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
(93
)
1,403
—
1,403
Adjusted EBITDA attributable to
noncontrolling interest
—
(613
)
(546
)
—
(1,159
)
—
(1,159
)
Revaluation of liabilities
—
(806
)
—
—
(806
)
—
(806
)
Intersegment transactions (1)
—
—
974
—
974
—
974
Other
3,681
1,360
64
—
5,105
—
5,105
Discontinued operations
—
—
—
—
—
(6,908
)
(6,908
)
Adjusted EBITDA
$
56,938
$
72,140
$
47,424
$
(14,740
)
$
161,762
$
(6,908
)
$
154,854
Three Months Ended March 31,
2019
Discontinued
Operations
Crude Oil Logistics
Water Solutions
Liquids and Refined
Products
Corporate and Other
Continuing Operations
TPSL, Mid- Con, Gas
Blending
Retail Propane
Consolidated
(in thousands)
Operating income (loss)
$
29,315
$
113,049
$
(30,141
)
$
(16,530
)
$
95,693
$
—
$
—
$
95,693
Depreciation and amortization
17,679
28,950
6,785
788
54,202
—
—
54,202
Amortization recorded to cost of sales
—
—
101
—
101
—
—
101
Net unrealized losses (gains) on
derivatives
10,170
7,695
(4,312
)
—
13,553
—
—
13,553
Inventory valuation adjustment
—
—
1,808
—
1,808
—
—
1,808
Lower of cost or net realizable value
adjustments
(11,446
)
—
197
—
(11,249
)
—
—
(11,249
)
Loss (gain) on disposal or impairment of
assets, net
2,238
(105,238
)
66,219
—
(36,781
)
—
—
(36,781
)
Equity-based compensation expense
—
—
—
8,792
8,792
—
—
8,792
Acquisition expense
—
31
—
480
511
—
—
511
Other (expense) income, net
(5
)
1,503
(50
)
(451
)
997
—
—
997
Adjusted EBITDA attributable to
unconsolidated entities
—
182
5
—
187
—
—
187
Adjusted EBITDA attributable to
noncontrolling interest
—
(47
)
(536
)
—
(583
)
—
—
(583
)
Revaluation of liabilities
—
(6,173
)
—
—
(6,173
)
—
—
(6,173
)
Intersegment transactions (1)
—
—
(9,852
)
—
(9,852
)
—
—
(9,852
)
Other
3,298
132
79
—
3,509
—
—
3,509
Discontinued operations
—
—
—
—
—
17,855
(402
)
17,453
Adjusted EBITDA
$
51,249
$
40,084
$
30,303
$
(6,921
)
$
114,715
$
17,855
$
(402
)
$
132,168
Year 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)
$
117,768
$
(173,064
)
$
142,411
$
(90,447
)
$
(3,332
)
$
—
$
(3,332
)
Depreciation and amortization
70,759
163,588
27,930
3,035
265,312
—
265,312
Amortization recorded to cost of sales
—
—
349
—
349
—
349
Net unrealized (gains) losses on
derivatives
(11,315
)
(29,861
)
2,619
—
(38,557
)
—
(38,557
)
Inventory valuation adjustment
—
—
(2,150
)
—
(2,150
)
—
(2,150
)
Lower of cost or net realizable value
adjustments
29,469
—
2,724
—
32,193
—
32,193
(Gain) loss on disposal or impairment of
assets, net
(1,144
)
255,285
7,645
—
261,786
—
261,786
Equity-based compensation expense
—
—
—
26,510
26,510
—
26,510
Acquisition expense
—
4,079
—
15,643
19,722
—
19,722
Other income (expense), net
717
(448
)
21
1,394
1,684
—
1,684
Adjusted EBITDA attributable to
unconsolidated entities
—
2,152
24
(263
)
1,913
—
1,913
Adjusted EBITDA attributable to
noncontrolling interest
—
(1,210
)
(1,842
)
—
(3,052
)
—
(3,052
)
Revaluation of liabilities
—
9,194
—
—
9,194
—
9,194
Intersegment transactions (1)
—
—
2,099
—
2,099
—
2,099
Other
12,965
2,607
214
—
15,786
—
15,786
Discontinued operations
—
—
—
—
—
(42,270
)
(42,270
)
Adjusted EBITDA
$
219,219
$
232,322
$
182,044
$
(44,128
)
$
589,457
$
(42,270
)
$
547,187
Year Ended March 31,
2019
Discontinued
Operations
Crude Oil Logistics
Water Solutions
Liquids and Refined
Products
Corporate and Other
Continuing Operations
TPSL, Mid- Con, Gas
Blending
Retail Propane
Consolidated
(in thousands)
Operating (loss) income
$
(7,379
)
$
210,525
