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BPL > SEC Filings for BPL > Form 8-K on 14-Feb-2014All Recent SEC Filings

Show all filings for BUCKEYE PARTNERS, L.P.

Form 8-K for BUCKEYE PARTNERS, L.P.


14-Feb-2014

Other Events


Item 8.01. Other Events.

On February 7, 2014, Buckeye Partners, L.P. (the "Partnership") reported its preliminary unaudited financial results for the fourth quarter and full year of 2013.

Fourth Quarter Results

The Partnership reported income from continuing operations for the fourth quarter of 2013 of $87.5 million compared to income from continuing operations for the fourth quarter of 2012 of $32.5 million, which included an asset impairment charge of $60.0 million relating to ceasing operations on a portion of the Partnership's NORCO pipeline system. Income from continuing operations attributable to the Partnership's unitholders was $0.75 per diluted limited partnership unit ("LP Unit") for the fourth quarter of 2013 compared to $0.32 per diluted LP Unit for the fourth quarter of 2012. The diluted weighted average of LP Units outstanding in the fourth quarter of 2013 was 114.1 million compared to 98.5 million in the fourth quarter of 2012. The increase in LP Units is primarily the result of two LP Unit offerings during 2013, the proceeds from which were used to reduce outstanding borrowings and fund a portion of the Hess terminals acquisition.

Adjusted EBITDA from continuing operations for the fourth quarter of 2013 was $178.6 million compared to $165.4 million for the fourth quarter of 2012. Distributable cash flow from continuing operations for the fourth quarter of 2013 was $117.8 million compared to $118.1 million for the fourth quarter of 2012. The Partnership also reported distribution coverage of 0.94 times for the fourth quarter of 2013.

Maintenance capital expenditures for the fourth quarter of 2013 were $27.3 million compared to $18.5 million for the fourth quarter of 2012 and interest and debt expense, excluding certain non-cash items, for the fourth quarter of 2013 was $33.3 million compared to $29.0 million for the fourth quarter of 2012.

Full Year Results

For 2013, the Partnership reported income from continuing operations of $351.6 million compared to income from continuing operations for 2012 of $235.9 million, which included the NORCO asset impairment charge. Income from continuing operations attributable to the Partnership's unitholders was $3.23 per diluted LP Unit for 2013 compared to $2.37 per diluted LP Unit for 2012. The diluted weighted average of LP Units outstanding for 2013 was 107.7 million compared to 97.6 million for 2012. The increase in LP Units is primarily the result of two LP Unit offerings during 2013.

For 2013, Adjusted EBITDA from continuing operations was $648.8 million compared to $552.4 million for 2012. Distributable cash flow from continuing operations was $454.2 million compared to $385.8 million for 2012. The Partnership reported distribution coverage of 0.99 times for 2013. Maintenance capital expenditures for 2013 were $71.5 million compared with $54.1 million for 2012.

Discontinued Operations. The board of directors of the Partnership's general partner approved a plan in December 2013 to divest its noncore Natural Gas Storage business. The Partnership expects to complete the disposition of this business and its assets in 2014. The Partnership recorded an asset impairment charge of $169.0 million relating to discontinuing the Natural Gas Storage business. This business has been classified as discontinued operations in the Partnership's consolidated financial statements.

Business Segments. The Partnership also announced changes to its operating structure and related reporting segments to better align its businesses with its long-term growth strategies.

The new Global Marine Terminals segment includes the Partnership's BORCO facility, Yabucoa terminal and the St. Lucia terminal acquired from Hess Corporation ("Hess"), as well as in the New York Harbor at the legacy Perth Amboy terminal and the Port Reading and Raritan Bay terminals acquired from Hess. Khalid A. Muslih, formerly


President of the International Operations business unit, will serve as President of the new Global Marine Terminals business unit.

The Partnership's Merchant Services segment includes the legacy Energy Services segment, the Caribbean fuel oil supply and distribution business and new merchant activities supporting the terminals recently acquired from Hess. Jeremiah J. Ashcroft III continues as President of the Buckeye Services business unit, which includes the new Merchant Services segment as well as the unchanged Development & Logistics segment.

