Exhibit 99.1 |
Statements contained in this presentation that state management’s expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “believe,” “expect,” “should,” “estimates,” and other similar expressions identify forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see NuStar Energy L.P.’s and NuStar GP Holdings, LLC’s respective annual reports on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission and available on NuStar’s websites at www.nustarenergy.com and www.nustargp.com. Forward Looking Statements 2 |
NuStar Overview 3 |
NuStar Energy L.P. (NYSE: NS) is a leading publicly traded growth-oriented partnership with a market capitalization of around $3.5 billion and an enterprise value of approximately $5.3 billion One of the largest independent petroleum pipeline and terminal operators in the U.S. and one of the largest asphalt refiners and marketers in the U.S. NuStar GP Holdings, LLC (NYSE: NSH) holds the 2% general partner interest, 16.7% of the common units and incentive distribution rights in NuStar Energy L.P. with a market capitalization of around $1.2 billion NuStar Overview – Two Publicly Traded Companies NS NSH IPO Date: 4/16/2001 7/19/2006 Unit Price (1/28/10): $57.57 $28.17 Annual Distribution/Unit: $4.26 $1.74 Yield (1/28/10): 7.40% 6.18% Market Capitalization: $3,466 million $1,199 million Enterprise Value: $5,254 million $1,213 million Total Assets (12/31/09): $4,775 million $593 million Debt/Capitalization (12/31/09): 42.7% n/a Fortune 500 Ranking: 485 n/a 4 83.7% Membership Interest 81.3% L.P. Interest Public Unitholders 35,602,018 NSH Units Public Unitholders 49,953,342 NS Units 16.3% Membership Interest 2.0% G.P. Interest 16.7 L.P. Interest Incentive Distribution Rights William E. Greehey 6,945,276 NSH Units NYSE: NSH NYSE: NS |
Asset Stats: Operations in eight different countries including the U.S., Mexico, Netherlands, Netherlands Antilles (i.e. Caribbean), England, Ireland, Scotland and Canada 8,417 miles of crude oil and refined product pipelines Own 82 terminal facilities and four crude oil storage tank facilities Over 91 million barrels of storage capacity 2 asphalt refineries on the U.S. East Coast capable of processing 104,000 bpd of crude oil Large and Diverse Geographic Footprint with Assets in Key Locations 5 |
46% 37% 17% Percentage of 2009 Segment Operating Income Approximately 83% of NuStar Energy’s segment operating income in 2009 came from fee- based transportation and storage segments Remainder of 2009 segment operating income related to margin-based asphalt and fuels marketing segment Storage: 46% Transportation: 37% Refined Product Terminals Crude Oil Storage Refined Product Pipelines* Crude Oil Pipelines Asphalt & Fuels Marketing: 17% Asphalt Fuels Marketing Product Supply, Wholesale and Fuel Oil Marketing Bunkering Diversified Operations from Three Business Segments * Includes primarily distillates, gasoline, propane, jet fuel, ammonia and other light products. Does not include natural gas. 6 |
174 104 102 91 85 60 39 34 31 28 25 24 20 16 12 10 8 8 Independent Liquids Storage Capacity (Millions of Barrels) Global Leader in Independent Liquids Storage NuStar is the fourth largest independent liquids terminal operator in the world and second largest in the U.S. Of the roughly 91 million barrels of storage capacity, approximately 50 million barrels are crude oil and heavy fuel products, 39 million barrels are refined products and 2 million barrels are biofuels Source: Company Websites & Management Presentations 7 |
Note: 2005 and 2006 distributable cash flow are from continuing operations Record Growth in Distributable Cash Flows at NS Has Fueled Solid Distribution Growth at Both NS and NSH Every Year Since Their IPOs 8 NS Distribution ($ per Unit) NSH Distribution ($ per Unit) NS Distributable Cash Flows ($ in Millions) ~7.5% CAGR ~10.5% CAGR * Annualized Distribution * * 2001 2002 2003 2004 2005 2006 2007 2008 2009 $56 $68 $86 $102 $154 $214 $221 $319 $346 2006 2007 2008 2009 $1.28 $1.38 $1.58 $1.73 |
