Western Refining Logistics, LP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - May 1, 2017

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8-K - 8-K - Western Refining Logistics, LPform8-kxwnrlearningsreleas.htm


FOR IMMEDIATE RELEASE
Exhibit 99.1
 
 
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 FIRST QUARTER 2017 RESULTS
• Net income of $19.9 million; EBITDA of $36.1 million, up 27% versus Q1 2016
• Increased quarterly distribution to $0.4525 per unit; 13th consecutive increase since IPO
• Distributable cash flow of $28.1 million, up 25% compared to Q1 2016
EL PASO, Texas - May 2, 2017 - Western Refining Logistics, LP (NYSE: WNRL) today reported first quarter 2017 net income attributable to limited partners of $19.9 million, or $0.22 per common limited partner unit, which compares to $14.0 million and $0.28, respectively, in the first quarter 2016. First quarter 2017 EBITDA was $36.1 million and distributable cash flow was $28.1 million; this compares to $28.5 million and $22.5 million, respectively, for the first quarter 2016.
"WNRL delivered an increase in net income, EBITDA, distributable cash flow and its 13th consecutive quarter of distribution growth driven primarily by increases in Delaware Basin mainline movements and the recent acquisition of the St. Paul Park logistics assets," said Jeff Stevens, President and Chief Executive Officer of WNRL's general partner. "Our Wholesale fuel business had a good quarter due to strong margins. We also saw strong growth in our crude oil and asphalt trucking volumes in the Delaware."
On April 28, 2017, the board of directors declared a quarterly cash distribution for the first quarter 2017 of $0.4525 per unit, or $1.81 per unit, on an annualized basis. This distribution represents a 15% compound annual growth rate since WNRL's October 2013 initial public offering.
Stevens concluded, “Delaware Basin rig activity and crude oil production growth continues to be positive. We believe we are well-positioned to increase net income, EBITDA and distributions as crude oil production increases and we fully leverage our logistics assets.”
Conference Call Information
The Company issued a press release on April 5, 2017, announcing an earnings conference call on May 2, 2017, to discuss results for the first quarter ended March 31, 2017.  On April 17, 2017, Tesoro Logistics LP (“TLLP”), filed a Schedule 13D, indicating that management of TLLP had been authorized to consider, discuss and endeavor to negotiate a merger, consolidation or combination of assets held by and securities issued by WNRL.  Consequently, WNRL will not be hosting a conference call.
About Western Refining Logistics, LP
Western Refining Logistics, LP is principally a 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 logistics assets related to the terminalling, transportation and storage of crude oil and refined products. Headquartered in El Paso, Texas, Western Refining Logistics, LP's assets include approximately 705 miles of pipelines, approximately 12.4 million barrels of active storage capacity, distribution of wholesale petroleum products and crude oil and asphalt trucking.




More information about Western Refining Logistics, LP 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 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 available for distribution to our 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 reflect WNRL’s current expectation regarding future events, results or outcomes. The forward-looking statements contained herein include statements related to, among other things: the continued growth of Delaware Basin rig activity and crude oil production; WNRL’s ability to increase net income, EBITDA and distributions; increases in crude oil production; WNRL’s ability to fully leverage its logistics assets; and the consideration and discussion of a merger, consolidation or combination of assets held by and securities issued by WNRL with Tesoro Logistics LP. These statements are subject to the general risks inherent in WNRL’s business. These expectations may or may not be realized and some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, WNRL’s business and operations involve numerous risks and uncertainties, many of which are beyond its control, which could result in WNRL’s expectations not being realized, or otherwise materially affect WNRL’s 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 to which you are referred. The forward-looking statements are only as of the date made. Except as required by law, 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
 
March 31,
 
2017
 
2016
 
(Unaudited)
 
(In thousands, except per unit data)
Revenues:
 
 
 
Fee based:
 
 
 
Affiliate
$
65,477

 
$
51,928

Third-party
619

 
690

Sales based:
 
 
 
Affiliate
125,067

 
97,529

Third-party
413,529

 
317,892

Total revenues
604,692

 
468,039

Operating costs and expenses:
 
 
 
Cost of products sold:
 
 
 
Affiliate
122,699

 
95,149

Third-party
394,600

 
300,441

Operating and maintenance expenses
44,847

 
44,658

Selling, general and administrative expenses
6,743

 
5,364

Gain on disposal of assets, net
(291
)
 
(99
)
Depreciation and amortization
9,732

 
9,338

Total operating costs and expenses
578,330

 
454,851

Operating income
26,362

 
13,188

Other income (expense):
 

 
 

Interest and debt expense
(6,608
)
 
