Exhibit 99.1
News Release NYSE: BPL | Buckeye Partners, L.P. One Greenway Plaza Suite 600 Houston, TX 77046 | 
|
Contact: | Kevin J. Goodwin |
| Vice President and Treasurer |
| irelations@buckeye.com |
| (800) 422-2825 |
BUCKEYE PARTNERS, L.P. REPORTS RECORD FINANCIAL RESULTS
FOR SECOND QUARTER 2015
Announces Increase in Cash Distribution
HOUSTON, July 31, 2015 — Buckeye Partners, L.P. (“Buckeye”) (NYSE: BPL) today reported its financial results for the second quarter of 2015. Buckeye reported income from continuing operations for the second quarter of 2015 of $91.3 million compared to income from continuing operations for the second quarter of 2014 of $61.9 million.
Adjusted EBITDA (as defined below) from continuing operations for the second quarter of 2015 was $206.5 million, representing a record second quarter Adjusted EBITDA for Buckeye, compared to $150.8 million for the second quarter of 2014.
Income from continuing operations attributable to Buckeye’s unitholders was $0.71 per diluted unit for the second quarter of 2015 compared to $0.53 per diluted unit for the second quarter of 2014. The diluted weighted average number of units outstanding in the second quarter of 2015 was 128.2 million compared to 116.7 million in the second quarter of 2014.
“I am pleased to report another quarter of record financial results, which demonstrate the benefits of our diversified portfolio of assets,” said Clark C. Smith, Chairman, President and Chief Executive Officer. “Our Global Marine Terminals and Merchant Services segments drove significant improvement compared to the prior year. Our commercial and operating teams were successful in improving utilization and driving rate increases at our Global Marine Terminals segment, which also benefited from incremental cash flows from our interest in Buckeye Texas Partners LLC. Our Merchant Services segment continues to deliver positive contributions as our disciplined business strategy to optimize asset utilization and reduce commodity risk allowed us to capitalize on favorable market conditions in the quarter. In our Pipelines & Terminals segment, we continued to benefit from growth capital investments that have expanded our domestic terminals network and increased our terminal throughput growth by nearly 10% year over year. Additionally, we saw solid performance from our pipelines producing volume growth of nearly 4% compared to prior year.”
“We remain focused on the construction of the new condensate splitter as well as refrigerated LPG storage capacity at our Buckeye Texas Partners facilities. We expect both of these projects to be operational in the third quarter of 2015. Once operational, these assets are expected to generate significant incremental cash flows,” continued Mr. Smith.
Buckeye announced in June that one of its operating subsidiaries, Buckeye Pipe Line Company, L.P., reached a settlement with certain airlines resolving all complaints filed with the Federal Energy Regulatory Commission (“FERC”) by those airlines challenging the rates for transportation of jet fuel
from New Jersey to the three New York City area airports and that the settlement had been submitted to FERC for approval. “This settlement represents a positive resolution for Buckeye. We expect FERC action on the settlement in the third quarter of 2015,” concluded Mr. Smith.
Distributable cash flow (as defined below) from continuing operations for the second quarter of 2015 was $144.9 million compared to $94.4 million for the second quarter of 2014. Distribution coverage was 0.97 times for the second quarter of 2015.
Cash Distribution. Buckeye also announced today that its general partner declared a cash distribution of $1.1625 per limited partner unit (“LP Unit”) for the quarter ended June 30, 2015. The distribution will be payable on August 17, 2015 to unitholders of record on August 10, 2015. This cash distribution represents a 4.5 percent increase over the $1.1125 per LP Unit distribution declared for the second quarter of 2014. Buckeye has paid cash distributions in each quarter since its formation in 1986.
Conference Call. Buckeye will host a conference call with members of executive management today, July 31, 2015, at 11:00 a.m. Eastern Time. To access the live webcast of the call, go to http://edge.media-server.com/m/p/v87xonj3 ten minutes prior to its start. Interested parties may participate in the call by dialing 877-870-9226. A replay will be archived and available at this link through September 30, 2015, and the replay also may be accessed by dialing 800-585-8367 and entering conference ID 83323662.
About Buckeye Partners, L.P.
