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Western Refining Logistics, LP Reports Fourth Quarter and Full Year 2014 Results

  • Completed acquisition of Western Refining's Wholesale business in October
  • Increased crude oil gathering and pipeline volumes
  • Generated $21.3 million of distributable cash flow in Q4
  • Increased quarterly distribution to $0.3325 per unit

EL PASO, Texas, Feb. 26, 2015 (GLOBE NEWSWIRE) -- Western Refining Logistics, LP (NYSE:WNRL) reported fourth quarter 2014 net income of $18.8 million, or $0.40 per diluted common unit. During this period, EBITDA was $24.7 million and distributable cash flow was $21.3 million. For full year 2014, net income was $53.0 million, or $1.15 per diluted common unit.

"We are pleased with our first full year of operations," said WNRL Chief Executive Officer and President Jeff Stevens. "We completed the acquisition of Western Refining's (NYSE:WNR) southwest Wholesale business in the fourth quarter, which we expect will add approximately $40 million in annual EBITDA in 2015, increasing WNRL's estimated annual EBITDA by more than 50%. This acquisition, and the performance of our logistics business, positions us to continue to grow our quarterly distributions to unitholders."

On January 30, 2015, the board of directors declared a quarterly cash distribution for the fourth quarter 2014 of $0.3325 per unit, or $1.33 per unit on an annualized basis. This distribution represents a 4.7% increase over the third quarter distribution of $0.3175 per unit paid in November 2014, and a 15.7% increase over the minimum quarterly distribution.

As of December 31, 2014, WNRL had cash of $54.3 million. In mid-February 2015, WNRL issued $300 million in senior unsecured notes, proceeds of which were used to repay the revolving credit facility and for general partnership purposes. As of February 20, 2015, the partnership has $92 million in cash and an undrawn $300 million revolving credit facility, which WNRL intends to use primarily to fund future acquisitions.

Stevens continued, "We will continue to focus on growing our business and are excited about the future of WNRL. With the strategic location of our asset base and our financial flexibility, we are well positioned to capitalize on the growing crude oil production in our area."

Conference Call Information

On Thursday, February 26, 2015, at 3:00 p.m. ET, WNRL will hold a webcast and conference call to discuss the reported results and provide an update on partnership operations. The call will be webcast and can be accessed at Western Refining Logistics' website, www.wnrl.com. The call can also be heard by dialing (844) 831-3028 or (315) 625-6887, pass code: 55481684. The audio replay will be available two hours after the end of the call through March 12, 2015 by dialing (855) 859-2056 or (404) 537-3406, pass code: 355481684.

About Western Refining Logistics, LP

Western Refining Logistics, LP is a principally fee-based, growth-oriented master limited partnership formed by Western Refining, Inc. (NYSE:WNR) to own, operate, develop and acquire terminals, storage tanks, pipelines and other related businesses. Headquartered in El Paso, Texas, WNRL's assets include approximately 300 miles of pipelines, approximately 8.0 million barrels of active storage capacity, distribution of wholesale petroleum products and crude oil trucking.

More information about Western Refining Logistics is available at www.wnrl.com.

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with U.S. generally accepted accounting principles (GAAP), management utilizes additional non-GAAP measures to facilitate comparisons of past performance. This press release and supporting schedules include the non-GAAP measures earnings before interest, taxes, depreciation and amortization (EBITDA) and Distributable Cash Flow. We believe certain investors and financial analysts use EBITDA and Distributable Cash Flow to evaluate WNRL's financial performance between periods and to compare WNRL's performance to certain competitors. We believe certain investors and financial analysts use Distributable Cash Flow to determine the amount of cash generated from the partnership's operations and available for distribution to its unitholders. These additional financial measures are reconciled from the most directly comparable measures as reported in accordance with GAAP and should be viewed in addition to, and not in lieu of, financial information that we report in accordance with GAAP.

Cautionary Statement on Forward-Looking Statements

This press release contains forward-looking statements. The forward-looking statements contained herein include statements about: the expected EBITDA of the Wholesale business and WNRL's expected annual EBITDA; our focus on growing our business and increasing distributions to our unitholders; the attractiveness of the location of our asset base; our financial flexibility; our ability to capitalize on growing crude oil production in our area; our ability to grow our business, including through organic growth projects and acquisitions; our potential use of funds under our revolving credit facility; and the source of funds to finance future acquisitions. These statements are subject to the general risks inherent in WNRL's business. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized, or otherwise materially affect our financial condition, results of operations, and cash flows. Additional information relating to the uncertainties affecting WNRL's business is contained in its filings with the Securities and Exchange Commission. The forward-looking statements are only as of the date made, and WNRL does not undertake any obligation to (and expressly disclaims any obligation to) update any forward looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence of unanticipated events.

