- Achieved record levels of revenue,
Consolidated EBITDA and distributable cash flow for the third
quarter of 2018
- Revenue for the third quarter of 2018
totaled $57.2 million, compared to $45.5 million in the prior year
third quarter
- Consolidated EBITDA totaled $36.1
million, compared to $25.4 million in the prior year third
quarter
- Distributable cash flow for the third
quarter of 2018 totaled $24.7 million, with aggregate distributions
of $17.2 million, resulting in quarterly distribution coverage of
1.43x
- Increased the quarterly cash
distribution for the twelfth consecutive quarter to $0.805,
reflecting a 6.6% increase over the prior year quarterly
distribution
- Leverage as of September 30, 2018 was
4.31x
TransMontaigne Partners L.P. (NYSE:TLP) (the Partnership,
we, us, our) today announced third quarter 2018 financial and
operating results.
FINANCIAL RESULTS
Revenue for the third quarter of 2018 totaled $57.2 million, an
increase of $11.7 million, or approximately 26%, compared to $45.5
million for the third quarter of 2017. Consolidated EBITDA totaled
$36.1 million for the third quarter of 2018, representing an
increase of $10.7 million, or approximately 42%, compared to $25.4
million for the third quarter of 2017. The improvement in revenue
and Consolidated EBITDA compared to the prior year was primarily
attributed to the acquisition of the West Coast terminals on
December 15, 2017.
An overview of our financial performance for the third quarter
of 2018 compared to the third quarter of 2017 includes:
- Operating income for the third quarter
2018 was approximately $20.1 million compared to $13.9 million for
the third quarter 2017. Changes in the primary components of
operating income are as follows:
- Revenue increased approximately $11.7
million to $57.2 million driven by contributions from our
acquisition of the West Coast terminals in December 2017, which
added approximately $9.9 million to revenue. In addition, we
experienced increases in revenue at our Gulf Coast, Midwest and
Southeast terminals of approximately $0.5 million, $0.8 million and
$1.3 million, respectively, partially offset by decreases in
revenue at our Brownsville and River terminals of approximately
$0.7 million and $0.1 million, respectively.
- Direct operating costs and expenses
increased approximately $2.2 million to $19.9 million driven by our
West Coast acquisition, which added approximately $3.5 million to
expenses, partially offset by a decrease in direct operating costs
and expenses at our Gulf Coast, Brownsville, River and Southeast
terminals of approximately $0.2 million, $0.9 million, $0.1 million
and $0.1 million, respectively. Direct operating costs and expenses
for the Midwest terminals were consistent with the prior year
quarter.
- Depreciation and amortization expenses
increased approximately $3.4 million to $12.3 million primarily
driven by an increased asset base associated with our acquisition
of the West Coast terminals.
- Net earnings were approximately $10.9
million for the third quarter 2018 compared to $11.0 million for
the third quarter 2017. The decrease was principally due to the
increase in quarterly operating income discussed above, offset by
increases in interest expense and amortization of deferred issuance
costs of approximately $6.0 million and $0.3 million, respectively.
The increase was primarily attributable to increased financing
costs associated with financing our acquisition of the West Coast
terminals, the issuance of senior notes in the first quarter of
2018 and increases in LIBOR based interest rates.
- Quarterly net earnings per limited
partner unit was $0.42 per unit for the third quarter 2018 compared
to $0.47 per unit for the third quarter 2017.
- Consolidated EBITDA for the third
quarter 2018 was approximately $36.1 million compared to $25.4
million for the third quarter 2017. The increase in Consolidated
EBITDA was due to the changes in revenue and direct operating costs
and expenses discussed above, as well as an increase in
distributions from unconsolidated affiliates of approximately $0.8
million.
- Distributable cash flow for the third
quarter 2018 was approximately $24.7 million compared to $21.6
million for the third quarter 2017. The increase in distributable
cash flow was due to the changes in EBITDA and interest expense
discussed above, partially offset by an increase in capitalized
maintenance expenditures of approximately $0.9 million.
- The distribution declared per limited
partner unit was $0.805 per unit for the third quarter 2018
compared to $0.755 per unit for the third quarter 2017, reflecting
an increase of 6.6%.
