NuStar Energy L.P. (NS) Q1 2012 Earnings Call April 25, 2012 10:30 am ET Executives Curt Anastasio - CEO and President of NuStar Energy L.P. and NuStar GP Holdings, LLC. Steve Blank - CFO Paul Brattlof - SVP Marketing Mike Stone - Head of Asphalt Marketing Analysts Brian Zarahn - Barclays Darren Horowitz - Raymond James Mark Reichman - Simmons John Tysseland - Citigroup Michael Blum - Wells Fargo James Jampel - HITE Selman Ekyol - Stifel Nicolaus Presentation Operator
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During the course of this call, we will also make reference to certain non-GAAP financial measures. Our non-GAAP financial measures should not be considered as alternative to GAAP measures. Reconciliation of these non-GAAP financial measures to US GAAP maybe found either in our earnings press release or on our website.Now, let me turn the call over to Curt. Curt Anastasio Good morning and thanks for joining us on the call this morning. During the firsts quarter NuStar Storage and Transportation segment results continued to benefit from the capital we invested in internal growth projects over the last couple of years, while our Asphalt and Fuels Marketing segment went in fact a negatively on ongoing weak asphalt demand, high crude oil cost and hedging losses. For the quarter, NuStar Energy generated $97 million of EBITDA which was higher than the $93 million earned in the first quarter of 2011. Our Storage segment earned a record $79 million of EBITDA, $10 million higher than the first quarter of 2011. The third quarter 2011 completion of the 3.2 million barrel storage expansion project at our St, James, Louisiana terminal as well as higher storage rates on new and existing storage contracts, all had positive impacts on the segment's EBITDA. Pipeline transportation segment EBITDA of $50 million was higher than the $47 million earned in the first quarter of 2011. Higher pipeline revenues as a result of the 6.9% July 1, 2011 tariff adjustment and additional EBITDA generated by the Eagle Ford shale projects completed for Koch pipeline and Valero Energy in the second and third quarters of 2011 were the main drivers for the increase in EBITDA. Throughputs on our pipelines were down about 2% compared to the first quarter of 2011. Competitive supply economics and reduced charge rates at some of our customer's refinery as a result of lower refining margins and gasoline demands were the main reasons for the reduced throughputs. However, crude oil movements on a reactivated idle pipeline that was placed in service in late June of 2011 are being shipped by Koch under a capacity lease agreement. Those lines are not included in our reported throughput volumes. If those lines have been included total throughput volume for the quarter would have been higher than last year's.
The Asphalt and Fuels Marketing segment generated a loss of $9 million of EBITDA during the quarter; $14 million lower than the $5 million of EBITDA earned in the first quarter of last year. The asphalt portion of that segment lost $16 million in EBITDA during the quarter compared to a $9 million loss last year. The first quarter is seasonally a weak quarter for asphalt, but continued weak demand for asphalt caused first quarter sales volumes to be lower than last year putting additional downward pressure on results.Fuels marketing operations EBITDA increased to $16 million, $2 million higher than the $14 million generated in the same quarter of last year. Increased EBITDA in our crude oil trading operation more than offset reduced EBITDA in our bunkering and heavy fuels businesses. Our crude trading operations benefited from the wide LLS WTI spread that existed during the quarter, while our bunkering and heavy fuel oil business margins were negatively impacted by hedging losses due to product location differential. Our San Antonio refinery purchased in April of last year lost $9 million of EBITDA during the quarter, largely as a result of hedging losses and increased crude cost during the quarter. Excluding the hedging losses, the refinery made $2.5 million of EBITDA during the quarter. Increased industry demand for our lower cost Eagle Ford crude has driven up the cost of crude for the San Antonio refinery causing our refining margins to be lower than anticipated. Read the rest of this transcript for free on seekingalpha.com