Dominion Energy Midstream Partners, LP - FORM 8-K - EX-99 - February 1, 2017

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8-K - DM EARNINGS 8-K 02-01-2017 - Dominion Energy Midstream Partners, LPdmearnings8k02012017.htm
                                                                                                        February 1, 2017


Dominion Midstream Partners Announces Fourth-Quarter 2016 Earnings

·
Net Income attributable to the partnership of $36.5 million
·
Adjusted EBITDA of $45.8 million for fourth-quarter 2016
·
Management affirms targeted 22% annual distribution growth through 2020


RICHMOND, Va. – Dominion Midstream Partners, LP (NYSE: DM) reported unaudited net income attributable to the partnership of $36.5 million for the three months ended Dec. 31, 2016.  Adjusted earnings before interest, income taxes, depreciation and amortization (Adjusted EBITDA) was $45.8 million, and distributable cash flow was $37.7 million for the quarter. On Dec. 1, 2016, Dominion Midstream successfully completed the acquisition of Questar Pipeline, LLC, from Dominion Resources, Inc. (NYSE: D).

Dominion Midstream uses Adjusted EBITDA and distributable cash flow as the primary performance measurements of its earnings and results for public communications with analysts and investors.  Dominion Midstream also uses Adjusted EBITDA and distributable cash flow internally for budgeting, reporting to the Board of Directors and other purposes. Management believes Adjusted EBITDA and distributable cash flow provide a more meaningful representation of the partnership's financial performance and liquidity.   Schedules B and D of this press release include reconciliations to the most directly comparable GAAP measures.

QUARTERLY DISTRIBUTION
On Jan. 25, 2017, the Board of Directors declared a quarterly distribution of $0.2605 per common and subordinated unit, payable on Feb. 15, 2017, to such unitholders of record at the close of business Feb. 6, 2017.

CONFERENCE CALL TODAY
Dominion Midstream and Dominion Resources will jointly host a fourth-quarter earnings conference call at 10 a.m. ET on Wednesday, Feb. 1, 2017.  Management will discuss its fourth-quarter financial results and other matters of interest to the financial community.

Domestic callers should dial (877) 410-5657.  International callers should dial (334) 323-9872.  The passcode for the conference call is "Dominion."  Participants should dial in 10 to 15 minutes prior to the scheduled start time.  Members of the media also are invited to listen.

A live webcast of the conference call, including accompanying slides, will be available on the partnership's investor information page at www.dommidstream.com/investors.

A replay of the conference call will be available beginning about 1 p.m. ET Feb. 1, 2017 and lasting until 11 p.m. ET Feb. 8, 2017.  Domestic callers may access the recording by dialing (877) 919-4059.  International callers should dial (334) 323-0140.  The PIN for the replay is 61568881.  Additionally, a replay of the webcast will be available on the investor information pages by the end of the day Feb. 1, 2017.

ABOUT DOMINION MIDSTREAM
Dominion Midstream is a Delaware limited partnership formed by Dominion Resources, Inc., to grow a portfolio of natural gas terminaling, processing, storage, transportation and related assets.  It is headquartered in Richmond, Va. For more information about Dominion Midstream, visit its website at www.dommidstream.com.

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CONTACTS:     Media: Ryan Frazier, (804) 819-2521 or C.Ryan.Frazier@dom.com
        Financial analysts: Kristy Babcock, (804) 819-2492 or Kristy.R.Babcock@dom.com
 
 
 
Dominion Midstream Partners, LP
Schedule A - Consolidated Statements of Income*
(Unaudited)   
               
 
 Three Months Ended
  
 Year Ended
 
 December 31,
  
 December 31,
 
2016
  
2015
  
2016
  
2015
(millions, except per unit data)
              
