NuStar Energy L.P. and NuStar GP Holdings, LLC Announce Earnings Results for First Quarter 2018
6:46 am ET April 26, 2018 (Dow Jones) Print
NuStar Energy L.P. and NuStar GP Holdings, LLC Announce Earnings Results for First Quarter 2018
Merger and Simplification on Track to Close in Second Quarter 2018
Finalized Strategic Growth Projects to Supply Refined Products to Mexico
Recently Closed on Immediately Accretive Pipeline and Terminal Acquisition
SAN ANTONIO--(BUSINESS WIRE)--April 26, 2018--
For the first quarter of 2018, NuStar Energy L.P.'s (NYSE: NS) (the "Partnership" or "NuStar" or "NS") net income applicable to common limited partners was $107 million, or $1.15 per unit, up 178% from $38 million, or $0.49 per unit for first quarter 2017, while earnings before interest, taxes, depreciation and amortization (EBITDA) were $250 million, up 62% from $154 million for first quarter 2017.
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During the first quarter of 2018, the partnership received hurricane insurance proceeds of $87.5 million to fully cover the cost of repairing the property damage at its St. Eustatius terminal during 2017. While a gain of $79 million was reflected in the partnership's first quarter net income and EBITDA, NuStar stated that it is important to note that the gain will only be recognized in distributable cash flow (DCF) available to common limited partners as the proceeds are spent over the next couple of years to repair damage caused from the hurricane.
The partnership announced first quarter 2018 Series A, Series B and Series C preferred unit distributions of $0.53125 per unit, $0.47657 per unit and $0.56250 per unit, respectively, that will be paid on June 15, 2018 to holders of record as of June 1, 2018. In addition, a first quarter 2018 common unit distribution of $0.60 per unit will be paid on May 14, 2018 to holders of record as of May 8, 2018.
"Excluding the effect of the associated gain related to hurricane insurance proceeds, our strong first quarter results were primarily driven by contributions from our Permian Crude System and increased storage rates at some of our international storage facilities. In addition, we experienced improved results in our Fuels Marketing segment due to the streamlining efforts that we executed last year. Overall, the strength of our business was demonstrated this quarter as results in all three of our segments were up, quarter over quarter," said Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC.
Barron continued, "During our most recent earnings call in early February, we laid out a comprehensive, staged approach to best position NuStar for long-term financial strength and sustainable growth, which includes simplifying our structure, restoring our coverage, lowering our leverage and minimizing our need to access the equity capital markets. Since then, we have made substantial progress on our simplification. In mid-March, we filed a Form S-4 preliminary proxy statement to seek NuStar GP Holdings, LLC's unitholder approval and issue NS units to execute the simplification. We are in the process of responding to the SEC's comments to the Form S-4, and we expect to be positioned to schedule the unitholder vote and close by the end of the second quarter."
Strategic Growth Projects to Supply Refined Products to Mexico
Barron also announced that NuStar will be expanding its existing pipeline assets in South Texas, as well as its terminal in Nuevo Laredo, Mexico, with projects to supply refined products to growing markets in Mexico.
"For those of you who have followed NuStar over the years, you know that, since Mexico's energy reforms began, we have been excited about the new opportunities those reforms presented for us," Barron said. "Since then, we have worked to position NuStar to take advantage of these opportunities by utilizing our existing assets in South Texas and Mexico to supply products to the Mexico market, and I'm happy to say we have accomplished that.
"In support of this expansion, I am pleased to announce that we have signed several long-term T&D contracts with strong, creditworthy customers to support a series of healthy-return capital projects to connect to third-party rail facilities in Corpus Christi, expand certain South Texas products pipeline systems and expand our terminal in Nuevo Laredo.
"We expect to benefit from incremental revenue from these projects, starting as soon as late 2018, and we believe the Mexico market presents significant opportunities for future growth. And, I am proud of our team's perseverance and creativity in developing these projects, which we believe will establish NuStar as one of the primary logistics providers for this burgeoning market," said Barron.
Completed Purchase of Refined Products Pipeline and Terminal from CHS Inc.
Barron also stated that in mid-April, NuStar closed on an immediately accretive, $38 million acquisition of CHS' Council Bluffs system, consisting of a 227-mile pipeline and 18 storage tanks at a very attractive multiple.
"This bolt-on system is supported by long-term throughput and storage agreements and enhances our existing Central East System by increasing our overall system flexibility and allowing expansion into new markets, while at the same time enhancing our role as a key logistics provider to CHS," said Barron.
NuStar GP Holdings, LLC's Earnings Results for First Quarter 2018
NuStar GP Holdings, LLC (NYSE: NSH) (the "Company" or "NSH") today announced first quarter 2018 net income of $12 million, or $0.28 per unit, and DCF available to unitholders of $6 million.
The company also announced a first quarter 2018 distribution of $0.33 per unit that will be paid on May 16, 2018 to holders of record as of May 8, 2018. The NSH distribution was calculated assuming that NSH unitholders are expected to receive 0.55 units of NS for each NSH unit they own after the closing of the upcoming simplification transaction.
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