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Oiltanking Partners, L.P. Reports Financial Results For The Second Quarter 2012

HOUSTON, Aug. 8, 2012 /PRNewswire/ -- Oiltanking Partners, L.P. (NYSE: OILT) (the "Partnership") today reported second quarter 2012 net income of $16.6 million, or $0.41 per unit on a basic and diluted basis, compared to second quarter 2011 net income of $7.6 million.  Adjusted EBITDA for the second quarter of 2012 was $21.1 million, an increase of 25% over $16.9 million for the second quarter of 2011.  Adjusted EBITDA, which is a financial measure that is not presented in accordance with U.S. generally accepted accounting principles ("GAAP"), is defined and reconciled to net income below.

The Partnership's overall operating results for the second quarter of 2012 improved compared to the prior year period primarily due to higher storage and throughput volumes generating increased service fees, and to higher ancillary service fees and lower operating expenses.  Revenues increased approximately $4.2 million, or 14.1%, to $33.8 million during the 2012 quarter, mainly due to additional revenues from new storage capacity placed into service in December 2011 and April 2012 and to an escalation in storage fees, resulting in an increase in storage service fee revenue of $2.3 million, higher throughput fee revenue of $1.5 million, largely attributable to higher liquefied petroleum gas exports during the 2012 period, and an increase in ancillary services fee revenue of $0.4 million.

Operating expenses during the second quarter of 2012 were $8.0 million, down $0.2 million compared to the same period in 2011, primarily due to lower property taxes and power and fuel costs, partially offset by higher repairs and maintenance costs.  Selling, general and administrative expenses increased by $0.1 million due to increased costs associated with being a publicly traded company and increased personnel costs.  Interest expense declined approximately $1.9 million to $0.4 million for the period as compared to the second quarter of 2011 due to a lower level of outstanding borrowings.  Income tax expense was reduced by approximately $2.9 million to $0.1 million due to the conversion to a non-taxable entity in connection with the Partnership's initial public offering. 

"We are pleased to report record results for the second quarter as the Partnership benefitted from the positive impact of an additional 390,000 barrels of crude storage capacity that was placed into service in April as well as increased throughput during the quarter," said Carlin Conner, Chairman, President and Chief Executive Officer of the Partnership's general partner.  "We are continuing to build on our strategic position as the largest and most flexible crude storage distribution terminal serving the Houston and Texas City markets.  The Partnership is a key link between the incremental as well as existing crude oil flows coming to the Gulf Coast and the growing demand for crude oil storage by Gulf Coast refineries, oil producers and oil traders." 

"Our current crude storage expansion projects and crude pipeline project are on budget and on schedule with an additional 1.1 million barrels of new storage capacity and the pipelines expected to be placed into service by early 2013 and a further 3.2 million barrels of crude storage capacity expected to be in service by year-end 2013.  We have secured long-term contracts for 100% of this additional capacity and our confidence in future growth opportunities continues to build as our existing customer base as well as new customers continue to express strong interest in making future commitments," added Conner.

On July 19, 2012, the Partnership declared an increase in its cash distribution to $0.36 per unit, or $1.44 per unit on an annualized basis, for all of its outstanding limited partner units.  The $14.3 million cash distribution will be paid on August 14, 2012 to all unitholders of record as of August 3, 2012.  Distributable cash flow for the second quarter of 2012 provided distribution coverage of 1.42 times the amount needed for the Partnership to fund the quarterly distribution to both the general and limited partners.  Distributable cash flow and distribution coverage ratio, which are non-GAAP financial measures, are defined and reconciled to net income below.     

Conference Call
The Partnership will hold a conference call to discuss its second quarter 2012 financial results on August 9, 2012 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time).  To participate in the call, dial (480) 629-9771 and ask for the Oiltanking call ten minutes prior to the start time, or access it live over the internet at www.oiltankingpartners.com on the "Investor Relations" page of the Partnership's website.

