NEW YORK, May 04, 2017 (GLOBE NEWSWIRE) -- Arc Logistics Partners LP (NYSE:ARCX) ("Arc Logistics" or the "Partnership") today reported its financial and operating results for the first quarter ended March 31, 2017.
During the first quarter of 2017, the Partnership accomplished the following:
- Realized throughput of 159.5 thousand barrels per day (“mbpd”)
- Reported revenues, net income and Adjusted EBITDA of $25.9 million, $3.8 million and $13.3 million, respectively
- Invested $2.9 million of expansion capital expenditures to support existing, new and future customer initiatives
- Generated cash flows from operating activities of $11.5 million and Distributable Cash Flow of $9.2 million
- Declared a quarterly cash distribution of $0.44 per unit for the first quarter ended March 31, 2017
For additional information regarding the Partnership’s calculation of Adjusted EBITDA and Distributable Cash Flow, which are non-GAAP financial measures, and a reconciliation of net income to Adjusted EBITDA and cash flows from operating activities to Distributable Cash Flow, please see below in this release and the accompanying tables.
First Quarter 2017 Operational and Financial Results
The Partnership’s first quarter 2017 reported revenues, net income and Adjusted EBITDA of $25.9 million, $3.8 million and $13.3 million, respectively, represents a decrease over the Partnership’s first quarter 2016 reported revenues, net income and Adjusted EBITDA of $26.1 million, $5.0 million and $13.5 million, respectively. Operating income decreased by $0.9 million to $4.1 million for the first quarter 2017 when compared to the first quarter 2016 operating income of $5.0 million, which decrease was principally due to the following:
- Revenues decreased by $0.1 million, or 1%, to $25.9 million as compared to $26.1 million, which decrease was related to a $1.1 million decrease in minimum storage and throughput services fees primarily due to transitioning customers from short-term agreements to long-term agreements, customers reducing short-term storage capacity needs and/or total minimum take-or-pay contract terms at Altoona, Blakeley, Chickasaw, Dupont, Mechanicsburg, Mobile, Portland and Williamsport terminals, offset by (i) $0.7 million increase in excess throughput and handling fees primarily due to execution of new agreements and incremental existing customer throughput and handling fees at the Partnership’s Altoona, Baltimore, Chickasaw, Cleveland, Dupont, Mechanicsburg, Mobile, Norfolk, Pawnee, Selma, Toledo and Williamsport terminals and (ii) a $0.3 million increase in ancillary services fees primarily due to services provided to existing customers at the Partnership’s Baltimore, Brooklyn, Dupont, Mechanicsburg, Norfolk, Pawnee, Selma and Spartanburg terminals due to increased activity.
- Operating expenses increased by $0.2 million, or 2%, to $8.9 million as compared to $8.7 million, which increase was the result of a (i) $0.2 million increase attributable to increased throughput activity including additive, utility and supply expenses, (ii) $0.1 million increase in repair and maintenance expense, (iii) $0.2 million increase in contract labor in support of customer activities at the Joliet terminal and (iv) an increase in compliance expense of $0.1 million, offset by (i) reduced payroll expenses of $0.1 million due to a realignment and optimization of the Partnership’s workforce, (ii) $0.1 million related to a reduction in office expenses, (iii) $0.1 million related to prior period tank cleaning projects and (iv) $0.1 million related to a reduction in estimated property taxes related to prior year acquisitions.
- Selling, general and administrative expenses decreased by approximately $0.7 million, or 14%, to $4.5 million as compared to $5.2 million, which was a result of a (i) $0.3 million decrease in due diligence expenses, (ii) $0.2 million decrease in professional fees associated with a customer dispute, (iii) $0.2 million decrease related to a reduction in compensation expense under the Partnership’s long-term incentive plan and (iv) less than $0.1 million decrease related to a reduction in allocation of expenses from the Partnership’s general partner.
- Depreciation expense increased by $0.8 million, or 22%, to $4.5 million as compared to $3.7 million, which increase was primarily due to the impact of the expansion project at our Pennsylvania terminals which were acquired in 2016, customer expansion activities and incremental maintenance projects. Amortization expense decreased by less than $0.1 million, or 1%, to $3.7 million, which decrease was primarily due to an intangible asset related to the Mobile terminal acquisition becoming fully amortized in the first quarter of 2016.