(7,052
)
Other income (expense), net
22

 
(118
)
Net income before income taxes
19,776

 
6,018

Benefit (provision) for income taxes
110

 
(261
)
Net income
19,886

 
5,757

Less net loss attributable to General Partner
—

 
(8,250
)
Net income attributable to limited partners
$
19,886

 
$
14,007

 
 
 
 
Net income per limited partner unit:
 
 
 
Common - basic
$
0.22

 
$
0.28

Common - diluted
0.22

 
0.28

Subordinated - basic and diluted
0.51

 
0.28

 
 
 
 
Weighted average limited partner units outstanding:
 
 
 
Common - basic
45,681

 
24,448

Common - diluted
45,688

 
24,454

Subordinated - basic and diluted
15,207

 
22,811






 
Three Months Ended
 
March 31,
 
2017
 
2016
 
(Unaudited)
 
(In thousands)
Cash Flow Data
 
 
 
Net cash provided by (used in):
 
 
 
Operating activities
$
43,346

 
$
19,013

Investing activities
(5,107
)
 
(8,237
)
Financing activities
(29,593
)
 
(26,728
)
Capital expenditures
5,470

 
8,356

Other Data
 
 
 
EBITDA (1)
$
36,116

 
$
28,464

Distributable cash flow (1)
28,075

 
22,528

Balance Sheet Data (at end of period)
 
 
 
Cash and cash equivalents
$
23,298

 
$
28,653

Property, plant and equipment, net
410,154

 
432,750

Total assets
579,478

 
596,048

Total liabilities
490,149

 
561,595

Division equity
—

 
108,138

Partners' capital
89,329

 
(73,685
)
Total liabilities, division equity and partners' capital
579,478

 
596,048

(1)
We define EBITDA as earnings before interest and debt expense, provision for income taxes and depreciation and amortization. We define Distributable Cash Flow as EBITDA plus the change in deferred revenues, less interest accruals, income taxes paid, maintenance capital expenditures and distributions declared on our TexNew Mex units. The GAAP performance measure most directly comparable to EBITDA is net income. The GAAP liquidity measure most directly comparable to EBITDA and distributable cash flow is net cash provided by operating activities. These non-GAAP financial measures should not be considered alternatives to GAAP net income or net cash provided by operating activities.
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 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 our affiliates or other companies in our industry, thereby limiting its usefulness as a comparative measure.
EBITDA and Distributable Cash Flow are used as supplemental financial measures by management and by external users of our financial statements, such as investors and commercial banks, to assess:
•
our operating performance and liquidity as compared to those of other companies in the midstream energy industry, without regard to financial methods, historical cost basis or capital structure;
•
the ability of our assets to generate sufficient cash 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.




Distributable Cash Flow is a standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is, in part, measured by its yield. Yield is based on the amount of cash distributions a partnership can pay to a unitholder. Although distributable cash flow is a liquidity measure, it is presented in this reconciliation to net income as supplemental information.
We believe that the presentation of these non-GAAP measures provides useful information to investors in assessing our financial condition and results of operations. These non-GAAP measures should not be considered as alternatives to net income or any other measure of financial performance presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income attributable to limited partners. These non-GAAP measures may vary from those of other companies. As a result, EBITDA and Distributable Cash Flow as presented herein may not be comparable to similarly titled measures of other companies.
The calculation of EBITDA and Distributable Cash Flow includes the results of operations for the St. Paul Park Logistics Assets subsequent to the St. Paul Park Logistics Transaction for the three months ended March 31, 2017. The results of operations for the St. Paul Park Logistics Assets are excluded from the EBITDA and Distributable Cash Flow calculations for the comparable periods in the prior year because a retrospective adjustment of these performance measures is not a representative measure of performance results.




The following tables reconcile net income attributable to limited partners and net cash provided by operating activities to EBITDA and Distributable Cash Flow for the three months ended March 31, 2017 and 2016, respectively.
 
Three Months Ended
 
March 31,
 
2017
 
2016
 
(Unaudited)
 
(In thousands)
Net income attributable to limited partners
$
19,886

 
$
14,007

Interest and debt expense
6,608

 
7,052

Provision (benefit) for income taxes
(110
)
 
261

Depreciation and amortization
9,732

 
7,144

EBITDA
36,116

 
28,464

 
 
 
 
Change in deferred revenues
364

 
2,232

Interest accruals
(6,132
)
 
(6,709
)
Income taxes paid
(89
)
 
(30
)
Maintenance capital expenditures
(2,184
)
 
(1,429
)
Distributable cash flow
$
28,075

 
$
22,528


 
Three Months Ended
 
March 31,
 
2017
 
2016
 
(In thousands)
Net cash provided by operating activities
$
43,346

 
$
19,013

Changes in operating assets and liabilities
(12,419
)
 
(3,150
)
Interest and debt expense
6,608

 
7,052

Unit-based compensation expense
(635
)
 
