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SemGroup Corporation Reports Second Quarter 2013 Results



SemGroup Corporation Reports Second Quarter 2013 Results

      Second Quarter Adjusted EBITDA Increased 23% Over Previous Quarter

TULSA, Okla., Aug. 8, 2013 (GLOBE NEWSWIRE) -- SemGroup^® Corporation
(NYSE:SEMG) (SemGroup) today announced its financial results for the three
months ended June 30, 2013.

SemGroup's adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA) was $43.6 million for the second quarter 2013,
compared to $35.5 million for the first quarter 2013 and $30.3 million for the
second quarter 2012, an increase of 23% and an increase of 44%, respectively.
Adjusted EBITDA, which is a non-GAAP measure, is reconciled to net income
below.

"SemGroup's second quarter offered solid results, as we continue to execute on
our long-term strategic growth plans, focused on infrastructure demands in the
mid-continent," said Norm Szydlowski, president and chief executive officer of
SemGroup. "We have added meaningfully to our portfolio of announced organic
growth projects such as the expansion of White Cliffs Pipeline and
acquisitions including the one we recently closed to acquire gas gathering and
processing assets in the Mississippi Lime play. These investments will
increase our presence in our key growth areas and provide strong shareholder
value for years to come."

Second Quarter 2013 Adjusted EBITDA Highlights

Compared to the First Quarter 2013

  * SemGas increased by $3.8 million largely driven by a 29% increase in
    processing volumes in the Mississippi Lime play;
  * SemCAMS increased by $3.1 million primarily related to a $2.0 million
    increase in overhead revenue from the KA plant turnaround and
    approximately $1.0 million of higher capital fees from new well connects;
  * SemMaterials Mexico was higher by $3.1 million due to favorable margins
    and higher volumes; and
  * Crude Adjusted EBITDA declined by $1.3 million primarily related to a
    decrease in marketing margins from lower crude oil market conditions
    compared to strong first quarter 2013 results.

SemGroup reported revenues for second quarter 2013 of $324.2 million with net
income attributable to SemGroup of $3.6 million, or $0.08 per diluted share,
compared to revenues of $287.7 million with a net income attributable to
SemGroup of $43.4 million, or $1.03 per diluted share, for the first quarter
2013. For the second quarter 2012, revenues totaled $331.8 million with net
income of $5.1 million, or $0.12 per diluted share. Net income for the second
quarter 2013 was down from the prior quarter primarily due to the absence of a
$54 million income tax benefit realized in the first quarter 2013.

Dividend

The SemGroup board of directors declared a quarterly cash dividend to common
shareholders of $0.20 per share, resulting in an annualized distribution of
$0.80 per share. This represents a 5.3% increase from the initial quarterly
dividend of $0.19. The company is targeting a 10% increase in dividends paid
in 2013 and anticipates a double-digit annual dividend growth rate for the
next three years. The dividend will be paid on August 30, 2013 to all common
shareholders of record on August 19, 2013.

Recent Developments

  * August 1, 2013, closed acquisition of Mississippi Lime gas gathering and
    processing assets from Chesapeake Energy Corporation;
  * Rose Rock Midstream^® executed a definitive agreement on August 1, 2013,
    to acquire transportation assets from Barcas Field Services. The proposed
    acquisition includes 114 trucks with operations in eight states in key
    production areas and a long-term take-or-pay customer transportation
    agreement;
  * August 6, 2013, increased ownership of NGL Energy Partners GP interest
    from 6.4% to 11.8%.

2013 Guidance

SemGroup reaffirms 2013 consolidated Adjusted EBITDA guidance of $165 million
to $175 million, an increase of approximately 25% from the midpoint of
guidance over 2012 results of $135 million. The company is increasing its 2013
capital expenditures for 2013 from $400 million to $850 million which includes
capital related to the recently closed Mississippi Lime gas gathering and
processing assets and several other recent acquisitions.