As of March 31, 2017, the Partnership's storage capacity was approximately 7.8 million barrels, which represents an approximately 0.1 million barrel, or 1%, increase when compared to the Partnership’s capacity at March 31, 2016. The increase in storage capacity is related to three newly constructed biodiesel tanks at the Pennsylvania terminals and the completion of the third 100,000 barrel tank at the Pawnee terminal.
The Partnership's throughput activity increased by 14.5 mbpd, or 10%, to 159.5 mbpd during the first quarter of 2017 compared to the first quarter of 2016. The increase was due to (i) 2.9 mbpd increase in asphalt and industrial products throughput related to existing customer activity in the Gulf Coast, (ii) 0.5 mbpd decrease in crude oil throughput as customer activity at the Joliet terminal offset a reduction in customer activity at the Pawnee and Portland terminals, (iii) 5.0 mbpd increase in distillates throughput is the result of recently executed agreements and increased existing customer activity in Baltimore, Chickasaw, Cleveland and the Pennsylvania terminals, partially offset by reduced customer activity and customer non-renewals in the Partnership’s Blakeley, Madison, Mobile, Portland, Selma, Toledo terminals, (iv) 7.1 mbpd increase in gasoline throughput as a result of 8.3 mbpd of recently executed agreements and increased commercial activity across the entire network providing gasoline service offset by 1.2 mbpd of reduced customer activity in the Partnership’s Dupont and Selma terminals.
In April 2017, the Partnership declared a quarterly cash distribution of $0.44 per unit, or $1.76 per unit on an annualized basis, for the period from January 1, 2017 through March 31, 2017. The distribution will be paid on May 15, 2017 to unitholders of record on May 8, 2017.
Arc Logistics will hold a conference call and webcast to discuss the first quarter 2017 financial and operating results on May 4, 2017, at 5:00 p.m. Eastern. Interested parties may listen to the conference call by dialing (855) 433-0931. International callers may access the conference call by dialing (484) 756-4279. The call may also be accessed live over the internet by visiting the “Investor Relations” page of the Partnership’s website at www.arcxlp.com and will be available for replay for approximately one month.
About Arc Logistics Partners LP
Arc Logistics is a fee-based, growth-oriented limited partnership that owns, operates, develops and acquires a diversified portfolio of complementary energy logistics assets. Arc Logistics is principally engaged in the terminalling, storage, throughput and transloading of petroleum products and other liquids. For more information, please visit www.arcxlp.com.
Certain statements and information in this press release constitute “forward-looking statements.” Certain expressions including “believe,” “expect,” “intends,” or other similar expressions are intended to identify the Partnership’s current expectations, opinions, views or beliefs concerning future developments and their potential effect on the Partnership. While management believes that these forward-looking statements are reasonable when made, there can be no assurance that future developments affecting the Partnership will be those that it anticipates. The forward-looking statements involve significant risks and uncertainties (some of which are beyond the Partnership’s control) and assumptions that could cause actual results to differ materially from the Partnership’s historical experience and its present expectations or projections. Important factors that could cause actual results to differ materially from forward-looking statements include but are not limited to: (i) adverse economic, capital markets and political conditions; (ii) changes in the market place for the Partnership’s services; (iii) changes in prices and supply and demand of crude oil and petroleum products; (iv) actions and performance of the Partnership’s customers, vendors or competitors; (v) nonrenewal, nonpayment or nonperformance by the Partnership’s customers and the Partnership’s ability to replace such contracts and/or customers; (vi) changes in the cost of or availability of capital; (vi) unanticipated capital expenditures in connection with the construction, repair or replacement of the Partnership’s assets; (viii) operating hazards, unforeseen weather events or matters beyond the Partnership’s control; (ix) inability to consummate acquisitions, pending or otherwise, on acceptable terms and successfully integrate acquired businesses into the Partnership’s operations; (x) effects of existing and future laws or governmental regulations; and (xi) litigation. Additional information concerning these and other factors that could cause the Partnership’s actual results to differ from projected results can be found in the Partnership’s public periodic filings with the Securities and Exchange Commission (“SEC”), including the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 14, 2017 and any updates thereto in the Partnership’s subsequent quarterly reports on Form 10-Q and current reports on Forms 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The Partnership undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
The Partnership defines Adjusted EBITDA as net income before interest expense, income taxes and depreciation and amortization expense, as further adjusted for other non-cash charges and other charges that are not reflective of its ongoing operations. Adjusted EBITDA is a non-GAAP financial measure that management and external users of the Partnership’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess (i) the performance of the Partnership’s assets without regard to the impact of financing methods, capital structure or historical cost basis of the Partnership’s assets; (ii) the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities; (iii) the Partnership’s ability to make distributions; (iv) the Partnership’s ability to incur and service debt and fund capital expenditures; and (v) the Partnership’s ability to incur additional expenses. The Partnership believes that the presentation of Adjusted EBITDA provides useful information to investors in assessing its financial condition and results of operations.
