, or $0.96 per diluted unit (excluding a non-cash impairment charge of $60.0 million related to the ceasing of operations of a portion of Buckeye's NORCO pipeline system in January 2013), compared to net income attributable to Buckeye's unitholders for the fourth quarter of 2011 of $59.7 million, or $0.64 per diluted unit. Buckeye's Adjusted EBITDA (as defined below) for the fourth quarter of 2012 was $172.0 million compared to $121.5 million for the fourth quarter of 2011. Operating income for the fourth quarter of 2012, excluding the impairment charge, was $122.4 million compared to $87.7 million for the fourth quarter of 2011. Including the impairment charge, net income attributable to Buckeye's unitholders and operating income for the fourth quarter of 2012 were $35.0 million, or $0.35 per diluted unit, and $62.5 million, respectively. For 2012, Buckeye reported net income attributable to Buckeye's unitholders of $226.4 million, or $2.32 per diluted unit, operating income of $339.2 million, Adjusted EBITDA of $559.5 million, and distributable cash flow of $392.5 million. Full year 2012 net income attributable to Buckeye's unitholders and operating income were negatively impacted by the non-cash charge of $60.0 million for the impairment of a portion of Buckeye's NORCO pipeline system. Full year 2011 net income attributable to Buckeye's unitholders and operating income were $108.5 million, or $1.20 per diluted unit, and $188.7 million, respectively, both of which were negatively impacted by a non-cash charge of $169.6 million for the impairment of goodwill associated with the acquisition of Lodi Gas Storage, L.L.C. Excluding the impairment charges, net income attributable to Buckeye's unitholders would have been $286.4 million, or $2.93 per diluted unit, and $278.1 million, or $3.06 per diluted unit, for 2012 and 2011, respectively.  Operating income, excluding the impairment charges, would have been $399.2 million for 2012 and $358.2 million for 2011. "We are pleased to report record Adjusted EBITDA for the fourth quarter and full year 2012," stated Clark C. Smith, President and Chief Executive Officer. "We finished the year exceptionally strong, with fourth quarter results reflecting year-over-year improvement in each of our business segments." "During the fourth quarter of 2012, we continued to make progress on our expansion at BORCO by placing into service 775,000 barrels of refined product storage capacity, with another 1.6 million barrels of fully leased capacity to be placed into service in the first quarter of 2013, increasing BORCO's storage capacity to 24.9 million barrels," continued Smith. "We also commenced crude oil operations during the quarter at our Albany terminal pursuant to the previously announced multi-year agreement with Irving Oil Limited and benefitted from our first full quarter of operating results for the Perth Amboy terminal which was acquired from Chevron in late July."  Buckeye also announced today that its general partner declared a cash distribution of $1.0375 per limited partner ("LP") unitfor the quarter ended December 31, 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 February 28, 2013, to unitholders of record on February 19, 2013. 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, February 8, 2013, 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=123983&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 88359046.  A replay will be archived and available at this link through March 29, 2013, and the replay also may be accessed by dialing 800-585-8367 and entering conference ID 88359046.  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 approximately 6,000 miles of pipeline.  Buckeye also owns approximately 100 liquid petroleum products terminals with aggregate storage capacity of over 70 million barrels. In addition, Buckeye operates and/or maintains third-party pipelines under agreements with major oil and gas 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 with our existing assets and to realize anticipated cost savings and other efficiencies and benefits, (x) our ability to successfully complete our organic growth projects and to realize the anticipated financial benefits, and (xi) an unfavorable outcome with respect to the proceedings pending before the Federal Energy Regulatory Commission ("FERC") regarding Buckeye Pipe Line Company, L.P.'s tariff rates. 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.