Oiltanking Partners Delivers Record Financial Results for the Fourth Quarter and Full Year 2013 PR Newswire HOUSTON, Feb. 24, 2014 HOUSTON, Feb. 24, 2014 /PRNewswire/ --Oiltanking Partners, L.P. (NYSE: OILT) (the "Partnership") today reported fourth quarter 2013 net income of $34.5 million, or $0.69 per common unit, an increase of 127% over fourth quarter 2012 net income of $15.2 million, or $0.30 per unit. Net income for the full year of 2013 increased 87% to $117.1 million, or $2.45 per common unit, compared to net income for the full year of 2012 of $62.6 million, or $1.57 per unit. Adjusted EBITDA increased 113% to $42.2 million for the fourth quarter of 2013, compared to $19.8 million for the fourth quarter of 2012. Adjusted EBITDA for the year 2013 increased 80% to $145.3 million compared to $80.6 million for 2012. Adjusted EBITDA, which is a financial measure not presented in accordance with U.S. generally accepted accounting principles ("GAAP"), is defined and reconciled to net income in the financial tables below. "The fourth quarter capped a year of records and milestones for the Partnership," said Anne-Marie Ainsworth, President and Chief Executive Officer of the Partnership's general partner. "In addition to across-the-board record results for revenues, net income, Adjusted EBITDA and distributable cash flow, we successfully achieved key operational milestones last year by increasing our storage capacity by 23% and exceeding one million barrels of throughput per day." The Partnership's revenues increased by approximately $26.1 million, or 77%, to $60.2 million during the fourth quarter of 2013 compared to the same period in 2012, due to higher storage service fee revenues, throughput fee revenues and ancillary service fee revenues. Storage service fee revenue grew by $9.0 million due to new storage capacity of approximately 4.1 million barrels placed into service throughout 2013 and, to a lesser extent, higher contract rates. Throughput fee revenues grew by $15.3 million during the fourth quarter of 2013 due, in large part, to an increase in fees related to liquefied petroleum gas ("LPG") exports at our Houston terminal and, to a lesser extent, fees generated on pipelines placed into service in the first quarter of 2013. A significant proportion of the increase in throughput fees was attributable to amounts we received under a margin sharing arrangement with our customer; the margin sharing fees received were in addition to the volume-based throughput fees we earned under that arrangement. Operating expenses during the fourth quarter of 2013 were $12.1 million, increasing by $2.7 million compared to the same period in 2012, primarily due to higher costs associated with operations personnel, repairs and maintenance, power and fuel, property taxes and insurance. Selling, general and administrative expenses during the fourth quarter of 2013 were $5.8 million, increasing by $1.0 million compared to the same period in 2012, primarily due to an increase in the fixed fee charged to us under our services agreement with our general partner and its affiliate. On January 7, 2014, we announced an expanded terminal agreement with Enterprise Products Partners, L.P. to further increase exports of LPG at the Partnership's terminal on the Houston Ship Channel. Already one of the world's largest, the LPG export terminal is expected to have total loading capacity of more than 16 million barrels per month of low-ethane propane and/or butane if the expansion is completed as planned by year-end 2015. Under the expanded agreement with Enterprise, the Partnership will provide additional dock capacity to load LPG vessels and land for Enterprise to expand its export facility. The expanded agreement amends the agreement previously announced in March 2013, and has a 50-year term beginning on February 1, 2014. The Partnership will continue to earn volume-based throughput fees and participate in margin sharing on all customer vessels loaded at our Houston facility under the expanded agreement. "In 2014, we expect to deliver continued growth by executing on our previously announced capital projects and capitalizing on our substantial organic growth opportunities," commented Ms. Ainsworth. "As part of our ongoing Appelt expansion projects, we expect to add another 3.7 million barrels of storage in 2014 and 2015 to our nearly 22 million barrels of current capacity. In addition, we expect to complete the 24-inch pipeline to Crossroads Junction, providing our terminal customers access to the origination point of Shell Pipeline's Houston-to-Houma pipeline. Based