Western Refining Logistics, LP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 25, 2015

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8-K - 8-K - Western Refining Logistics, LPwnrlearningsrelease-2014x8.htm


FOR IMMEDIATE RELEASE
 
 
 
Investor and Analyst Contact:
Media Contact:
Michelle Clemente
Gary W. Hanson
(602) 286-1533
(602) 286-1777
 
 
Jeffrey S. Beyersdorfer
 
(602) 286-1530
 
        
WESTERN REFINING LOGISTICS, LP
REPORTS FOURTH QUARTER AND FULL YEAR 2014 RESULTS
• Completed acquisition of Western Refining's Wholesale business in October
• Increased crude oil gathering and pipeline volumes
• Generated $21.3 million of distributable cash flow in Q4
• Increased quarterly distribution to $0.3325 per unit
EL PASO, Texas - February 26, 2015 - Western Refining Logistics, LP (NYSE: WNRL), reported fourth quarter 2014 net income of $18.8 million, or $0.40 per diluted common unit. During this period, EBITDA was $24.7 million and distributable cash flow was $21.3 million. For full year 2014, net income was $53.0 million, or $1.15 per diluted common unit.
“We are pleased with our first full year of operations,” said WNRL Chief Executive Officer and President Jeff Stevens. “We completed the acquisition of Western Refining's (NYSE:WNR) southwest Wholesale business in the fourth quarter, which we expect will add approximately $40 million in annual EBITDA in 2015, increasing WNRL's estimated annual EBITDA by more than 50%. This acquisition, and the performance of our logistics business, positions us to continue to grow our quarterly distributions to unitholders.”

On January 30, 2015, the board of directors declared a quarterly cash distribution for the fourth quarter 2014 of $0.3325 per unit, or $1.33 per unit on an annualized basis. This distribution represents a 4.7% increase over the third quarter distribution of $0.3175 per unit paid in November 2014, and a 15.7% increase over the minimum quarterly distribution.

As of December 31, 2014, WNRL had cash of $54.3 million. In mid-February 2015, WNRL issued $300 million in senior unsecured notes, proceeds of which were used to repay the revolving credit facility and for general partnership purposes. As of February 20, 2015, the partnership has $92 million in cash and an undrawn $300 million revolving credit facility, which WNRL intends to use primarily to fund future acquisitions.

Stevens continued, “We will continue to focus on growing our business and are excited about the future of WNRL. With the strategic location of our asset base and our financial flexibility, we are well positioned to capitalize on the growing crude oil production in our area.”




Conference Call Information
On Thursday, February 26, 2015, 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: 55481684. The audio replay will be available two hours after the end of the call through March 12, 2015 by dialing (855) 859-2056 or (404) 537-3406, pass code: 355481684.
About Western Refining Logistics, LP
Western Refining Logistics, LP is a principally 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 related businesses. Headquartered in El Paso, Texas, WNRL’s assets include approximately 300 miles of pipelines, approximately 8.0 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 additional 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 generated from the partnership's operations and available for distribution to its 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 contained herein include statements about: the expected EBITDA of the Wholesale business and WNRL’s expected annual EBITDA; our focus on growing our business and increasing distributions to our unitholders; the attractiveness of the location of our asset base; our financial flexibility; our ability to capitalize on growing crude oil production in our area; our ability to grow our business, including through organic growth projects and acquisitions; our potential use of funds under our revolving credit facility; and the source of funds to finance future acquisitions. These statements are subject to the general risks inherent in WNRL’s business. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized, or otherwise materially affect our 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. The forward-looking statements are only as of the date made, and 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,
 
2014
 
2013
 
2014
 
2013
 
(In thousands, except per unit data)
Revenues (1):
 
 
 
 
 
 
 
Affiliate
$
221,769

 
$
230,722

 
$
1,011,575

 
$
882,533

Third-party
529,453

 
602,836

 
2,490,313

 
2,524,595

Total revenues
751,222

 
833,558

 
3,501,888

 
3,407,128

Operating costs and expenses:
 

 
 

 
 
 
 

Cost of products sold:
 
 
 
 
 
 
 
Affiliate
183,239

 
204,619

 
871,751

 
853,447

Third-party
499,895

 
576,680

 
2,373,168

 
2,426,270

Operating and maintenance expenses
34,628

 
33,255

 
142,398

 
135,307

General and administrative expenses
5,264

 
4,476

 
22,540

 
17,661

Loss on disposal of assets, net
173

 
—

 
157

 
—

Depreciation and amortization
4,473

 
4,015

 
17,372

 
15,970

Total operating costs and expenses
727,672

 
823,045

 
3,427,386

 
3,448,655

Operating income (loss)
23,550

 
10,513

 
74,502

 
(41,527
)
Other income (expense):
 
 
 
 
 
 
 
