Oiltanking Partners, L.P. Reports Financial Results For The Second Quarter 2012

  Oiltanking Partners, L.P. Reports Financial Results For The Second Quarter
                                     2012

PR Newswire

HOUSTON, Aug. 8, 2012

HOUSTON, Aug. 8, 2012 /PRNewswire/ -- Oiltanking Partners, L.P. (NYSE: OILT)
(the "Partnership") today reported second quarter 2012 net income of $16.6
million, or $0.41 per unit on a basic and diluted basis, compared to second
quarter 2011 net income of $7.6 million.  Adjusted EBITDA for the second
quarter of 2012 was $21.1 million, an increase of 25% over $16.9 million for
the second quarter of 2011.  Adjusted EBITDA, which is a financial measure
that is not presented in accordance with U.S. generally accepted accounting
principles ("GAAP"), is defined and reconciled to net income below.

The Partnership's overall operating results for the second quarter of 2012
improved compared to the prior year period primarily due to higher storage and
throughput volumes generating increased service fees, and to higher ancillary
service fees and lower operating expenses.  Revenues increased approximately
$4.2 million, or 14.1%, to $33.8 million during the 2012 quarter, mainly due
to additional revenues from new storage capacity placed into service in
December 2011 and April 2012 and to an escalation in storage fees, resulting
in an increase in storage service fee revenue of $2.3 million, higher
throughput fee revenue of $1.5 million, largely attributable to higher
liquefied petroleum gas exports during the 2012 period, and an increase in
ancillary services fee revenue of $0.4 million.

Operating expenses during the second quarter of 2012 were $8.0 million, down
$0.2 million compared to the same period in 2011, primarily due to lower
property taxes and power and fuel costs, partially offset by higher repairs
and maintenance costs.  Selling, general and administrative expenses increased
by $0.1 million due to increased costs associated with being a publicly traded
company and increased personnel costs.  Interest expense declined
approximately $1.9 million to $0.4 million for the period as compared to the
second quarter of 2011 due to a lower level of outstanding borrowings.  Income
tax expense was reduced by approximately $2.9 million to $0.1 million due to
the conversion to a non-taxable entity in connection with the Partnership's
initial public offering. 

"We are pleased to report record results for the second quarter as the
Partnership benefitted from the positive impact of an additional 390,000
barrels of crude storage capacity that was placed into service in April as
well as increased throughput during the quarter," said Carlin Conner,
Chairman, President and Chief Executive Officer of the Partnership's general
partner.  "We are continuing to build on our strategic position as the largest
and most flexible crude storage distribution terminal serving the Houston and
Texas City markets.  The Partnership is a key link between the incremental as
well as existing crude oil flows coming to the Gulf Coast and the growing
demand for crude oil storage by Gulf Coast refineries, oil producers and oil
traders." 

"Our current crude storage expansion projects and crude pipeline project are
on budget and on schedule with an additional 1.1 million barrels of new
storage capacity and the pipelines expected to be placed into service by early
2013 and a further 3.2 million barrels of crude storage capacity expected to
be in service by year-end 2013.  We have secured long-term contracts for 100%
of this additional capacity and our confidence in future growth opportunities
continues to build as our existing customer base as well as new customers
continue to express strong interest in making future commitments," added
Conner.

On July 19, 2012, the Partnership declared an increase in its cash
distribution to $0.36 per unit, or $1.44 per unit on an annualized basis, for
all of its outstanding limited partner units.  The $14.3 million cash
distribution will be paid on August 14, 2012 to all unitholders of record as
of August 3, 2012.  Distributable cash flow for the second quarter of 2012
provided distribution coverage of 1.42 times the amount needed for the
Partnership to fund the quarterly distribution to both the general and limited
partners.  Distributable cash flow and distribution coverage ratio, which are
non-GAAP financial measures, are defined and reconciled to net income
below.     

Conference Call
The Partnership will hold a conference call to discuss its second quarter 2012
financial results on August 9, 2012 at 11:00 a.m. Eastern Time (10:00 a.m.
Central Time).  To participate in the call, dial (480) 629-9771 and ask for
the Oiltanking call ten minutes prior to the start time, or access it live
over the internet at www.oiltankingpartners.com on the "Investor Relations"
page of the Partnership's website.

A replay of the audio webcast will be available shortly after the call on the
Partnership's website.  A telephonic replay will be available through August
16, 2012 by calling (303) 590-3030 and using the pass code 4551927#.