The Partnership's Pipelines & Terminals segment is comprised of the legacy domestic terminals (other than Perth Amboy) combined with the domestic terminals acquired from Hess in Upstate New York, the Middle Atlantic, the Southeast (including Florida), and the New York Harbor, excluding the Port Reading and Raritan Bay terminals. The Domestic Pipelines & Terminals business unit, which is the Partnership's largest, remains under the leadership of Robert A. Malecky.

Cash Distribution

The Partnership also announced that its general partner declared a cash distribution of $1.0875 per LP Unit for the quarter ended December 31, 2013. The distribution will be payable on February 25, 2014, to unitholders of record on February 18, 2014. This cash distribution represents a 4.8 percent increase over the $1.0375 per LP Unit distribution declared for the fourth quarter of 2012. For 2013, the Partnership declared distributions of $4.275 per LP Unit, which represents a 3.0 percent increase over the $4.15 per LP Unit for 2012.

Adjusted EBITDA and Distributable Cash Flow

Adjusted EBITDA and distributable cash flow are measures not defined by GAAP. Adjusted EBITDA is the primary measure used by the Partnership's senior management, including the Chief Executive Officer of its general partner, to
(i) evaluate the Partnership's consolidated operating performance and the operating performance of the Partnership's business segments, (ii) allocate resources and capital to business segments, (iii) evaluate the viability of proposed projects, and (iv) determine overall rates of return on alternative investment opportunities. Distributable cash flow is another measure used by senior management to provide a clearer picture of the Partnership's cash available for distribution to its unitholders. Adjusted EBITDA and distributable cash flow eliminate (i) non-cash expenses, including, but not limited to, depreciation and amortization expense resulting from the significant capital investments the Partnership makes in its businesses and from intangible assets recognized in business combinations, (ii) charges for obligations expected to be settled with the issuance of equity instruments, and (iii) items that are not indicative of the Partnership's core operating performance results and business outlook.

The Partnership believes that investors benefit from having access to the same financial measures used by senior management and that these measures are useful to investors because they aid in comparing the Partnership's operating performance with that of other companies with similar operations. The Adjusted EBITDA and distributable cash flow data presented by the Partnership may not be comparable to similarly titled measures at other companies because these items may be defined differently by other companies. Please see the reconciliations of each of Adjusted EBITDA and distributable cash flow to net income below.


                             BUCKEYE PARTNERS, L.P.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                    (In thousands, except per unit amounts)

                                  (Unaudited)



                                        Three Months Ended                Year Ended
                                           December 31,                  December 31,
                                       2013           2012           2013           2012
Revenue:
Product sales                       $ 1,357,353    $   869,602    $ 3,966,247    $ 3,332,301
Transportation, storage and
other services                          298,231        255,161      1,087,854        953,602
Total revenue                         1,655,584      1,124,763      5,054,101      4,285,903

Costs and expenses:
Cost of product sales                 1,353,996        856,061      3,944,448      3,304,326
Operating expenses                      120,647         91,858        413,577        372,993
Depreciation and amortization            37,499         40,039        147,591        138,857
General and administrative               19,625         17,647         70,444         65,241
Asset impairment expense                      -         59,950              -         59,950
Total costs and expenses              1,531,767      1,065,555      4,576,060      3,941,367
Operating income                        123,817         59,208        478,041        344,536

Other income (expense):
Earnings from equity investments            272          1,813          5,243          6,100
Interest and debt expense               (36,093 )      (29,821 )     (130,920 )     (114,980 )
Other income (expense)                        8           (509 )          295           (452 )
Total other expense, net                (35,813 )      (28,517 )     (125,382 )     (109,332 )

Income from continuing
operations before taxes                  88,004         30,691        352,659        235,204
Income tax benefit (expense)               (539 )        1,852         (1,060 )          675
Income from continuing
operations                               87,465         32,543        351,599        235,879
Income (loss) from discontinued
operations (including a $169
million asset impairment)              (169,160 )        3,256       (187,174 )       (5,328 )
Net income (loss)                       (81,695 )       35,799        164,425        230,551
Less: Net income attributable to
noncontrolling interests                 (1,057 )         (836 )       (4,152 )       (4,134 )
Net income (loss) attributable
to Buckeye Partners, L.P.           $   (82,752 )  $    34,963    $   160,273    $   226,417