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per unit amounts)(Unaudited)            Three Months Ended December 31,Year Ended December 31,  2012 2011 2012 2011 Revenue:     Product sales $ 869,602 $ 1,069,190 $ 3,332,301 $ 3,844,888 Transportation, storage and other services  279,591  243,881  1,024,941  914,722 Total revenue  1,149,193  1,313,071  4,357,242  4,759,610          Costs and expenses:         Cost of product sales and natural gas storage services  868,158  1,077,680  3,344,817  3,851,579 Operating expenses  97,921  99,032  397,007  366,133 Depreciation and amortization  41,938  32,307  146,424  119,534 General and administrative  18,762  16,371  69,836  64,122 Asset impairment expense  59,950  --  59,950  -- Goodwill impairment expense  --  --  --  169,560 Total costs and expenses  1,086,729  1,225,390  4,018,034  4,570,928           Operating income  62,464  87,681  339,208  188,682          Other income (expense):         Earnings from equity investments  1,813  2,674  6,100  10,434 Gain on sale of equity investment  --  615  --  34,727 Interest and debt expense (29,821) (29,269) (114,980) (119,561) Other income (expense) (509) (242) (452)  190 Total other expense, net (28,517) (26,222) (109,332) (74,210)           Income before taxes  33,947  61,459  229,876  114,472 Income tax benefit (1,852) -- (675) (192) Net Income $ 35,799 $ 61,459 $ 230,551 $ 114,664 Less: Net income attributable to noncontrolling interests (836) (1,772) (4,134) (6,163) Net income attributable to Buckeye Partners, L.P. $ 34,963 $ 59,687 $ 226,417 $ 108,501          Earnings per unit:         Basic $ 0.36 $ 0.64 $ 2.33 $ 1.20 Diluted $ 0.35 $ 0.64 $ 2.32 $ 1.20          Weighted average units outstanding:         Basic  98,180  93,166  97,309  90,423 Diluted  98,514  93,565  97,635  90,772  BUCKEYE PARTNERS, L.P.SELECTED FINANCIAL AND OPERATING DATA(In thousands)(Unaudited)            Three Months Ended December 31,Year Ended December 31,  2012 2011 2012 2011 Revenue:          Pipelines & Terminals  $ 191,277 $ 175,233 $ 719,126 $ 631,289 International Operations   102,013  47,909  254,362  193,960 Natural Gas Storage   24,430  16,559  71,339  65,990 Energy Services   824,152  1,078,906  3,293,274  3,888,961 Development & Logistics   12,796  12,131  50,211  43,068 Intersegment  (5,475) (17,667) (31,070) (63,658) Total revenue  $ 1,149,193 $ 1,313,071 $ 4,357,242 $ 4,759,610          Total costs and expenses: (1)          Pipelines & Terminals  $ 162,852 $ 93,037 $ 458,806 $ 340,710 International Operations   78,563  32,200  171,223  121,893 Natural Gas Storage   21,465  15,626  77,832  243,153 Energy Services   818,567  1,092,308  3,301,423  3,893,423 Development & Logistics   10,757  9,886  39,820  35,407 Intersegment  (5,475) (17,667) (31,070) (63,658) Total costs and expenses  $ 1,086,729 $ 1,225,390 $ 4,018,034 $ 4,570,928          Depreciation and amortization:          Pipelines & Terminals  $ 22,863 $ 14,967 $ 72,231 $ 55,469 International Operations   15,265  13,712  59,138  50,011 Natural Gas Storage   1,899  1,810  7,567  7,136 Energy Services   1,417  1,367  5,521  5,261 Development & Logistics   494  451  1,967  1,657 Total depreciation and amortization  $ 41,938 $ 32,307 $ 146,424 $ 119,534          Operating income (loss):          Pipelines & Terminals  $ 28,425 $ 82,196 $ 260,320 $ 290,579 International Operations   23,450  15,709  83,139  72,067 Natural Gas Storage   2,965  933 (6,493) (177,163) Energy Services   5,585 (13,402) (8,149) (4,462) Development & Logistics   2,039  2,245  10,391  7,661 Total operating income  $ 62,464 $ 87,681 $ 339,208 $ 188,682          Adjusted EBITDA:          Pipelines & Terminals  $ 118,346 $ 100,274 $ 409,055 $ 361,018 International Operations   36,299  26,748  132,104  112,996 Natural Gas Storage   6,417  3,938  6,118  4,204 Energy Services   8,283 (11,781)  524  1,797 Development & Logistics   2,688  2,369  11,722  7,932 Adjusted EBITDA  $ 172,033 $ 121,548 $ 559,523 $ 487,947          Capital additions, net: (2)          Pipelines & Terminals  $ 49,006 $ 42,522 $ 156,056 $ 103,678 International Operations   47,496  61,601  169,699  184,438 Natural Gas Storage   405  4,424  2,369  10,097 Energy Services   983  596  2,490  1,824 Development & Logistics   443  4,813  724  5,287 Total capital additions, net  $ 98,333 $ 113,956 $ 331,338 $ 305,324          Summary of capital additions, net: (2)          Maintenance capital expenditures  $ 18,661 $ 20,898 $ 54,425 $ 57,467 Expansion and cost reduction   79,672  93,058  276,913  247,857 Total capital additions, net  $ 98,333 $ 113,956 $ 331,338 $ 305,324                December 31,Key Balance Sheet Information:     20122011 Cash and cash equivalent      $ 6,776 $ 12,986 Long-term debt, total (3)       2,735,244  2,393,574 _________________           (1) Includes depreciation and amortization, asset impairment expense and goodwill impairment expense.      (2) Amounts exclude accruals for capital expenditures.          (3) Includes long-term debt portion of Buckeye Partners, L.P. Credit Facility of $665.0 million and $324.0 million for 2012 and 2011, respectively.  BUCKEYE PARTNERS, L.P.SELECTED FINANCIAL AND OPERATING DATA - Continued(Unaudited)            Three Months Ended December, 31Year Ended December, 31  2012 2011 2012 2011  Pipeline & Terminals (average bpd in thousands):         Pipelines:          Gasoline   690.4  697.5  701.9  668.1 Jet fuel   328.5  342.9  339.2  340.6 Middle distillates (1)   345.2  379.8  322.3  327.2 Other products (2)   18.4  14.8  22.2  22.2 Total pipelines throughput   1,382.5  1,435.0  1,385.6  1,358.1           Terminals:          Products throughput (3)   924.0  877.4  897.3  730.9           Pipeline Average Tariff (cents/bbl)   80.3  79.0  81.5  76.9           Energy Services (in millions of gallons)          Sales volumes   269.6  377.0  1,106.3  1,337.8           _________________         (1)  Includes diesel fuel, heating oil and kerosene.         (2)  Includes liquefied petroleum gas ("LPG").         (3)  Amounts for 2011 include throughput volumes on terminals acquired from BP Products North America Inc. and its affiliates ("BP") 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 Ended December 31,Year Ended December 31,  2012 2011 2012 2011        Net income  $ 35,799 $ 61,459 $ 230,551 $ 114,664 Less: Net income attributable to noncontrolling interests  (836) (1,772) (4,134) (6,163) Net income attributable to Buckeye Partners, L.P.   34,963  59,687  226,417  108,501 Add: Interest and debt expense   29,821  29,269  114,980  119,561 Income tax benefit  (1,852)  -- (675) (192) Depreciation and amortization   41,938  32,307  146,424  119,534 Non-cash deferred lease expense   976  1,031  3,901  4,122 Non-cash unit-based compensation expense   8,986  2,618  19,520  9,150 Asset impairment expense   59,950  --  59,950  -- Goodwill impairment expense   --  --  --  169,560 Less: Amortization of unfavorable storage contracts (1) (2,749) (2,749) (10,994) (7,562) Gain on sale of equity investment   -- (615)  -- (34,727) Adjusted EBITDA  $ 172,033 $ 121,548 $ 559,523 $ 487,947 Less: Interest and debt expense, excluding amortization of deferred financing costs and debt discounts  (28,959) (28,400) (111,511) (111,941) Income tax (expense) benefit, excluding non-cash taxes   82  -- (1,095) (6) Maintenance capital expenditures  (18,661) (20,898) (54,425) (57,467) Distributable cash flow  $ 124,495 $ 72,250 $ 392,492 $ 318,533           Distributions for coverage ratio (2) $ 94,033 $ 89,478 $ 376,193 $ 351,245           Coverage ratio   1.32  0.81  1.04  0.91_____________________          (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 LP units outstanding as of each respective period. Amounts for 2012 reflect actual cash distributions paid on LP units for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012 and estimated cash distribution for the quarter ended December 31, 2012. Distributions with respect to the 7,445,999, 7,605,510 and 7,777,811 Class B Units outstanding on the record date for the quarters ended March 31, 2012, June 30, 2012, and September 30, 2012, respectively, and the 7,974,750 Class B units expected to be outstanding on the record date for the quarter ending December 31, 2012 are paid in additional Class B units rather than in cash.  BUCKEYE PARTNERS, L.P.SELECTED FINANCIAL AND OPERATING DATANon-GAAP Reconciliations - Continued(In thousands, except per unit amounts and coverage ratio)(Unaudited)            Three Months Ended December 31,Year Ended December 31,  2012 2011 2012 2011       Net income attributable to Buckeye Partners, L.P. (as adjusted):         Net income (as reported)  $ 35,799 $ 61,459 $ 230,551 $ 114,664 Add: Asset impairment expense  59,950  --  59,950  -- Goodwill impairment expense  --  --  --  169,560 Net income (as adjusted)  95,749  61,459  290,501  284,224 Less: Net income attributable to noncontrolling interests (836) (1,772) (4,134) (6,163)Net income attributable to Buckeye Partners, L.P. (as adjusted) $ 94,913 $ 59,687 $ 286,367 $ 278,061           Earnings per unit-diluted (as adjusted) $ 0.96 $ 0.64 $ 2.93 $ 3.06          Operating income (as adjusted):         Operating income (as reported) $ 62,464 $ 87,681 $ 339,208 $ 188,682 Add: Asset impairment expense  59,950  --  59,950  -- Goodwill impairment expense  --  --  --  169,560Operating income (as adjusted) $ 122,414 $ 87,681 $ 399,158 $ 358,242CONTACT: Kevin J. Goodwin Senior Director, Investor Relations Irelations@buckeye.com (800) 422-2825