Operating Revenue
 $          177.5
  
 $            82.7
  
 $          441.3
  
 $          369.6
Operating Expenses
              
     Purchased gas
               33.4
  
                 1.8
  
               41.7
  
               54.6
     Other operations and maintenance
               34.3
  
               13.6
  
               95.3
  
               56.7
     Depreciation and amortization
               24.0
  
               10.0
  
               56.6
  
               40.4
     Other taxes
                 8.5
  
                 6.3
  
               30.6
  
               26.3
          Total operating expenses
             100.2
  
               31.7
  
             224.2
  
             178.0
Income from operations
               77.3
  
               51.0
  
             217.1
  
             191.6
Earnings from equity method investees
                 8.0
  
                 6.6
  
               23.0
  
                 6.6
Other income
                 1.0
  
                 0.4
  
                 3.2
  
                 1.0
Interest and related charges
                 6.6
  
                 0.3
  
                 7.3
  
                 0.6
Income from operations including noncontrolling interest before income taxes
               79.7
  
               57.7
  
             236.0
  
             198.6
Income tax expense
                 5.1
  
                    -
  
                 6.3
  
                 2.1
Net income including noncontrolling interest and predecessors
 $            74.6
  
 $            57.7
  
 $          229.7
  
 $          196.5
Less: Net income attributable to DCG Predecessor 1
                    -
  
                    -
  
                    -
  
                 2.3
Less: Net income attributable to Questar Pipeline Predecessor2
                 8.7
  
                    -
  
                 5.5
  
                    -
Net income including noncontrolling interest
               65.9
 
               57.7
 
             224.2
 
             194.2
Less: Net income attributable to noncontrolling interest
               29.4
  
               32.6
  
             117.8
  
             121.7
Net income attributable to partners
 $            36.5
  
 $            25.1
  
 $          106.4
  
 $            72.5
               
Net income attributable to partners' ownership interest
              
  Preferred unitholders' interest in net income
 $              3.2
  
 $                -
  
 $              3.2
  
 $                -
  General partner's interest in net income
                 0.6
  
                 0.2
  
                 2.3
  
                (0.5)
  Common unitholders' interest in net income
               23.8
  
               14.6
  
               63.9
  
               41.3
  Subordinated unitholder's interest in net income
                 8.9
  
               10.3
  
               37.0
  
               31.7
               
               
Net income per limited partner unit (basic and diluted)
              
  Common Units
 $            0.38
  
 $            0.32
  
 $            1.30
  
 $            1.08
  Subordinated Units
 $            0.34
  
 $            0.32
  
 $            1.17
  
 $            1.00
               
1 Represents amounts for the period from January 31, 2015 through March 31, 2015.
              
2 Represents amounts for the period from September 16, 2016 through November 30, 2016.
            
               
* The notes contained in Dominion Midstream's most recent quarterly report on Form 10-Q or annual report on Form 10-K are an integral part of the Consolidated Financial Statements.
               
 
 
 
Dominion Midstream Partners, LP
          Schedule B - Reconciliation of EBITDA and Adjusted EBITDA to Net Income*      
(Unaudited)
          
                     
The following table presents a reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable GAAP financial measure for each period.
                     
                     
       
Three Months Ended
December 31,
  
Year Ended
December 31,
         
       
2016
  
2015
  
2016
  
2015
(millions)
                    
Net income including noncontrolling interest and predecessors
      
 $    74.6
  
 $            57.7
  
 $          229.7
  
 $          196.5
Add:
                    