Basic earnings (loss) per unit
attributable to Buckeye
Partners, L.P.:
Continuing operations               $      0.76    $      0.33    $      3.25    $      2.38
Discontinued operations                   (1.49 )         0.03          (1.75 )        (0.05 )
Total                               $     (0.73 )  $      0.36    $      1.50    $      2.33

Diluted earnings (loss) per unit
attributable to Buckeye
Partners, L.P.:
Continuing operations               $      0.75    $      0.32    $      3.23    $      2.37
Discontinued operations                   (1.48 )         0.03          (1.74 )        (0.05 )
Total                               $     (0.73 )  $      0.35    $      1.49    $      2.32

Weighted average units
outstanding:
Basic                                   113,535         98,180        107,202         97,309
Diluted                                 114,091         98,514        107,677         97,635


                             BUCKEYE PARTNERS, L.P.

                     SELECTED FINANCIAL AND OPERATING DATA

                                 (In thousands)

                                  (Unaudited)



                                        Three Months Ended                Year Ended
                                           December 31,                  December 31,
                                       2013           2012           2013           2012
Revenue:
Pipelines & Terminals               $   217,887    $   185,472    $   786,759    $   709,341
Global Marine Terminals                  65,854         61,851        252,270        218,180
Merchant Services                     1,362,857        870,119      3,990,575      3,339,241
Development & Logistics                  17,199         12,796         59,247         50,211
Intersegment                             (8,213 )       (5,475 )      (34,750 )      (31,070 )
Total revenue                       $ 1,655,584    $ 1,124,763    $ 5,054,101    $ 4,285,903

Total costs and expenses: (1)
Pipelines & Terminals               $   113,566    $   154,608    $   401,329    $   441,531
Global Marine Terminals                  48,714         42,096        176,890        146,051
Merchant Services                     1,364,089        863,994      3,987,490      3,346,721
Development & Logistics                  13,611         10,332         45,101         38,134
Intersegment                             (8,213 )       (5,475 )      (34,750 )      (31,070 )
Total costs and expenses            $ 1,531,767    $ 1,065,555    $ 4,576,060    $ 3,941,367

Depreciation and amortization:
Pipelines & Terminals               $    16,717    $    19,398    $    63,799    $    66,457
Global Marine Terminals                  18,828         18,730         76,146         64,912
Merchant Services                         1,461          1,417          5,693          5,521
Development & Logistics                     493            494          1,953          1,967
Total depreciation and
amortization                        $    37,499    $    40,039    $   147,591    $   138,857

Operating income (loss):
Pipelines & Terminals               $   104,321    $    30,864    $   385,430    $   267,810
Global Marine Terminals                  17,140         19,755         75,380         72,129
Merchant Services                        (1,232 )        6,125          3,085         (7,480 )
Development & Logistics                   3,588          2,464         14,146         12,077
Total operating income              $   123,817    $    59,208    $   478,041    $   344,536

Adjusted EBITDA from continuing
operations:
Pipelines & Terminals               $   132,195    $   116,724    $   471,091    $   409,541
Global Marine Terminals                  40,494         36,890        149,740        128,581
Merchant Services                         1,772          8,801         12,616          1,144
Development & Logistics                   4,120          3,003         15,367         13,174
Adjusted EBITDA from continuing
operations                          $   178,581    $   165,418    $   648,814    $   552,440

Capital additions, net: (2)
Pipelines & Terminals               $    37,313    $    51,497    $   151,827    $   158,547
Global Marine Terminals                  65,685         45,005        206,472        167,208
Merchant Services                             -            983            113          2,490
Development & Logistics                   1,398            443          2,840            724
Total segment capital additions,
net                                     104,396         97,928        361,252        328,969
Natural Gas Storage disposal
group (3)                                    41            405            193          2,369
Total capital additions, net        $   104,437    $    98,333    $   361,445    $   331,338


