2012-11-05 23:03:24 -
SAN ANTONIO - November 5, 2012 - Tesoro Logistics LP (NYSE: TLLP) ("TLLP" or the
"Partnership") today reported third quarter 2012 net income of $17.3 million, or
$0.54 per diluted limited partner unit. This amount includes historical income
earned by the predecessor on assets TLLP acquired during the quarter. Excluding
such amounts, TLLP earned net income of $15.6 million.
Distributable cash flow, excluding predecessor results, for the third quarter
was $17.9 million. On October 18, 2012, the Partnership announced its quarterly
cash distribution of $17.0 million, or $0.455 per limited partnership unit, or
$1.82 on an annualized basis. This distribution represents an 11% increase over
the quarterly distribution of $0.410 per unit ($1.64 per unit on an annualized
basis) paid in August 2012. In the prior four quarters, TLLP has increased its
distribution to limited partners by 30%.
"During the quarter we drove growth across all phases of our strategy," said
Greg Goff, TLLP's Chairman and Chief Executive Officer. "We successfully
executed our second purchase of assets from Tesoro with the acquisition of the
Long Beach Assets, drove additional volumes in our Crude Oil Gathering segment,
and set throughput records with our existing terminal assets. We are on track
to deliver on our commitment to generate approximately $120 million of EBITDA
from these assets in 2013."
Third Quarter 2012 Highlights
Results of operations for the three months ended September 30, 2012 include the
historical results of the Long Beach marine terminal and Los Angeles short-haul
pipelines (collectively, the "Long Beach Assets") acquired from Tesoro Refining
and Marketing Company ("Tesoro") during the quarter. As a result, operating
income and volumes are not comparable on a period-to-period basis. To assist
the reader, we have provided additional information that is comparable on a
period-to-period basis focusing on the results of operations of TLLP assets
following their acquisition from Tesoro and excluding predecessor results of
operations. A reconciliation of the TLLP results to the full third quarter
results can be found in the attached tables.
Revenues for the third quarter totaled $44.0 million. Excluding predecessor
results, revenues for the third quarter totaled $40.8 million, which was up $7.7
million from the prior quarter. The sequential improvement was primarily
attributable to higher volumes across all segments of the business and the
annual escalation in contracted fees that took effect on July 1, 2012. Volume
increases in both the pipeline and trucking operations are consistent with the
High Plains capital expansion plans, driving a sequential revenue increase of
$4.8 million in the Crude Oil Gathering segment. Revenues in the Terminalling,
Transportation and Storage segment increased $2.9 million from the prior
quarter, driven by the addition of the Long Beach Assets and increased
throughputs at existing terminals. The Los Angeles terminal achieved record
volumes during the quarter as a result of additional asset optimization and
higher permitted ethanol throughput. As a result of the success achieved at the
Los Angeles terminal thus far, the capital project to further expand the
terminal has been eliminated from our capital spending plans.
Total costs and expenses for the third quarter were $24.9 million. Excluding
predecessor results, total costs and expenses for the third quarter totaled
$23.5 million, which were up $4.4 million from the prior quarter. Costs for the
quarter include $0.6 million related to the acquisition of the Long Beach
Assets. The resulting EBITDA for the third quarter was $20.3 million, excluding
predecessor results, in-line with prior guidance.
On September 14, 2012, Tesoro Logistics purchased the Long Beach Assets owned by
Tesoro for a purchase price of $210 million, including cash of $189 million and
Tesoro Logistics equity valued at approximately $21 million. Concurrent with the
transaction, TLLP issued $350 million 5.875% Senior Notes due 2020, TLLP's first
ever senior debt issuance. Proceeds from the offering were used to fund the Long
Beach Assets acquisition and to repay all of the outstanding indebtedness under
TLLP's revolving credit facility. Additionally, Tesoro and the Partnership
entered into a 10-year access, use and throughput agreement and a 10-year
transportation services agreement, both with minimum throughput commitments.
