JP Energy Partners LP (NYSE: JPEP) (“JP Energy”, “we,” “our,” or
“us”) today announced fourth quarter and full-year 2015 financial
and operating results.
2015 Accomplishments
- Adjusted EBITDA increased 31%
year-over-year excluding the impact of corporate overhead support
from our general partner
- Maintained under 3.5x leverage ratio
for each quarter of 2015, below our long-term targeted range of 3.5
– 4.0x
- Completed Phase I of the 50+ mile
strategic extension of our Silver Dollar Crude gathering system
north into Reagan and Glasscock Counties
- Completed the acquisition of Southern
Propane, growing our non-heating degree day industrial propane
distribution business
- Increased throughput on our Silver
Dollar system by 35% and our retail propane volumes by 16%
year-over-year
Fourth Quarter and Full-Year 2015 Results
JP Energy reported Adjusted EBITDA of $14.2 million for the
fourth quarter of 2015, compared to $10.0 million for the fourth
quarter of 2014. Adjusted EBITDA for the fourth quarter of 2015
included $2.5 million of corporate overhead support from our
general partner. JP Energy reported a loss from continuing
operations of $32.1 million for the fourth quarter of 2015,
compared to a loss from continuing operations of $18.1 million for
the fourth quarter of 2014. Distributable Cash Flow was $12.1
million for the fourth quarter of 2015, resulting in a distribution
coverage ratio for the quarter of 1.0x.
For the year ended December 31, 2015, JP Energy reported $46.9
million of Adjusted EBITDA, or $41.4 million excluding $5.5 million
of corporate overhead support from our general partner, a 31%
increase compared to $31.7 million for the year ended December 31,
2014. Loss from continuing operations was $43.7 million for each of
the full-years 2015 and 2014. The loss from continuing operations
for the fourth quarter and full-year 2015 include a non-cash
goodwill impairment charge of $29.9 million. Distributable Cash
Flow was $38.8 million for the full-year 2015 and the distribution
coverage ratio was approximately 0.8x.
“I am proud of the accomplishments our team was able to achieve
in 2015 despite significant headwinds that we and the industry
continue to face,” said J. Patrick Barley, Executive Chairman,
President and Chief Executive Officer of JP Energy. “During the
year, we increased our Silver Dollar crude oil storage capacity by
250%, completed a strategic interconnection and extension of our
Silver Dollar pipeline in the Midland Basin, completed a strategic
propane acquisition and sold certain non-core crude oil assets in
the Mid-Continent. We also made significant progress reducing the
overall cost structure of the company, exiting the year with
approximately 1.0x coverage and we maintained our strong balance
sheet position and flexibility. We continue to target 1.0x
distribution coverage for the full-year 2016 through the existing
organic growth profile of our business as well as through our
continued cost management initiatives.”
Review of Segment Performance
NGL Distribution and Sales – Adjusted EBITDA for the NGL
Distribution and Sales segment was $7.9 million for the fourth
quarter of 2015 and $30.9 million for the year ended December 31,
2015, compared to $5.6 million for the fourth quarter of 2014 and
$15.5 million for the year ended December 31, 2014. The increase
was driven by both higher average NGL and refined products sales
margins due to more favorable market conditions and higher NGL and
refined products sales volumes from organic growth in our customer
base and the acquisition of Southern Propane in May 2015.
Crude Oil Pipelines and Storage – In the fourth quarter of 2015,
we reorganized our business segments to match the change in our
internal organization and management structure by combining our
formerly reported Crude Oil Supply and Logistics segment into our
Crude Oil Pipelines and Storage segment. The segment changes
reflect the focus of our management team and how performance of
operations is evaluated and resources are allocated. Adjusted
EBITDA for the Crude Oil Pipelines and Storage segment was $6.8
million for the fourth quarter of 2015 and $23.1 million for the
year ended December 31, 2015, compared to $6.2 million for the
fourth quarter of 2014 and $25.3 million for the year ended
December 31, 2014. The decrease for the full-year 2015 compared to
the full-year 2014 was primarily due to reduced margins associated
with continued low crude oil prices driving a decrease in
production volumes and creating more competition for crude
purchases, partially offset by higher crude oil sales volumes and
throughput due to expansions of the Silver Dollar Pipeline System
throughout 2015.
