NGL Energy Partners LP Announces Fourth Quarter and Record Full Year Fiscal 2020 Financial Results

NGL Energy Partners LP (NYSE:NGL) ("NGL," "our," "we," or the "Partnership") today reported its fourth quarter and full year fiscal 2020 results.

"Our fourth quarter and record Fiscal 2020 earnings came in at the high-end of our guidance range, despite the significant downturn in the crude oil environment and the economy," stated Mike Krimbill, NGL’s CEO. "Our Crude Oil and Liquids businesses continued to outperform expectations. We completed our sales of certain Refined Products businesses, significantly reducing both volatility in earnings and working capital debt balances, and we successfully executed on all of our plans to complete the integration of our Delaware Basin Water Solutions infrastructure. We saw increased volumes on that system throughout the fiscal fourth quarter, with approximately 1.9 million barrels per day processed across all our systems for the month of March. Since our fiscal year-end, we have taken significant steps to improve our balance sheet and liquidity, including reductions in capital expenditures, distributions and operating costs, while also taking advantage of our diversified business platform to maximize cash flows. As we stated previously, we see significant challenges and opportunities in this uncertain environment but believe our business model and diversified asset footprint will continue to prove beneficial through this cycle."

Highlights for the quarter and fiscal year ended March 31, 2020 include:

  • Loss from continuing operations for the quarter ended March 31, 2020 of $223.0 million, including a non-cash goodwill impairment charge of $250.0 million in our Water Solutions segment as a result of the current macroeconomic environment, and a loss from continuing operations of $180.5 million for the full fiscal year
  • Adjusted EBITDA from continuing operations for the fourth quarter of Fiscal 2020 of $161.8 million; Record Fiscal Year 2020 Adjusted EBITDA from continuing operations totaled $589.5 million
  • Sale of our refined products marketing business in the mid-continent region ("Mid-Con") and our gas blending business in the southeastern and eastern regions ("Gas Blending") of the United States
  • Fiscal Year 2021 Adjusted EBITDA guidance target of $600 million remains unchanged

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

 

 

March 31, 2020

 

March 31, 2019

 

 

Operating
Income (Loss)

 

Adjusted
EBITDA

 

Operating
Income (Loss)

 

Adjusted
EBITDA

 

 

(in thousands)

Crude Oil Logistics

 

$

16,750

 

 

$

56,938

 

 

$

29,315

 

 

$

51,249

 

Liquids and Refined Products (1)

 

29,204

 

 

47,424

 

 

(30,141

)

 

30,303

 

Water Solutions

 

(207,444

)

 

72,140

 

 

113,049

 

 

40,084

 

Corporate and Other

 

(15,872

)

 

(14,740

)

 

(16,530

)

 

(6,921

)

Total

 

$

(177,362

)

 

$

161,762

 

 

$

95,693

 

 

$

114,715

 

(1)

The remaining business within the former Refined Products and Renewables reportable segment were aggregated with the prior Liquids reportable segment and formed the current Liquids and Refined Products reportable segment.

The tables included in this release reconcile operating income (loss) to Adjusted EBITDA from continuing operations, a non-GAAP financial measure, on a consolidated basis and for each of the Partnership’s reportable segments.

Crude Oil Logistics

Operating income for the fourth quarter of Fiscal 2020 decreased compared to the same quarter in Fiscal 2019 primarily related to lower volumes, lower prices and a non-cash charge to reduce our inventory to the lower of cost or its net realizable value. These declines were due to the volatility in the crude oil market during the month of March 2020 caused by the COVID-19 pandemic and the fight for market share between Saudi Arabia and Russia. Adjusted EBITDA for the fourth quarter of Fiscal 2020 increased compared to the same quarter in Fiscal 2019 due to increased revenue from the Grand Mesa Pipeline. During the three months ended March 31, 2020, financial volumes on the Grand Mesa Pipeline averaged approximately 131,000 barrels per day, which was an increase compared to the prior year period.

