Western Refining Logistics, LP
Oct 31, 2016
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Western Refining Logistics, LP Reports Third Quarter 2016 Results

EL PASO, Texas, Oct. 31, 2016 (GLOBE NEWSWIRE) -- Western Refining Logistics, LP (NYSE:WNRL) today reported third quarter 2016 net income attributable to limited partners of $14.0 million, or $0.23 per common limited partner unit, which compares to $16.5 million and $0.35, respectively, in the third quarter of 2015. Third quarter 2016 EBITDA was $29.1 million and distributable cash flow was $24.7 million; this compares to $27.7 million and $18.6 million, respectively, for the third quarter of 2015.

"During the quarter, we acquired St. Paul Park refinery storage and terminalling assets, which expands our geographical diversity," said Jeff Stevens, President and Chief Executive Officer of WNRL's general partner.   "We successfully completed an equity offering to fund the acquisition and expanded our revolver to $500 million to position us for further growth. We believe we have sufficient liquidity to fund our business plan for the foreseeable future.

"WNRL delivered good results for the quarter, demonstrating the locational advantage of our asset base in the Delaware Basin. We've completed pipeline connections to new production, which will help increase our pipeline and gathering volumes. This not only benefits WNRL, but our sponsor Western Refining also benefits from increased volumes of high quality, advantaged crude oil," continued Stevens.

On October 24, 2016, the board of directors declared a quarterly cash distribution for the third quarter 2016 of $0.4225 per unit, or $1.69 per unit, on an annualized basis. This distribution represents a 15% compound annual growth rate since WNRL's October 2013 initial public offering.

Stevens concluded, "Delaware Basin rig activity and crude oil production growth estimates continue to be encouraging. We believe we are well-positioned to increase EBITDA and distributions as crude oil production increases. Additionally, WNRL will benefit from the geographic diversification and growth potential as a result of the St. Paul Park logistics assets acquisition. We continue to be excited about the strategic locations of our assets and the growth potential of WNRL."

Conference Call Information

On Tuesday, November 1, 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: 83728384. The audio replay will be available two hours after the end of the call through November 15, 2016 by dialing (855) 859-2056 or (404) 537-3406, pass code: 83728384.

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 692 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, 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 positioning for continued growth; WNRL's ability to fund its business plan in the future;  the locational advantage of WNRL's assets in the Delaware Basin; the ability of WNRL's new pipeline connections to increase its pipeline and gathering volumes; growing rig activity and crude oil production in the Delaware Basin and WNRL's ability to increase EBITDA and distributions as crude oil production increases; and WNRL's ability to benefit from the St. Paul Park logistics assets acquisition.  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 Nine Months Ended
 September 30, September 30,
 2016 2015 2016 2015
 (Unaudited)
 (In thousands, except per unit data)
Revenues:       
Fee based:       
Affiliate$51,749  $58,111  $157,642  $151,054 
Third-party814  787  2,181  2,089 
Sales based:       
Affiliate131,405  158,848  355,459  456,195 
Third-party385,293  462,924  1,100,620  1,414,632 
Total revenues569,261  680,670  1,615,902  2,023,970 
Operating costs and expenses:       
Cost of products sold:       
Affiliate128,792  156,388  347,811  449,087 
Third-party366,744  445,169  1,047,571  1,358,197 
Operating and maintenance expenses43,454  45,927  131,103  131,156 
Selling, general and administrative expenses6,483  5,812  17,854  18,517 
Gain on disposal of assets, net(62) (13) (963) (257)
Depreciation and amortization10,579  8,963  29,470  25,816 
Total operating costs and expenses555,990  662,246  1,572,846  1,982,516 
Operating income13,271  18,424  43,056  41,454 
Other income (expense):       
Interest and debt expense(6,148) (6,204) (19,614) (16,416)
Other, net17  16  (87) 51 
Net income before income taxes7,140  12,236  23,355  25,089 
Provision for income taxes(282) (3) (760) (354)
Net income6,858  12,233  22,595  24,735 
Less net loss attributable to General Partner(7,165) (4,260) (23,309) (22,996)
Net income attributable to limited partners$14,023  $16,493  $45,904  $47,731 
        
Net income per limited partner unit:       
Common - basic$0.23  $0.35  $0.83  $1.01 
Common - diluted0.23  0.35  0.83  1.01 
Subordinated - basic and diluted0.25  0.35  0.89  1.01 
        
Weighted average limited partner units outstanding:       
Common - basic30,884  24,017  27,260  24,006 
Common - diluted30,901  24,024  27,274  24,024 
Subordinated - basic and diluted22,811  22,811  22,811  22,811 


 Three Months Ended Nine Months Ended
 September 30, September 30,
 2016 2015 2016 2015
 (Unaudited)
 (In thousands)
Cash Flow Data       
Net cash provided by (used in):       
Operating activities$33,293  $17,253  $80,709  $53,410 
Investing activities(8,502) (11,395) (23,613) (53,255)
Financing activities(25,811) (13,036) (85,159) 16,919 
Capital expenditures8,530  11,558  24,618  53,708 
Other Data       
EBITDA (1)$29,090  $27,683  $89,384  $78,959 
Distributable cash flow (1)24,704  18,648  72,322  57,857 
Balance Sheet Data (at end of period)       
Cash and cash equivalents    $16,542  $71,372 
Property, plant and equipment, net    422,006  426,093 
Total assets    582,730  643,385 
Total liabilities    478,287  434,940 
Division equity      236,503 
Partners' capital    104,443  (28,058)
Total liabilities, division equity and partners' capital    582,730  643,385 

(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 St. Paul Park Logistics Assets subsequent to the St. Paul Park Logistics Transaction and the TexNew Mex Pipeline System for the three and nine months ended September 30, 2016. The results of operations for the St. Paul Park Logistics Assets and 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 nine months ended September 30, 2016 and 2015, respectively.