Buckeye Partners, L.P. (NYSE: BPL) is a publicly traded master limited partnership and owns and operates a diversified network of integrated assets providing midstream logistic solutions, primarily consisting of the transportation, storage, and marketing of liquid petroleum products. Buckeye is one of the largest independent liquid petroleum products pipeline operators in the United States in terms of volumes delivered with approximately 6,000 miles of pipeline and more than 120 liquid petroleum products terminals with aggregate storage capacity of over 110 million barrels across our portfolio of pipelines, inland terminals and an integrated network of marine terminals located primarily in the East Coast and Gulf Coast regions of the United States and in the Caribbean. Buckeye has a controlling interest in a company with a vertically integrated system of marine midstream assets in Corpus Christi and the Eagle Ford play in Texas. Buckeye’s flagship marine terminal, BORCO, is in The Bahamas and is one of the largest marine crude oil and refined petroleum products storage facilities in the world and provides an array of logistics and blending services for the global flow of petroleum products. Buckeye’s network of marine terminals enables it to facilitate global flows of crude oil, refined petroleum products, and other commodities, and to offer its customers connectivity to some of the world’s most important bulk storage and blending hubs. Buckeye is also a wholesale distributor of refined petroleum products in areas served by its pipelines and terminals. Finally, Buckeye also operates and/or maintains third-party pipelines under agreements with major oil and gas, petrochemical and chemical companies, and performs certain engineering and construction management services for third parties. More information concerning Buckeye can be found at www.buckeye.com.
* * * * *
Adjusted EBITDA and distributable cash flow are measures not defined by GAAP. Adjusted EBITDA is the primary measure used by our senior management, including our Chief Executive Officer, to (i) evaluate our consolidated operating performance and the operating performance of our business segments, (ii) allocate resources and capital to business segments, (iii) evaluate the viability of proposed projects, and (iv) determine overall rates of return on alternative investment opportunities. Distributable
cash flow is another measure used by our senior management to provide a clearer picture of Buckeye’s cash available for distribution to its unitholders. Adjusted EBITDA and distributable cash flow eliminate (i) non-cash expenses, including, but not limited to, depreciation and amortization expense resulting from the significant capital investments we make in our businesses and from intangible assets recognized in business combinations, (ii) charges for obligations expected to be settled with the issuance of equity instruments, and (iii) items that are not indicative of our core operating performance results and business outlook.
Buckeye believes that investors benefit from having access to the same financial measures used by senior management and that these measures are useful to investors because they aid in comparing Buckeye’s operating performance with that of other companies with similar operations. The Adjusted EBITDA and distributable cash flow data presented by Buckeye may not be comparable to similarly titled measures at other companies because these items may be defined differently by other companies. Please see the attached reconciliations of each of Adjusted EBITDA and distributable cash flow to income from continuing operations.
* * * * *
This press release includes forward-looking statements that we believe to be reasonable as of today’s date. Such statements are identified by use of the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “should,” and similar expressions. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and that may be beyond our control. Among them are (i) changes in federal, state, local, and foreign laws or regulations to which we are subject, including those governing pipeline tariff rates and those that permit the treatment of us as a partnership for federal income tax purposes, (ii) terrorism and other security risks, including cyber risk, adverse weather conditions, including hurricanes, environmental releases, and natural disasters, (iii) changes in the marketplace for our products or services, such as increased competition, better energy efficiency, or general reductions in demand, (iv) adverse regional, national, or international economic conditions, adverse capital market conditions, and adverse political developments, (v) shutdowns or interruptions at our pipeline, terminal, and storage assets or at the source points for the products we transport, store, or sell, (vi) unanticipated capital expenditures in connection with the construction, repair, or replacement of our assets, (vii) volatility in the price of liquid petroleum products, (viii) nonpayment or nonperformance by our customers, (ix) our ability to integrate acquired assets with our existing assets and to realize anticipated cost savings and other efficiencies and benefits, (x) our inability to realize the expected benefits of the Buckeye Texas Partners transaction, and (xi) our ability to successfully complete our organic growth projects and to realize the anticipated financial benefits. You should read our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2014 and our most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, for a more extensive list of factors that could affect results. We undertake no obligation to revise our forward-looking statements to reflect events or circumstances occurring after today’s date.
