NEW YORK, Nov. 03, 2016 (GLOBE NEWSWIRE) -- Arc Logistics Partners LP (NYSE:ARCX) ("Arc Logistics" or the "Partnership") today reported its financial and operating results for the third quarter ended September 30, 2016.
During the third quarter of 2016, the Partnership accomplished the following:
- Realized throughput of 171.2 thousand barrels per day (“mbpd”)
- Reported revenues, net income and Adjusted EBITDA of $26.7 million, $6.3 million and $14.9 million, respectively
- Invested $3.5 million of expansion capital expenditures to support existing, new and future customer initiatives
- Generated cash flows from operating activities of $15.7 million and Distributable Cash Flow of $10.0 million
- Declared a quarterly cash distribution of $0.44 per unit for the third quarter ended September 30, 2016
For additional information regarding the Partnership’s calculation of Adjusted EBITDA and Distributable Cash Flow, which are non-GAAP financial measures, and a reconciliation of net income to Adjusted EBITDA and cash flows from operating activities to Distributable Cash Flow, please see below in this release and the accompanying tables.
Third Quarter 2016 Operational and Financial Results
The Partnership’s third quarter 2016 reported revenues, net income and Adjusted EBITDA of $26.7 million, $6.3 million and $14.9 million, respectively, represents an increase over the Partnership’s third quarter 2015 reported revenues, net income and Adjusted EBITDA of $2.6 million, $2.6 million and $2.1 million, respectively. Operating income increased by $3.0 million to $6.4 million for the third quarter 2016 when compared to the third quarter 2015 operating income of $3.4 million, which increase was principally due to the following:
- Revenues increased by $2.6 million, or 11%, to $26.7 million as compared to $24.1 million, which increase was related to (i) $0.8 million of new agreements acquired and newly executed in connection with the Pennsylvania terminals acquisition, (ii) $1.1 million at the Pawnee terminal due to a full quarter of operations and volume-related increases, (iii) $0.6 million related to the execution of new contracts at the Blakeley and Madison terminals, (iv) $0.6 million of additional customer activity across a number of light and heavy product terminals and (v) less than $0.1 million increase in ancillary services fees as a result of reimbursable services provided to our customers. The increased revenue was offset by $0.6 million decrease related to customer contract renewals and a reduction of short-term storage by a customer at the Partnership’s Gulf Coast and Portland terminals.
- Operating expenses increased by $0.4 million, or 6%, to $8.2 million as compared to $7.8 million, which increase was the result of (i) $0.4 million attributable to an increase in maintenance, utilities, payroll and property taxes associated with the operations of the recently acquired Pennsylvania terminals, (ii) $0.2 million related to tank cleaning projects in Chickasaw, (iii) $0.1 million related to an increase of additive and utility expenses as a result of increased throughput at the Baltimore and Brooklyn terminals and (iv) $0.1 attributable to contract labor in support of customer activities at the Joliet terminal. The increase in operating expenses was offset by reduced payroll expenses of $0.1 million due to a realignment and optimization of the Partnership’s workforce, $0.1 million related to a reduction in maintenance expenses and $0.1 million related to a reduction in estimated property taxes related to prior year acquisitions.
- Selling, general and administrative expenses decreased by approximately $1.1 million, or 20%, to $4.5 million as compared to $5.6 million, which was a result of a (i) $0.5 million decrease in due diligence expenses and (ii) $0.8 million decrease in professional fees tied to the Blakeley customer settlement negotiations in 2015 offset by a $0.1 million increase attributable to salaries and related payroll taxes and benefits due to the operations of the Partnership’s recently acquired terminals.
- Depreciation expense increased by $0.3 million, or 9%, to $4.0 million as compared to $3.6 million, which increase was primarily due to the impact of the Pennsylvania terminals acquisition, a full quarter of operations at the Joliet and Pawnee terminals and customer expansion activities and incremental maintenance. Amortization expense decreased by less than $0.1 million, or 1%, which decrease was primarily due to an intangible asset related to the Mobile terminal acquisition becoming fully amortized in the first quarter of 2016.
As of September 30, 2016, the Partnership's storage capacity was approximately 7.8 million barrels, which represents an approximately 0.9 million barrel, or 13%, increase when compared to the Partnership’s capacity at September 30, 2015. The increase in storage capacity is related to the Pennsylvania terminals acquisition and the completion of the third 100,000 barrel tank at the Pawnee terminal.