                                       Three Months Ended               Year Ended
                                          December 31,                 December 31,
                                       2013           2012          2013          2012
Summary of capital additions,
net: (2) (3)
Maintenance capital expenditures    $    27,291    $   18,661    $   71,595    $   54,425
Expansion and cost reduction             77,146        79,672       289,850       276,913
Total capital additions, net        $   104,437    $   98,333    $  361,445    $  331,338




                                       December 31,
                                    2013          2012
Key Balance Sheet Information:
Cash and cash equivalent         $     4,950   $     6,776
Long-term debt, total (4)          3,092,711     2,735,244




--------------------------------------------------------------------------------
(1)                 Includes depreciation and amortization and asset impairment
expense.

(2)                 Amounts exclude accruals for capital expenditures.

(3)                 Includes Natural Gas Storage disposal group capital

expenditures as follows: (i) maintenance capital expenditures of $41 thousand and $119 thousand for the quarter and year ended December 31, 2013, respectively, and $203 thousand and $355 thousand for the quarter and year ended December 31, 2012, respectively, and (ii) expansion and cost reduction capital of $74 thousand for the year ended December 31, 2013, and $202 thousand and $2 million for the quarter and year ended December 31, 2012, respectively.

(4) Includes long-term debt portion of Buckeye Partners, L.P. Credit Facility of $29 million and $665 million as of December 31, 2013 and 2012, respectively.


                             BUCKEYE PARTNERS, L.P.

               SELECTED FINANCIAL AND OPERATING DATA - Continued

                                  (Unaudited)



                                      Three Months Ended            Year Ended
                                         December 31               December 31,
                                      2013         2012         2013         2012
Pipeline & Terminals (average
bpd in thousands):
Pipelines:
Gasoline                                710.7        690.4        717.8        701.9
Jet fuel                                335.1        328.5        334.4        339.2
Middle distillates (1)                  390.7        342.9        345.7        318.6
Other products (2)                       26.1         20.7         28.5         25.9
Total pipelines throughput            1,462.6      1,382.5      1,426.4      1,385.6

Terminals:
Products throughput                   1,003.9        940.1        975.1        916.7

Pipeline Average Tariff
(cents/bbl)                              83.6         80.3         82.2         81.5

Merchant Services (in millions
of gallons) (3)
Sales volumes                           461.7        289.2      1,371.5      1,125.9



(1) Includes diesel fuel and heating oil.

(2) Includes liquefied petroleum gas, intermediate petroleum products and crude oil.

(3) Includes volumes related to fuel oil supply and distribution services which began in late 2012.


                             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,
                                       2013           2012          2013          2012
Income from continuing
operations                          $    87,465    $   32,543    $  351,599    $  235,879
Less: Net income attributable to
noncontrolling interests                 (1,057 )        (836 )      (4,152 )      (4,134 )
Income from continuing
operations attributable to
Buckeye Partners, L.P.                   86,408        31,707       347,447       231,745
Add: Interest and debt expense           36,093        29,821       130,920       114,980
Income tax expense (benefit)                539        (1,852 )       1,060          (675 )
Depreciation and amortization            37,499        40,039       147,591       138,857
Non-cash unit-based compensation
expense                                   9,004         8,502        21,013        18,577
Asset impairment expense                      -        59,950             -        59,950
Hess acquisition and transition
expense                                  11,806             -        11,806             -
Less: Amortization of
unfavorable storage contracts
(1)                                      (2,768 )      (2,749 )     (11,023 )     (10,994 )
Adjusted EBITDA from continuing
operations                          $   178,581    $  165,418    $  648,814    $  552,440
Less: Interest and debt expense,
excluding amortization of
deferred financing costs, debt
discounts and other                     (33,317 )     (28,959 )    (122,471 )    (111,511 )
Income tax (expense) benefit,
excluding non-cash taxes                   (196 )          82          (717 )      (1,095 )
Maintenance capital expenditures        (27,250 )     (18,458 )     (71,476 )     (54,070 )
Distributable cash flow from
continuing operations               $   117,818    $  118,083    $  454,150    $  385,764

Distributions for coverage ratio
(2)                                 $   125,475    $   94,033    $  456,507    $  376,193
Coverage ratio from continuing
operations                                 0.94          1.26          0.99          1.03



(1) Represents the amortization of the negative fair values allocated to certain unfavorable storage contracts acquired in connection with the BORCO acquisition.