The Partnership defines Distributable Cash Flow as Adjusted EBITDA less (i) cash interest expense paid; (ii) cash income taxes paid; (iii) maintenance capital expenditures paid; and (iv) equity earnings from the Partnership’s interests in Gulf LNG Holdings Group, LLC (the “LNG Interest”); plus (v) cash distributions from the LNG Interest. Distributable Cash Flow is a non-GAAP financial measure that management and external users of the Partnership’s consolidated financial statements may use to evaluate whether the Partnership is generating sufficient cash flow to support distributions to its unitholders as well as to measure the ability of the Partnership’s assets to generate cash sufficient to support its indebtedness and maintain its operations.
The GAAP measure most directly comparable to Adjusted EBITDA is net income and to Distributable Cash Flow is cash flows from operating activities. Neither Adjusted EBITDA nor Distributable Cash Flow should be considered an alternative to net income or cash flows from operating activities, respectively. Adjusted EBITDA and Distributable Cash Flow have important limitations as analytical tools because they exclude some but not all items that affect net income. You should not consider Adjusted EBITDA or Distributable Cash Flow in isolation or as a substitute for analysis of the Partnership’s results as reported under GAAP. Additionally, because Adjusted EBITDA and Distributable Cash Flow may be defined differently by other companies in the Partnership’s industry, the Partnership’s definitions of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. Please see the reconciliation of net income to Adjusted EBITDA and cash flows from operating activities to Distributable Cash Flow in the accompanying tables.
|ARC LOGISTICS PARTNERS LP|
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME|
|(In thousands, except per unit amounts)|
|Three Months Ended|
|Selling, general and administrative||3,239||3,924|
|Selling, general and administrative - affiliate||1,262||1,322|
|(Gain) loss on revaluation of contingent consideration, net||318||(189||)|
|Operating (loss) income||4,105||4,974|
|Other income (expense):|
|Equity earnings from unconsolidated affiliate||2,371||2,461|
|Total other income (expenses), net||(283||)||94|
|(Loss) income before income taxes||3,822||5,068|
|Net (loss) income||3,791||5,040|
|Net income attributable to non-controlling interests||(1,328||)||(1,811||)|
|Net (loss) income attributable to partners' capital||2,463||3,229|
|Other comprehensive (loss) income||448||(896||)|
|Comprehensive (loss) income attributable to partners’ capital||$||2,911||$||2,333|
|Earnings (loss) per limited partner unit:|
|Common units (basic and diluted)||$||0.12||$||0.15|
|Subordinated units (basic and diluted)||$||-||$||0.15|
|ARC LOGISTICS PARTNERS LP|
|CONSOLIDATED BALANCE SHEETS|
|(In thousands, except unit amounts)|
|March 31,||December 31,|
|Cash and cash equivalents||$||1,762||$||4,584|
|Trade accounts receivable||9,216||8,257|
|Due from related parties||549||1,321|
|Other current assets||2,341||2,060|
|Total current assets||14,237||16,619|
|Property, plant and equipment, net||395,006||395,511|
|Investment in unconsolidated affiliate||76,807||75,716|
|Intangible assets, net||114,121||117,716|
|Liabilities and partners' capital:|
|Due to general partner||1,557||2,082|
|Total current liabilities||13,762||13,182|
|Other non-current liabilities||19,391||19,805|
|Commitments and contingencies|
|General partner interest||-||-|
|Limited partners' interest|
|Common units – (19,515,678 and 19,477,021 units issued and |
outstanding at March 31, 2017 and December 31, 2016, respectively)
|Accumulated other comprehensive income||3,105||2,657|
|Total partners' capital||359,988||366,426|
|Total liabilities and partners' capital||$||642,641||$||648,413|
|ARC LOGISTICS PARTNERS LP|