Interest income
4

 
—

 
4

 
7

Interest expense and other financing costs
(1,154
)
 
(194
)
 
(1,851
)
 
(213
)
Amortization of loan fees
(132
)
 
(109
)
 
(523
)
 
(109
)
Other, net
12

 
41

 
120

 
143

Net income (loss) before income taxes
22,280

 
10,251

 
72,252

 
(41,699
)
Provision for income taxes
(120
)
 
(95
)
 
(459
)
 
(95
)
Net income (loss)
22,160

 
10,156

 
71,793

 
(41,794
)
Less net income (loss) attributable to Predecessor
3,341

 
1,628

 
18,801

 
(50,322
)
Net income attributable to partners
$
18,819

 
$
8,528

 
$
52,992

 
$
8,528

 
 
 
 
 
 
 
 
Net income per limited partner unit:
 
 
 
 
 
 
 
Common - basic
$
0.40

 
$
0.19

 
$
1.16

 
$
0.19

Common - diluted
0.40

 
0.19

 
1.15

 
0.19

Subordinated - basic and diluted
0.40

 
0.19

 
1.15

 
0.19

 
 
 
 
 
 
 
 
Weighted average limited partner units outstanding:
 
 
 
 
 
 
 
Common - basic
23,795

 
22,811

 
23,059

 
22,811

Common - diluted
23,861

 
22,813

 
23,107

 
22,813

Subordinated - basic and diluted
22,811

 
22,811

 
22,811

 
22,811






 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2014
 
2013
 
2014
 
2013
 
(In thousands, except per barrel data)
Cash Flow Data
 

 
 
 
 

 
 

Net cash provided by (used in):
 

 
 
 
 

 
 

Operating activities
$
53,159

 
$
10,167

 
$
118,150

 
$
(32,735
)
Investing activities
(12,119
)
 
(10,478
)
 
(43,420
)
 
(72,362
)
Financing activities
(65,854
)
 
84,311

 
(104,436
)
 
189,096

Capital expenditures
4,990

 
10,514

 
22,325

 
72,398

Other Data
 

 
 
 
 

 
 

EBITDA (2)
$
24,703

 
$
11,598

 
$
70,330

 
$
11,598

Distributable cash flow (2)
21,294

 
13,146

 
66,127

 
13,146

Balance Sheet Data (at end of period)
 

 
 
 
 

 
 

Cash and cash equivalents
 
 
 
 
$
54,298

 
$
84,004

Property, plant and equipment, net
 
 
 
 
182,545

 
178,765

Total assets
 
 
 
 
376,908

 
307,176

Total debt
 
 
 
 
269,000

 
—

Total liabilities
 
 
 
 
404,002

 
13,056

Division equity
 
 
 
 
—

 
60,768

Partners' capital
 
 
 
 
(27,094
)
 
233,352

Total liabilities, division equity and partners' capital
 
 
 
 
376,908

 
307,176

(1)
Prior to the initial public offering, our assets were a part of the integrated operations of Western, and the Predecessor generally recognized only the costs and did not record revenue associated with the transportation, terminalling or storage services provided to Western on an intercompany basis. Accordingly, the revenues in the Predecessor’s historical combined financial statements relate only to amounts received from third parties for these services and minimum amounts required to be recorded for Western for local tax purposes. Following the closing of the initial public offering, our revenues were generated by existing third-party contracts and from the commercial agreements with Western.
(2)
EBITDA represents earnings before interest expense and other financing costs, provision for income taxes, depreciation, amortization, and certain other non-cash income and expense items. However, EBITDA is not a recognized measurement under United States generally accepted accounting principles ("GAAP"). Our management believes that the presentation of EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. In addition, our management believes that EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financings, income taxes, the accounting effects of significant turnaround activities (that many of our competitors capitalize and thereby exclude from their measures of EBITDA) and certain non-cash charges that are items that may vary for different companies for reasons unrelated to overall operating performance.
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 does not reflect our cash expenditures or future requirements for significant turnaround activities, capital expenditures, or contractual commitments;
•
EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;
•
EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and
•
EBITDA, as we calculate it, may differ from the EBITDA calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure.
Because of these limitations, EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally.