* * * * *
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of Buckeye’s distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, Buckeye’s distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
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BUCKEYE PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
(Unaudited)
| | Three Months Ended
June 30, | | Six Months Ended
June 30, | |
| | 2015 | | 2014 | | 2015 | | 2014 | |
Revenue: | | | | | | | | | |
Product sales | | $ | 458,613 | | $ | 1,492,697 | | $ | 1,198,831 | | $ | 3,170,439 | |
Transportation, storage and other services | | 338,170 | | 316,254 | | 686,052 | | 630,341 | |
Total revenue | | 796,783 | | 1,808,951 | | 1,884,883 | | 3,800,780 | |
| | | | | | | | | |
Costs and expenses: | | | | | | | | | |
Cost of product sales | | 448,534 | | 1,510,043 | | 1,166,073 | | 3,175,422 | |
Operating expenses | | 141,339 | | 133,018 | | 283,704 | | 257,847 | |
Depreciation and amortization | | 55,598 | | 43,394 | | 109,374 | | 86,385 | |
General and administrative | | 20,293 | | 20,330 | | 42,911 | | 37,687 | |
Total costs and expenses | | 665,764 | | 1,706,785 | | 1,602,062 | | 3,557,341 | |
Operating income | | 131,019 | | 102,166 | | 282,821 | | 243,439 | |
| | | | | | | | | |
Other income (expense): | | | | | | | | | |
Earnings from equity investments | | 2,446 | | 2,170 | | 4,580 | | 3,436 | |
Interest and debt expense | | (41,975 | ) | (42,012 | ) | (83,684 | ) | (83,225 | ) |
Other income (expense) | | 77 | | (232 | ) | 110 | | (96 | ) |
Total other expense, net | | (39,452 | ) | (40,074 | ) | (78,994 | ) | (79,885 | ) |
Income from continuing operations before taxes | | 91,567 | | 62,092 | | 203,827 | | 163,554 | |
Income tax expense | | (241 | ) | (153 | ) | (480 | ) | (76 | ) |
Income from continuing operations | | 91,326 | | 61,939 | | 203,347 | | 163,478 | |
Loss from discontinued operations | | — | | (38,186 | ) | (857 | ) | (48,228 | ) |
Net income | | 91,326 | | 23,753 | | 202,490 | | 115,250 | |
Less: Net loss (income) attributable to noncontrolling interests | | 254 | | (733 | ) | 701 | | (1,762 | ) |
Net income attributable to Buckeye Partners, L.P. | | $ | 91,580 | | $ | 23,020 | | $ | 203,191 | | $ | 113,488 | |
| | | | | | | | | |
Basic earnings (loss) per unit attributable to Buckeye Partners, L.P.: | | | | | | | | | |
Continuing operations | | $ | 0.72 | | $ | 0.53 | | $ | 1.60 | | $ | 1.40 | |
Discontinued operations | | — | | (0.33 | ) | (0.01 | ) | (0.42 | ) |
Total | | $ | 0.72 | | $ | 0.20 | | $ | 1.59 | | $ | 0.98 | |
| | | | | | | | | |
Diluted earnings (loss) per unit attributable to Buckeye Partners, L.P.: | | | | | | | |
Continuing operations | | $ | 0.71 | | $ | 0.53 | | $ | 1.60 | | $ | 1.39 | |
Discontinued operations | | — | | (0.33 | ) | (0.01 | ) | (0.41 | ) |
Total | | $ | 0.71 | | $ | 0.20 | | $ | 1.59 | | $ | 0.98 | |
| | | | | | | | | |
Weighted average units outstanding: | | | | | | | | | |
Basic | | 127,650 | | 116,078 | | 127,414 | | 115,701 | |
Diluted | | 128,198 | | 116,652 | | 127,904 | | 116,226 | |
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
(In thousands)
(Unaudited)
| | Three Months Ended
June 30, | | Six Months Ended
June 30, | |
| | 2015 | | 2014 | | 2015 | | 2014 | |
Revenue: | | | | | | | | | |
Pipelines & Terminals | | $ | 206,980 | | $ | 218,624 | | $ | 432,236 | | $ | 437,163 | |
Global Marine Terminals | | 124,590 | | 90,791 | | 245,574 | | 179,560 | |
Merchant Services | | 460,156 | | 1,495,441 | | 1,200,316 | | 3,173,743 | |