$
9,288
$
(85,706
)
$
126,728
$
—
$
—
$
126,728
Depreciation and amortization
74,165
108,162
26,628
3,018
211,973
—
—
211,973
Amortization recorded to cost of sales
80
—
406
—
486
—
—
486
Net unrealized gains on derivatives
(1,725
)
(15,521
)
(129
)
—
(17,375
)
—
—
(17,375
)
Inventory valuation adjustment
—
—
(784
)
—
(784
)
—
—
(784
)
Lower of cost or net realizable value
adjustments
—
—
1,276
—
1,276
—
—
1,276
Loss (gain) on disposal or impairment of
assets, net
107,424
(138,204
)
64,187
889
34,296
—
—
34,296
Equity-based compensation expense
—
—
—
41,367
41,367
—
—
41,367
Acquisition expense
—
3,490
161
6,176
9,827
—
—
9,827
Other income (expense), net
21
(1
)
(330
)
(30,108
)
(30,418
)
—
—
(30,418
)
Adjusted EBITDA attributable to
unconsolidated entities
—
2,396
481
—
2,877
—
—
2,877
Adjusted EBITDA attributable to
noncontrolling interest
—
(166
)
(1,481
)
—
(1,647
)
—
—
(1,647
)
Revaluation of liabilities
—
(5,373
)
—
—
(5,373
)
—
—
(5,373
)
Gavilon legal matter settlement
—
—
—
34,788
34,788
—
—
34,788
Intersegment transactions (1)
—
—
1,926
—
1,926
—
—
1,926
Other
8,274
436
493
—
9,203
—
—
9,203
Discontinued operations
—
—
—
—
—
16,827
4,465
21,292
Adjusted EBITDA
$
180,860
$
165,744
$
102,122
$
(29,576
)
$
419,150
$
16,827
$
4,465
$
440,442
(1)
Amount reflects the transactions
with TPSL, Mid-Con and Gas Blending that are eliminated in
consolidation.
OPERATIONAL DATA
(Unaudited)
Three Months Ended
Year Ended
March 31,
March 31,
2020
2019
2020
2019
(in thousands, except per day
amounts)
Crude Oil Logistics:
Crude oil sold (barrels)
9,870
12,917
42,799
48,366
Crude oil transported on owned pipelines
(barrels)
10,971
11,179
45,884
42,564
Crude oil storage capacity - owned and
leased (barrels) (1)
5,362
5,232
Crude oil inventory (barrels) (1)
1,111
827
Water Solutions:
Produced water processed (barrels per
day)
Northern Delaware Basin (2)
1,024,975
43,448
901,884
21,802
Permian Basin
307,907
392,114
318,766
439,654
Eagle Ford Basin
197,587
250,735
246,784
270,849
DJ Basin
158,159
164,159
164,936
161,010
Other Basins
9,462
9,767
10,599
53,799
Total
1,698,090
860,223
1,642,969
947,114
Solids processed (barrels per day)
5,449
7,654
5,697
6,957
Skim oil sold (barrels per day)
3,539
3,723
3,397
3,567
Liquids and Refined Products:
Refined products sold (gallons)
292,140
312,186
1,272,546
1,243,494
Propane sold (gallons)
502,977
454,585
1,478,759
1,383,986
Butane sold (gallons)
225,834
164,628
814,528
610,968
Other products sold (gallons)
127,286
167,293
602,872
647,599
Liquids and Refined Products storage
capacity - owned and leased (gallons) (1)
400,301
400,409
Refined products inventory (gallons)
(1)
2,391
4,536
Propane inventory (gallons) (1)
57,221
44,757
Butane inventory (gallons) (1)
24,808
21,677
Other products inventory (gallons) (1)
26,126
52,082
(1)
Information is presented as of March 31,
2020 and March 31, 2019, respectively.
(2)
Barrels per day of produced water
processed by the assets acquired in the Mesquite and Hillstone
transaction are calculated by the number of days in which we owned
the assets for the periods presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200601005729/en/
NGL Energy Partners LP Trey Karlovich, 918-481-1119 Chief
Financial Officer and Executive Vice President
Trey.Karlovich@nglep.com
or
Linda Bridges, 918-481-1119 Senior Vice President - Finance and
Treasurer Linda.Bridges@nglep.com
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