WNRL
$20.95
Western Refining Logistics LP
$.25
1.21%
Earnings Details
3rd Quarter September 2016
Monday, October 31, 2016 11:45:29 PM
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Summary

Western Refining Logistics LP (WNRL) Recent Earnings

Western Refining Logistics LP (WNRL) reported 3rd Quarter September 2016 earnings of $0.23 per share on revenue of $569.3 million. The consensus earnings estimate was $0.35 per share on revenue of $599.9 million. Revenue fell 15.6% compared to the same quarter a year ago.

Western Refining Logistics LP is a fee-based, growth-oriented, limited partnership that owns, operates, develops and acquires logistics and related assets and businesses to include terminals, storage tanks, pipelines and other logistics assets.

Results
Reported Earnings
$0.23
Earnings Whisper
-
Consensus Estimate
$0.35
Reported Revenue
$569.3 Mil
Revenue Estimate
$599.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Western Refining Logistics, LP Reports Third Quarter 2016 Results

Net income attributable to limited partners, $14.0 million; Distributable cash flow of $24.7 million

Increased quarterly distribution to $0.4225 per unit; 11th consecutive increase since IPO

-- Completed purchase of St. Paul Park refinery logistics assets for $210 million

-- Completed $193 million equity offering; increased revolver to $500 million

Western Refining Logistics, LP (WNRL) today reported third quarter 2016 net income attributable to limited partners of $14.0 million, or $0.23 per common limited partner unit, which compares to $16.5 million and $0.35, respectively, in the third quarter of 2015. Third quarter 2016 EBITDA was $29.1 million and distributable cash flow was $24.7 million; this compares to $27.7 million and $18.6 million, respectively, for the third quarter of 2015.

"During the quarter, we acquired St. Paul Park refinery storage and terminalling assets, which expands our geographical diversity," said Jeff Stevens, President and Chief Executive Officer of WNRL’s general partner. "We successfully completed an equity offering to fund the acquisition and expanded our revolver to $500 million to position us for further growth. We believe we have sufficient liquidity to fund our business plan for the foreseeable future.

"WNRL delivered good results for the quarter, demonstrating the locational advantage of our asset base in the Delaware Basin. We’ve completed pipeline connections to new production, which will help increase our pipeline and gathering volumes. This not only benefits WNRL, but our sponsor Western Refining also benefits from increased volumes of high quality, advantaged crude oil," continued Stevens.

On October 24, 2016, the board of directors declared a quarterly cash distribution for the third quarter 2016 of $0.4225 per unit, or $1.69 per unit, on an annualized basis. This distribution represents a 15% compound annual growth rate since WNRL’s October 2013 initial public offering.

Stevens concluded, "Delaware Basin rig activity and crude oil production growth estimates continue to be encouraging. We believe we are well-positioned to increase EBITDA and distributions as crude oil production increases. Additionally, WNRL will benefit from the geographic diversification and growth potential as a result of the St. Paul Park logistics assets acquisition. We continue to be excited about the strategic locations of our assets and the growth potential of WNRL."

Conference Call Information

On Tuesday, November 1, 2016, at 4:00 p.m. ET, WNRL will hold a webcast and conference call to discuss the reported results and provide an update on partnership operations. The webcast can be accessed at Western Refining Logistics, LP’s website, www.wnrl.com. The call can also be heard by dialing (844) 831-3028 or (315) 625-6887, pass code: 83728384. The audio replay will be available two hours after the end of the call through November 15, 2016 by dialing (855) 859-2056 or (404) 537-3406, pass code: 83728384.

About Western Refining Logistics, LP

Western Refining Logistics, LP is principally a fee-based, growth-oriented master limited partnership formed by Western Refining, Inc. (WNR) to own, operate, develop and acquire terminals, storage tanks, pipelines and other logistics assets related to the terminalling, transportation and storage of crude oil and refined products. Headquartered in El Paso, Texas, Western Refining Logistics, LP’s assets include approximately 692 miles of pipelines, approximately 12.4 million barrels of active storage capacity, distribution of wholesale petroleum products and crude oil trucking.

More information about Western Refining Logistics, LP is available at www.wnrl.com.