Liquids and Refined Products

Propane volumes increased by approximately 48.4 million gallons, or 10.6%, during the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019. Butane volumes increased by approximately 61.2 million gallons, or 37.2%, during the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019. Butane volumes were augmented by steady volumes at the Chesapeake, Virginia export terminal. Refined product sold during the quarter ended March 31, 2020 totaled approximately 292.1 million gallons, which was lower than the same period in the prior year as demand declined for refined products due to the COVID-19 pandemic. Other product volumes decreased by 23.9% during the quarter ended March 31, 2020, compared to the quarter ended March 31, 2019, as the Partnership wound down its ethanol business. Total product margins also increased compared to the prior year period, primarily the result of higher butane and other product margins, driven by strong demand for these products.

Water Solutions

The Partnership processed approximately 1.7 million barrels of water per day during the quarter ended March 31, 2020, a 97.4% increase when compared to approximately 860,000 barrels of water per day processed during the quarter ended March 31, 2019. Water Solutions revenue increased to $127.4 million for the quarter ended March 31, 2020, an 81.2% increase over the comparable prior year quarter as a result of the increase in volume, which was primarily driven by the acquisitions of Mesquite Disposals Unlimited, LLC ("Mesquite") and Hillstone Environmental Partners, LLC ("Hillstone"). These increases were partially offset by the sale of the South Pecos water disposal business during the quarter ended March 31, 2019.

Revenues from recovered crude oil, including the impact from realized skim oil hedges, totaled $17.5 million for the quarter ended March 31, 2020, a decrease of $0.7 million from the prior year period. The percentage of recovered crude oil per barrel of produced water processed has declined over the past several periods due to an increase in produced water transported through pipelines (which contains less oil per barrel of produced water) and the addition of contract structures that allow producers to keep the skim oil recovered from produced water.

We recorded a goodwill impairment charge of $250.0 million during the three months ended March 31, 2020 due to a triggering event caused by the current macroeconomic conditions, the collapse of oil prices driven by both the decrease in demand caused by the COVID-19 pandemic and excess supply, as well as changing market conditions and expected lower crude oil production in certain regions, which resulted in expected decreases in future cash flows for certain of the Partnership’s assets primarily located in the Eagle Ford Basin and the Pinedale Anticline.

Corporate and Other

Operating loss in the Corporate and Other segment decreased from the comparable prior year period due to a decrease in equity-based compensation, offset by higher legal expenses. Cash expenses increased due to higher overall compensation expense, which was driven by the Mesquite and Hillstone acquisitions and out-performance of certain business units.

Capitalization and Liquidity

Total debt outstanding was $3.15 billion at March 31, 2020 compared to $2.16 billion at March 31, 2019, an increase of $989 million due primarily to the Mesquite and Hillstone acquisitions and the funding of certain capital expenditures, which was partially offset by a reduction in working capital borrowings using proceeds from the sale of TransMontaigne Product Services, LLC ("TPSL") and the Gas Blending and Mid-Con businesses.

The Partnership’s Total Leverage Indebtedness Ratio (as defined in our Credit Agreement) was approximately 4.86x at March 31, 2020. Total liquidity (cash plus available capacity on our revolving credit facility) was approximately $401.9 million as of March 31, 2020.

On April 27, 2020, we amended our credit agreement to reallocate availability between the two revolving credit facilities. We reduced the capacity of the Working Capital Facility to $350.0 million and increased the Expansion Capital Facility to $1.565 billion. This change was due to reduced working capital borrowing needs going forward as a result of the sale of the TPSL, Mid-Con and Gas Blending refined products businesses.

Fourth Quarter Conference Call Information

A conference call to discuss NGL’s results of operations is scheduled for 5:00 pm Central Time on Monday, June 1, 2020. Analysts, investors, and other interested parties may access the conference call by dialing (800) 291-4083 and providing access code 1256577. An archived audio replay of the conference call will be available for 7 days beginning at 1:00 pm Central Time on June 2, 2020, which can be accessed by dialing (855) 859-2056 and providing access code 1256577.

