- TransMontaigne will expand its
Brownsville, Texas operations, supported by the execution of
long-term, fee-based terminaling and pipeline agreements for new
storage and additional pipeline capacity
- Net earnings for the first quarter of
2018 totaled $12.2 million, compared to $13.0 million in the prior
year first quarter, which includes increases in depreciation and
amortization and interest expense
- Achieved record levels of both revenue
and EBITDA for the first quarter 2018
- Consolidated EBITDA for the first
quarter of 2018 totaled $32.9 million, compared to $27.3 million in
the prior year first quarter
- Distributable cash flow for the first
quarter of 2018 totaled $23.0 million, compared to $23.5 million in
the prior year first quarter
- Distribution coverage for first quarter
2018 was 1.39x; leverage as of March 31, 2018 was 4.35x on an
as-adjusted basis for the acquisition of the West Coast terminal
facilities
- Increased the quarterly cash
distribution for the tenth consecutive quarter to $0.785,
reflecting an 8.3% increase over prior year quarterly
distribution
TransMontaigne Partners L.P. (NYSE:TLP) (the Partnership,
we, us, our) today announced first quarter 2018 financial and
operating results.
“Our business continued to perform extremely well during the
first quarter, achieving record levels of both revenue and EBITDA,”
said Fred Boutin, Chief Executive Officer of TransMontaigne
Partners. “Our sequential growth during the first quarter was
driven by the continued geographic and organic expansion of our
platform, including our recent West Coast terminal acquisition, the
completion of our Collins terminal Phase I expansion and successful
contracting efforts across our terminal portfolio. Our organic and
acquisition expansion initiatives have resulted in a more diverse
platform with greater scale, driving continued growth opportunities
for the Partnership, including our ability to deliver our tenth
consecutive quarter of distribution growth.”
“Today, I am excited to announce the entry into long-term
customer contracts supporting new growth projects in Brownsville,”
continued Mr. Boutin. “These projects involve construction of new
tankage and related facilities and the conversion of our
Diamondback Pipelines from propane service to gasoline and diesel.
These are in addition to our recently announced growth projects of
870,000 barrels of new storage capacity at Collins and 125,000
barrels of new storage capacity at our recently acquired Richmond
terminal. We remain committed to additional growth in our business
over the long-term, and continue to execute on our expansion plans,
including growth through asset optimization, organic expansions and
potential acquisitions.”
FINANCIAL RESULTS
Revenue for the first quarter of 2018 totaled $56.4 million, an
increase of $11.5 million, or approximately 26%, compared to $44.9
million for the first quarter of 2017. Consolidated EBITDA totaled
$32.9 million for the first quarter of 2018, representing an
increase of $5.6 million, or approximately 21%, compared to $27.3
million for the first quarter of 2017. The improvement compared to
the prior year was primarily attributed to the acquisition of the
West Coast terminals on December 15, 2017 and our Collins Phase I
terminal expansion coming fully on-line in June 2017.
An overview of our financial performance for the quarter ended
March 31, 2018 compared to the quarter ended March 31, 2017,
includes:
- Operating income for the quarter ended
March 31, 2018 was approximately $19.1 million compared to $15.4
million for the quarter ended March 31, 2017. Changes in the
primary components of operating income are as follows:
- Revenue increased approximately $11.5
million to $56.4 million due to our December 15, 2017 acquisition
of the West Coast terminals adding approximately $9.5 million to
revenue. In addition there were increases in revenue at our River
and Southeast terminals of approximately $0.1 million and $3.1
million, respectively, partially offset by decreases in revenue at
our Brownsville terminals of approximately $1.1 million. Revenue
for the Gulf Coast and Midwest terminals were consistent.
- Direct operating costs and expenses
increased approximately $3.6 million to $20.1 million due to our
acquisition of the West Coast terminals adding approximately $3.1
million to expense. In addition there were increases in direct
operating costs and expenses at our Gulf Coast, River and the
Southeast terminals of approximately $0.3 million, $0.2 million,
and $0.9 million, respectively, partially offset by decreases in
our Brownsville terminals of approximately $0.8 million. Direct
operating costs and expenses for the Midwest terminals was
consistent.
- General and administrative expenses
increased approximately $1.0 million to $5.0 million.
- Insurance expenses increased
approximately $0.2 million to $1.2 million.
