SemGroup Corporation Reports Fourth Quarter And Full Year 2012 Results

Fourth Quarter Adjusted EBITDA Increased 33% Over Previous Quarter;

2013 Adjusted EBITDA Guidance $165 to $175 Million;

2013 Capex Guidance $400 Million

TULSA, Okla., Feb. 28, 2013 (GLOBE NEWSWIRE) -- SemGroup ® Corporation (NYSE:SEMG) (SemGroup) today announced its financial results for the three months and year ended December 31, 2012.

"SemGroup delivered exceptional performance during 2012, wrapping up a multi-quarter trend with continued strong results in the fourth quarter. We continue to invest significantly in organic growth projects, which are all currently on schedule and on budget," said Norm Szydlowski, president and chief executive officer of SemGroup. "These positive results exceeded our projections and affirmed the strength of our strategic plan and asset base. Looking forward to 2013, we are well positioned for another exciting year. Our solid business model, strong balance sheet and attractive fee-based growth projects should provide significant benefit and attractive results for our shareholders."

Fourth Quarter Highlights
  • White Cliffs Pipeline ® volumes increased 6% from third quarter 2012;
  • SemCAMS' Adjusted EBITDA increased 41%, primarily due to capital recovery fees;
  • Cash distributions increased 99% from NGL Energy Partners LP with full distributions received on LP units; and
  • SemGas margins increased due to higher volumes and prices.

SemGroup's adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $43.7 million for the fourth quarter 2012, compared to $32.9 million for the third quarter 2012 and $31.8 million for the fourth quarter 2011, an increase of 33% and 37%, respectively. Adjusted EBITDA, which is a non-GAAP measure, is reconciled to net income below.

SemGroup reported revenues for fourth quarter 2012 of $315.8 million with net income attributable to SemGroup of $21.1 million, or $0.50 per diluted share, compared to revenues of $277.9 million with a net loss attributable to SemGroup of $2.8 million, or a loss of $0.07 per diluted share, for the third quarter 2012. For the fourth quarter 2011, revenues totaled $330.2 million with net income of $0.3 million, or $0.01 per diluted share.

Full Year 2012 Highlights

  • White Cliffs Pipeline volumes increased 65%;
  • Rose Rock Midstream transportation and marketing volumes increased 53% and 63%, respectively; and
  • Increased Cushing storage capacity by 39%.

Adjusted EBITDA for the year ended December 31, 2012, totaled $135.0 million, up 17% from $115.5 million for the year ended December 31, 2011. For the year ended December 31, 2012, SemGroup reported revenues of $1.2 billion with a net income attributable to SemGroup of $22.1 million, or $0.52 per diluted share, compared to revenues of $1.5 billion with a net income attributable to SemGroup of $2.4 million, or a net loss of $0.06 per diluted share, for the year ended December 31, 2011.

2013 Adjusted EBITDA and Capex Guidance

SemGroup anticipates 2013 consolidated Adjusted EBITDA of $165 million to $175 million, an increase of approximately 25% over 2012 results of $135.0 million. The company also expects to deploy $400 million in capital investments in 2013, with more than 90% allocated to growth projects.

Recent Developments
  • On December 31, 2012, SemGroup closed on the sale of SemStream Arizona Propane assets to J.P. Energy Partners, L.P.;
  • On January 9, 2013, SemGroup announced plans to pay a quarterly cash dividend to common shareholders beginning in the second quarter of 2013; and
  • On January 11, 2013, SemGroup's Master Limited Partnership, Rose Rock Midstream, acquired a 33.3% interest in SemCrude Pipeline, L.L.C., which owns 51% of White Cliffs Pipeline L.L.C., for $273.9 million.

Earnings Conference Call

SemGroup will host a joint conference call with Rose Rock Midstream, L.P. (NYSE:RRMS) for investors tomorrow, March 1, 2013, at 11 a.m. EST. The call can be accessed live over the telephone by dialing 877.359.3652, or for international callers, 720.545.0014. The pass code for the call is 88748209. Interested parties may also listen to a simultaneous webcast of the conference call by logging onto SemGroup's Investor Relations website at ir.semgroupcorp.com. A replay of the webcast will also be available for a year following the call at ir.semgroupcorp.com on the Calendar of Events-Past Events page. The fourth quarter and full year 2012 earnings slide deck will be posted under Presentations.

About SemGroup

Based in Tulsa, OK, SemGroup ® Corporation (NYSE:SEMG) is a publicly traded midstream service company providing the energy industry the means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end-users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminalling and storing energy.

SemGroup ®, SemGas ®, SemMaterialsMè xico MR, SemStream ® and White Cliffs Pipeline ® are registered trademarks of SemGroup Corporation.

