Buckeye Partners, L.P. Reports Record Financial Results for Second Quarter 2015

HOUSTON, July 31, 2015 (GLOBE NEWSWIRE) -- Buckeye Partners, L.P. (“Buckeye”) (NYSE:BPL) today reported its financial results for the second quarter of 2015. Buckeye reported income from continuing operations for the second quarter of 2015 of $91.3 million compared to income from continuing operations for the second quarter of 2014 of $61.9 million.

Adjusted EBITDA (as defined below) from continuing operations for the second quarter of 2015 was $206.5 million, representing a record second quarter Adjusted EBITDA for Buckeye, compared to $150.8 million for the second quarter of 2014.

Income from continuing operations attributable to Buckeye’s unitholders was $0.71 per diluted unit for the second quarter of 2015 compared to $0.53 per diluted unit for the second quarter of 2014. The diluted weighted average number of units outstanding in the second quarter of 2015 was 128.2 million compared to 116.7 million in the second quarter of 2014.

“I am pleased to report another quarter of record financial results, which demonstrate the benefits of our diversified portfolio of assets,” said Clark C. Smith, Chairman, President and Chief Executive Officer. “Our Global Marine Terminals and Merchant Services segments drove significant improvement compared to the prior year. Our commercial and operating teams were successful in improving utilization and driving rate increases at our Global Marine Terminals segment, which also benefited from incremental cash flows from our interest in Buckeye Texas Partners LLC. Our Merchant Services segment continues to deliver positive contributions as our disciplined business strategy to optimize asset utilization and reduce commodity risk allowed us to capitalize on favorable market conditions in the quarter. In our Pipelines & Terminals segment, we continued to benefit from growth capital investments that have expanded our domestic terminals network and increased our terminal throughput growth by nearly 10% year over year. Additionally, we saw solid performance from our pipelines producing volume growth of nearly 4% compared to prior year.”

“We remain focused on the construction of the new condensate splitter as well as refrigerated LPG storage capacity at our Buckeye Texas Partners facilities. We expect both of these projects to be operational in the third quarter of 2015. Once operational, these assets are expected to generate significant incremental cash flows,” continued Mr. Smith.

Buckeye announced in June that one of its operating subsidiaries, Buckeye Pipe Line Company, L.P., reached a settlement with certain airlines resolving all complaints filed with the Federal Energy Regulatory Commission (“FERC”) by those airlines challenging the rates for transportation of jet fuel from New Jersey to the three New York City area airports and that the settlement had been submitted to FERC for approval. “This settlement represents a positive resolution for Buckeye. We expect FERC action on the settlement in the third quarter of 2015,” concluded Mr. Smith.

Distributable cash flow (as defined below) from continuing operations for the second quarter of 2015 was $144.9 million compared to $94.4 million for the second quarter of 2014. Distribution coverage was 0.97 times for the second quarter of 2015.

Cash Distribution. Buckeye also announced today that its general partner declared a cash distribution of $1.1625 per limited partner unit (“LP Unit”) for the quarter ended June 30, 2015. The distribution will be payable on August 17, 2015 to unitholders of record on August 10, 2015. This cash distribution represents a 4.5 percent increase over the $1.1125 per LP Unit distribution declared for the second quarter of 2014. Buckeye has paid cash distributions in each quarter since its formation in 1986.

Conference Call. Buckeye will host a conference call with members of executive management today, July 31, 2015, at 11:00 a.m. Eastern Time. To access the live webcast of the call, go to http://edge.media-server.com/m/p/v87xonj3 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 through September 30, 2015, and the replay also may be accessed by dialing 800-585-8367 and entering conference ID 83323662.

About Buckeye Partners, L.P.

Buckeye Partners, L.P. (NYSE:BPL) is a publicly traded master limited partnership and owns and operates a diversified network of integrated assets providing midstream logistic solutions, primarily consisting of the transportation, storage, and marketing of liquid petroleum products. Buckeye is one of the largest independent liquid petroleum products pipeline operators in the United States in terms of volumes delivered with approximately 6,000 miles of pipeline and more than 120 liquid petroleum products terminals with aggregate storage capacity of over 110 million barrels across our portfolio of pipelines, inland terminals and an integrated network of marine terminals located primarily in the East Coast and Gulf Coast regions of the United States and in the Caribbean. Buckeye has a controlling interest in a company with a vertically integrated system of marine midstream assets in Corpus Christi and the Eagle Ford play in Texas. Buckeye’s flagship marine terminal, BORCO, is in The Bahamas and is one of the largest marine crude oil and refined petroleum products storage facilities in the world and provides an array of logistics and blending services for the global flow of petroleum products. Buckeye’s network of marine terminals enables it to facilitate global flows of crude oil, refined petroleum products, and other commodities, and to offer its customers connectivity to some of the world’s most important bulk storage and blending hubs. Buckeye is also a wholesale distributor of refined petroleum products in areas served by its pipelines and terminals. Finally, Buckeye also operates and/or maintains third-party pipelines under agreements with major oil and gas, petrochemical and chemical companies, and performs certain engineering and construction management services for third parties. 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 income from continuing operations.