- Equity-based compensation expense
increased approximately $0.2 million to $2.0 million.
- Depreciation and amortization expenses
increased approximately $3.1 million to $11.8 million.
- Earnings from unconsolidated affiliates
increased approximately $0.3 million to $2.9 million.
- Net earnings were $12.2 million for the
quarter ended March 31, 2018 compared to $13.0 million for the
quarter ended March 31, 2017. The decrease was principally due to
the net increases in quarterly operating income discussed above,
more than offset by an increase in interest expense of
approximately $4.3 million. The increase in interest expense is
attributable to financing the acquisition of the West Coast
terminals, the issuance of senior notes and increases in LIBOR
rates.
- Quarterly net earnings per limited
partner unit was $0.52 per unit for the quarter ended March 31,
2018 compared to $0.62 per unit for the quarter ended March 31,
2017.
- Consolidated EBITDA for the quarter
ended March 31, 2018 was $32.9 million compared to $27.3 million
for the quarter ended March 31, 2017.
- Distributable cash flow for the quarter
ended March 31, 2018 was $23.0 million compared to $23.5 million
for the quarter ended March 31, 2017.
- The distribution declared per limited
partner unit was $0.785 per unit for the quarter ended March 31,
2018 compared to $0.725 per unit for the quarter ended March 31,
2017.
- We paid aggregate distributions of
$16.6 million for the quarter ended March 31, 2018, resulting in a
quarterly distribution coverage ratio of 1.39x.
RECENT DEVELOPMENTS
Expansion of our Brownsville operations. In the first
quarter, we entered into terminaling services agreements with third
parties for the construction by either the Partnership, or
Frontera, of new facilities in Brownsville for the storage of
gasoline, diesel and additives for further transportation by truck
and the Diamondback Pipeline to the U.S./Mexico border. The
Diamondback pipeline consists of an 8” pipeline that previously
transported propane approximately 16 miles from our Brownsville,
Texas facilities to the U.S./Mexico border and a 6” pipeline, which
runs parallel to the 8” pipeline that has been idle and can be used
to transport additional refined products. We expect the first tanks
of the additional storage capacity under construction to be
completed and placed into commercial service by the end of 2018. We
expect to recommission the Diamondback pipeline and resume
operations by the end of 2019, with the additional storage capacity
being completed and placed into commercial service at the same
time.
Due to rights of first refusal held by our Frontera joint
venture, it is uncertain at this time whether our Brownsville
terminaling expansion efforts will be constructed and owned by the
Partnership or Frontera. The anticipated aggregate cost of the
above terminaling and pipeline expansion projects is estimated to
be approximately $60 million.
Expansion of our Collins bulk storage terminal. Our
Collins/Purvis, Mississippi terminal complex is strategically
located for the bulk storage market and is the only independent
terminal capable of receiving from, delivering to, and transferring
refined petroleum products between the Colonial and Plantation
pipeline systems. We previously entered into long-term terminaling
services agreements with various customers for approximately 2
million barrels of new tank capacity at our Collins terminal. The
revenue associated with these agreements came on-line upon
completion of the construction of the new tank capacity at various
stages beginning in the fourth quarter of 2016 through the second
quarter of 2017. The aggregate cost of the approximately 2 million
barrels of new tank capacity was approximately $75 million. With
the completion of our Phase I expansion, our Collins/Purvis
terminal complex has current active storage capacity of
approximately 5.4 million barrels.
In addition to the Phase I expansion at our Collins terminal, in
the second half of 2017 we obtained an air permit for an additional
5 million barrels of capacity for a Phase II buildout. We have
started the design and buildout of 870,000 barrels of new storage
capacity supported by a new long-term, terminaling services
agreement, which constitutes the beginning of a Phase II buildout.
To facilitate our further expansion of Collins, we also entered
into an agreement with Colonial Pipeline Company for significant
improvements to the Colonial Pipeline receipt and delivery
manifolds and our related receipt and delivery facilities. The
improvements will result in significant increased flexibility for
our Collins customers. The anticipated cost of the approximately
870,000 barrels of new storage capacity and our share of the
improvements to the pipeline connections is approximately $55
million. We are currently in active discussions with several other
existing and prospective customers regarding additional future
capacity at our Collins terminal. We expect the first of the new
tanks and the Colonial Pipeline Company improvements to come online
in the first quarter of 2019.
