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8-K - CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES - JP Energy Partners LPa15-6484_18k.htm

Exhibit 99.1

 

 

JP Energy Partners LP Announces Fourth Quarter and Full-Year 2014 Financial Results

 

IRVING, Texas, March 11, 2015 — JP Energy Partners LP (NYSE: JPEP) (“JP Energy”, “we,” “our,” or “us”) today announced fourth quarter and full-year 2014 financial and operating results.

 

JP Energy reported Adjusted EBITDA of $12.1 million for the fourth quarter of 2014 and $38.9 million for the year ended December 31, 2014, excluding $2.1 million and $7.2 million, respectively, of non-recurring charges that were primarily associated with our IPO and the previously disclosed product measurement and quality control issue in our Refined Products Terminals segment that was substantially settled in the fourth quarter.

 

“Since the completion of our IPO in October, we are focused on executing our growth plan in spite of challenging industry conditions,” said J. Patrick Barley, Chairman and Chief Executive Officer of JP Energy. “We are focused on maintaining our strong balance sheet while taking advantage of new opportunities presented in the current environment such as the recently announced expansion of our Silver Dollar Pipeline into the core of the Midland Basin.”

 

Review of Segment Performance

 

Crude Oil Pipelines and Storage — Adjusted EBITDA for the Crude Oil Pipelines and Storage segment was $4.7 million for the fourth quarter of 2014 and $20.2 million for the year ended December 31, 2014, compared to $4.4 million for the fourth quarter of 2013, and $13.4 million for the year ended December 31, 2013.  The increase was primarily due to the acquisition of the Silver Dollar Pipeline System in October 2013 and subsequent expansions of that system.  Adjusted EBITDA for the fourth quarter and year ended December 31, 2014 was impacted by $0.7 million in one-time costs associated with a temporary service outage that occurred to make repairs to a portion of our storage tanks.

 

Crude Oil Supply and Logistics — Adjusted EBITDA for the Crude Oil Supply and Logistics segment was $2.0 million for the fourth quarter of 2014 and $9.2 million for the year ended December 31, 2014, compared to $3.0 million for the fourth quarter of 2013, and $14.7 million for the year ended December 31, 2013.  The decrease for the fourth quarter of 2014 compared to the fourth quarter of 2013 was primarily due to a $2.4 million decrease in adjusted gross margin as a result of less favorable regional crude pricing differentials and was partially offset by $1.5 million of lower operating expenses.  The decrease for the year ended December 31, 2014 compared to the year ended December 31, 2013 was primarily due to a $7.3 million decrease in adjusted gross margin from lower sales volumes and less favorable regional crude pricing differentials and was partially offset by $2.2 million of lower operating expenses.

 

Refined Products Terminals and Storage — Adjusted EBITDA for the Refined Products Terminals and Storage segment was $3.1 million for the fourth quarter of 2014, and $10.7 million for the year ended December 31, 2014, compared to $3.4 million for the fourth quarter of 2013 and $16.1 million for the year ended December 31, 2013.  The decrease for the fourth quarter of 2014 compared to the fourth quarter of 2013 was primarily due to a $1.0 million decrease in adjusted gross margin as a result of a decrease in refined product sales and was partially offset by $0.7 million of lower operating expenses. The decrease for the year ended December 31, 2014 compared to the year ended December 31, 2013 was primarily due to a $2.5 million decrease in adjusted gross margin from lower refined product sales and reduced throughput at the North Little Rock terminal attributable to supply disruptions and competition.  Adjusted EBITDA for the year ended December 31, 2014 was also impacted by $2.8 million in one-time costs associated with the improvement and remediation of measurement and quality control processes at our terminals.

 

NGL Distribution and Sales — Adjusted EBITDA for the NGL Distribution and Sales segment was $5.6 million for the fourth quarter of 2014, and $15.5 million for the year ended December 31, 2014, compared to $4.0 million for the fourth quarter of 2013 and $15.5 million for the year ended December 31, 2013.  The increase for the fourth quarter of 2014 compared to the fourth quarter of 2013 was primarily due to a $2.0 million increase in adjusted gross margin as a result of an increase in sales volumes from the expansion of our customer base, particularly those with industrial applications.