Results of Operations

The following tables set forth WNRL's summary historical financial and operating data for the periods indicated below:

Three Months Ended
December 31,
Year Ended
December 31,
2014 2013 2014 2013
(In thousands, except per unit data)
Revenues (1):
Affiliate $ 221,769 $ 230,722 $ 1,011,575 $ 882,533
Third-party 529,453 602,836 2,490,313 2,524,595
Total revenues 751,222 833,558 3,501,888 3,407,128
Operating costs and expenses:
Cost of products sold:
Affiliate 183,239 204,619 871,751 853,447
Third-party 499,895 576,680 2,373,168 2,426,270
Operating and maintenance expenses 34,628 33,255 142,398 135,307
General and administrative expenses 5,264 4,476 22,540 17,661
Loss on disposal of assets, net 173 157
Depreciation and amortization 4,473 4,015 17,372 15,970
Total operating costs and expenses 727,672 823,045 3,427,386 3,448,655
Operating income (loss) 23,550 10,513 74,502 (41,527)
Other income (expense):
Interest income 4 4 7
Interest expense and other financing costs (1,154) (194) (1,851) (213)
Amortization of loan fees (132) (109) (523) (109)
Other, net 12 41 120 143
Net income (loss) before income taxes 22,280 10,251 72,252 (41,699)
Provision for income taxes (120) (95) (459) (95)
Net income (loss) 22,160 10,156 71,793 (41,794)
Less net income (loss) attributable to Predecessor 3,341 1,628 18,801 (50,322)
Net income attributable to partners $ 18,819 $ 8,528 $ 52,992 $ 8,528
Net income per limited partner unit:
Common - basic $ 0.40 $ 0.19 $ 1.16 $ 0.19
Common - diluted 0.40 0.19 1.15 0.19
Subordinated - basic and diluted 0.40 0.19 1.15 0.19
Weighted average limited partner units outstanding:
Common - basic 23,795 22,811 23,059 22,811
Common - diluted 23,861 22,813 23,107 22,813
Subordinated - basic and diluted 22,811 22,811 22,811 22,811
Three Months Ended
December 31,
Year Ended
December 31,
2014 2013 2014 2013
(In thousands, except per barrel data)
Cash Flow Data
Net cash provided by (used in):
Operating activities $ 53,159 $ 10,167 $ 118,150 $(32,735)
Investing activities (12,119) (10,478) (43,420) (72,362)
Financing activities (65,854) 84,311 (104,436) 189,096
Capital expenditures 4,990 10,514 22,325 72,398
Other Data
EBITDA (2) $ 24,703 $ 11,598 $ 70,330 $ 11,598
Distributable cash flow (2) 21,294 13,146 66,127 13,146
Balance Sheet Data (at end of period)
Cash and cash equivalents $ 54,298 $ 84,004
Property, plant and equipment, net 182,545 178,765
Total assets 376,908 307,176
Total debt 269,000
Total liabilities 404,002 13,056
Division equity 60,768
Partners' capital (27,094) 233,352
Total liabilities, division equity and partners' capital 376,908 307,176

(1) Prior to the initial public offering, our assets were a part of the integrated operations of Western, and the Predecessor generally recognized only the costs and did not record revenue associated with the transportation, terminalling or storage services provided to Western on an intercompany basis. Accordingly, the revenues in the Predecessor's historical combined financial statements relate only to amounts received from third parties for these services and minimum amounts required to be recorded for Western for local tax purposes. Following the closing of the initial public offering, our revenues were generated by existing third-party contracts and from the commercial agreements with Western.

(2) EBITDA represents earnings before interest expense and other financing costs, provision for income taxes, depreciation, amortization, and certain other non-cash income and expense items. However, EBITDA is not a recognized measurement under United States generally accepted accounting principles ("GAAP"). Our management believes that the presentation of EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. In addition, our management believes that EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financings, income taxes, the accounting effects of significant turnaround activities (that many of our competitors capitalize and thereby exclude from their measures of EBITDA) and certain non-cash charges that are items that may vary for different companies for reasons unrelated to overall operating performance.

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

  • EBITDA does not reflect our cash expenditures or future requirements for significant turnaround activities, capital expenditures, or contractual commitments;
  • EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;
  • EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and
  • EBITDA, as we calculate it, may differ from the EBITDA calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally.

