NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the “Partnership”) today reported its second quarter Fiscal 2022 results. Highlights for the quarter include:
- Loss from continuing operations for the second quarter of Fiscal 2022 of $1.2 million, compared to income from continuing operations of $6.0 million for the second quarter of Fiscal 2021. Excluding losses on the disposal or impairment of assets, income from continuing operations for the second quarter of Fiscal 2022 was $12.5 million, compared to $11.9 million for the second quarter of Fiscal 2021
- Adjusted EBITDA1 from continuing operations for the second quarter of Fiscal 2022 of $146.3 million, compared to $138.0 million for the second quarter of Fiscal 2021
- Record quarterly Adjusted EBITDA of $87.4 million in the Water Solutions segment, a 43% increase versus the second quarter of Fiscal 2021
- Produced water volumes processed increased approximately 37% versus the same period in the prior year, with volumes growing approximately 94,000 barrels per day, or 5.6%, versus the preceding quarter
- Fiscal 2022 Adjusted EBITDA guidance of $570 million - $600 million and expected full year capital expenditures of approximately $115 million2
“Our Water Solutions segment achieved strong growth due to increased customer activities in the Delaware basin. Produced water volumes have grown meaningfully year-over-year and sequentially quarter-over-quarter. We expect water volumes to continue to grow for the foreseeable future. Operational free cash flow, reduction in working capital requirements and asset sale proceeds will be deployed to the balance sheet to reduce leverage,” stated Mike Krimbill, NGL’s CEO. “Our top priority is to reduce absolute debt and drive leverage below 4.75 times,” Krimbill concluded.
Quarterly Results of Operations
The following table summarizes operating income (loss) and Adjusted EBITDA from continuing operations by reportable segment for the periods indicated:
|
|
Quarter Ended |
||||||||||||||
|
|
September 30, 2021 |
|
September 30, 2020 |
||||||||||||
|
|
Operating
|
|
Adjusted
|
|
Operating
|
|
Adjusted
|
||||||||
|
|
(in thousands) |
||||||||||||||
Water Solutions |
|
$ |
32,772 |
|
|
$ |
87,424 |
|
|
$ |
(13,277 |
) |
|
$ |
61,047 |
|
Crude Oil Logistics |
|
28,231 |
|
|
48,776 |
|
|
48,239 |
|
|
65,181 |
|
||||
Liquids Logistics |
|
11,461 |
|
|
18,465 |
|
|
14,338 |
|
|
21,257 |
|
||||
Corporate and Other |
|
(7,646 |
) |
|
(8,404 |
) |
|
(12,984 |
) |
|
(9,514 |
) |
||||
Total |
|
$ |
64,818 |
|
|
$ |
146,261 |
|
|
$ |
36,316 |
|
|
$ |
137,971 |
|
Water Solutions
The Partnership processed approximately 1.8 million barrels of water per day during the quarter ended September 30, 2021, a 37.3% increase when compared to approximately 1.3 million barrels of water per day processed during the quarter ended September 30, 2020, due to higher production volumes primarily in the Delaware Basin driven by the recovery in crude oil prices from the prior year.
Revenues from recovered crude oil, including the impact from realized skim oil hedges, totaled $19.3 million for the quarter ended September 30, 2021, an increase of $6.8 million from the prior year period. This was due to higher crude oil prices, larger amounts of skim oil recovered per barrel of water processed and increasing producer activity.
Operating expenses in the Water Solutions segment decreased to $0.26 per barrel compared to $0.27 per barrel in the comparative quarter last year primarily due to continued efforts to reduce operating costs per barrel along with higher produced water volumes processed.
Crude Oil Logistics
Operating income for the second quarter of Fiscal 2022 decreased compared to the second quarter of Fiscal 2021 primarily due to lower revenues related to the Grand Mesa Pipeline, which was primarily the result of the court-approved rejection of the Extraction transportation agreement (as part of its bankruptcy) as well as decreased production in the DJ Basin. During the three months ended September 30, 2021, financial volumes on the Grand Mesa Pipeline averaged approximately 80,000 barrels per day, compared to approximately 123,000 barrels per day for the three months ended September 30, 2020. For the quarter, our margins, excluding the impact of derivatives, benefited from higher crude oil prices which increased contracted rates with some producers.
Liquids Logistics
Operating income for the Liquids Logistics segment totaled $11.5 million, including a loss on the sale of a facility of $11.7 million, for the quarter ended September 30, 2021. Excluding the loss on the sale of the facility, operating income increased by $8.9 million compared to the quarter ended September 30, 2020, due to higher product margins, including the impact of derivatives.
Propane volumes decreased by approximately 72.4 million gallons, or 28.6%, compared to the quarter ended September 30, 2020, due to backwardation in the propane market and deferred purchases from customers. Butane volumes decreased by approximately 18.5 million gallons, or 12.9%, compared to the quarter ended September 30, 2020, due to the tight supply market as a result of decreased refinery runs and an increase in demand for exports.
Corporate and Other
Corporate and Other expenses decreased from the comparable prior year period primarily due to lower legal expenses.