Development & Logistics | | 18,208 | | 18,802 | | 37,057 | | 35,634 | |
Intersegment | | (13,151 | ) | (14,707 | ) | (30,300 | ) | (25,320 | ) |
Total revenue | | $ | 796,783 | | $ | 1,808,951 | | $ | 1,884,883 | | $ | 3,800,780 | |
| | | | | | | | | |
Total costs and expenses: (1) | | | | | | | | | |
Pipelines & Terminals | | $ | 126,352 | | $ | 125,810 | | $ | 248,362 | | $ | 239,569 | |
Global Marine Terminals | | 79,609 | | 58,652 | | 163,198 | | 117,762 | |
Merchant Services | | 459,257 | | 1,523,740 | | 1,192,562 | | 3,200,013 | |
Development & Logistics | | 13,697 | | 13,290 | | 28,240 | | 25,317 | |
Intersegment | | (13,151 | ) | (14,707 | ) | (30,300 | ) | (25,320 | ) |
Total costs and expenses | | $ | 665,764 | | $ | 1,706,785 | | $ | 1,602,062 | | $ | 3,557,341 | |
| | | | | | | | | |
Depreciation and amortization: | | | | | | | | | |
Pipelines & Terminals | | $ | 20,235 | | $ | 17,452 | | $ | 37,510 | | $ | 34,854 | |
Global Marine Terminals | | 33,623 | | 24,007 | | 68,501 | | 47,604 | |
Merchant Services | | 1,308 | | 1,507 | | 2,504 | | 3,012 | |
Development & Logistics | | 432 | | 428 | | 859 | | 915 | |
Total depreciation and amortization | | $ | 55,598 | | $ | 43,394 | | $ | 109,374 | | $ | 86,385 | |
| | | | | | | | | |
Operating income: | | | | | | | | | |
Pipelines & Terminals | | $ | 80,628 | | $ | 92,814 | | $ | 183,874 | | $ | 197,594 | |
Global Marine Terminals | | 44,981 | | 32,139 | | 82,376 | | 61,798 | |
Merchant Services | | 899 | | (28,299 | ) | 7,754 | | (26,270 | ) |
Development & Logistics | | 4,511 | | 5,512 | | 8,817 | | 10,317 | |
Total operating income | | $ | 131,019 | | $ | 102,166 | | $ | 282,821 | | $ | 243,439 | |
| | | | | | | | | |
Adjusted EBITDA from continuing operations: | | | | | | | | | |
Pipelines & Terminals | | $ | 120,241 | | $ | 115,679 | | $ | 245,792 | | $ | 242,399 | |
Global Marine Terminals | | 78,705 | | 55,559 | | 153,123 | | 109,262 | |
Merchant Services | | 2,763 | | (26,169 | ) | 11,205 | | (23,036 | ) |
Development & Logistics | | 4,772 | | 5,719 | | 9,271 | | 10,787 | |
Adjusted EBITDA from continuing operations | | $ | 206,481 | | $ | 150,788 | | $ | 419,391 | | $ | 339,412 | |
| | | | | | | | | |
Capital additions, net: (2) | | | | | | | | | |
Pipelines & Terminals | | $ | 53,038 | | $ | 49,610 | | $ | 99,471 | | $ | 108,487 | |
Global Marine Terminals | | 110,748 | | 41,522 | | 198,090 | | 92,299 | |
Merchant Services | | 302 | | 67 | | 417 | | 100 | |
Development & Logistics | | 302 | | 362 | | 436 | | 441 | |
Total segment capital additions, net | | 164,390 | | 91,561 | | 298,414 | | 201,327 | |
Natural Gas Storage disposal group | | — | | 90 | | — | | 188 | |
Total capital additions, net | | $ | 164,390 | | $ | 91,651 | | $ | 298,414 | | $ | 201,515 | |
| | | | | | | | | |
Summary of capital additions, net: (2) | | | | | | | | | |
Maintenance capital expenditures | | $ | 23,584 | | $ | 17,229 | | $ | 43,014 | | $ | 35,933 | |
Expansion and cost reduction | | 140,806 | | 74,422 | | 255,400 | | 165,582 | |
Total capital additions, net | | $ | 164,390 | | $ | 91,651 | | $ | 298,414 | | $ | 201,515 | |
| | June 30,
2015 | | December 31,
2014 | |
Key Balance Sheet Information: | | | | | |
Cash and cash equivalents | | $ | 8,577 | | $ | 8,208 | |
Long-term debt, total (3) | | 3,574,555 | | 3,388,986 | |
| | | | | | | |
(1) Includes depreciation and amortization.
(2) Amounts exclude accruals for capital expenditures.
(3) Includes long-term debt portion of Buckeye Partners L.P. Credit Facility of $185.0 million as of June 30, 2015.
