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8-K - CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES - JP Energy Partners LPa15-17295_18k.htm

Exhibit 99.1

 

 

JP Energy Partners LP Announces Second Quarter 2015 Financial Results

 

IRVING, Texas, August 10, 2015 — JP Energy Partners LP (NYSE: JPEP) (“JP Energy,” “we,” “our,” or “us”) today announced second quarter 2015 financial and operating results.

 

JP Energy reported Adjusted EBITDA of $7.1 million for the second quarter of 2015, compared to $3.5 million for the second quarter of 2014, and reported a loss from continuing operations of $4.9 million for the second quarter of 2015, compared to a loss from continuing operations of $11.0 million for the second quarter of 2014. Distributable Cash Flow was $4.4 million for the second quarter of 2015.

 

For the six months ended June 30, 2015, JP Energy reported $22.2 million of Adjusted EBITDA, an 85% increase compared to $12.0 million for the first six months of 2014, and reported a loss from continuing operations of $4.3 million for the first six months of 2015 compared to a loss from continuing operations of $19.2 million for the same period of 2014. Distributable Cash Flow was $18.1 million for the first six months of 2015.

 

“The benefits of our well-diversified operating platform have been on clear display for the first six months of the year, and during the most recent quarter,” said J. Patrick Barley, Executive Chairman and Chief Executive Officer of JP Energy. “Our second quarter Adjusted EBITDA continued to grow in three of our four segments when compared to our results for the same period last year, highlighting the quality of our assets. We also successfully completed an accretive NGL acquisition during the second quarter, and we announced a strategic interconnection of our Silver Dollar Pipeline system, further enhancing the connectivity and diversity of our Midland Basin pipeline system. We remain committed to maintaining a conservative balance sheet, controlling expenses and executing on the growth initiatives we have invested in over the last couple of years to continue creating value for our unitholders.”

 

Review of Segment Performance

 

NGL distribution and sales — Adjusted EBITDA for the NGL Distribution and Sales segment was $4.8 million for the second quarter of 2015, compared to $2.4 million for the second quarter of 2014. The increase was primarily a result of higher average margins from more favorable market conditions, an increase in sales volumes as a result of organic growth in our customer base as well as the acquisition of Southern Propane in May 2015.

 

Crude oil pipelines and storage — Adjusted EBITDA for the Crude Oil Pipelines and Storage segment was $6.1 million for the second quarter of 2015, compared to $5.2 million for the second quarter of 2014. The increase was primarily due to higher volumes from the expansion of the Silver Dollar Pipeline System in the fourth quarter of 2014.

 

Crude oil supply and logistics — Adjusted EBITDA for the Crude Oil Supply and Logistics segment was a loss of $0.3 million for the second quarter of 2015, compared to a gain of $1.0 million for the second quarter of 2014. The decrease was primarily due to a $1.2 million decrease in adjusted gross margin, partially offset by higher crude oil sales volumes from the expansions of the Silver Dollar Pipeline System in the fourth quarter of 2014 and new contracts signed in the first half of 2015.

 

Refined products terminals and storage — Adjusted EBITDA for the Refined Products Terminals and Storage segment was $2.5 million for the second quarter of 2015, compared to $0.3 million for the second quarter of 2014. The increase was primarily due to the $2.7 million one-time charge recorded in the second quarter of 2014.

 

Recent Developments

 

On August 4, 2015, Jeremiah J. Ashcroft III, Executive Vice President and Chief Operating Officer of JP Energy GP II LLC, the general partner of JP Energy Partners LP, submitted his resignation effective August 28, 2015. He has accepted the Chief Executive Officer position with another company in the ArcLight portfolio of companies.

 



 

In May 2015, we completed our previously announced acquisition of substantially all of the assets of Southern Propane Inc. (“Southern”), a Houston-based industrial and commercial propane distribution and logistics company for approximately $16.3 million after customary closing adjustments. The transaction was funded through the use of borrowings from our revolving credit facility and the issuance of common units.

