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Buckeye Partners, L.P. Reports Second Quarter 2016 Financial Results

HOUSTON, Aug. 05, 2016 (GLOBE NEWSWIRE) -- Buckeye Partners, L.P. (“Buckeye”) (NYSE:BPL) today reported its financial results for the second quarter of 2016. Buckeye reported income from continuing operations for the second quarter of 2016 of $144.5 million compared to income from continuing operations for the second quarter of 2015 of $91.3 million. Income from continuing operations attributable to Buckeye’s unitholders was $1.07 per diluted unit for the second quarter of 2016 compared to $0.71 per diluted unit for the second quarter of 2015. The diluted weighted average number of units outstanding in the second quarter of 2016 was 131.2 million compared to 128.2 million in the second quarter of 2015.

Adjusted EBITDA (as defined below) from continuing operations for the second quarter of 2016 was $256.6 million compared to $206.5 million for the second quarter of 2015. Distributable cash flow (as defined below) from continuing operations for the second quarter of 2016 was $183.1 million compared to $144.9 million for the second quarter of 2015. Buckeye also reported distribution coverage of 1.15 times for the second quarter of 2016.

“I’m pleased to report that Buckeye Partners posted very strong results for the second quarter of 2016. These results continue to highlight the benefits of our diversified portfolio of fee-based assets,” said Clark C. Smith, Chairman, President and Chief Executive Officer. “All of our segments contributed to the improved performance over the year-ago quarter. The Global Marine Terminals segment drove significant growth, primarily attributable to the incremental contribution from the completion of the buildout at our Buckeye Texas Partners joint venture, as well as strong demand for storage services across that segment’s legacy assets. Our Domestic Pipelines & Terminals business capitalized on favorable market conditions to drive incremental transportation and throughput revenues across our pipeline and terminal system while continuing to increase utilization of segregated storage across the domestic system. Our merchant business continued to drive volumes across our system, while creating value through effective supply management.”

“We believe our second quarter performance demonstrates the success of both our commercial and operating models. Our ability to execute on investment opportunities and capitalize on favorable market conditions contributed to our record results,” continued Mr. Smith. “Our domestic business, in particular, benefited from temporary shifts in supply and pricing differentials that drove a more favorable mix of long-haul pipeline movements during the second quarter that contributed to these exceptional results. Looking forward, we believe we have a robust backlog of potential strategic capital investment opportunities across the Buckeye system that our teams are evaluating as we seek to maximize the value of our asset portfolio, while also continuing to focus on improving operational efficiencies across the organization.”

Cash Distribution. Buckeye also announced today that its general partner declared a cash distribution of $1.2125 per limited partner unit (“LP Unit”) for the quarter ended June 30, 2016. The distribution will be payable on August 22, 2016 to unitholders of record on August 15, 2016. This cash distribution represents a 4.3 percent increase over the $1.1625 per LP Unit distribution declared for the second quarter of 2015. 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, August 5, 2016, at 11:00 a.m. Eastern Time. To access the live webcast of the call, go to http://edge.media-server.com/m/p/8ctwdywm 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 5, 2016, and the replay also may be accessed by dialing 800-585-8367 and entering the conference ID 45954817.

