NGL Energy Partners LP Announces Earnings And Filing Of Form 10-Q

NGL Energy Partners LP (NYSE:NGL), "NGL Energy," reported net income allocable to limited partners for the three month period ended December 31, 2011 of $6.1 million and Adjusted EBITDA of $13.6 million. Net income per limited partner common unit for the period was $0.24. Costs associated with acquisitions that were expensed amounted to $0.3 million.

For the nine month period ended December 31, 2011, NGL Energy reported a net loss allocable to limited partners of $(6.1) million and Adjusted EBITDA of $8.0 million. Net loss per limited partner common unit for the period was $(0.41). Costs associated with acquisitions that were expensed amounted to $1.4 million.

During the three months ended December 31, 2011, NGL Energy completed two significant business combinations. On October 3, 2011, NGL Energy combined the retail propane operations in the northeastern United States of E. Osterman Propane, Inc., its affiliated companies and members of the Osterman family. The contributed assets include 20 owned or leased customer service and satellite distribution locations, with aggregate propane storage capacity of 1.7 million gallons. On November 1, 2011, NGL Energy obtained substantially all of the natural gas liquids business of SemStream, L.P. The contributed assets include 12 natural gas liquids terminals, 12 million gallons of above ground propane storage, 3.7 million barrels of underground leased storage for natural gas liquids and a rail fleet of approximately 350 leased and 12 owned cars.

Subsequent to December 31, 2011, NGL Energy completed two significant business combinations. In January 2012, NGL Energy acquired the assets of seven retail propane companies affiliated with Pacer Propane Holdings, L.P. in exchange for approximately $32.2 million in cash and 1.5 million common units of NGL Energy. In February 2012, NGL Energy acquired the propane and distillate operations and assets of North American Propane for cash of approximately $66.8 million, subject to adjustment for certain assumed liabilities, working capital and other specified items.

EBITDA and Adjusted EBITDA are non-GAAP financial measures which we believe are used by industry analysts, investors, lenders and rating agencies to assess the financial performance and the operating results of NGL Energy's fundamental business activities and should not be considered in isolation or as a substitute for net income, income from operations, or other measures of cash flow. A table reconciling EBITDA and Adjusted EBITDA with appropriate GAAP financial measures is included in the summarized financial information in this release. NGL Energy's Adjusted EBITDA excludes from EBITDA the unrealized gain or loss on commodity derivative contracts and gain or loss on asset sales for the period.

A conference call to discuss the Partnership's results of operations is scheduled for 2:00 p.m. Central Time on February 16, 2012. Analysts, investors, and other interested parties may access the conference call by dialing (866) 783-2142 and providing access code 45599372. An audio replay of the conference call will be available for 7 days beginning at 4:00 p.m. Central Time on February 16, 2012, and can be accessed by dialing (888) 286-8010 and providing access code 51885684.

NGL Energy also announced that it has filed its quarterly report on Form 10-Q for its fiscal quarter ended December 31, 2011 with the Securities and Exchange Commission. NGL Energy has posted a copy of the Form 10-Q on its website at www.nglenergypartners.com. Unitholders of NGL Energy will be provided a copy of NGL Energy's Form 10-Q free of charge upon request. Any such request should be made in writing directed to: NGL Energy Partners LP, Investor Relations, 6120 South Yale Avenue, #805, Tulsa, OK 74136.

About NGL Energy Partners: NGL Energy Partners LP owns and operates a vertically integrated energy business with three operating segments: midstream, wholesale supply and marketing, and retail propane. For further information about NGL Energy and the financial results disclosed in this press release, see our website at www.nglenergypartners.com.

NGL ENERGY PARTNERS LP

Unaudited Condensed Consolidated Balance Sheets

As of December 31, 2011 and March 31, 2011

(U.S. Dollars in Thousands)
 
  December 31,   March 31,
  2011   2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,368 $ 16,337
Accounts receivable - trade, net of allowance for doubtful accounts of $508 and
$161, respectively 115,202 44,346
Accounts receivable - affiliates 2,770 -
Inventories 184,698 12,697
Product exchanges 3,793 427
Derivative financial instruments 4,424 783
Assets held for sale 3,500 -
Prepaid expenses and other current assets   7,389   2,900
Total current assets 332,144 77,490
 
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $9,155
and $2,871, respectively 227,893 66,020
GOODWILL 92,930 8,568
INTANGIBLE ASSETS, net of accumulated amortization of $5,035 and $1,558, respectively 99,264 11,755
OTHER ASSETS   2,974   -
Total assets $ 755,205 $ 163,833
 
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 107,933 $ 37,244
Accrued expenses and other payables 9,698 3,711
Product exchanges 19,524 1,045
Advance payments received from customers 29,082 7,714
Payable to related parties 9,868 -
Current maturities of long-term debt   92,968   830
Total current liabilities 269,073 50,544
 
LONG-TERM DEBT, net of current maturities 117,590 65,541
OTHER NON-CURRENT LIABILITIES 222 395
 
COMMITMENTS AND CONTINGENCIES
 

PARTNERS' EQUITY:
General Partner — 0.1% interest; 27,743 and 10,945 notional units outstanding, respectively 409 72
Limited Partners — 99.9% interest —
Common units — 21,796,253 and 10,933,568 units outstanding, respectively 349,112 47,225
Subordinated units — 5,919,346 and no units outstanding, respectively 18,781 -
Accumulated other comprehensive income —
Foreign currency translation   18   56
Total partners' equity   368,320   47,353
Total liabilities and partners' equity $ 755,205 $ 163,833
 

NGL ENERGY PARTNERS LP

AND NGL SUPPLY, INC.

