NuStar Energy L.P. Q1 2010 Earnings Call Transcript

NuStar Energy L.P. Q1 2010 Earnings Call Transcript
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NuStar Energy L.P. (NS)

Q1 2010 Earnings Conference Call

April 29, 2010 10:00 AM ET

Executives

Curt Anastasio – President and CEO

Chris Russell – VP, IR

Paul Brattlof – SVP, Marketing, Supply and Trading

Mike Hoeltzel – SVP, Strategic Planning

Steve Blank – SVP, Chief Financial Officer and Treasurer

Danny Oliver – VP, Marketing and Business Development

Mike Stone – VP, Asphalt Marketing

Rick Bluntzer – SVP, Operations

Analysts

Joseph Siano – Credit Suisse

Brian Zarahn – Barclays Capital

Steve Maresca – Morgan Stanley

John Tysseland – Citigroup

Darren Horowitz – Raymond James

Michael Blum – Wells Fargo

Mark Reichman – Madison Williams

Louis Shamie – Zimmer Lucas

Michael Cerasoli – Goldman Sachs

Mark Easterbrook – RBC Capital Markets

Yves Siegel – Credit Suisse

Presentation

Operator

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Good morning, my name is Michael and I will be your conference operator today. At this time I would like to welcome everyone to the NuStar Energy LP and NuStar GP Holdings LLC first quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the conference over to Mr. Curt Anastasio, CEO and President of NuStar. Sir, you may begin your conference.

Curt Anastasio

Good morning and welcome to our conference call to discuss NuStar Energy L.P. and NuStar GP Holdings LLC's first quarter 2010 earnings results. I'd like to introduce our new Vice President of Investor Relations Chris Russell. Chris has been with NuStar for five years and has held the title of Assistant Treasurer overseeing our budgeting and forecasting, credit and cash management departments during that time. Previously Chris was with Citco for about 20 years and was involved in various accounting and finance roles. He has done an excellent job at NuStar having gained a thorough understanding of the company and its businesses and will be a great fit running the Investor Relations department.

I'd like to thank Mark Meador, our outgoing Vice President of Investor Relations, who has been instrumental in getting our program to where it is today. Mark will be transitioning to a new role in the company in operations. This transition will allow both Chris and Mark to broaden their experience and knowledge of the company by taking on new roles. Now I'll turn it over to Chris Russell.

Chris Russell

Thank you, Curt and good morning everyone. If you have not received the earnings releases and would like copies of each, you may obtain them from our website at nustarenergy.com and nustargp.com. Attached to the earnings releases, we have provided additional financial information for both companies, including information on NuStar Energy L.P.’s business segments. In addition, we have posted operating highlights and fundamental data for our asphalt operations under the investor's asphalt highlights portion of the NuStar Energy L.P. website.

If after reviewing this additional financial information and operating highlights you have questions on the information that's presented, please feel free to contact us after the call. With me today is Curt Anastasio, CEO and President of NuStar Energy L.P. and NuStar GP Holdings LLC, Steve Blank, our CFO and other members of our management team.

Before we get started we'd like to remind you that during the course of this call NuStar Management will make certain statements concerning the future performance of NuStar and other statements that will be forward-looking statements as defined by securities laws. These statements reflect our current views with regard to future events and are subject to various risks, uncertainties and assumptions described in NuStar Energy, L.P. and NuStar GP Holdings Annual Reports on Form 10-K for the year ended December 31, 2009 and subsequent filings with the Securities and Exchange Commission. Actual results may materially differ from those discussed in these forward-looking statements and we undertake no duty to update any forward-looking statements to conform the statement to actual results or changes in our expectations.

During the course of this call, we will also make reference to certain non-GAAP financial measures. We have provided an additional schedule under the investors financial reports and SEC filings portion of the NuStar Energy L.P. website reconciling these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with the U.S. Generally Accepted Accounting Principles or GAAP. Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, net cash flows provided by operating activities or any other GAAP measure of liquidity or financial performance.

Now let me turn the call back over to Curt.

Curt Anastasio

Thanks, Chris. First quarter 2010 earnings were in line with the $80 million to $100 million EBITDA guidance we had provided in late January during the fourth quarter earnings conference call. EBITDA came in at $81 million is at the lower end of the range but reflective of the seasonal weakness that occurs during this time of the year when sales and throughput volumes are relatively low but then ramp up during the second and third quarter as the asphalt, the summer driving and the agricultural season start up. In fact we are seeing sales and throughput volumes increase as we start the second quarter.

Lower than expected earnings in the first quarter were also due to several timing issues. Some of our asphalt and fuel sales that we had expected to occur in the first quarter will actually take place in the second instead. In addition, we recorded some mark to market paper losses in the first quarter that will be recovered when the physical sales occur later.

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