A replay of the audio webcast will be available shortly after the call on the Partnership's website.  A telephonic replay will be available through August 16, 2012 by calling (303) 590-3030 and using the pass code 4551927#.

Oiltanking Partners is a master limited partnership engaged in independent storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas.  We provide our services to a variety of customers, including major integrated oil companies, distributors, marketers and chemical and petrochemical companies. Our assets are located along the Gulf Coast of the United States.  For more information, visit www.oiltankingpartners.com.

Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements reflect the Partnership's current expectations, opinions, views or beliefs with respect to future events, based on what it believes are reasonable assumptions. No assurance can be given, however, that these events will occur.  Important factors that could cause actual results to differ from forward-looking statements include, but are not limited to:  adverse economic or market conditions, changes in demand for the products that we handle or for our services, increased competition, changes in the availability and cost of capital, operating hazards and the effects of existing and future government regulations.  These and other significant risks and uncertainties are described more fully in the Partnership's filings with the Securities and Exchange Commission (the "SEC"), available at the SEC's website at www.sec.gov.  The Partnership has no obligation and, except as required by law, does not undertake any obligation, to update or revise these statements or provide any other information relating to such statements.

Use of Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-GAAP financial measures of Adjusted EBITDA, distributable cash flow and distribution coverage ratio, which may be used periodically by management when discussing our financial results with investors and analysts.  The accompanying schedules of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP.  Adjusted EBITDA, distributable cash flow and distribution coverage ratio are presented because management believes they provide additional information and metrics relative to the performance of our business, such as the cash distributions we expect to pay to our unitholders.  These metrics are commonly employed by financial analysts and investors to evaluate the operating and financial performance of the Partnership from period to period and to compare it with the performance of other publicly traded partnerships within the industry.  You should not consider Adjusted EBITDA, distributable cash flow and distribution coverage ratio in isolation or as a substitute for analysis of the Partnership's results as reported under GAAP.  Because Adjusted EBITDA, distributable cash flow and distribution coverage ratio may be defined differently by other companies in the Partnership's industry, the Partnership's presentation of Adjusted EBITDA, distributable cash flow and distribution coverage ratio may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

The Partnership defines Adjusted EBITDA as net income (loss) before net interest expense, income tax expense (benefit) and depreciation and amortization expense, as further adjusted to exclude certain other non-cash and non-recurring items, including gains and losses on disposals of fixed assets and property casualty indemnification.  Adjusted EBITDA is not a presentation made in accordance with GAAP.  Adjusted EBITDA is a non-GAAP supplemental financial performance measure that management and external users of the consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess: (i) the Partnership's financial performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or financing methods, and (ii) the viability of proposed projects and acquisitions and determine overall rates of returns on investment in various opportunities.  The GAAP measure most directly comparable to Adjusted EBITDA is net income.  Adjusted EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income.

Distributable cash flow, which is a financial measure included in the schedules to this press release, is another non-GAAP financial measure used by the Partnership's management.  The Partnership defines distributable cash flow as the Partnership's net income (loss) before (i) depreciation and amortization expense; (ii) gains or losses on disposal of fixed assets and property casualty indemnification; (iii) other (income) expense; and (iv) income tax expense; less maintenance capital expenditures.  The Partnership's management believes that distributable cash flow is useful to investors because it removes non-cash items from net income and provides a clearer picture of the Partnership's cash available for distribution to its unitholders. 

The Partnership defines distribution coverage ratio for any given period as the ratio of distributable cash flow during such period to the total quarterly distribution payable to all common and subordinated unitholders and the general partner interest.

Adjusted EBITDA, distributable cash flow and distribution coverage ratio should not be considered alternatives to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP.

The Partnership believes that investors benefit from having access to the same financial measures used by its management. Further, the Partnership believes that these measures are useful to investors because they are one of the bases for comparing the Partnership's operating and financial performance with that of other companies with similar operations, although the Partnership's measures may not be directly comparable to similar measures used by other companies. Please see the attached reconciliations of Adjusted EBITDA, distributable cash flow and distribution coverage ratio, to net income.