Earnings Conference Call

SemGroup will host a joint conference call with Rose Rock Midstream, L.P.
(NYSE: RRMS) for investors tomorrow, August 9, 2013, at 11 a.m. EDT. The call
can be accessed live over the telephone by dialing 877.359.3652, or for
international callers, 720.545.0014. The pass code for the call is 10053658.
Interested parties may also listen to a simultaneous webcast of the conference
call by logging onto SemGroup's Investor Relations website at
ir.semgroupcorp.com. A replay of the webcast will also be available for a year
following the call at ir.semgroupcorp.com on the Calendar of Events-Past
Events page. The second quarter 2013 earnings slide deck will be posted under
Presentations.

About SemGroup

Based in Tulsa, OK, SemGroup^® Corporation (NYSE:SEMG) is a publicly traded
midstream service company providing the energy industry the means to move
products from the wellhead to the wholesale marketplace. SemGroup provides
diversified services for end-users and consumers of crude oil, natural gas,
natural gas liquids, refined products and asphalt. Services include
purchasing, selling, processing, transporting, terminalling and storing
energy.

SemGroup uses its Investor Relations website and social media outlets as
channels of distribution of material company information. Such information is
routinely posted and accessible on our Investor Relations website at
ir.semgroupcorp.com, our Twitter account and LinkedIn account.

SemGroup^®, Rose Rock Midstream^®, SemGas^®, SemMaterials Mèxico^MR,
SemStream^® and White Cliffs Pipeline^® are registered trademarks of SemGroup
Corporation.

Non-GAAP Financial Measures

Adjusted EBITDA is not a generally accepted accounting principles (GAAP)
measure and is not intended to be used in lieu of a GAAP presentation of net
income/loss. Adjusted EBITDA is presented in this Press Release because
SemGroup believes it provides additional information with respect to its
performance. Adjusted EBITDA represents earnings before interest, taxes,
depreciation and amortization, adjusted for selected items that SemGroup
believes impact the comparability of financial results between reporting
periods. Although SemGroup presents selected items that it considers in
evaluating its performance, you should also be aware that the items presented
do not represent all items that affect comparability between the periods
presented. Variations in SemGroup's operating results are also caused by
changes in volumes, prices, exchange rates, mechanical interruptions and
numerous other factors. These types of variances are not separately identified
in this Press Release. Because all companies do not use identical
calculations, SemGroup's presentation of Adjusted EBITDA may be different from
similarly titled measures of other companies, thereby diminishing its utility.
Reconciliations of net income (loss) to Adjusted EBITDA for the periods
presented are included in the tables at the end of this Press Release.

Non-GAPP Financial Data Reconciliations are available on SemGroup's website.

Forward-Looking Statements

Certain matters contained in this Press Release include "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. We make these forward-looking statements in reliance on the safe
harbor protections provided under the Private Securities Litigation Reform Act
of 1995.

All statements, other than statements of historical fact, included in this
Press Release including the prospects of our industry, our anticipated
financial performance, our anticipated annual dividend growth rate, NGL Energy
Partners LP (NYSE:NGL) anticipated financial performance, management's plans
and objectives for future operations, business prospects, outcome of
regulatory proceedings, market conditions and other matters, may constitute
forward-looking statements. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, we cannot assure
you that these expectations will prove to be correct. These forward-looking
statements are subject to certain known and unknown risks and uncertainties,
as well as assumptions that could cause actual results to differ materially
from those reflected in these forward-looking statements. Factors that might
cause actual results to differ include, but are not limited to, our ability to
comply with the covenants contained in and maintain certain financial ratios
required by our credit facilities; NGL's operations, which we do not control;
the ability of our subsidiary, Rose Rock Midstream L.P. (NYSE:RRMS), to make
minimum quarterly distributions; the possibility that our hedging activities
may result in losses or may have a negative impact on our financial results;
any sustained reduction in demand for the petroleum products we gather,
transport, process and store; our ability to obtain new sources of supply of
petroleum products; our failure to comply with new or existing environmental
laws or regulations or cross border laws or regulations; the possibility that
the construction or acquisition of new assets may not result in the
corresponding anticipated revenue increases; changes in currency exchange
rates; and the risks and uncertainties of doing business outside of the U.S.,
including political and economic instability and changes in local governmental
laws, regulations and policies, as well as other risk factors discussed from
time to time in each of our documents and reports filed with the SEC.