The Long Beach Assets added $1.2 million of segment EBITDA following their
acquisition on September 14, 2012.
On October 5, 2012, TLLP closed a public offering of 4,255,000 common units at
an offering price of $41.80 per unit, which included a 555,000 unit over-
allotment option that was exercised by the underwriters. Net proceeds to TLLP
from the sale of the units were approximately $171 million.
On October 31, 2012, Tesoro reaffirmed its intention to offer the Anacortes,
Washington unit train unloading facility to TLLP. The unloading facility, which
became operational in September of this year, should generate an expected annual
logistics EBITDA in the $15 to $20 million range. Closing is expected to occur
in the fourth quarter 2012 and include corresponding throughput and minimum
volume commitment agreements.
Public Invited to Listen to Analyst Conference Call
At 7:30 a.m. CST on November 6, 2012, TLLP will broadcast, live, its conference
call with analysts regarding third quarter 2012 results and other business
matters. Interested parties may listen to the live conference call over the
Internet by logging on to
www.tesorologistics.com.
About Tesoro Logistics LP
Tesoro Logistics LP, headquartered in San Antonio, Texas, is a fee-based,
growth-oriented Delaware limited partnership formed by Tesoro Corporation to
own, operate, develop and acquire crude oil and refined products logistics
assets.
This earnings release contains certain statements that are "forward-looking"
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, concerning expected growth
projects and our expectations about 2013 EBITDA and the anticipated incremental
EBITDA from the Long Beach marine terminal and Los Angeles short-haul pipelines
and anticipated timing and incremental EBITDA from the Anacortes unit train
unloading facility acquisition. For more information concerning factors that
could affect these statements see our annual report on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K filed with the Securities
and Exchange Commission. We undertake no obligation to publicly release the
result of any revisions to any such forward-looking statements that may be made
to reflect events or circumstances that occur, or which we become aware of,
after the date hereof.
Contact:
Investors:
Louie Rubiola, Director, Investor Relations, (210) 626-4355
Media:
Tesoro Media Relations,
media@tsocorp.com, (210) 626-7702
Results of Operations (Unaudited)
Factors Affecting Comparability
The following tables present net income, distributable cash flow, earnings
before interest, income taxes, depreciation and amortization expenses ("EBITDA")
and related operational information for the three and nine months ended
September 30, 2012 and 2011. The information presented contains the unaudited
condensed combined financial results of Tesoro Logistics LP Predecessor (the
"TLLP Predecessor"), our predecessor for accounting purposes, for periods
presented through April 25, 2011. The TLLP Predecessor includes the financial
results of the initial assets acquired from Tesoro during the initial public
offering. The unaudited condensed combined consolidated financial results for
the three and nine months ended September 30, 2012 and 2011 also include the
results of operations for Tesoro Logistics LP ("TLLP" or the
"Partnership") for
the period beginning April 26, 2011, the date TLLP commenced operations.
The financial information contained herein of the TLLP Predecessor and TLLP have
been retrospectively adjusted to include the historical results of the Martinez
crude oil marine terminal assets (the "Martinez Crude Oil Marine Terminal")
prior to the acquisition through April 1, 2012 and the Long Beach marine
terminal assets and related short-haul pipelines, including the Los Angeles
("LA") short-haul pipelines, (collectively, the "Long Beach Assets")
prior to
the acquisition through September 14, 2012, the dates of the respective
acquisitions. We refer to the historical results of the TLLP Predecessor, the
Martinez Crude Oil Marine Terminal and the Long Beach Assets prior to the
acquisition dates collectively as our "Predecessor(s)." The results of the
Martinez Crude Oil Marine Terminal and the Long Beach Assets are included in the
Terminalling, Transportation and Storage segment.
Our Predecessors generally recognized only the costs and did not record revenue
associated with the trucking, terminalling, storage and short-haul pipeline
transportation services provided to affiliates on an intercompany basis.