(524
)
Amortization of loan fees and original issue discount
(492
)
 
(342
)
Deferred income taxes
(488
)
 
—

Gain on disposal of assets, net
291

 
99

Provision (benefit) for income taxes
(110
)
 
261

Reserve for doubtful accounts
15

 
(1
)
EBITDA attributable to General Partner (1)
—

 
6,056

EBITDA
36,116

 
28,464

 
 
 
 
Change in deferred revenues
364

 
2,232

Interest accruals
(6,132
)
 
(6,709
)
Income taxes paid
(89
)
 
(30
)
Maintenance capital expenditures
(2,184
)
 
(1,429
)
Distributable cash flow
$
28,075

 
$
22,528





(1)
The calculation of EBITDA attributable to General Partner is as follows:
 
Three Months Ended
 
March 31,
 
2016
 
(In thousands)
Net loss attributable to General Partner
$
(8,250
)
Depreciation and amortization
2,194

EBITDA attributable to General Partner
$
(6,056
)





Logistics Segment
 
Three Months Ended
 
March 31,
 
2017
 
2016
 
(Unaudited)
 
(In thousands, except key operating statistics)
Statement of Operations Data:
 
 
 
Fee based revenues:
 
 
 
Affiliate
$
49,637

 
$
40,916

Third-party
619

 
690

Total revenues
50,256

 
41,606

Operating costs and expenses:
 

 
 

Operating and maintenance expenses
25,828

 
26,757

General and administrative expenses
807

 
781

Loss on disposal of assets, net
10

 
—

Depreciation and amortization
8,581

 
8,155

Total operating costs and expenses
35,226

 
35,693

Operating income
$
15,030

 
$
5,913

Key Operating Statistics:
 
 
 
Pipeline and gathering (bpd):
 
 
 
Mainline movements (1):
 
 
 
Permian/Delaware Basin system
53,136

 
49,486

Four Corners system
47,480

 
52,467

TexNew Mex system
4,402

 
12,544

Gathering (truck offloading):
 
 
 
Permian/Delaware Basin system
14,605

 
20,533

Four Corners system
6,617

 
12,761

Pipeline gathering and injection system:
 
 
 
Permian/Delaware Basin system
11,972

 
7,885

Four Corners system
24,068

 
24,437

TexNew Mex system
5,336

 
—

Tank storage capacity (bbls) (2)
959,087

 
828,202

Terminalling, transportation and storage:
 
 
 
Shipments into and out of storage (bpd) (includes asphalt)
584,476

 
388,258

Terminal storage capacity (bbls) (2)
11,376,734

 
7,385,543

(1)
Some barrels of crude oil in route to Western's Gallup refinery and Permian/Delaware Basin are transported on more than one of our mainlines. Mainline movements for the Four Corners and Delaware Basin systems include each barrel transported on each mainline.
(2)
Storage shell capacities represent weighted-average capacities for the periods indicated.
 





Wholesale Segment
 
Three Months Ended
 
March 31,
 
2017
 
2016
 
(Unaudited)
 
(In thousands, except key operating stats)
Statement of Operations Data:
 
 
 
Fee based revenues (1):
 
 
 
Affiliate
$
15,840

 
$
11,012

Sales based revenues (1):
 
 
 
Affiliate
125,067

 
97,529

Third-party
413,529

 
317,892

Total revenues
554,436

 
426,433

Operating costs and expenses:
 

 
 

Cost of products sold:
 
 
 
Affiliate
122,699

 
95,149

Third-party
394,600

 
300,441

Operating and maintenance expenses
19,019

 
17,901

Selling, general and administrative expenses
2,294

 
1,905

Gain on disposal of assets, net
(301
)
 
(99
)
Depreciation and amortization
1,151

 
1,183

Total operating costs and expenses
539,462

 
416,480

Operating income
$
14,974

 
$
9,953

Key Operating Statistics:
 
 
 
Fuel gallons sold (in thousands)
302,050

 
314,943

Fuel gallons sold to retail (included in fuel gallons sold above) (in thousands)
79,113

 
79,841

Fuel margin per gallon (2)
$
0.042

 
$
0.028

Lubricant gallons sold (in thousands)
1,321

 
2,201

Lubricant margin per gallon (3)
$
1.08

 
$
0.69

Asphalt trucking volume (bpd)
5,205

 
—

Crude oil trucking volume (bpd)
48,894

 
35,111

Average crude oil revenue per barrel
$
2.26

 
$
2.24

(1)
All wholesale fee based revenues are generated through fees charged to Western's refining segment for truck transportation and delivery of crude oil and asphalt. Affiliate and third-party sales based revenues result from sales of refined products to Western and third-party customers at a delivered price that includes charges for product transportation.
(2)
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 business 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.
(3)
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 the number of gallons sold. 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