Buckeye Partners, L.P. Reports 2009 Fourth Quarter and Full YearResults and Increases Quarterly Cash Distribution
Buckeye Partners, L.P. ("Buckeye") (BPL) today reported net
income attributable to Buckeye’s unitholders for the fourth quarter
of 2009 of $77.7 million, or $1.17 per limited partner ("LP") unit,
compared to $54.1 million, or $0.89 per LP unit, for the fourth
quarter of 2008. Net income attributable to Buckeye’s unitholders
for the fourth quarter of 2009 included the reversal of $12.8 million
of a previously recognized non-cash impairment expense as a result of
the sale in January 2010 of a natural gas liquids ("NGL") pipeline
system, and the recognition of $2.9 million of additional
restructuring charges. Combined, these special items increased net
income by $9.9 million, or $0.14 per LP unit, for the fourth quarter
of 2009.
Buckeye’s Adjusted EBITDA (as defined below) for the fourth quarter
of 2009 increased 18 percent to $105.7 million compared to $89.3
million for the fourth quarter of 2008. Operating income for the
fourth quarter of 2009 was $96.9 million compared to operating income
of $72.4 million for the fourth quarter of 2008. Operating income
before special items for the fourth quarter of 2009 was $87.0
million, an increase of 20 percent over the prior year.
Net income attributable to Buckeye’s unitholders for the year ended
December 31, 2009, was $141.0 million, or $1.84 per LP unit, compared
to $184.4 million, or $3.00 per LP unit, for the full year of 2008.
During 2009, Buckeye recorded special items totaling $91.8 million,
comprised of $59.7 million of non-cash impairment expense to reduce
the carrying value of the NGL pipeline system, which was sold in
January 2010, and $32.1 million of expense related to organizational
restructuring. Net income attributable to Buckeye’s unitholders
before special items for the full year of 2009 was $232.5 million, or
$3.63 per LP unit.
Buckeye’s Adjusted EBITDA for the year ended December 31, 2009,
increased 17 percent to $370.9 million compared to $318.2 million for
the full year of 2008. Operating income for the year ended December
31, 2009, was $208.4 million compared to $253.6 million for 2008.
Operating income before special items totaled $300.2 million for the
year ended December 31, 2009, an increase of 18 percent from 2008.
Buckeye also announced today that its general partner, Buckeye GP
LLC, declared a cash distribution of $0.9375 per LP unit for the
quarter ended December 31, 2009. The distribution will be payable on
February 26, 2010, to unitholders of record on February 16, 2010.
This cash distribution is the 23rd consecutive increase in the
quarterly cash distribution and represents a cumulative 5.6 percent
increase over the distribution declared for the fourth quarter of
2008. Buckeye has paid cash distributions in each quarter since its
formation in 1986.
"Buckeye continued to generate solid financial and operational
performance in the fourth quarter of 2009," said Forrest E. Wylie,
Chairman and CEO of Buckeye’s general partner. "Despite lower volumes
in our Pipeline Operations and Terminalling and Storage segments, we
generated an 18 percent increase in Adjusted EBITDA during the fourth
quarter of 2009 compared to the same quarter in 2008. We continue to
identify opportunities to grow and strengthen our business. In
mid-November 2009, we completed the previously announced acquisition
of 310 miles of refined petroleum products pipelines and three
refined petroleum products terminals from ConocoPhillips and
integrated these strategic assets into our business."
"Buckeye’s fourth quarter performance demonstrates that our
transition to a more commercially focused and entrepreneurial
business culture is producing tangible results," Wylie said.
"The fourth quarter capped a year of transformation for Buckeye,"
continued Wylie. "Our employees worked hard to change the culture to
make Buckeye a much more nimble commercial organization that is
better able to respond to the constantly evolving demands of the
market and needs of our customers, while continuing to focus on being
an environmentally responsible and reliable operator. In light of
difficult economic conditions impacting product demand, we are
pleased with our strong results in 2009 and the growth in cash
distributions to our unitholders."
Buckeye will host a conference call with members of executive
management on Friday, February 5, 2010, at 11:00 a.m. Eastern Time.
To access the live Webcast of the call, go to
http://www.visualwebcaster.com/event.asp?id=63429 10 minutes prior to
its start. A replay will be archived and available at this link for 14
days. Interested parties may participate in the call by dialing
866-226-1792 at least 10 minutes prior to the start and referencing
conference ID 404519.
