LONDON, Nov. 8, 2016 /PRNewswire/ -- VTTI Energy Partners
LP ("VTTI" or the "Partnership") (NYSE: VTTI) today reported its
preliminary financial results for the third quarter ended
September 30, 2016.
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Highlights
- Generated operating income and net income of $30.9 million and $21.0
million, respectively, for the third quarter of 2016,
compared to operating income and net income of $39.7 million and $27.4
million, respectively, for the third quarter of 2015. As
previously indicated, the third quarter of 2015 benefited from a
non-recurring revenue item of approximately $9 million.
- Completed the acquisition of an additional 8.4% equity interest
in VTTI MLP B.V. and associated pro-rata net debt from VTTI MLP
Partners B.V. for cash consideration of $96.2 million on September
1, 2016.
- Declared a cash distribution to unitholders of $0.3281 per unit with respect to the third
quarter of 2016, representing a quarter-on-quarter increase of 2.4%
and equivalent to $1.3124 per unit on
an annualized basis. The implied distribution coverage ratio was
0.90x, or 1.03x on a pro forma basis assuming the full quarter
benefit of the additional 8.4% equity interest in VTTI MLP
B.V.
Financial and Operating Results Overview
The underlying financial performance of VTTI for the third
quarter ended September 30, 2016
exceeded the performance of the Partnership during the second
quarter ended June 30, 2016.
Mr. Rob Nijst, Chief Executive
Officer of VTTI, stated: "VTTI continues to perform consistently
with another strong financial and operating performance this
quarter. Our coverage ratio was negatively impacted by the timing
of the recent dropdown but our distribution coverage target remains
1.10x and we expect to meet that in the fourth quarter of
2016."
Total operating income for the third quarter ended September 30, 2016, was $30.9 million while net income was $21.0 million compared to total operating income
of $39.7 million and net income of
$27.4 million for the third quarter
of 2015, which benefited from a non-recurring revenue item of
approximately $9 million. Adjusted
EBITDA(1) for the third quarter ended September 30, 2016, was $48.6 million, compared to $57.4 million for the third quarter of 2015. The
Partnership generated $13.9 million
of distributable cash flow(1) for the third quarter
ended September 30, 2016, compared to
distributable cash flow of $17.8
million for the third quarter of 2015, again the difference
being driven by the aforementioned non-recurring revenue item.
(1) Adjusted EBITDA and distributable cash flow are
non-GAAP financial measures. See Appendix A for a reconciliation to
the most directly comparable U.S. GAAP financial measure.
Cash Distribution
On October 24, 2016, the Board
declared a quarterly cash distribution of $0.3281 per unit with respect to the third
quarter of 2016, equivalent to $1.3124 per unit on an annualized basis and
representing a 2.4% increase on the quarterly cash distribution of
the second quarter 2016. The implied distribution coverage ratio
was 0.90x, or 1.03x on a pro forma basis assuming the full quarter
benefit of the additional 8.4% equity interest in VTTI MLP B.V.
The cash distribution will be paid on November 14, 2016, to unitholders of record as of
the close of business on November 4,
2016.
Financing and Liquidity
As of September 30, 2016, the
Partnership had cash and cash equivalents of $39.8 million and total unaffiliated debt
outstanding of $560.1 million
(excluding restricted cash and debt held by affiliates). As of
September 30, 2016, there was an
undrawn amount of approximately $218
million available under our €300 million revolving credit
facility.
We believe that our current resources, including cash generated
by the operations of the Partnership, are sufficient to meet the
working capital requirements of our ongoing business.
Outlook
Mr. Rob Nijst, Chief Executive
Officer of VTTI commented: "Although we have seen an increase in
commodity price volatility in this quarter, the international
storage market remains supportive of international storage demand.
We are pleased to announce a number of significant new expansion
projects this quarter, primarily at the VTTI B.V. level, and we
intend to continue this growth trend going forwards."
About VTTI Energy Partners LP
VTTI Energy Partners LP is a fee-based, growth-oriented limited
partnership, formed to own, operate, develop and acquire refined
petroleum product and crude oil terminaling and related energy
infrastructure assets on global scale. The Partnership's assets
include interests in a broad-based portfolio of six terminals that
are strategically located in energy hubs throughout the world with
a combined total storage capacity of 35.7 million barrels.