Accordingly, the revenues in our Predecessors' historical combined financial
statements relate only to amounts received from third parties for these services
and amounts received from affiliates with respect to transportation regulated by
the Federal Energy Regulatory Commission and the North Dakota Public Service
Commission on our High Plains system. Affiliate revenues have been recorded for
all of our assets in the Crude Oil Gathering segment and the Terminalling,
Transportation and Storage segment subsequent to the commencement of the new
commercial agreements with Tesoro upon completion of the initial public offering
(the "Initial Offering") on April 26, 2011, the acquisition of the Martinez
Crude Oil Marine Terminal on April 1, 2012 and the acquisition of the Long Beach
Assets on September 14, 2012. As a result, the information included in the
following tables is not comparable on a year-over-year basis.
TESORO LOGISTICS LP
RESULTS OF OPERATIONS
(Unaudited)
(In thousands, except units and per unit amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- ----------------------------
2012 2011 2012 2011
-------------- -------------- -------------- -------------
REVENUES (a)
Crude Oil Gathering $ 20,847 $ 13,789 $ 51,022 $ 30,047
Terminalling,
Transportation and
Storage 23,106 14,833 58,079 27,833
-------------- -------------- -------------- -------------
Total Revenues 43,953 28,622 109,101 57,880
-------------- -------------- -------------- -------------
COSTS AND EXPENSES
Operating and
maintenance expenses 17,405 10,731 44,500 33,143
Depreciation and
amortization
expenses 3,202 2,811 8,892 8,449
General and
administrative
expenses (a) 4,235 2,192 11,542 5,998
Loss on asset
disposals 21 - 257 26
-------------- -------------- -------------- -------------
Total Costs and
Expenses 24,863 15,734 65,191 47,616
-------------- -------------- -------------- -------------
OPERATING INCOME 19,090 12,888 43,910 10,264
Interest and
financing costs, net (1,810 ) (601 ) (3,360 ) (1,062 )
-------------- -------------- -------------- -------------
NET INCOME 17,280 12,287 40,550 9,202
Less: Income (loss)
attributable to
Predecessors 1,702 (2,840 ) 331 (13,820 )
-------------- -------------- -------------- -------------
Net income
attributable to
partners 15,578 15,127 40,219 23,022
Less: General
partner's interest
in net income,
including incentive
distribution rights 842 303 1,436 460
-------------- -------------- -------------- -------------
Limited partners'
interest in net
income $ 14,736 $ 14,824 $ 38,783 $ 22,562
-------------- -------------- -------------- -------------
Net income per
limited partner
unit:
Common - basic $ 0.55 $ 0.49 $ 1.34 $ 0.74
Common - diluted $ 0.54 $ 0.49 $ 1.33 $ 0.74
Subordinated - basic
and diluted $ 0.41 $ 0.49 $ 1.19 $ 0.74
Weighted average
limited partner
units outstanding:
Common units - basic 15,553,113 15,254,890 15,424,700 15,254,890
Common units -
diluted 15,663,537 15,277,526 15,513,252 15,286,170
Subordinated units -
basic and diluted 15,254,890 15,254,890 15,254,890 15,254,890
Cash distributions
per unit (b) $ 0.4550 $ 0.3500 $ 1.2425 $ 0.5948
TESORO LOGISTICS LP
RESULTS OF OPERATIONS
RECONCILIATION OF PARTNERSHIP AND PREDECESSOR (c)
(Unaudited)
(In thousands)
Three Months
Long Beach Ended
Tesoro Assets September
Logistics LP (Predecessor) 30, 2012
----------------- ----------------- ---------------
REVENUES (a)
Crude Oil Gathering $ 20,847 $ - $ 20,847
Terminalling, Transportation
and Storage 19,998 3,108 23,106