Expansion of our West Coast terminals. On
December 15, 2017, we acquired the West Coast terminals from a
third party for a total purchase price of approximately
$276.8 million. The West Coast terminals are two waterborne
refined product and crude oil terminals located in the San
Francisco Bay Area refining complex with a total of 64 storage
tanks with approximately 5 million barrels of active storage
capacity. The West Coast terminals have access to domestic and
international crude oil and refined products markets through
marine, pipeline, truck and rail logistics capabilities.
Pursuant to a new long-term terminaling services agreement, we
have begun the construction of an additional 125,000 barrels of
storage capacity at our Richmond West Coast terminal. The cost of
constructing this new capacity is expected to be about $8 million.
We are also pursuing other high-return investment opportunities
similar to this at these terminals. We expect the first of the new
tanks to come online in the fourth quarter of 2018.
Public offering of senior notes. On February 12, 2018, we
completed the sale of $300 million of 6.125% senior notes, issued
at par and due 2026. The senior notes were guaranteed on a senior
unsecured basis by each of our wholly owned subsidiaries that
guarantee obligations under our revolving credit facility. Net
proceeds were used primarily to repay indebtedness under our
revolving credit facility.
Third Amended and Restated Omnibus Agreement. Since the
inception of the Partnership in 2005 we have been party to an
omnibus agreement with the owner of our general partner, which
agreement has been amended and restated from time to time. The
omnibus agreement provides for the provision of various services
for our benefit. The fees payable under the omnibus agreement to
the owner of our general partner are comprised of (i) the
reimbursement of the direct operating costs and expenses, such as
salaries and benefits of operational personnel performing services
on site at our terminals and pipelines, which we refer to as
on-site employees, (ii) bonus awards to key personnel who perform
services for the Partnership, which are typically paid in the
Partnership’s units and are subject to the approval by the
compensation committee and the conflicts committee of our general
partner, and (iii) the administrative fee for the provision of
various general and administrative services for the Partnership’s
benefit such as legal, accounting, treasury, insurance
administration and claims processing, information technology, human
resources, credit, payroll, taxes, engineering, environmental
safety and occupational health (ESOH) and other corporate services,
to the extent such services are not outsourced by the
Partnership.
In accordance with the Second Amended and Restated Omnibus
Agreement and the prior versions thereto, if we acquire or
construct additional facilities, the owner of our general partner
may propose a revised administrative fee covering the provision of
services for such additional facilities, subject to the approval by
the conflicts committee of our general partner. In connection with
our previously discussed Phase II expansion activity at our Collins
terminal, the expansion of the Brownsville terminal and pipeline
operations and the December 2017 acquisition of the West Coast
facilities, on May 7, 2018, the Partnership, with the concurrence
of the conflicts committee of our general partner, agreed to an
annual increase in the aggregate fees payable to the owner of the
general partner under the omnibus agreement of $3.6 million
beginning May 13, 2018.
To effectuate this $3.6 million annual increase in the aggregate
fees payable to the owner of the general partner, on May 7, 2018
the Partnership, with the concurrence of the conflicts committee of
our general partner, entered into the Third Amended and Restated
Omnibus Agreement. The effect of the change to the omnibus
agreement is to allow the Partnership to assume the costs and
expenses of personnel performing engineering and ESOH services for
and on behalf of the Partnership and to receive an equal and
offsetting decrease in the administrative fee. These costs and
expenses are expected to approximate $8.9 million in 2018. We
expect that a significant portion of the assumed engineering costs
will be capitalized under generally accepted accounting
principles.
Prior to the $3.6 million annual increase and the effective date
of the Third Amended and Restated Omnibus Agreement, the annual
administrative fee was approximately $13.7 million and included the
costs and expenses of the personnel performing engineering and ESOH
services. Subsequent to the $3.6 million annual increase and the
effective date of the Third Amended and Restated Omnibus Agreement,
the annual administrative fee will be approximately $8.4 million
and the Partnership will bear the approximately $8.9 million costs
and expenses of the personnel performing engineering and ESOH
services for and on behalf of the Partnership.
The administrative fee under the Third Amended and Restated
Omnibus Agreement is subject to an increase each calendar year tied
to an increase in the consumer price index, if any, plus two
percent. If we acquire or construct additional facilities, the
owner of our general partner may propose a revised administrative
fee covering the provision of services for such additional
facilities, subject to approval by the conflicts committee of our
general partner.
