KANEB today reported results for the quarter ended March 31, 2005.
The KANEB Companies are Kaneb Services LLC (NYSE: KSL) and Kaneb
Pipe Line Partners, L.P. (NYSE: KPP, "the Partnership"). Kaneb
Services LLC's wholly owned subsidiary, Kaneb Pipe Line Company
LLC, is the Partnership's General Partner. "KANEB delivered an
outstanding first quarter. Our results, exclusive of merger costs,
delivered a 15 percent increase in the Partnership's income and a
16 percent increase in KSL's income compared to the first quarter
last year," said John R. Barnes, chairman and CEO of KANEB. "We are
very pleased with this performance. The KANEB companies continue to
build value and deliver growth for our unitholders and
shareholders." On November 1, 2004, Valero L.P. (NYSE: VLI) and the
KANEB companies (NYSE: KPP and NYSE: KSL) announced that they had
executed definitive agreements to merge Valero L.P. and Kaneb Pipe
Line Partners, L.P., and that Valero L.P. will purchase all of
Kaneb Services' shares for cash. The agreements were approved by
the unitholders of Valero L.P. and Kaneb Pipe Line Partners, L.P.
and the shareholders of Kaneb Services LLC at special meetings held
March 11, 2005. The transaction is anticipated to close in the
second quarter 2005. Further information about the transaction is
provided on the Valero L.P. website at www.valerolp.com, and a link
to the management presentation regarding the transaction is
available on the KANEB website at www.kaneb.com. 1Q 2005 RESULTS
FOR KANEB SERVICES LLC For the quarter ended March 31, 2005, Kaneb
Services LLC's distributions received from KPP (see Supplemental
Information in the attached table) increased to $7.1 million,
compared with $6.8 million for the first quarter 2004. KSL reported
first quarter net income of $6.6 million, or $0.55 per share,
compared with $6.0 million, or $0.50 per share, for the same period
last year. First quarter income before merger costs (see
Supplemental Information in the attached table) was $6.9 million,
or $0.57 per share, compared with $6.0 million, or $0.50 per share,
for first quarter 2004. KSL is a unique limited liability company,
the only publicly traded, cash distributing entity taxed as a
partnership that owns the general partner interest of another
publicly traded master limited partnership. Its assets include the
KPP general partner interest and incentive as well as 5.1 million
Partnership units, a wholesale petroleum product marketing company,
and a wholly owned subsidiary that manages and operates the
pipeline and terminaling assets of KPP. 1Q 2005 RESULTS FOR KANEB
PIPE LINE PARTNERS, L.P. Kaneb Pipe Line Partners, L.P. reported
revenues of $183.0 million for the quarter ended March 31, 2005,
compared with $146.4 million for the first quarter 2004. Net income
for the quarter was $21.8 million (after merger costs), compared
with $20.8 million for the same period last year. Net income per
unit for the quarter was $0.68, compared with $0.65 for the first
quarter 2004. First quarter income before merger costs (see
Supplemental Information in the attached table) was $23.9 million,
or $0.76 per unit, compared with $20.8 million, or $0.65 per unit,
for first quarter 2004. EBITDA increased (see Supplemental
Information in the attached table) to $49.3 million for the
quarter, compared with $46.5 million for the first quarter 2004.
"The Partnership recently completed another strategic acquisition
of a 1.1 million barrel capacity terminal through our newly formed
Dutch subsidiary. This acquisition gives KANEB a substantial
initial terminal in the growing Amsterdam harbor area, as well as a
large amount of additional land for future expansion," said Edward
D. Doherty, chairman and CEO of Kaneb Pipe Line Company LLC, the
Partnership's General Partner. "The Partnership operations had an
outstanding quarter. We increased revenues overall by $36.6
million, operating income by $1.9 million and net income by $1.0
million," said Michael L. Rose, chief operating officer of Kaneb
Pipe Line Company LLC. "We're extremely proud of the Kaneb
operating team. Even with the additional requirements associated
with the merger, the team still outperformed last year's results by
a great margin. That's dedication." Pipeline revenues for the first
quarter 2005 (see Supplemental Information in the attached table)
were $30.1 million, compared with $27.9 million for the first
quarter last year. Pipeline operating income for the quarter was
$11.7 million, compared with $11.2 million for the same period last
year. Petroleum pipeline barrel miles shipped in the first quarter
were 5.2 billion, compared with 5.1 billion in the first quarter
2004. Terminaling revenues for the first quarter 2005 (see
Supplemental Information in the attached table) were $69.1 million,
compared with $62.8 million for the first quarter last year.
Terminaling operating income was $18.7 million, compared with $18.5
million for the same period last year. Terminaling average annual
barrels of tankage utilized in the first quarter were 50.5 million,
compared with 48.2 million in the first quarter 2004, and the
average annualized revenues per barrel of tankage utilized for the
quarter were $5.55, compared with $5.24 for the first quarter last
year. Product sales revenues for the first quarter 2005 (see
Supplemental Information in the attached table) were $83.8 million,
compared with $55.7 million for the first quarter last year.