Capitalization and Liquidity
Total liquidity (cash plus available capacity on our asset-based revolving credit facility) was approximately $207 million as of September 30, 2021. Borrowings on the Partnership’s revolving credit facility totaled approximately $146.0 million. The balance increase from March 31, 2021 was primarily due to increases in working capital balances driven by increased inventory volumes and higher commodity prices.
The Partnership is in compliance with all of its debt covenants and has no significant debt maturities before November 2023. The Partnership expects to generate operational free cash flow in Fiscal Year 2022, which will be utilized to repay outstanding indebtedness and improve leverage.
Second Quarter Conference Call Information
A conference call to discuss NGL’s results of operations is scheduled for 4:00 pm Central Time on Tuesday, November 9, 2021. Analysts, investors, and other interested parties may join the webcast via the event link: https://www.webcaster4.com/Webcast/Page/2808/43431 or by dialing (888) 506-0062 and providing access code: 646174. An archived audio replay of the call will be available for 14 days, which can be accessed by dialing (877) 481-4010 and providing replay passcode 43431.
Non-GAAP Financial Measures
NGL defines EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities, certain legal settlements and other. NGL also includes in Adjusted EBITDA certain inventory valuation adjustments related to TransMontaigne Product Services, LLC (“TPSL”), our refined products business in the mid-continent region of the United States (“Mid-Con”) and our gas blending business in the southeastern and eastern regions of the United States (“Gas Blending”), which are included in discontinued operations, and certain refined products businesses within NGL’s Liquids Logistics segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered as alternatives to net (loss) income, (loss) income from continuing operations before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations. NGL believes that EBITDA provides additional information to investors for evaluating NGL’s ability to make quarterly distributions to NGL’s unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information to investors for evaluating NGL’s financial performance without regard to NGL’s financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.
Other than for certain businesses within NGL’s Liquids Logistics segment, for purposes of the Adjusted EBITDA calculation, NGL makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, NGL reverses the previously recorded unrealized gain or loss and records a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of certain businesses within NGL’s Liquids Logistics segment. The primary hedging strategy of these businesses is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges cover extended periods of time. The “inventory valuation adjustment” row in the reconciliation table reflects the difference between the market value of the inventory of these businesses at the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. NGL includes this in Adjusted EBITDA because the unrealized gains and losses associated with derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA. In NGL’s Crude Oil Logistics segment, they purchase certain crude oil barrels using the West Texas Intermediate (“WTI”) calendar month average (“CMA”) price and sell the crude oil barrels using the WTI CMA price plus the Argus CMA Differential Roll Component (“CMA Differential Roll”) per NGL’s contracts. To eliminate the volatility of the CMA Differential Roll, NGL entered into derivative instrument positions in January 2021 to secure a margin of approximately $0.20 per barrel on 1.5 million barrels per month from May 2021 through December 2023. Due to the nature of these positions, the cash flow and earnings recognized on a GAAP basis will differ from period to period depending on the current crude oil price and future estimated crude oil price which are valued utilizing third-party market quoted prices. NGL is recognizing in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin NGL is hedging each month through the term of this transaction. This representation aligns with management’s evaluation of the transaction.
Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, income tax expense, cash interest expense, preferred unit distributions and other. Maintenance capital expenditures represent capital expenditures necessary to maintain the Partnership’s operating capacity. For the CMA Differential Roll transaction, as discussed above, we have included an adjustment to Distributable Cash Flow to reflect, in the period for which they relate, the actual cash flows for the positions that settled that are not being recognized in Adjusted EBITDA. Distributable Cash Flow is a performance metric used by senior management to compare cash flows generated by the Partnership (excluding growth capital expenditures and prior to the establishment of any retained cash reserves by the Board of Directors) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. This financial measure also is important to investors as an indicator of whether the Partnership is generating cash flow at a level that can sustain, or support an increase in, quarterly distribution rates. Actual distribution amounts are set by the Board of Directors.
Forward-Looking Statements
This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes such forward-looking statements are reasonable, NGL cannot assure they will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.
NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership’s Adjusted EBITDA, and the Partnership is not able to provide a reconciliation of its Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.
About NGL Energy Partners LP
NGL Energy Partners LP, a Delaware limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports, treats and disposes of produced water generated as part of the oil and natural gas production process.
For further information, visit the Partnership’s website at www.nglenergypartners.com.