Filing of the 10-K

NGL filed its Annual Report on Form 10-K for the year ended March 31, 2020 with the Securities and Exchange Commission after market on June 1, 2020. A copy of the Form 10-K can be found on the Partnership’s website at www.nglenergypartners.com. Unitholders may also request, free of charge, a hard copy of our Form 10-K and our complete audited financial statements.

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 the TPSL, Mid-Con, and Gas Blending businesses, which are included in discontinued operations, and certain refined products businesses within NGL’s Liquids and Refined Products segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered 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 the TPSL, Mid-Con, and Gas Blending businesses, which are included in discontinued operations, and certain businesses within NGL’s Liquids and Refined Products 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 record a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of the TPSL, Mid-Con and Gas Blending businesses, which are included in discontinued operations, and certain businesses within NGL’s Liquids and Refined Products 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 are six months to one year in duration at inception. 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.

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. 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 is a Delaware limited partnership. NGL owns and operates a vertically integrated energy business with three primary businesses: Crude Oil Logistics, Water Solutions, and Liquids and Refined Products. NGL completed its initial public offering in May 2011. For further information, visit the Partnership’s website at www.nglenergypartners.com.

 

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Consolidated Balance Sheets

(in Thousands, except unit amounts)

 

 

March 31,

 

2020

 

2019

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

22,704

 

 

$

18,572

 

Accounts receivable-trade, net of allowance for doubtful accounts of $4,540 and $4,016, respectively

566,834

 

 

998,203

 

Accounts receivable-affiliates

12,934

 

 

12,867

 

Inventories

69,634

 

 

136,128

 

Prepaid expenses and other current assets

101,981

 

 

65,918

 

Assets held for sale

 

 

580,985

 

Total current assets

774,087

 

 

1,812,673

 

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $529,068 and $417,457, respectively

2,851,555

 

 

1,828,940

 

GOODWILL

993,587

 

 

1,110,456

 

INTANGIBLE ASSETS, net of accumulated amortization of $631,449 and $503,117, respectively

1,612,480

 

 

800,889

 

INVESTMENTS IN UNCONSOLIDATED ENTITIES

23,182

 

 

1,127

 

OPERATING LEASE RIGHT-OF-USE ASSETS

180,708

 

 

 

OTHER NONCURRENT ASSETS

63,137

 

 

113,857

 

ASSETS HELD FOR SALE

 

 

234,551

 

Total assets

$

6,498,736

 

 

$

5,902,493

 

LIABILITIES AND EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable-trade

$

515,049

 

 

$

879,063

 

Accounts payable-affiliates

17,717

 

 

28,469

 

Accrued expenses and other payables

232,062

 

 

107,759

 

Advance payments received from customers

19,536

 

 

8,461

 

Current maturities of long-term debt

4,683

 

 

648

 

Operating lease obligations

56,776

 

 

 

Liabilities held for sale

 

 

226,753

 

Total current liabilities

845,823

 

 

1,251,153

 

LONG-TERM DEBT, net of debt issuance costs of $19,795 and $12,008, respectively, and current maturities

3,144,848

 

 

2,160,133

 

OPERATING LEASE OBLIGATIONS

121,013

 

 

 

OTHER NONCURRENT LIABILITIES

114,079

 

 

63,542

 

NONCURRENT LIABILITIES HELD FOR SALE

 

 

33

 

 

 

 

 

CLASS A 10.75% CONVERTIBLE PREFERRED UNITS, 0 and 19,942,169 preferred units issued and outstanding, respectively

 

 

149,814

 

CLASS D 9.00% PREFERRED UNITS, 600,000 and 0 preferred units issued and outstanding, respectively

537,283

 

 

 

 

 

 

 

EQUITY:

 

 

 

General partner, representing a 0.1% interest, 128,901 and 124,633 notional units, respectively

(51,390

)

 

(50,603

)

Limited partners, representing a 99.9% interest, 128,771,715 and 124,508,497 common units issued and outstanding, respectively

1,366,152

 

 

2,067,197

 

Class B preferred limited partners, 12,585,642 and 8,400,000 preferred units issued and outstanding, respectively

305,468

 

 

202,731

 

Class C preferred limited partners, 1,800,000 and 0 preferred units issued and outstanding, respectively