- Aggregate distributions totaled $17.2
million for the third quarter 2018, resulting in a quarterly
distribution coverage ratio of 1.43x.
QUARTERLY DISTRIBUTION
The Partnership previously announced that it declared a
quarterly cash distribution of $0.805 per unit for the period from
July 1, 2018 through September 30, 2018. This $0.01 increase over
the previous quarter reflects the twelfth consecutive increase in
the quarterly distribution and represents annual growth of 6.6%
over the prior year. The distribution was paid on November 8, 2018
to unitholders of record on October 31, 2018.
RECENT DEVELOPMENTS
Expansion of our Brownsville operations. The Frontera
joint venture has waived its right of first refusal to participate
in our previously announced Brownsville terminal expansion.
Accordingly, our Brownsville expansion project will be 100%
constructed and owned by TransMontaigne Partners. The project,
which is underpinned by new long-term agreements, includes the
construction of approximately 630,000 barrels of additional liquids
storage capacity and the conversion of our Diamondback Pipeline to
transport diesel and gasoline to the U.S./Mexico border. The
Diamondback Pipeline is comprised of an 8” pipeline that previously
transported propane approximately 16 miles from our Brownsville
facilities to the U.S./Mexico border, as well as 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 liquids storage capacity under
construction to be completed and placed into commercial service
during the first quarter of 2019. We expect to recommission the
Diamondback Pipeline and resume operations on both the 8” pipeline
and the previously idle 6” pipeline by the end of 2019, with the
remaining additional liquids storage capacity being completed and
placed into commercial service at the same time. The anticipated
aggregate cost of the terminal expansion and pipeline
recommissioning is estimated to be approximately $55 million.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2018 total long-term debt was $591.0
million, excluding $7.6 million of unamortized deferred issuance
costs. Our long-term debt amounts included $291.0 million of
outstanding borrowings on our $850 million revolving credit
facility and $300 million of issued senior notes. For the trailing
twelve months, Consolidated EBITDA combined with bank approved pro
forma acquisition and project credit was $137.2 million, resulting
in a debt to Consolidated EBITDA ratio, or total leverage ratio, of
4.31x. Consolidated EBITDA is a non-GAAP financial performance
measure used in the calculation of our leverage and interest
coverage ratio requirements under our revolving credit facility.
See Attachment B hereto for a reconciliation of Consolidated EBITDA
to net earnings. See also Attachment C hereto for 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 third quarter of 2018 we reported $16.5 million in total
capital expenditures, which consisted of $2.9 million of
maintenance expenditures and $13.6 million in expansion
expenditures. As of September 30, 2018 remaining capital
expenditures for approved expansion projects are estimated to be
approximately $100 million, which is expected to be spent through
the end of 2019. We expect to fund approved expansion projects with
cash flows from operations and additional borrowings under our
revolving credit facility. Approved expansion projects are
underpinned by new long-term agreements and primarily include
expansions at our Collins, Brownsville and Richmond terminals:
- Collins, Mississippi Phase II terminal
expansion includes the construction of an additional 870,000
barrels of liquids storage capacity and improvements to the
Colonial Pipeline receipt and delivery manifolds. Total capital
expenditures for this project are expected to be approximately $55
million, of which approximately $13.2 million has been spent though
September 30, 2018. We expect the first of the new tanks to be
placed into commercial service in the fourth quarter of 2018, with
the remaining capacity and the manifold improvements to be placed
into commercial service in the second quarter of 2019.
- Brownsville, Texas terminal expansion
and pipeline recommissioning is discussed above under “Recent
Developments”. As of September 30, 2018 we have spent approximately
$5.7 million on this project.
- Richmond, California terminal includes
the construction of an additional 125,000 barrels of liquids
storage capacity. Total capital expenditures for this project is
expected to be approximately $8 million, of which, approximately
$2.2 million has been spent though September 30, 2018. We expect
the first of the new tank capacity to be placed into commercial
service in the fourth quarter of 2018, with the remaining capacity
to be placed into commercial service in the first quarter of
2019.