on our current plans, we expect to spend between $230 million and $250 million on capital expenditures in 2014." During 2014, construction will continue on the 36-inch pipeline to Crossroads Junction, which is expected to be completed by the end of the first quarter of 2015. We anticipate commencing construction on 3.1 million barrels of storage capacity as part of our Appelt III expansion project during the third quarter of 2014, after all relevant permits have been obtained. We expect to place the additional tanks into service during the fourth quarter of 2015 and first quarter of 2016. When the Appelt II and III expansion projects have been completed, the Partnership's total storage capacity is projected to be nearly 29 million barrels. "We remain focused on expansion opportunities that will deliver continued growth in distributable cash flow per unit to our investors," added Ainsworth. "Our low leverage and robust distribution coverage give us substantial financial flexibility as we continue to evaluate more than $400 million in potential capital projects and acquisitions." On January 21, 2014, the Partnership declared an increase in its quarterly cash distribution to $0.47 per unit, or $1.88 per unit on an annualized basis, for all of its outstanding limited partner units. The fourth quarter distribution represents our ninth consecutive quarterly increase since going public in the third quarter of 2011, a 6% increase over the distribution of $0.445 per unit for the third quarter of 2013 and a 21% increase over the distribution of $0.39 per unit for the fourth quarter of 2012. The $20.7 million fourth quarter 2013 cash distribution was paid on February 14, 2014. Distributable cash flow for the fourth quarter of 2013 provided distribution coverage of 1.88 times the amount needed for the Partnership to fund the quarterly distribution to both the general and limited partners and incentive distribution rights. The Partnership will retain cash flow in excess of distributions paid to fund, in part, announced expansion projects. Distributable cash flow and distribution coverage ratio, which are non-GAAP financial measures, are defined and reconciled to net income in the financial tables below. Conference Call The Partnership will hold a conference call to discuss its fourth quarter 2013 financial results on February 25, 2014, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). To participate in the call, dial (480) 629-9722 and ask for the Oiltanking call 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 March 7, 2014 by calling (303) 590-3030 and using the pass code 4666713#. Oiltanking Partners, L.P. is a growth-oriented master limited partnership engaged in independent storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas. We are the logistics provider of choice to major integrated oil companies, distributors, marketers and chemical and petrochemical companies. Our core assets are strategically located along the Gulf Coast of the United States on the Houston Ship Channel and in Beaumont, Texas. 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 U.S. 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, distribution coverage ratio and the ratio of debt to Adjusted EBITDA, 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 the most directly comparable financial measures calculated and presented in accordance with GAAP. The Partnership believes investors benefit from having access to the same financial measures used by its management. These non-GAAP financial measures are commonly employed by management, financial analysts and investors to evaluate our performance from period to period and to compare our performance with the performance of our peers. The Partnership defines Adjusted EBITDA as net income before net interest expense, income tax expense, depreciation and amortization expense and other income, as further adjusted to exclude certain other items management deems appropriate, including gains and losses on disposals of fixed assets and property casualty indemnification. Adjusted EBITDA is a non-GAAP supplemental financial performance measure management and other third parties, such as industry analysts, investors, lenders and rating agencies, may use to assess: (i) the Partnership's financial performance as compared to the performance of its peers, without regard to historical cost basis or financing methods, and (ii) the viability of proposed projects and acquisitions and determine 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 affecting net income. Distributable cash flow is another non-GAAP financial measure