42,891

 

 

 

Accumulated other comprehensive loss

(385

)

 

(255

)

Noncontrolling interests

72,954

 

 

58,748

 

Total equity

1,735,690

 

 

2,277,818

 

Total liabilities and equity

$

6,498,736

$

5,902,493

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(in Thousands, except unit and per unit amounts)

 

 

 

Three Months Ended March 31,

 

Year Ended March 31,

 

 

2020

 

2019

 

2020

 

2019

REVENUES:

 

 

 

 

 

 

 

 

Crude Oil Logistics

 

$

501,466

 

 

$

741,571

 

 

$

2,549,767

 

 

$

3,136,635

 

Water Solutions

 

127,420

 

 

70,319

 

 

422,059

 

 

301,686

 

Liquids and Refined Products

 

1,052,119

 

 

1,310,968

 

 

4,611,136

 

 

5,249,474

 

Other

 

239

 

 

296

 

 

1,038

 

 

1,362

 

Total Revenues

 

1,681,244

 

 

2,123,154

 

 

7,584,000

 

 

8,689,157

 

COST OF SALES:

 

 

 

 

 

 

 

 

Crude Oil Logistics

 

446,571

 

 

676,259

 

 

2,293,953

 

 

2,902,656

 

Water Solutions

 

(38,571

)

 

6,522

 

 

(33,870

)

 

(10,787

)

Liquids and Refined Products

 

981,341

 

 

1,253,159

 

 

4,342,526

 

 

5,089,263

 

Other

 

437

 

 

448

 

 

1,774

 

 

1,929

 

Total Cost of Sales

 

1,389,778

 

 

1,936,388

 

 

6,604,383

 

 

7,983,061

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Operating

 

102,383

 

 

58,846

 

 

332,993

 

 

231,065

 

General and administrative

 

20,264

 

 

20,979

 

 

113,664

 

 

107,407

 

Depreciation and amortization

 

74,719

 

 

54,202

 

 

265,312

 

 

211,973

 

Loss (gain) on disposal or impairment of assets, net

 

272,268

 

 

(36,781

)

 

261,786

 

 

34,296

 

Revaluation of liabilities

 

(806

)

 

(6,173

)

 

9,194

 

 

(5,373

)

Operating (Loss) Income

 

(177,362

)

 

95,693

 

 

(3,332

)

 

126,728

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

1,014

 

 

158

 

 

1,291

 

 

2,533

 

Interest expense

 

(49,370

)

 

(37,949

)

 

(181,184

)

 

(164,725

)

Gain (loss) on early extinguishment of liabilities, net

 

1,341

 

 

(2,120

)

 

1,341

 

 

(12,340

)

Other income (expense), net

 

717

 

 

997

 

 

1,684

 

 

(30,418

)

(Loss) Income From Continuing Operations Before Income Taxes

 

(223,660

)

 

56,779

 

 

(180,200

)

 

(78,222

)

INCOME TAX BENEFIT (EXPENSE)

 

651

 

 

1,089

 

 

(345

)

 

(1,233

)

(Loss) Income From Continuing Operations

 

(223,009

)

 

57,868

 

 

(180,545

)

 

(79,455

)

(Loss) Income From Discontinued Operations, net of Tax

 

(25,435

)

 

(14,651

)

 

(218,235

)

 

418,850

 

Net (Loss) Income

 

(248,444

)

 

43,217

 

 

(398,780

)

 

339,395

 

LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

1,210

 

 

19,036

 

 

1,773

 

 

20,206

 

LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS

 

 

 

 

 

 

 

446

 

NET (LOSS) INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP

 

$

(247,234

)

 

$

62,253

 

 

$

(397,007

)

 

$

360,047

 

NET (LOSS) INCOME FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS

 

$

(243,454

)

 

$

38,775

 

 

$

(367,246

)

 

$

(171,153

)

NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS

 

$

(25,410

)

 

$

(14,636

)

 

$

(218,017

)

 

$

418,877

 

NET (LOSS) INCOME ALLOCATED TO COMMON UNITHOLDERS

 

