Buckeye Partners, L.P. Reports 2013 Third Quarter Results and Increases Cash Distribution

HOUSTON, Nov. 1, 2013 (GLOBE NEWSWIRE) -- Buckeye Partners, L.P. ("Buckeye") (NYSE:BPL) today reported net income attributable to Buckeye's unitholders for the third quarter of 2013 of $77.3 million, or $0.72 per diluted unit, compared to net income attributable to Buckeye's unitholders for the third quarter of 2012 of $85.1 million, or $0.87 per diluted unit. Adjusted EBITDA (as defined below) for the third quarter of 2013 was $153.8 million compared with Adjusted EBITDA of $152.6 million for the third quarter of 2012. Operating income for the third quarter of 2013 was $111.4 million compared to $113.9 million for the third quarter of 2012. The diluted weighted average of units outstanding in the third quarter of 2013 was 106.8 million compared to 98.3 million in the third quarter of 2012. The increase in units is primarily the result of our unit offering in January 2013.

"We continued to benefit from the strong performance of our two largest business segments during this quarter. Investments in organic growth projects, including crude oil diversification and additional service capabilities in our Pipelines & Terminals segment contributed to our strong results. We generated incremental cash flows from higher throughput volumes at our terminals, including crude oil services at our Albany terminal, propylene and diluent services at our Chicago Complex, and increased butane blending activities," stated Clark C. Smith, President and Chief Executive Officer. "In addition, our results reflect contributions from our expansion activities at our BORCO facility, including the completion of the last phase of the expansion that placed into service 1.2 million barrels of fully leased crude oil storage capacity."

"Adjusted EBITDA for the third quarter of 2012 included a one-time $10.6 million adjustment related to a pipeline product settlement. Excluding this settlement adjustment, Adjusted EBITDA increased over 8% compared to the third quarter of 2012," said Mr. Smith. "We are well-positioned to generate strong financial results in the fourth quarter of 2013 as we expect the pipe-to-rail crude oil project at our Chicago Complex to be operational this month, and the butane blending winter season will be in full swing," continued Mr. Smith.

Buckeye announced in October that it had signed a definitive agreement with Hess Corporation to acquire a premier network of liquid petroleum products terminals with 39 million barrels of storage capacity. In connection with this announcement, Buckeye issued 8.6 million limited partner units ("LP Units") with the intent to utilize the net proceeds from this offering to fund indirectly a portion of the purchase price. "We are excited about this acquisition and how it expands our footprint into several key, high growth markets. We believe we will generate significant value by implementing our commercial operating model across these strategic assets," said Mr. Smith. "We expect this transaction to be immediately accretive to our distributable cash flow per unit, excluding first year transition-related expenses, and position us for long-term distribution growth."

Distributable cash flow (as defined below) for the third quarter of 2013 was $96.3 million compared with distributable cash flow of $112.3 million for the third quarter of 2012. Buckeye also reported distribution coverage of 0.84 times for the third quarter of 2013. "As expected, coverage for the quarter was negatively impacted by the conversion of 8.5 million Class B Units during the quarter. In addition, maintenance capital expenditures were elevated during the quarter as a result of the completion of activities previously planned for the first half of the year that were delayed due to extended permitting timelines and difficulty in securing available qualified contractors, many of whom were working on the post-Sandy recovery," added Mr. Smith. Maintenance capital expenditures for the third quarter of 2013 were $26.1 million compared with $11.9 million for the third quarter of 2012.

Buckeye announced today that its general partner declared a cash distribution of $1.075 per LP Unit for the quarter ended September 30, 2013. As of September 1, 2013, 8.5 million Class B Units outstanding converted into LP Units on a one-for-one basis. The distribution will be payable on November 19, 2013 to unitholders of record on November 12, 2013. This cash distribution represents a 3.6 percent increase over the $1.0375 per LP Unit distribution declared for the third quarter of 2012 and a 1.2 percent increase over the $1.0625 per LP Unit distribution declared for the second quarter of 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, November 1, 2013, at 11:00 a.m. Eastern Time. To access the live Webcast of the call, go to http://www.media-server.com/m/p/oi4p247k ten minutes prior to its start. Interested parties may participate in the call by dialing 877-870-9226. A replay will be archived and available at this link until December 31, 2013, and the replay also may be accessed by dialing 800-585-8367 and entering conference ID 85838581.

