Nice I will take that 1.04 on the way out
Northern Tier Reports Third Quarter 2015 Results
1 comment | Tue November 3, 2015 5:45 AM|GlobeNewswire | About: NTI
Highlights
Third quarter Adjusted Net Income of $140.3 million and Adjusted EBITDA of $173.3 million
Declares third quarter distribution of $1.04 per common unit to be paid in cash on November 25, 2015
Record retail segment fuel sales and strong retail fuel margins
Approved Solvent Deasphalting unit project at the St. Paul Park refinery
TEMPE, Ariz., Nov. 03, 2015 (GLOBE NEWSWIRE) -- Northern Tier Energy LP and its subsidiaries (NYSE:NTI) (collectively, "Northern Tier" or the "Company") today reported third quarter 2015 Net Income of $103.5 million, compared to $96.2 million for third quarter 2014. Results for the 2015 quarter included a $36.8 million non-cash lower of cost or market ("LCM") inventory adjustment, which reduced operating income. Adjusted Net Income, which excludes the LCM adjustment, was $140.3 million for third quarter 2015, compared to $96.2 million for the prior year quarter. Adjusted EBITDA for third quarter 2015 was $173.3 million (excluding the LCM adjustment) compared to $122.8 million for third quarter 2014, due to higher gross margins per barrel. A reconciliation of reported earnings to these non-GAAP performance measures can be found in the accompanying tables.
Dave Lamp, Northern Tier's Chief Executive Officer, said, "This was an outstanding quarter for Northern Tier. We experienced an unplanned shutdown of our No. 2 Crude Unit at the end of September for crude tower repairs but were able to minimize the impact of the downtime by drawing down our finished product inventories. Our retail segment also performed well with our network of company-operated and franchise store locations achieving record fuel sale volumes. With these results, I am pleased to announce a third quarter distribution of $1.04 per unit."
Mr. Lamp continued, "Our general partner's Board of Directors recently approved the purchase and relocation to the St. Paul Park refinery of an existing 5,000 barrel per day Solvent Deasphalting unit, or SDA, for a total installed cost of approximately $63 million. The SDA is expected to be completed in mid-2017 and thereafter should contribute approximately $27 million annually in EBITDA, driven by upgrading residual oils for conversion to gasoline and diesel using our excess FCC (FCIC) capacity. Meanwhile, we continue to make good progress on the organic growth projects we previously announced, including our crude unit desalter and No. 2 crude unit revamp projects as well as the construction of new company-operated retail stores."
Third Quarter Operating Segment Highlights
Refining Segment
Refining operating income excluding the LCM adjustment was $147.1 million ($111.1 million including the LCM adjustment) for third quarter 2015 compared to $107.4 million for the prior year period. Refining gross margin was $24.97 per barrel of throughput for third quarter 2015 ($20.65 per barrel including the LCM adjustment) compared to $18.87 per barrel of throughput for third quarter 2014. Refining Adjusted EBITDA for third quarter 2015 was $165.0 million (excluding the LCM adjustment) compared to $121.4 million for the prior year period. This increase was driven by improved gross margins. Refined product sales for the third quarter 2015 were 99,600 barrels per day, while total throughput averaged 90,600 barrels per day, reflecting the impact of the unplanned shutdown of the No. 2 crude unit in September. Refined product sales and total throughput for the prior year period averaged 100,100 barrels per day and 96,500 barrels per day, respectively.
Retail Segment
Retail operating income for third quarter 2015, was $9.4 million (excluding the LCM adjustment), compared to $5.8 million for third quarter 2014. Fuel margins were $0.28 per gallon for third quarter 2015 ($0.27 per gallon including the LCM adjustment) compared to $0.20 per gallon for the prior year period. Adjusted EBITDA for the third quarter 2015 was $11.5 million (excluding the LCM adjustment) compared to $7.6 million in the third quarter 2014.
The aggregate of fuel gallons sold at company-operated retail stores plus fuel gallons sold to franchise stores increased 8.2% for the quarter ended September 30, 2015 compared to third quarter 2014 and 10.4% compared to third quarter 2013. This growth was primarily the result of adding 20 SuperAmerica franchise locations. The number of franchise locations totaled 102 as of September 30, 2015, compared to 82 as of September 30, 2014.
Liquidity and Capital Spending
Northern Tier's primary sources of liquidity are cash generated from operating activities and its ABL Facility ("ABL"). As of September 30, 2015, Northern Tier's cash on hand and availability under the ABL amounted to approximately $322 million as compared to approximately $381 million as of June 30, 2015. Working capital requirements can have a significant impact on the Company's liquidity. During periods of declining crude oil prices, cash from operations is negatively impacted by the timing of crude oil payables versus current product pricing. The reverse is true during periods of rising crude oil prices. Beginning in the fourth quarter of 2014, when the Company's crude oil costs dropped by over $30.00 per barrel, the Board of Directors of Northern Tier's general partner established a working capital reserve to reflect the negative impact on cash earnings for that period and to manage working capital requirements. While the Company considers its current level of liquidity to be adequate to support its continuing operations, the Board anticipates making changes, both increases and decreases, to the working capital reserve in periods when changes in crude oil prices significantly impact cash earnings versus earnings reported in accordance with generally accepted accounting principles ("GAAP"). During the third quarter of 2015, the Company's crude oil costs declined by approximately $19.00 per barrel from the beginning of the quarter to the end of the quarter, resulting in an estimated $40.0 million negative impact on cash earnings for the period. As a result, the Board increased the working capital reserve by $40.0 million, which reduced cash available for distribution for the third quarter 2015 correspondingly.
