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Buckeye Partners, L.P. Reports Financial Results for Third Quarter 2015 and Increases Cash Distributions

HOUSTON, Oct. 30, 2015 (GLOBE NEWSWIRE) -- Buckeye Partners, L.P. (“Buckeye”) (NYSE:BPL) today reported its financial results for the third quarter of 2015. Buckeye reported income from continuing operations for the third quarter of 2015 of $99.9 million compared to income from continuing operations for the third quarter of 2014 of $107.0 million.

Adjusted EBITDA (as defined below) from continuing operations for the third quarter of 2015 was $204.2 million, representing a record third quarter Adjusted EBITDA for Buckeye, compared to $200.6 million for the third quarter of 2014.

Income from continuing operations attributable to Buckeye’s unitholders was $0.78 per diluted unit for the third quarter of 2015 compared to $0.89 per diluted unit for the third quarter of 2014. The diluted weighted average number of units outstanding in the third quarter of 2015 was 128.9 million compared to 119.4 million in the third quarter of 2014.

“Buckeye’s diversified portfolio of assets generated solid quarterly financial performance despite the volatile commodity price environment. We were able to capitalize on strong market conditions, particularly increasing demand for storage services across our domestic and international assets,” said Clark C. Smith, Chairman, President and Chief Executive Officer. “During the quarter, we were successful in increasing utilization as well as rates across our domestic and Caribbean assets, which contributed significant incremental cash flows. The continued ramp-up of operations at Buckeye Texas Partners LLC (“BTP”) also contributed to our improved results over the prior year quarter.”

“We are pleased to report that our 1.1 million barrels of refrigerated LPG storage capacity at our BTP facility in South Texas is now in-service. In addition, we are nearing completion of the commissioning phase for our 50,000 barrel per day splitter facility. We believe both will contribute substantial additional cash flows in the fourth quarter. These assets provide Trafigura, our partner and customer, with world-class marine terminaling, storage and processing capabilities on the Gulf Coast. We expect these assets and other growth capital investments across our platform to produce significant financial returns for our unitholders,” continued Mr. Smith.

Distributable cash flow (as defined below) from continuing operations for the third quarter of 2015 was $135.6 million compared to $140.5 million for the third quarter of 2014. Distribution coverage was 0.89 times for the third quarter of 2015.

Cash Distribution. Buckeye also announced today that its general partner declared a cash distribution of $1.175 per limited partner unit (“LP Unit”) for the quarter ended September 30, 2015. The distribution will be payable on November 17, 2015 to unitholders of record on November 9, 2015. This cash distribution represents a 4.4 percent increase over the $1.125 per LP Unit distribution declared for the third 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, October 30, 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/5vwqtqi8 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 December 31, 2015, and the replay also may be accessed by dialing 800-585-8367 and entering conference ID 58766462.

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 Reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 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.


BUCKEYE PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2015 2014 2015 2014
Revenue:
Product sales$382,624 $1,241,696 $1,581,455 $4,412,135
Transportation, storage and other services345,760 331,777 1,031,812 962,118
Total revenue728,384 1,573,473 2,613,267 5,374,253
Costs and expenses:
Cost of product sales366,319 1,218,471 1,532,392 4,393,893
Operating expenses141,790 138,906 425,494 396,753
Depreciation and amortization54,830 45,406 164,204 131,791
General and administrative21,885 21,749 64,796 59,436
Total costs and expenses584,824 1,424,532 2,186,886 4,981,873
Operating income143,560 148,941 426,381 392,380
Other income (expense):
(Loss) earnings from equity investments(30) 2,523 4,550 5,959
Interest and debt expense(43,413) (43,838) (127,097) (127,063)
Other income (expense)70 (375) 180 (471)
Total other expense, net(43,373) (41,690) (122,367) (121,575)
Income from continuing operations before taxes100,187 107,251 304,014 270,805
Income tax expense(240) (243) (720) (319)
Income from continuing operations99,947 107,008 303,294 270,486
Loss from discontinued operations (3,280) (857) (51,508)
Net income99,947 103,728 302,437 218,978
Less: Net loss (income) attributable to noncontrolling interests93 (785) 794 (2,547)
Net income attributable to Buckeye Partners, L.P.$100,040 $102,943 $303,231 $216,431
Basic earnings (loss) per unit attributable to Buckeye Partners, L.P.:
Continuing operations$0.78 $0.90 $2.38 $2.29
Discontinued operations (0.03) (0.01) (0.44)
Total$0.78 $0.87 $2.37 $1.85
Diluted earnings (loss) per unit attributable to Buckeye Partners, L.P.:
Continuing operations$0.78 $0.89 $2.37 $2.29
Discontinued operations (0.03) (0.01) (0.44)
Total$0.78 $0.86 $2.36 $1.85
Weighted average units outstanding:
Basic128,329 118,804 127,722 116,747
Diluted128,906 119,429 128,241 117,305


BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
(In thousands)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2015 2014 2015 2014
Revenue:
Pipelines & Terminals$219,942 $228,466 $652,178 $665,629
Global Marine Terminals127,161 104,522 372,735 284,082
Merchant Services386,105 1,246,462 1,586,421 4,420,205
Development & Logistics16,553 21,003 53,610 56,637
Intersegment(21,377) (26,980) (51,677) (52,300)
Total revenue$728,384 $1,573,473 $2,613,267 $5,374,253
Total costs and expenses: (1)
Pipelines & Terminals$128,086 $124,323 $376,448 $363,892
Global Marine Terminals80,219 72,262 243,417 190,024
Merchant Services385,369 1,238,457 1,577,931 4,438,470
Development & Logistics12,527 16,470 40,767 41,787
Intersegment(21,377) (26,980) (51,677) (52,300)
Total costs and expenses$584,824 $1,424,532 $2,186,886 $4,981,873
Depreciation and amortization:
Pipelines & Terminals$19,225 $18,525 $56,735 $53,379
Global Marine Terminals33,931 24,900 102,432 72,504
Merchant Services1,259 1,544 3,763 4,556
Development & Logistics415 437 1,274 1,352
Total depreciation and amortization$54,830 $45,406 $164,204 $131,791
Operating income:
Pipelines & Terminals$91,856 $104,143 $275,730 $301,737
Global Marine Terminals46,942 32,260 129,318 94,058
Merchant Services736 8,005 8,490 (18,265)
Development & Logistics4,026 4,533 12,843 14,850
Total operating income$143,560 $148,941 $426,381 $392,380
Adjusted EBITDA from continuing operations:
Pipelines & Terminals$116,711 $128,171 $362,503 $370,570
Global Marine Terminals80,593 57,270 233,716 166,532
Merchant Services2,592 10,468 13,797 (12,568)
Development & Logistics4,268 4,713 13,539 15,500
Adjusted EBITDA from continuing operations$204,164 $200,622 $623,555 $540,034
Capital additions, net: (2)
Pipelines & Terminals$51,205 $57,421 $150,676 $165,908
Global Marine Terminals82,846 40,786 280,936 133,085
Merchant Services343 53 760 153
Development & Logistics344 1,056 780 1,497
Total segment capital additions, net134,738 99,316 433,152 300,643
Natural Gas Storage disposal group 188
Total capital additions, net$134,738 $99,316 $433,152 $300,831
Summary of capital additions, net: (2)
Maintenance capital expenditures$29,129 $20,433 $72,143 $56,366
Expansion and cost reduction105,609 78,883 361,009 244,465
Total capital additions, net$134,738 $99,316 $433,152 $300,831
September 30,
2015
December 31,
2014
Key Balance Sheet Information:
Cash and cash equivalents$7,081 $8,208
Long-term debt, total (3)3,632,843 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 $243.0 million as of September 30, 2015.


BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA - Continued
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2015 2014 2015 2014
Pipelines & Terminals (average bpd in thousands):
Pipelines:
Gasoline 762.4 721.9 740.8 700.3
Jet fuel 370.5 349.8 360.6 332.1
Middle distillates (1) 301.4 321.8 340.8 350.7
Other products (2) 28.0 34.9 32.1 37.0
Total pipelines throughput 1,462.3 1,428.4 1,474.3 1,420.1
Terminals:
Products throughput 1,185.4 1,133.5 1,212.3 1,128.7
Pipeline average tariff (cents/bbl) 84.4 86.8 83.6 85.5
Global Marine Terminals (percent of capacity):
Average capacity utilization rate (3) 97% 84% 95% 84%
Merchant Services (in millions of gallons):
Sales volumes 229.7 464.1 902.1 1,571.6

_________________________
(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 85% and 74% for the three months ended September 30, 2015 and 2014, respectively, and approximately 83% and 73% for the nine months ended September 30, 2015 and 2014, respectively.



BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
Non-GAAP Reconciliations
(In thousands, except coverage ratio)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2015 2014 2015 2014
Income from continuing operations$99,947 $107,008 $303,294 $270,486
Less: Net loss (income) attributable to noncontrolling interests93 (785) 794 (2,547)
Income from continuing operations attributable to Buckeye Partners, L.P.100,040 106,223 304,088 267,939
Add: Interest and debt expense43,413 43,838 127,097 127,063
Income tax expense240 243 720 319
Depreciation and amortization (1)54,830 45,406 164,204 131,791
Non-cash unit-based compensation expense6,597 5,228 17,578 13,149
Acquisition and transition expense (2)82 2,451 2,942 8,076
Litigation contingency accrual (3)1,729 15,229
Less: Amortization of unfavorable storage contracts (4)(2,767) (2,767) (8,303) (8,303)
Adjusted EBITDA from continuing operations$204,164 $200,622 $623,555 $540,034
Less: Interest and debt expense, excluding amortization of deferred financing costs, debt discounts and other(39,197) (39,496) (114,450) (116,842)
Income tax expense, excluding non-cash taxes(240) (243) (720) (319)
Maintenance capital expenditures (5)(29,129) (20,433) (72,143) (56,205)
Distributable cash flow from continuing operations$135,598 $140,450 $436,242 $366,668
Distributions for coverage ratio (6)$152,037 $142,240 $448,612 $403,547
Coverage ratio from continuing operations0.89 0.99 0.97 0.91

_________________________
(1) Includes 100% of the depreciation and amortization expense of $12.2 million and $34.7 million for Buckeye Texas Partners LLC for the three and nine months ended September 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 quarters ended March 31, 2015 and June 30, 2015 and estimated cash distributions for LP Units for the quarter ended September 30, 2015.


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

Source:Buckeye Partners, L.P.