   Depreciation and amortization
      
       24.0
  
               10.0
  
               56.6
  
               40.4
   Interest and related charges
      
         6.6
  
                 0.3
  
                 7.3
  
                 0.6
   Income tax expense
      
         5.1
  
                    -
  
                 6.3
  
                 2.1
EBITDA
      
 $ 110.3
  
 $            68.0
  
 $          299.9
  
 $          239.6
Distributions from equity method investees
      
         7.2
  
                 2.6
  
               25.1
  
                 2.6
Less:
                    
   Earnings from equity method investees
      
         8.0
  
                 6.6
  
               23.0
  
                 6.6
   EBITDA attributable to DCG Predecessor 1
      
           -
  
                    -
  
                    -
  
                 5.7
   EBITDA attributable to Questar Pipeline Predecessor 2
      
       26.8
  
                    -
  
               28.0
  
                    -
   EBITDA attributable to noncontrolling interest
      
       36.9
  
               40.4
  
             148.2
  
             154.3
Adjusted EBITDA
      
 $    45.8
  
 $            23.6
  
 $          125.8
  
 $            75.6
                     
1 Represents amounts for the period from January 31, 2015 through March 31, 2015.
                  
2 Represents amounts for the period from September 16, 2016 through November 30, 2016.
                
                     
* The notes contained in Dominion Midstream's most recent quarterly report on Form 10-Q or annual report on Form 10-K are an integral part of the Consolidated Financial Statements.
                     
 
 
 
Dominion Midstream Partners, LP
Schedule C - Summary of Consolidated Statements of Cash Flows*       
(Unaudited)
        
                 
   
 Three Months Ended
  
 Year Ended
   
 December 31,
  
 December 31,
   
2016
  
2015
  
2016
  
2015
(millions)
                
Cash flows from operating activities:
                
   Net income including noncontrolling interest and predecessors
  
 $         74.6
  
 $      57.7
  
 $       229.7
  
 $       196.5
   Adjustments to reconcile net income including noncontrolling interest and
                
      predecessors to net cash provided by operating activities
  
          (14.6)
  
          (9.8)
  
            58.9
  
            47.0
Net cash provided by operating activities
  
 $         60.0
  
 $      47.9
  
 $       288.6
  
 $       243.5
                 
Cash flows from investing activities:
                
Net cash used in investing activities
  
 $ (1,163.2)
  
 $  (432.3)
  
 $ (2,122.8)
  
 $  (1,282.7)
                 
Cash flows from financing activities:
                
Net cash provided by financing activities
  
 $   1,064.7
  
 $    312.4
  
 $   1,838.8
  
 $       898.8
                 
Cash and cash equivalents at  beginning of period
  
            78.1
  
       107.0
  
            35.0
  
          175.4
Cash and cash equivalents at end of period
  
 $         39.6
  
 $      35.0
  
 $         39.6
  
 $         35.0
                 
* The notes contained in Dominion Midstream's most recent quarterly report on Form 10-Q or annual report  on Form 10-K are an integral part of the Consolidated Financial Statements.
                 
 
 
 
Dominion Midstream Partners, LP
Schedule D - Reconciliation of Distributable Cash Flow to Net Cash from Operating Activities*  
(Unaudited)
        
                 
The following table presents a reconciliation of distributable cash flow to the most directly comparable GAAP financial measure for each period.
                 
                  
                 
   
Three Months Ended
December 31,
  
Year Ended
December 31,
     
   
2016
  
2015
  
2016
  
2015
(millions)
                
Net cash provided by operating activities
  
 $            60.0
  
 $            47.9
  
 $          288.6
  
 $          243.5
Less:
                
   Cash attributable to noncontrolling interest
  
               17.9
  
               25.5
  
             150.5
  
             154.4
   Cash attributable to DCG Predecessor 1
  
                    -
  
                    -
  
                    -
  
               10.4
   Cash attributable to Questar Pipeline Predecessor 2
  
                 1.1
  
                    -
  
               19.7
  
                    -
Other changes in working capital and noncash adjustments
  
                 4.8
  
                 1.2
  
                 7.4
  
                (3.1)
Adjusted EBITDA
  
 $            45.8
 
 $            23.6
  
 $          125.8
  
 $            75.6
Adjustments to cash3:
                
   Less: Distributions to preferred unitholders
  
 $            (3.2)
  
 $                -
  
 $            (3.2)
  
 $                -
   Plus: Deferred revenue
  
                 3.0
  
                 4.0
  
                 5.0
  
                 8.0
   Less: Amortization of regulatory liability
  
               (0.7)
  
                (0.7)
  
               (2.8)
  
                (2.1)
   Less: Maintenance capital expenditures
  
               (5.2)
  
                (3.4)
  
             (16.0)
  