Oiltanking Partners is a master limited partnership engaged in independent
storage and transportation of crude oil, refined petroleum products and
liquefied petroleum gas.  We provide our services to a variety of customers,
including major integrated oil companies, distributors, marketers and chemical
and petrochemical companies. Our assets are located along the Gulf Coast of
the United States.  For more information, visit www.oiltankingpartners.com.

Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking
statements reflect the Partnership's current expectations, opinions, views or
beliefs with respect to future events, based on what it believes are
reasonable assumptions. No assurance can be given, however, that these events
will occur.  Important factors that could cause actual results to differ from
forward-looking statements include, but are not limited to:  adverse economic
or market conditions, changes in demand for the products that we handle or for
our services, increased competition, changes in the availability and cost of
capital, operating hazards and the effects of existing and future government
regulations.  These and other significant risks and uncertainties are
described more fully in the Partnership's filings with the Securities and
Exchange Commission (the "SEC"), available at the SEC's website at
www.sec.gov.  The Partnership has no obligation and, except as required by
law, does not undertake any obligation, to update or revise these statements
or provide any other information relating to such statements.

Use of Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-GAAP
financial measures of Adjusted EBITDA, distributable cash flow and
distribution coverage ratio, which may be used periodically by management when
discussing our financial results with investors and analysts.  The
accompanying schedules of this news release provide reconciliations of these
non-GAAP financial measures to their most directly comparable financial
measures calculated and presented in accordance with GAAP.  Adjusted EBITDA,
distributable cash flow and distribution coverage ratio are presented because
management believes they provide additional information and metrics relative
to the performance of our business, such as the cash distributions we expect
to pay to our unitholders.  These metrics are commonly employed by financial
analysts and investors to evaluate the operating and financial performance of
the Partnership from period to period and to compare it with the performance
of other publicly traded partnerships within the industry.  You should not
consider Adjusted EBITDA, distributable cash flow and distribution coverage
ratio in isolation or as a substitute for analysis of the Partnership's
results as reported under GAAP.  Because Adjusted EBITDA, distributable cash
flow and distribution coverage ratio may be defined differently by other
companies in the Partnership's industry, the Partnership's presentation of
Adjusted EBITDA, distributable cash flow and distribution coverage ratio may
not be comparable to similarly titled measures of other companies, thereby
diminishing its utility.

The Partnership defines Adjusted EBITDA as net income (loss) before net
interest expense, income tax expense (benefit) and depreciation and
amortization expense, as further adjusted to exclude certain other non-cash
and non-recurring items, including gains and losses on disposals of fixed
assets and property casualty indemnification.  Adjusted EBITDA is not a
presentation made in accordance with GAAP.  Adjusted EBITDA is a non-GAAP
supplemental financial performance measure that management and external users
of the consolidated financial statements, such as industry analysts,
investors, lenders and rating agencies, may use to assess: (i) the
Partnership's financial performance as compared to other publicly traded
partnerships in the midstream energy industry, without regard to historical
cost basis or financing methods, and (ii) the viability of proposed projects
and acquisitions and determine overall rates of returns on investment in
various opportunities.  The GAAP measure most directly comparable to Adjusted
EBITDA is net income.  Adjusted EBITDA has important limitations as an
analytical tool because it excludes some but not all items that affect net
income.

Distributable cash flow, which is a financial measure included in the
schedules to this press release, is another non-GAAP financial measure used by
the Partnership's management.  The Partnership defines distributable cash flow
as the Partnership's net income (loss) before (i) depreciation and
amortization expense; (ii) gains or losses on disposal of fixed assets and
property casualty indemnification; (iii) other (income) expense; and (iv)
income tax expense; less maintenance capital expenditures.  The Partnership's
management believes that distributable cash flow is useful to investors
because it removes non-cash items from net income and provides a clearer
picture of the Partnership's cash available for distribution to its
unitholders. 

The Partnership defines distribution coverage ratio for any given period as
the ratio of distributable cash flow during such period to the total quarterly
distribution payable to all common and subordinated unitholders and the
general partner interest.

Adjusted EBITDA, distributable cash flow and distribution coverage ratio
should not be considered alternatives to net income, operating income, cash
flow from operations, or any other measure of financial performance presented
in accordance with GAAP.

The Partnership believes that investors benefit from having access to the same
financial measures used by its management. Further, the Partnership believes
that these measures are useful to investors because they are one of the bases
for comparing the Partnership's operating and financial performance with that
of other companies with similar operations, although the Partnership's
measures may not be directly comparable to similar measures used by other
companies. Please see the attached reconciliations of Adjusted EBITDA,
distributable cash flow and distribution coverage ratio, to net income.