Forward Looking Statements
This press release contains "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995.
You are cautioned not to rely on these forward-looking statements,
which speak only as the date of this press release. All statements,
other than statements of historical facts, that address activities,
events or developments that the Partnership expects, projects,
believes or anticipates will or may occur in the future, including,
without limitation, future operating or financial results and
future revenues and expenses, future, pending or recent
acquisitions, general market conditions and industry trends, the
financial condition and liquidity, cash available for distribution
and future capital expenditures are forward-looking statements.
These statements often include the words "could," "believe,"
"anticipate," "intend," "estimate," "expect," "project" and similar
expressions and are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words. These statements are based on current
expectations of future events, are not guarantees of future
performance and are subject to risks, uncertainties and other
factors, some of which are beyond the Partnership's control and are
difficult to predict. If underlying assumptions prove inaccurate or
unknown risks or uncertainties materialize, actual results could
vary materially from our expectations and projections. In addition
to other factors described herein that could cause VTTI's actual
results to differ materially from those implied in these
forward-looking statements, negative capital market conditions,
including a persistence or increase of the current yield on common
units, which is higher than historical yields, could adversely
affect VTTI's ability to meet its distribution growth guidance.
Risks and uncertainties include, but are not limited to, such
matters as: future operating or financial results and future
revenues and expenses; our future financial condition and
liquidity; significant interruptions in the operations of our
customers; future supply of, and demand for, refined petroleum
products and crude oil; our ability to renew or extend terminaling
services agreements; the credit risk of our customers; our ability
to retain our key customers; including Vitol; operational hazards
and unforeseen interruptions, including interruptions from
terrorist attacks, hurricanes, floods or severe storms; volatility
in energy prices; competition from other terminals; changes in
trade patterns and the global flow of oil; future or pending
acquisitions of terminals or other assets; business strategy, areas
of possible expansion and expected capital spending or operating
expenses; the ability of our customers to obtain access to
shipping, barge facilities, third party pipelines or other
transportation facilities; maintenance or remediation capital
expenditures on our terminals; environmental and regulatory
conditions, including changes in such laws relating to climate
change or greenhouse gases; health and safety regulatory
conditions, including changes in such laws; costs and liabilities
in responding to contamination at our facilities; our ability to
obtain financing; restrictions in our credit facilities and debt
agreements, including expected compliance and effect of restrictive
covenants in such facilities and debt agreements; fluctuations in
currencies and interest rates; the adoption of derivatives
legislation by Congress; our ability to retain key officers and
personnel; the expected cost of, and our ability to comply with,
governmental regulations and self-regulatory organization
standards, as well as standard regulations imposed by our customers
applicable to our business; risks associated with our international
operations; compliance with the U.S. Foreign Corrupt Practices Act
or the U.K. Bribery Act; risks associated with our potential
business activities involving countries, entities, and individuals
subject to restrictions imposed by U.S. or other governments; and
tax liabilities associated with indirect taxes on the products we
service. A further list and description of these risks,
uncertainties and other factors can be found in our Annual Report
filed on Form 20-F which was filed with the United States
Securities and Exchange Commission on April
29, 2016 and is available via the SEC's website at
www.sec.gov. VTTI undertakes no obligation and does not intend to
update these forward-looking statements to reflect events or
circumstances occurring after this press release.