----------------- ----------------- ---------------
Total Revenues 40,845 3,108 43,953
----------------- ----------------- ---------------
COSTS AND EXPENSES
Operating and maintenance
expenses 16,383 1,022 17,405
Depreciation and amortization
expenses 2,908 294 3,202
General and administrative
expenses (a) 4,153 82 4,235
Loss on asset disposals 13 8 21
----------------- ----------------- ---------------
Total Costs and Expenses 23,457 1,406 24,863
----------------- ----------------- ---------------
OPERATING INCOME 17,388 1,702 19,090
Interest and financing costs,
net (1,810 ) - (1,810 )
----------------- ----------------- ---------------
NET INCOME 15,578 1,702 17,280
Less: Income attributable to
Predecessors - 1,702 1,702
----------------- ----------------- ---------------
Net income attributable to
partners $ 15,578 $ - $ 15,578
----------------- ----------------- ---------------
TESORO LOGISTICS LP
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
(Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ------------------------
2012 2011 2012 2011
-------------- ------------ ------------ -----------
Reconciliation of EBITDA and
Distributable Cash Flow to
Net Income:
Net income $ 17,280 $ 12,287 $ 40,550 $ 9,202
Add: Depreciation and
amortization expenses 3,202 2,811 8,892 8,449
Add: Interest and financing
costs, net 1,810 601 3,360 1,062
------------ ------------ ------------ -----------
EBITDA (c) $ 22,292 $ 15,699 $ 52,802 $ 18,713
------------ ------------ ------------ -----------
Less: Interest and financing
costs, net 1,810 601 3,360 1,062
Less: Maintenance capital
expenditures (d) 4,171 4,582 6,925 5,419
Add: Change in deferred
revenue related to shortfall
payments (88 ) - 179 -
Add: Reimbursement for
maintenance capital
expenditures (d) 2,396 8 2,928 8
Add: Non-cash unit-based
compensation expense 151 178 863 301
Add: Other reimbursements 703 - 703 -
------------ ------------ ------------ -----------
Distributable Cash Flow (c) $ 19,473 $ 10,702 $ 47,190 $ 12,541
------------ ------------ ------------ -----------
Reconciliation of EBITDA to Net Cash from Operating
Activities:
Net cash from operating
activities $ 22,225 $ 13,860 $ 54,086 $ 14,244
Less: Changes in assets and
liabilities 1,291 (1,571 ) 2,860 (4,000 )
Less: Amortization of debt
issuance costs 280 155 664 266
Less: Unit-based
compensation expense 151 178 863 301
Less: Loss on asset
disposals 21 - 257 26
Add: Interest and financing
costs, net 1,810 601 3,360 1,062
------------ ------------ ------------ -----------
EBITDA (c) $ 22,292 $ 15,699 $ 52,802 $ 18,713
------------ ------------ ------------ -----------
TESORO LOGISTICS LP
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
RECONCILIATION OF PARTNERSHIP AND PREDECESSORS (c)
(Unaudited)
(In thousands)
Three Months
Long Beach Ended
Tesoro Assets September
Logistics LP (Predecessor) 30, 2012
----------------- --------------- ---------------
Reconciliation of EBITDA and
Distributable Cash Flow to Net
Income:
Net income $ 15,578 $ 1,702 $ 17,280
Add: Depreciation and
amortization expenses 2,908 294 3,202
Add: Interest and financing
costs, net 1,810 - 1,810
----------------- --------------- ---------------
EBITDA (c) $ 20,296 $ 1,996 $ 22,292
----------------- --------------- ---------------
Less: Interest and financing
costs, net 1,810 - 1,810
Less: Maintenance capital
expenditures (d) 3,793 378 4,171
Add: Change in deferred revenue
related to shortfall payments (88 ) - (88 )
Add: Reimbursement for
maintenance capital
expenditures (d) 2,396 - 2,396
Add: Non-cash unit-based