The Partnership's throughput activity increased by 50.7 mbpd, or 42%, to 171.2 mbpd during the third quarter of 2016 compared to the third quarter of 2015. The increase was due to the Pennsylvania terminals acquisition, a full quarter of operations at the Pawnee terminal and increased customer activity at the Partnership’s Baltimore, Blakeley, Brooklyn, Chickasaw, Joliet, Madison, Mobile-Methanol, Norfolk terminals offset by decreased customer activity at the Partnership’s Cleveland, Portland, Spartanburg and Selma terminals.
In October 2016, the Partnership declared a quarterly cash distribution of $0.44 per unit, or $1.76 per unit on an annualized basis, for the period from July 1, 2016 through September 30, 2016. The distribution will be paid on November 15, 2016 to unitholders of record on November 7, 2016.
Conference Call
Arc Logistics will hold a conference call and webcast to discuss the third quarter 2016 financial and operating results on November 3, 2016, at 5:00 p.m. Eastern. Interested parties may listen to the conference call by dialing (855) 433-0931. International callers may access the conference call by dialing (484) 756-4279. The call may also be accessed live over the internet by visiting the “Investor Relations” page of the Partnership’s website at www.arcxlp.com and will be available for replay for approximately one month.
About Arc Logistics Partners LP
Arc Logistics is a fee-based, growth-oriented limited partnership that owns, operates, develops and acquires a diversified portfolio of complementary energy logistics assets. Arc Logistics is principally engaged in the terminalling, storage, throughput and transloading of crude oil and petroleum products. For more information, please visit www.arcxlp.com.
Forward-Looking Statements
Certain statements and information in this press release constitute “forward-looking statements.” Certain expressions including “believe,” “expect,” “intends,” or other similar expressions are intended to identify the Partnership’s current expectations, opinions, views or beliefs concerning future developments and their potential effect on the Partnership. While management believes that these forward-looking statements are reasonable when made, there can be no assurance that future developments affecting the Partnership will be those that it anticipates. The forward-looking statements involve significant risks and uncertainties (some of which are beyond the Partnership’s control) and assumptions that could cause actual results to differ materially from the Partnership’s historical experience and its present expectations or projections. Important factors that could cause actual results to differ materially from forward-looking statements include but are not limited to: (i) adverse economic, capital markets and political conditions; (ii) changes in the market place for the Partnership’s services; (iii) changes in supply and demand of crude oil and petroleum products; (iv) actions and performance of the Partnership’s customers, vendors or competitors; (v) changes in the cost of or availability of capital; (vi) unanticipated capital expenditures in connection with the construction, repair or replacement of the Partnership’s assets; (vii) operating hazards, unforeseen weather events or matters beyond the Partnership’s control; (viii) inability to consummate acquisitions, pending or otherwise, on acceptable terms and successfully integrate acquired businesses into the Partnership’s operations; (ix) effects of existing and future laws or governmental regulations; and (x) litigation. Additional information concerning these and other factors that could cause the Partnership’s actual results to differ from projected results can be found in the Partnership’s public periodic filings with the Securities and Exchange Commission (“SEC”), including the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 11, 2016 and any updates thereto in the Partnership’s subsequent quarterly reports on Form 10-Q and current reports on Forms 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The Partnership undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
The Partnership defines Adjusted EBITDA as net income before interest expense, income taxes and depreciation and amortization expense, as further adjusted for other non-cash charges and other charges that are not reflective of its ongoing operations. Adjusted EBITDA is a non-GAAP financial measure that management and external users of the Partnership’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess (i) the performance of the Partnership’s assets without regard to the impact of financing methods, capital structure or historical cost basis of the Partnership’s assets; (ii) the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities; (iii) the Partnership’s ability to make distributions; (iv) the Partnership’s ability to incur and service debt and fund capital expenditures; and (v) the Partnership’s ability to incur additional expenses. The Partnership believes that the presentation of Adjusted EBITDA provides useful information to investors in assessing its financial condition and results of operations.