Contacts
VTTI Energy Partners LP
Robert Abbott, Chief Financial
Officer
+44 20 3772 0110
Hill + Knowlton Strategies New York,
Joel Moore
+1 212 885 0468
Hill + Knowlton Strategies Amsterdam,
Tanno Massar
+31 20 4044707
VTTI ENERGY
PARTNERS LP
UNAUDITED CONDENSED INTERIM CONSOLIDATED
STATEMENT OF OPERATIONS
Three months ended September 30, 2016 and 2015
(in US$ millions)
|
|
|
Three Months
Ended
September 30,
|
Three Months
Ended
September 30,
|
|
2016
|
2015
|
Revenues, third
parties
|
24.3
|
19.3
|
Revenues,
affiliates
|
53.2
|
55.0
|
Total
revenues
|
77.5
|
74.3
|
Operating costs and
expenses:
|
|
|
Operating
costs
|
19.8
|
18.3
|
Depreciation and
amortization
|
18.3
|
17.5
|
Selling, general and
administrative
|
8.4
|
8.1
|
Disposal of property,
plant and equipment
|
0.1
|
—
|
Total operating
expenses
|
46.6
|
43.9
|
Other operating
income
|
—
|
9.3
|
Total operating
income
|
30.9
|
39.7
|
Other
income/(expense):
|
|
|
Interest expense,
including affiliates
|
(6.4)
|
(3.6)
|
Other finance
expense
|
(0.4)
|
(0.5)
|
Gain/(loss) on
foreign currency transactions
|
1.2
|
2.9
|
Gain/(loss) on
derivative financial instruments
|
(2.0)
|
(2.2)
|
Total other
income/(expense), net
|
(7.6)
|
(3.4)
|
Income before
income tax expense
|
23.3
|
36.3
|
Income tax
expense
|
(2.3)
|
(8.9)
|
Net
income
|
21.0
|
27.4
|
Non-controlling
interest
|
(13.8)
|
(18.3)
|
Net income
attributable to VTTI Energy Partners LP Owners
|
7.2
|
9.1
|
VTTI ENERGY
PARTNERS LP
UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
as of September 30, 2016 and December 31, 2015
(in US$ millions)
|
|
|
September 30,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
39.8
|
|
55.9
|
Restricted
cash
|
2.3
|
|
3.0
|
Trade accounts
receivable
|
4.9
|
|
4.7
|
Affiliates
|
21.3
|
|
16.4
|
Other receivables and
current assets
|
15.8
|
|
12.7
|
Prepaid
expenses
|
2.5
|
|
1.2
|
Derivative
assets
|
8.3
|
|
11.0
|
Total current
assets
|
94.9
|
|
104.9
|
Non-current
assets:
|
|
|
|
Long-term
receivables
|
1.0
|
|
1.0
|
Long-term prepaid
expenses
|
20.8
|
|
21.7
|
Deferred tax
assets
|
26.8
|
|
28.3
|
Property, plant and
equipment
|
1,225.7
|
|
1,227.2
|
Intangible assets,
net
|
35.6
|
|
35.2
|
Goodwill
|
112.3
|
|
110.2
|
Derivative
assets
|
14.2
|
|
22.9
|
Total non-current
assets
|
1,436.4
|
|
1,446.5
|
Total
assets
|
1,531.3
|
|
1,551.4
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Trade accounts
payable
|
15.4
|
|
19.7
|
Affiliates
|
14.8
|
|
10.2
|
Current installments
of long-term debt, affiliates
|
7.5
|
|
8.9
|
Derivative
liabilities
|
6.4
|
|
5.1
|
Other liabilities and
accrued expenses
|
26.0
|
|
33.3
|
Total current
liabilities
|
70.1
|
|
77.2
|
Non-current
liabilities:
|
|
|
|
Long-term
debt
|
560.1
|
|
541.6
|
Derivative
liabilities
|
4.5
|
|
5.8
|
Long-term debt,
affiliates
|
137.4
|
|
141.3
|
Post-retirement
benefit and post-employment obligation
|
10.1
|
|
9.6
|
Environmental
provisions
|
19.7
|
|
19.8
|
Deferred tax
liabilities
|
78.3
|
|
65.8
|
Other long-term
liabilities
|
17.0
|
|
16.2
|
Total non-current
liabilities
|
827.1
|
|
800.1
|
Total
liabilities
|
897.2
|
|
877.3
|
Equity:
|
|
|
|
Total
equity
|
634.1
|
|
674.1
|
Total liabilities
and equity
|
1,531.3
|
|
1,551.4
|
APPENDIX A—RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
Adjusted EBITDA
We define Adjusted EBITDA as net income before interest expense,
income tax expense, depreciation and amortization expense, other
finance expense, gain (loss) on foreign currency transactions and
gain (loss) on derivative financial instruments, as further
adjusted to reflect realized cash gains on forward foreign exchange
contracts, certain other non-cash, non-recurring items, and to
exclude the revenues from the Phase 2 assets of our Malaysian
terminal in excess of the costs incurred to operate Phase 2 which
are attributable to VTTI B.V.