Refined Products Terminals and Storage – Adjusted EBITDA for the
Refined Products Terminals and Storage segment was $3.3 million for
the fourth quarter of 2015 and $10.9 million for the year ended
December 31, 2015, compared to $3.1 million for the fourth quarter
of 2014 and $10.7 million for the year ended December 31, 2014. The
slight increase for the full-year 2015 compared to the full-year
2014 was primarily due to an increase in refined product sales
volumes due to the addition of butane blending capabilities at our
North Little Rock Terminal in the second quarter of 2015 and lower
operating expenses due to the lack of a non-recurring one-time
expense item realized in 2014. These benefits were partially offset
by a decrease in refined product sales revenue from lower commodity
prices.
Recent Developments
Mid-Continent Business Sale
On February 1, 2016, we sold certain trucking and marketing
assets in the Mid-Continent in connection with JP Development’s
sale of its Great Salt Plains Pipeline assets to a third party.
Total proceeds to JP Energy Partners, including approximately $5.3
million of inventory was $9.7 million, which has been used to
reduce borrowings under our revolving credit facility. We continue
to retain our crude oil storage operations in the
Mid-Continent.
2016 Financial Guidance
JP Energy previously provided financial guidance for 2016
including full-year Adjusted EBITDA of $50-$56 million and
Distributable Cash Flow of $39-$45 million. For the full-year 2016,
our target is to achieve total unit distribution coverage of 1.0x,
which could include some level of corporate overhead support from
our general partner. Full-year 2016 growth capital expenditures are
estimated to range $25-$35 million. Of this amount, $15 million is
expected to be focused on the continued development of our Silver
Dollar Pipeline system in the Midland Basin.
Cash Distributions
On February 12, 2016, JP Energy paid to unitholders of record on
February 5, 2016, a cash distribution of $0.3250 per common and
subordinated unit for the three month period ended December 31,
2015.
Earnings Conference Call Information
We will hold a conference call on Tuesday, March 1, 2016, at
8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss our
fourth quarter and full-year 2015 financial results. The call can
be accessed live over the telephone by dialing (877) 407-0784, or
for international callers, (201) 689-8560. A replay will be
available shortly after the call and can be accessed by dialing
(877) 870-5176, or for international callers (858) 384-5517. The
passcode for the replay is 13630895. The replay will be available
until March 15, 2016.
Interested parties may also listen to a simultaneous webcast of
the conference call by logging onto JP Energy’s website at
www.jpenergypartners.com in the Investors section. A replay of the
webcast will also be available for approximately 30 days following
the conference call.
Form 10-K Filing
JP Energy filed with the Securities and Exchange Commission (the
“SEC”) its Annual Report on Form 10-K for the fiscal year ended
December 31, 2015 (the “Form 10-K”) on February 29, 2016. An
electronic copy of the Form 10-K (including these financial
statements) is available on JPE’s website at
www.jpenergypartners.com under the “Investors” section, and also
may be obtained through the SEC’s website at www.sec.gov.
Interested parties also may receive a hard copy of the Form 10-K
and these financial statements free of charge upon request to the
secretary of our general partner at our principal executive
offices. Our principal executive offices are located at 600 East
Las Colinas Blvd Suite 2000, Irving, Texas 75039, and our telephone
number is (866) 912-3714.
About JP Energy Partners LP
JP Energy Partners LP (JPEP) is a publicly traded,
growth-oriented limited partnership that owns, operates, develops
and acquires a diversified portfolio of midstream energy assets.
Our operations currently consist of: (i) crude oil pipelines and
storage; (ii) refined products terminals and storage; and (iii) NGL
distribution and sales, which together provide midstream
infrastructure solutions for the growing supply of crude oil,
refined products and NGLs in the United States. To learn more,
please visit our website at www.jpenergypartners.com.
Use of Non-GAAP Financial Measures
Adjusted EBITDA, distributable cash flow and adjusted gross
margin are supplemental, non-GAAP financial measures used 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 sector, without regard
to financing methods, historical cost basis or capital
structure;
- the ability of our assets to generate
sufficient cash flow 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.