The Partnership defines Distributable Cash Flow as Adjusted EBITDA less (i) cash interest expense paid; (ii) cash income taxes paid; (iii) maintenance capital expenditures paid; and (iv) equity earnings from the Partnership’s interests in Gulf LNG Holdings Group, LLC (the “LNG Interest”); plus (v) cash distributions from the LNG Interest. Distributable Cash Flow is a non-GAAP financial measure that management and external users of the Partnership’s consolidated financial statements may use to evaluate whether the Partnership is generating sufficient cash flow to support distributions to its unitholders as well as to measure the ability of the Partnership’s assets to generate cash sufficient to support its indebtedness and maintain its operations.
The GAAP measure most directly comparable to Adjusted EBITDA is net income and to Distributable Cash Flow is cash flows from operating activities. Neither Adjusted EBITDA nor Distributable Cash Flow should be considered an alternative to net income or cash flows from operating activities, respectively. Adjusted EBITDA and Distributable Cash Flow have important limitations as analytical tools because they exclude some but not all items that affect net income. You should not consider Adjusted EBITDA or Distributable Cash Flow in isolation or as a substitute for analysis of the Partnership’s results as reported under GAAP. Additionally, because Adjusted EBITDA and Distributable Cash Flow may be defined differently by other companies in the Partnership’s industry, the Partnership’s definitions of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. Please see the reconciliation of net income to Adjusted EBITDA and cash flows from operating activities to Distributable Cash Flow in the accompanying tables.
| ARC LOGISTICS PARTNERS LP | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||||||||||||||||
| (In thousands, except per unit amounts) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Revenues: | |||||||||||||||||
| Third-party customers | $ | 22,933 | $ | 20,823 | $ | 68,136 | $ | 49,188 | |||||||||
| Related parties | 3,739 | 3,261 | 10,847 | 7,562 | |||||||||||||
| 26,672 | 24,084 | 78,983 | 56,750 | ||||||||||||||
| Expenses: | |||||||||||||||||
| Operating expenses | 8,192 | 7,764 | 25,107 | 21,058 | |||||||||||||
| Selling, general and administrative | 3,141 | 4,272 | 10,168 | 12,969 | |||||||||||||
| Selling, general and administrative - affiliate | 1,342 | 1,306 | 3,965 | 3,468 | |||||||||||||
| Depreciation | 3,972 | 3,630 | 11,345 | 8,092 | |||||||||||||
| Amortization | 3,672 | 3,717 | 11,042 | 7,093 | |||||||||||||
| Total expenses | 20,319 | 20,689 | 61,627 | 52,680 | |||||||||||||
| Operating (loss) income | 6,353 | 3,395 | 17,356 | 4,070 | |||||||||||||
| Other income (expense): | |||||||||||||||||
| Equity earnings from unconsolidated affiliate | 2,512 | 2,518 | 7,439 | 7,510 | |||||||||||||
| Other income | 1 | 2 | 2 | 9 | |||||||||||||
| Interest expense | (2,481 | ) | (2,163 | ) | (7,234 | ) | (4,631 | ) | |||||||||
| Total other income, net | 32 | 357 | 207 | 2,888 | |||||||||||||
| Income before income taxes | 6,385 | 3,752 | 17,563 | 6,958 | |||||||||||||
| Income taxes | 49 | 40 | 101 | 109 | |||||||||||||
| Net income | 6,336 | 3,712 | 17,462 | 6,849 | |||||||||||||
| Net income attributable to non-controlling interests | (1,878 | ) | (1,711 | ) | (5,433 | ) | (2,356 | ) | |||||||||
| Net income attributable to partners' capital | 4,458 | 2,001 | 12,029 | 4,493 | |||||||||||||
| Other comprehensive income (loss) | 831 | (615 | ) | (84 | ) | (246 | ) | ||||||||||
| Comprehensive (loss) income attributable to partners’ capital | $ | 5,289 | $ | 1,386 | $ | 11,945 | $ | 4,247 | |||||||||
| Earnings per limited partner unit: | |||||||||||||||||
| Common units (basic and diluted) | $ | 0.22 | $ | 0.19 | $ | 0.58 | $ | 0.31 | |||||||||