Readers are cautioned not to place undue reliance on any forward-looking
statements contained in this Press Release, which reflect management's
opinions only as of the date hereof. Except as required by law, we undertake
no obligation to revise or publicly release the results of any revision to any
forward-looking statements.

Condensed Consolidated Balance Sheets
(in thousands, unaudited)
                                                         
                                          June 30, 2013 December 31, 2012
ASSETS                                                   
Current assets                            $ 740,023     $ 520,003
Property, plant and equipment, net        833,591       814,724
Goodwill and other intangible assets      16,727        17,469
Equity method investments                 466,239       387,802
Other noncurrent assets, net              40,071        8,181
Total assets                              $ 2,096,651   $ 1,748,179
LIABILITIES AND OWNERS' EQUITY                           
Current liabilities:                                     
Current portion of long-term debt         $ 4,349       $ 24
Other current liabilities                 378,399       374,320
Total current liabilities                 382,748       374,344
Long-term debt, excluding current portion 466,549       206,062
Other noncurrent liabilities              145,249       146,245
Total liabilities                         994,546       726,651
Total owners' equity                      1,102,105     1,021,528
Total liabilities and owners' equity      $ 2,096,651   $ 1,748,179

 
 
 
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts, unaudited)
                                                                      
                             Three Months Ended            Six Months Ended
                             June 30,            March 31, June 30,
                             2013      2012      2013      2013      2012
Revenues                     $ 324,244 $ 331,777 $ 287,696 $ 611,940 $ 643,808
Expenses:                                                             
Costs of products sold,
exclusive of depreciation    212,709   219,936   212,369   425,078   461,457
and amortization shown below
Operating                    69,682    82,389    40,771    110,453   120,380
General and administrative   16,898    16,561    17,037    33,935    36,391
Depreciation and             12,814    11,882    12,636    25,450    23,607
amortization
(Gain) loss on disposal of   (376)     119       (162)     (538)     119
long-lived assets, net
Total expenses               311,727   330,887   282,651   594,378   641,954
Earnings from equity method  14,861    12,289    17,345    32,206    19,787
investments
Operating income             27,378    13,179    22,390    49,768    21,641
Other expenses, net          10,613    5,587     27,862    38,475    13,203
Income (loss) from
continuing operations before 16,765    7,592     (5,472)   11,293    8,438
income taxes
Income tax expense (benefit) 9,288     (92)      (54,006)  (44,718)  (1,104)
Income from continuing       7,477     7,684     48,534    56,011    9,542
operations
Income (loss) from
discontinued operations, net 35        (441)     32        67        (189)
of income taxes ^(1)
Net income                   7,512     7,243     48,566    56,078    9,353
Less: net income
attributable to              3,943     2,096     5,143     9,065     5,579
noncontrolling interests
Net income attributable to   $ 3,569   $ 5,147   $ 43,423  $ 47,013  $ 3,774
SemGroup Corporation
Net income attributable to   $ 3,569   $ 5,147   $ 43,423  $ 47,013  $ 3,774
SemGroup Corporation
Other comprehensive income   (5,354)   (9,897)   (5,058)   (10,412)  2,858
(loss), net of income taxes
Comprehensive income (loss)
attributable to SemGroup     $ (1,785) $ (4,750) $ 38,365  $ 36,601  $ 6,632
Corporation
Net income per common share:                                          
Basic                        $ 0.08    $ 0.12    $ 1.03    $ 1.12    $ 0.09
Diluted                      $ 0.08    $ 0.12    $ 1.03    $ 1.11    $ 0.09
Weighted average shares                                               
(thousands):
Basic                        42,211    41,934    42,070    42,145    41,920
Diluted                      42,526    42,133    42,346    42,424    42,096

 
(1) SemStream Arizona was sold on December 31, 2012. Prior periods have been
recast to reflect its results as discontinued operations.