The following table reconciles net income to EBITDA for the periods presented:

Three Months Ended
December 31,
Year Ended
December 31,
2014 2013 2014 2013
(In thousands)
Net income attributable to partners $ 18,819 $ 8,528 $ 52,992 $ 8,528
Interest expense and other financing costs 1,154 190 1,836 190
Provision for income taxes 120 95 459 95
Amortization of loan fees 132 109 523 109
Depreciation and amortization 4,478 2,676 14,520 2,676
EBITDA 24,703 11,598 70,330 11,598
Change in deferred revenues 768 2,589 4,190 2,589
Cash interest paid (1,154) (190) (1,837) (190)
Income taxes paid (1)
Maintenance capital expenditures (3,023) (851) (6,555) (851)
Distributable cash flow $ 21,294 $ 13,146 $ 66,127 $ 13,146
Logistics
Three Months Ended
December 31,
Year Ended
December 31,
2014 2013 2014 2013
(In thousands)
Revenues:
Affiliate $ 36,692 $ 26,100 $ 137,986 $ 29,086
Third-party 674 621 2,718 1,743
Total revenues 37,366 26,721 140,704 30,829
Operating costs and expenses:
Operating and maintenance expenses 16,553 16,507 67,676 72,455
General and administrative expenses 590 861 2,359 2,863
Loss on disposal of assets, net 262 262
Depreciation and amortization 3,437 3,169 13,479 13,042
Total operating costs and expenses 20,842 20,537 83,776 88,360
Operating income (loss) $ 16,524 $ 6,184 $ 56,928 $(57,531)
Key Operating Statistics
Pipeline and gathering (bpd):
Mainline movements:
Permian/Delaware Basin system 31,447 10,519 24,644 3,258
Four Corners system (1) 34,525 36,933 37,485 38,091
Gathering (truck offloading):
Permian/Delaware Basin system 24,050 16,996 24,166 10,169
Four Corners system 12,627 11,695 11,550 8,814
Pipeline Gathering and Injection system:
McCamey Station 1,519 1,562 1,525 1,559
Four Corners 17,333 20,441 19,943 22,972
Pipeline storage (bbls) (2) 619,706 568,040 598,057 399,096
Terminalling, transportation and storage:
Shipments into and out of storage (bpd) (includes asphalt) 387,633 383,017 381,371 367,208
Terminal storage capacity (bbls) (2) 7,359,066 6,881,964 7,356,348 6,881,964
(1) Some barrels of crude oil in route to Western's Gallup Refinery are transported on more than one of our mainlines. Mainline movements for the Four Corners system include each barrel transported on each mainline.
(2) Pipeline and terminal storage shell capacities represent weighted-average capacities for the periods indicated.
Wholesale
Three Months Ended
December 31,
Year Ended
December 31,
2014 2013 2014 2013
(In thousands, except per gallon/barrel data)
Revenues:
Affiliate $ 185,077 $ 204,622 $ 873,589 $ 853,447
Third-party, net of excise taxes 528,779 602,215 2,487,595 2,522,852
Total revenues 713,856 806,837 3,361,184 3,376,299
Operating costs and expenses:
Cost of products sold:
Affiliate 183,239 204,619 871,751 853,447
Third-party, net of excise taxes 499,895 576,680 2,373,168 2,426,270
Operating and maintenance expenses 18,075 16,748 74,722 62,852
General and administrative expenses 1,193 2,564 9,521 10,012
Gain on disposal of assets, net (89) (105)
Depreciation and amortization 1,036 846 3,893 2,928
Total operating costs and expenses 703,349 801,457 3,332,950 3,355,509
Operating income $ 10,507 $ 5,380 $ 28,234 $ 20,790
Key Operating Statistics:
Fuel gallons sold 297,020 268,411 1,147,860 1,073,538
Fuel gallons sold to retail (included in fuel gallons sold, above) 73,395 63,444 268,148 254,907
Fuel margin per gallon (1) $0.024 $0.028 $0.022 $0.026
Lubricant gallons sold 2,919 2,854 12,082 11,793
Lubricant margin per gallon (2) $ 0.83 $ 0.96 $ 0.86 $ 0.89
Crude oil trucking volume (bpd) 41,369 17,778 36,314 12,603
Average crude oil revenue per barrel $ 2.79 $ 2.14 $ 2.90 $ 2.24
(1) Fuel margin per gallon is a measurement calculated by dividing the difference between fuel sales and cost of fuel sales for our wholesale distribution segment by the number of gallons sold. Fuel margin per gallon is a measure frequently used in the petroleum products wholesale industry to measure operating results related to fuel sales.
(2) Lubricant margin is a measurement calculated by dividing the difference between lubricant sales and lubricant cost of products sold by lubricant sales. Lubricant margin is a measure frequently used in the petroleum products wholesale industry to measure operating results related to lubricant sales.

CONTACT: Investor and Analyst Contact: Michelle Clemente (602) 286-1533 Jeffrey S. Beyersdorfer (602) 286-1530 Media Contact: Gary W. Hanson (602) 286-1777

Source:Western Refining Logistics, LP