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 more than 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 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 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) the risk that the acquisition of the liquid petroleum products terminals from Hess may not be consummated, (xi) our failure to realize the expected benefits of the acquisition of the liquid petroleum products terminals from Hess, (xii) our ability to successfully complete our organic growth projects and to realize the anticipated financial benefits, and (xiii) an unfavorable outcome with respect to the proceedings pending before the Federal Energy Regulatory Commission ("FERC") regarding Buckeye Pipe Line Company, L.P.'s transportation of jet fuel to the New York City airports. 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, 2012 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013, 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 Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Revenue:
Product sales $ 805,281 $ 688,948 $ 2,608,894 $ 2,462,699
Transportation and other services 283,477 277,022 830,204 745,350
Total revenue 1,088,758 965,970 3,439,098 3,208,049
Costs and expenses:
Cost of product sales and natural gas storage services 813,959 698,019 2,624,869 2,476,659
Operating expenses 106,461 100,731 308,611 299,086
Depreciation and amortization 38,755 37,134 115,798 104,486
General and administrative 18,173 16,222 53,610 51,074
Total costs and expenses 977,348 852,106 3,102,888 2,931,305
Operating income 111,410 113,864 336,210 276,744
Other income (expense):
Earnings from equity investments 1,389 553 4,971 4,287
Interest and debt expense (34,341) (28,737) (94,827) (85,159)
Other income (expense) (12) 90 287 57
Total other expense, net (32,964) (28,094) (89,569) (80,815)
Income before taxes 78,446 85,770 246,641 195,929
Income tax expense (195) (511) (521) (1,177)
Net income 78,251 85,259 246,120 194,752
Less: Net income attributable to noncontrolling interests (997) (143) (3,095) (3,298)
Net income attributable to Buckeye Partners, L.P. $ 77,254 $ 85,116 $ 243,025 $ 191,454
Earnings per unit:
Basic $ 0.73 $ 0.87 $ 2.31 $ 1.97
Diluted $ 0.72 $ 0.87 $ 2.30 $ 1.97
Weighted average units outstanding:
Basic 106,223 97,993 105,068 97,017
Diluted 106,774 98,342 105,516 97,340
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Revenue:
Pipelines & Terminals $ 198,270 $ 194,609 $ 583,102 $ 527,849
International Operations 154,629 51,686 469,848 152,349
Natural Gas Storage 14,907 20,229 40,581 46,909
Energy Services 717,911 691,875 2,330,056 2,469,122
Development & Logistics 16,439 11,798 42,048 37,415
Intersegment (13,398) (4,227) (26,537) (25,595)
Total revenue $ 1,088,758 $ 965,970 $ 3,439,098 $ 3,208,049
Total costs and expenses:(1)
Pipelines & Terminals $ 106,243 $ 102,715 $ 311,804 $ 295,953
International Operations 128,373 30,614 397,655 92,660
Natural Gas Storage 20,787 21,872 60,088 56,367
Energy Services 722,457 692,304 2,326,782 2,482,857
Development & Logistics 12,886 8,828 33,096 29,063
Intersegment (13,398) (4,227) (26,537) (25,595)
Total costs and expenses $ 977,348 $ 852,106 $ 3,102,888 $ 2,931,305
Depreciation and amortization:
Pipelines & Terminals $ 18,182 $ 18,272 $ 56,178 $ 49,368
International Operations 16,740 14,971 48,222 43,873
Natural Gas Storage 1,913 1,893 5,706 5,668
Energy Services 1,425 1,510 4,232 4,104
Development & Logistics 495 488 1,460 1,473
Total depreciation and amortization $ 38,755 $ 37,134 $ 115,798 $ 104,486
Operating income (loss):
Pipelines & Terminals $ 92,027 $ 91,894 $ 271,298 $ 231,896
International Operations 26,256 21,072 72,193 59,689
Natural Gas Storage (5,880) (1,643) (19,507) (9,458)
Energy Services (4,546) (429) 3,274 (13,735)
Development & Logistics 3,553 2,970 8,952 8,352
Total operating income (loss) $ 111,410 $ 113,864 $ 336,210 $ 276,744
Adjusted EBITDA:
Pipelines & Terminals $ 114,412 $ 112,879 $ 339,041 $ 290,709
International Operations 40,475 33,548 112,921 95,805
Natural Gas Storage (2,759) 1,357 (10,343) (299)
Energy Services (2,220) 1,619 9,744 (7,759)
Development & Logistics 3,934 3,168 9,819 9,034
Adjusted EBITDA $ 153,842 $ 152,571 $ 461,182 $ 387,490
Capital additions: (2)
Pipelines & Terminals $ 86,957 $ 34,944 $ 189,400 $ 107,050
International Operations 21,481 48,704 65,901 122,203
Natural Gas Storage 16 235 152 1,964
Energy Services 15 1,020 113 1,507
Development & Logistics 672 102 1,442 281
Total capital additions $ 109,141 $ 85,005 $ 257,008 $ 233,005
Summary of capital additions: (2)
Maintenance capital expenditures $ 26,102 $ 11,889 $ 44,304 $ 35,764
Expansion and cost reduction 83,039 73,116 212,704 197,241
Total capital additions $ 109,141 $ 85,005 $ 257,008 $ 233,005
September 30, December 31,
Key Balance Sheet information: 2013 2012
Cash and cash equivalents $ 4,982 $ 6,776
Long-term debt, total (3) 2,676,946 2,735,244
(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 $407.1 million and $665.0 million as of September 30, 2013 and December 31, 2012, respectively.
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA - Continued
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Pipelines & Terminals (average bpd in thousands):
Pipelines:
Gasoline 723.2 729.7 720.4 705.9
Jet fuel 343.1 352.7 334.1 342.7
Middle distillates (1) 302.9 299.8 330.5 310.4
Other products (2) 29.4 25.0 29.2 27.7
Total pipelines throughput 1,398.6 1,407.2 1,414.2 1,386.7
Terminals:
Products throughput 969.1 931.4 980.6 909.5
Pipeline Average Tariff (cents/bbl) 84.1 84.5 81.8 82.1
Energy Services (in millions of gallons):
Sales volumes 242.5 233.4 779.8 836.7
(1) Includes diesel fuel and heating oil.
(2) Includes liquefied petroleum gas, intermediate petroleum products and crude oil.
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
Non-GAAP Reconciliations
(In thousands, except per unit amounts and coverage ratio)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Net income $ 78,251 $ 85,259 $ 246,120 $ 194,752
Less: Net income attributable to noncontrolling interests (997) (143) (3,095) (3,298)
Net income attributable to Buckeye Partners, L.P. 77,254 85,116 243,025 191,454
Add: Interest and debt expense 34,341 28,737 94,827 85,159
Income tax expense 195 511 521 1,177
Depreciation and amortization 38,755 37,134 115,798 104,486
Non-cash deferred lease expense 944 975 2,828 2,925
Non-cash unit-based compensation expense 5,111 2,846 12,438 10,534
Less: Amortization of unfavorable storage contracts (1) (2,758) (2,748) (8,255) (8,245)
Adjusted EBITDA $ 153,842 $ 152,571 $ 461,182 $ 387,490
Less: Interest and debt expense, excluding amortization of deferred financing costs, debt discounts and other (31,267) (27,868) (89,154) (82,552)
Income tax expense (195) (511) (521) (1,177)
Maintenance capital expenditures (26,102) (11,889) (44,304) (35,764)
Distributable cash flow $ 96,278 $ 112,303 $ 327,203 $ 267,997
Distributions for Coverage Ratio (2) $ 114,777 $ 94,055 $ 321,758 $ 282,160
Coverage Ratio 0.84 1.19 1.02 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 as of each respective period. Amounts for 2013 reflect actual cash distributions paid on LP Units for the quarters ended March 31, 2013 and June 30, 2013, and estimated cash distributions for LP Units for the quarter ended September 30, 2013. Distributions with respect to the 8,160,943 and 8,323,992 Class B Units outstanding on the record date for the quarters ended March 31, 2013 and June 30, 2013, respectively, were paid in additional Class B Units rather than in cash. As of September 1, 2013, the 8,469,233 Class B Units outstanding converted into LP Units on a one-for-one basis. As a result, there were no outstanding Class B Units as of September 30, 2013.

CONTACT: Kevin J. Goodwin Senior Director, Investor Relations Irelations@buckeye.com (800) 422-2825Source:Buckeye Partners, L.P.