NuStar Energy L.P.’s Distribution was Covered by the Non-Asphalt Distributable Cash Flows in 2008 and 2009 2008 2009 Non-Asphalt Distributable Cash Flows* $271.5 $325.0 Total Distribution 252.8 271.5 Excess Distributable Cash Flows $18.7 $53.5 % of Distribution Covered by Non-Asphalt Distributable Cash Flows 100% 100% Asphalt EBITDA $90.4** $70.2 Asphalt Distributable Cash Flows $47.5** $20.6 50% Holdback on Asphalt Distributable Cash Flows $23.8 $10.3 Cumulative Asphalt Distributable Cash Flows Available for Future Distributions $23.8 $34.1 (Dollars in Millions) * Includes transportation, storage and fuels marketing operations ** Includes $61 million hedging loss. Adjusted Asphalt EBITDA was $151.2 million and adjusted distributable cash flows were $108.2 million without the hedging loss. Cumulative holdback of distributable cash flows from the asphalt operations expected to be available should their be a shortfall in the distributable cash flows from the non-asphalt operations 9 |
Financial Overview 10 |
Large Increase in Internal Growth Capital Expected in 2010 that Will Seed the Next Phase of NuStar’s Growth 11 (Dollars in Millions) $142 $131 $310 $81 Transportation Storage Asphalt & Fuels Marketing $230 $60 $20 Early in 2009, we were cautious on our capital spending given the challenging economic and capital market conditions and we lightened our internal growth program to around $80 million As capital markets improved throughout 2009, our internal growth program increased and ended at $131 million 2010 internal growth program is significantly higher at over $310 million and includes projects to: Build new storage for large creditworthy customers under long-term contracts (i.e. 5 to 8 years) Develop and improve logistics at key terminals Expand our pipeline systems in fast-growing regions Put in place the necessary infrastructure at key terminals to capture incremental ethanol and biofuel volumes Optimize our asphalt operations Expand our fuel oil blending and bunkering operations Develop new crude supply logistics to capitalize on heavy crude oil imbalances |
Maintaining Sufficient Liquidity with Disciplined Financial Strategy NS Current Revolver Availability Total Bank Credit $1,216 Less: Borrowings (530) Letters of Credit (60) Revolver Availability $626* (Dollars in Millions) NSH Current Revolver Availability Total Bank Credit $19.5 Less: Borrowings 14.3 Letters of Credit - Revolver Availability $ 5.2 (Dollars in Millions) 2010 2011 $0.8 2012 $909.9** 2013 2014 $0.1 ** Primarily includes maturity of revolver, which expires December 2012, and $350 million of senior notes NS Debt Maturities (12/31/09) Note: NSH’s revolving credit facility expires on July 16, 2010 12 No significant near-term debt maturities Bond markets continue to remain strong for investment grade MLPs like NuStar Energy L.P. * Debt-to-EBITDA cannot exceed 5.0 to 1.0 times $20.8 $480.9 |
Business Segment Overview – Storage 13 |
Strong Earnings Growth in NuStar’s Fee-Based Storage Segment…New Opportunities Expected to Continue to be Primarily in Storage 14 NuStar’s has generated strong earnings growth in its storage segment mainly due to the $400 million construction program started in 2006 and completed in 2009 and higher rates on storage contracts up for renewal Targeting an incremental $18 to $22 million of EBITDA in 2010 compared to 2009 as projects started last year and new projects under our significantly higher internal growth program for this year will provide continued growth in this segment. Refined product demand growth outside the U.S. should continue to benefit companies like NuStar that are developing international storage opportunities Storage Segment EBITDA ($ in Millions) Storage Contract Renewals (% of Revenues) 1 Year or Less 1 to 3 Years 3 to 5 Years Greater Than 5 Years Flatter contango market not expected to impact NuStar as we continue to sign up large credit worthy customers under long-term contracts Since approximately 90% of our revenues come from leased assets, lower throughputs are not expected to have a material impact to storage results 2006 2007 2008 2009 $162 $177 $208 $242 24% 26% 37% 13% |