CONFERENCE CALL
On Thursday, November 8, 2018, the Partnership will hold a
conference call for analysts and investors at 12:00 p.m. Eastern
Time to discuss our third 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 13684763. The replay
will be available until November 22, 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
November 22, 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. 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 ASELECTED 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 Nine months ended September 30,
September 30, 2018 2017 2018
2017 Terminaling services fees: Firm commitments $ 43,220 $
33,857 $ 128,051 $ 99,590 Ancillary 11,132 8,123
31,870 24,640 Total terminaling services fees 54,352
41,980 159,921 124,230 Pipeline transportation fees 774 1,091 2,437
4,603 Management fees 2,024 2,378 6,580
6,830 Total revenue $ 57,150 $ 45,449 $ 168,938 $ 135,663
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 September 30, 2018 was as follows (in thousands):
Remaining terms on terminaling services
agreements that generated “firm commitments”: Less than 1 year
remaining $ 9,932 23% 1 year or more, but less than 3 years
remaining 12,952 30% 3 years or more, but less than 5 years
remaining 11,063 26% 5 years or more remaining (1) 9,273 21%
Total firm commitments for the three months ended September 30,
2018 $ 43,220
(1) We have a terminaling services agreement with a third party
relating to our Southeast terminals that will continue in effect
through February 1, 2023, after which it shall automatically
continue unless and until the third party provides at least 24
months’ prior notice of its intent to terminate the agreement.
Effective at any time from and after July 31, 2040, we have the
right to terminate the agreement by providing at least 24 months’
prior notice of our intent to terminate the agreement. We do not
believe the third party will terminate the agreement prior to July
31, 2040; therefore we have presented the firm commitments related
to this terminaling services agreement in the 5 years or more
remaining category in the table above.
The following selected financial information is extracted from
our quarterly report on Form 10-Q for the quarter ended September
30, 2018, which was filed on November 8, 2018 with the Securities
and Exchange Commission (in thousands, except per unit
amounts):
Three
months ended Nine months ended September 30,
September 30, 2018 2017 2018
2017
Income Statement
Data
Revenue $ 57,150 $ 45,449 $ 168,938 $ 135,663 Direct operating
costs and expenses (19,910 ) (17,719 ) (59,330 ) (50,214 ) General
and administrative expenses (4,957 ) (5,247 ) (14,557 ) (13,298 )
Earnings from unconsolidated affiliates 1,862 1,884 7,195 6,564
Operating income 20,125 13,942 58,283 46,616 Interest expense
(8,608 ) (2,656 ) (23,342 ) (7,333 ) Net earnings 10,895 10,966
32,529 38,398 Net earnings allocable to limited partners 4,058
3,270 11,696 9,218 Net earnings per limited partner unit—basic $
0.42 $ 0.47 $ 1.28 $ 1.79
September 30, December 31, 2018 2017
Balance Sheet
Data
Property, plant and equipment, net $ 662,819 $ 655,053 Investments
in unconsolidated affiliates 228,622 233,181 Goodwill 9,428 9,428
Customer relationships, net 45,130 47,136 Total assets 976,587
987,003 Long-term debt 583,420 593,200 Partners’ equity 349,485
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 $ 55,344 $ 57,150 $ — $ 168,938 Direct
operating costs and expenses (20,145 ) (19,275 ) (19,910 ) —
(59,330 ) General and administrative expenses (4,981 ) (4,619 )
(4,957 ) — (14,557 ) Insurance expenses (1,246 ) (1,271 ) (1,227 )
— (3,744 ) Equity-based compensation expense (2,017 ) (441 ) (483 )
— (2,941 ) Depreciation and amortization (11,808 ) (13,160 )
(12,310 ) — (37,278 ) Earnings from unconsolidated affiliates
2,889 2,444 1,862
— 7,195 Operating income 19,136 19,022 20,125 —
58,283 Interest expense (6,461 ) (8,273 ) (8,608 ) — (23,342 )
Amortization of deferred issuance costs (501 ) (1,289
) (622 ) — (2,412 ) Net earnings $ 12,174
$ 9,460 $ 10,895 $ — $ 32,529