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 and other security risks, including cyber risk, 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 liquid petroleum products, (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 inability to realize the expected benefits of the Buckeye Texas Partners transaction, and (xi) our ability to successfully complete our organic growth projects and to realize the anticipated financial benefits. 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, 2014 and our most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, 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.

(In thousands, except per unit amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2015 2014 2015 2014
Product sales$458,613 $1,492,697 $1,198,831 $3,170,439
Transportation, storage and other services338,170 316,254 686,052 630,341
Total revenue796,783 1,808,951 1,884,883 3,800,780
Costs and expenses:
Cost of product sales448,534 1,510,043 1,166,073 3,175,422
Operating expenses141,339 133,018 283,704 257,847
Depreciation and amortization55,598 43,394 109,374 86,385
General and administrative20,293 20,330 42,911 37,687
Total costs and expenses665,764 1,706,785 1,602,062 3,557,341
Operating income131,019 102,166 282,821 243,439
Other income (expense):
Earnings from equity investments2,446 2,170 4,580 3,436
Interest and debt expense(41,975) (42,012) (83,684) (83,225)
Other income (expense)77 (232) 110 (96)
Total other expense, net(39,452) (40,074) (78,994) (79,885)
Income from continuing operations before taxes91,567 62,092 203,827 163,554
Income tax expense(241) (153) (480) (76)
Income from continuing operations91,326 61,939 203,347 163,478
Loss from discontinued operations (38,186) (857) (48,228)
Net income91,326 23,753 202,490 115,250
Less: Net loss (income) attributable to noncontrolling interests254 (733) 701 (1,762)
Net income attributable to Buckeye Partners, L.P.$91,580 $23,020 $203,191 $113,488
Basic earnings (loss) per unit attributable to Buckeye Partners, L.P.:
Continuing operations$0.72 $0.53 $1.60 $1.40
Discontinued operations (0.33) (0.01) (0.42)
Total$0.72 $0.20 $1.59 $0.98
Diluted earnings (loss) per unit attributable to Buckeye Partners, L.P.:
Continuing operations$0.71 $0.53 $1.60 $1.39
Discontinued operations (0.33) (0.01) (0.41)
Total$0.71 $0.20 $1.59 $0.98
Weighted average units outstanding:
Basic127,650 116,078 127,414 115,701
Diluted128,198 116,652 127,904 116,226

(In thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2015 2014 2015 2014
Pipelines & Terminals$206,980 $218,624 $432,236 $437,163
Global Marine Terminals124,590 90,791 245,574 179,560
Merchant Services460,156 1,495,441 1,200,316 3,173,743
Development & Logistics18,208 18,802 37,057 35,634
Intersegment(13,151) (14,707) (30,300) (25,320)
Total revenue$796,783 $1,808,951 $1,884,883 $3,800,780
Total costs and expenses: (1)
Pipelines & Terminals$126,352 $125,810 $248,362 $239,569
Global Marine Terminals79,609 58,652 163,198 117,762
Merchant Services459,257 1,523,740 1,192,562 3,200,013
Development & Logistics13,697 13,290 28,240 25,317
Intersegment(13,151) (14,707) (30,300) (25,320)
Total costs and expenses$665,764 $1,706,785 $1,602,062 $3,557,341
Depreciation and amortization:
Pipelines & Terminals$20,235 $17,452 $37,510 $34,854
Global Marine Terminals33,623 24,007 68,501 47,604
Merchant Services1,308 1,507 2,504 3,012
Development & Logistics432 428 859 915
Total depreciation and amortization$55,598 $43,394 $109,374 $86,385
Operating income:
Pipelines & Terminals$80,628 $92,814 $183,874 $197,594
Global Marine Terminals44,981 32,139 82,376 61,798
Merchant Services899 (28,299) 7,754 (26,270)
Development & Logistics4,511 5,512 8,817 10,317
Total operating income$131,019 $102,166 $282,821 $243,439
Adjusted EBITDA from continuing operations:
Pipelines & Terminals$120,241 $115,679 $245,792 $242,399
Global Marine Terminals78,705 55,559 153,123 109,262
Merchant Services2,763 (26,169) 11,205 (23,036)
Development & Logistics4,772 5,719 9,271 10,787
Adjusted EBITDA from continuing operations$206,481 $150,788 $419,391 $339,412
Capital additions, net: (2)
Pipelines & Terminals$53,038 $49,610 $99,471 $108,487
Global Marine Terminals110,748 41,522 198,090 92,299
Merchant Services302 67 417 100
Development & Logistics302 362 436 441
Total segment capital additions, net164,390 91,561 298,414 201,327
Natural Gas Storage disposal group 90 188
Total capital additions, net$164,390 $91,651 $298,414 $201,515
Summary of capital additions, net: (2)
Maintenance capital expenditures$23,584 $17,229 $43,014 $35,933
Expansion and cost reduction140,806 74,422 255,400 165,582
Total capital additions, net$164,390 $91,651 $298,414 $201,515
June 30, December 31,
2015 2014
Key Balance Sheet Information:
Cash and cash equivalents $8,577 $8,208
Long-term debt, total (3) 3,574,555 3,388,986