We do not directly employ any of the persons responsible for
managing our business. We are managed by our general partner, and
all of the officers of our general partner and employees who
provide services to the Partnership are employed by TLP Management
Services, a wholly owned subsidiary of ArcLight. TLP Management
Services provides payroll and maintains all employee benefits
programs on behalf of our general partner and the Partnership
pursuant to the omnibus agreement. The omnibus agreement will
continue in effect until the earlier of (i) ArcLight ceasing to
control our general partner or (ii) the election of either us or
the owner, following at least 24 months’ prior written notice to
the other parties.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2018, our total long-term debt was $582.4
million, which included $290.2 million of outstanding borrowings on
our $850 million revolving credit facility. For the trailing twelve
months, on an as-adjusted basis for our acquisition of the West
Coast terminals, our Consolidated EBITDA was $134.0 million,
resulting in a debt to Consolidated EBITDA ratio of 4.35x.
Consolidated EBITDA is a non-GAAP financial performance measure
used in the calculation of the leverage ratio requirement under our
revolving credit facility. See Attachment B hereto for a
reconciliation of Consolidated EBITDA to net earnings. See also
Attachment C hereto for a table showing the calculation of our
total leverage ratio and interest coverage ratio and a
reconciliation of Consolidated EBITDA to Cash flows provided by
operating activities.
For the first quarter of 2018, we reported $6.5 million in total
capital expenditures. As of March 31, 2018, remaining expenditures
for approved expansion projects are estimated to be approximately
$120 million, assuming our Frontera joint venture does not exercise
its rights of first refusal related to our Brownsville terminaling
expansion efforts. Approved expenditures include the construction
costs associated with the expansion at our Collins, Brownsville and
West Coast terminals, as further discussed above.
QUARTERLY DISTRIBUTION
The Partnership previously announced that it declared a
distribution of $0.785 per unit for the period from January 1, 2018
through March 31, 2018. This $0.015 increase over the previous
quarter reflects the tenth consecutive increase in the quarterly
distribution and represents annual growth of 8.3% over the prior
year first quarter distribution. This distribution was paid on May
8, 2018 to unitholders of record on April 30, 2018.
CONFERENCE CALL
On Wednesday, May 9, 2018, the Partnership will hold a
conference call for analysts and investors at 12:00 p.m. Eastern
Time to discuss our first quarter results. Hosting the call will be
Fred Boutin, Chief Executive Officer, and Rob Fuller, Chief
Financial Officer. The call can be accessed live over the telephone
by dialing (877) 407-4018, or for international callers (201)
689-8471. A replay will be available shortly after the call and can
be accessed by dialing (844) 512-2921, or for international callers
(412) 317-6671. The passcode for the replay is 13679778. The replay
will be available until May 23, 2018.
Interested parties may also listen to a simultaneous webcast of
the conference call by logging onto TLP’s website at
www.transmontaignepartners.com under the Investor Information
section. A replay of the webcast will also be available until May
23, 2018.
ABOUT TRANSMONTAIGNE PARTNERS L.P.
TransMontaigne Partners L.P. is a terminaling and transportation
company based in Denver, Colorado with operations in the United
States along the Gulf Coast, in the Midwest, in Houston and
Brownsville, Texas, along the Mississippi and Ohio Rivers, in the
Southeast and on the West Coast. We provide integrated terminaling,
storage, transportation and related services for customers engaged
in the distribution and marketing of light refined petroleum
products, heavy refined petroleum products, crude oil, chemicals,
fertilizers and other liquid products. Light refined products
include gasolines, diesel fuels, heating oil and jet fuels, and
heavy refined products include residual fuel oils and asphalt. We
do not purchase or market products that we handle or transport.
News and additional information about TransMontaigne Partners L.P.
is available on our website: www.transmontaignepartners.com.
FORWARD-LOOKING STATEMENTS
This press release includes statements that may constitute
forward looking statements made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995.