Buckeye Partners, L.P. (www.buckeye.com) is a publicly traded
partnership that owns and operates one of the largest independent
refined petroleum products pipeline systems in the United States in
terms of volumes delivered, with approximately 5,400 miles of
pipeline. Buckeye Partners, L.P. also owns 67 refined petroleum
products terminals, operates and maintains approximately 2,400 miles
of pipeline under agreements with major oil and chemical companies,
owns a major natural gas storage facility in northern California, and
markets refined petroleum products in certain of the geographic areas
served by its pipeline and terminal operations. The general partner
of Buckeye Partners, L.P. is owned by Buckeye GP Holdings L.P. (BGH).
EBITDA, a measure not defined under U.S. generally accepted
accounting principles ("GAAP"), is defined by Buckeye as net income
attributable to Buckeye’s unitholders from continuing operations
before interest expense, income taxes, and depreciation and
amortization. The EBITDA measure eliminates the significant level of
non-cash depreciation and amortization expense that results from the
capital-intensive nature of Buckeye’s businesses and from intangible
assets recognized in business combinations. In addition, EBITDA is
unaffected by Buckeye’s capital structure due to the elimination of
interest expense and income taxes. Adjusted EBITDA, which also is a
non-GAAP measure, is defined by Buckeye as EBITDA plus non-cash
deferred lease expense, which is the difference between the estimated
annual land lease expense for Buckeye’s natural gas storage facility
in the Natural Gas Storage segment to be recorded under GAAP and the
actual cash to be paid for such annual land lease. In addition,
Buckeye’s management has excluded the impairment expense related to
the approximately 350-mile natural gas liquids pipeline from
Wattenberg, Colorado, to Bushton, Kansas, that Buckeye sold in
January 2010 (the "Buckeye NGL Pipeline"), and reorganization expense
from Adjusted EBITDA in order to evaluate the results of Buckeye’s
operations on a comparative basis over multiple periods. This press
release also includes discussion of net income attributable to
Buckeye’s unitholders before special items, which is a non-GAAP
measure derived by excluding from net income attributable to
Buckeye’s unitholders items to recognize the Buckeye NGL Pipeline
impairment expense and expenses related to an organizational
restructuring, and operating income before special items, which is a
non-GAAP measure derived by excluding from operating income items to
recognize the Buckeye NGL Pipeline impairment expense and expenses
related to an organizational restructuring. EBITDA, Adjusted EBITDA,
net income attributable to Buckeye’s unitholders before special
items, and operating income before special items 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 EBITDA and Adjusted EBITDA data presented may not be directly
comparable to similarly titled measures at other companies because
EBITDA and Adjusted EBITDA exclude some items that affect net income
attributable to Buckeye’s unitholders, and these items may vary among
other companies. Management of Buckeye uses Adjusted EBITDA to
evaluate the consolidated operating performance and the operating
performance of the business segments and to allocate resources and
capital to the business. In addition, Buckeye’s management uses
Adjusted EBITDA as a performance measure to evaluate the viability of
proposed projects and to determine overall rates of return on
alternative investment opportunities. Net income attributable to
Buckeye’s unitholders before special items and operating income
before special items are useful measures for investors because they
allow comparison of Buckeye’s core operations from period to period.
Distributable cash flow, which is a financial measure included in the
schedules to this press release, is another measure not defined under
GAAP that is defined by Buckeye as net income attributable to
Buckeye’s unitholders from continuing operations, excluding
depreciation and amortization, the Buckeye NGL Pipeline impairment
expense, and Buckeye’s reorganization expense. In addition,
distributable cash flow excludes the deferred land lease expense for
Buckeye’s Natural Gas Storage segment and the senior administrative
charge, which has been waived indefinitely, both of which are
non-cash items, and is reduced by maintenance capital expenditures.
Distributable cash flow is useful to investors because it removes
non-cash items from net income and provides a clearer picture of
Buckeye’s cash available for distribution to its unitholders.
Buckeye believes that investors benefit from having access to the
same financial measures used by Buckeye’s management. Further,
Buckeye believes that these measures are useful to investors because
they are one of the bases for comparing Buckeye’s operating
performance with that of other companies with similar operations,
although Buckeye’s measures may not be directly comparable to similar
measures used by other companies. Please see the attached
reconciliations of each of EBITDA, Adjusted EBITDA, net income
attributable to Buckeye’s unitholders before special items, and
distributable cash flow to net income attributable to Buckeye’s
unitholders, as well as a reconciliation of operating income before
special items to operating income.