used by the Partnership's management. The Partnership defines distributable cash flow as net income before (i) depreciation and amortization expense; (ii) gains or losses on disposal of fixed assets and property casualty indemnification; and (iii) other (income) expense; less maintenance capital expenditures. Maintenance capital expenditures are capital expenditures (as defined by GAAP) resulting from improvements to and major renewals of existing assets. Such expenditures serve to maintain existing operations but do not generate additional revenues. Management believes distributable cash flow is useful to investors because it removes non-cash items from net income and provides visibility regarding the Partnership's cash available for distribution to unitholders. The Partnership defines distribution coverage ratio for any given period as the ratio of distributable cash flow during such period to the total distribution payable to all unitholders, the general partner interest and incentive distribution rights. The Partnership defines the ratio of debt to Adjusted EBITDA for any given period as the ratio of total outstanding debt, including the current portion at the end of such period, to Adjusted EBITDA for the latest twelve month period. Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the ratio of debt to Adjusted EBITDA 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 presentation of these measures may not be comparable to similarly titled measures of other companies in the industry because the Partnership may define these measures differently than other companies. Please see the attached reconciliations of Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the ratio of debt to Adjusted EBITDA. Contact Information: Mark Buscovich Manager, FP&A and IR firstname.lastname@example.org (855) 866-6458 — Tables to Follow — OILTANKING PARTNERS, L.P. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit data) (Unaudited) Three Months Ended Year Ended December31, December31, 2013 2012 2013 2012 Revenues $ 60,154 $ 34,061 $ 210,950 $ 135,497 Costs and expenses: Operating 12,127 9,386 43,910 36,025 Selling, general and administrative 5,792 4,841 21,765 18,856 Depreciation and amortization 5,600 3,828 20,407 15,901 (Gain) loss on disposal of fixed (176) — (329) 13 assets Gain on property casualty (303) — (303) — indemnification Total costs and expenses 23,040 18,055 85,450 70,795 Operating income 37,114 16,006 125,500 64,702 Other income (expense): Interest expense (2,246) (560) (7,393) (1,654) Interest income 26 2 30 33 Other income 1 66 13 140 Total other expense, net (2,219) (492) (7,350) (1,481) Income before income tax expense 34,895 15,514 118,150 63,221 Income tax expense (383) (336) (1,087) (576) Net income $ 34,512 $ 15,178 $ 117,063 $ 62,645 Allocation of net income to partners: Net income allocated to general $ 7,623 $ 237 $ 22,096 $ 1,489 partner Net income allocated to common $ 14,287 $ 5,807 $ 48,326 $ 30,578 unitholders Net income allocated to subordinated $ 12,602 $ 5,807 $ 46,641 $ 30,578 unitholders Earnings per limited partner unit: Common unit (basic and diluted) $ 0.69 $ 0.30 $ 2.45 $ 1.57 Subordinated unit (basic and diluted) $ 0.65 $ 0.30 $ 2.40 $ 1.57 Weighted average number of limited partner units outstanding: Common units (basic and diluted) 20,580 19,450 19,735 19,450 Subordinated units (basic and 19,450 19,450 19,450 19,450 diluted) OILTANKING PARTNERS, L.P. CONSOLIDATED BALANCE SHEETS (In thousands, except unit amounts) (Unaudited) December31, 2013 2012 Assets: Current assets: Cash and cash equivalents $ 17,332 $ 7,071 Receivables: Trade 18,013 12,160 Affiliates 127 615 Other 613 313 Notes receivable, affiliate 100,000 28,000 Prepaid expenses and other 1,502 1,290 Total current assets 137,587 49,449 Property, plant and equipment, net 585,826 418,289 Intangible assets 3,739 — Other assets, net 1,822 1,482 Total assets $ 728,974 $ 469,220 Liabilities and partners' capital: Current liabilities: Accounts payable and accrued expenses $ 38,104 $ 29,399 Current maturities of long-term debt, affiliate 2,500 2,500 Accounts payable, affiliates 4,264 2,049 Total current liabilities 44,868 33,948 Long-term debt, affiliate, less current maturities 188,300 146,800 Deferred revenue 2,159 2,544 Total liabilities 235,327 183,292 Commitments and contingencies Partners' capital: Common units (22,049,901 and 19,449,901 units issued and outstanding at December 31, 2013 and 2012, 418,435 248,176 respectively) Subordinated units (19,449,901 units issued and 50,611 36,354 outstanding at December 31, 2013 and 2012) General partner's