NGL Energy Partners LP Announces First Quarter Results And Filing Of Form 10-Q

NGL Energy Partners LP (NYSE:NGL) today reported a net loss of $24.7 million and an Adjusted EBITDA loss of $6.5 million for the three months ended June 30, 2012. Net loss per limited partner common unit for the quarter was $0.76.

The net loss was impacted by the following items:
  • General and administrative expenses during the quarter ended June 30, 2012, included $3.5 million of costs related to the merger with High Sierra Energy, LP and High Sierra Energy, GP (collectively, “High Sierra”).
  • NGL recorded a loss of $5.8 million resulting from the accelerated amortization of previously capitalized debt issuance costs upon closing of its new $645 million revolving credit facility.
  • Declining propane prices had an adverse impact on margins of NGL’s wholesale marketing and supply segment which NGL expects to recover when delivering future volumes. NGL has contracts whereby it has committed to purchase ratable volumes of propane at index prices. NGL seeks to manage the price risk associated with these contracts primarily by selling the inventory not stored immediately after it is received. When NGL sells product, it records the cost of sale at the average cost of all inventory at that location, which may include inventory purchased earlier at higher prices and stored for sale in the future. During periods of falling prices, this results in negative margins on these sales.

On June 19, 2012, NGL completed a merger with High Sierra. High Sierra is a Denver, Colorado based limited partnership with three core businesses: crude oil gathering, transportation and marketing; water treatment, disposal, recycling and transportation; and natural gas liquids transportation and marketing.

During April and May 2012, NGL completed three separate business combinations to acquire retail propane and distillate operations in Georgia, Kansas, Maine, and New Hampshire.

A conference call to discuss NGL's results of operations is scheduled for 2:00 p.m. Central Time on August 16, 2012. Analysts, investors, and other interested parties may access the conference call by dialing (800) 237-9752 and providing access code 58099124. An audio replay of the conference call will be available for 7 days beginning at 4:00 p.m. Central Time on August 16, 2012, and can be accessed by dialing (888) 286-8010 and providing access code 48448684.

NGL also announced that it has filed its quarterly report on Form 10-Q for its fiscal quarter ended June 30, 2012, with the Securities and Exchange Commission. NGL has posted a copy of the Form 10-Q on its website at

NGL defines EBITDA as net income (loss) attributable to parent equity, plus income taxes, interest expense and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding the unrealized gain or loss on derivative contracts and 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. NGL believes that EBITDA provides additional information for evaluating its ability to make quarterly distributions to its unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information for evaluating its financial performance without regard to its financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA and Adjusted EBITDA or similarly titled measures used by other entities. A reconciliation of Adjusted EBITDA to net income (loss) attributable to parent equity is shown below.

About NGL Energy Partners LP:

NGL Energy Partners LP is a Delaware limited partnership. NGL owns and operates a vertically integrated energy business with four primary businesses: water services, crude oil logistics, NGL logistics and retail. NGL completed its initial public offering in May 2011. For further information about NGL and the financial results disclosed in this press release, see NGL Energy’s website at


Unaudited Condensed Consolidated Balance Sheets

As of June 30, 2012, and March 31, 2012

(U.S. Dollars in Thousands, except unit amounts)
June 30, March 31,
2012 2012
Cash and cash equivalents $ 21,467 $ 7,832

Accounts receivable - trade, net of allowance for doubtful accounts of $1,111 and $818, respectively
347,709 84,004
Receivables from affiliates 4,599 2,282
Inventories 192,066 94,504
Prepaid expenses and other current assets   62,617     10,002  
Total current assets 628,458 198,624