_______
1 See the “Non-GAAP Financial Measures” section of this release for the definition of Adjusted EBITDA and a discussion of this non-GAAP financial measure. |
2 See the “Forward-Looking Statements” section of this release for more information. |
NGL ENERGY PARTNERS LP AND SUBSIDIARIES Unaudited Condensed Consolidated Balance Sheets (in Thousands, except unit amounts) |
|||||||
|
September 30, 2021 |
|
March 31, 2021 |
||||
ASSETS |
|
|
|
||||
CURRENT ASSETS: |
|
|
|
||||
Cash and cash equivalents |
$ |
5,531 |
|
|
$ |
4,829 |
|
Accounts receivable-trade, net of allowance for expected credit losses of $2,257 and $2,192, respectively |
863,228 |
|
|
725,943 |
|
||
Accounts receivable-affiliates |
8,979 |
|
|
9,435 |
|
||
Inventories |
319,895 |
|
|
158,467 |
|
||
Prepaid expenses and other current assets |
140,434 |
|
|
109,164 |
|
||
Total current assets |
1,338,067 |
|
|
1,007,838 |
|
||
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $844,605 and $776,279, respectively |
2,524,287 |
|
|
2,706,853 |
|
||
GOODWILL |
744,439 |
|
|
744,439 |
|
||
INTANGIBLE ASSETS, net of accumulated amortization of $532,901 and $517,518, respectively |
1,170,468 |
|
|
1,262,613 |
|
||
INVESTMENTS IN UNCONSOLIDATED ENTITIES |
21,029 |
|
|
22,719 |
|
||
OPERATING LEASE RIGHT-OF-USE ASSETS |
133,868 |
|
|
152,146 |
|
||
OTHER NONCURRENT ASSETS |
49,634 |
|
|
50,733 |
|
||
Total assets |
$ |
5,981,792 |
|
|
$ |
5,947,341 |
|
LIABILITIES AND EQUITY |
|
|
|
||||
CURRENT LIABILITIES: |
|
|
|
||||
Accounts payable-trade |
$ |
819,094 |
|
|
$ |
679,868 |
|
Accounts payable-affiliates |
97 |
|
|
119 |
|
||
Accrued expenses and other payables |
165,110 |
|
|
170,400 |
|
||
Advance payments received from customers |
18,651 |
|
|
11,163 |
|
||
Current maturities of long-term debt |
2,278 |
|
|
2,183 |
|
||
Operating lease obligations |
45,456 |
|
|
47,070 |
|
||
Total current liabilities |
1,050,686 |
|
|
910,803 |
|
||
LONG-TERM DEBT, net of debt issuance costs of $49,214 and $55,555, respectively, and current maturities |
3,419,352 |
|
|
3,319,030 |
|
||
OPERATING LEASE OBLIGATIONS |
87,388 |
|
|
103,637 |
|
||
OTHER NONCURRENT LIABILITIES |
110,909 |
|
|
114,615 |
|
||
|
|
|
|
||||
CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively |
551,097 |
|
|
551,097 |
|
||
|
|
|
|
||||
EQUITY: |
|
|
|
||||
General partner, representing a 0.1% interest, 129,724 and 129,724 notional units, respectively |
(52,375 |
) |
|
(52,189 |
) |
||
Limited partners, representing a 99.9% interest, 129,593,939 and 129,593,939 common units issued and outstanding, respectively |
448,501 |
|
|
582,784 |
|
||
Class B preferred limited partners, 12,585,642 and 12,585,642 preferred units issued and outstanding, respectively |
305,468 |
|
|
305,468 |
|
||
Class C preferred limited partners, 1,800,000 and 1,800,000 preferred units issued and outstanding, respectively |
42,891 |
|
|
42,891 |
|
||
Accumulated other comprehensive loss |
(310 |
) |
|
(266 |
) |
||
Noncontrolling interests |
18,185 |
|
|
69,471 |
|
||
Total equity |
762,360 |
|
|
948,159 |
|
||
Total liabilities and equity |
$ |
5,981,792 |
|
|
$ |
5,947,341 |
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations (in Thousands, except unit and per unit amounts) |
||||||||||||||||
|
|
Three Months Ended September 30, |
|
Six Months Ended September 30, |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
REVENUES: |
|
|
|
|
|
|
|
|
||||||||
Water Solutions |
|
$ |
136,210 |
|
|
$ |
88,678 |
|
|
$ |
266,436 |
|
|
$ |
176,743 |
|
Crude Oil Logistics |
|
554,830 |
|
|
466,841 |
|
|
1,108,454 |
|
|
742,880 |
|
||||
Liquids Logistics |
|
1,063,097 |
|
|
612,324 |
|
|
1,867,902 |
|
|
1,092,322 |
|