| Subordinated units (basic and diluted) | $ | 0.22 | $ | 0.00 | $ | 0.58 | $ | 0.12 | |||||||||
| ARC LOGISTICS PARTNERS LP | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except unit amounts) | ||||||||
| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 4,394 | $ | 5,870 | ||||
| Trade accounts receivable | 8,050 | 8,633 | ||||||
| Due from related parties | 1,566 | 1,532 | ||||||
| Inventories | 401 | 318 | ||||||
| Other current assets | 1,604 | 1,162 | ||||||
| Total current assets | 16,015 | 17,515 | ||||||
| Property, plant and equipment, net | 396,701 | 380,671 | ||||||
| Investment in unconsolidated affiliate | 74,203 | 74,399 | ||||||
| Intangible assets, net | 121,311 | 132,121 | ||||||
| Goodwill | 39,871 | 39,871 | ||||||
| Other assets | 3,383 | 3,945 | ||||||
| Total assets | $ | 651,484 | $ | 648,522 | ||||
| Liabilities and partners' capital: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,390 | $ | 4,085 | ||||
| Accrued expenses | 5,386 | 6,857 | ||||||
| Due to general partner | 1,985 | 638 | ||||||
| Other liabilities | 2,194 | 3,914 | ||||||
| Total current liabilities | 12,955 | 15,494 | ||||||
| Credit facility | 246,000 | 226,063 | ||||||
| Other non-current liabilities | 20,609 | 21,745 | ||||||
| Total liabilities | 279,564 | 263,302 | ||||||
| Commitments and contingencies | ||||||||
| Partners' capital: | ||||||||
| General partner interest | - | - | ||||||
| Limited partners' interest | ||||||||
| Common units – (13,214,744 and 13,174,410 units issued and outstanding at September 30, 2016 and December 31, 2015, respectively) | 206,864 | 213,281 | ||||||
| Subordinated units – (6,081,081 units issued and outstanding at September 30, 2016 and December 31, 2015) | 81,139 | 85,371 | ||||||
| Non-controlling interests | 82,708 | 85,275 | ||||||
| Accumulated other comprehensive (loss) income | 1,209 | 1,293 | ||||||
| Total partners' capital | 371,920 | 385,220 | ||||||
| Total liabilities and partners' capital | $ | 651,484 | $ | 648,522 | ||||
| ARC LOGISTICS PARTNERS LP | |||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (In thousands) | |||||||||
| (Unaudited) | |||||||||
| Nine months ended | |||||||||
| September 30, | |||||||||
| 2016 | 2015 | ||||||||
| Cash flow from operating activities: | |||||||||
| Net income | $ | 17,462 | $ | 6,849 | |||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||
| Depreciation | 11,345 | 8,092 | |||||||
| Amortization | 11,042 | 7,093 | |||||||
| Equity earnings from unconsolidated affiliate, net of distributions | (120 | ) | (501 | ) | |||||
| Amortization of deferred financing costs | 1,145 | 685 | |||||||
| Unit-based compensation | 3,523 | 4,177 | |||||||
| Changes in operating assets and liabilities: | |||||||||
| Trade accounts receivable | 583 | (3,334 | ) | ||||||
| Due from related parties | (34 | ) | (998 | ) | |||||
| Inventories | 80 | 9 | |||||||
| Other current assets | (442 | ) | 193 | ||||||
| Accounts payable | (573 | ) | 2,942 | ||||||
| Accrued expenses | (227 | ) | 2,360 | ||||||
| Due to general partner | 1,347 | 1,047 | |||||||
| Other liabilities | (1,829 | ) | 17 | ||||||
| Net cash provided by operating activities | 43,302 | 28,631 | |||||||
| Cash flows from investing activities: | |||||||||
| Capital expenditures | (20,902 | ) | (6,486 | ) | |||||
| Investment in unconsolidated affiliate | - | (310 | ) | ||||||
| Net cash paid for acquisitions | (8,000 | ) | (260,332 | ) | |||||
| Net cash used in investing activities | (28,902 | ) | (267,128 | ) | |||||
| Cash flows from financing activities: | |||||||||
| Distributions | (25,438 | ) | (18,799 | ) | |||||
| Deferred financing costs | (584 | ) | (3,250 | ) | |||||
| Repayments to credit facility | (3,313 | ) | - | ||||||
| Proceeds from equity offering, net | - | 72,081 | |||||||