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with U.S. generally accepted accounting principles (GAAP), management utilizes non-GAAP measures to facilitate comparisons of past performance. This press release and supporting schedules include the non-GAAP measures Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Distributable Cash Flow. We believe certain investors and financial analysts use EBITDA and Distributable Cash Flow to evaluate WNRL’s financial performance between periods and to compare WNRL’s performance to certain competitors. We believe certain investors and financial analysts use Distributable Cash Flow to determine the amount of cash available for distribution to our unitholders. These additional financial measures are reconciled from the most directly comparable measures as reported in accordance with GAAP and should be viewed in addition to, and not in lieu of, financial information that we report in accordance with GAAP.

Cautionary Statement on Forward-Looking Statements

This press release contains forward-looking statements. The forward-looking statements reflect WNRL’s current expectation regarding future events, results or outcomes. The forward-looking statements contained herein include statements related to, among other things: WNRL’s positioning for continued growth; WNRL’s ability to fund its business plan in the future; the locational advantage of WNRL’s assets in the Delaware Basin; the ability of WNRL’s new pipeline connections to increase its pipeline and gathering volumes; growing rig activity and crude oil production in the Delaware Basin and WNRL’s ability to increase EBITDA and distributions as crude oil production increases; and WNRL’s ability to benefit from the St. Paul Park logistics assets acquisition. These statements are subject to the general risks inherent in WNRL’s business. These expectations may or may not be realized and some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, WNRL’s business and operations involve numerous risks and uncertainties, many of which are beyond its control, which could result in WNRL’s expectations not being realized, or otherwise materially affect WNRL’s financial condition, results of operations, and cash flows. Additional information relating to the uncertainties affecting WNRL’s business is contained in its filings with the Securities and Exchange Commission to which you are referred. The forward-looking statements are only as of the date made. Except as required by law, WNRL does not undertake any obligation to (and expressly disclaims any obligation to) update any forward-looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence of unanticipated events.

Results of Operations

The following tables set forth WNRL’s summary historical financial and operating data for the periods indicated below:

Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
(Unaudited)
(In thousands, except per unit data)
Revenues:
Fee based:
Affiliate
$
51,749
$
58,111
$
157,642
$
151,054
Third-party
814
787
2,181
2,089
Sales based:
Affiliate
131,405
158,848
355,459
456,195
Third-party
385,293
462,924
1,100,620
1,414,632
Total revenues
569,261
680,670
1,615,902
2,023,970
Operating costs and expenses:
Cost of products sold:
Affiliate
128,792
156,388
347,811
449,087
Third-party
366,744
445,169
1,047,571
1,358,197
Operating and maintenance expenses
43,454
45,927
131,103
131,156
Selling, general and administrative expenses
6,483
5,812
17,854
18,517
Gain on disposal of assets, net
(62
)
(13
)
(963
)
(257
)
Depreciation and amortization
10,579
8,963
29,470
25,816
Total operating costs and expenses
555,990
662,246
1,572,846
1,982,516
Operating income
13,271
18,424
43,056
41,454
Other income (expense):
Interest and debt expense
(6,148
)
(6,204
)
(19,614
)
(16,416
)
Other, net
17
16
(87
)
51
Net income before income taxes
7,140
12,236
23,355
25,089
Provision for income taxes
(282
)
(3
)
(760
)
(354
)
Net income
6,858
12,233
22,595
24,735
Less net loss attributable to General Partner
(7,165
)
(4,260
)
(23,309
)
(22,996
)
Net income attributable to limited partners
$
14,023
$
16,493
$
45,904
$
47,731
Net income per limited partner unit:
Common - basic
$
0.23
$
0.35
$
0.83
$
1.01
Common - diluted
0.23
0.35
0.83
1.01
Subordinated - basic and diluted
0.25
0.35
0.89
1.01
Weighted average limited partner units outstanding:
Common - basic
30,884
24,017
27,260
24,006
Common - diluted
30,901
24,024
27,274
24,024
Subordinated - basic and diluted
22,811
22,811
22,811
22,811
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
(Unaudited)
(In thousands)
Cash Flow Data
Net cash provided by (used in):
Operating activities
$
33,293
$
17,253
$
80,709
$
53,410
Investing activities
(8,502
)
(11,395
)
(23,613
)
(53,255
)
Financing activities
(25,811
)
(13,036
)
(85,159
)
16,919
Capital expenditures
8,530
11,558
24,618
53,708
Other Data
EBITDA (1)
$
29,090
$
27,683
$
89,384
$
78,959
Distributable cash flow (1)
24,704
18,648
72,322
57,857
Balance Sheet Data (at end of period)
Cash and cash equivalents
$
16,542
$
71,372
Property, plant and equipment, net
422,006
426,093
Total assets
582,730
643,385
Total liabilities
478,287
434,940
Division equity
--
236,503
Partners’ capital
104,443
(28,058
)
Total liabilities, division equity and partners’ capital
582,730
643,385