compensation expense 151 - 151
Add: Other reimbursements 703 - 703
----------------- --------------- ---------------
Distributable Cash Flow (c) $ 17,855 $ 1,618 $ 19,473
----------------- --------------- ---------------
Reconciliation of EBITDA to Net
Cash from Operating Activities:
Net cash from operating
activities $ 20,790 $ 1,435 $ 22,225
Less: Changes in assets and
liabilities 1,860 (569 ) 1,291
Less: Amortization of debt
issuance costs 280 - 280
Less: Unit-based compensation
expense 151 - 151
Less: Loss on asset disposals 13 8 21
Add: Interest and financing
costs, net 1,810 - 1,810
----------------- --------------- ---------------
EBITDA (c) $ 20,296 $ 1,996 $ 22,292
----------------- --------------- ---------------
TESORO LOGISTICS LP
SELECTED OPERATING SEGMENT DATA
(Unaudited)
(In thousands, except barrel and per barrel amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ------------------------
2012 2011 2012 2011
------------ ------------ ------------ -----------
OPERATING SEGMENTS
CRUDE OIL GATHERING
Pipeline:
Pipeline revenues (a) $ 9,193 $ 7,412 $ 23,822 $ 19,281
Pipeline throughput (barrels
per day ("bpd")) (e) 69,147 59,530 62,973
57,171
Average pipeline revenue per
barrel (f) $ 1.45 $ 1.35 $ 1.38 $ 1.24
Trucking:
Trucking revenues (a) $ 11,654 $ 6,377 $ 27,200 $ 10,766
Trucking volume (bpd) 42,821 23,879 34,543 23,066
Average trucking revenue per
barrel (f) $ 2.96 $ 2.90 $ 2.87 $ 1.71
------------ ------------ ------------ -----------
Total Revenues $ 20,847 $ 13,789 $ 51,022 $ 30,047
------------ ------------ ------------ -----------
Costs and Expenses:
Operating and maintenance
expenses $ 12,029 $ 5,998 $ 27,711 $ 15,874
Depreciation and
amortization expenses 916 785 2,482 2,355
General and administrative
expenses (a) 1,046 386 2,364 821
Gain on asset disposals - - - (10 )
------------ ------------ ------------ -----------
Total Costs and Expenses 13,991 7,169 32,557 19,040
------------ ------------ ------------ -----------
CRUDE OIL GATHERING SEGMENT
OPERATING INCOME $ 6,856 $ 6,620 $ 18,465 $ 11,007
------------ ------------ ------------ -----------
TERMINALLING, TRANSPORTATION AND STORAGE
Terminalling:
Terminalling revenues (a) $ 19,887 $ 11,776 $ 48,804 $ 22,467
Terminalling throughput
(bpd) 373,709 328,960 329,514 309,530
Average terminalling revenue
per barrel (f) $ 0.58 $ 0.39 $ 0.54 $ 0.27
Short-haul pipeline
transportation:
Short-haul pipeline
transportation revenues (a) $ 1,838 $ 1,718 $ 5,216 $ 3,076
Short-haul pipeline
transportation throughput
(bpd) 90,286 93,052 92,124 90,371
Average short-haul pipeline
transportation revenue per
barrel (f) $ 0.22 $ 0.20 $ 0.21 $ 0.12
Storage:
Storage revenues (a) $ 1,381 $ 1,339 $ 4,059 $ 2,290
Storage capacity reserved
(shell capacity barrels) 878,000 878,000 878,000 878,000
Storage revenue per barrel
on shell capacity (per
month) (f) $ 0.52 $ 0.51 $ 0.51 $ 0.50
------------ ------------ ------------ -----------
Total Revenues $ 23,106 $ 14,833 $ 58,079 $ 27,833
------------ ------------ ------------ -----------
Costs and Expenses:
Operating and maintenance
expenses $ 5,376 $ 4,733 $ 16,789 $ 17,269
Depreciation and
amortization expenses 2,286 2,026 6,410 6,094
General and administrative
expenses (a) 1,103 675 2,468 1,558
Loss on asset disposals 21 - 257 36
------------ ------------ ------------ -----------
Total Costs and Expenses 8,786 7,434 25,924 24,957
------------ ------------ ------------ -----------
TERMINALLING, TRANSPORTATION
AND STORAGE SEGMENT
OPERATING INCOME $ 14,320 $ 7,399 $ 32,155 $ 2,876