| Equity contribution from non-controlling interests | - | 86,960 | |||||||
| Proceeds from credit facility | 23,250 | 112,000 | |||||||
| Payments of earn-out liability | (1,028 | ) | (525 | ) | |||||
| Distributions paid to non-controlling interests | (8,000 | ) | (3,200 | ) | |||||
| Distribution equivalent rights paid on unissued units | (763 | ) | (683 | ) | |||||
| Net cash used in financing activities | (15,876 | ) | 244,584 | ||||||
| Net decrease in cash and cash equivalents | (1,476 | ) | 6,087 | ||||||
| Cash and cash equivalents, beginning of period | 5,870 | 6,599 | |||||||
| Cash and cash equivalents, end of period | $ | 4,394 | $ | 12,686 | |||||
| ARC LOGISTICS PARTNERS LP | |||||||||||||||||
| RECONCILIATIONS OF ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Net income attributable to partners' capital | $ | 4,458 | $ | 2,001 | $ | 12,029 | $ | 4,493 | |||||||||
| Income taxes | 49 | 40 | 101 | 109 | |||||||||||||
| Interest expense | 2,481 | 2,163 | 7,234 | 4,631 | |||||||||||||
| Depreciation (a) | 3,512 | 3,182 | 9,979 | 7,346 | |||||||||||||
| Amortization (a) | 3,055 | 3,100 | 9,192 | 6,065 | |||||||||||||
| One-time non-recurring expenses (b) | 15 | 888 | 616 | 3,620 | |||||||||||||
| Non-cash unit-based compensation | 1,233 | 1,333 | 3,528 | 4,185 | |||||||||||||
| Non-cash deferred rent expense (c) | 65 | 88 | 196 | 390 | |||||||||||||
| Adjusted EBITDA | $ | 14,868 | $ | 12,795 | $ | 42,875 | $ | 30,839 | |||||||||
| Cash interest expense | (2,280 | ) | (1,909 | ) | (6,601 | ) | (4,135 | ) | |||||||||
| Cash income taxes | (49 | ) | (40 | ) | (100 | ) | (109 | ) | |||||||||
| Maintenance capital expenditures | (2,583 | ) | (2,979 | ) | (6,985 | ) | (3,974 | ) | |||||||||
| Equity earnings from the LNG Interest | (2,512 | ) | (2,518 | ) | (7,439 | ) | (7,510 | ) | |||||||||
| Cash distributions received from the LNG Interest | 2,560 | 2,632 | 7,319 | 7,009 | |||||||||||||
| Distributable Cash Flow | $ | 10,004 | $ | 7,981 | $ | 29,069 | $ | 22,120 | |||||||||
| Maintenance capital expenditures | 2,583 | 2,979 | 6,985 | 3,974 | |||||||||||||
| Distributable cash flow attributable to non-controlling interests | 2,955 | 2,775 | 8,649 | 4,129 | |||||||||||||
| Changes in operating assets and liabilities | 11 | 3,230 | (1,095 | ) | 2,236 | ||||||||||||
| One-time non-recurring expenses (b) | (15 | ) | (888 | ) | (616 | ) | (3,620 | ) | |||||||||
| Other non-cash adjustments | 134 | (31 | ) | 310 | (208 | ) | |||||||||||
| Net cash provided by operating activities | $ | 15,672 | $ | 16,046 | $ | 43,302 | $ | 28,631 | |||||||||
___________
(a) The depreciation and amortization have been adjusted to remove the non-controlling interest portion related to the GE EFS affiliate’s ownership interest in Joliet Holdings.
(b) The one-time non-recurring expenses relate to amounts incurred as due diligence expenses from acquisitions and other infrequent or unusual expenses incurred.
(c) The non-cash deferred rent expense relates to the accounting treatment for the Portland terminal lease transaction termination fees.
| ARC LOGISTICS PARTNERS LP | |||||||||||||||||
| SUPPLEMENTAL INFORMATION | |||||||||||||||||
| (In thousands, except operating data) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Selected Operating Data: | |||||||||||||||||
| Storage capacity (bbls) | 7,841,100 | 6,925,100 | 7,841,100 | 6,925,100 | |||||||||||||
| Throughput (bpd) | 171,170 | 120,470 | 167,190 | 118,512 | |||||||||||||
| % Take or pay revenue | 84 | % | 84 | % | 85 | % | 82 | % | |||||||||
| Capital Expenditures Summary: | |||||||||||||||||
| Maintenance capital expenditures | $ | 2,583 | $ | 2,979 | $ | 6,985 | $ | 3,974 | |||||||||
| Expansion capital expenditures | 3,493 | 3,670 | 12,552 | 6,048 | |||||||||||||
| Total capital expenditures | $ | 6,076 | $ | 6,649 | $ | 19,537 | $ | 10,022 | |||||||||