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Western Refining Logistics, LP Reports Second Quarter 2016 Results

  • Net income of $17.9 million; EBITDA of $31.8 million
  • Quarterly distribution of $0.4125; up 13% versus prior year
  • Completed $92 million equity offering; proceeds used to reduce debt

EL PASO, Texas, Aug. 02, 2016 (GLOBE NEWSWIRE) -- Western Refining Logistics, LP (NYSE:WNRL) today reported second quarter 2016 net income attributable to limited partners of $17.9 million, or $0.33 per common limited partner unit, which compares to $15.9 million and $0.34, respectively, in the second quarter of 2015. Second quarter 2016 EBITDA was $31.8 million and distributable cash flow was $25.1 million; this compares to $27.0 million and $17.4 million, respectively, for the second quarter of 2015.

"WNRL realized improved net income and delivered its 10th consecutive quarter of distribution growth. Our strategic location in the Delaware Basin allows us to continue to achieve good financial performance," said WNRL Chief Executive Officer and President Jeff Stevens.

In May, WNRL issued 4,312,500 common units, with proceeds of approximately $92 million which were used to reduce debt. On July 26, 2016, the board of directors declared a quarterly cash distribution for the second quarter of 2016 of $0.4125 per unit, or $1.65 per unit on an annualized basis. This distribution represents a 2.5% increase over the first quarter 2016 distribution of $0.4025 per unit.

Stevens concluded, “We continued to invest in the business as we completed additional crude oil gathering lines and storage tanks. These projects will allow us to capture the growing crude oil production that we see in the Delaware Basin. We continue to target mid-to-high teens distribution growth through 2018 while keeping our debt-to-EBITDA leverage ratio below four times. Overall, the Partnership is well-positioned for continued growth.”

Conference Call Information

On Tuesday, August 2, 2016, at 4:00 p.m. ET, WNRL will hold a webcast and conference call to discuss the reported results and provide an update on partnership operations. The webcast can be accessed at Western Refining Logistics, LP's website, www.wnrl.com. The call can also be heard by dialing (844) 831-3028 or (315) 625-6887, pass code: 35351266. The audio replay will be available two hours after the end of the call through August 16, 2016 by dialing (855) 859-2056 or (404) 537-3406, pass code: 35351266.

About Western Refining Logistics, LP

Western Refining Logistics, LP is principally a 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 logistics assets related to the terminalling, transportation and storage of crude oil and refined products. Headquartered in El Paso, Texas, Western Refining Logistics, LP's assets include approximately 685 miles of pipelines, approximately 8.4 million barrels of active storage capacity, distribution of wholesale petroleum products and crude oil trucking.

More information about Western Refining Logistics, LP 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 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 available for distribution to our 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 reflect WNRL’s current expectation regarding future events, results or outcomes. The forward-looking statements contained herein include statements related to, among other things: WNRL's good operational performance in the Delaware Basin; WNRL’s investment in its business, including additions to the crude oil gathering system and storage capacity; growing crude oil production in the Delaware Basin and WNRL's ability to capture such growth; WNRL's distribution growth and ability to keep its debt-to-EBITDA leverage ratio at target levels; and WNRL’s positioning for continued growth. These statements are subject to the general risks inherent in WNRL’s business. These expectations may or may not be realized and some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, WNRL’s business and operations involve numerous risks and uncertainties, many of which are beyond its control, which could result in WNRL’s expectations not being realized, or otherwise materially affect WNRL’s 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 to which you are referred. The forward-looking statements are only as of the date made. Except as required by law, 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 Six Months Ended
June 30, June 30,
2016 2015 2016 2015
(Unaudited)
(In thousands, except per unit data)
Revenues:
Fee based:
Affiliate$53,965 $47,465 $105,893 $92,943
Third-party677 679 1,367 1,302
Sales based:
Affiliate126,525 164,576 224,054 297,347
Third-party397,435 523,184 715,327 951,708
Total revenues578,602 735,904 1,046,641 1,343,300
Operating costs and expenses:
Cost of products sold:
Affiliate123,870 162,191 219,019 292,699
Third-party380,386 501,835 680,827 913,028
Operating and maintenance expenses37,574 38,058 76,475 74,429
Selling, general and administrative expenses5,758 6,279 10,823 12,234
Gain on disposal of assets, net(802) (160) (901) (244)
Depreciation and amortization7,325 6,670 14,469 12,562
Total operating costs and expenses554,111 714,873 1,000,712 1,304,708
Operating income24,491 21,031 45,929 38,592
Other income (expense):
Interest and debt expense(6,414) (6,248) (13,466) (10,212)
Other, net14 18 (104) 35
Net income before income taxes18,091 14,801 32,359 28,415
Provision for income taxes(217) (148) (478) (351)
Net income17,874 14,653 31,881 28,064
Less net loss attributable to General Partner (1,262) (3,174)
Net income attributable to limited partners$17,874 $15,915 $31,881 $31,238
Net income per limited partner unit:
Common - basic$0.33 $0.34 $0.61 $0.66
Common - diluted0.33 0.34 0.61 0.66
Subordinated - basic and diluted0.36 0.34 0.64 0.66
Weighted average limited partner units outstanding:
Common - basic26,409 24,017 25,429 24,001
Common - diluted26,427 24,051 25,441 24,023
Subordinated - basic and diluted22,811 22,811 22,811 22,811


Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
(Unaudited)
(In thousands)
Cash Flow Data
Net cash provided by (used in):
Operating activities$34,209 $15,400 $58,999 $48,132
Investing activities(7,470) (14,673) (13,592) (41,200)
Financing activities(37,830) (10,349) (72,450) 17,320
Capital expenditures8,328 14,846 14,569 41,490
Other Data
EBITDA (1)$31,830 $27,048 $60,294 $51,276
Distributable cash flow (1)25,090 17,440 47,618 39,209
Balance Sheet Data (at end of period)
Cash and cash equivalents $17,562 $78,550
Property, plant and equipment, net 320,493 316,642
Total assets 483,221 563,748
Total liabilities 466,139 463,174
Division equity 128,264
Partners' capital 17,082 (27,690)
Total liabilities, division equity and partners' capital 483,221 563,748

(1) We define EBITDA as earnings before interest and debt expense, provision for income taxes and depreciation and amortization. We define Distributable Cash Flow as EBITDA plus the change in deferred revenues, less debt interest accruals, income taxes paid, maintenance capital expenditures and distributions declared on our TexNew Mex units. The GAAP performance measure most directly comparable to EBITDA is net income. The GAAP liquidity measure most directly comparable to EBITDA and distributable cash flow is net cash provided by operating activities. These non-GAAP financial measures should not be considered alternatives to GAAP net income or net cash provided by operating activities.

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 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 our affiliates or other companies in our industry, thereby limiting its usefulness as a comparative measure.

EBITDA and Distributable Cash Flow are used as supplemental financial measures by management and by external users of our financial statements, such as investors and commercial banks, to assess:

  • our operating performance as compared to those of other companies in the midstream energy industry, without regard to financial methods, historical cost basis or capital structure;

  • the ability of our assets to generate sufficient cash to make distributions to our unitholders;

  • our ability to incur and service debt and fund capital expenditures; and

  • the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

Distributable Cash Flow is a standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is, in part, measured by its yield. Yield is based on the amount of cash distributions a partnership can pay to a unitholder. Although distributable cash flow is a liquidity measure, it is presented in this reconciliation to net income as supplemental information.

We believe that the presentation of these non-GAAP measures provides useful information to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to EBITDA and Distributable Cash Flow is net income attributable to limited partners. These non-GAAP measures should not be considered as alternatives to net income or any other measure of financial performance presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income attributable to limited partners. These non-GAAP measures may vary from those of other companies. As a result, EBITDA and Distributable Cash Flow as presented herein may not be comparable to similarly titled measures of other companies.

The calculation of EBITDA and Distributable Cash Flow includes the results of operations for the TexNew Mex Pipeline System for the three and six months ended June 30, 2016. The results of operations for the TexNew Mex Pipeline System are excluded from the EBITDA and Distributable Cash Flow calculations for the comparable periods in the prior year because a retrospective adjustment of these performance measures is not a representative measure of performance results.

The following table reconciles net income attributable to limited partners to EBITDA for the periods presented and Distributable Cash Flow for the three and six months ended June 30, 2016 and 2015, respectively.

Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
(Unaudited)
(In thousands)
Net income attributable to limited partners$17,874 $15,915 $31,881 $31,238
Interest and debt expense6,414 6,248 13,466 10,212
Provision for income taxes217 148 478 351
Depreciation and amortization7,325 4,737 14,469 9,475
EBITDA31,830 27,048 60,294 51,276
Change in deferred revenues1,446 1,215 3,678 2,447
Interest accruals(6,072) (8,908) (12,781) (9,633)
Income taxes paid(64) (580) (94) (581)
Maintenance capital expenditures(2,050) (2,117) (3,479) (5,082)
Distributions on TexNew Mex Units
Other 782 782
Distributable cash flow$25,090 $17,440 $47,618 $39,209