$

(268,864

)

 

$

24,139

 

 

$

(585,263

)

 

$

247,724

 

BASIC (LOSS) INCOME PER COMMON UNIT

 

 

 

 

 

 

 

 

(Loss) Income From Continuing Operations

 

$

(1.89

)

 

$

0.31

 

 

$

(2.88

)

 

$

(1.39

)

(Loss) Income From Discontinued Operations, net of Tax

 

$

(0.20

)

 

$

(0.11

)

 

$

(1.71

)

 

$

3.41

 

Net (Loss) Income

 

$

(2.09

)

 

$

0.20

 

 

$

(4.59

)

 

$

2.01

 

DILUTED (LOSS) INCOME PER COMMON UNIT

 

 

 

 

 

 

 

 

(Loss) Income From Continuing Operations

 

$

(1.89

)

 

$

0.31

 

 

$

(2.88

)

 

$

(1.39

)

(Loss) Income From Discontinued Operations, net of Tax

 

$

(0.20

)

 

$

(0.12

)

 

$

(1.71

)

 

$

3.41

 

Net (Loss) Income

 

$

(2.09

)

 

$

0.19

 

 

$

(4.59

)

 

$

2.01

 

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

128,576,572

 

 

124,262,014

 

 

127,411,908

 

 

123,017,064

 

DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

128,576,572

126,926,589

127,411,908

123,017,064

 

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 March 31,

 

Year Ended March 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

(in thousands)

Net (loss) income

 

$

(248,444

)

 

$

43,217

 

 

$

(398,780

)

 

$

339,395

 

Less: Net loss attributable to noncontrolling interests

 

1,210

 

 

19,036

 

 

1,773

 

 

20,206

 

Less: Net loss attributable to redeemable noncontrolling interests

 

 

 

 

 

 

 

446

 

Net (loss) income attributable to NGL Energy Partners LP

 

(247,234

)

 

62,253

 

 

(397,007

)

 

360,047

 

Interest expense

 

49,388

 

 

37,949

 

 

181,357

 

 

164,879

 

Income tax expense

 

(650

)

 

(232

)

 

365

 

 

2,222

 

Depreciation and amortization

 

74,098

 

 

55,312

 

 

265,147

 

 

224,547

 

EBITDA

 

(124,398

)

 

155,282

 

 

49,862

 

 

751,695

 

Net unrealized (gains) losses on derivatives

 

(46,408

)

 

13,553

 

 

(38,557

)

 

(17,296

)

Inventory valuation adjustment (1)

 

(4,121

)

 

55,294

 

 

(29,676

)

 

(5,203

)

Lower of cost or net realizable value adjustments

 

33,667

 

 

(45,090

)

 

31,202

 

 

2,695

 

Loss (gain) on disposal or impairment of assets, net

 

292,726

 

 

(55,629

)

 

464,483

 

 

(393,554

)

(Gain) loss on early extinguishment of liabilities, net

 

(1,341

)

 

2,120

 

 

(1,341

)

 

12,340

 

Equity-based compensation expense (2)

 

(699

)

 

8,792

 

 

26,510

 

 

41,367

 

Acquisition expense (3)

 

1,127

 

 

510

 

 

19,722

 

 

9,780

 

Revaluation of liabilities (4)

 

(806

)

 

(6,173

)

 

9,194

 

 

(5,373

)

Gavilon legal matter settlement (5)

 

 

 

 

 

 

 

34,788

 

Other (6)

 

5,107

 

 

3,509

 

 

15,788

 

 

9,203

 

Adjusted EBITDA

 

$

154,854

 

 

$

132,168

 

 

$

547,187

 

 

$

440,442

 

Adjusted EBITDA - Discontinued Operations (7)

 

$

(6,908

)

 

$

17,453

 

 

$

(42,270

)

 

$

21,292

 

Adjusted EBITDA - Continuing Operations

 

$

161,762

 

 

$

114,715

 

 

$

589,457

 

 

$

419,150

 

Less: Cash interest expense (8)

 

45,848

 

 

35,836

 

 

170,254

 

 