 

Cash Distributions

 

On July 28, 2015, JP Energy announced that it would pay on August 14, 2015, to unitholders of record on August 7, 2015, a cash distribution of $0.3250 per common and subordinated unit for the three month period ended June 30, 2015.

 

Earnings Conference Call Information

 

We will hold a conference call on Tuesday, August 11, 2015, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss our second quarter 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 13614756.  The replay will be available until August 25, 2015.

 

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 30 days 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.

 

Form 10-K Filing

 

JP Energy Partners LP previously filed with the Securities and Exchange Commission (the “SEC”) its Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “Form 10-K”) on March 11, 2015. 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.

 

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.

 

2



 

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.

 

3



 

JP ENERGY PARTNERS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2015

 

2014

 

 

 

(in thousands, except unit data)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

2,421

 

$

3,325

 

Restricted cash

 

600

 

600

 

Accounts receivable, net

 

94,274

 

108,725

 

Receivables from related parties

 

8,389

 

10,548

 

Inventory

 

30,142

 

20,826

 

Prepaid expenses and other current assets

 

10,106

 

4,915

 

Total Current Assets

 

145,932

 

148,939

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment, net

 

282,992

 

262,148

 

Goodwill

 

254,559

 

248,721

 

Intangible assets, net

 

146,123

 

148,311

 

Deferred financing costs and other assets, net

 

4,656

 

5,054

 

Total Non-Current Assets

 

688,330

 

664,234

 

Total Assets

 

$

834,262

 

$

813,173

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

83,349

 

$

88,052

 

Accrued liabilities

 

33,087

 

28,971

 

Capital leases and short-term debt

 

133

 

229

 

Customer deposits and advances

 

2,526

 

5,050

 

Current portion of long-term debt

 

401

 

383

 

Total Current Liabilities

 

119,496

 

122,685

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Long-term debt

 

130,997

 

84,125

 

Other long-term liabilities

 

3,978

 

5,683

 

Total Liabilities

 

254,471

 

212,493

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

Partners’ capital

 

 

 

 

 

General partner interest

 

2,604

 

 

Common units (22,119,170 and 21,852,219 units authorized as of June 30, 2015 and December 31, 2014 respectively; 18,466,309 and 18,209,519 units issued and outstanding as of June 30, 2015 and December 31, 2014, respectively)

 

305,698

 

315,630

 

 

 

 

 

 

 

Subordinated units (18,197,249 units authorized; 18,148,898 and 18,197,249 units issued and outstanding as of June 30, 2015 and December 31, 2014, respectively)

 

271,489

 

285,050

 

Total Partners’ Capital

 

579,791

 

600,680

 

Total Liabilities and Partners’ Capital

 

$

834,262

 

$

813,173

 

 

4



 

JP ENERGY PARTNERS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

(in thousands, except unit and per unit data)

 

REVENUES:

 

 

 

 

 

 

 

 

 

Crude oil sales

 

$

288,520

 

$

389,401

 

$

520,437

 

$

730,406

 

Gathering, transportation and storage fees

 

6,929

 

7,698

 

13,880

 

15,795

 

NGL and refined product sales

 

38,070

 

43,297

 

92,255

 

107,098

 

Refined products terminals and storage fees

 

3,068

 

3,005

 

6,176

 

5,668

 

Other revenues

 

3,900

 

3,746

 

7,025

 

6,850

 

Total revenues

 

340,487

 

447,147

 

639,773

 

865,817

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

Cost of sales, excluding depreciation and amortization

 

301,858

 

415,304

 

556,748

 

798,193

 

Operating expense

 

17,946

 

19,113

 

34,557

 

35,266

 

General and administrative

 

10,981

 

11,251

 

25,456

 

23,879

 

Depreciation and amortization

 

12,086

 

10,071

 

23,425

 

20,165

 

Loss on disposal of assets, net

 

1,279

 

305

 

1,409

 

661

 

Total costs and expenses

 

344,150

 

456,044

 