The following table reconciles net income to EBITDA for the periods presented:
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
Net income attributable to partners
$
18,819

 
$
8,528

 
$
52,992

 
$
8,528

Interest expense and other financing costs
1,154

 
190

 
1,836

 
190

Provision for income taxes
120

 
95

 
459

 
95

Amortization of loan fees
132

 
109

 
523

 
109

Depreciation and amortization
4,478

 
2,676

 
14,520

 
2,676

EBITDA
24,703

 
11,598

 
70,330

 
11,598

 
 
 
 
 
 
 
 
Change in deferred revenues
768

 
2,589

 
4,190

 
2,589

Cash interest paid
(1,154
)
 
(190
)
 
(1,837
)
 
(190
)
Income taxes paid
—

 
—

 
(1
)
 
—

Maintenance capital expenditures
(3,023
)
 
(851
)
 
(6,555
)
 
(851
)
Distributable cash flow
$
21,294

 
$
13,146

 
$
66,127

 
$
13,146






Logistics
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
Affiliate
$
36,692

 
$
26,100

 
$
137,986

 
$
29,086

Third-party
674

 
621

 
2,718

 
1,743

Total revenues
37,366

 
26,721

 
140,704

 
30,829

Operating costs and expenses:
 

 
 

 
 

 
 

Operating and maintenance expenses
16,553

 
16,507

 
67,676

 
72,455

General and administrative expenses
590

 
708

 
2,359

 
2,742

Loss on disposal of assets, net
262

 
—

 
262

 
—

Depreciation and amortization
3,437

 
3,169

 
13,479

 
13,042

Total operating costs and expenses
20,842

 
20,384

 
83,776

 
88,239

Operating income (loss)
$
16,524

 
$
6,337

 
$
56,928

 
$
(57,410
)
Key Operating Statistics
 
 
 
 
 
 
 
Pipeline and gathering (bpd):
 
 
 
 
 
 
 
Mainline movements:
 
 
 
 
 
 
 
Permian/Delaware Basin system
31,447

 
10,519

 
24,644

 
3,258

Four Corners system (1)
34,525

 
36,933

 
37,485

 
38,091

Gathering (truck offloading):
 
 
 
 
 
 
 
Permian/Delaware Basin system
24,050

 
16,996

 
24,166

 
10,169

Four Corners system
12,627

 
11,695

 
11,550

 
8,814

Pipeline Gathering and Injection system:
 
 
 
 
 
 
 
McCamey Station
1,519

 
1,562

 
1,525

 
1,559

Four Corners
17,333

 
20,441

 
19,943

 
22,972

Pipeline storage (bbls) (2)
619,706

 
568,040

 
598,057

 
399,096

Terminalling, transportation and storage:
 
 
 
 
 
 
 
Shipments into and out of storage (bpd) (includes asphalt)
387,633

 
383,017

 
381,371

 
367,208

Terminal storage capacity (bbls) (2)
7,359,066

 
6,881,964

 
7,356,348

 
6,881,964

(1)
Some barrels of crude oil in route to Western’s Gallup Refinery are transported on more than one of our mainlines. Mainline movements for the Four Corners system include each barrel transported on each mainline.
(2)
Pipeline and terminal storage shell capacities represent weighted-average capacities for the periods indicated.





Wholesale
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2014
 
2013
 
2014
 
2013
 
(In thousands, except per gallon/barrel data)
Revenues:
 
 
 
 
 
 
 
Affiliate
$
185,077

 
$
204,622

 
$
873,589

 
$
853,447

Third-party, net of excise taxes
528,779

 
602,215

 
2,487,595

 
2,522,852

Total revenues
713,856

 
806,837

 
3,361,184

 
3,376,299

Operating costs and expenses:
 
 
 
 
 

 
 

Cost of products sold:
 
 
 
 
 
 
 
Affiliate
183,239

 
204,619

 
871,751

 
853,447

Third-party, net of excise taxes
499,895

 
576,680

 
2,373,168

 
2,426,270

Operating and maintenance expenses
18,075

 
16,748

 
74,722

 
62,852

General and administrative expenses
1,193

 
2,564

 
9,521

 
10,012

Gain on disposal of assets, net
(89
)
 
—

 
(105
)
 
—

Depreciation and amortization
1,036

 
846

 
3,893

 
2,928

Total operating costs and expenses
703,349

 
801,457

 
3,332,950

 
3,355,509

Operating income
$
10,507

 
$
5,380

 
$
28,234

 
$
20,790

Key Operating Statistics:
 
 
 
 
 
 
 
Fuel gallons sold
297,020

 
268,411

 
1,147,860

 
1,073,538

Fuel gallons sold to retail (included in fuel gallons sold, above)
73,395

 
63,444

 
268,148

 
254,907

Fuel margin per gallon (1)
$
0.024

 
$
0.028

 
$
0.022

 
$
0.026

Lubricant gallons sold
2,919

 
2,854

 
12,082

 
11,793

Lubricant margin per gallon (2)
$
0.83

 
$
0.96

 
$
0.86

 
$
0.89

Crude oil trucking volume (bpd)
41,369

 
17,778

 
36,314

 
12,603

Average crude oil revenue per barrel
$
2.79

 
$
2.14

 
$
2.90

 
$
2.24

(1)
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 distribution 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.
(2)
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 lubricant sales. Lubricant margin is a measure frequently used in the petroleum products wholesale industry to measure operating results related to lubricant sales.



Western Refining Logistics, LP Reports