Rose Rock Midstream, L.P. Reports First Quarter 2014 Results

Rose Rock Midstream, L.P. Reports First Quarter 2014 Results

      First Quarter Adjusted EBITDA Increased 32% Over Previous Quarter

TULSA, Okla., May 8, 2014 (GLOBE NEWSWIRE) -- Rose Rock Midstream^®, L.P.
(NYSE:RRMS) today announced its financial results for the three months ended
March 31, 2014.

Rose Rock Midstream reported first quarter 2014 Adjusted EBITDA of $27.8
million, compared to $21.0 million for the fourth quarter 2013 and $16.4
million for the first quarter 2013, an increase of approximately 32% and 70%,
respectively.

"Rose Rock posted an exceptional first quarter, largely reflecting growth from
our acquisitions during 2013," said Carlin Conner, chief executive officer of
Rose Rock Midstream's general partner. "I am very pleased with our progress
thus far and look forward to working with the team as we continue to focus on
organic growth projects and growth-oriented acquisitions."

Adjusted gross margin was $37.0 million for the first quarter 2014, up 4% from
the fourth quarter 2013 of $35.6 million and 66% above first quarter 2013
Adjusted gross margin of $22.3 million. Adjusted gross margin and Adjusted
EBITDA, which are non-GAAP measures, are reconciled to their most directly
comparable GAAP measures below.

First quarter 2014 net income totaled $16.2 million, compared to $7.5 million
for the fourth quarter 2013 and $12.0 million for the first quarter 2013.

Rose Rock Midstream's distributable cash flow for the three months ended March
31, 2014 was $24.9 million. On April 24, 2014, Rose Rock Midstream increased
the partnership's quarterly cash distribution to $0.495 per unit from $0.465
per unit, effective for the first quarter 2014, resulting in an annualized
distribution of $1.98 per unit. This is a 6.5% increase over the fourth
quarter 2013 and marks the ninth consecutive increase in the quarterly cash
distribution to RRMS limited partner unitholders. The distribution will be
paid on May 15, 2014 to all unitholders of record on May 5, 2014.
Distributable cash flow, which is a non-GAAP measure, is reconciled to its
most directly comparable GAAP measure below.

First Quarter 2014 Highlights

Compared to the Fourth Quarter 2013

  *$1.4 million increase in Adjusted gross margin primarily related to higher
    pipeline and trucking volumes
  *$2.1 million decrease in operating and G&A expenses
  *$3.2 million increase in cash distributions attributable to our two-thirds
    interest in White Cliffs Pipeline

2014 Guidance

Rose Rock Midstream reaffirms 2014 Adjusted EBITDA of $92 million to $97
million, an increase of approximately 40% over 2013 results of $68.5 million.
The partnership is on target to deploy $75 million in capital investments in
2014, with 84% allocated to growth projects and a target distribution growth
rate in 2014 of 15% year-over-year.

Earnings Conference Call

Rose Rock Midstream will host a joint conference call with SemGroup^®
Corporation (NYSE:SEMG) for investors tomorrow, May 9, 2014, at 11 a.m. ET.
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
27070053. Interested parties may also listen to a simultaneous webcast of the
conference call by logging onto Rose Rock Midstream's Investor Relations
website at ir.rrmidstream.com. A replay of the webcast will also be available
for a year following the call at ir.rrmidstream.com on the Calendar of
Events-Past Events page. The first quarter 2014 earnings slide deck will be
posted under Presentations.

About Rose Rock Midstream

Rose Rock Midstream^®, L.P. (NYSE:RRMS) is a growth-oriented Delaware limited
partnership formed by SemGroup^® Corporation (NYSE:SEMG) to own, operate,
develop and acquire a diversified portfolio of midstream energy assets.
Headquartered in Tulsa, OK, Rose Rock Midstream provides crude oil gathering,
transportation, storage and marketing services with the majority of its assets
strategically located in or connected to the Cushing, Oklahoma crude oil
marketing hub.

Rose Rock 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.rrmidstream.com, our Twitter account and LinkedIn account.

Non-GAAP Financial Measures

This Press Release and the accompanying schedules include the non-GAAP
financial measures of Adjusted gross margin, Adjusted EBITDA and distributable
cash flow, which may be used periodically by management when discussing our
financial results with investors and analysts. The accompanying schedules of
this Press Release provide reconciliations of these non-GAAP financial
measures to their most directly comparable financial measures calculated and
presented in accordance with generally accepted accounting principles in the
United States of America (GAAP). Adjusted gross margin, Adjusted EBITDA and
distributable cash flow are presented as management believes they provide
additional information and metrics relative to the performance of our
business.

Operating income (loss) is the GAAP measure most directly comparable to
Adjusted gross margin, net income (loss) and cash provided by (used in)
operating activities are the GAAP measures most directly comparable to
Adjusted EBITDA, and net income (loss) is the GAAP measure most directly
comparable to distributable cash flow. Our non-GAAP financial measures should
not be considered as alternatives to the most directly comparable GAAP
financial measures. These non-GAAP financial measures have important
limitations as analytical tools because they exclude some, but not all, items
that affect the most directly comparable GAAP financial measures. You should
not consider Adjusted gross margin, Adjusted EBITDA or distributable cash flow
in isolation or as substitutes for analysis of our results as reported under
GAAP. Because Adjusted gross margin, Adjusted EBITDA and distributable cash
flow may be defined differently by other companies in our industry, our
definitions of these non-GAAP financial measures may not be comparable to
similarly titled measures of other companies, thereby diminishing their
utility.