This press release includes forward-looking statements that we
believe to be reasonable as of today’s date. Such statements are
identified by use of the words "anticipates," "believes,"
"estimates," "expects," "intends," "plans," "predicts," "projects,"
"should," and similar expressions. Actual results may differ
significantly because of risks and uncertainties that are difficult
to predict and that may be beyond Buckeye’s control. Among them are
(1) changes in laws or regulations to which we are subject, including
those that permit the treatment of us as a partnership for federal
income tax purposes, (2) terrorism, adverse weather conditions,
environmental releases, and natural disasters, (3) changes in the
marketplace for our products or services, such as increased
competition, better energy efficiency, or general reductions in
demand, (4) adverse regional or national economic conditions or
adverse capital market conditions, (5) shutdowns or interruptions at
the source points for the products we transport, store, or sell, (6)
unanticipated capital expenditures in connection with the
construction, repair, or replacement of our assets, (7) volatility in
the price of refined petroleum products and the value of natural gas
storage services, (8) nonpayment or nonperformance by our customers,
(9) our ability to realize efficiencies expected to result from our
previously announced reorganization, and (10) our ability to
integrate acquired assets with our existing assets and to realize
anticipated cost savings and other efficiencies. You should read our
Annual Report on Form 10-K and our most recent Quarterly Reports on
Form 10-Q for a more extensive list of factors that could affect
results. We undertake no obligation to revise our forward-looking
statements to reflect events or circumstances occurring after today’s
date.
BUCKEYE PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Revenue:
Product sales $ 396,909 $ 370,886 $ 1,125,653 $ 1,304,097
Transportation and
other services 181,959 156,773 644,719 592,555
----------- ----------- ----------- -----------
Total revenue 578,868 527,659 1,770,372 1,896,652
----------- ----------- ----------- -----------
Costs and expenses:
Cost of product sales
and natural gas
storage services 400,392 360,974 1,103,015 1,274,135
Operating expenses 66,346 72,330 273,985 279,454
Depreciation and
amortization 15,756 13,884 59,164 55,299
Asset impairment
expense, net (12,816) - 59,724 -
General and
administrative 9,359 8,101 33,984 34,143
Reorganization expense 2,948 - 32,057 -
----------- ----------- ----------- -----------
Total costs and
expenses 481,985 455,289 1,561,929 1,643,031
----------- ----------- ----------- -----------
Operating income 96,883 72,370 208,443 253,621
----------- ----------- ----------- -----------
Other income (expense):
Earnings from equity
investments 3,500 2,186 12,531 7,988
Interest and debt
expense (21,071) (19,378) (74,851) (74,387)
Other income 146 344 777 1,429
----------- ----------- ----------- -----------
Total other expense (17,425) (16,848) (61,543) (64,970)
----------- ----------- ----------- -----------
Income from continuing
operations 79,458 55,522 146,900 188,651
Income from
discontinued
operations - - - 1,230
----------- ----------- ----------- -----------
Net income 79,458 55,522 146,900 189,881
Less: Net income
attributable to
noncontrolling
interest (1,754) (1,404) (5,918) (5,492)
----------- ----------- ----------- -----------
Net income
attributable to
Buckeye Partners,
L.P. $ 77,704 $ 54,118 $ 140,982 $ 184,389
=========== =========== =========== ===========
Amounts attributable to
Buckeye Partners, L.P.
Income from
continuing
operations $ 77,704 $ 54,118 $ 140,982 $ 183,159
Income from
discontinued
operations - - - 1,230
----------- ----------- ----------- -----------
Total amounts
attributable to
Buckeye Partners,
L.P. $ 77,704 $ 54,118 $ 140,982 $ 184,389
=========== =========== =========== ===========
Allocation of net
income attributable to
Buckeye Partners, L.P.