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $18,819 and $12,843, respectively
435,369 255,403
GOODWILL 476,894 148,785
INTANGIBLE ASSETS, net of accumulated amortization of $9,805 and $8,174, respectively 355,673 143,559
Other   3,816     2,766  
Total assets $ 1,900,210   $ 749,137  
Trade accounts payable $ 360,941 $ 81,369
Accrued expenses and other payables 51,068 10,023
Product exchanges 15,372 4,764
Advance payments received from customers 47,042 20,293
Payable to affiliates 14,778 8,486
Current maturities of long-term debt   92,412     19,484  
Total current liabilities 581,613 144,419
LONG-TERM DEBT, net of current maturities 510,437 199,177
General Partner — 0.1% interest; 50,720 and 29,245 notional units outstanding, respectively (51,601 ) 442
Limited Partners — 99.9% interest —
Common units — 44,749,763 and 23,296,253 units outstanding, respectively 840,744 384,604

Subordinated units — 5,919,346 units outstanding at June 30, 2012, and March 31, 2012
13,133 19,824
Accumulated other comprehensive income —
Foreign currency translation 18 31
Noncontrolling interests   2,888     428  
Total partners' equity   805,182     405,329  
Total liabilities and partners' equity $ 1,900,210   $ 749,137  
Unaudited Condensed Consolidated Statements of Operations
For the Three Months Ended June 30, 2012 and 2011
(U.S. Dollars in Thousands, except unit and per unit amounts)


Three Months
Three Months




June 30,
June 30,
2012 2011
Retail propane $ 59,184 $ 12,852
Wholesale supply and marketing 164,675 177,497
Midstream 2,151 497
High Sierra operations   100,426     -  
Total Revenues   326,436     190,846  
Retail propane 37,417 8,106
Wholesale supply and marketing 155,176 177,769
Midstream 803 98
High Sierra operations   105,589     -  
Total Cost of Sales   298,985     185,973  
Operating 23,338 7,142
General and administrative 9,960 2,036
Depreciation and amortization   9,227     1,377  
Operating Loss (15,074 ) (5,682 )
Interest income 366 126
Interest expense (3,800 ) (1,301 )
Loss on extinguishment of debt (5,769 ) -
Other, net   26     85  
Loss Before Income Taxes (24,251 ) (6,772 )
Net Loss (24,710 ) (6,772 )
Net (Income) Loss Allocated to General Partner (95 ) 7
Net Loss Attributable to Noncontrolling Interests 60
Net Loss Attributable to Parent Equity            
Allocated to Limited Partners $ (24,745 ) $ (6,765 )
Basic and Diluted Earnings Per Common Unit $ (0.76 ) $ (0.53 )
Basic and Diluted Earnings per Subordinated Unit $ (0.77 ) $ (0.53 )
Basic and Diluted Weighted average units outstanding:
Common   26,529,133     9,883,342  
Subordinated   5,919,346     2,927,149  


The following table summarizes the volume of gallons sold by NGL Energy’s retail propane and wholesale supply and marketing segments and the throughput volume for the midstream segment. Gallons sold by the wholesale supply and marketing segment shown in the table below include sales to the retail segment.
Three Months Ended June 30,

2012 2011
(gallons in thousands)
Retail propane
Propane 19,270 5,003
Distillates 3,249 -
Wholesale supply and marketing
Propane 116,618 102,698
Other natural gas liquids 48,146 18,446
Midstream 36,300 21,004

The volumes shown in the table above do not include the operations of High Sierra. NGL Energy’s consolidated statement of operations for the three months ended June 30, 2012 includes the results of operations of High Sierra from the June 19, 2012 merger date through the end of the quarter.


The following table reconciles net loss attribtuable to parent equity to EBITDA and Adjusted EBITDA, each of which are non-GAAP financial measures, for the periods indicated:
  Three Months Ended June 30,
2012   2011
(in thousands)
Net loss attributable to parent equity $ (24,650 ) $ (6,772 )
Provision for income taxes 459 -
Interest expense 3,800 1,301
Loss on early extinguishment of debt 5,769 -
Depreciation and amortization   9,414     1,577  
EBITDA $ (5,208 ) $ (3,894 )
Unrealized (gain) loss on derivative contracts (1,929 ) 2,246
Loss on sale of assets 7 -
Share-based compensation expense   655     -  
Adjusted EBITDA $ (6,475 ) $ (1,648 )

Copyright Business Wire 2010

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