|CONSOLIDATED STATEMENTS OF CASH FLOWS|
|Three Months Ended|
|Cash flow from operating activities:|
|Adjustments to reconcile net income to net cash provided |
by (used in) operating activities:
|Equity earnings from unconsolidated affiliate, net of distributions||(719||)||(282||)|
|Amortization of deferred financing costs||406||359|
|Net loss (gain) on revaluation of contingent consideration||318||(189||)|
|Changes in operating assets and liabilities:|
|Trade accounts receivable||(960||)||(219||)|
|Due from related parties||772||195|
|Other current assets||(281||)||56|
|Due to general partner||(525||)||383|
|Net cash provided by operating activities||11,543||12,520|
|Cash flows from investing activities:|
|Investment in unconsolidated affiliate||-||(8,000||)|
|Net cash used in investing activities||(2,557||)||(13,715||)|
|Cash flows from financing activities:|
|Deferred financing costs||(25||)||(192||)|
|Repayments to credit facility||(5,000||)||-|
|Proceeds from credit facility||5,500||14,250|
|Payments of earn-out liability||(951||)||(341||)|
|Distributions paid to non-controlling interests||(2,600||)||(2,800||)|
|Distribution equivalent rights paid on unissued units||(162||)||(231||)|
|Net cash (used in) provided by financing activities||(11,808||)||2,213|
|Net increase in cash and cash equivalents||(2,822||)||1,018|
|Cash and cash equivalents, beginning of period||4,584||5,870|
|Cash and cash equivalents, end of period||$||1,762||$||6,888|
|ARC LOGISTICS PARTNERS LP|
|RECONCILIATIONS OF ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW|
|Three Months Ended|
|Net Income Attributable to Partners' Capital||$||2,463||$||3,229|
|One-time non-recurring expenses (b)||-||559|
|Non-cash unit-based compensation||840||1,088|
|Non-cash loss (gain) on revaluation of contingent consideration, net (a),(c)||191||(113||)|
|Non-cash deferred rent expense (d)||65||65|
|Cash interest expense||(2,273||)||(2,138||)|
|Cash income taxes||(31||)||(27||)|
|Maintenance capital expenditures||(1,096||)||(2,080||)|
|Equity earnings from the LNG Interest||(2,371||)||(2,461||)|
|Cash distributions received from the LNG Interest||1,652||2,179|
|Distributable Cash Flow||$||9,158||$||8,979|
|Maintenance capital expenditures||1,096||2,080|
|Distributable cash flow attributable to non-controlling interests||2,423||2,803|
|Changes in operating assets and liabilities||(1,220||)||(852||)|
|One-time non-recurring expenses (b)||-||(559||)|
|Other non-cash adjustments||86||69|
|Net Cash Provided by Operating Activities||$||11,543||$||12,520|
(a) The (gain) loss on revaluation of contingent consideration, depreciation and amortization have been adjusted to remove the non-controlling interest portion related to the GE EFS affiliate’s ownership interest in Arc Terminals Joliet Holdings LLC.
(b) The one-time non-recurring expenses relate to amounts incurred as due diligence expenses from acquisitions and other infrequent or unusual expenses incurred.
(c) The non-cash (gain) loss on revaluation of contingent consideration is related to the earn-out obligations incurred as a part of the Joliet terminal acquisition.
(d) The non-cash deferred rent expense relates to the accounting treatment for the Portland terminal lease transaction termination fees.
|ARC LOGISTICS PARTNERS LP|
|(In thousands, except operating data)|
|Three Months Ended|
|Selected Operating Data:|
|Storage capacity (bbls)||7,842,600||7,741,100|
|Throughput Data (bpd):|
|Asphalts and industrial products||17,324||14,452|
|Minimum storage & throughput services fees||$||20,919||$||22,018|
|Excess throughput & handling fees||3,316||2,656|
|Total storage & throughput fees||24,235||24,674|
|Ancillary services fees||1,690||1,393|
|Maintenance capital expenditures||$||1,096||$||2,080|
|Growth capital expenditures||2,854||4,177|
|Total capital expenditures||$||3,950||$||6,257|
Source:Arc Logistics Partners