Adjusted EBITDA is a non-GAAP financial measure that management
and external users of our financial statements, such as industry
analysts, investors, lenders and rating agencies, may use to assess
our operating performance as compared to other publicly traded
partnerships in the midstream energy industry, without regard to
historical cost basis or financing methods, and the viability of
acquisitions and other capital expenditure projects and the returns
on investment in various opportunities.
We believe that the presentation Adjusted EBITDA provides useful
information to management in assessing our financial condition and
results of operations. The U.S. GAAP measure most directly
comparable to Adjusted EBITDA is net income. Our non-GAAP financial
measure of Adjusted EBITDA should not be considered as an
alternative to U.S. GAAP net income. Adjusted EBITDA has important
limitations as an analytical tool because it excludes some but not
all items that affect net income. You should not consider Adjusted
EBITDA in isolation or as a substitute for analysis of our results
as reported under U.S. GAAP. Because Adjusted EBITDA may be defined
differently by other companies in our industry, our definitions of
Adjusted EBITDA may not be comparable to similarly titled measures
of other companies, thereby diminishing its utility.
The following table reconciles net income to Adjusted EBITDA for
the third quarters ended September 30,
2016 and 2015.
(in US$
millions)
|
Three Months
Ended
September 30,
2016
|
Three Months
Ended
September 30,
2015
|
Net
income
|
21.0
|
27.4
|
Interest expense,
including affiliates
|
6.4
|
3.6
|
Income tax
expense
|
2.3
|
8.9
|
Depreciation and
amortization
|
18.3
|
17.5
|
Other finance
expense
|
0.4
|
0.5
|
Gain/(loss) on
foreign currency transactions
|
(1.2)
|
(2.9)
|
Gain/(loss) on
derivative financial instruments
|
2.0
|
2.2
|
Realized cash gains
on forward foreign exchange contracts
|
2.3
|
2.4
|
Non-cash PP&E
disposals and write-offs
|
0.1
|
—
|
Non-cash stock based
compensation
|
0.1
|
—
|
EBITDA attributable
to Affiliate
|
(3.1)
|
(2.2)
|
Adjusted
EBITDA
|
48.6
|
57.4
|
Distributable Cash Flow ("DCF")
In determining the amount of cash to distribute to our
unitholders, the Board of Directors of our general partner
evaluates the amount of distributable cash flow. As used by the
Board of Directors, distributable cash flow represents Adjusted
EBITDA after considering certain period cash payments including
maintenance capital expenditures, certain period cash receipts and
other reserves established by the Partnership.
Maintenance capital expenditures represent capital expenditures
required to maintain over the long-term the operating capacity of,
or the revenue generated by, our capital assets. Cash interest
expense includes interest expense attributable to our Senior
Unsecured Notes, VTTI Operating Revolving Credit Facility, Related
Party MLP Loan Agreement (as defined in our Annual Report filed on
Form 20-F on April 29, 2016),
periodic cash settlement amounts for interest rate swap derivative
financial instruments and other cash finance expenses.
Distributable cash flow is a quantitative standard used by
investors in publicly-traded partnerships to assist in evaluating a
partnership's ability to make quarterly cash distributions.
Distributable cash flow is a non-GAAP financial measure and should
not be considered as an alternative to net income or any other
indicator of the Partnership's performance calculated in accordance
with U.S. GAAP.
The table below reconciles Adjusted EBITDA to distributable cash
flow for the third quarters ended September
30, 2016 and 2015.
(in US$
millions)
|
Three Months
Ended
September 30,
2016
|
Three Months
Ended
September 30,
2015
|
Adjusted
EBITDA
|
48.6
|
57.4
|
Cash interest
expense
|
(7.3)
|
(4.6)
|
Cash income tax
expense
|
—
|
—
|
Maintenance capital
expenditures
|
(4.7)
|
(3.4)
|
Cash environmental
remediation payments
|
(0.3)
|
(0.6)
|
Non-cash lease
expense
|
1.0
|
1.0
|
Change in deferred
income
|
(0.5)
|
(0.5)
|
Harbor fees cash
receipt
|
—
|
(0.3)
|
Non-cash revenue
adjustments
|
(0.4)
|
—
|
Cash flow
attributable to non-controlling interest
|
(22.5)
|
(31.2)
|
Distributable cash
flow
|
13.9
|
17.8
|
Total
distribution
|
15.5
|
12.0
|
Coverage
ratio
|
0.90x
|
1.48x
|