||||
Other |
|
— |
|
|
315 |
|
|
— |
|
|
628 |
|
||||
Total Revenues |
|
1,754,137 |
|
|
1,168,158 |
|
|
3,242,792 |
|
|
2,012,573 |
|
||||
COST OF SALES: |
|
|
|
|
|
|
|
|
||||||||
Water Solutions |
|
6,423 |
|
|
579 |
|
|
16,761 |
|
|
5,279 |
|
||||
Crude Oil Logistics |
|
498,089 |
|
|
386,771 |
|
|
1,035,346 |
|
|
604,328 |
|
||||
Liquids Logistics |
|
1,021,081 |
|
|
577,086 |
|
|
1,798,279 |
|
|
1,031,422 |
|
||||
Other |
|
— |
|
|
454 |
|
|
— |
|
|
908 |
|
||||
Total Cost of Sales |
|
1,525,593 |
|
|
964,890 |
|
|
2,850,386 |
|
|
1,641,937 |
|
||||
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
||||||||
Operating |
|
69,019 |
|
|
56,054 |
|
|
134,803 |
|
|
121,041 |
|
||||
General and administrative |
|
11,450 |
|
|
17,475 |
|
|
27,224 |
|
|
34,633 |
|
||||
Depreciation and amortization |
|
69,563 |
|
|
87,469 |
|
|
153,665 |
|
|
171,455 |
|
||||
Loss on disposal or impairment of assets, net |
|
13,694 |
|
|
5,954 |
|
|
81,230 |
|
|
17,976 |
|
||||
Operating Income (Loss) |
|
64,818 |
|
|
36,316 |
|
|
(4,516 |
) |
|
25,531 |
|
||||
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
||||||||
Equity in earnings of unconsolidated entities |
|
434 |
|
|
501 |
|
|
646 |
|
|
790 |
|
||||
Interest expense |
|
(68,495 |
) |
|
(46,935 |
) |
|
(135,625 |
) |
|
(90,896 |
) |
||||
Gain on early extinguishment of liabilities, net |
|
1,071 |
|
|
13,747 |
|
|
1,122 |
|
|
33,102 |
|
||||
Other income, net |
|
730 |
|
|
1,585 |
|
|
1,979 |
|
|
2,620 |
|
||||
(Loss) Income From Continuing Operations Before Income Taxes |
|
(1,442 |
) |
|
5,214 |
|
|
(136,394 |
) |
|
(28,853 |
) |
||||
INCOME TAX BENEFIT |
|
235 |
|
|
774 |
|
|
685 |
|
|
1,075 |
|
||||
(Loss) Income From Continuing Operations |
|
(1,207 |
) |
|
5,988 |
|
|
(135,709 |
) |
|
(27,778 |
) |
||||
Loss From Discontinued Operations, net of Tax |
|
— |
|
|
(153 |
) |
|
— |
|
|
(1,639 |
) |
||||
Net (Loss) Income |
|
(1,207 |
) |
|
5,835 |
|
|
(135,709 |
) |
|
(29,417 |
) |
||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
|
(330 |
) |
|
(168 |
) |
|
(768 |
) |
|
(219 |
) |
||||
NET (LOSS) INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP |
|
$ |
(1,537 |
) |
|
$ |
5,667 |
|
|
$ |
(136,477 |
) |
|
$ |
(29,636 |
) |
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS |
|
$ |
(27,236 |
) |
|
$ |
(17,933 |
) |
|
$ |
(187,128 |
) |
|
$ |
(73,748 |
) |
NET LOSS FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS |
|
$ |
— |
|
|
$ |
(152 |
) |
|
$ |
— |
|
|
$ |
(1,637 |
) |
NET LOSS ALLOCATED TO COMMON UNITHOLDERS |
|
$ |
(27,236 |
) |
|
$ |
(18,085 |
) |
|
$ |
(187,128 |
) |
|
$ |
(75,385 |
) |
BASIC LOSS PER COMMON UNIT |
|
|
|
|
|
|
|
|
||||||||
Loss From Continuing Operations |
|
$ |
(0.21 |
) |
|
$ |
(0.14 |
) |
|
$ |
(1.44 |
) |
|
$ |
(0.57 |
) |
Loss From Discontinued Operations, net of Tax |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.01 |
) |
Net Loss |
|
$ |
(0.21 |
) |
|
$ |
(0.14 |
) |
|
$ |
(1.44 |
) |
|
$ |
(0.58 |
) |
DILUTED LOSS PER COMMON UNIT |
|
|
|
|
|
|
|
|
||||||||
Loss From Continuing Operations |
|
$ |
(0.21 |
) |
|
$ |
(0.14 |
) |
|
$ |
(1.44 |
) |
|
$ |
(0.57 |
) |
Loss From Discontinued Operations, net of Tax |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.01 |
) |
Net Loss |
|
$ |
(0.21 |
) |
|
$ |
(0.14 |
) |
|
$ |
(1.44 |
) |
|
$ |
(0.58 |
) |
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING |
|
129,593,939 |
|
|
128,771,715 |
|
|
129,593,939 |
|
|
128,771,715 |
|
||||
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING |
|
129,593,939 |
|
|
128,771,715 |
|
|
129,593,939 |
|
|
128,771,715 |
|||||
EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION (Unaudited) |
||||||||||||||||