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. Buckeye also uses its service expertise to operate and/or maintain third-party pipelines and perform certain engineering and construction services for its customers. Additionally, Buckeye is one of the largest independent terminalling and storage operators in the United States in terms of capacity available for service. Buckeye’s terminal network comprises more than 120 liquid petroleum products terminals with aggregate storage capacity of over 110 million barrels across its portfolio of pipelines, inland terminals and marine terminals located primarily in the East Coast and Gulf Coast regions of the United States and in the Caribbean. Buckeye’s network of marine terminals enables it to facilitate global flows of crude oil and refined petroleum products, offering its customers connectivity between supply areas and market centers through some of the world’s most important bulk storage and blending hubs. Buckeye’s flagship marine terminal in The Bahamas, Buckeye Bahamas Hub Limited, formerly known as BORCO, 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 expansion into the Gulf Coast has added another regional hub with world-class marine terminalling, storage and processing capabilities. Buckeye is also a wholesale distributor of refined petroleum products in areas served by its pipelines and terminals. 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. We use distributable cash flow as a performance metric to compare cash generating performance of Buckeye from period to period and to compare the cash generating performance for specific periods to the cash distributions (if any) that are expected to be paid to our unit holders. Distributable cash flow is not intended to be a liquidity measure. 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, changes in product flows, 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, terminalling, storage, and processing 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, and (x) 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, 2015 and our most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, 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
June 30,
Six Months Ended
June 30,
2016 2015 2016 2015
Revenue:
Product sales$364,326 $458,613 $749,088 $1,198,831
Transportation, storage and other services412,796 338,170 808,628 686,052
Total revenue777,122 796,783 1,557,716 1,884,883
Costs and expenses:
Cost of product sales353,953 448,534 722,597 1,166,073
Operating expenses147,718 141,339 296,804 283,704
Depreciation and amortization63,322 55,598 124,748 109,374
General and administrative22,185 20,293 43,416 42,911
Total costs and expenses587,178 665,764 1,187,565 1,602,062
Operating income189,944 131,019 370,151 282,821
Other income (expense):
Earnings from equity investments2,470 2,446 5,558 4,580
Interest and debt expense(47,834) (41,975) (95,617) (83,684)
Other (expense) income(108) 77 (28) 110
Total other expense, net(45,472) (39,452) (90,087) (78,994)
Income from continuing operations before taxes144,472 91,567 280,064 203,827
Income tax benefit (expense)27 (241) (588) (480)
Income from continuing operations144,499 91,326 279,476 203,347
Loss from discontinued operations (857)
Net income144,499 91,326 279,476 202,490
Less: Net (income) loss attributable to noncontrolling interests(4,043) 254 (7,907) 701
Net income attributable to Buckeye Partners, L.P.$140,456 $91,580 $271,569 $203,191
Basic earnings (loss) per unit attributable to Buckeye Partners, L.P.:
Continuing operations$1.08 $0.72 $2.09 $1.60
Discontinued operations (0.01)
Total$1.08 $0.72 $2.09 $1.59
Diluted earnings (loss) per unit attributable to Buckeye Partners, L.P.:
Continuing operations$1.07 $0.71 $2.08 $1.60
Discontinued operations (0.01)
Total$1.07 $0.71 $2.08 $1.59
Weighted average units outstanding:
Basic130,494 127,650 130,099 127,414
Diluted131,153 128,198 130,641 127,904






BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
(In thousands)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2016 2015 2016 2015
Revenue:
Domestic Pipelines & Terminals (1)$249,979 $224,654 $487,932 $468,225
Global Marine Terminals169,517 124,590 339,581 245,574
Merchant Services369,408 460,156 759,145 1,200,316
Intersegment(11,782) (12,617) (28,942) (29,232)
Total revenue$777,122 $796,783 $1,557,716 $1,884,883
Total costs and expenses: (2)
Domestic Pipelines & Terminals$136,406 $139,515 $272,320 $275,534
Global Marine Terminals97,251 79,609 196,908 163,198
Merchant Services365,303 459,257 747,279 1,192,562
Intersegment(11,782) (12,617) (28,942) (29,232)
Total costs and expenses$587,178 $665,764 $1,187,565 $1,602,062
Depreciation and amortization:
Domestic Pipelines & Terminals$21,838 $20,667 $41,791 $38,369
Global Marine Terminals40,110 33,623 80,417 68,501
Merchant Services1,374 1,308 2,540 2,504
Total depreciation and amortization$63,322 $55,598 $124,748 $109,374
Operating income:
Domestic Pipelines & Terminals$113,573 $85,139 $215,612 $192,691
Global Marine Terminals72,266 44,981 142,673 82,376
Merchant Services4,105 899 11,866 7,754
Total operating income$189,944 $131,019 $370,151 $282,821
Adjusted EBITDA from continuing operations:
Domestic Pipelines & Terminals$141,979 $125,013 $270,460 $255,063
Global Marine Terminals108,382 78,705 215,005 153,123
Merchant Services6,228 2,763 15,750 11,205
Adjusted EBITDA from continuing operations$256,589 $206,481 $501,215 $419,391
Capital expenditures: (3)
Domestic Pipelines & Terminals$72,116 $53,340 $127,666 $99,907
Global Marine Terminals39,656 110,748 96,419 198,090
Merchant Services 302 32 417
Total capital expenditures$111,772 $164,390 $224,117 $298,414
Summary of capital expenditures:
Maintenance capital expenditures$29,881 $23,584 $51,447 $43,014
Expansion and cost reduction81,891 140,806 172,670 255,400
Total capital expenditures (3)$111,772 $164,390 $224,117 $298,414