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2016 2015 2016 2015
 (Unaudited)
 (In thousands)
Net income attributable to limited partners$14,023  $16,493  $45,904  $47,731 
Interest and debt expense6,148  6,204  19,614  16,416 
Provision for income taxes282  3  760  354 
Depreciation and amortization8,637  4,983  23,106  14,458 
EBITDA29,090  27,683  89,384  78,959 
        
Change in deferred revenues4,460  (218) 8,138  2,229 
Interest accruals(6,377) (5,858) (19,158) (15,491)
Income taxes paid(150) (156) (244) (737)
Maintenance capital expenditures(2,319) (2,803) (5,798) (7,885)
Other      782 
Distributable cash flow$24,704  $18,648  $72,322  $57,857 

Logistics Segment

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2016 2015 2016 2015
 (Unaudited)
 (In thousands, except key operating statistics)
Statement of Operations Data:       
Fee based revenues:       
Affiliate$42,319  $46,669  $126,288  $117,723 
Third-party814  787  2,181  2,089 
Total revenues43,133  47,456  128,469  119,812 
Operating costs and expenses:       
Operating and maintenance expenses25,241  26,063  75,732  73,621 
General and administrative expenses629  303  2,000  2,168 
Loss (gain) on disposal of assets, net(12) 124  (17) 124 
Depreciation and amortization8,581  7,817  25,083  22,486 
Total operating costs and expenses34,439  34,307  102,798  98,399 
Operating income$8,694  $13,149  $25,671  $21,413 
Key Operating Statistics:       
Pipeline and gathering (bpd):       
Mainline movements (1):       
Permian/Delaware Basin system49,709  56,745  51,709  45,784 
Four Corners system53,070  66,602  54,523  54,719 
TexNew Mex system7,504  14,834  10,132  6,131 
Gathering (truck offloading):       
Permian/Delaware Basin system15,514  25,961  17,948  24,207 
Four Corners system9,577  16,487  11,151  13,387 
Pipeline Gathering and Injection system:       
Permian/Delaware Basin system15,229  8,458  11,486  5,353 
Four Corners system21,776  28,841  24,470  23,859 
TexNew Mex system1,669    674   
Tank storage capacity (bbls) (2)959,087  651,545  877,899  630,761 
Terminalling, transportation and storage:       
Shipments into and out of storage (bpd) (includes asphalt)416,761  408,787  399,415  396,506 
Terminal storage capacity (bbls) (2)8,082,734  7,420,754  7,619,637  7,464,236 

(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 Nine Months Ended
 September 30, September 30,
 2016 2015 2016 2015
 (Unaudited)
 (In thousands, except key operating stats)
Statement of Operations Data:       
Fee based revenues (1):       
Affiliate$9,430  $11,442  $31,354  $33,331 
Sales based revenues (1):       
Affiliate131,405  158,848  355,459  456,195 
Third-party385,293  462,924  1,100,620  1,414,632 
Total revenues526,128  633,214  1,487,433  1,904,158 
Operating costs and expenses:       
Cost of products sold:       
Affiliate128,792  156,388  347,811  449,087 
Third-party366,744  445,169  1,047,571  1,358,197 
Operating and maintenance expenses18,213  19,864  55,371  57,535 
Selling, general and administrative expenses2,065  2,269  6,123  6,715 
Gain on disposal of assets, net(50) (137) (946) (381)
Depreciation and amortization1,998  1,146  4,387  3,330 
Total operating costs and expenses517,762  624,699  1,460,317  1,874,483 
Operating income$8,366  $8,515  $27,116  $29,675 
Key Operating Statistics:       
Fuel gallons sold (in thousands)313,600  305,566  940,029  919,808 
Fuel gallons sold to retail (included in fuel gallons sold above) (in thousands)87,131  81,538  250,693  235,824 
Fuel margin per gallon (2)$0.030  $0.029  $0.028  $0.031 
Lubricant gallons sold (in thousands)1,355  2,998  5,402  8,969 
Lubricant margin per gallon (3)$1.05  $0.70  $0.85  $0.71 
Asphalt trucking volume (bpd)5,620    4,461   
Crude oil trucking volume (bpd)36,144  49,620  37,909  47,245 
Average crude oil revenue per barrel$2.11  $2.51  $2.17  $2.58 

(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:
Michelle Clemente
(602) 286-1533

Jeffrey S. Beyersdorfer
(602) 286-1530

Retail Investors Contact:
Alpha IR Group
Dylan Schweitzer
Chris Hodges
(312) 445-2870
WNRL@alpha-ir.com

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