We believe that the presentation of Adjusted EBITDA,
distributable cash flow and adjusted gross margin provides
information useful to investors in assessing our financial
condition and results of operations. The GAAP measures most
directly comparable to Adjusted EBITDA and distributable cash flow
are net income (loss) and cash flow from operating activities,
respectively, and the GAAP measure most directly comparable to
adjusted gross margin is operating income (loss). These non-GAAP
measures should not be considered as alternatives to the most
directly comparable GAAP financial measure. Each of these non-GAAP
financial measures exclude some, but not all, items that affect the
most directly comparable GAAP financial measure. Because Adjusted
EBITDA, distributable cash flow and adjusted gross margin may be
defined differently by other companies in the our industry, our
definitions of these non-GAAP financial measures may not be
comparable to similarly titled measures of other companies, thereby
diminishing their utility.
We define Adjusted EBITDA as net income (loss) plus (minus)
interest expense (income), income tax expense (benefit),
depreciation and amortization expense, asset impairments, (gains)
losses on asset sales, certain non-cash charges such as non-cash
equity compensation, non-cash vacation expense, non-cash (gains)
losses on commodity derivative contracts (total (gain) loss on
commodity derivatives less net cash flow associated with commodity
derivatives settled during the period) and selected (gains) charges
and transaction costs that are unusual or non-recurring. We define
distributable cash flow as Adjusted EBITDA plus proceeds from the
sale of assets, less net cash interest paid, income taxes paid and
maintenance capital expenditures. We define adjusted gross margin
as total revenues minus cost of sales, excluding depreciation and
amortization, and certain non-cash charges such as non-cash
vacation expense and non-cash gains (losses) on derivative
contracts (total gain (losses) on commodity derivatives less net
cash flow associated with commodity derivatives settled during the
period).
Forward-Looking Statements
Disclosures in this press release contain “forward-looking
statements.” The words “believe,” “expect,” “anticipate,” “plan,”
“intend,” “foresee,” “should,” “would,” “could” or other similar
expressions are intended to identify forward-looking statements,
which are generally not historical in nature. These forward-looking
statements are based on our current expectations and beliefs
concerning future developments and their potential effect on us.
While management believes that these forward-looking statements are
reasonable as and when made, there can be no assurance that future
developments affecting us will be those that we anticipate. All
comments concerning our expectations for future revenues and
operating results are based on our forecasts for our existing
operations and do not include the potential impact of any future
acquisitions. Our forward-looking statements involve significant
risks and uncertainties (some of which are beyond our control) and
assumptions that could cause actual results to differ materially
from our historical experience and our present expectations or
projections. Important factors that could cause actual results to
differ materially from those in the forward-looking statements
include, but are not limited to the price of, and the demand for,
crude oil, refined products and NGLs in the markets we serve; the
volumes of crude oil that we gather, transport and store, the
throughput volumes at our refined products terminals and our NGL
sales volumes; the fees we receive for the crude oil, refined
products and NGL volumes we handle; pressures from our competitors,
some of which may have significantly greater resources than us; the
cost of propane that we buy for resale, including due to
disruptions in its supply, and whether we are able to pass along
cost increases to our customers; competitive pressures from other
energy sources such as natural gas, which could reduce existing
demand for propane; the risk of contract cancellation, non-renewal
or failure to perform by our customers, and our inability to
replace such contracts and/or customers; leaks or releases of
hydrocarbons into the environment that result in significant costs
and liabilities; the level of our operating, maintenance and
general and administrative expenses; regulatory action affecting
our existing contracts, our operating costs or our operating
flexibility; failure to secure or maintain contracts with our
largest customers, or non-performance of any of those customers
under the applicable contract; competitive conditions in our
industry; changes in the long-term supply of and demand for oil and
natural gas; volatility of fuel prices; actions taken by our
customers, competitors and third-party operators; our ability to
complete growth projects on time and on budget; inclement or
hazardous weather conditions, including flooding, and the physical
impacts of climate change; environmental hazards; industrial
accidents; changes in laws and regulations (or the interpretation
thereof) related to the transportation, storage or terminaling of
crude oil and refined products or the distribution and sales of
NGLs; fires, explosions or other accidents; the effects of future
litigation; and other factors discussed from time to time in each
of our documents and reports filed with the Securities and Exchange
Commission. Any forward-looking statement applies only as of the
date on which such statement is made and we do not intend to
correct or update any forward-looking statement, whether as a
result of new information, future events or otherwise, except as
required by law.