Management compensates for the limitation of Adjusted gross margin, Adjusted
EBITDA and distributable cash flow as analytical tools by reviewing the
comparable GAAP measures, understanding the differences between Adjusted gross
margin, Adjusted EBITDA and distributable cash flow, on the one hand, and
operating income (loss), net income (loss) and net cash provided by (used in)
operating activities, on the other hand, and incorporating this knowledge into
its decision-making processes. We believe that investors benefit from having
access to the same financial measures that our management uses in evaluating
our operating results.

Forward-Looking Statements

Certain matters contained in this Press Release include "forward-looking
statements." All statements, other than statements of historical fact,
included in this Press Release including the prospects of our industry, our
anticipated financial performance, including distributable cash flow, cash
distributions, management's plans and objectives for future operations,
capital investments, 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, insufficient cash from
operations following the establishment of cash reserves and payment of fees
and expenses to pay the minimum quarterly distribution; any sustained
reduction in demand for crude oil in markets served by our midstream assets;
our ability to obtain new sources of supply of crude oil; the amount of
collateral required to be posted from time to time in our transactions;
competition from other midstream energy companies; our ability to comply with
the covenants contained in and maintain certain financial ratios required by
our credit facility; our ability to access credit and capital markets; our
ability to renew or replace expiring storage contracts; the loss of or a
material nonpayment or nonperformance by any of our key customers; the overall
forward market for crude oil; the possibility that our hedging activities may
result in losses or may have a negative impact on our financial results;
weather and other natural phenomena; hazards or operating risks incidental to
the gathering, transporting or storing of crude oil; our failure to comply
with new or existing environmental laws or regulations; the possibility that
the construction or acquisition of new assets may not result in the
corresponding anticipated revenue increases; 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)
                                                            
                                                   March 31, December 31,
                                                   2014      2013
ASSETS                                                       
Current assets                                      $ 349,640 $ 321,587
Property, plant and equipment, net                  308,270   311,616
Equity method investment                            234,742   224,095
Other noncurrent assets, net                        38,737    39,949
Total assets                                        $ 931,389 $ 897,247
                                                            
LIABILITIES AND EQUITY                                       
Current liabilities                                 $ 326,835 $ 293,031
Long-term debt                                      244,578   245,088
Total liabilities                                   571,413   538,119
                                                            
Total Rose Rock Midstream, L.P. partners' capital   280,450   280,571
Noncontrolling interests in consolidated subsidiary 79,526    78,557
Total equity                                        359,976   359,128
Total liabilities and equity                        $ 931,389 $ 897,247
                                                            


Condensed Consolidated Statements of Income
(in thousands, except per unit data, unaudited)

                                                               
                                           Three Months Ended
                                           March 31,             December 31,
                                           2014       2013       2013
Revenues, including revenues from                               
affiliates:
Product                                     $266,290 $158,728 $228,434
Service                                     24,633     12,504     23,607
Total revenues                              290,923    171,232    252,041
Expenses, including expenses from                               
affiliates:
Costs of products sold, exclusive of        254,537    148,451    217,252
depreciation and amortization
Operating                                   14,878     5,418      15,322
General and administrative                  3,623      3,561      5,326
Depreciation and amortization               10,534     3,507      11,838
Total expenses                              283,572    160,937    249,738
Earnings from equity method investment      11,080     3,453      7,140
Operating income                            18,431     13,748     9,443
Other expenses:                                                 
Interest expense                            2,272      1,754      1,979
Other expense (income)                      —          —          (2)
Total other expenses, net                   2,272      1,754      1,977
Net income                                  16,159     11,994     7,466
Less: net income attributable to            3,676      —          1,256
noncontrolling interests
Net income attributable to Rose Rock        $12,483  $11,994  $6,210
Midstream, L.P.
Net income allocated to general partner     $738     $281     $368
Net income allocated to common unitholders  $8,114   $6,767   $4,379
Net income allocated to subordinated        $3,750   $4,773   $2,023
unitholders
Net income (loss) allocated to Class A      $(119)   $173     $(560)
unitholders
Earnings (loss) per limited partner unit:                       
Common unit (basic)                         $0.45    $0.59    $0.26
Common unit (diluted)                       $0.45    $0.59    $0.26
Subordinated unit (basic and diluted)       $0.45    $0.57    $0.24
Class A unit (basic and diluted)            $(0.05)  $0.16    $(0.38)
Basic weighted average number of limited                        
partner units outstanding:
Common units                                18,149     11,465     16,890
Subordinated units                          8,390      8,390      8,390
Class A units                               2,500      1,097      1,454
Diluted weighted average number of limited                      
partner units outstanding:
Common units                                18,198     11,491     16,934
Subordinated units                          8,390      8,390      8,390
Class A units                               2,500      1,097      1,454