Business Segment Overview – Transportation 15 |
Transportation Segment Continues to Generate Stable, Fee-Based Income Despite Weaker Refined Product Demand and Lower Throughputs 16 2009 results higher than 2008 mainly due to 7.6% tariff increase effective July 1, 2009 and lower operating expenses as a result of lower power costs Most industry experts are predicting that 2010 product demand should recover slightly as the economy improves, net of fuel efficiency estimates Refinery utilization is projected to continue to be in the range of 80% to 85% Refined product demand growth expected to be less in the U.S. and primarily international, mainly the Far East, Middle East and parts of Latin America Expect NuStar’s throughput volumes to increase slightly in 2010 compared to 2009, excluding the impact of the assets sales, and in-line with our view of a modest economic recovery next year Recently announced refinery closures and proposed refinery sales not expected to impact NuStar’s results Higher natural gas prices and higher power costs could negatively impact results While the tariff adjustment is estimated to be around 1.2% lower starting July 1, 2010 compared to the July 2009 adjustment, the 2010 calendar year rate should be slightly higher than the 2009 calendar year rate Should continue to benefit from last year’s 7.6% tariff increase for the first six months of 2010 Transportation Segment EBITDA ($ in Millions) 2006 2007 2008 2009 $170 $177 $186 $190 |
Business Segment Overview – Asphalt & Fuels Marketing 17 |
Two-year adjusted EBITDA contribution from the asphalt operations excluding the large 2008 crude oil hedging loss, is now just over $220 million, which is in line with acquisition economics Asphalt inventories are at low-levels as significant declines in production and imports have resulted in healthy inventory draws despite weak demand 2009 winter-fill season has been atypical as prices have increased during this time and supply has been tight resulting in fewer suppliers building inventories Two-Year Contribution from Asphalt Operations in Line with Original Projections - Expect to See Improved Asphalt Results in 2010 Due to Tight Supply and Improved Demand 18 Expect improved results from our asphalt operations in 2010 as we expect a higher margin per barrel and higher sales volumes due to: (a) flat to slightly higher asphalt demand aided by the stimulus package, and (b) continued tightness in supply mainly due to low refinery utilization rates and impact from coker projects Although stimulus fund outlays have ramped up recently, it still represents only a small percentage of the total apportioned or, roughly $5.8 billion of the $27.5 billion available for highway projects ARRA funding outlays lags in the states NuStar markets asphalt Expect higher stimulus fund outlays in 2010 Industry groups continue to urge Congress to pass a multi-year highway funding bill instead of passing further continuing resolutions |
10,000 20,000 30,000 40,000 50,000 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2006 2007 2008 2009 5-Year Avg. 36.5 31.8 35.2 21.2 -1.2 -7.7 -10.0 0.0 10.0 20.0 30.0 40.0 50.0 2004 2005 2006 2007 2008 2009 (YTD Nov) Imports Exports Net Imports Significantly Lower Asphalt Production and Imports Through November 2009 Are Causing Inventories to Decline Even Further Despite Weak Demand U.S. Asphalt Production (mbbls) U.S. Asphalt Inventories (mbbls) Source of data for graphs: U.S. Energy Information Administration. Data only available through November 2009 19 U.S. Net Imports (mbpd) 5,000 10,000 15,000 20,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2006 2007 2008 2009 4-Year Avg. |