JP ENERGY PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31,
December 31, 2015 2014 ASSETS (in
thousands, except unit data) Current assets Cash
and cash equivalents $ 1,987 $ 3,325 Restricted cash - 600 Accounts
receivable, net 60,519 108,725 Receivables from related parties
8,624 10,548 Inventory 4,786 5,677 Prepaid expenses and other
current assets 4,168 4,915 Current assets of discontinued
operations held for sale 2,730 15,149 Total Current
Assets 82,814 148,939
Non-current
assets Property, plant and equipment, net 291,454 251,690
Goodwill 216,692 240,782 Intangible assets, net 134,432 145,330
Deferred financing costs and other assets, net 3,223 4,711
Noncurrent assets of discontinued operations held for sale
6,644 21,721 Total Non-Current Assets 652,445
664,234 Total Assets $ 735,259 $ 813,173
LIABILITIES AND
PARTNERS' CAPITAL Current liabilities Accounts
payable $ 45,933 $ 88,052 Accrued liabilities 15,260 28,971 Capital
leases and short-term debt 107 229 Customer deposits and advances
3,742 5,050 Current portion of long-term debt 454 383 Current
liabilities of discontinued operations held for sale 640
- Total Current Liabilities 66,136 122,685
Non-current liabilities Long-term debt 162,740 84,125 Other
long-term liabilities 1,463 5,683 Total Liabilities
230,339 212,493 Commitments and Contingencies
Partners' capital General partner interest 5,568 -
Common units (22,119,170 and 21,852,219 units authorized as of
December 31, 2015 and 2014, respectively; 18,465,320 and 18,209,519
units issued and outstanding as of December 31, 2015 and 2014,
respectively) 266,691 315,630 Subordinated units (18,197,249 units
authorized; 18,127,678 and 18,197,249 units issued and outstanding
as of December 31, 2015 and 2014, respectively) 232,661
285,050 Total Partners' Capital 504,920
600,680 Total Liabilities and Partners' Capital $ 735,259 $ 813,173
JP ENERGY PARTNERS
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended December 31,
Year Ended December 31, 2015 2014
2015 2014 (in thousands, except unit and
per unit data) REVENUES: Crude oil sales $ 96,525 $
142,742 $ 455,465 $ 470,336 Crude oil sales - related parties 688 -
884 - Gathering, transportation and storage fees 5,944 6,864 25,991
30,762 Gathering, transportation and storage fees - related parties
959 - 2,165 - NGL and refined product sales 42,981 50,658 170,009
192,804 NGL and refined product sales - related parties - 10 -
7,419 Refined products terminals and storage fees 2,813 2,970
12,362 10,260 Refined products terminals and storage fees - related
parties - 12 - 1,533 Other revenues 3,295
3,010 13,709 13,040 Total
revenues 153,205 206,266 680,585
726,154
COSTS AND EXPENSES: Cost
of sales, excluding depreciation and amortization 115,733 183,965
527,476 605,682 Operating expense 16,709 14,968 69,377 65,584
General and administrative 9,976 11,980 45,383 46,362 Depreciation
and amortization 12,796 11,356 46,852 40,230 Goodwill impairment
29,896 - 29,896 - (Gain) loss on disposal of assets, net
(493 ) 112 909 1,137
Total costs and expenses 184,617 222,381
719,893 758,995
OPERATING LOSS (31,412 ) (16,115 ) (39,308 ) (32,841 )
OTHER INCOME (EXPENSE) Interest expense (1,527 )
(1,353 ) (5,375 ) (8,981 ) Loss on extinguishment of debt - - -
(1,634 ) Other income (expense), net 1,264
(355 ) 1,732 8