The following table reconciles NGL’s net (loss) income to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow: |
||||||||||||||||
|
|
Three Months Ended September 30, |
|
Six Months Ended September 30, |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
(in thousands) |
||||||||||||||
Net (loss) income |
|
$ |
(1,207 |
) |
|
$ |
5,835 |
|
|
$ |
(135,709 |
) |
|
$ |
(29,417 |
) |
Less: Net income attributable to noncontrolling interests |
|
(330 |
) |
|
(168 |
) |
|
(768 |
) |
|
(219 |
) |
||||
Net (loss) income attributable to NGL Energy Partners LP |
|
(1,537 |
) |
|
5,667 |
|
|
(136,477 |
) |
|
(29,636 |
) |
||||
Interest expense |
|
68,512 |
|
|
46,840 |
|
|
135,642 |
|
|
90,906 |
|
||||
Income tax benefit |
|
(235 |
) |
|
(827 |
) |
|
(685 |
) |
|
(1,128 |
) |
||||
Depreciation and amortization |
|
69,543 |
|
|
86,822 |
|
|
152,900 |
|
|
170,024 |
|
||||
EBITDA |
|
136,283 |
|
|
138,502 |
|
|
151,380 |
|
|
230,166 |
|
||||
Net unrealized (gains) losses on derivatives |
|
(18,490 |
) |
|
4,457 |
|
|
(34,754 |
) |
|
31,128 |
|
||||
CMA Differential Roll net losses (gains) (1) |
|
12,805 |
|
|
— |
|
|
37,115 |
|
|
— |
|
||||
Inventory valuation adjustment (2) |
|
(451 |
) |
|
(1,641 |
) |
|
767 |
|
|
2,179 |
|
||||
Lower of cost or net realizable value adjustments |
|
3,521 |
|
|
(1,531 |
) |
|
(285 |
) |
|
(33,534 |
) |
||||
Loss on disposal or impairment of assets, net |
|
13,695 |
|
|
6,063 |
|
|
81,233 |
|
|
19,147 |
|
||||
Gain on early extinguishment of liabilities, net |
|
(1,072 |
) |
|
(13,747 |
) |
|
(1,159 |
) |
|
(33,102 |
) |
||||
Equity-based compensation expense (3) |
|
(2,753 |
) |
|
2,256 |
|
|
(1,793 |
) |
|
4,558 |
|
||||
Acquisition expense (4) |
|
36 |
|
|
169 |
|
|
103 |
|
|
326 |
|
||||
Other (5) |
|
2,687 |
|
|
3,253 |
|
|
4,755 |
|
|
7,601 |
|
||||
Adjusted EBITDA |
|
$ |
146,261 |
|
|
$ |
137,781 |
|
|
$ |
237,362 |
|
|
$ |
228,469 |
|
Adjusted EBITDA - Discontinued Operations (6) |
|
$ |
— |
|
|
$ |
(190 |
) |
|
$ |
— |
|
|
$ |
(484 |
) |
Adjusted EBITDA - Continuing Operations |
|
$ |
146,261 |
|
|
$ |
137,971 |
|
|
$ |
237,362 |
|
|
$ |
228,953 |
|
Less: Cash interest expense (7) |
|
63,729 |
|
|
43,568 |
|
|
127,088 |
|
|
83,967 |
|
||||
Less: Income tax benefit |
|
(235 |
) |
|
(774 |
) |
|
(685 |
) |
|
(1,075 |
) |
||||
Less: Maintenance capital expenditures |
|
16,979 |
|
|
6,830 |
|
|
24,724 |
|
|
15,998 |
|
||||
Less: CMA Differential Roll (8) |
|
9,968 |
|
|
— |
|
|
33,900 |
|
|
— |
|
||||
Less: Preferred unit distributions paid |
|
— |
|
|
15,108 |
|
|
— |
|
|
30,138 |
|
||||
Distributable Cash Flow - Continuing Operations |
|
$ |
55,820 |
|
|
$ |
73,239 |
|
|
$ |
52,335 |
|
|
$ |
99,925 |
|
_______
(1) |
Adjustment to align, within Adjusted EBITDA, the net gains and losses of the Partnership’s CMA Differential Roll derivative instruments positions with the physical margin being hedged. See “Non-GAAP Financial Measures” section above for a further discussion. |
(2) |
Amount reflects the difference between the market value of the inventory at the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. See “Non-GAAP Financial Measures” section above for a further discussion. |
(3) |
Equity-based compensation expense in the table above may differ from equity-based compensation expense reported in the footnotes to our unaudited condensed consolidated financial statements included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021. Amounts reported in the table above include expense accruals for bonuses expected to be paid in common units, whereas the amounts reported in the footnotes to our unaudited condensed consolidated financial statements only include expenses associated with equity-based awards that have been formally granted. |