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA - Continued
(Unaudited)
| | Three Months Ended
June 30, | | Six Months Ended
June 30, | |
| | 2015 | | 2014 | | 2015 | | 2014 | |
| | | | | | | | | |
Pipelines & Terminals (average bpd in thousands): | | | | | | | | | |
Pipelines: | | | | | | | | | |
Gasoline | | 764.1 | | 721.4 | | 729.7 | | 679.9 | |
Jet fuel | | 374.0 | | 340.4 | | 355.5 | | 323.1 | |
Middle distillates (1) | | 308.9 | | 326.2 | | 361.0 | | 374.7 | |
Other products (2) | | 40.6 | | 45.0 | | 34.1 | | 38.1 | |
Total pipelines throughput | | 1,487.6 | | 1,433.0 | | 1,480.3 | | 1,415.8 | |
Terminals: | | | | | | | | | |
Products throughput | | 1,255.7 | | 1,144.7 | | 1,226.0 | | 1,126.2 | |
| | | | | | | | | |
Pipeline average tariff (cents/bbl) | | 82.4 | | 86.4 | | 83.1 | | 84.8 | |
| | | | | | | | | |
Global Marine Terminals (percent of capacity): | | | | | | | | | |
Average capacity utilization rate (3) | | 96 | % | 82 | % | 95 | % | 84 | % |
| | | | | | | | | |
Merchant Services (in millions of gallons): | | | | | | | | | |
Sales volumes | | 247.7 | | 538.5 | | 672.4 | | 1,107.5 | |
(1) Includes diesel fuel and heating oil.
(2) Includes liquefied petroleum gas, intermediate petroleum products and crude oil.
(3) Represents the ratio of contracted capacity to capacity available to be contracted. Based on total capacity (i.e., including out of service capacity), average capacity utilization rates are approximately 84% and 72% for the three months ended June 30, 2015 and 2014, respectively, and approximately 82% and 72% for the six months ended June 30, 2015 and 2014, respectively.
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
Non-GAAP Reconciliations
(In thousands, except coverage ratio)
(Unaudited)
| | Three Months Ended
June 30, | | Six Months Ended
June 30, | |
| | 2015 | | 2014 | | 2015 | | 2014 | |
| | | | | | | | | |
Income from continuing operations | | $ | 91,326 | | $ | 61,939 | | $ | 203,347 | | $ | 163,478 | |
Less: Net loss (income) attributable to noncontrolling interests | | 254 | | (733 | ) | 701 | | (1,762 | ) |
Income from continuing operations attributable to Buckeye Partners, L.P. | | 91,580 | | 61,206 | | 204,048 | | 161,716 | |
Add: Interest and debt expense | | 41,975 | | 42,012 | | 83,684 | | 83,225 | |
Income tax expense | | 241 | | 153 | | 480 | | 76 | |
Depreciation and amortization (1) | | 55,598 | | 43,394 | | 109,374 | | 86,385 | |
Non-cash unit-based compensation expense | | 5,895 | | 4,799 | | 10,981 | | 7,921 | |
Acquisition and transition expense (2) | | 460 | | 1,992 | | 2,860 | | 5,625 | |
Litigation contingency accrual (3) | | 13,500 | | — | | 13,500 | | — | |
Less: Amortization of unfavorable storage contracts (4) | | (2,768 | ) | (2,768 | ) | (5,536 | ) | (5,536 | ) |
Adjusted EBITDA from continuing operations | | $ | 206,481 | | $ | 150,788 | | $ | 419,391 | | $ | 339,412 | |
Less: Interest and debt expense, excluding amortization of deferred financing costs, debt discounts and other | | (37,760 | ) | (39,073 | ) | (75,253 | ) | (77,346 | ) |
Income tax expense, excluding non-cash taxes | | (241 | ) | (153 | ) | (480 | ) | (76 | ) |
Maintenance capital expenditures (5) | | (23,584 | ) | (17,139 | ) | (43,014 | ) | (35,772 | ) |
Distributable cash flow from continuing operations | | $ | 144,896 | | $ | 94,423 | | $ | 300,644 | | $ | 226,218 | |
| | | | | | | | | |
Distributions for coverage ratio (6) | | $ | 149,483 | | $ | 129,815 | | $ | 296,568 | | $ | 257,981 | |
| | | | | | | | | |
Coverage ratio from continuing operations | | 0.97 | | 0.73 | | 1.01 | | 0.88 | |
(1) Includes 100% of the depreciation and amortization expense of $10.8 million and $22.5 million for Buckeye Texas Partners LLC for the three and six months ended June 30, 2015.
(2) Acquisition and transition expense consists of transaction costs, costs for transitional employees, and other employee and third party costs related to the integration of the acquired assets that are non-recurring in nature.
(3) Represents an adjustment to the FERC litigation accrual.
(4) Represents the amortization of the negative fair values allocated to certain unfavorable storage contracts acquired in connection with the BORCO acquisition.
(5) Represents expenditures that maintain the operating, safety and/or earnings capacity of our existing assets.
(6) Represents cash distributions declared for LP Units outstanding as of each respective period. Amount for 2015 reflects actual cash distributions paid on LP Units for the quarter ended March 31, 2015 and estimated cash distributions for LP Units for the quarter ended June 30, 2015.