LOSS FROM
CONTINUING OPERATIONS BEFORE INCOME TAXES (31,675 ) (17,823 )
(42,951 ) (43,448 ) Income tax (expense) benefit (422 ) (302
) (754 ) (300 )
LOSS FROM CONTINUING
OPERATIONS (32,097 ) (18,125 ) (43,705 ) (43,748 )
DISCONTINUED OPERATIONS Net loss from discontinued
operations (13,839 ) (491 ) (14,951 ) (9,275 )
NET LOSS $ (45,936 ) $ (18,616 ) $ (58,656 ) $
(53,023 ) Net loss attributable to the period from January
1, 2014 to October 1, 2014 - - -
34,407
Net loss attributable to limited
partners $ (45,936 ) $ (18,616 ) $ (58,656 ) $ (18,616 )
Basic and diluted loss per unit Net loss from continuing
operations allocated to common units $ (16,160 ) $ (9,460 ) $
(21,830 ) $ (9,460 ) Net loss allocated to common units $ (23,143 )
$ (9,293 ) $ (29,351 ) $ (9,293 ) Weighted average number of common
units outstanding 18,464,964 $ 18,212,632 18,373,594 $ 18,212,632
Basic and diluted net loss from continuing operations per common
unit $ (0.88 ) $ (0.52 ) $ (1.19 ) $ (0.52 ) Basic and diluted net
loss per common unit $ (1.26 ) $ (0.51 ) $ (1.60 ) $ (0.51 )
Net loss from continuing operations allocated to subordinated units
$ (15,937 ) $ (9,490 ) $ (21,875 ) $ (9,490 ) Net loss allocated to
subordinated units $ (22,793 ) $ (9,323 ) $ (29,305 ) $ (9,323 )
Weighted average number of subordinated units outstanding
18,129,255 18,209,948 18,151,700 18,209,948 Basic and diluted net
loss from continuing operations per subordinated unit $ (0.88 ) $
(0.52 ) $ (1.20 ) $ (0.52 ) Basic and diluted net loss per
subordinated unit $ (1.26 ) $ (0.51 ) $ (1.61 ) $ (0.51 )
Distribution declared per common and subordinated unit $ 0.325 $ -
$ 1.279 $ -
JP ENERGY PARTNERS LP
NON-GAAP RECONCILIATIONS
(Unaudited)
Three months ended
December 31, Year ended December 31, 2015
2014 2015 2014 (in thousands)
Segment Adjusted EBITDA Crude oil pipelines and storage $
6,811 $ 6,237 $ 23,119 $ 25,339 Refined products terminals and
storage 3,266 3,057 10,867 10,723 NGL distribution and sales 7,901
5,623 30,896 15,511 Discontinued operations (559 ) 521 1,209 5,002
Corporate and other (3,257 ) (5,422 ) (19,226
) (24,924 )
Total Adjusted EBITDA 14,162 10,016
46,865 31,651 Depreciation and amortization (12,796 ) (11,356 )
(46,852 ) (40,230 ) Goodwill impairment (29,896 ) - (29,896 ) -
Interest expense (1,527 ) (1,353 ) (5,375 ) (8,981 ) Loss on
extinguishment of debt - - - (1,634 ) Income tax (expense) benefit
(422 ) (302 ) (754 ) (300 ) Gain (loss) on disposal of assets, net
493 (112 ) (909 ) (1,137 ) Unit-based compensation (434 ) (640 )
(1,217 ) (1,658 ) Total gain (loss) on commodity derivatives (858 )
(13,032 ) (3,057 ) (13,762 ) Net cash (receipts) payments for
commodity derivatives
settled during the period
67 1,554 14,821 1,071 Early settlement of commodity derivatives - -
(8,745 ) - Corporate overhead support from general partner (2,500 )
- (5,500 ) - Transaction costs and other 1,056 (2,301 ) (1,877 )
(3,766 ) Discontinued operations (13,281 ) (1,090 )
(16,160 ) (14,277 )
Net loss $ (45,936 ) $
(18,616 ) $ (58,656 ) $ (53,023 )
Three months ended December
31, Year ended December 31, 2015
2014 2015 2014 (in thousands)
Segment Adjusted gross margin Crude oil pipelines and
storage $ 9,228 $ 8,836 $ 35,500 $ 36,788 Refined products
terminals and storage 4,054 3,455 14,578 16,834 NGL distribution