The SemGroup Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=14815

Non-GAAP Financial Measures

Adjusted EBITDA is not a generally accepted accounting principles (GAAP) measure and is not intended to be used in lieu of a GAAP presentation of net income/loss. Adjusted EBITDA is presented in this Press Release because SemGroup believes it provides additional information with respect to its financial performance and its ability to meet future debt service, capital expenditures and working capital requirements. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, adjusted for selected items that SemGroup believes impact the comparability of financial results between reporting periods. Although SemGroup presents selected items that it considers in evaluating its performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in SemGroup's operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions and numerous other factors. These types of variances are not separately identified in this Press Release. Because all companies do not use identical calculations, SemGroup's presentation of Adjusted EBITDA may be different from similarly titled measures of other companies. Reconciliations of net income (loss) to Adjusted EBITDA for the periods presented are included in the tables at the end of this Press Release.

Forward-Looking Statements

Certain matters contained in this Press Release include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical fact, included in this Press Release including the prospects of our industry, our anticipated financial performance, NGL Energy Partners LP (NYSE:NGL) anticipated financial performance, management's plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters, may constitute forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, our ability to comply with the covenants contained in and maintain certain financial ratios required by our credit facilities; NGL's operations, which we do not control; the ability of our subsidiary, Rose Rock Midstream L.P. (NYSE:RRMS), to make minimum quarterly distributions; the possibility that our hedging activities may result in losses or may have a negative impact on our financial results; any sustained reduction in demand for the petroleum products we gather, transport, process and store; our ability to obtain new sources of supply of petroleum products; our failure to comply with new or existing environmental laws or regulations or cross border laws or regulations; the possibility that the construction or acquisition of new assets may not result in the corresponding anticipated revenue increases; changes in currency exchange rates; and the risks and uncertainties of doing business outside of the U.S., including political and economic instability and changes in local governmental laws, regulations and policies, as well as other risk factors discussed from time to time in each of our documents and reports filed with the SEC.

Readers are cautioned not to place undue reliance on any forward-looking statements contained in this Press Release, which reflect management's opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements.

Condensed Consolidated Balance Sheets
(in thousands, unaudited)
     
     
  December 31, 2012 December 31, 2011
ASSETS    
Current assets  $ 520,003  $ 389,735
Property, plant and equipment, net 814,724 733,925
Goodwill and other intangible assets 17,469 18,403
Equity method investments 387,802 327,243
Other noncurrent assets, net 8,181 21,875
Total assets  $ 1,748,179  $ 1,491,181
LIABILITIES AND OWNERS' EQUITY    
Current liabilities:    
Current portion of long-term debt  $ 24  $ 26,058
Other current liabilities 374,320 270,453
Total current liabilities 374,344 296,511
Long-term debt, excluding current portion 206,062 83,277
Other noncurrent liabilities 146,245 132,728
Total liabilities 726,651 512,516
Total owners' equity 1,021,528 978,665
Total liabilities and owners' equity  $ 1,748,179  $ 1,491,181
 
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts, unaudited)
           
           
  Three Months Ended Year Ended
  December 31, September 30, December 31,
  2012 2011 2012 2012 2011
Revenues  $ 315,837  $ 330,159  $ 277,852  $ 1,237,497  $ 1,465,246
Expenses:          
Costs of products sold, exclusive of depreciation and amortization shown below  223,602  247,568  189,830  874,885  1,144,439
Operating  51,950  38,657  52,367  224,700  155,041
General and administrative  18,845  19,004  16,680  71,918  75,447
Depreciation and amortization  12,523  11,468  12,081  48,210  49,823
(Gain) loss on disposal or impairment of long-lived assets, net  (35)  437  (3,615)  (3,531)  301
Total expenses  306,885  317,134  267,343  1,216,182  1,425,051
Earnings from equity method investments  13,133  4,838  3,116  36,036  15,004
Operating income  22,085  17,863  13,625  57,351  55,199
Other expenses, net  5,567  13,822  11,701  30,471  45,149
Income from continuing operations before income taxes  16,518  4,041  1,924  26,880  10,050
Income tax (benefit) expense  (3,066)  (5,592)  2,092  (2,078)  (2,310)
Income (loss) from continuing operations  19,584  9,633  (168)  28,958  12,360
Income (loss) from discontinued operations, net of income taxes  3,392  (8,893)  (264)  2,939  (9,548)
Net income (loss)  22,976  740  (432)  31,897  2,812
Less: net income attributable to noncontrolling interests  1,882  435  2,336  9,797  435
Net income (loss) attributable to SemGroup Corporation  $ 21,094  $ 305  $ (2,768)  $ 22,100  $ 2,377
Net income (loss) attributable to SemGroup Corporation  $ 21,094  $ 305  $ (2,768)  $ 22,100  $ 2,377
Other comprehensive income (loss), net of income taxes  (2,354)  (3,525)  12,072  12,576  (14,990)
Comprehensive income (loss) attributable to SemGroup Corporation  $ 18,740  $ (3,220)  $ 9,304  $ 34,676  $ (12,613)
Net income (loss) per common share:          
Basic  $ 0.50  $ 0.01  $ (0.07)  $ 0.53  $ 0.06
Diluted  $ 0.50  $ 0.01  $ (0.07)  $ 0.52  $ (0.06)
Weighted average shares (thousands):          
Basic 41,960 41,698 41,949 41,939 41,640
Diluted 42,303 41,890 42,234 42,254 41,640
           