Net income allocated
to general partner:
Income from
continuing
operations $ 19,790 $ 10,862 $ 55,153 $ 33,684
=========== =========== =========== ===========
Income from
discontinued
operations $ - $ - $ - $ 370
=========== =========== =========== ===========
Net income allocated
to limited partners:
Income from
continuing
operations $ 57,914 $ 43,256 $ 85,829 $ 149,475
=========== =========== =========== ===========
Income from
discontinued
operations $ - $ - $ - $ 860
=========== =========== =========== ===========
Calculation of Earnings
per Limited Partner
Unit-diluted:
Earnings per limited
partner unit-diluted:
Income from
continuing
operations $ 1.17 $ 0.89 $ 1.84 $ 2.97
Income from
discontinued
operations - - - 0.03
----------- ----------- ----------- -----------
Earnings per limited
partner unit-diluted $ 1.17 $ 0.89 $ 1.84 $ 3.00
=========== =========== =========== ===========
Weighted average number
of limited partner
units outstanding:
Basic 51,418 48,372 50,620 47,747
=========== =========== =========== ===========
Diluted 51,516 48,374 50,663 47,763
=========== =========== =========== ===========
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
(In thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
-------------------------- --------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Revenue:
Pipeline
Operations $ 98,583 $ 100,552 $ 392,667 $ 387,267
Terminalling and
Storage 42,468 31,406 136,576 119,155
Natural Gas
Storage 38,838 18,379 99,163 61,791
Energy Services 396,450 369,116 1,125,013 1,295,925
Other Operations 8,690 9,861 34,136 43,498
Intersegment
eliminations (6,161) (1,655) (17,183) (10,984)
----------- ----------- ----------- -----------
Total revenue $ 578,868 $ 527,659 $ 1,770,372 $ 1,896,652
=========== =========== =========== ===========
Operating income:
Pipeline
Operations $ 59,334 $ 44,455 $ 96,683 $ 153,250
Terminalling and
Storage 22,377 13,410 61,950 53,704
Natural Gas
Storage 11,057 11,218 30,748 32,692
Energy Services 2,886 800 13,521 6,039
Other Operations 1,229 2,487 5,541 7,936
----------- ----------- ----------- -----------
Total operating
income $ 96,883 $ 72,370 $ 208,443 $ 253,621
=========== =========== =========== ===========
Total costs and
expenses: (1)
Pipeline
Operations $ 39,249 $ 56,098 $ 295,984 $ 234,017
Terminalling and
Storage 20,091 17,996 74,626 65,451
Natural Gas
Storage 27,781 7,160 68,415 29,099
Energy Services 393,564 368,316 1,111,492 1,289,886
Other Operations 7,461 7,374 28,595 35,562
Intersegment
eliminations (6,161) (1,655) (17,183) (10,984)
----------- ----------- ----------- -----------
Total costs and
expenses $ 481,985 $ 455,289 $ 1,561,929 $ 1,643,031
=========== =========== =========== ===========
Depreciation and
amortization:
Pipeline
Operations $ 9,738 $ 9,575 $ 38,433 $ 38,279
Terminalling and
Storage 1,999 1,979 7,851 6,583
Natural Gas
Storage 2,186 1,271 6,458 5,003
Energy Services 1,355 613 4,547 3,683
Other Operations 477 446 1,874 1,751
----------- ----------- ----------- -----------
Total
depreciation
and
amortization $ 15,756 $ 13,884 $ 59,164 $ 55,299
=========== =========== =========== ===========
Adjusted EBITDA:
Pipeline
Operations $ 61,133 $ 55,489 $ 230,172 $ 196,852
Terminalling and
Storage 24,560 15,411 72,518 60,410
Natural Gas
Storage 14,480 14,037 42,214 42,374
Energy Services 4,384 1,363 19,419 9,818
Other Operations 1,146 2,974 6,607 8,785
----------- ----------- ----------- -----------
Adjusted EBITDA $ 105,703 $ 89,274 $ 370,930 $ 318,239
=========== =========== =========== ===========
Capital additions:
Pipeline
Operations $ 12,257 $ 13,478 $ 34,209 $ 38,182
Terminalling and
Storage 7,279 12,919 20,927 30,245
Natural Gas
Storage 3,949 21,986 20,860 49,514
Energy Services 4,185 1,540 7,317 4,191
Other Operations 146 297 700 297
----------- ----------- ----------- -----------
Total capital
additions $ 27,816 $ 50,220 $ 84,013 $ 122,429
=========== =========== =========== ===========
Summary of capital
additions:
Maintenance and
capital
expenditures $ 11,627 $ 14,439 $ 23,496 $ 28,936
Expansion and cost
reduction 16,189 35,781 60,517 93,493
----------- ----------- ----------- -----------
Total capital
additions $ 27,816 $ 50,220 $ 84,013 $ 122,429
=========== =========== =========== ===========
Operating data:
Pipeline
Throughput (b/d -
000s) 1,264.9 1,378.6 1,309.9 1,382.2
Pipeline Average
Tariff
(Cents/bbl.) 72.5 69.0 72.1 67.6
Terminal
Throughput (b/d -
000s) (2) 442.8 474.3 444.9 457.4
Product sales
(in millions
of gallons) 199.6 144.0 655.1 435.2
(1) Includes depreciation and amortization, asset impairment expense and
reorganization expense.