Although the company believes that the expectations reflected in
such forward looking statements are based on reasonable
assumptions, such statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
projected. Among the key risk factors that could negatively impact
our assumptions on future growth prospects and acquisitions
include, without limitation, (i) our ability to identify suitable
growth projects or acquisitions; (ii) our ability to complete
identified projects timely and at expected costs, (iii) competition
for acquisition opportunities, and (iv) the successful integration
and performance of acquired assets or businesses and the risks of
operating assets or businesses that are distinct from our
historical operations. Key risk factors associated with the West
Coast terminals include, without limitation: (i) the successful
integration and performance of the acquired assets, (ii) adverse
changes in general economic or market conditions, and (iii)
competitive factors such as pricing pressures and the entry of new
competitors. Key risk factors associated with the Collins and
Brownsville terminal and pipeline expansions and related
improvements include, without limitation: (i) the ability to
complete construction of the project on time and at expected costs;
(ii) the ability to obtain required permits and other approvals on
a timely basis; (iii) the occurrence of operational hazards,
weather related events or unforeseen interruption; and (iv) the
failure of our customers or vendors to satisfy or continue
contractual obligations. Additional important factors that could
cause actual results to differ materially from the Partnership’s
expectations and may adversely affect its business and results of
operations are disclosed in "Item 1A. Risk Factors" in the
Partnership’s Annual Report on Form 10-K for the year ended
December 31, 2017, filed with the Securities and Exchange
Commission on March 15, 2018. The forward looking statements speak
only as of the date made, and, other than as may be required by
law, the Partnership undertakes no obligation to update or revise
any forward looking statements, whether as a result of new
information, future events or otherwise.
ATTACHMENT A
SELECTED FINANCIAL INFORMATION AND
RESULTS OF OPERATIONS
Our terminaling services agreements are structured as either
throughput agreements or storage agreements. Our throughput
agreements contain provisions that require our customers to make
minimum payments, which are based on contractually established
minimum volumes of throughput of the customer’s product at our
facilities over a stipulated period of time. Due to this minimum
payment arrangement, we recognize a fixed amount of revenue from
the customer over a certain period of time, even if the customer
throughputs less than the minimum volume of product during that
period. In addition, if a customer throughputs a volume of product
exceeding the minimum volume, we would recognize additional revenue
on this incremental volume. Our storage agreements require our
customers to make minimum payments based on the volume of storage
capacity available to the customer under the agreement, which
results in a fixed amount of recognized revenue.
We refer to the fixed amount of revenue recognized pursuant to
our terminaling services agreements as being “firm commitments.”
Revenue recognized in excess of firm commitments and revenue
recognized based solely on the volume of product distributed or
injected are referred to as “ancillary.” In addition “ancillary”
revenue also includes fees received from ancillary services
including heating and mixing of stored products, product transfer,
railcar handling, butane blending, proceeds from the sale of
product gains, wharfage and vapor recovery.
The “firm commitments” and “ancillary” revenue included in
terminaling services fees were as follows (in thousands):
Three months ended March 31,
2018 2017 Terminaling services fees:
Firm commitments $ 42,133 $ 32,064 Ancillary 11,058
8,680 Total terminaling services fees 53,191 40,744 Pipeline
transportation fees 869 1,716 Management fees 2,384
2,390 Total revenue $ 56,444 $ 44,850
The amount of revenue recognized as “firm commitments” based on
the remaining contractual term of the terminaling services
agreements that generated “firm commitments” for the three months
ended March 31, 2018 was as follows (in thousands):
Remaining terms on terminaling services agreements
that generated “firm commitments”: Less than 1 year remaining $
6,901 16% 1 year or more, but less than 3 years remaining 13,787
33% 3 years or more, but less than 5 years remaining 19,133 45% 5
