Western Refining Logistics, LP
Feb 28, 2017
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Western Refining Logistics, LP Reports Fourth Quarter and Full Year 2016 Results

EL PASO, Texas, Feb. 28, 2017 (GLOBE NEWSWIRE) -- Western Refining Logistics, LP (NYSE:WNRL), reported fourth quarter 2016 net income attributable to limited partners of $20.8 million, or $0.31 per common limited partner unit, which compares to $14.8 million and $0.30 respectively in the fourth quarter 2015. Fourth quarter 2016 EBITDA was $36.8 million and distributable cash flow was $27.7 million; this compares to $27.7 million and $20.8 million respectively for the fourth quarter 2015.

"We are proud of the success we achieved in 2016.  We had a number of organic growth projects in the Delaware Basin and Four Corners area that are generating cash flow and we completed the acquisition of the St. Paul Park logistics assets in the Upper Midwest," said Jeff Stevens, President and Chief Executive Officer of WNRL's general partner.  "Crude oil production estimates in the Permian Basin are increasing, which should provide additional opportunities to grow throughput on our system in 2017."

On January 31, 2017, the board of directors declared a quarterly cash distribution for the fourth quarter 2016 of $0.4375 per unit, or $1.75 per unit on an annualized basis. This distribution represents a 3.6% increase over the third quarter distribution of $0.4225 per unit, and an 11.5% increase over the fourth quarter 2015 distribution.

Stevens continued, "With the organic projects we have completed in 2016 and with several nearing completion, between Western Refining (NYSE: WNR) and WNRL, we now have an integrated crude oil logistics system from the Four Corners to Wink, Texas.  This system, which includes pipelines, crude oil terminals and storage tanks for segregating and blending crude oil, is ideal for supplying WNR's refineries and for gathering and marketing crude oil for third parties.  We are excited about the potential for further development of our logistics presence in the Permian and Williston Basins."

Conference Call Information

On Tuesday, February 28, 2017, at 3:00 p.m. ET, WNRL will hold a webcast and conference call to discuss the reported results and provide an update on partnership operations. The call will be webcast and can be accessed at Western Refining Logistics' website, www.wnrl.com. The call can also be heard by dialing (844) 831-3028 or (315) 625-6887, pass code: 49159984. The audio replay will be available two hours after the end of the call through March 7, 2017 by dialing (855) 859-2056 or (404) 537-3406, pass code: 49159984.

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 705 miles of pipelines, approximately 12.4 million barrels of active storage capacity, distribution of wholesale petroleum products and crude oil trucking.

More information about Western Refining Logistics 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: the ability of WNRL's organic growth projects to generate cash flow; increase of crude oil production in the Permian Basin; growth of WNRL's system; completion of WNRL's on-going organic growth project; the ability of WNRL's assets to supply WNR's refineries; WNRL's ability to gather and market crude oil for third parties; and further development of WNRL's logistics presence in the Permian and Williston Basins.  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 Year Ended
 December 31, December 31,
 2016 2015 2016 2015
 (In thousands, except per unit data)
Revenues:       
Fee based:       
Affiliate$65,482  $52,381  $223,124  $203,435 
Third-party730  682  2,911  2,771 
Sales based:       
Affiliate123,574  126,693  479,033  582,888 
Third-party417,030  396,141  1,517,650  1,810,773 
Total revenues606,816  575,897  2,222,718  2,599,867 
Operating costs and expenses:       
Cost of products sold:       
Affiliate121,124  124,177  468,935  573,264 
Third-party399,607  376,676  1,447,178  1,734,873 
Operating and maintenance expenses43,833  44,611  174,936  175,767 
Selling, general and administrative expenses5,532  6,546  23,386  25,063 
Gain and impairments on disposal of assets, net(91) (21) (1,054) (278)
Depreciation and amortization9,772  9,568  39,242  35,384 
Total operating costs and expenses579,777  561,557  2,152,623  2,544,073 
Operating income27,039  14,340  70,095  55,794 
Other income (expense):       
Interest and debt expense(6,358) (6,691) (25,972) (23,107)
Other income (expense), net17  15  (70) 66 
Net income before income taxes20,698  7,664  44,053  32,753 
Provision for income taxes54  307  (706) (47)
Net income20,752  7,971  43,347  32,706 
Less net loss attributable to General Partner  (6,871) (23,309) (29,867)
Net income attributable to limited partners$20,752  $14,842  $66,656  $62,573 
        
Net income per limited partner unit:       
Common - basic$0.31  $0.30  $1.16  $1.31 
Common - diluted0.31  0.30  1.16  1.30 
Subordinated - basic and diluted0.31  0.29  1.21  1.30 
        
Weighted average limited partner units outstanding:       
Common - basic38,074  24,314  29,979  24,084 
Common - diluted38,095  24,321  29,994  24,099 
Subordinated - basic and diluted22,811  22,811  22,811  22,811 


 Three Months Ended Year Ended
 December 31, December 31,
 2016 2015 2016 2015
 (In thousands)
Cash Flow Data       
Net cash provided by (used in):       
Operating activities$27,471  $19,136  $108,180  $72,546 
Investing activities(1,392) (13,864) (25,005) (67,119)
Financing activities(27,969) (32,039) (113,128) (15,120)
Capital expenditures5,690  13,917  30,308  67,625 
Other Data       
EBITDA (1)$36,828  $27,703  $126,212  $106,662 
Distributable cash flow (1)27,737  20,774  100,059  78,631 
Balance Sheet Data (at end of period)       
Cash and cash equivalents    $14,652  $44,605 
Property, plant and equipment, net    412,170  430,141 
Total assets    580,854  610,222 
Total debt    313,032  437,467 
Total liabilities    482,530  570,632 
Division equity      108,013 
Partners' capital    98,324  (68,423)
Total liabilities, division equity and partners' capital    580,854  610,222 

(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 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 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:

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. 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 period subsequent to the Offering, the results of operations for the wholesale segment for the period subsequent to the Wholesale Acquisition, the results of the TexNew Mex Pipeline System subsequent to the TexNew Mex Pipeline Acquisition and the results of the St. Paul Park Logistics Assets subsequent to the St. Paul Park Logistics Transaction.