                                                               
                                                               
Non-GAAP Reconciliations                                        
                                                               
(in thousands, unaudited)                     Three Months Ended
                                             March 31,           December 31,
                                             2014      2013      2013
Reconciliation of operating income to                           
Adjusted gross margin:
Operating income                              $18,431 $13,748 $9,443
Add:                                                            
Operating expense                             14,878    5,418     15,322
General and administrative                    3,623     3,561     5,326
Depreciation and amortization                 10,534    3,507     11,838
Less:                                                           
Earnings from equity method investment        11,080   3,453     7,140
Non-cash unrealized gain (loss) on            (606)     468       (785)
derivatives, net
Adjusted gross margin                         $36,992 $22,313 $35,574
                                                               
Reconciliation of net income to Adjusted                        
EBITDA:
Net income                                    $16,159 $11,994 $7,466
Add:                                                            
Interest expense                              2,272     1,754     1,979
Depreciation and amortization                 10,534    3,507     11,838
Cash distributions from equity method         13,585    2,892     5,861
investment
Non-cash equity compensation                  260       143       228
Gain on disposal of long-lived assets, net    (34)      —         (31)
Less:                                                           
Earnings from equity method investment        11,080    3,453     7,140
White Cliffs cash distributions attributable  4,528     —         —
to noncontrolling interests
Impact from derivative instruments:                             
Total gain (loss) on derivatives, net         (807)     (544)   837
Total realized (gain) loss (cash flow) on     201       1,012     (1,622)
derivatives, net
Non-cash unrealized gain (loss) on            (606)     468       (785)
derivatives, net
Adjusted EBITDA                               $27,774 $16,369 $20,986
                                                               
Reconciliation of net cash provided by                          
operating activities to Adjusted EBITDA:
Net cash provided by operating activities     $18,388 $9,915  $50,360
Less:                                                           
Changes in operating assets and liabilities,  (9,397)   (4,898)   30,466
net
White Cliffs cash distributions attributable  4,528     —         —
to noncontrolling interests
Add:                                                            
Interest expense, excluding amortization of   2,012     1,556     1,799
debt issuance costs
Distributions in excess of equity in earnings 2,505     —         (707)
of affiliates
Adjusted EBITDA                               $27,774 $16,369 $20,986

                                                              
                                                              
Non-GAAP Reconciliations (Continued)                           
                                                              
(in thousands, unaudited)                 Three Months Ended
                                         March 31,               December 31,
                                         2014         2013      2013
Reconciliation of net income to                                
distributable cash flow:
Net income                                $ 16,159     $ 11,994  $ 7,466
Add:                                                           
Interest expense                          2,272        1,754     1,979
Depreciation and amortization             10,534       3,507     11,838
EBITDA                                    28,965       17,255    21,283
Add:                                                           
Gain on disposal of long-lived assets,    (34)         —         (31)
net
Cash distributions from equity method     13,585       2,892     5,861
investment
Non-cash equity compensation              260          143       228
Less:                                                          
Earnings from equity method investment    11,080       3,453     7,140
White Cliffs cash distributions           4,528        —         —
attributable to noncontrolling interests
Non-cash unrealized gain (loss) on        (606)        468       (785)
derivatives, net
Adjusted EBITDA                           $ 27,774     $ 16,369 $ 20,986
Less:                                                          
Cash interest expense                     1,989        1,556     1,865
Maintenance capital expenditures          907          2,071     1,174
Distributable cash flow                   $ 24,878     $ 12,742  $ 17,947
                                                              
Distribution declared                     $ 13,903 ^(1) $ 8,941   $ 12,841
                                                              
Distribution coverage ratio               1.79x        1.43x     1.40x

(1) The distribution declared April 24, 2014 represents $0.495 per unit, or
$1.98 per unit on an annualized basis. This is a 6.5% increase over the prior
quarter.

                                                       
2014 RRMS Adjusted EBITDA Guidance Reconciliation       
                                                       
(millions, unaudited)                                   
                                                 Low    High
Net income                                        $ 64   $ 67
Add: Interest expense                             13     15
Add: Depreciation and amortization                22     22
EBITDA                                            $ 99   $ 104
Non-Cash Adjustments and Other Adjustments        (7)    (7)
Adjusted EBITDA                                   $ 92   $ 97
                                                       
                                                       
Non-Cash and Other Adjustments                          
Earnings from equity method investment            $ (44) $ (48)
Distributions from equity method investment^(1)   36     40
Non-cash equity compensation                      1      1
Non-Cash and Other Adjustments                    $ (7)  $ (7)

(1) Distributions from equity method investment includes only the cash
distributions from White Cliffs attributable to Rose Rock and excludes the
distributions attributable to noncontrolling interests from Adjusted EBITDA.

CONTACT: Investor Relations:
         Alisa Perkins
         918-524-8081
         roserockir@rrmidstream.com
        
         Media:
         Kiley Roberson
         918-524-8594
         kroberson@rrmidstream.com

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