years or more remaining 2,312 6% Total firm commitments for
the three months ended March 31, 2018 $ 42,133
The following selected financial information is extracted from
our quarterly report on Form 10-Q for the quarter ended March 31,
2018, which was filed on May 9, 2018 with the Securities and
Exchange Commission (in thousands, except per unit amounts):
Three months ended March 31,
2018 2017
Income Statement
Data
Revenue $ 56,444 $ 44,850 Direct operating costs and expenses
(20,145 ) (16,511 ) General and administrative expenses (4,981 )
(3,971 ) Earnings from unconsolidated affiliates 2,889 2,560
Operating income 19,136 15,400 Net earnings 12,174 12,954 Net
earnings allocable to limited partners 8,408 10,111 Net earnings
per limited partner unit—basic $ 0.52 $ 0.62
March
31, December 31, 2018 2017
Balance Sheet
Data
Property, plant and equipment, net $ 650,037 $ 655,053 Investments
in unconsolidated affiliates 234,030 233,181 Goodwill 9,428 9,428
Customer relationships, net 46,389 47,136 Total assets 975,618
987,003 Long-term debt 582,377 593,200 Partners’ equity 362,022
364,217
Selected results of operations data for each of the quarters in
the years ended December 31, 2018 and 2017 are summarized
below (in thousands):
Three months ended
Year ending March 31, June 30, September
30, December 31, December 31, 2018
2018 2018 2018 2018 Revenue $ 56,444 $
— $ — $ — $ 56,444 Direct operating costs and expenses (20,145 ) —
— — (20,145 ) General and administrative expenses (4,981 ) — — —
(4,981 ) Insurance expenses (1,246 ) — — — (1,246 ) Equity-based
compensation expense (2,017 ) — — — (2,017 ) Depreciation and
amortization (11,808 ) — — — (11,808 ) Earnings from unconsolidated
affiliates 2,889 — — —
2,889 Operating income 19,136 — — — 19,136 Interest expense
(6,461 ) — — — (6,461 ) Amortization of deferred issuance costs
(501 ) — — — (501 ) Net earnings
$ 12,174 $ — $ — $ — $ 12,174
Three months ended Year ending March
31, June 30, September 30, December 31,
December 31, 2017 2017 2017
2017 2017 Revenue $ 44,850 $ 45,364 $ 45,449 $ 47,609
$ 183,272 Direct operating costs and expenses (16,511 ) (15,984 )
(17,719 ) (17,486 ) (67,700 ) General and administrative expenses
(3,971 ) (4,080 ) (5,247 ) (6,135 ) (19,433 ) Insurance expenses
(1,006 ) (1,002 ) (999 ) (1,057 ) (4,064 ) Equity-based
compensation expense (1,817 ) (352 ) (544 ) (286 ) (2,999 )
Depreciation and amortization (8,705 ) (8,792 ) (8,882 ) (9,581 )
(35,960 ) Earnings from unconsolidated affiliates 2,560
2,120 1,884 507
7,071 Operating income 15,400 17,274 13,942 13,571
60,187 Interest expense (2,152 ) (2,525 ) (2,656 ) (3,140 ) (10,473
) Amortization of deferred issuance costs (294 ) (271
) (320 ) (336 ) (1,221 ) Net earnings $ 12,954
$ 14,478 $ 10,966 $ 10,095 $ 48,493
ATTACHMENT B
DISTRIBUTABLE CASH FLOW
The following summarizes our distributable cash flow for the
period indicated (in thousands):
January 1, 2018 through March 31, 2018
Net earnings $ 12,174 Depreciation and amortization 11,808 Earnings
from unconsolidated affiliates (2,889 ) Distributions from
unconsolidated affiliates 3,190 Equity-based compensation expense
2,017 Settlement of tax withholdings on equity-based compensation
(341 ) Interest expense 6,461 Amortization of deferred issuance
costs 501 Consolidated EBITDA (1) (2) 32,921 Interest
expense (6,461 ) Unrealized loss on derivative instruments 42
Amortization of deferred issuance costs (501 ) Amounts due under
long-term terminaling services agreements, net 28 Project
amortization of deferred revenue under GAAP
(187
) Project amortization of deferred revenue for DCF
582
Capitalized maintenance (3,389 ) “Distributable cash flow”,
or DCF, generated during the period (2) $ 23,035
Actual distribution for the period on all common units and the
general partner interest including incentive distribution rights $
16,571 Distribution coverage ratio (2) 1.39x
(1) Reflects the calculation of Consolidated EBITDA in accordance
with the definition for such financial metric in our revolving
credit facility. (2) Distributable cash flow, the
distribution coverage ratio and Consolidated EBITDA are not
computations based upon generally accepted accounting principles.
The amounts included in the computations of our distributable cash
flow and Consolidated EBITDA are derived from amounts separately
presented in our consolidated financial statements, notes thereto
and “Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations” in our quarterly report on
Form 10-Q for the quarter ended March 31, 2018, which was filed
with the Securities and Exchange Commission on May 9, 2018.