 



 

Cash Distributions

 

On February 13, 2015, JP Energy paid a pro-rated cash distribution of $0.3038 per common unit for the three month period ended December 31, 2014.  This distribution was JP Energy’s first distribution and corresponds to the minimum quarterly distribution of $0.3250 per unit, or $1.30 on an annualized basis, pro-rated for the portion of the fourth quarter following the closing of our initial public offering on October 7, 2014.

 

2015 Outlook and Guidance

 

JP Energy expects Adjusted EBITDA of $50 million to $60 million, maintenance capital expenditures of approximately $5.9 million for the year ending December 31, 2015.  We expect to achieve our target distribution coverage ratio of 1.2x by the fourth quarter of 2015 with a full year distribution coverage ratio of 0.8x — 1.0x.  Organic growth capital expenditures are estimated to range from $75 million to $100 million, with the substantial majority of these investments to be made on our Silver Dollar Pipeline system.  This guidance does not include any positive impacts from drop down transactions or from any potential third-party acquisitions which we will continue to evaluate throughout 2015.

 

Earnings Conference Call Information

 

We will hold a conference call on Thursday, March 12, 2015, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss our fourth quarter and full-year 2014 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 13602810. The replay of the conference call will be available for approximately two weeks following the call.

 

Interested parties may also listen to a simultaneous webcast of the call on our website at www.jpenergypartners.com under the “Investors” section. A replay of the webcast will also be available for approximately two weeks following the call.

 

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) crude oil supply and logistics; (iii) refined products terminals and storage; and (iv) 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 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 and adjusted gross margin provides information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to Adjusted

 



 

EBITDA is net income (loss) 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. Because Adjusted EBITDA 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 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.

 

Contacts:

Investor Relations, 866-912-3714

investorrelations@jpep.com

Source: JP Energy Partners LP

 



 

JP ENERGY PARTNERS

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

December 31,

 

December 31,

 

 

 

2014

 

2013

 

 

 

(in thousands, except unit data)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

3,325

 

$

3,234

 

Restricted cash

 

600

 

 

Accounts receivable, net

 

108,725

 

122,919

 

Receivables from related parties

 

10,548

 

2,742

 

Inventory

 

20,826

 

38,579

 

Prepaid expenses and other current assets

 

4,915

 

4,991

 

Total Current Assets

 

148,939

 

172,465

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment, net

 

262,148

 

238,093

 

Goodwill

 

248,721

 

250,705

 

Intangible assets, net

 

148,311

 

175,101

 

Deferred financing costs and other assets, net

 

5,054

 

7,038

 

Total Non-Current Assets

 

664,234

 

670,937

 

Total Assets

 

$

813,173

 

$

843,402

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

88,052

 

$

95,765

 

Payables to related parties

 

 

1,274

 

Accrued liabilities

 

28,971

 

22,748

 

Capital leases and short-term debt

 

229

 

538

 

Customer deposits and advances

 

5,050

 

2,722

 

Current portion of long-term debt

 

383

 

698

 

Total Current Liabilities

 

122,685

 

123,745

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Long-term debt

 

84,125

 

183,148

 

Note payable to related party

 

 

1,000

 

Other long-term liabilities

 

5,683

 

2,116

 

Total Liabilities

 

212,493

 

310,009

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

Partners’ capital

 

 

 

 

 

Predecessor capital

 

 

304,065

 

General partner interest

 

 

404

 

Class A common units (8,004,368 units authorized, issued and outstanding at December 31, 2013)

 

 

140,752

 

Class B common units (1,244,508 units authorized and 1,206,844 units issued and outstanding at December 31, 2013)

 

 

11,366

 

Class C common units (3,254,781 units authorized, issued and outstanding at of December 31, 2013)

 

 

76,806

 

Common units (21,852,219 units authorized and 18,209,519 units issued and outstanding as of December 31, 2014)