While Asphalt Demand has been Trending Lower… Asphalt Margins still Better Than Historical Margins Even Before Coker Impact in 2011 and Beyond Weak public and private road demand due to the poor economy and lower than expected stimulus funds have caused asphalt demand to lag compared to last year Asphalt demand through November 2009 was around 14% lower than 2008 and 29% below the 5-year average Impact should result in a deferral and not a cancellation of road work projects Continue to expect a positive impact to asphalt demand primarily in 2010 and 2011 when most of the stimulus spending is expected to occur and economic recovery supports private sector demand Asphalt margins have already improved compared to history even before the coker story fully kicks in 2011-2012 U.S. Asphalt Demand (mbbls) Source: U.S. Energy Information Administration. Data only available through November 2009 20 $3.78 $8.75 $6.37 U.S. East Coast Product Margin ($ per barrel) * 2000 to 2007 is prior to NuStar’s acquisition of the asphalt operations and is based on the estimated margin for that period. ** Excludes impact from $61 million hedging loss incurred in 2008 ** * 5,000 10,000 15,000 20,000 25,000 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec 2006 2007 2008 2009 5-Year Avg. |
No. Refinery PADD Announced Coker Capacity (Mbpd) Announced Crude Capacity (Mbpd) Start Up Date Status 1 Coffeyville Resources - Coffeyville, Kansas II 2.0 8.0 1Q 2007 Complete 2 BP - Toledo, Ohio II 2.0 10.0 1Q 2007 Complete 3 Valero - Port Arthur, Texas III 25.0 75.0 1Q 2007 Complete 4 Frontier - Cheyenne, Wyoming IV 4.3 - 3Q 2007 Complete 5 Chevron - El Segundo, California V 15.0 - 4Q 2007 Complete 6 Sinclair – Sinclair, Wyoming IV 20.0 11.0 4Q 2007 Complete 7 ConocoPhillips - Borger, Texas III 25.0 - 4Q 2007 Complete 8 Cenex - Laurel, Montana IV 15.0 - 1Q 2008 Complete 9 Frontier - El Dorado, Kansas II 3.0 11.0 2Q 2008 Complete 10 Tesoro - Martinez, California V 4.4 - 2Q 2008 Complete 11 ConocoPhillips - Los Angeles, California V 5.0 - 4Q 2008 Complete 12 Marathon - Garyville, Louisiana III 44.0 180.0 1Q 2010 Complete 13 Hunt - Tuscaloosa, Alabama III 18.5 15.0 4Q 2010 Firm 14 Atofina Petrochemicals Inc.- Port Arthur, Texas III 50.0 - 1Q 2011 Firm 15 ConocoPhillips - Wood River, Illinois II 65.0 55.0 3Q 2011 Firm 16 BP - Whiting, Indiana II 95.0 30.0 1Q 2012 Firm 17 Motiva - Port Arthur, Texas III 95.0 325.0 3Q 2012 Firm 18 Marathon - Detroit, Michigan II 28.0 13.0 2Q 2013 Probable Total US Expansion 516.2 733.0 Expansions Completed through 1Q 2010 164.7 295.0 Firm Expansions 2010-2013 323.5 425.0 Probable Expansions 2010-2013 28.0 13.0 Announced U.S. Coker Projects: Despite Some Delays/Cancellations, Long-Term Impact of Coker Projects on Asphalt Supply Still Intact Source: PIRA Refinery Database; Company Information Approximately 95% of the announced coker projects listed are either complete or have a high likelihood of completion (i.e. firm projects) One of the coker projects expected to start up in first quarter of 2010 has already commenced operations Most of the coker capacity is still expected to come on-line starting next year and through 2013, which should contribute to further tightening of asphalt supply 21 |
Majority of business derived from attractive set of fee-based storage and transportation assets that support U.S. and international energy infrastructure NuStar provides world class pipeline and terminalling services to some of the world’s largest crude oil producers, integrated oil companies, chemical companies, oil traders and refineries Pipeline and storage businesses have performed well in one of the worst recessions since the Great Depression Investors provided optionality on the performance of the asphalt operations since the non-asphalt distributable cash flows have covered all of the distribution for the period NuStar has owned the asphalt refineries Two-year contribution from the acquisition of