(1) We define EBITDA as earnings before interest and debt expense, provision for income taxes and depreciation and amortization. We define Distributable Cash Flow as EBITDA plus the change in deferred revenues, less interest accruals, income taxes paid, maintenance capital expenditures and distributions declared on our TexNew Mex units. The GAAP performance measure most directly comparable to EBITDA is net income. The GAAP liquidity measure most directly comparable to EBITDA and distributable cash flow is net cash provided by operating activities. These non-GAAP financial measures should not be considered alternatives to GAAP net income or net cash provided by operating activities.

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;

EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and

EBITDA, as we calculate it, may differ from the EBITDA calculations of our affiliates or other companies in our industry, thereby limiting its usefulness as a comparative measure.

EBITDA and Distributable Cash Flow are used as supplemental financial measures by management and by external users of our financial statements, such as investors and commercial banks, to assess:

our operating performance as compared to those of other companies in the midstream energy industry, without regard to financial methods, historical cost basis or capital structure;

the ability of our assets to generate sufficient cash to make distributions to our unitholders;

-- our ability to incur and service debt and fund capital expenditures; and

the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

Distributable Cash Flow is a standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is, in part, measured by its yield. Yield is based on the amount of cash distributions a partnership can pay to a unitholder. Although distributable cash flow is a liquidity measure, it is presented in this reconciliation to net income as supplemental information.

We believe that the presentation of these non-GAAP measures provides useful information to investors in assessing our financial condition and results of operations. These non-GAAP measures should not be considered as alternatives to net income or any other measure of financial performance presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income attributable to limited partners. These non-GAAP measures may vary from those of other companies. As a result, EBITDA and Distributable Cash Flow as presented herein may not be comparable to similarly titled measures of other companies.

The calculation of EBITDA and Distributable Cash Flow includes the results of operations for the St. Paul Park Logistics Assets subsequent to the St. Paul Park Logistics Transaction and the TexNew Mex Pipeline System for the three and nine months ended September 30, 2016. The results of operations for the St. Paul Park Logistics Assets and the TexNew Mex Pipeline System are excluded from the EBITDA and Distributable Cash Flow calculations for the comparable periods in the prior year because a retrospective adjustment of these performance measures is not a representative measure of performance results.

The following table reconciles net income attributable to limited partners to EBITDA for the periods presented and Distributable Cash Flow for the three and nine months ended September 30, 2016 and 2015, respectively.

Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
(Unaudited)
(In thousands)
Net income attributable to limited partners $
14,023
$
16,493
$
45,904
$
47,731
Interest and debt expense
6,148
6,204
19,614
16,416
Provision for income taxes
282
3
760
354
Depreciation and amortization
8,637
4,983
23,106
14,458
EBITDA
29,090
27,683
89,384
78,959
Change in deferred revenues
4,460
(218
)
8,138
2,229
Interest accruals
(6,377
)
(5,858
)
(19,158
)
(15,491
)
Income taxes paid
(150
)
(156
)
(244
)
(737
)
Maintenance capital expenditures
(2,319
)
(2,803
)
(5,798
)
(7,885
)
Other
--
--
--
782
Distributable cash flow
$
24,704
$
18,648
$
72,322
$
57,857