Unaudited Condensed Consolidated Statements of Operations

Three Months and Nine Months Ended December 31, 2011 and 2010

(U.S. Dollars in Thousands, except per unit and per share amounts)
 
  NGL Energy Partners LP   NGL Energy Partners LP   NGL Supply, Inc.
  Nine Months Ended December 31, 2011 and 2010
Three Months   Three Months Six Months
Ended Ended Ended
December 31, December 31, September 30,
  2011     2010     2011     2010     2010  
REVENUES:
Retail propane $ 62,701 $ 31,662 $ 94,787 $ 31,662 $ 6,868
Wholesale supply and marketing 405,626 278,263 773,253 278,263 309,029
Midstream   2,322     1,212     3,504     1,212     1,046  
Total Revenues   470,649     311,137     871,544     311,137     316,943  
 
COST OF SALES:
Retail propane 40,502 20,697 61,825 20,697 4,749
Wholesale supply and marketing 399,131 270,623 765,044 270,623 305,965
Midstream   157     153     356     153     194  
Total Cost of Sales   439,790     291,473     827,225     291,473     310,908  
 
Gross Margin 30,859 19,664 44,319 19,664 6,035
 
OPERATING COSTS AND EXPENSES:
Operating 12,653 8,330 27,045 8,330 5,231
General and administrative 4,163 2,417 10,363 2,417 3,210
Depreciation and amortization   5,402     1,696     8,480     1,696     1,389  
Operating Income (Loss) 8,641 7,221 (1,569 ) 7,221 (3,795 )
 
OTHER INCOME (EXPENSE):
Interest income 197 93 422 93 66
Interest expense (2,676 ) (1,314 ) (4,989 ) (1,314 ) (372 )
Other, net   86     56     215     56     124  
Income (Loss) Before Income Taxes 6,248 6,056 (5,921 ) 6,056 (3,977 )
 
INCOME TAX (PROVISION) BENEFIT   (158 )   -     (158 )   -     1,417  
 
Net Income (Loss) 6,090 6,056 (6,079 ) 6,056 (2,560 )
 
Net Income (Loss) Allocated to General Partner 6 6 (6 ) 6
 
Net Loss Attributable to Noncontrolling Interest 45
 
Net Income (Loss) Allocable to Limited Partners          
or Attributable to Parent Equity $ 6,084   $ 6,050   $ (6,073 ) $ 6,050   $ (2,515 )
 
Basic and Diluted Earnings (Loss) Per Common Unit or Share $ 0.24   $ 0.55   $ (0.41 ) $ 0.55   $ (128.46 )
 
Basic and Diluted Earnings (Loss) per Subordinated Unit $ 0.28   $ -   $ (0.20 ) $ -  
 
Basic and Diluted Weighted average units outstanding:
Common   18,699,590     10,933,568     12,491,836     10,933,568  
Subordinated   5,919,346     -     4,929,201     -  
 
Weighted average common shares outstanding:
Basic   19,711  
Diluted   19,711  
 

 

NGL ENERGY PARTNERS LP

AND NGL SUPPLY, INC.

Summarized Operating Information

 

VOLUME INFORMATION
     
  Nine Months Ended December 31, 2011 and 2010
  Three Months Six Months
Ended Ended
Three Months Ended December 31, December 31, September 30,

Segment
2011 2010 2011 2010 2010
(gallons in thousands)
Retail propane 24,694 14,676 37,658 14,676 3,747
Wholesale supply and marketing —
Propane 237,490 191,833 449,656 191,833 226,330
Other NGLs 50,456 26,421 88,556 26,421 46,092
Midstream 79,273 50,451 128,532 50,451 43,704
Total 391,913 283,381 704,402 283,381 319,873
 

ADJUSTED EBITDA RECONCILIATION

The following tables reconcile net income (loss) or net income (loss) to parent equity to our EBITDA and Adjusted EBITDA, each of which are non-GAAP financial measures, for the periods indicated:

        Nine Months Ended December 31, 2010
Three Months Nine Months Three Months   Six Months
Ended Ended Ended Ended
December 31, December 31, December 31, September 30,
  2011     2010   2011     2010   2010  
(in thousands)
EBITDA:
Net income (loss) or net income (loss) to parent equity $ 6,090 $ 6,056 $ (6,079 ) $ 6,056 $ (2,515 )
Provision (Benefit) for income taxes 158 - 158 - (1,417 )
Interest expense 2,676 1,314 4,989 1,314 372
Depreciation and amortization   5,602     1,896   9,080     1,896   1,789  
EBITDA $ 14,526 $ 9,266 $ 8,148 $ 9,266 $ (1,771 )
Unrealized (gain) loss on derivative contracts (938 ) 31 (76 ) 31 200
Gain on sale of assets   (38 )   -   (84 )   -   (124 )
Adjusted EBITDA $ 13,550   $ 9,297 $ 7,988   $ 9,297 $ (1,695 )
 

We define EBITDA as net income (loss) or net income (loss) attributable to parent equity, plus income taxes, interest expense and depreciation and amortization expense. We define Adjusted EBITDA as EBITDA excluding the unrealized gain or loss on derivative contracts, the gain or loss on the disposal of assets and share-based compensation expenses. EBITDA and Adjusted EBITDA should not be considered an alternative to net income, income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP as those items are used to measure operating performance, liquidity or the ability to service debt obligations. We believe that EBITDA provides additional information for evaluating our ability to make quarterly distributions to our unitholders and is presented solely as a supplemental measure. We believe that Adjusted EBITDA provides additional information for evaluating our financial performance without regard to our financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as we define them, may not be comparable to EBITDA and Adjusted EBITDA or similarly titled measures used by other entities.

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