                (9.4)
   Plus: Acquisition costs funded by Dominion
  
                 1.2
  
                    -
  
                 1.6
  
                 0.7
   Less: Interest expense and AFUDC equity
  
               (3.3)
  
                (0.5)
  
               (4.8)
  
                (1.4)
   Plus: Non-cash director compensation
  
                 0.1
  
                 0.1
  
                 0.3
  
                 0.2
Distributable cash flow
  
 $            37.7
  
 $            23.1
  
 $          105.9
  
 $            71.6
                 
1 Represents amounts for the period from January 31, 2015 through March 31, 2015.
            
2 Represents amounts for the period from September 16, 2016 through November 30, 2016.
            
3 Beginning in the first quarter of 2016, distributable cash flow no longer reflects an adjustment for the timing difference between cash paid for property taxes and the amount recognized into expense. All prior periods presented have been recalculated to reflect a consistent approach.  Previously, distributable cash flow for the three and twelve months ended December 31, 2015 was $24.7 million and $75.7 million, respectively.
                           
* The notes contained in Dominion Midstream's most recent quarterly report on Form 10-Q or  annual report on Form 10-K are an integral part of the Consolidated Financial Statements.
                 
HOW WE EVALUATE OUR OPERATIONS
        
Subsequent to the Questar Pipeline Acquisition, we define distributable cash flow as Adjusted EBITDA less distributions to preferred unitholders, maintenance capital expenditures and interest expense and adjusted for known timing differences between cash and income.
 
 
 
Dominion Midstream Partners, LP
        Schedule E - Selected Financial Data*       
(Unaudited)
        
                 
                 
   
Three Months Ended
  
Year Ended
       
December 31,
    
December 31,
   
2016
  
2015
  
2016
  
2015
(millions)
                
                 
Adjusted EBITDA
  
 $            45.8
  
 $            23.6
  
 $             125.8
  
 $      75.6
Adjustments to cash1:
                
   Less: Distributions to preferred unitholders
  
(3.2)
  
                    -
  
(3.2)
  
             -
   Plus: Deferred revenue
  
                 3.0
  
                 4.0
  
                     5.0
  
           8.0
   Less: Amortization of regulatory liability
  
               (0.7)
  
                (0.7)
  
                   (2.8)
  
          (2.1)
   Less: Maintenance capital expenditures
  
               (5.2)
  
                (3.4)
  
                 (16.0)
  
          (9.4)
   Plus: Acquisition costs funded by Dominion
  
                 1.2
  
                    -
  
                     1.6
  
           0.7
   Less: Interest expense and AFUDC equity
  
               (3.3)
  
                (0.5)
  
                   (4.8)
  
          (1.4)
   Plus: Non-cash director compensation
  
                 0.1
  
                 0.1
  
                     0.3
  
           0.2
Distributable Cash Flow
  
 $            37.7
  
 $            23.1
  
 $             105.9
  
 $      71.6
                 
Distributions:
                
   Incentive distribution rights
  
 $              1.7
  
 $              0.2
  
 $                  3.9
  
 $        0.2
   Common unitholders
  
               17.5
  
                 9.8
  
                   53.8
  
         32.3
   Subordinated unitholder
  
                 8.3
  
                 6.8
  
                   30.9
  
         24.8
Total distributions
  
 $            27.5
  
 $            16.8
  
 $                88.6
  
 $      57.3
                 
Coverage Ratio
  
1.37x
  
1.38x
  
1.20x
  
1.25x
1 Beginning in the first quarter of 2016, distributable cash flow no longer reflects an adjustment for the timing difference between cash paid for property taxes and the amount recognized into expense. All prior periods presented have been recalculated to reflect a consistent approach.  Previously, distributable cash flow for the three and twelve months ended December 31, 2015 was $24.7 million and $75.7 million, respectively.
                           
* The notes contained in Dominion Midstream's most recent quarterly report on Form 10-Q or annual report on Form 10-K are an integral part of the Consolidated Financial Statements.
                 
                 
See schedules B and D for reconciliations of non-GAAP measures.
              

Dominion Energy Midstream Partners, LP Reports