155,480

 

Less: Income tax (benefit) expense

 

(650

)

 

(1,089

)

 

345

 

 

1,233

 

Less: Maintenance capital expenditures

 

10,999

 

 

11,967

 

 

61,353

 

 

45,424

 

Less: Preferred unit distributions

 

14,237

 

 

11,174

 

 

45,721

 

 

44,696

 

Less: Other (9)

 

16

 

 

 

 

658

 

 

546

 

Distributable Cash Flow - Continuing Operations

 

$

91,312

 

 

$

56,827

 

 

$

311,126

 

 

$

171,771

 

(1)

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" above for a further discussion.

(2)

 

 

Equity-based compensation expense in the table above may differ from equity-based compensation expense reported in the footnotes to our consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended March 31, 2020. 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 consolidated financial statements only include expenses associated with equity-based awards that have been formally granted.

(3)

 

 

Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions, including Mesquite and Hillstone, along with amounts accrued related to the LCT Capital, LLC legal matter (as discussed in the footnotes to our consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended March 31, 2020), partially offset by reimbursement for certain legal costs incurred in prior periods.

(4)

 

 

Amount for the year ended March 31, 2020 represents the non-cash valuation adjustment of our contingent consideration liability issued by us as part of our acquisition of Mesquite (as discussed in the footnotes to our consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended March 31, 2020), partially offset by the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment. Amounts for the three months ended March 31, 2020 and three months and year ended March 31, 2019 represent the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment.

(5)

 

 

Represents the accrual for the estimated cost of the settlement of the Gavilon legal matter (as discussed in the footnotes to our consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended March 31, 2020). We have excluded this amount from Adjusted EBITDA as it relates to transactions that occurred prior to our acquisition of Gavilon LLC in December 2013.

(6)

 

 

Amounts for the three months and years ended March 31, 2020 and 2019 represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations.

(7)

 

 

Amounts include the operations of TPSL, Gas Blending, Mid-Con and our former Retail Propane segment.

(8)

 

 

Amounts represent interest expense payable in cash for the period presented, excluding changes in the accrued interest balance.

(9)

 

 

Amounts represents cash paid to settle asset retirement obligations.

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

(Unaudited)

 

 

Three Months Ended March 31, 2020

 

Crude
Oil
Logistics

 

Water
Solutions

 

Liquids
and
Refined
Products

 

Corporate
and
Other

 

Continuing
Operations

 

Discontinued
Operations
(TPSL, Mid-Con,
Gas Blending)

 

Consolidated

 

(in thousands)

Operating income (loss)

$

16,750

 

 

$

(207,444

)

 

$

29,204

 

 

$

(15,872

)

 

$

(177,362

)

 

$

 

 

$

(177,362

)

Depreciation and amortization

17,531

 

 

49,522

 

 

6,896

 

 

770

 

 

74,719

 

 

 

 

74,719

 

Amortization recorded to cost of sales

 

 

 

 

87

 

 

 

 

87

 

 

 

 

87

 

Net unrealized (gains) losses on derivatives

(11,391

)

 

(35,748

)

 

731

 

 

 

 

(46,408

)

 

 

 

(46,408

)

Inventory valuation adjustment

 

 

 

 

(1,886

)

 

 

 

(1,886

)

 

 

 

(1,886

)

Lower of cost or net realizable value adjustments

29,469

 

 

 

 

4,213

 

 

 

 

33,682

 

 

 

 

33,682

 

Loss on disposal or impairment of assets, net

284

 

 

264,306

 

 

7,678

 

 

 

 

272,268

 

 

 

 

272,268

 

Equity-based compensation expense

 

 

 

 

 

 

(699

)

 

(699

)

 

 

 

(699

)

Acquisition expense

 

 

92

 

 

 

 

1,035

 

 

1,127

 

 

 

 

1,127

 

Other income (expense), net

614

 

 

4

 

 

(20

)

 

119

 

 

717

 

 

 

 

717

 

Adjusted EBITDA attributable to unconsolidated entities

 

 

1,467

 

 

29

 

...