Capital spending for third quarter 2015 was $17.5 million, including $8.7 million on organic growth projects, compared to third quarter 2014 spending of $9.2 million.
Quarterly Distribution
Effective November 3, 2015, the Board of Directors (the "Board") of Northern Tier Energy GP LLC, the general partner of the Company declared a quarterly distribution of $1.04 per unit that will be paid in cash on November 25, 2015 to common unit holders of record as of the close of business on November 16, 2015. Cash available for distribution totaled $97.4 million for third quarter 2015, including the $40 million increase in the working capital reserve.
Northern Tier Energy LP is a variable distribution master limited partnership. As a result, its quarterly distributions, if any, will vary from quarter-to-quarter as a result of variations in, among other factors, (i) operating performance, (ii) cash flows caused by, among other things, fluctuations in the prices of crude oil and other feedstocks and the prices received for finished products, (iii) working capital requirements including inventory fluctuations, (iv) maintenance and regulatory capital expenditures, (v) organic growth capital expenditures less any amounts we may choose to fund with borrowings from our ABL Facility or by issuance of debt or equity securities and (vi) cash reserves deemed necessary or appropriate by the Board of Directors of our general partner.
Q4 2015 Operating and Capital Expenditure Guidance
For the fourth quarter of 2015, Northern Tier projects total throughput of between 96,000 and 101,000 barrels per day at the St. Paul Park refinery. Direct operating expense per barrel of throughput is expected to be between $4.20 and $4.70, not including turnaround expenditures. Total capital expenditures for the fourth quarter are expected to be between approximately $23 million and approximately $27 million, including between $10 million and $12 million for the organic growth projects. See the accompanying table for additional key metric guidance.
Conference Call Information
Northern Tier will host a conference call to discuss its quarterly results on Tuesday, November 3, 2015, at 11:30 am Eastern Time. Callers may listen to the live presentation, which will be followed by a question and answer segment, by dialing (877) 728-3739 or (530) 379-4675 and the passcode 48587440. An audio webcast of the call, as well as a slide presentation, will be available on the Investor section of www.northerntier.com under Calendar of Events. An audio replay of the conference call will be available for fourteen days following the call on www.northerntier.com and for seven days following the call by dialing (855) 859-2056 or (404) 537-3406 and the passcode 48587440.
About Northern Tier
Northern Tier Energy LP (NYSE:NTI) is an independent downstream energy company with refining, retail and logistics operations that serves the PADD II region of the United States. Northern Tier operates a 97,800 barrels per stream day refinery located in St. Paul Park, Minnesota. Northern Tier also operates approximately 165 convenience stores and supports approximately 102 franchised convenience stores, primarily in Minnesota and Wisconsin, under the SuperAmerica trademark, and owns a bakery and commissary under the SuperMom's brand. Northern Tier is headquartered in Tempe, Arizona.
More information about Northern Tier is available at www.northerntier.com.
Non-GAAP Measures
This earnings release includes non-GAAP measures including Adjusted Net Income, Adjusted EBITDA, Cash Available for Distribution, Refining Gross Margin, Retail Fuel and Retail Merchandise Gross Margins, and other measures that exclude the impact of non-cash and special items. Northern Tier believes that these non-GAAP financial measures provide useful information about its operating performance. However, these measures have important limitations as analytical tools and should not be viewed in isolation or considered as alternatives to comparable GAAP financial measures. Northern Tier's non-GAAP financial measures may also differ from similarly named measures used by other companies. See the accompanying tables and footnotes in this release for additional information on the non-GAAP measures used in this release and reconciliations to the most directly comparable GAAP measures.
Forward-Looking Statements and Qualified Notice
This press release contains certain "forward-looking statements" which reflect Northern Tier's views and assumptions on the date of this press release regarding future events. These forward-looking statements include statements about, among other things, future: payment of distributions including the amount and timing thereof; finished product inventory levels; organic growth initiatives including the crude unit desalter, the No. 2 crude unit revamp and the solvent deasphalting unit projects and the progress, cost, details, timing and expected operating and financial performance thereof; FCC capacity; construction of new retail stores; franchise growth; liquidity including cash and ABL availability; working capital requirements and reserves relating thereto; crude oil prices; cash reserves including increases and/or decreases thereof; calculations of cash available for distribution; total or other throughput; crude oil charge and inventories; direct operating expenses; turnaround and related expenses; retail and franchise volumes, sales and margins; SG&A, depreciation and amortization; interest expense; income taxes and amounts and types of capital expenditures on maintenance, regulatory, discretionary and organic growth projects or otherwise. They involve known and unknown risks, uncertainties and other factors, many of which may be beyond its control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. All forward-looking statements speak only as of the date hereof. Northern Tier undertakes no obligation to update or revise publicly any such forward-looking statements. Northern Tier cautions you not to place undue reliance on these forward-looking statements. Please refer to Northern Tier's filings with the SEC (SCUR) for more detailed information regarding these risks, uncertainties and assumptions.
This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of Northern Tier's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, Northern Tier's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