Product sales operating income for the quarter was $4.0 million,
compared with $2.9 million for the first quarter 2004. ABOUT KANEB
KANEB is a single business represented by two separate publicly
traded entities on the New York Stock Exchange. KANEB's business is
focused on mid-stream energy assets -- refined petroleum product
pipelines, and petroleum and specialty liquids storage and
terminaling facilities. KANEB is a major transporter of refined
petroleum products in the Midwest and is the third largest
independent liquids terminaling company in the world. Worldwide
operations include facilities in 29 states, Canada, the Netherlands
Antilles, Australia, New Zealand, the United Kingdom and The
Netherlands. Its publicly traded entities are Kaneb Services LLC
(NYSE: KSL) and Kaneb Pipe Line Partners, L.P., (NYSE: KPP, "the
Partnership"). For more information, visit www.kaneb.com. Kaneb
Services LLC was formed as a limited liability company in 2001 from
assets previously held by Kaneb Services, Inc. (now Xanser
Corporation). Those assets include the KPP general partner interest
and incentive as well as 5.1 million Partnership units, a wholesale
petroleum product marketing company, and a wholly owned subsidiary,
Kaneb Pipe Line Company LLC, that manages and operates the pipeline
and terminaling assets of KPP. KSL is a unique limited liability
company, the only publicly traded, cash distributing entity taxed
as a partnership that owns the general partner interest of another
publicly traded master limited partnership. Kaneb Pipe Line
Partners, L.P., a master limited partnership, was formed in 1989 to
own a 2,075 mile common carrier pipeline system from Kansas to
North Dakota that has been managed by Kaneb Pipe Line Company LLC
since 1953. Pipeline acquisitions in 1995 and 1998 added 725 miles
of pipeline in Colorado, Iowa, South Dakota and Wyoming. In 2002,
the Partnership acquired the largest fertilizer pipeline in the
country, a 2,000-mile pipeline system that runs from the Louisiana
Gulf Coast to the upper Midwest states. In December 2002, the
Partnership acquired a 400 mile products pipeline and four
terminals in North Dakota and Minnesota. The Partnership entered
the liquids terminaling business with a large acquisition in 1993,
and has more than tripled the size of this operation through
subsequent acquisitions. In 2001, the Partnership completed a $165
million acquisition of seven West Coast, U.S. terminals. In 2002,
the Partnership completed a $300 million acquisition of two
world-class terminaling facilities located in Point Tupper, Nova
Scotia, Canada and on the island of St. Eustatius in the
Netherlands Antilles and the acquisition of eight bulk liquid
storage terminals in Australia and New Zealand. Certain of the
Company's statements in this press release are not purely
historical, and as such are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
These include statements regarding management's intentions, plans,
beliefs, expectations or projections of the future. Forward-looking
statements involve risks and uncertainties, including without
limitation, the various risks inherent in the Company's business,
and other risks and uncertainties detailed from time to time in the
Company's periodic reports filed with the Securities and Exchange
Commission. One or more of these factors have affected, and could
in the future affect the Company's business and financial results
in future periods, and could cause actual results to differ
materially from plans and projections. There can be no assurance
that the forward-looking statements made in this document will
prove to be accurate, and issuance of such forward-looking
statements should not be regarded as a representation by the
Company, or any other person, that the objectives and plans of the
Company will be achieved. All forward-looking statements made in
this press release are based on information presently available to
management, and the Company assumes no obligation to update any
forward-looking statements. -0- *T KANEB SERVICES LLC CONSOLIDATED
STATEMENTS OF INCOME (In thousands, except per share amounts)
(Unaudited) Three Months Ended March 31, -------------------- 2005
2004 --------- --------- Consolidated revenues: Services $ 99,222 $
90,698 Products 191,804 142,481 --------- --------- Total
consolidated revenues 291,026 233,179 --------- ---------
Consolidated costs and expenses: Cost of products sold 182,997
136,431 Operating costs 46,622 43,424 Depreciation and amortization
14,838 13,907 General and administrative 8,976 6,502 Valero merger
costs 2,422 - --------- --------- Total consolidated costs and
expenses 255,855 200,264 --------- --------- Consolidated operating
income 35,171 32,915 Consolidated interest and other income 206 32
Consolidated interest expense (11,348) (10,629) --------- ---------