Reconciliation of net income to Adjusted EBITDA:
(in thousands, unaudited)
           
  Three Months Ended Year Ended
   December 31, September 30, December 31,
   2012 2011 2012 2012 2011
Net income (loss)  $ 22,976  $ 740  $ (432)  $ 31,897  $ 2,812
Add: Interest expense  1,139  10,817  1,992  8,902  60,138
Add: Income tax (benefit) expense  (3,066)  (5,592)  2,092  (2,078)  (2,310)
Add: Depreciation and amortization expense  12,523  11,468  12,081  48,210  49,823
EBITDA  33,572  17,433  15,733  86,931  110,463
Selected Non-Cash Items and Other Items Impacting Comparability  10,080  14,399  17,204  48,034  5,082
Adjusted EBITDA  $ 43,652  $ 31,832  $ 32,937  $ 134,965  $ 115,545
           
Selected Non-Cash Items and Other Items Impacting Comparability
(in thousands, unaudited)
           
           
    Three Months Ended   Year Ended 
    December 31,   September 30,   December 31, 
    2012  2011  2012   2012  2011
(Gain) loss on disposal or impairment of long-lived assets, net  $ (35)  $ 437  $ (3,615)  $ (3,531)  $ 301
Loss (income) from discontinued operations, net of income taxes (1)  (3,392)  8,893  264  (2,939)  9,548
Foreign currency transaction (gain) loss  (60)  (20)  355  298  (3,450)
Remove NGL equity (earnings) losses  (1,747)  —   6,905  403  — 
NGL cash distribution  4,155  —   2,090  9,218  — 
Employee severance expense  —   —   —   354  4,374
Unrealized (gain) loss on derivative activities  1,628  (4,720)  (554)  1,196  (14,114)
Change in fair value of warrants  4,227  3,246  9,544  21,310  (5,012)
Reversal of allowance on goods and services tax receivable  —   —   —   —   (4,144)
Depreciation and amortization included within equity earnings of White Cliffs  2,550  2,663  2,546  10,181  10,630
Defense costs  —   1,000  —   5,899  1,000
Recovery of receivable from AGE Refining  —   (1,792)  —   —   (2,692)
Recovery of receivables written off at emergence  1,082  —   (1,940)  (858)  — 
Non-cash equity compensation  1,672  4,692  1,609  6,503  8,641
Selected Non-Cash Items and Other Items Impacting Comparability  $ 10,080  $ 14,399  $ 17,204  $ 48,034  $ 5,082
           
(1) SemStream Arizona has been reported as a discontinued operation at December 31, 2012. Prior periods have been recast to conform with the current presentation.
 
2013 Adjusted EBITDA Guidance
(in millions, unaudited)
  Guidance (1)
  Low   High
Net income  $ 68.6    $ 72.1
Add: Interest expense  19.0    20.0
Add: Income tax expense  6.0    6.5
Add: Depreciation and amortization  55.0    60.0
EBITDA  $ 148.6    $ 158.6
Selected Non-Cash Items and Other Items Impacting Comparability  16.4    16.4
Adjusted EBITDA  $ 165.0    $ 175.0
Selected Non-Cash Items and Other Items Impacting Comparability      
Depreciation and amortization included within equity earnings    $ 10.1  
Non-cash equity compensation   6.3  
Selected Non-Cash Items and Other Items Impacting Comparability    $ 16.4  
       
(1) Guidance is on a cash basis for equity investments including NGL, White Cliffs Pipeline and Glass Mountain Pipeline and includes fully consolidated Rose Rock Midstream.
CONTACT: Investor Relations:         Mary Catherine Ward         918-524-8081         investor.relations@semgroupcorp.com                  Media:         Kiley Roberson         918-524-8594         kroberson@semgroupcorp.com

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