Contacts:
Ken Owen, Chief Financial Officer
ir@oiltankingpartners.com
(855) 866-6458

Jack Lascar / jlascar@drg-l.com
Lisa Elliott / lelliott@drg-l.com
DRG&L / 713-529-6600

 

—  Tables to Follow  —

 

OILTANKING PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per unit data)

(Unaudited)






Three Months Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011









Revenues

$

33,823



$

29,654



$

68,109



$

59,609


Costs and expenses:








Operating

8,019



8,211



17,646



16,635


Selling, general and administrative

4,703



4,559



9,191



9,351


Depreciation and amortization

4,068



4,077



8,034



7,952


Loss on disposal of fixed assets





13



544


Gain on property casualty indemnification







(247)


Total costs and expenses

16,790



16,847



34,884



34,235


Operating income

17,033



12,807



33,225



25,374


Other income (expense):








Interest expense

(400)



(2,309)



(607)



(4,588)


Interest income

9



9



29



24


Other income

59



45



73



141


Total other expense, net

(332)



(2,255)



(505)



(4,423)


Income before income tax expense

16,701



10,552



32,720



20,951


Income tax expense

(80)



(2,936)



(160)



(5,715)


Net income

$

16,621



$

7,616



$

32,560



$

15,236










Allocation of net income to partners:








Net income allocated to general partner

$

489





$

876




Net income allocated to common unitholders

$

8,066





$

15,842




Net income allocated to subordinated unitholders

$

8,066





$

15,842












Earnings per limited partner unit:








Common unit (basic and diluted)

$

0.41





$

0.81




Subordinated unit (basic and diluted)

$

0.41





$

0.81












Weighted average number of limited partner

   units outstanding:








Common units (basic and diluted)

19,450





19,450




Subordinated units (basic and diluted)

19,450





19,450




 

OILTANKING PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit amounts)

(Unaudited)






June 30,

2012


December 31,
2011

Assets:




Current assets:




Cash and cash equivalents

$

11,874



$

23,836


Receivables:




Trade

8,225



5,613


Affiliates

3,665



3,751


Other

43



261


Note receivable, affiliate

1,500



15,300


Prepaid expenses and other

2,135



1,352


Total current assets

27,442



50,113


Property, plant and equipment, net

305,759



271,644


Other assets, net

966



278


Total assets

$

334,167



$

322,035


Liabilities and partners' capital:




Current liabilities:




Accounts payable and accrued expenses

$

13,581



$

13,582


Current maturities of long-term debt, affiliate

2,500



2,500


Accounts payable, affiliates

2,070



3,681


Federal income taxes due to parent

1,210



1,210


Total current liabilities

19,361



20,973


Long-term debt, affiliate, less current maturities

27,050



18,300


Deferred revenue

2,737



2,915


Total liabilities

49,148



42,188


Commitments and contingencies




Partners' capital:




    Common units (19,449,901 units issued and outstanding at

       June 30, 2012 and December 31, 2011)

247,736



245,314


    Subordinated units (19,449,901 units issued and outstanding at

       June 30, 2012 and December 31, 2011)

35,914



33,492


General partner's interests

1,369



1,041


Total partners' capital

285,019



279,847


Total liabilities and partners' capital

$

334,167



$

322,035


 

 

OILTANKING PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 




Six Months Ended


June 30,


2012


2011

Cash flows from operating activities:




Net income

$

32,560



$

15,236


Adjustments to reconcile net income to net cash provided by operating

  activities:




Depreciation and amortization

8,034



7,952


Deferred income tax benefit



(108)


Postretirement net periodic benefit cost



695


Unrealized loss on investment in mutual funds



(96)


Increase in cash surrender value of life insurance policies



(42)


Loss on disposal of fixed assets

13



544


Gain on property casualty indemnification



(247)


Amortization of deferred financing costs

70




Changes in assets and liabilities:




Trade and other receivables

(2,394)