interest 24,601 1,398 Total partners' capital 493,647 285,928 Total liabilities and partners' capital $ 728,974 $ 469,220 OILTANKING PARTNERS, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Year Ended December 31, 2013 2012 Cash flows from operating activities: Net income $ 117,063 $ 62,645 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,407 15,901 (Gain) loss on disposal of fixed assets (329) 13 Gain on property casualty indemnification (303) — Amortization of deferred financing costs 196 165 Changes in assets and liabilities: Trade and other receivables (5,850) (6,599) Federal income taxes due to parent — (1,210) Prepaid expenses and other assets (523) (57) Accounts receivable/payable, affiliates 2,703 1,682 Accounts payable and accrued expenses (248) 2,847 Deferred revenue 1,185 (133) Total adjustments from operating activities 17,238 12,609 Net cash provided by operating activities 134,301 75,254 Cash flows from investing activities: Issuance of notes receivable, affiliate (111,000) (52,000) Collections of notes receivable, affiliate 39,000 39,300 Payments for purchase of property, plant and equipment (180,672) (149,827) Proceeds from sale of property, plant and equipment 440 — Purchase of intangible assets (3,739) — Net cash used in investing activities (255,971) (162,527) Cash flows from financing activities: Borrowings under loan agreement, affiliate 50,000 125,000 Borrowings under credit agreement, affiliate 100,000 6,000 Payments under notes payable, affiliate (2,500) (2,500) Payments under credit agreement, affiliate (106,000) — Net proceeds from issuance of common units 154,317 — Debt issuance costs (225) (1,250) Contribution from general partner 3,271 — Distributions paid to partners (66,932) (56,742) Net cash provided by financing activities 131,931 70,508 Net increase (decrease) in cash and cash equivalents 10,261 (16,765) Cash and cash equivalents — Beginning of period 7,071 23,836 Cash and cash equivalents — End of period $ 17,332 $ 7,071 OILTANKING PARTNERS, L.P. SELECTED OPERATING DATA (Unaudited) Operating data: Three Months Ended Year Ended December31, December31, 2013 2012 2013 2012 Storage capacity, end of period 21.7 17.7 21.7 17.7 (mmbbls) (1) (3) Storage capacity, average (mmbbls) (3) 21.1 17.7 19.3 17.6 Terminal throughput (mbpd) (2) 1,143.8 823.0 1,064.3 822.2 Vessels per period 245 218 914 879 Barges per period 730 887 3,228 3,233 Trucks per period 9,361 3,326 30,910 11,307 Rail cars per period 156 1,390 4,914 7,979 (1) Represents million barrels ("mmbbls"). (2) Represents thousands of barrels per day ("mbpd"). (3) Amounts do not reflect approximately 0.2 million barrels of storage capacity placed into service in January 2014. Revenues by service category: (In thousands) Three Months Ended Year Ended December31, December31, 2013 2012 2013 2012 Storage service fees $ 32,824 $ 23,781 $ 120,245 $ 97,591 Throughput fees 23,599 8,328 79,663 29,096 Ancillary service fees 3,731 1,952 11,042 8,810 Total revenues $ 60,154 $ 34,061 $ 210,950 $ 135,497 OILTANKING PARTNERS, L.P. SELECTED FINANCIAL DATA Non-GAAP Reconciliations (In thousands) (Unaudited) Three Months Ended Year Ended December31, December31, 2013 2012 2013 2012 Reconciliation of Adjusted EBITDA andDistributable cash flow from net income: Net income $ 34,512 $ 15,178 $ 117,063 $ 62,645 Depreciation and amortization 5,600 3,828 20,407 15,901 Income tax expense 383 336 1,087 576 Interest expense, net 2,220 558 7,363 1,621 (Gain) loss on disposal of fixed (176) — (329) 13 assets Gain on property casualty (303) — (303) — indemnification Other income (1) (66) (13) (140) Adjusted EBITDA $ 42,235 $ 19,834 $ 145,275 $ 80,616 Interest expense, net (2,220) (558) (7,363) (1,621) Income tax expense (383) (336) (1,087) (576) Maintenance capital expenditures (1,216) (1,276) (3,111) (3,682) Distributable cash flow $ 38,416 $ 17,664 $ 133,714 $ 74,737 Cash distributions (1) $ 20,469 $ 15,492 $ 71,909 $ 58,560 Distribution coverage ratio 1.88x 1.14x 1.86x 1.28x Amounts represent cash distributions declared for our limited partner (1) units, general partner interest and incentive distribution rights, as applicable, for each respective period. Reconciliation of Debt to Adjusted EBITDA Ratio: Adjusted EBITDA for year ended December 31, 2013 $ 145,275 Total debt, including current portion at December 31, 2013 $ 190,800 Debt/Adjusted EBITDA Ratio 1.31x SOURCE Oiltanking Partners, L.P. Website: http://www.oiltankingpartners.com
Oiltanking Partners Delivers Record Financial Results for the Fourth Quarter and Full Year 2013
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