(4) |
Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions. |
(5) |
Amounts for the three months and six months ended September 30, 2021 and 2020 represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations. |
(6) |
Amounts include the operations of TPSL, Gas Blending and Mid-Con. |
(7) |
Amounts represent interest expense payable in cash for the period presented, excluding changes in the accrued interest balance. |
(8) |
Amount represents the cash portion of the adjustments of the Partnership’s CMA Differential Roll derivative instrument positions, as discussed above, that settled during the period. |
ADJUSTED EBITDA RECONCILIATION BY SEGMENT |
|||||||||||||||||||
|
Three Months Ended September 30, 2021 |
||||||||||||||||||
|
Water Solutions |
|
Crude Oil Logistics |
|
Liquids Logistics |
|
Corporate and Other |
|
Consolidated |
||||||||||
|
(in thousands) |
||||||||||||||||||
Operating income (loss) |
$ |
32,772 |
|
|
$ |
28,231 |
|
|
$ |
11,461 |
|
|
$ |
(7,646 |
) |
|
$ |
64,818 |
|
Depreciation and amortization |
50,670 |
|
|
12,454 |
|
|
4,686 |
|
|
1,753 |
|
|
69,563 |
|
|||||
Amortization recorded to cost of sales |
— |
|
|
— |
|
|
71 |
|
|
— |
|
|
71 |
|
|||||
Net unrealized losses (gains) on derivatives |
1,521 |
|
|
(7,153 |
) |
|
(12,858 |
) |
|
— |
|
|
(18,490 |
) |
|||||
CMA Differential Roll net losses (gains) |
— |
|
|
12,805 |
|
|
— |
|
|
— |
|
|
12,805 |
|
|||||
Inventory valuation adjustment |
— |
|
|
— |
|
|
(451 |
) |
|
— |
|
|
(451 |
) |
|||||
Lower of cost or net realizable value adjustments |
— |
|
|
— |
|
|
3,521 |
|
|
— |
|
|
3,521 |
|
|||||
Loss (gain) on disposal or impairment of assets, net |
1,962 |
|
|
(14 |
) |
|
11,746 |
|
|
— |
|
|
13,694 |
|
|||||
Equity-based compensation expense |
— |
|
|
— |
|
|
— |
|
|
(2,753 |
) |
|
(2,753 |
) |
|||||
Acquisition expense |
— |
|
|
— |
|
|
— |
|
|
36 |
|
|
36 |
|
|||||
Other income, net |
10 |
|
|
154 |
|
|
295 |
|
|
271 |
|
|
730 |
|
|||||
Adjusted EBITDA attributable to unconsolidated entities |
716 |
|
|
— |
|
|
(9 |
) |
|
(65 |
) |
|
642 |
|
|||||
Adjusted EBITDA attributable to noncontrolling interest |
(614 |
) |
|
— |
|
|
3 |
|
|
— |
|
|
(611 |
) |
|||||
Other |
387 |
|
|
2,299 |
|
|
— |
|
|
— |
|
|
2,686 |
|
|||||
Adjusted EBITDA |
$ |
87,424 |
|
|
$ |
48,776 |
|
|
$ |
18,465 |
|
|
$ |
(8,404 |
) |
|
$ |
146,261 |
|
|
Three Months Ended September 30, 2020 |
||||||||||||||||||||||||||
|
Water Solutions |
|
Crude Oil Logistics |
|
Liquids Logistics |
|
Corporate and Other |
|
Continuing Operations |
|
Discontinued Operations (TPSL, Mid-Con, Gas Blending) |
|
Consolidated |
||||||||||||||
|
(in thousands) |
||||||||||||||||||||||||||
Operating (loss) income |
$ |
(13,277 |
) |
|
$ |
48,239 |
|
|
$ |
14,338 |
|
|
$ |
(12,984 |
) |
|
$ |
36,316 |
|
|
$ |
— |
|
|
$ |
36,316 |
|
Depreciation and amortization |
62,220 |
|
|
17,232 |
|
|
7,026 |
|
|
991 |
|
|
87,469 |
|
|
— |
|
|
87,469 |
|
|||||||
Amortization recorded to cost of sales |
— |
|
|
— |
|
|
76 |
|
|
— |
|
|
76 |
|
|
— |
|
|
76 |
|
|||||||
Net unrealized losses (gains) on derivatives |
4,413 |
|
|
(3,317 |
) |
|
3,361 |
|
|
— |
|
|
4,457 |
|
|
— |
|
|
4,457 |
|
|||||||
Inventory valuation adjustment |
— |
|
|
— |
|
|
(1,639 |
) |
|
— |
|
|
(1,639 |
) |
|
— |
|
|
(1,639 |
) |
|||||||
Lower of cost or net realizable value adjustments |
— |
|
|
(19 |
) |
|
(1,513 |
) |
|
— |
|
|
(1,532 |
) |
|
— |
|
|
(1,532 |
) |
|||||||
Loss (gain) on disposal or impairment of assets, net |
6,223 |
|
|
(310 |
) |
|
43 |
|
|
(2 |
) |
|
5,954 |
|
|
— |
|
|
5,954 |
|
|||||||
Equity-based compensation expense |
— |
|
|
— |
|
|
— |
|
|
2,256 |