1,356


Refundable income taxes



4,387


Prepaid expenses and other assets

(791)



(210)


Accounts receivable/payable, affiliates

(1,347)



(4,733)


Accounts payable and accrued expenses

(386)



(6,108)


Deferred compensation



453


Deferred revenue

207



284


Total adjustments from operating activities

3,406



4,127


Net cash provided by operating activities

35,966



19,363


Cash flows from investing activities:




Issuance of notes receivable, affiliate

(20,000)



(3,000)


Collections of notes receivable, affiliate

33,800




Payments for purchase of property, plant and equipment

(42,162)



(12,248)


Proceeds from sale of property, plant and equipment



14


Payment for disposal of assets



(544)


Proceeds from property casualty indemnification



617


Investment in life insurance policies



(1,378)


Proceeds from sale of mutual funds



1,378


Net cash used in investing activities

(28,362)



(15,161)


Cash flows from financing activities:




Borrowings under loan agreement

10,000




Payments under notes payable, affiliate

(1,250)



(6,300)


Payment of offering costs



(1,795)


Debt issuance costs

(750)




Distributions paid to partners

(27,566)



(2,000)


Net cash used in financing activities

(19,566)



(10,095)


Net decrease in cash and cash equivalents

(11,962)



(5,893)


Cash and cash equivalents — Beginning of period

23,836



8,746


Cash and cash equivalents — End of period

$

11,874



$

2,853


 

OILTANKING PARTNERS, L.P.

SELECTED OPERATING DATA

(Unaudited)









Operating data:

















Three Months Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011

Storage capacity, end of period (mmbbls) (1)

17.7



16.8



17.7



16.8


Storage capacity, average (mmbbls)

17.6



16.8



17.6



16.8


Terminal throughput (mbpd) (2)

832.8



795.5



839.5



808.7


Vessels per period

221



198



450



409


Barges per period

780



645



1,553



1,291


Trucks per period (3)

2,617



333



5,368



333


Rail cars per period (4)

2,600





4,888




________________

(1)

Represents million barrels ("mmbbls").

(2)

Represents thousands of barrels per day ("mbpd").

(3)

Beginning in June 2011, one of our customers began unloading product by truck.

(4)

Beginning in November 2011, one of our customers began unloading product by rail car. 









Revenues by service category:

(In thousands)


Three Months Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011









Storage service fees

$

24,953



$

22,668



$

49,247



$

44,551


Throughput fees

7,215



5,706



14,096



12,299


Ancillary service fees

1,655



1,280



4,766



2,759


Total revenues

$

33,823



$

29,654



$

68,109



$

59,609


 

OILTANKING PARTNERS, L.P.

SELECTED FINANCIAL DATA

Non-GAAP Reconciliations

(In thousands)

(Unaudited)






Three Months Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011









Reconciliation of Adjusted EBITDA from

   net income:








Net income

$

16,621



$

7,616



$

32,560



$

15,236


Depreciation and amortization

4,068



4,077



8,034



7,952


Income tax expense

80



2,936



160



5,715


Interest expense, net

391



2,300



578



4,564


Loss on disposal of fixed assets





13



544


Gain on property casualty indemnification







(247)


Other income

(59)



(45)



(73)



(141)


Adjusted EBITDA

$

21,101



$

16,884



$

41,272



$

33,623










Distributable cash flow:








Net income

$

16,621





$

32,560




Depreciation and amortization

4,068





8,034




Loss on disposal of fixed assets





13




Other income

(59)





(73)




Maintenance capital expenditures

(397)





(1,152)




Distributable cash flow

$

20,233





$

39,382












Cash distribution (1)

$

14,290





$

28,182












Distribution coverage ratio

1.42x





1.40x





_____________

(1)

Cash distribution represents the distribution of $0.36 per unit declared on July 19, 2012 attributable to the second quarter of 2012, to be paid on August 14, 2012.

SOURCE Oiltanking Partners, L.P.

 
 
   
 
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