 

315,630

 

 

Subordinated units (18,197,249 units authorized, issued and outstanding as of December 31, 2014)

 

285,050

 

 

Total Partners’ Capital

 

600,680

 

533,393

 

Total Liabilities and Partners’ Capital

 

$

813,173

 

$

843,402

 

 



 

JP ENERGY PARTNERS

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(in thousands, except unit and per unit data)

 

REVENUES:

 

 

 

 

 

 

 

 

 

Crude oil sales

 

$

332,905

 

$

482,821

 

$

1,427,784

 

$

1,875,392

 

Gathering, transportation and storage fees

 

9,630

 

9,899

 

40,704

 

24,146

 

NGL and refined product sales

 

50,668

 

51,149

 

200,223

 

178,588

 

Refined products terminals and storage fees

 

2,982

 

2,833

 

11,793

 

12,309

 

Other revenues

 

3,044

 

3,168

 

13,130

 

11,798

 

Total revenues

 

399,229

 

549,870

 

1,693,634

 

2,102,233

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

Cost of sales, excluding depreciation and amortization

 

376,251

 

513,216

 

1,567,110

 

1,964,631

 

Operating expense

 

15,210

 

17,212

 

67,514

 

61,925

 

General and administrative

 

12,202

 

14,316

 

47,398

 

45,284

 

Depreciation and amortization

 

11,919

 

10,369

 

42,488

 

33,345

 

Loss on disposal of assets, net

 

173

 

15

 

1,366

 

1,492

 

Total costs and expenses

 

415,755

 

555,128

 

1,725,876

 

2,106,677

 

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

(16,526

)

(5,258

)

(32,242

)

(4,444

)

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

Interest expense

 

(1,436

)

(2,981

)

(9,393

)

(9,075

)

Loss on extinguishment of debt

 

 

 

(1,634

)

 

Other income (expense), net

 

(352

)

411

 

154

 

688

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

 

(18,314

)

(7,828

)

(43,115

)

(12,831

)

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

(302

)

138

 

(300

)

(208

)

 

 

 

 

 

 

 

 

 

 

LOSS FROM CONTINUING OPERATIONS

 

(18,616

)

(7,690

)

(43,415

)

(13,039

)

 

 

 

 

 

 

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

 

(1,095

)

(9,608

)

(1,182

)

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(18,616

)

$

(8,785

)

$

(53,023

)

$

(14,221

)

 

 

 

 

 

 

 

 

 

 

Net loss attributable to the period from January 1, 2014 to October 1, 2014

 

$

 

 

 

$

34,407

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to limited partners’

 

$

(18,616

)

 

 

$

(18,616

)

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per unit

 

 

 

 

 

 

 

 

 

Net loss allocated to common units

 

$

(9,293

)

 

 

$

(9,293

)

 

 

Weighted average number of common units outstanding

 

18,212,632

 

 

 

18,212,632

 

 

 

Basic and diluted loss per common unit

 

$

(0.51

)

 

 

$

(0.51

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss allocated to subordinated units

 

$

(9,323

)

 

 

$

(9,323

)

 

 

Weighted average number of subordinated units outstanding

 

18,209,948

 

 

 

18,209,948

 

 

 

Basic and diluted loss per subordinated unit

 

$

(0.51

)

 

 

$

(0.51

)

 

 

 



 

JP ENERGY PARTNERS LP

NON-GAAP RECONCILIATIONS

(Unaudited)

 

 

 

Three months ended December 31,

 

Twelve months ended December 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(in thousands)

 

Segment Adjusted EBITDA

 

 

 

 

 

 

 

 

 

Crude oil pipelines and storage

 

$

4,712

 

$

4,399

 

$

20,159

 

$

13,353

 

Crude oil supply and logistics

 

2,046

 

3,014

 

9,185

 

14,686

 

Refined products terminals and storage

 

3,057

 

3,374

 

10,723

 

16,100

 

NGLs distribution and sales

 

5,623

 

3,991

 

15,525

 