The following table reconciles net income attributable to limited partners to EBITDA and Distributable Cash Flow for the periods presented:

 Three Months Ended Year Ended
 December 31, December 31,
 2016 2015 2016 2015
 (In thousands)
Net income attributable to limited partners$20,752  $14,842  $66,656  $62,573 
Interest and debt expense6,358  6,691  25,972  23,107 
Provision for income taxes(54) (307) 706  47 
Depreciation and amortization9,772  6,477  32,878  20,935 
EBITDA36,828  27,703  126,212  106,662 
        
Change in deferred revenues864  1,122  9,002  3,351 
Interest accruals(6,154) (6,345) (25,312) (21,836)
Income taxes paid(171) 281  (415) (456)
Maintenance capital expenditures(3,630) (1,677) (9,428) (9,562)
Distributions on TexNew Mex Units  (310)   (310)
Proceeds from asset sale to affiliate      782 
Distributable cash flow$27,737  $20,774  $100,059  $78,631 


Logistics
 
 Three Months Ended Year Ended
 December 31, December 31,
 2016 2015 2016 2015
 (In thousands, except key operating statistics)
Revenues:       
Fee based revenues:       
Affiliate$52,312  $43,813  $178,600  $161,536 
Third-party730  682  2,911  2,771 
Total revenues53,042  44,495  181,511  164,307 
Operating costs and expenses:       
Operating and maintenance expenses25,596  25,809  101,328  99,430 
General and administrative expenses627  785  2,627  2,953 
Loss (gain) and impairments on disposal of assets, net  22  (17) 146 
Depreciation and amortization8,627  8,412  33,710  30,898 
Total operating costs and expenses34,850  35,028  137,648  133,427 
Operating income$18,192  $9,467  $43,863  $30,880 
Key Operating Statistics       
Pipeline and gathering (bpd) (1):       
Mainline movements:       
Permian/Delaware Basin system52,090  52,068  51,805  47,368 
TexNew Mex system7,790  14,566  9,543  12,302 
Four Corners system49,278  60,115  53,204  56,079 
Gathering (truck offloading) (bpd):       
Permian/Delaware Basin system16,809  21,865  17,662  23,617 
Four Corners system8,417  13,589  10,464  13,438 
Pipeline Gathering and Injection system:       
Permian/Delaware Basin system14,706  7,367  12,295  5,861 
TexNew Mex system3,379    1,354   
Four Corners system26,788  26,360  25,052  24,490 
Tank storage capacity (bbls) (2)959,087  783,879  898,307  669,356 
Terminalling, transportation and storage:       
Shipments into and out of storage (bpd) (includes asphalt)568,288  377,698  441,865  391,842 
Terminal storage capacity (bbls) (2)11,376,805  7,397,408  8,564,061  7,447,391 

(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
 
 Three Months Ended Year Ended
 December 31, December 31,
 2016 2015 2016 2015
 (In thousands, except key operating statistics)
Revenues:       
Fee based revenues (1):       
Affiliate$13,170  $8,568  $44,524  $41,899 
Sales based revenues (1):       
Affiliate123,574  126,693  479,033  582,888 
Third party417,030  396,141  1,517,650  1,810,773 
Total revenues553,774  531,402  2,041,207  2,435,560 
Operating costs and expenses:       
Cost of products sold:       
Affiliate121,124  124,177  468,935  573,264 
Third-party399,607  376,676  1,447,178  1,734,873 
Operating and maintenance expenses18,237  18,802  73,608  76,337 
Selling, general and administrative expenses1,484  2,150  7,607  8,865 
Gain and impairments on disposal of assets, net(91) (43) (1,037) (424)
Depreciation and amortization1,145  1,156  5,532  4,486 
Total operating costs and expenses541,506  522,918  2,001,823  2,397,401 
Operating income$12,268  $8,484  $39,384  $38,159 
Key Operating Statistics:       
Fuel gallons sold (in thousands)317,998  318,186  1,258,027  1,237,994 
Fuel gallons sold to retail (included in fuel gallons sold, above) (in thousands)81,521  78,780  332,214  314,604 
Fuel margin per gallon (2)$0.030  $0.026  $0.028  $0.030 
Lubricant gallons sold (in thousands)1,385  2,728  6,787  11,697 
Lubricant margin per gallon (3)$0.83  $0.77  $0.85  $0.73 
Asphalt trucking volume (bpd)5,518    4,727   
Crude oil trucking volume (bpd)40,586  39,675  38,582  45,337 
Average crude oil revenue per barrel$2.12  $2.35  $2.16  $2.53 

(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 segment 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:
Michelle Clemente
(602) 286-1533

Jeffrey S. Beyersdorfer
(602) 286-1530

Media Contact:
Gary W. Hanson
(602) 286-1777