(2) Reported quantities exclude transfer volumes, which are non-revenue
generating transfers among our various terminals.
Previously reported amounts included transfer volumes.
December 31,
--------------------------
Key Balance Sheet 2009 2008
information: ----------- -----------
Cash and cash
equivalents $ 34,599 $ 58,843
Long-term debt 1,498,970 1,445,722
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
Non-GAAP Reconciliations
(In thousands, except per unit amounts and coverage ratio)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Operating income before
special charges:
Operating income $ 96,883 $ 72,370 $ 208,443 $ 253,621
Asset impairment expense,
net (12,816) - 59,724 -
Reorganization expense 2,948 - 32,057 -
--------- --------- --------- ---------
Operating income before
special charges $ 87,015 $ 72,370 $ 300,224 $ 253,621
========= ========= ========= =========
Net income allocated to
limited partners (before
special charges):
Net income as reported $ 79,458 $ 146,900
Add: Asset impairment
expense, net (12,816) 59,724
Add: Reorganization
expense 2,948 32,057
--------- ---------
Net income (as adjusted) 69,590 238,681
Less: Net income
attributable to
noncontrolling interest
(as adjusted) (1,800) (6,177)
--------- ---------
Net income attributable
to Buckeye Partners,
L.P. (as adjusted) $ 67,790 $ 232,504
========= =========
Earnings per limited
partner unit-diluted
(as adjusted):
Earnings per limited
partner unit-diluted
(as adjusted) $ 1.03 $ 3.63
========= =========
Adjusted EBITDA:
Net income attributable
to Buckeye Partners,
L.P. $ 77,704 $ 54,118 $ 140,982 $ 184,389
Less: Income from
discontinued operations - - - 1,230
--------- --------- --------- ---------
Net income from
continuing operations
attributable to
Buckeye Partners, L.P. 77,704 54,118 140,982 183,159
Interest and debt expense 21,071 19,378 74,851 74,387
Income tax expense
(benefit) (85) 361 (348) 796
Depreciation and
amortization 15,756 13,884 59,164 55,299
--------- --------- --------- ---------
EBITDA 114,446 87,741 274,649 313,641
Non-cash deferred lease
expense 1,125 1,533 4,500 4,598
Asset impairment expense,
net (12,816) - 59,724 -
Reorganization expense 2,948 - 32,057 -
--------- --------- --------- ---------
Adjusted EBITDA $ 105,703 $ 89,274 $ 370,930 $ 318,239
========= ========= ========= =========
Distributable Cash Flow:
Net income attributable
to Buckeye Partners,
L.P. $ 77,704 $ 54,118 $ 140,982 $ 184,389
Less: Income from
discontinued operations - - - 1,230
--------- --------- --------- ---------
Net income from
continuing operations
attributable to
Buckeye Partners, L.P. 77,704 54,118 140,982 183,159
Depreciation and
amortization 15,756 13,884 59,164 55,299
Non-cash deferred lease
expense 1,125 1,533 4,500 4,598
Asset impairment expense,
net (12,816) - 59,724 -
Reorganization expense 2,948 - 32,057 -
Non-cash senior
administrative charge - 475 475 1,900
Maintenance and capital
expenditures (11,627) (14,439) (23,496) (28,936)
--------- --------- --------- ---------
Distributable cash flow $ 73,090 $ 55,571 $ 273,406 $ 216,020
========= ========= ========= =========
Distributions for
Coverage Ratio (1) $ 60,760 $ 53,652 $ 237,318 $ 209,412
========= ========= ========= =========
Coverage Ratio 1.20 1.04 1.15 1.03
========= ========= ========= =========
(1) Represents cash distributions declared for respective periods.