Logistics Segment

Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
(Unaudited)
(In thousands, except key operating statistics)
Statement of Operations Data:
Fee based revenues:
Affiliate$43,053 $36,279 $83,969 $71,054
Third-party677 679 1,367 1,302
Total revenues43,730 36,958 85,336 72,356
Operating costs and expenses:
Operating and maintenance expenses18,317 18,506 39,317 36,758
General and administrative expenses548 886 1,263 1,865
Gain on disposal of assets, net(5) (5)
Depreciation and amortization6,119 5,563 12,080 10,378
Total operating costs and expenses24,979 24,955 52,655 49,001
Operating income$18,751 $12,003 $32,681 $23,355
Key Operating Statistics:
Pipeline and gathering (bpd):
Mainline movements (1):
Permian/Delaware Basin system55,953 43,873 52,719 40,213
Four Corners system58,047 51,486 55,257 48,679
TexNew Mex system10,375 3,398 11,460 1,708
Gathering (truck offloading):
Permian/Delaware Basin system17,823 24,019 19,178 23,316
Four Corners system11,133 12,950 11,947 11,812
Pipeline Gathering and Injection system:
Permian/Delaware Basin system11,302 5,911 9,594 3,775
Four Corners system27,225 22,081 25,831 21,327
TexNew Mex system343 171
Tank storage capacity (bbls) (2)845,514 619,893 836,858 620,198
Terminalling, transportation and storage:
Shipments into and out of storage (bpd) (includes asphalt)393,037 389,220 390,647 390,263
Terminal storage capacity (bbls) (2)7,385,543 7,482,152 7,385,543 7,486,337

(1) Some barrels of crude oil in route to Western's Gallup refinery and Permian/Delaware Basin are transported on more than one of our mainlines. Mainline movements for the Four Corners and Delaware Basin systems include each barrel transported on each mainline. During the second quarter of 2015, we began shipping crude oil from the Four Corners system, through the TexNew Mex Pipeline System, to the Permian/Delaware system.

(2) Storage shell capacities represent weighted-average capacities for the periods indicated.

Wholesale Segment

Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
(Unaudited)
(In thousands, except key operating stats)
Statement of Operations Data:
Fee based revenues (1):
Affiliate$10,912 $11,186 $21,924 $21,889
Sales based revenues (1):
Affiliate126,525 164,576 224,054 297,347
Third-party397,435 523,184 715,327 951,708
Total revenues534,872 698,946 961,305 1,270,944
Operating costs and expenses:
Cost of products sold:
Affiliate123,870 162,191 219,019 292,699
Third-party380,386 501,835 680,827 913,028
Operating and maintenance expenses19,257 19,552 37,158 37,671
Selling, general and administrative expenses2,153 2,250 4,058 4,446
Gain on disposal of assets, net(797) (160) (896) (244)
Depreciation and amortization1,206 1,107 2,389 2,184
Total operating costs and expenses526,075 686,775 942,555 1,249,784
Operating income$8,797 $12,171 $18,750 $21,160
Key Operating Statistics:
Fuel gallons sold (in thousands)311,486 310,811 626,429 614,242
Fuel gallons sold to retail (included in fuel gallons sold above) (in thousands)83,721 79,023 163,562 154,286
Fuel margin per gallon (2)$0.025 $0.037 $0.027 $0.032
Lubricant gallons sold (in thousands)1,846 3,014 4,047 5,971
Lubricant margin per gallon (3)$0.89 $0.78 $0.78 $0.72
Asphalt trucking volume (tons)4,876 3,875
Crude oil trucking volume (bpd)42,092 48,992 38,801 46,037
Average crude oil revenue per barrel$2.17 $2.51 $2.20 $2.63

(1) All wholesale fee based revenues are generated through fees charged to Western's refining segment for truck transportation and delivery of crude oil and asphalt. Affiliate and third-party sales based revenues result from sales of refined products to Western and third-party customers at a delivered price that includes charges for product transportation.

(2) Fuel margin per gallon is a measurement calculated by dividing the difference between fuel sales, net of transportation charges, and cost of fuel sales for our wholesale business 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.

(3) Lubricant margin per gallon is a measurement calculated by dividing the difference between lubricant sales, net of transportation charges, and lubricant cost of products sold by the number of gallons sold. Lubricant margin is a measure frequently used in the petroleum products wholesale industry to measure operating results related to lubricant sales.

Investor and Analyst Contact: Retail Investors Contact: Media Contact:
Michelle ClementeAlpha IR GroupGary W. Hanson
(602) 286-1533Dylan Schweitzer(602) 286-1777
Chris Hodges
Jeffrey S. Beyersdorfer(312) 445-2870
(602) 286-1530WNRL@alpha-ir.com


Source:Western Refining Logistics, LP