(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 $185.0 million as of June 30, 2015.

Three Months Ended
June 30,
Six Months Ended
June 30,
2015 2014 2015 2014
Pipelines & Terminals (average bpd in thousands):
Gasoline 764.1 721.4 729.7 679.9
Jet fuel 374.0 340.4 355.5 323.1
Middle distillates (1) 308.9 326.2 361.0 374.7
Other products (2) 40.6 45.0 34.1 38.1
Total pipelines throughput 1,487.6 1,433.0 1,480.3 1,415.8
Products throughput 1,255.7 1,144.7 1,226.0 1,126.2
Pipeline average tariff (cents/bbl) 82.4 86.4 83.1 84.8
Global Marine Terminals (percent of capacity):
Average capacity utilization rate (3) 96% 82% 95% 84%
Merchant Services (in millions of gallons):
Sales volumes 247.7 538.5 672.4 1,107.5

(1) Includes diesel fuel and heating oil.
(2) Includes liquefied petroleum gas, intermediate petroleum products and crude oil.
(3) Represents the ratio of contracted capacity to capacity available to be contracted. Based on total capacity (i.e., including out of service capacity), average capacity utilization rates are approximately 84% and 72% for the three months ended June 30, 2015 and 2014, respectively, and approximately 82% and 72% for the six months ended June 30, 2015 and 2014, respectively.

Non-GAAP Reconciliations
(In thousands, except coverage ratio)
Three Months Ended
June 30,
Six Months Ended
June 30,
2015 2014 2015 2014
Income from continuing operations$91,326 $61,939 $203,347 $163,478
Less: Net loss (income) attributable to noncontrolling interests254 (733) 701 (1,762)
Income from continuing operations attributable to Buckeye Partners, L.P.91,580 61,206 204,048 161,716
Add: Interest and debt expense41,975 42,012 83,684 83,225
Income tax expense241 153 480 76
Depreciation and amortization (1)55,598 43,394 109,374 86,385
Non-cash unit-based compensation expense5,895 4,799 10,981 7,921
Acquisition and transition expense (2)460 1,992 2,860 5,625
Litigation contingency accrual (3)13,500 13,500
Less: Amortization of unfavorable storage contracts (4)(2,768) (2,768) (5,536) (5,536)
Adjusted EBITDA from continuing operations$206,481 $150,788 $419,391 $339,412
Less: Interest and debt expense, excluding amortization of deferred financing costs, debt discounts and other(37,760) (39,073) (75,253) (77,346)
Income tax expense, excluding non-cash taxes(241) (153) (480) (76)
Maintenance capital expenditures (5)(23,584) (17,139) (43,014) (35,772)
Distributable cash flow from continuing operations$144,896 $94,423 $300,644 $226,218
Distributions for coverage ratio (6)$149,483 $129,815 $296,568 $257,981
Coverage ratio from continuing operations0.97 0.73 1.01 0.88

(1) Includes 100% of the depreciation and amortization expense of $10.8 million and $22.5 million for Buckeye Texas Partners LLC for the three and six months ended June 30, 2015.
(2) Acquisition and transition expense consists of transaction costs, costs for transitional employees, and other employee and third party costs related to the integration of the acquired assets that are non-recurring in nature.
(3) Represents an adjustment to the FERC litigation accrual.
(4) Represents the amortization of the negative fair values allocated to certain unfavorable storage contracts acquired in connection with the BORCO acquisition.
(5) Represents expenditures that maintain the operating, safety and/or earnings capacity of our existing assets.
(6) Represents cash distributions declared for LP Units outstanding as of each respective period. Amount for 2015 reflects actual cash distributions paid on LP Units for the quarter ended March 31, 2015 and estimated cash distributions for LP Units for the quarter ended June 30, 2015.

Contact: Kevin J. Goodwin Vice President and Treasurer irelations@buckeye.com (800) 422-2825

Source:Buckeye Partners, L.P.