15,518

 

Discontinued operations

 

 

(226

)

983

 

2,023

 

Corporate and other

 

(5,422

)

(9,142

)

(24,924

)

(27,396

)

Total Adjusted EBITDA

 

10,016

 

5,410

 

31,651

 

34,284

 

Depreciation and amortization

 

(11,919

)

(10,369

)

(42,488

)

(33,345

)

Interest expense

 

(1,436

)

(2,981

)

(9,393

)

(9,075

)

Loss on extinguishment of debt

 

 

 

(1,634

)

 

Income tax benefit (expense)

 

(302

)

138

 

(300

)

(208

)

Loss on disposal of assets, net

 

(173

)

(15

)

(1,366

)

(1,492

)

Unit-based compensation

 

(714

)

(275

)

(1,877

)

(948

)

Total gain (loss) on commodity derivatives

 

(13,032

)

489

 

(13,762

)

902

 

Net cash (receipts) payments for commodity derivatives settled during the period

 

1,554

 

(317

)

1,071

 

209

 

Discontinued operations

 

 

(869

)

(10,591

)

(3,205

)

Non-cash inventory LCM adjustment

 

(222

)

 

(222

)

 

Transaction costs and other non-cash items

 

(2,388

)

4

 

(4,112

)

(1,343

)

Net loss

 

$

(18,616

)

$

(8,785

)

$

(53,023

)

$

(14,221

)

 

 

 

Three months ended December 31,

 

Twelve months ended December 31,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(in thousands)

 

Adjusted gross margin

 

 

 

 

 

 

 

 

 

Crude oil pipelines and storage

 

$

5,574

 

$

5,707

 

$

24,442

 

$

16,507

 

Crude oil supply and logistics

 

4,241

 

6,660

 

18,943

 

26,280

 

Refined products terminals and storage

 

3,456

 

4,413

 

16,835

 

19,327

 

NGL distribution and sales

 

21,683

 

19,702

 

80,223

 

74,377

 

Total Adjusted gross margin

 

34,954

 

36,482

 

140,443

 

136,491

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

(15,210

)

(17,212

)

(67,514

)

(61,925

)

General and administrative

 

(12,202

)

(14,316

)

(47,398

)

(45,284

)

Depreciation and amortization

 

(11,919

)

(10,369

)

(42,488

)

(33,345

)

Loss on disposal of assets, net

 

(173

)

(15

)

(1,366

)

(1,492

)

Total gain (loss) on commodity derivatives

 

(13,032

)

489

 

(13,762

)

902

 

Net cash (receipts) payments for commodity derivatives settled during the period

 

1,554

 

(317

)

1,071

 

209

 

Non-cash inventory LCM adjustment

 

(222

)

 

(222

)

 

Other non-cash items

 

(276

)

 

(1,006

)

 

Operating loss

 

$

(16,526

)

$

(5,258

)

$

(32,242

)

$

(4,444

)

 



 

JP ENERGY PARTNERS LP

SUPPLEMENTAL OPERATIONAL DATA

(Unaudited)

 

 

 

 

 

Three months ended December 31,

 

Twelve months ended December 31,

 

Segment

 

Key Operational Data

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil pipelines and storage

 

Crude oil pipeline throughput (Bbl/d) (1)

 

23,812

 

13,738

 

20,868

 

13,738

 

Crude oil supply and logistics

 

Crude oil sales (Bbls/d) (1)

 

54,581

 

57,859

 

45,643

 

53,471

 

Refined products terminals and storage

 

Terminal and storage throughput (Bbls/d) (1)

 

60,176

 

63,823

 

63,859

 

69,071

 

NGLs distribution and sales

 

NGL and refined product sales (Mgal/d) (1)

 

229

 

211

 

200

 

181

 

 


(1)                                 Represents the average daily throughput volume in our crude oil pipeline and storage segment, the average daily sales volume in our crude oil supply and logistics segment, the average daily throughput volume in our refined products terminals and storage segment and the average daily sales volume in our NGL distribution and sales segment.