Logistics Segment

Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
(Unaudited)
(In thousands, except key operating statistics)
Statement of Operations Data:
Fee based revenues:
Affiliate
$
42,319
$
46,669
$
126,288
$
117,723
Third-party
814
787
2,181
2,089
Total revenues
43,133
47,456
128,469
119,812
Operating costs and expenses:
Operating and maintenance expenses
25,241
26,063
75,732
73,621
General and administrative expenses
629
303
2,000
2,168
Loss (gain) on disposal of assets, net
(12
)
124
(17
)
124
Depreciation and amortization
8,581
7,817
25,083
22,486
Total operating costs and expenses
34,439
34,307
102,798
98,399
Operating income
$
8,694
$
13,149
$
25,671
$
21,413
Key Operating Statistics:
Pipeline and gathering (bpd):
Mainline movements (1):
Permian/Delaware Basin system
49,709
56,745
51,709
45,784
Four Corners system
53,070
66,602
54,523
54,719
TexNew Mex system
7,504
14,834
10,132
6,131
Gathering (truck offloading):
Permian/Delaware Basin system
15,514
25,961
17,948
24,207
Four Corners system
9,577
16,487
11,151
13,387
Pipeline Gathering and Injection system:
Permian/Delaware Basin system
15,229
8,458
11,486
5,353
Four Corners system
21,776
28,841
24,470
23,859
TexNew Mex system
1,669
--
674
--
Tank storage capacity (bbls) (2)
959,087
651,545
877,899
630,761
Terminalling, transportation and storage:
Shipments into and out of storage (bpd) (includes asphalt) 416,761
408,787
399,415
396,506
Terminal storage capacity (bbls) (2)
8,082,734
7,420,754
7,619,637
7,464,236

(1) Some barrels of crude oil in route to Western’s Gallup refinery and Permian/Delaware Basin are transported on more than one of our mainlines. Mainline movements for the Four Corners and Delaware Basin systems include each barrel transported on each mainline. During the second quarter of 2015, we began shipping crude oil from the Four Corners system, through the TexNew Mex Pipeline System, to the Permian/Delaware system.

(2) Storage shell capacities represent weighted-average capacities for the periods indicated.

Wholesale Segment

Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
(Unaudited)
(In thousands, except key operating stats)
Statement of Operations Data:
Fee based revenues (1):
Affiliate
$
9,430
$
11,442
$
31,354
$
33,331
Sales based revenues (1):
Affiliate
131,405
158,848
355,459
456,195
Third-party
385,293
462,924
1,100,620
1,414,632
Total revenues
526,128
633,214
1,487,433
1,904,158
Operating costs and expenses:
Cost of products sold:
Affiliate
128,792
156,388
347,811
449,087
Third-party
366,744
445,169
1,047,571
1,358,197
Operating and maintenance expenses
18,213
19,864
55,371
57,535
Selling, general and administrative expenses
2,065
2,269
6,123
6,715
Gain on disposal of assets, net
(50
)
(137
)
(946
)
(381
)
Depreciation and amortization
1,998
1,146
4,387
3,330
Total operating costs and expenses
517,762
624,699
1,460,317
1,874,483
Operating income
$
8,366
$
8,515
$
27,116
$
29,675
Key Operating Statistics:
Fuel gallons sold (in thousands)
313,600
305,566
940,029
919,808
Fuel gallons sold to retail (included in fuel gallons sold above) (in thousands) 87,131
81,538
250,693
235,824
Fuel margin per gallon (2)
$
0.030
$
0.029
$
0.028
$
0.031
Lubricant gallons sold (in thousands)
1,355
2,998
5,402
8,969
Lubricant margin per gallon (3)
$
1.05
$
0.70
$
0.85
$
0.71
Asphalt trucking volume (bpd)
5,620
--
4,461
--
Crude oil trucking volume (bpd)
36,144
49,620
37,909
47,245
Average crude oil revenue per barrel
$
2.11
$
2.51
$
2.17
$
2.58

(1) All wholesale fee based revenues are generated through fees charged to Western’s refining segment for truck transportation and delivery of crude oil and asphalt. Affiliate and third-party sales based revenues result from sales of refined products to Western and third-party customers at a delivered price that includes charges for product transportation.

(2) Fuel margin per gallon is a measurement calculated by dividing the difference between fuel sales, net of transportation charges, and cost of fuel sales for our wholesale business by the number of gallons sold. Fuel margin per gallon is a measure frequently used in the petroleum products wholesale industry to measure operating results related to fuel sales.

(3) Lubricant margin per gallon is a measurement calculated by dividing the difference between lubricant sales, net of transportation charges, and lubricant cost of products sold by the number of gallons sold. Lubricant margin is a measure frequently used in the petroleum products wholesale industry to measure operating results related to lubricant sales.

Investor and Analyst Contact:
Michelle Clemente
(602) 286-1533
Jeffrey S. Beyersdorfer
(602) 286-1530
Retail Investors Contact:
Alpha IR Group
Dylan Schweitzer
Chris Hodges
(312) 445-2870
WNRL@alpha-ir.com
Media Contact:
Gary W. Hanson
(602) 286-1777

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