------------ ------------ ------------ -----------
TESORO LOGISTICS LP
SELECTED OPERATING SEGMENT DATA
RECONCILIATION OF PARTNERSHIP AND PREDECESSOR (c)
(Unaudited)
(In thousands, except barrel and per barrel amounts)
Three Months
Long Beach Ended
Tesoro Assets September
Logistics LP (Predecessor) 30, 2012
----------------- --------------- ---------------
REVENUES (a)
Terminalling revenues $ 16,852 $ 3,035 $ 19,887
Short-haul pipeline
transportation revenues 1,765 73 1,838
Storage revenues 1,381 - 1,381
----------------- --------------- ---------------
Total Revenues 19,998 3,108 23,106
COSTS AND EXPENSES
Operating and maintenance
expenses 4,354 1,022 5,376
Depreciation and amortization
expenses 1,992 294 2,286
General and administrative
expenses (a) 1,021 82 1,103
Loss on asset disposals 13 8 21
----------------- --------------- ---------------
Total Costs and Expenses 7,380 1,406 8,786
----------------- --------------- ---------------
TERMINALLING, TRANSPORTATION
AND
STORAGE SEGMENT OPERATING
INCOME $ 12,618 $ 1,702 $ 14,320
----------------- --------------- ---------------
VOLUMES (bpd)
Terminalling throughput 260,090
Average terminalling revenue
per barrel (f) $ 0.70
Short-haul pipeline
transportation throughput 74,216
Average short-haul pipeline
transportation revenue per
barrel (f) $ 0.26
Storage capacity reserved
(shell capacity barrels) 878,000
Storage revenue per barrel on
shell capacity (per month) (f) $ 0.52
TESORO LOGISTICS LP
SELECTED FINANCIAL DATA
(Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -----------------------
2012 2011 2012 2011
------------ ----------- ------------ ----------
Capital Expenditures
Expansion $ 8,331 $ 2,183 $ 19,638 $ 3,531
Maintenance (d) 4,171 4,582 6,925 5,419
------------ ----------- ------------ ----------
Total Capital Expenditures $ 12,502 $ 6,765 $ 26,563 $ 8,950
------------ ----------- ------------ ----------
TESORO LOGISTICS LP
SELECTED FINANCIAL DATA
RECONCILIATION OF PARTNERSHIP AND PREDECESSOR (c)
(Unaudited)
(In thousands)
Three Months
Long Beach Ended
Tesoro Assets September
Logistics LP (Predecessor) 30, 2012
----------------- --------------- ---------------
Capital Expenditures
Expansion $ 8,331 $ - $ 8,331
Maintenance (d) 3,793 378 4,171
----------------- --------------- ---------------
Total Capital Expenditures $ 12,124 $ 378 $ 12,502
----------------- --------------- ---------------
TESORO LOGISTICS LP
SELECTED FINANCIAL DATA
(Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2012 2011 2012 2011
----------- ----------- ------------ ----------
General and Administrative
Expenses (a)
Crude Oil Gathering $ 1,046 $ 386 $ 2,364 $ 821
Terminalling, Transportation
and Storage 1,103 675 2,468 1,558
Unallocated 2,086 1,131 6,710 3,619
----------- ----------- ------------ ----------
Total General and
Administrative Expenses $ 4,235 $ 2,192 $ 11,542 $ 5,998
----------- ----------- ------------ ----------
TESORO LOGISTICS LP
BALANCE SHEET DATA
(Unaudited)
(In thousands)
September 30, December 31,
2012 2011
------------------ -----------------
Cash and cash equivalents $ 55,274 $ 18,326
Total Assets 291,290 233,809
Debt 350,000 50,000
Total Equity (Deficit) (78,481 ) 166,672
TESORO LOGISTICS LP
GROWTH PROJECTS
(Unaudited)
(In millions)
Total
Expected Projected
Project EBITDA
Capital (Annual)
Expenditures (c) (g) Expected Completion Date
-------------- ----------- -------------------------
OPERATING SEGMENTS
CRUDE OIL GATHERING
High Plains expansion $ 4.0 $ 5.0 substantially complete