June 30, December 31,
2016 2015
Key Balance Sheet Information:
Cash and cash equivalents$14,762 $4,881
Long-term debt, total (4)3,738,610 3,732,824

_______________________________

(1) Amounts include reductions in revenue of $13.5 million for the three and six months ended June 30, 2015 related to settlement of a Federal Energy Regulatory Commission (“FERC”) proceeding.
(2) Includes depreciation and amortization.
(3) Amounts exclude the impact of accruals. On an accrual basis, the additions to property, plant and equipment related to expansion and cost reduction projects were $86.6 million and $135.9 million for the three months ended June 30, 2016 and 2015, respectively, and $164.2 million and $260.5 million for the six months ended June 30, 2016 and 2015, respectively.
(4) Includes long-term debt portion of Buckeye Partners, L.P. Credit Facility of $365.0 million as of June 30, 2016.






BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA - Continued
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2016 2015 2016 2015
Domestic Pipelines & Terminals (average bpd in thousands):
Pipelines:
Gasoline 803.1 764.1 750.2 729.7
Jet fuel 366.4 374.0 356.8 355.5
Middle distillates (1) 258.9 308.9 286.5 361.0
Other products (2) 22.4 40.6 17.3 34.1
Total throughput 1,450.8 1,487.6 1,410.8 1,480.3
Terminals:
Throughput (3) 1,278.5 1,267.0 1,227.2 1,238.9
Pipeline average tariff (cents/bbl) 86.0 82.4 85.1 83.1
Global Marine Terminals (percent of capacity):
Average capacity utilization rate (4) 99% 96% 99% 95%
Merchant Services (in millions of gallons):
Sales volumes 260.9 247.7 613.8 672.4

_________________________
(1) Includes diesel fuel and heating oil.
(2) Includes liquefied petroleum gas, intermediate petroleum products and crude oil.
(3) Includes throughput of two underground propane storage caverns.
(4) 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 91% and 84% for the three months ended June 30, 2016 and 2015, respectively, and approximately 91% and 82% for the six months ended June 30, 2016 and 2015, respectively.





BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
Non-GAAP Reconciliations
(In thousands, except coverage ratio)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2016 2015 2016 2015
Income from continuing operations$144,499 $91,326 $279,476 $203,347
Less: Net (income) loss attributable to noncontrolling interests(4,043) 254 (7,907) 701
Income from continuing operations attributable to Buckeye Partners, L.P.140,456 91,580 271,569 204,048
Add:Interest and debt expense 47,834 41,975 95,617 83,684
Income tax (benefit) expense (27) 241 588 480
Depreciation and amortization (1) 63,322 55,598 124,748 109,374
Non-cash unit-based compensation expense 7,724 5,895 14,059 10,981
Acquisition and transition expense (2) 48 460 170 2,860
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$256,589 $206,481 $501,215 $419,391
Less:Interest and debt expense, excluding amortization of deferred financing costs, debt discounts and other (43,624) (37,760) (87,197) (75,253)
Income tax benefit (expense), excluding non-cash taxes 29 (241) (588) (480)
Maintenance capital expenditures (5) (29,881) (23,584) (51,447) (43,014)
Distributable cash flow from continuing operations$183,113 $144,896 $361,983 $300,644
Distributions for coverage ratio (6)$159,787 $149,483 $317,033 $296,568
Coverage ratio from continuing operations1.15 0.97 1.14 1.01

_________________________
(1) Includes 100% of the depreciation and amortization expense of $17.2 million and $10.8 million for Buckeye Texas Partners LLC for the three months ended June 30, 2016 and 2015, respectively, and $34.0 million and $22.5 million for the six months ended June 30, 2016 and 2015, respectively.
(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.
(3) Represents reductions in revenue related to settlement of a FERC proceeding.
(4) Represents amortization of the negative fair value allocated to certain unfavorable storage contracts acquired in connection with the BBH 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 2016 reflects actual cash distributions paid on LP Units for the quarter ended March 31, 2016 and estimated cash distributions for LP Units for the quarter ended June 30, 2016.


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

Source:Buckeye Partners, L.P.