641,595

 

878,164

 

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

(3,663

)

(8,897

)

(1,822

)

(12,347

)

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

Interest expense

 

(1,382

)

(2,292

)

(2,555

)

(5,551

)

Loss on extinguishment of debt

 

 

 

 

(1,634

)

Other income, net

 

337

 

396

 

356

 

504

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

 

(4,708

)

(10,793

)

(4,021

)

(19,028

)

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(229

)

(213

)

(251

)

(156

)

 

 

 

 

 

 

 

 

 

 

LOSS FROM CONTINUING OPERATIONS

 

(4,937

)

(11,006

)

(4,272

)

(19,184

)

 

 

 

 

 

 

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

 

(9,203

)

 

(9,608

)

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(4,937

)

$

(20,209

)

$

(4,272

)

$

(28,792

)

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per unit

 

 

 

 

 

 

 

 

 

Net loss allocated to common units

 

$

(2,419

)

 

 

$

(2,069

)

 

 

Weighted average number of common units outstanding

 

18,356,902

 

 

 

18,281,786

 

 

 

Basic and diluted loss per common unit

 

$

(0.13

)

 

 

$

(0.11

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss allocated to subordinated units

 

$

(2,518

)

 

 

$

(2,203

)

 

 

Weighted average number of subordinated units outstanding

 

18,149,629

 

 

 

18,167,625

 

 

 

Basic and diluted loss per subordinated unit

 

$

(0.14

)

 

 

$

(0.12

)

 

 

 

 

 

 

 

 

 

 

 

 

Distribution declared per common and subordinated unit

 

$

0.325

 

 

 

$

0.65

 

 

 

 

5



 

JP ENERGY PARTNERS LP

NON-GAAP RECONCILIATIONS

(Unaudited)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

(in thousands)

 

Segment Adjusted EBITDA

 

 

 

 

 

 

 

 

 

Crude oil pipelines and storage

 

$

6,129

 

$

5,178

 

$

11,605

 

$

10,146

 

Crude oil supply and logistics

 

(312

)

963

 

1,671

 

1,658

 

Refined products terminals and storage

 

2,518

 

288

 

5,340

 

5,141

 

NGL distribution and sales

 

4,843

 

2,394

 

16,941

 

7,646

 

Discontinued operations

 

 

904

 

 

983

 

Corporate and other

 

(6,120

)

(6,187

)

(13,310

)

(13,536

)

Total Adjusted EBITDA

 

7,058

 

3,540

 

22,247

 

12,038

 

Depreciation and amortization

 

(12,086

)

(10,071

)

(23,425

)

(20,165

)

Interest expense

 

(1,382

)

(2,292

)

(2,555

)

(5,551

)

Loss on extinguishment of debt

 

 

 

 

(1,634

)

Income tax expense

 

(229

)

(213

)

(251

)

(156

)

Loss on disposal of assets, net

 

(1,279

)

(305

)

(1,409

)

(661

)

Unit-based compensation

 

(121

)

(302

)

(552

)

(584

)

Total gain (loss) on commodity derivatives

 

(5,691

)

(103

)

(4,920

)

32

 

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

 

5,222

 

45

 

8,415

 

(588

)

Non-cash inventory costing adjustment

 

3,906

 

 

991

 

 

Transaction costs and other

 

(335

)

(401

)

(2,813

)

(932

)

Discontinued operations

 

 

(10,107

)

 

(10,591

)

Net loss

 

$

(4,937

)

$

(20,209

)

$

(4,272

)

$

(28,792

)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

(in thousands)

 

Segment Adjusted gross margin

 

 

 

 

 

 

 

 

 

Crude oil pipelines and storage

 

$

7,331

 

$

6,271

 

$

13,998

 

$

12,367

 

Crude oil supply and logistics

 

2,197

 

3,404

 

7,190

 

6,474

 

Refined products terminals and storage

 

3,411

 

3,944

 

7,044

 

9,806

 

NGL distribution and sales

 

22,253

 