and sales 24,981 21,683 100,213
80,210
Total Adjusted gross margin
38,263 33,974 150,291 133,832 Operating expenses (16,709 ) (14,968
) (69,377 ) (65,584 ) General and administrative (9,976 ) (11,980 )
(45,383 ) (46,362 ) Depreciation and amortization (12,796 ) (11,356
) (46,852 ) (40,230 ) Goodwill impairment (29,896 ) - (29,896 ) -
Gain (loss) on disposal of assets, net 493 (112 ) (909 ) (1,137 )
Total gain (loss) on commodity derivatives (858 ) (13,032 ) (3,057
) (13,762 ) Net cash (receipts) payments for commodity derivatives
settled during the period
67 1,554 14,821 1,071 Early settlement of commodity derivatives - -
(8,745 ) - Other non-cash items - (195 )
(201 ) (669 )
Operating loss $ (31,412 ) $
(16,115 ) $ (39,308 ) $ (32,841 )
JP ENERGY PARTNERS LP
NON-GAAP RECONCILIATIONS
(Unaudited)
Three months ended
Year ended December 31, December 31,
2015 2015 (in thousands) Net cash provided
by operating activities $ 21,775 $ 46,041 Depreciation and
amortization (13,365 ) (49,133 ) Goodwill impairment (37,835 )
(37,835 ) Asset impairment (4,970 ) (4,970 ) Derivative valuation
changes (3,285 ) 11,340 Amortization of deferred financing costs
(227 ) (909 ) Unit-based compensation (434 ) (1,309 ) Loss on
disposal of assets 367 (1,028 ) Bad debt expense (213 ) (1,212 )
Other non-cash items (1,937 ) (1,744 ) Changes in assets and
liabilities (5,812 ) (17,897 )
Net loss $
(45,936 ) $ (58,656 ) Depreciation and amortization 12,796 46,852
Goodwill impairment 29,896 29,896 Interest expense 1,527 5,375
Income tax expense 422 754 (Gain) loss on disposal of assets, net
(493 ) 909 Unit-based compensation 434 1,217 Total gain (loss) on
commodity derivatives 858 3,057 Net cash payments for commodity
derivatives
settled during the period
(67 ) (14,821 ) Early settlement of commodity derivatives - 8,745
Corporate overhead support from general partner 2,500 5,500
Transaction costs and other (1,056 ) 1,877 Discontinued operations
13,281 16,160
Adjusted EBITDA $
14,162 $ 46,865 Less: Cash interest paid, net of interest income
1,318 4,527 Cash taxes paid - 450 Maintenance capital expenditures,
net 718 3,109
Distributable cash
flow $ 12,126 $ 38,779 Less: Distributions 12,017
48,063
Amount in excess of (less than)
distributions $ 109 $ (9,284 )
Distribution
coverage 1.01x 0.81x
JP ENERGY PARTNERS
SUPPLEMENTAL OPERATIONAL DATA
(Unaudited)
Three months endedDecember
31,
Year endedDecember
31,
Segment Key Operational Data 2015
2014 2015 2014 Crude oil
pipelines and storage Crude oil pipeline throughput (Bbls/d) (1)
26,888 23,812 28,246 20,868 Crude oil pipelines and storage Crude
oil sales (Bbls/d) 38,358 27,150 40,255 15,612 Refined products
terminals and storage Terminal and storage throughput (Bbls/d)
56,499 60,176 62,075 63,859 NGL distribution and sales NGL and
refined product sales (Mgal/d) 218 229 211 200
_______________________________
(1) Represents the average daily throughput volume in our
crude oil pipelines operations. The volumes in our crude oil
storage operations have no effect on operations as we receive a set
fee per month that does not fluctuate with the volume of crude oil
stored.
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JP Energy Partners LPInvestor Relations,
866-912-3714investorrelations@jpep.com
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