Connolly gathering hub (h) 4.5 - substantially complete
Various growth plan
projects 57.0 21.5 2012-2013
-------------- -----------
CRUDE OIL GATHERING
SEGMENT GROWTH PROJECTS $ 65.5 $ 26.5
-------------- -----------
TERMINALLING, TRANSPORTATION AND STORAGE
(i)
Stockton terminal storage $ 10.0 $ 2.5 2013
New terminal expansion
projects 16.5 6.0 2012-2013
-------------- -----------
TERMINALLING,
TRANSPORTATION AND STORAGE
SEGMENT GROWTH PROJECTS $ 26.5 $ 8.5
-------------- -----------
TOTAL GROWTH PROJECTS $ 92.0 $ 35.0
-------------- -----------
TESORO LOGISTICS LP
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
LONG BEACH ASSETS, EXCLUDING PREDECESSOR
(Unaudited)
(In millions)
Three Months Ended
September 30, 2012
Reconciliation of EBITDA to Net Income:
Net income $ 1.1
Add: Depreciation and amortization expenses 0.1
Add: Interest and financing costs, net -
---------------------
EBITDA (c) $ 1.2
---------------------
TESORO LOGISTICS LP
RECONCILIATION OF FORECASTED EBITDA TO AMOUNTS UNDER U.S. GAAP
(Unaudited)
(In millions)
Tesoro
Logistics LP
Three Months
Ended
December
31, 2012
----------------
Reconciliation of Forecasted EBITDA to Forecasted Net Income:
Net income $ 21.4
Add: Depreciation and amortization expenses 2.7
Add: Interest and financing costs, net 5.1
----------------
Forecasted EBITDA (c) $ 29.2
----------------
Anacortes Rail
Unloading
Facility
Full Year 2013
---------------------
Reconciliation of Forecasted EBITDA to Forecasted Net
Income:
Net income $ 6.0
Add: Depreciation and amortization expenses 2.0
Add: Interest and financing costs, net 10.0
---------------------
Forecasted EBITDA (c) $ 18.0
---------------------
Full Year 2013
--------------------------------------------
Projected
EBITDA
Previously Long Beach
Reported Assets Total
----------------- --------------- ----------
Reconciliation of Forecasted EBITDA
to Forecasted Net Income:
Net income $ 79.0 $ 7.0 $ 86.0
Add: Depreciation and amortization
expenses 13.5 1.0 14.5
Add: Interest and financing costs,
net 7.5 14.0 21.5
----------------- --------------- ----------
Forecasted EBITDA (c) $ 100.0 $ 22.0 $ 122.0
----------------- --------------- ----------
_____________
(a) See discussion of the factors affecting comparability noted on page 3.
The Partnership's results of operations may not be comparable to the
Predecessors' historical results of operations for the reasons described below:
Revenues-- There are differences in the way our Predecessors recorded revenues
and the way the Partnership records revenues after completion of the Initial
Offering and subsequent acquisitions as discussed under factors affecting
comparability.
General and Administrative Expenses-- Our Predecessors' general and
administrative expenses included direct charges for the management and operation
of our logistics assets and certain expenses allocated by Tesoro for general
corporate services, such as treasury, accounting and legal services. These
expenses were charged, or allocated, to our Predecessors based on the nature of
the expenses. Tesoro continues to charge the Partnership a combination of
direct charges for the management and operation of our logistics assets and a
fixed annual fee for general corporate services, such as treasury, accounting
and legal services. We also incur additional incremental general and
administrative expenses as a result of being a separate publicly-traded
partnership.
(b) On October 17, 2012, we declared a quarterly cash distribution of
$0.455 per limited partner unit for the third quarter of 2012.