|
|
2,256 |
|
|
— |
|
|
2,256 |
|
|||||||
Acquisition expense |
1 |
|
|
— |
|
|
— |
|
|
168 |
|
|
169 |
|
|
— |
|
|
169 |
|
|||||||
Other income, net |
2 |
|
|
1,175 |
|
|
286 |
|
|
122 |
|
|
1,585 |
|
|
— |
|
|
1,585 |
|
|||||||
Adjusted EBITDA attributable to unconsolidated entities |
845 |
|
|
— |
|
|
(13 |
) |
|
(65 |
) |
|
767 |
|
|
— |
|
|
767 |
|
|||||||
Adjusted EBITDA attributable to noncontrolling interest |
(441 |
) |
|
— |
|
|
(736 |
) |
|
— |
|
|
(1,177 |
) |
|
— |
|
|
(1,177 |
) |
|||||||
Other |
1,061 |
|
|
2,181 |
|
|
28 |
|
|
— |
|
|
3,270 |
|
|
— |
|
|
3,270 |
|
|||||||
Discontinued operations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(190 |
) |
|
(190 |
) |
|||||||
Adjusted EBITDA |
$ |
61,047 |
|
|
$ |
65,181 |
|
|
$ |
21,257 |
|
|
$ |
(9,514 |
) |
|
$ |
137,971 |
|
|
$ |
(190 |
) |
|
$ |
137,781 |
|
|
Six Months Ended September 30, 2021 |
||||||||||||||||||
|
Water Solutions |
|
Crude Oil Logistics |
|
Liquids Logistics |
|
Corporate and Other |
|
Consolidated |
||||||||||
|
(in thousands) |
||||||||||||||||||
Operating income (loss) |
$ |
40,355 |
|
|
$ |
16,650 |
|
|
$ |
(41,948 |
) |
|
$ |
(19,573 |
) |
|
$ |
(4,516 |
) |
Depreciation and amortization |
113,651 |
|
|
24,863 |
|
|
11,653 |
|
|
3,498 |
|
|
153,665 |
|
|||||
Amortization recorded to cost of sales |
— |
|
|
— |
|
|
144 |
|
|
— |
|
|
144 |
|
|||||
Net unrealized losses (gains) on derivatives |
5,087 |
|
|
(21,607 |
) |
|
(18,234 |
) |
|
— |
|
|
(34,754 |
) |
|||||
CMA Differential Roll net losses (gains) |
— |
|
|
37,115 |
|
|
— |
|
|
— |
|
|
37,115 |
|
|||||
Inventory valuation adjustment |
— |
|
|
— |
|
|
767 |
|
|
— |
|
|
767 |
|
|||||
Lower of cost or net realizable value adjustments |
— |
|
|
(11 |
) |
|
(274 |
) |
|
— |
|
|
(285 |
) |
|||||
Loss (gain) on disposal or impairment of assets, net |
9,453 |
|
|
(56 |
) |
|
71,833 |
|
|
— |
|
|
81,230 |
|
|||||
Equity-based compensation expense |
— |
|
|
— |
|
|
— |
|
|
(1,793 |
) |
|
(1,793 |
) |
|||||
Acquisition expense |
— |
|
|
— |
|
|
— |
|
|
103 |
|
|
103 |
|
|||||
Other income, net |
622 |
|
|
350 |
|
|
658 |
|
|
349 |
|
|
1,979 |
|
|||||
Adjusted EBITDA attributable to unconsolidated entities |
1,175 |
|
|
— |
|
|
(19 |
) |
|
(120 |
) |
|
1,036 |
|
|||||
Adjusted EBITDA attributable to noncontrolling interest |
(1,568 |
) |
|
— |
|
|
(526 |
) |
|
— |
|
|
(2,094 |
) |
|||||
Other |
160 |
|
|
4,620 |
|
|
(15 |
) |
|
— |
|
|
4,765 |
|
|||||
Adjusted EBITDA |
$ |
168,935 |
|
|
$ |
61,924 |
|
|
$ |
24,039 |
|
|
$ |
(17,536 |
) |
|
$ |
237,362 |
|
|
Six Months Ended September 30, 2020 |
||||||||||||||||||||||||||
|
Water Solutions |
|
Crude Oil Logistics |
|
Liquids Logistics |
|
Corporate and Other |
|
Continuing Operations |
|
Discontinued Operations (TPSL, Mid-Con, Gas Blending) |
|
Consolidated |
||||||||||||||
|
(in thousands) |
||||||||||||||||||||||||||
Operating (loss) income |
$ |
(29,324 |
) |
|
$ |
71,559 |
|
|
$ |
18,900 |
|
|
$ |
(35,604 |
) |
|
$ |
25,531 |
|
|
$ |
— |
|
|
$ |
25,531 |
|
Depreciation and amortization |
120,353 |
|
|
34,027 |
|
|
15,182 |
|
|
1,893 |
|
|
171,455 |
|
|
— |
|
|
171,455 |
|
|||||||
Amortization recorded to cost of sales |
— |
|
|
— |
|
|
153 |
|
|
— |
|
|
153 |
|
|
— |
|
|
153 |
|
|||||||
Net unrealized losses on derivatives |
17,725 |
|
|
11,321 |
|
|
2,082 |
|
|
— |
|
|
31,128 |
|
|
— |
|
|
31,128 |
|
|||||||
Inventory valuation adjustment |
— |
|
|
— |
|
|
2,201 |
|
|
— |
|
|
2,201 |
|
|
— |
|
|
2,201 |
|
|||||||
Lower of cost or net realizable value adjustments |
— |
|
|
(29,079 |
) |
|
(4,476 |
) |
|
— |
|
|
(33,555 |
) |
|
— |
|
|
(33,555 |
) |
|||||||
Loss on disposal or impairment of assets, net |
6,552 |
|
|
1,140 |
