Southcross Energy Partners, L.P. Reports First Quarter Results

DALLAS, Texas, May 09, 2017 (GLOBE NEWSWIRE) -- Southcross Energy Partners, L.P. (NYSE:SXE) (“Southcross” or the “Partnership”) today announced first quarter financial and operating results. 

Southcross’ net loss was $15.4 million for the quarter ended March 31, 2017, compared to $15.5 million for the same period in the prior year and $39.5 million for the quarter ended December 31, 2016.  Adjusted EBITDA (as defined below) was $18.0 million for the quarter ended March 31, 2017, compared to $20.7 million for the same period in the prior year and $18.4 million for the quarter ended December 31, 2016. Adjusted EBITDA for the first quarter was 2% lower than the prior quarter despite 11% lower processed gas volumes resulting from the planned shut-down of the Conroe processing facility, as operating cost savings initiatives and higher Y-grade production substantially offset the gross margin impact.  

Processed gas volumes during the quarter averaged 256 MMcf/d, a decrease of 25% compared to 343 MMcf/d for the same period in the prior year and a decrease of 11% compared to 287 MMcf/d for the quarter ended December 31, 2016.

“In the first quarter of 2017, we benefitted from companywide cost-savings initiatives started at the end of last year, including lower operational expenses at our facilities,” said Bruce A. Williamson, President and Chief Executive Officer of Southcross’ general partner. “When adjusting for the decrease in volumes from the planned shut-down of our Conroe facility, we are starting to see our processed gas volumes stabilize, which is consistent with the recent increase in rig counts in the Eagle Ford Shale.”

“This quarter we also made progress on improving our liquidity position through debt pay downs and a reduction in our outstanding collateral posted. Looking ahead, we will continue our focus on efficient and reliable management of our operations while remaining disciplined in our efforts to reduce operating expenses and strengthen our liquidity.”

Capital Expenditures

For the quarter ended March 31, 2017, growth and maintenance capital expenditures were $6.9 million and were related primarily to the installation of a new gas gathering pipeline in Mississippi to support sales to end-use markets in the area. Southcross expects that capital expenditures for full-year 2017, including growth and maintenance expenditures, will be in the range of $15 million to $20 million and will be limited to projects with contractually committed volumes, along with recurring maintenance spending.

Capital and Liquidity

As of March 31, 2017, Southcross had total outstanding debt of $548 million, including $113 million under its revolving credit facility, as compared to total outstanding debt of $560 million as of December 31, 2016.  

Cash Distributions and Distributable Cash Flow

Distributable cash flow (as defined below) for the quarter ended March 31, 2017 was $8.9 million, compared to $10.3 million for the same period in the prior year and $11.5 million for the quarter ended December 31, 2016. The Partnership did not make a cash distribution for the quarter ended March 31, 2017 and is restricted from making cash distributions until the Partnership’s consolidated total leverage ratio, as defined under its credit agreement, is at or below 5.0x to 1.

About Southcross Energy Partners, L.P.

Southcross Energy Partners, L.P. is a master limited partnership that provides natural gas gathering, processing, treating, compression and transportation services and NGL fractionation and transportation services. It also sources, purchases, transports and sells natural gas and NGLs. Its assets are located in South Texas, Mississippi and Alabama and include two gas processing plants, one fractionation plant and approximately 3,100 miles of pipeline. The South Texas assets are located in or near the Eagle Ford shale region. Southcross is headquartered in Dallas, Texas. Visit www.southcrossenergy.com for more information.

Forward-Looking Statements

This press release includes certain statements concerning expectations for the future that are forward-looking within the meaning of the federal securities laws. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements, and may contain the words “expect,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “will be,” “will continue,” “will likely result,” and similar expressions, or future conditional verbs such as “may,” “will,” “should,” “would” and “could.” Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include: the expectations, plans, strategies, objectives and growth of Southcross; and anticipated capital expenditures and Adjusted EBITDA.    Although Southcross believes the expectations and forecasts reflected in these and other forward-looking statements are reasonable, Southcross can give no assurance they will prove to be correct. Forward-looking statements contain known and unknown risks and uncertainties (many of which are difficult to predict and beyond management’s control) that may cause Southcross’ actual results in future periods to differ materially from anticipated or projected results. An extensive list of specific material risks and uncertainties affecting Southcross is described in reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K and in subsequent reports, which are available through the SEC’s  EDGAR system at www.sec.gov and on our website.  Any forward-looking statements in this press release are made as of the date hereof and Southcross undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.

Use of Non-GAAP Financial Measures

We report our financial results in accordance with accounting principles generally accepted in the United States, or GAAP. We also present the non-GAAP financial measures of Adjusted EBITDA and distributable cash flow.

We define Adjusted EBITDA as net income/loss, plus interest expense, income tax expense, depreciation and amortization expense, equity in losses of joint venture investments, certain non-cash charges (such as non-cash unit-based compensation, impairments, loss on extinguishment of debt and unrealized losses on derivative contracts), major litigation costs net of recoveries, transaction-related costs, revenue deferral adjustment, loss on sale of assets, severance expense and selected charges that are unusual or non-recurring; less interest income, income tax benefit, unrealized gains on derivative contracts, equity in earnings of joint venture investments, gain on sale of assets and selected gains that are unusual or non-recurring. Adjusted EBITDA should not be considered an alternative to net income, operating cash flow or any other measure of financial performance presented in accordance with GAAP.

Adjusted EBITDA is a key metric used in measuring our compliance with our financial covenants under our debt agreements and is used as a supplemental measure by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others, to assess the ability of our assets to generate cash sufficient to support our indebtedness and make future cash distributions; operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure; and the attractiveness of capital projects and acquisitions and the overall rates of return on investment opportunities.

We define distributable cash flow as Adjusted EBITDA, plus interest income and income tax benefit, less cash paid for interest (net of capitalized costs), income tax expense and maintenance capital expenditures. We use distributable cash flow to analyze our liquidity. Distributable cash flow does not reflect changes in working capital balances. Distributable cash flow is used to assess the ability of our assets to generate cash sufficient to support our indebtedness and make future cash distributions to our unitholders; and the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.

Adjusted EBITDA and distributable cash flow are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures provides useful information to investors in assessing our financial condition, results of operations and cash flows from operations. Reconciliations of Adjusted EBITDA and distributable cash flow to their most directly comparable GAAP measure are included in this press release. Net income and net cash provided by operating activities are the GAAP measures most directly comparable to Adjusted EBITDA. The GAAP measure most directly comparable to distributable cash flow is net cash provided by operating activities. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as an analytical tool because each excludes some but not all items that affect the most directly comparable GAAP financial measure. You should not consider Adjusted EBITDA or distributable cash flow in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.