the asphalt operations, excluding the hedging loss, over $220 million – payback that is on track to be better than the typical MLP acquisition Coker thesis still intact - Asphalt operations expected to benefit from better-than-historic asphalt margins over the long- term as supply continues to tighten and demand improves Economic stimulus package expected to benefit U.S. asphalt demand primarily in 2010 and 2011 Strong balance sheet and investment grade rating with a stable outlook Attractive yield with quarterly distributions that are largely tax deferred Recognized nationally for our outstanding safety and environmental record and one of the best places to work for Large and diversified asset footprint in the U.S. and internationally allows for ample acquisition and internal growth opportunities Over $500 million of attractive internal growth projects over the next two to three years with over $310 million projected for 2010 Most of new growth projects expected to be in the storage segment Investment Highlights 22 |
Questions & Answers |
Appendix 24 |
(Dollars in Thousands) 25 The following is a reconciliation of net income to EBITDA and distributable cash flow: 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net income 45,873 $ 55,143 $ 69,593 $ 78,418 $ 107,675 $ 149,906 $ 150,298 $ 254,018 $ 224,875 $ Plus interest expense, net 3,811 4,880 15,860 20,950 41,388 66,266 76,516 90,818 79,384 Plus income tax expense - 395 - - 4,713 5,861 11,448 11,006 10,531 Plus depreciation and amortization expense 13,390 16,440 26,267 33,149 64,895 100,266 114,293 135,709 145,743 EBITDA 63,074 76,858 111,720 132,517 218,671 322,299 352,555 491,551 460,533 Less equity earnings from joint ventures 3,179 3,188 2,416 1,344 2,319 5,882 6,833 8,030 9,615 Less interest expense, net 3,811 4,880 15,860 20,950 41,388 66,266 76,516 90,818 79,384 Less reliability capital expenditures 2,786 3,943 10,353 9,701 23,707 35,803 40,337 55,669 45,163 Less income tax expense - - - - 4,713 5,861 11,448 11,006 10,531 Plus mark-to-market impact on hedge transactions - - - - - - 3,131 (9,784) 19,970 Plus charges reimbursed by general partner - - - - - 575 - - - Plus distributions from joint ventures 2,874 3,590 2,803 1,373 4,657 5,141 544 2,835 9,700 Plus other non-cash items - - - - 2,672 - - - - Distributable cash flow 56,172 $ 68,437 $ 85,894 $ 101,895 $ 153,873 $ 214,203 $ 221,096 $ 319,079 $ 345,510 $ Note: 2005 and 2006 distributable cash flow and EBITDA are from continuing operations. Year Ended December 31, NuStar Energy L.P. utilizes two financial measures, EBITDA and distributable cash flow, which are not defined in United States generally accepted accounting principles (GAAP). Management uses these financial measures because they are a widely accepted financial indicators used by investors to compare partnership performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the partnership's assets and the cash that the business is generating. Neither EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income. They should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP. Reconciliation of Non-GAAP Financial Information: EBITDA and Distributable Cash Flow |
26 (Dollars in Thousands) Reconciliation of Non-GAAP Financial Information: Asphalt & Fuels Marketing EBITDA in the following reconciliations relate to our operating segments or a portion of an operating segment. For purposes of segment reporting we do not allocate general and administrative expenses to our reported operating segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. Asphalt and Fuels Marketing Segment Less Non-Asphalt Operations Asphalt Operations Operating income 60,629 $ 9,919 $ 50,710 $ Plus depreciation and amortization expense 19,463 - 19,463 EBITDA 80,092 $ 9,919 $ 70,173 $ Asphalt and Fuels Marketing Segment Less Non-Asphalt Operations Asphalt Operations Operating income 112,506 $ 36,239 $ 76,267 $ Plus depreciation and amortization expense 14,734 552 14,182 Plus hedging loss 60,704 - 60,704 Adjusted EBITDA 187,944 $ 36,791 $ 151,153 $ Combined two-year adjusted EBITDA from asphalt operations 221,326 $ The following is a reconciliation of operating income to adjusted EBITDA and adjusted EBITDA for our asphalt operations and asphalt and fuels marketing segment: Year Ended December 31, 2008 Year Ended December 31, 2009 |