|
|
47 |
|
|
10,237 |
|
|
17,976 |
|
|
— |
|
|
17,976 |
|
|||||||
Equity-based compensation expense |
— |
|
|
— |
|
|
— |
|
|
4,558 |
|
|
4,558 |
|
|
— |
|
|
4,558 |
|
|||||||
Acquisition expense |
13 |
|
|
— |
|
|
— |
|
|
313 |
|
|
326 |
|
|
— |
|
|
326 |
|
|||||||
Other income, net |
258 |
|
|
1,513 |
|
|
663 |
|
|
186 |
|
|
2,620 |
|
|
— |
|
|
2,620 |
|
|||||||
Adjusted EBITDA attributable to unconsolidated entities |
1,310 |
|
|
— |
|
|
(14 |
) |
|
(127 |
) |
|
1,169 |
|
|
— |
|
|
1,169 |
|
|||||||
Adjusted EBITDA attributable to noncontrolling interest |
(928 |
) |
|
— |
|
|
(1,272 |
) |
|
— |
|
|
(2,200 |
) |
|
— |
|
|
(2,200 |
) |
|||||||
Intersegment transactions (1) |
— |
|
|
— |
|
|
(27 |
) |
|
— |
|
|
(27 |
) |
|
— |
|
|
(27 |
) |
|||||||
Other |
2,014 |
|
|
5,554 |
|
|
50 |
|
|
— |
|
|
7,618 |
|
|
— |
|
|
7,618 |
|
|||||||
Discontinued operations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(484 |
) |
|
(484 |
) |
|||||||
Adjusted EBITDA |
$ |
117,973 |
|
|
$ |
96,035 |
|
|
$ |
33,489 |
|
|
$ |
(18,544 |
) |
|
$ |
228,953 |
|
|
$ |
(484 |
) |
|
$ |
228,469 |
|
_______
| (1) | Amount reflects the transactions with TPSL, Mid-Con and Gas Blending that are eliminated in consolidation. |
OPERATIONAL DATA (Unaudited) |
|||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
September 30, |
|
September 30, |
||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||
|
(in thousands, except per day amounts) |
||||||||||
Water Solutions: |
|
|
|
|
|
|
|
||||
Produced water processed (barrels per day) |
|
|
|
|
|
|
|
||||
Delaware Basin |
1,485,087 |
|
|
1,060,353 |
|
|
1,456,810 |
|
|
1,083,229 |
|
Eagle Ford Basin |
95,728 |
|
|
81,260 |
|
|
93,796 |
|
|
88,279 |
|
DJ Basin |
149,426 |
|
|
114,219 |
|
|
134,197 |
|
|
123,242 |
|
Other Basins |
30,142 |
|
|
26,264 |
|
|
29,118 |
|
|
29,277 |
|
Total |
1,760,383 |
|
|
1,282,096 |
|
|
1,713,921 |
|
|
1,324,027 |
|
Solids processed (barrels per day) |
927 |
|
|
863 |
|
|
1,120 |
|
|
1,378 |
|
Skim oil sold (barrels per day) |
2,821 |
|
|
2,611 |
|
|
2,662 |
|
|
1,654 |
|
|
|
|
|
|
|
|
|
||||
Crude Oil Logistics: |
|
|
|
|
|
|
|
||||
Crude oil sold (barrels) |
7,518 |
|
|
10,178 |
|
|
15,512 |
|
|
19,470 |
|
Crude oil transported on owned pipelines (barrels) |
7,337 |
|
|
9,992 |
|
|
14,371 |
|
|
20,468 |
|
Crude oil storage capacity - owned and leased (barrels) (1) |
|
|
|
|
5,232 |
|
|
5,239 |
|
||
Crude oil inventory (barrels) (1) |
|
|
|
|
1,249 |
|
|
1,507 |
|
||
|
|
|
|
|
|
|
|
||||
Liquids Logistics: |
|
|
|
|
|
|
|
||||
Refined products sold (gallons) |
196,932 |
|
|
220,243 |
|
|
382,238 |
|
|
432,217 |
|
Propane sold (gallons) |
180,322 |
|
|
252,693 |
|
|
350,601 |
|
|
504,982 |
|
Butane sold (gallons) |
124,881 |
|
|
143,392 |
|
|
247,455 |
|
|
262,958 |
|
Other products sold (gallons) |
97,310 |
|
|
114,734 |
|
|
190,163 |
|
|
228,956 |
|
Natural gas liquids and refined products storage capacity - owned and leased (gallons) (1) |
|
|
|
|
169,087 |
|
|
427,004 |
|
||
Refined products inventory (gallons) (1) |
|
|
|
|
2,576 |
|
|
1,209 |
|
||
Propane inventory (gallons) (1) |
|
|
|
|
98,429 |
|
|
116,462 |
|
||
Butane inventory (gallons) (1) |
|
|
|
|
75,500 |
|
|
92,672 |
|
||
Other products inventory (gallons) (1) |
|
|
|
|
17,465 |
|
|
18,671 |
|
||
_______
| (1) | Information is presented as of September 30, 2021 and September 30, 2020, respectively. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211109006577/en/
Contacts
NGL Energy Partners LP
Linda J. Bridges, 918-481-1119
Executive Vice President, Chief Financial Officer and Treasurer
Linda.Bridges@nglep.com
or
David Sullivan, 918-481-1119
Vice President - Finance
David.Sullivan@nglep.com