 
 
 
Reconciliation of net income to Adjusted EBITDA:
(in thousands, unaudited)
                                                                       
                                 Three Months Ended          Six Months Ended
                                 June 30,          March 31, June 30,
                                 2013     2012     2013      2013     2012
Net income                       $ 7,512  $ 7,243  $ 48,566  $ 56,078 $ 9,353
Add: Interest expense            4,495    2,114    2,396     6,891    5,773
Add: Income tax (benefit)        9,288    (92)     (54,006)  (44,718) (1,104)
expense
Add: Depreciation and            12,814   11,882   12,636    25,450   23,607
amortization expense
EBITDA                           34,109   21,147   9,592     43,701   37,629
Selected Non-Cash Items and
Other Items Impacting            9,526    9,119    25,911    35,437   20,748
Comparability
Adjusted EBITDA                  $ 43,635 $ 30,266 $ 35,503  $ 79,138 $ 58,377

 
 
 
Selected Non-Cash Items and
Other Items Impacting Comparability
(in thousands, unaudited)
                                                                       
                                   Three Months Ended        Six Months Ended
                                   June 30,        March 31, June 30,
                                   2013    2012    2013      2013     2012
(Gain) loss on disposal of         $ (376) $ 119   $ (162)   $ (538)  $ 119
long-lived assets, net
(Income) loss from discontinued
operations, net of income taxes    (35)    441     (32)      (67)     189
^(1)
Foreign currency transaction       (349)   (35)    (167)     (516)    2
(gain) loss
Remove NGL equity earnings         (4,200) (3,828) (6,916)   (11,116) (4,755)
NGL cash distribution              4,426   1,812   4,272     8,698    2,972
Employee severance expense         9       (27)    —         9        354
Unrealized (gain) loss on          (827)   (24)    (468)     (1,295)  122
derivative activities
Change in fair value of warrants   6,398   3,552   25,796    32,194   7,539
Depreciation and amortization
included within equity earnings of 2,404   2,543   2,405     4,809    5,084
White Cliffs
Defense costs                      —       2,899   —         —        5,899
Non-cash equity compensation       2,076   1,667   1,183     3,259    3,223
Selected Non-Cash Items and Other  $ 9,526 $ 9,119 $ 25,911  $ 35,437 $ 20,748
Items Impacting Comparability

 
(1) SemStream Arizona was sold on December 31, 2012. Prior periods have been
recast to reflect its results as discontinued operations.

                                       

2013 Adjusted EBITDA Guidance                                           
(in millions, unaudited)                                Guidance^(1)
                                                        Low            High
Net income                                              $ 89.8         $ 93.3
Add: Interest expense                                   19.0           20.0
Add: Income tax benefit                                 (47.4)         (46.9)
Add: Depreciation and amortization                      55.0           60.0
EBITDA                                                  $ 116.4        $ 152.2
Selected Non-Cash Items and Other Items Impacting       48.6           48.6
Comparability
Adjusted EBITDA                                         $ 165.0        $ 175.0
                                                                        
                                                                        
Selected Non-Cash Items and Other Items Impacting                       
Comparability
Depreciation and amortization included within equity            $ 10.1  
earnings
Change in fair value of warrants                                32.2    
Non-cash equity compensation                                    6.3     
Selected Non-Cash Items and Other Items Impacting               $ 48.6  
Comparability
                                                                        

(1) Guidance is on a cash basis for equity investments in NGL, includes fully
consolidated Rose Rock Midstream and excludes recently closed and announced
acquisitions.

CONTACT: Investor Relations:
         Mary Catherine Ward
         918-524-8081
         investor.relations@semgroupcorp.com
        
         Media:
         Kiley Roberson
         918-524-8594
         kroberson@semgroupcorp.com

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