27 (Dollars in Thousands) Reconciliation of Non-GAAP Financial Information: Asphalt & Fuels Marketing (continued) EBITDA in the following reconciliations relate to our operating segments or a portion of an operating segment. For purposes of segment reporting we do not allocate general and administrative expenses to our reported operating segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. Asphalt and Fuels Marketing Segment Less Non-Asphalt Operations Asphalt Operations Gross margin $ 207,373 $ 58,577 $ 148,796 Plus hedging loss - 60,704 Adjusted gross margin $ 268,077 $ 58,577 $ 209,500 Sales volumes (barrels in thousands) 23,931 Adjusted margin per barrel $ 8.75 The following is a reconciliation of gross margin to adjusted gross margin per barrel for our asphalt operations: Year Ended December 31, 2008 60,704 |
28 (Dollars in Thousands) Reconciliation of Non-GAAP Financial Information: Asphalt & Fuels Marketing (continued) EBITDA in the following reconciliations relate to our operating segments or a portion of an operating segment. For purposes of segment reporting we do not allocate general and administrative expenses to our reported operating segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. Year Ended December 31, 2008 Year Ended December 31, 2009 Asphalt operations operating income 76,267 $ 50,710 $ Plus depreciation and amortization associated with asphalt operations 14,182 19,463 Asphalt operations EBITDA 90,449 70,173 18,640 16,105 Less interest expense 20,150 26,056 Less income tax expense - 489 Less reliability capital expenditures 4,126 6,962 Asphalt operations distributable cash flow 47,533 $ 20,561 $ Plus hedging loss in 2Q08 60,704 - Asphalt operations distributable cash flow excluding hedging loss 108,237 $ 20,561 $ Distributable cash flow 319,080 $ 345,510 $ Less asphalt operations distributable cash flow 47,533 20,561 Non-asphalt operations distributable cash flow 271,547 $ 324,949 $ Less general & administrative expense The following is a reconciliation of operating income to EBITDA and distributable cash flow for our asphalt operations: Allocated to asphalt operations for distributable cash flow purposes |
29 (Dollars in Thousands) Reconciliation of Non-GAAP Financial Information: Storage and Transportation EBITDA in the following reconciliations relate to our operating segments or a portion of an operating segment. For purposes of segment reporting we do not allocate general and administrative expenses to our reported operating segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. The following is a reconciliation of operating income to EBITDA for the Storage Segment: 2006 2007 2008 2009 Operating income 108,486 $ 114,635 $ 141,079 $ 171,245 $ Plus depreciation and amortization expense 53,121 62,317 66,706 70,888 EBITDA 161,607 176,952 207,785 242,133 Year Ended December 31, The following is a reconciliation of operating income to EBITDA for the Transportation Segment: 2006 2007 2008 2009 Operating income 122,714 126,508 135,086 139,869 Plus depreciation and amortization expense 47,145 49,946 50,749 50,528 EBITDA 169,859 $ 176,454 $ 185,835 $ 190,397 $ Year Ended December 31, The following is a reconciliation of projected incremental operating income to projected incremental EBITDA for the year ended December 31, 2010 compared to the year ended December 31, 2009: Storage Segment Projected incremental operating income range $ 13,000 - 17,000 Plus projected incremental depreciation and amortization expense 5,000 Projected incremental EBITDA range $ 18,000 - 22,000 |