Contacts:
Ken Owen, Chief Financial Officer
ir@oiltankingpartners.com
(855) 866-6458

Jack Lascar / jlascar@drg-l.com
Lisa Elliott / lelliott@drg-l.com
DRG&L / 713-529-6600

 

—  Tables to Follow  —

 

OILTANKING PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per unit data)

(Unaudited)
                                    Three Months Ended    Six Months Ended
                                    June 30,              June 30,
                                    2012       2011       2012       2011
Revenues                            $ 33,823   $ 29,654   $ 68,109   $ 59,609
Costs and expenses:
Operating                           8,019      8,211      17,646     16,635
Selling, general and administrative 4,703      4,559      9,191      9,351
Depreciation and amortization       4,068      4,077      8,034      7,952
Loss on disposal of fixed assets    —          —          13         544
Gain on property casualty           —          —          —          (247)
indemnification
Total costs and expenses            16,790     16,847     34,884     34,235
Operating income                    17,033     12,807     33,225     25,374
Other income (expense):
Interest expense                    (400)      (2,309)    (607)      (4,588)
Interest income                     9          9          29         24
Other income                        59         45         73         141
Total other expense, net            (332)      (2,255)    (505)      (4,423)
Income before income tax expense    16,701     10,552     32,720     20,951
Income tax expense                  (80)       (2,936)    (160)      (5,715)
Net income                          $ 16,621   $ 7,616    $ 32,560   $ 15,236
Allocation of net income to
partners:
Net income allocated to general     $ 489                 $ 876
partner
Net income allocated to common      $ 8,066               $ 15,842
unitholders
Net income allocated to             $ 8,066               $ 15,842
subordinated unitholders
Earnings per limited partner unit:
Common unit (basic and diluted)     $ 0.41                $ 0.81
Subordinated unit (basic and        $ 0.41                $ 0.81
diluted)
Weighted average number of limited
partner

   units outstanding:
Common units (basic and diluted)    19,450                19,450
Subordinated units (basic and       19,450                19,450
diluted)

 

OILTANKING PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit amounts)

(Unaudited)
                                                      June 30,    December 31,
                                                                  2011
                                                      2012
Assets:
Current assets:
Cash and cash equivalents                             $ 11,874    $  23,836
Receivables:
Trade                                                 8,225       5,613
Affiliates                                            3,665       3,751
Other                                                 43          261
Note receivable, affiliate                            1,500       15,300
Prepaid expenses and other                            2,135       1,352
Total current assets                                  27,442      50,113
Property, plant and equipment, net                    305,759     271,644
Other assets, net                                     966         278
Total assets                                          $ 334,167   $  322,035
Liabilities and partners' capital:
Current liabilities:
Accounts payable and accrued expenses                 $ 13,581    $  13,582
Current maturities of long-term debt, affiliate       2,500       2,500
Accounts payable, affiliates                          2,070       3,681
Federal income taxes due to parent                    1,210       1,210
Total current liabilities                             19,361      20,973
Long-term debt, affiliate, less current maturities    27,050      18,300
Deferred revenue                                      2,737       2,915
Total liabilities                                     49,148      42,188
Commitments and contingencies
Partners' capital:
    Common units (19,449,901 units issued and
outstanding at                                        247,736     245,314

       June 30, 2012 and December 31, 2011)
    Subordinated units (19,449,901 units issued and
outstanding at                                        35,914      33,492

       June 30, 2012 and December 31, 2011)
General partner's interests                           1,369       1,041
Total partners' capital                               285,019     279,847
Total liabilities and partners' capital               $ 334,167   $  322,035

 

 

OILTANKING PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
                                                          Six Months Ended
                                                          June 30,
                                                          2012       2011
Cash flows from operating activities:
Net income                                                $ 32,560   $ 15,236
Adjustments to reconcile net income to net cash provided
by operating