(2) Represents cash distributions declared for LP Units outstanding as of each respective period. Amounts for 2013 reflect actual cash distributions paid on LP Units for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 and estimated cash distribution for the quarter ended December 31, 2013. As of September 1, 2013, the 8,469,233 Class B Units outstanding, which represented all Class B Units, converted into LP Units on a one-for-one basis. Prior to conversion, distributions with respect to the Class B Units outstanding on the record date were paid in additional Class B Units rather than in cash.


                             BUCKEYE PARTNERS, L.P.

                     SELECTED FINANCIAL AND OPERATING DATA

                      Non-GAAP Reconciliations - Continued

                                 (In thousands)

                                  (Unaudited)



                                   First       Second        Third       Fourth
                                  Quarter      Quarter      Quarter      Quarter       Total
2013
Adjusted EBITDA from
continuing operations
(restated): (1)
Pipelines & Terminals            $ 115,385    $ 107,635    $ 115,876    $ 132,195    $ 471,091
Global Marine Terminals             35,479       37,803       35,964       40,494      149,740
Merchant Services                    6,194        4,724          (74 )      1,772       12,616
Development & Logistics              3,173        3,667        4,407        4,120       15,367
Adjusted EBITDA from
continuing operations
(restated)                       $ 160,231    $ 153,829    $ 156,173    $ 178,581    $ 648,814
Adjusted EBITDA (as
previously reported):
Pipelines & Terminals            $ 115,544    $ 109,085    $ 114,412    $ 132,195    $ 471,236
International Operations            35,243       37,203       40,475       40,494      153,415
Natural Gas Storage                 (1,827 )     (5,757 )     (2,759 )          -      (10,343 )
Energy Services                      7,191        4,773       (2,220 )      1,772       11,516
Development & Logistics              2,698        3,187        3,934        4,120       13,939
Adjusted EBITDA (as
previously reported)             $ 158,849    $ 148,491    $ 153,842    $ 178,581    $ 639,763

2012
Adjusted EBITDA from
continuing operations
(restated): (1)
Pipelines & Terminals            $  89,611    $  91,022    $ 112,184    $ 116,724    $ 409,541
Global Marine Terminals             29,493       28,533       33,665       36,890      128,581
Merchant Services                   (6,091 )     (3,195 )      1,629        8,801        1,144
Development & Logistics              2,930        3,722        3,519        3,003       13,174
Adjusted EBITDA from
continuing operations
(restated)                       $ 115,943    $ 120,082    $ 150,997    $ 165,418    $ 552,440

Adjusted EBITDA (as
previously reported):
Pipelines & Terminals            $  88,232    $  89,598    $ 112,879    $ 118,346    $ 409,055
International Operations            31,666       30,591       33,548       36,299      132,104
Natural Gas Storage                 (1,268 )       (388 )      1,357        6,417        6,118
Energy Services                     (6,172 )     (3,206 )      1,619        8,283          524
Development & Logistics              2,529        3,337        3,168        2,688       11,722
Adjusted EBITDA (as
previously reported)             $ 114,987    $ 119,932    $ 152,571    $ 172,033    $ 559,523



(1) Historical segment amounts previously reported have been restated to conform to the Partnership's new reporting structure. Additional changes in previously reported amounts are due to the following items:

In December 2013, the Board of Directors of Buckeye GP LLC approved a plan to divest the Partnership's Natural Gas Storage segment and its related assets as the Partnership no longer believes this business is aligned with its long-term business strategy. Therefore, assets and liabilities related to the former Natural Gas Storage segment were


classified as "Assets held for sale" and "Liabilities held for sale", respectively, as of December 31, 2013 and the Partnership has reported the results of operations as discontinued operations for all periods presented.

Reclassifications of operating and general and administrative expenses among the Partnership's segments. The reclassification impacted Adjusted EBITDA by segment, however, had no impact on total Adjusted EBITDA.


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