(c) We define EBITDA as net income before depreciation and amortization
expenses and net interest and financing costs. We define distributable cash flow
as EBITDA less net interest and financing costs and maintenance capital
expenditures, plus the change in deferred revenue related to shortfall payments,
reimbursement by Tesoro for certain maintenance capital expenditures and other
reimbursements by Tesoro and non-cash unit-based compensation expense. EBITDA
and distributable cash flow are not measures prescribed by U.S. GAAP ("non-
GAAP") but are supplemental financial measures that are used by management and
may be used by external users of our condensed combined consolidated financial
statements, such as industry analysts, investors, lenders and rating agencies,
to assess:
* our operating performance as compared to other publicly traded partnerships
in the midstream energy industry, without regard to historical cost basis or
financing methods;
* 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 EBITDA will provide useful information to
investors in assessing our financial condition and results of operations. The
U.S. GAAP measures most directly comparable to EBITDA are net income and net
cash from operating activities. EBITDA should not be considered as an
alternative to U.S. GAAP net income or net cash from operating activities.
EBITDA has important limitations as an analytical tool, because it excludes
some, but not all, items that affect net income and net cash from operating
activities.
We believe that the presentation of distributable cash flow will provide useful
information to investors as it is a widely accepted financial indicator used by
investors to compare partnership performance, as it provides investors an
enhanced perspective of the operating performance of our assets and the cash our
business is generating. The U.S. GAAP measure most directly comparable to
distributable cash flow is net income. The amounts included in the calculation
of distributable cash flow are derived from amounts separately presented in our
condensed combined consolidated financial statements, with the exception of
deferred revenue related to shortfall payments, maintenance capital
expenditures, reimbursement by Tesoro for certain maintenance capital
expenditures and other reimbursements by Tesoro.
We also include the results of our operations excluding results of our
Predecessors. We believe that the presentation of our results of operations
excluding results of our Predecessors will provide useful information to
investors in assessing our financial condition and results of operations. We
believe investors want to analyze operations of our business under our current
commercial agreements with Tesoro.
These non-GAAP financial metrics should not be considered in isolation or as a
substitute for analysis of our results as reported under U.S. GAAP. Our
definitions of these non-GAAP financial metrics may not be comparable to
similarly titled measures of other companies, because they may be defined
differently by other companies in our industry, thereby diminishing their
utility.
(d) Maintenance capital expenditures include expenditures required to maintain
equipment, reliability, tankage and pipeline integrity and safety, and to
address environmental regulations.
(e) Also includes barrels that were gathered and then delivered into our High
Plains Pipeline by truck.
(f) Management uses average revenue per barrel and storage revenue per barrel
on shell capacity to evaluate performance and compare profitability to other
companies in the industry. There are a variety of ways to calculate average
revenue per barrel; different companies may calculate it in different ways. We
calculate average revenue per barrel as revenue divided by the number of days in
the period divided by throughput (bpd). We calculate storage revenue per barrel
on shell capacity as revenue divided by number of months in the period divided
by shell capacity barrels. Investors and analysts use this financial measure to
help analyze and compare companies in the industry on the basis of operating
performance. This financial measure should not be considered as an alternative
to segment operating income, revenues and operating expenses or any other
measure of financial performance presented in accordance with U.S. GAAP.
(g) Projected EBITDA for growth projects approximates projected earnings but
excludes the impact of net interest expense, income tax and depreciation and
amortization, which are anticipated to be immaterial for these projects.
(h) The capital expenditures related to this project are reimbursed by our
Sponsor.
(i) The upgrade of the Los Angeles terminal to allow for offloading of
transmix has been removed from our capital spending plans in the Terminalling,
Transportation and Storage segment to reflect changes in current market
conditions. As such, the expected capital expenditures and projected EBITDA for
this project are no longer reflected in the growth projects table.
Tesoro Logistics LP Reports Third Quarter Results:
hugin.info/147417/R/1655204/534820.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Tesoro Logistics LP via Thomson Reuters ONE
[HUG#1655204]