18,463

 

50,611

 

39,906

 

Total Adjusted gross margin

 

35,192

 

32,082

 

78,843

 

68,553

 

Operating expenses

 

(17,946

)

(19,113

)

(34,557

)

(35,266

)

General and administrative

 

(10,981

)

(11,251

)

(25,456

)

(23,879

)

Depreciation and amortization

 

(12,086

)

(10,071

)

(23,425

)

(20,165

)

Loss on disposal of assets, net

 

(1,279

)

(305

)

(1,409

)

(661

)

Total gain (loss) on commodity derivatives

 

(5,691

)

(103

)

(4,920

)

32

 

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

 

5,222

 

45

 

8,415

 

(588

)

Non-cash inventory costing adjustment

 

3,906

 

 

991

 

 

Other non-cash items

 

 

(181

)

(304

)

(373

)

Operating loss

 

$

(3,663

)

$

(8,897

)

$

(1,822

)

$

(12,347

)

 

6



 

JP ENERGY PARTNERS

NON-GAAP RECONCILIATION (CONTINUED)

(Unaudited)

 

 

 

Three months
ended June
30, 2015

 

Six months
ended June 30,
2015

 

 

 

(in thousands)

 

Net cash provided by operating activities

 

$

15,882

 

$

19,322

 

Depreciation and amortization

 

(12,086

)

(23,425

)

Derivative valuation changes

 

(406

)

3,602

 

Amortization of deferred financing costs

 

(228

)

(455

)

Unit-based compensation

 

(121

)

(552

)

Loss on disposal of assets

 

(1,279

)

(1,409

)

Bad debt expense

 

(225

)

(692

)

Other non-cash items

 

257

 

186

 

Changes in assets and liabilities

 

(6,731

)

(849

)

Net loss

 

$

(4,937

)

$

(4,272

)

Depreciation and amortization

 

12,086

 

23,425

 

Interest expense

 

1,382

 

2,555

 

Income tax expense

 

229

 

251

 

Loss on disposal of assets, net

 

1,279

 

1,409

 

Unit-based compensation

 

121

 

552

 

Total gain on commodity derivatives

 

5,691

 

4,920

 

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

 

(5,222

)

(8,415

)

Non-cash inventory costing adjustment

 

(3,906

)

(991

)

Transaction costs and other

 

335

 

2,813

 

Adjusted EBITDA

 

$

7,058

 

$

22,247

 

Less:

 

 

 

 

 

Cash interest paid, net of interest income

 

1,084

 

1,971

 

Cash taxes paid

 

450

 

450

 

Maintenance capital expenditures

 

1,738

 

2,727

 

Plus:

 

 

 

 

 

Proceeds from the sale of assets

 

651

 

1,001

 

Distributable cash flow

 

$

4,437

 

$

18,100

 

Less:

 

 

 

 

 

Distributions

 

12,045

 

24,011

 

Amount in excess of (less than) distributions

 

$

(7,608

)

$

(5,911

)

Distribution coverage

 

0.37

x

0.75

x

 

7



 

JP ENERGY PARTNERS

SUPPLEMENTAL OPERATIONAL DATA

(Unaudited)

 

 

 

 

 

Three months ended June 30,

 

Segment

 

Key Operational Data

 

2015

 

2014

 

Change

 

 

 

 

 

 

 

 

 

 

 

Crude oil pipelines and storage

 

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

 

29,541

 

21,158

 

8,383

 

Crude oil supply and logistics

 

Crude oil sales (Bbls/d)

 

70,605

 

41,476

 

29,129

 

Refined products terminals and storage

 

Terminal and storage throughput (Bbls/d)

 

61,073

 

66,814

 

(5,741

)

NGL distribution and sales

 

NGL and refined product sales (Mgal/d)

 

180

 

165

 

15

 

 


(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.

 

Source: JP Energy Partners LP

 

JP Energy Partners LP

 

Investor Relations, 866-912-3714

 

investorrelations@jpep.com

 

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