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 BDISTRIBUTABLE CASH FLOW
The following summarizes our distributable cash flow for the
period indicated (in thousands):
July 1, 2018 January
1, 2018 through through September 30, 2018
September 30, 2018 Net earnings $ 10,895 $
32,529 Depreciation and amortization 12,310 37,278 Earnings from
unconsolidated affiliates (1,862 ) (7,195 ) Distributions from
unconsolidated affiliates 5,007 12,168 Equity-based compensation
expense 483 2,941 Settlement of tax withholdings on equity-based
compensation — (658 ) Interest expense 8,608 23,342 Amortization of
deferred issuance costs 622 2,412
Consolidated EBITDA (1) (2) 36,063 102,817 Interest expense (8,608
) (23,342 ) Unrealized loss on derivative instruments 144 271
Amortization of deferred issuance costs (622 ) (2,412 ) Amounts due
under long-term terminaling services agreements, net 171 375
Project amortization of deferred revenue under GAAP (185 ) (1,247 )
Project amortization of deferred revenue for DCF 581 2,433
Capitalized maintenance (2,853 ) (10,017 )
“Distributable cash flow”, or DCF, generated during the period (2)
$ 24,691 $ 68,878 Actual distribution for the
period on all common units and the general partner interest
including incentive distribution rights $ 17,243 $ 50,732
Distribution coverage ratio (2)
1.43
x
1.36
x
(1) Reflects the calculation of Consolidated EBITDA in
accordance with the definition for such financial metric in our
revolving credit facility. (2) Consolidated EBITDA, Distributable
cash flow and the distribution coverage ratio 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 September 30, 2018, which was filed with the
Securities and Exchange Commission on November 8, 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 CCREDIT 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
December 31, March 31, June 30, September
30, September 30, 2017 2018 2018
2018 2018 Financial performance covenant
tests: Consolidated EBITDA (1) $ 26,963 $ 32,921 $ 33,833 $
36,063 $ 129,780 Permitted Acquisition credit (2) 5,900 — — — 5,900
Material Project credit (3) — —
854 663 1,517 Consolidated
EBITDA for the leverage ratios (1) $ 32,863 $ 32,921
$ 34,687 $ 36,726 $ 137,197 Revolving credit
facility debt 291,000 6.125% senior notes due in 2026 300,000
Consolidated funded indebtedness $ 591,000
Senior
secured leverage ratio 2.12
x
Total leverage ratio 4.31
x
Consolidated EBITDA for the interest coverage ratio (1) $ 26,963 $
32,921 $ 33,833 $ 36,063 $ 129,780 Consolidated interest expense
(1) (4) $ 3,217 $ 6,419 $ 8,188 $ 8,464 $ 26,288
Interest
coverage ratio 4.94
x
Reconciliation of consolidated EBITDA to cash flows provided by
operating activities: Consolidated EBITDA for the total
leverage ratio (1) $ 32,863 $ 32,921 $ 34,687 $ 36,726 $ 137,197
Permitted Acquisition credit (2) (5,900 ) — — — (5,900 ) Material
Project credit (3) — — (854 ) (663 ) (1,517 ) Interest expense
(3,140 ) (6,461 ) (8,273 ) (8,608 ) (26,482 ) Unrealized loss
(gain) on derivative instruments (77 ) 42 85 144 194 Amortization
of deferred revenue (122 ) (187 ) (149 ) (119 ) (577 ) Settlement
of tax withholdings on equity-based compensation — 341 317 — 658
Change in operating assets and liabilities (3,709 )
(2,262 ) 9,656 3,122 6,807
Cash flows provided by operating activities $ 19,915
$ 24,394 $ 35,469 $ 30,602 $ 110,380
(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, the $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) Reflects percentage of
completion proforma credit related to the Collins, Mississippi
Phase II terminal expansion that qualifies as a “Material Project”
under the terms of our revolving credit facility. (4) 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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version on businesswire.com: https://www.businesswire.com/news/home/20181108005463/en/
TransMontaigne Partners L.P.Frederick W. Boutin,
303-626-8200Chief Executive OfficerorRobert T. Fuller,
303-626-8200Chief Financial Officer
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