  activities:
Depreciation and amortization                             8,034      7,952
Deferred income tax benefit                               —          (108)
Postretirement net periodic benefit cost                  —          695
Unrealized loss on investment in mutual funds             —          (96)
Increase in cash surrender value of life insurance        —          (42)
policies
Loss on disposal of fixed assets                          13         544
Gain on property casualty indemnification                 —          (247)
Amortization of deferred financing costs                  70         —
Changes in assets and liabilities:
Trade and other receivables                               (2,394)    1,356
Refundable income taxes                                   —          4,387
Prepaid expenses and other assets                         (791)      (210)
Accounts receivable/payable, affiliates                   (1,347)    (4,733)
Accounts payable and accrued expenses                     (386)      (6,108)
Deferred compensation                                     —          453
Deferred revenue                                          207        284
Total adjustments from operating activities               3,406      4,127
Net cash provided by operating activities                 35,966     19,363
Cash flows from investing activities:
Issuance of notes receivable, affiliate                   (20,000)   (3,000)
Collections of notes receivable, affiliate                33,800     —
Payments for purchase of property, plant and equipment    (42,162)   (12,248)
Proceeds from sale of property, plant and equipment       —          14
Payment for disposal of assets                            —          (544)
Proceeds from property casualty indemnification           —          617
Investment in life insurance policies                     —          (1,378)
Proceeds from sale of mutual funds                        —          1,378
Net cash used in investing activities                     (28,362)   (15,161)
Cash flows from financing activities:
Borrowings under loan agreement                           10,000     —
Payments under notes payable, affiliate                   (1,250)    (6,300)
Payment of offering costs                                 —          (1,795)
Debt issuance costs                                       (750)      —
Distributions paid to partners                            (27,566)   (2,000)
Net cash used in financing activities                     (19,566)   (10,095)
Net decrease in cash and cash equivalents                 (11,962)   (5,893)
Cash and cash equivalents — Beginning of period           23,836     8,746
Cash and cash equivalents — End of period                 $ 11,874   $ 2,853

 

OILTANKING PARTNERS, L.P.

SELECTED OPERATING DATA

(Unaudited)
Operating data:
                                          Three Months Ended  Six Months Ended
                                          June 30,            June 30,
                                          2012       2011     2012      2011
Storage capacity, end of period (mmbbls)  17.7       16.8     17.7      16.8
(1)
Storage capacity, average (mmbbls)        17.6       16.8     17.6      16.8
Terminal throughput (mbpd) (2)            832.8      795.5    839.5     808.7
Vessels per period                        221        198      450       409
Barges per period                         780        645      1,553     1,291
Trucks per period (3)                     2,617      333      5,368     333
Rail cars per period (4)                  2,600      —        4,888     —

________________
(1) Represents million barrels ("mmbbls").
(2) Represents thousands of barrels per day ("mbpd").
(3) Beginning in June 2011, one of our customers began unloading product by
    truck.
(4) Beginning in November 2011, one of our customers began unloading product
    by rail car. 

Revenues by service category:
(In thousands)
                       Three Months Ended    Six Months Ended
                       June 30,              June 30,
                       2012       2011       2012       2011
Storage service fees   $ 24,953   $ 22,668   $ 49,247   $ 44,551
Throughput fees        7,215      5,706      14,096     12,299
Ancillary service fees 1,655      1,280      4,766      2,759
Total revenues         $ 33,823   $ 29,654   $ 68,109   $ 59,609

 

OILTANKING PARTNERS, L.P.

SELECTED FINANCIAL DATA

Non-GAAP Reconciliations

(In thousands)

(Unaudited)
                                    Three Months Ended    Six Months Ended
                                    June 30,              June 30,
                                    2012       2011       2012       2011
Reconciliation of Adjusted EBITDA
from

   net income:
Net income                          $ 16,621   $ 7,616    $ 32,560   $ 15,236
Depreciation and amortization       4,068      4,077      8,034      7,952
Income tax expense                  80         2,936      160        5,715
Interest expense, net               391        2,300      578        4,564
Loss on disposal of fixed assets    —          —          13         544
Gain on property casualty           —          —          —          (247)
indemnification
Other income                        (59)       (45)       (73)       (141)
Adjusted EBITDA                     $ 21,101   $ 16,884   $ 41,272   $ 33,623
Distributable cash flow:
Net income                          $ 16,621              $ 32,560
Depreciation and amortization       4,068                 8,034
Loss on disposal of fixed assets    —                     13
Other income                        (59)                  (73)
Maintenance capital expenditures    (397)                 (1,152)
Distributable cash flow             $ 20,233              $ 39,382
Cash distribution (1)               $ 14,290              $ 28,182
Distribution coverage ratio         1.42x                 1.40x

_____________
    Cash distribution represents the distribution of $0.36 per unit declared
(1) on July 19, 2012 attributable to the second quarter of 2012, to be paid on
    August 14, 2012.

SOURCE Oiltanking Partners, L.P.

Website: http://www.oiltankingpartners.com