Consolidated income before income taxes and interest of outside
non-controlling partners in KPP's net income 24,029 22,318 Income
tax expense (1,526) (1,163) Interest of outside non-controlling
partners in KPP's net income (15,854) (15,160) --------- ---------
Net income $ 6,649 $ 5,995 ========= ========= Earnings per share:
Basic $ 0.56 $ 0.51 ========= ========= Diluted $ 0.55 $ 0.50
========= ========= KANEB SERVICES LLC SUPPLEMENTAL INFORMATION (In
thousands, except per share amounts) (Unaudited) Three Months Ended
March 31, --------------------- 2005 2004 ---------- --------- Net
Income $ 6,649 $ 5,995 Parent Company Valero merger costs (a) 293 -
--------- --------- Income before Parent Company Valero merger
costs $ 6,942 $ 5,995 ========= ========= Diluted earnings per
share before Parent Company Valero merger costs $ 0.57 $ 0.50
========= ========= Weighted average diluted shares outstanding
12,123 11,921 ========= ========= Consolidated revenues (including
KPP): Pipeline $ 30,092 $ 27,903 Terminaling 69,130 62,795 Product
Marketing 191,804 142,481 --------- --------- $ 291,026 $ 233,179
========= ========= Consolidated operating income (including KPP):
Pipeline $ 11,737 $ 11,210 Terminaling 18,727 18,484 Product
Marketing 5,567 3,754 General and administrative (567) (533) Parent
Company Valero merger costs (293) - --------- --------- $ 35,171 $
32,915 ========= ========= Supplemental cash flow information:
Distributions received from KPP $ 7,097 $ 6,838 General and
administrative (303) (533) Parent Company Valero merger costs (293)
- Parent Company interest expense (179) (137) --------- --------- $
6,322 $ 6,168 ========= ========= (a) Does not include the
Company's allocated portion of KPP's Valero merger costs. KANEB
PIPE LINE PARTNERS, L.P. CONSOLIDATED STATEMENTS OF INCOME (In
thousands, except per unit amounts) (Unaudited) Three Months Ended
March 31, --------------------- 2005 2004 ---------- ---------
Revenues: Services $ 99,222 $ 90,698 Products 83,796 55,715
--------- --------- Total revenues 183,018 146,413 ---------
--------- Costs and expenses: Cost of products sold 77,085 51,039
Operating costs 46,402 43,210 Depreciation and amortization 14,834
13,898 General and administrative 8,136 5,704 Valero merger costs
2,129 - --------- --------- Total costs and expenses 148,586
113,851 --------- --------- Operating income 34,432 32,562 Interest
and other income 204 5 Interest expense (11,105) (10,436) ---------
--------- Income before minority interest and income taxes 23,531
22,131 Minority interest in net income (220) (210) Income tax
expense (1,514) (1,152) --------- --------- Net income 21,797
20,769 General partner's interest in net income (2,466) (2,282)
--------- --------- Limited partners' interest in net income $
19,331 $ 18,487 ========= ========= Allocation of net income per
unit $ 0.68 $ 0.65 ========= ========= Weighted average number of
Partnership units outstanding 28,328 28,318 ========= =========
KANEB PIPE LINE PARTNERS, L.P. SUPPLEMENTAL INFORMATION (Unaudited)
Three Months Ended March 31, --------------------- 2005 2004
---------- --------- Net Income $ 21,797 $ 20,769 Valero merger
costs, net of minority interest 2,108 - --------- --------- Income
before Valero merger costs $ 23,905 $ 20,769 ========= =========
Allocation of income per unit before Valero merger costs $ 0.76 $
0.65 ========= ========= Revenues (in 000s): Pipeline $ 30,092 $
27,903 Terminaling 69,130 62,795 Product sales 83,796 55,715
--------- --------- $ 183,018 $ 146,413 ========= =========
Operating income (in 000s): Pipeline $ 11,737 $ 11,210 Terminaling
18,727 18,484 Product sales 3,968 2,868 --------- --------- $
34,432 $ 32,562 ========= ========= Depreciation and amortization
(in 000s): Pipeline $ 3,792 $ 3,599 Terminaling 10,824 10,084
Product sales 218 215 --------- --------- $ 14,834 $ 13,898
========= ========= Capital expenditures (in 000s): Maintenance and
environmental $ 7,368 $ 5,721 Expansion 1,375 1,626 ---------
--------- $ 8,743 $ 7,347 ========= ========= EBITDA (in 000s): Net
income $ 21,797 $ 20,769 Interest expense 11,105 10,436 Income tax
expense 1,514 1,152 Depreciation and amortization 14,834 13,898
Interest and other income (204) (5) Minority interest in net income
220 210 --------- --------- $ 49,266 $ 46,460 ========= =========
Pipeline operating statistics: Barrel miles shipped on petroleum
pipelines (in billions) 5.2 5.1 ========= ========= Volumes shipped
on anhydrous ammonia pipeline (in thousands of tons) 297 297
========= ========= Terminaling operating statistics: Average
barrels of tankage utilized (in millions) 50.5 48.2 =========
========= Average annualized revenues per barrel of tankage
utilized $ 5.55 $ 5.24 ========= ========= *T x
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