Distributable cash flow and Consolidated EBITDA should not be
considered in isolation or as an alternative to net earnings or
operating income, as an indication of our operating performance, or
as an alternative to cash flows from operating activities as a
measure of liquidity. Distributable cash flow and Consolidated
EBITDA are not necessarily comparable to similarly titled measures
of other companies. Distributable cash flow and Consolidated EBITDA
are presented here because they are widely accepted financial
indicators used to compare partnership performance. Further,
Consolidated EBITDA is calculated consistent with the provisions of
our credit facility and is a financial performance measure used in
the calculation of our leverage and interest coverage ratio
requirements. We believe that these measures provide investors an
enhanced perspective of the operating performance of our assets,
the cash we are generating and our ability to make distributions to
our unitholders and our general partner.
ATTACHMENT C
CREDIT FACILITY FINANCIAL
COVENANTS
The primary financial covenants contained in our revolving
credit facility are (i) a total leverage ratio test (not to
exceed 5.25 to 1.0), (ii) a senior secured leverage ratio test
(not to exceed 3.75 to 1.0), and (iii) a minimum interest
coverage ratio test (not less than 2.75 to 1.0). These financial
covenants are based on a non-GAAP, defined financial performance
measure within our revolving credit facility known as “Consolidated
EBITDA.” The following provides the calculation of “total leverage
ratio”, “senior secured leverage ratio” and “interest coverage
ratio” as such terms are used in our revolving credit facility for
certain financial covenants (in thousands, except ratios):
Twelve months Three
months ended ended June 30, September 30,
December 31, March 31, March 31, 2017
2017 2017 2018 2018 Financial
performance covenant tests: Consolidated EBITDA (1) $ 28,819 $
25,381 $ 26,963 $ 32,921 $ 114,084 Permitted acquisition credit (2)
7,000 7,000 5,900
— 19,900 Consolidated EBITDA for the leverage
ratios (1) $ 35,819 $ 32,381 $ 32,863 $ 32,921
$ 133,984 Revolving credit facility debt 290,200
6.125% senior notes due in 2026 300,000 Senior notes unamortized
deferred issuance costs (7,823 ) Consolidated funded indebtedness $
582,377
Senior secured leverage ratio 2.17
x Total leverage ratio 4.35 x
Consolidated EBITDA for the interest coverage ratio (1) $ 28,819 $
25,381 $ 26,963 $ 32,921 $ 114,084 Consolidated interest expense
(1) (3) $ 2,487 $ 2,591 $ 3,217 $ 6,419 $ 14,714
Interest
coverage ratio 7.75 x Reconciliation of
consolidated EBITDA to cash flows provided by operating
activities: Consolidated EBITDA for the total leverage ratio
(1) $ 35,819 $ 32,381 $ 32,863 $ 32,921 $ 133,984 Permitted
acquisition credit (2) (7,000 ) (7,000 ) (5,900 ) — (19,900 )
Interest expense (2,525 ) (2,656 ) (3,140 ) (6,461 ) (14,782 )
Unrealized loss (gain) on derivative instruments 38 65 (77 ) 42 68
Amortization of deferred revenue 10 (170 ) (122 ) (187 ) (469 )
Settlement of tax withholdings on equity-based compensation 25 304
— 341 670 Change in operating assets and liabilities (342 )
4,477 (3,709 ) (2,262 ) (1,836 )
Cash flows provided by operating activities $ 26,025 $
27,401 $ 19,915 $ 24,394 $ 97,735
(1) Reflects the calculation of Consolidated EBITDA and
Consolidated interest expense in accordance with the definition for
such financial metrics in our revolving credit facility. (2)
Reflects a proforma credit of $7.0 million per quarter relating to
the acquisition of the West Coast terminals, which qualified as a
“Permitted Acquisition” under the terms of our revolving credit
facility. For the three months ended December 31, 2017, such $7.0
million credit was reduced by approximately $1.1 million, which is
the amount of actual Consolidated EBITDA we recognized during the
period relating to the West Coast terminals following the
acquisition on December 15, 2017. (3) Consolidated interest
expense, used in the calculation of the interest coverage ratio,
excludes unrealized gains and losses recognized on our derivative
instruments.
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TransMontaigne Partners L.P.Frederick W. Boutin, (303)
626-8200Chief Executive OfficerorRobert T. Fuller, (303)
626-8200Chief Financial Officer
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