NS - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the NuStar Energy L.P. Fourth Quarter 2019 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. Instructions] [Operator

like Schmidt, conference Relations. Vice Please ahead, now speaker to Thank hand go Pam today, President madam. to would over the your you. I of Investor

Pam Schmidt

today’s to welcome and morning Good call.

Tom Barron, call the L.P.’s CEO; President members with today CFO, Brad of team. Shoaf, On NuStar our Vice Executive management are President Energy and along other and and

future statements. assumptions will Before These statements. performance views of this Actual course forward-looking that during we those statements get the are current that started, NuStar our and we with NuStar of uncertainties are from subject to the Commission. would the described make management the various risks, forward-looking like results concerning Exchange filings materially about the in and to may differ in remind you our described Securities statements call,

today, our words, we exclude Also will they in the operations. to divested this we facility describing Tom St. Brad July. when XXXX full and in and throughout year In and the results continuing quarterly we from results, European sold talk assets call refer Eustatius other our results be will last the the about call

financials press During financial with as course non-GAAP should These website at certain measures. non-GAAP be of of release located non-GAAP U.S. GAAP Investors certain page to the refer nustarenergy.com. measures the in we measures. this earnings financial additional also found the will considered Reconciliations GAAP our alternatives to these section to not of of measures call, of on be our may reconciliations

turn will over that, Brad. the to call I With

Brad Barron

a all financial, capital year When plan map didn't Nustar, to our targets company. measures, to a all we results Those happen. constructed reach for joining results road our great XXXX, project as Good developed across today. for strong goals. us was, you our we for and morning. by the XXXX and goals operational Thank we just generated a

the day-by-day, XXXX we year. all that on through or demonstrate execution, the results hard well Our strong And executed careful step-by-step, results work gave year. across our to how plan; than delivered employees and throughout stronger the the board last have thanks you we guidance

expected Last for $XXX the to generate year, to range you million. told $XXX of in million we XXXX we EBITDA

of times. at end we In guidance than our distribution XXXX. coverage XXXX XXXX's fact, coverage. achieve EBITDA X.X X.X initially XX% the Last XXXX, in we also X.XX times achieved high million projected higher We of and told better That's would $XXX generated EBITDA. better our year, to we times X.XX even than we actually you than for and times

we year, X.X a our large we finish to July, significant successful what million to X.XX expected net for of finished said the over in we of beginning proceeds with expected facility Last Caribbean prior also XXXX, XXXX ratio in debt-to-EBITDA times. the at of That's of divestiture terminal improvement XXXX part, ratio a $XXX debt-to-EBITDA of a the times. with to we Thanks, sale.

average an we strong throughput to footprint. financial result X.X record operations by a our day. XXXX pipeline of asset XXX barrels transported strong showing In our XXXX. across million in per grew impressive of an direct our In a million aggregate, volumes Our is barrels in XXXX, XX%

core the year XXX,XXX told system. day. we at day reach XXXX, Permian, the would exited performance we XXX,XXX outstanding barrels of of proud per we We're in In you per the barrels over our

Although acreage the year, during were our down rig as on rig the a XX% across whole the up count X%. Basin counts was Permian

nearly much the grew Permian in XXXX, our total throughput during as XX% twice year. While or XX% Basin's system grew

of our have on the throughput in February to our continue Permian We're and the well per January system, our Midland Basin barrels also a of XXX,XXX off and of great ahead over to increase With averaged start day nominations in forecast. XX% residing XXXX. come rigs in

Crude Permian XXXX. is of not System well performed footprint only during the our asset But our that part

our had also record numbers we System Product blending, Refined in hit movements. a December and where across Central propane East record-breaking products transportation, XXXX refined We for butane

grew volumes XX% impressive throughput stores XXXX. in an Our

solid told at the you unit activity XXXX. We XX,XXX December. where the our to we year-end, We barrels barrels target from expected that facility of day train per XX,XXX month in from contributions unit of train to St. saw saw per our per up day barrels for exceeded also XX,XXX James. activity end ramp By day facility we our by

even expect higher throughout numbers XXXX. We

We Xth. export project our into complete to into full-service to connection our successfully project September last a interim export to on Corpus a from told you Cactus will We we Christi summer service facility. January state-of-the-art solution II last provide last that mile put and

moving end refining complex. the by on Corpus handled back doubled barrels more XX% December remaining the at per averaging Christi we volumes the XX% have with of Corpus Christi our volumes the the dock than of XXXX, the and to in over into And facility XXX,XXX we system going day

a from million which almost only total out moved across barrels Christi during benefit Even our Corpus Christi XXX Corpus barrels, partial record XXXX, a million our at includes handled a of we year project barrels of XX number our facility docks. export

that XXXX. is Our get done successfully of we important that for project in NSTAR completed which Corpus an set out impressive Christi list and Trafigura, one projects of to

capital project our most history. ambitious with our program year, company's in employees Last the were tasked

our an accomplished, what be in productive Nustar. over for incredibly back XXXX, it turned Looking to year teams out

couple a through things. those run of me Let

capital receiving strategic local to Permian St. completing pipeline; expansions March, project completed from to after market. to to Longview second connection Bridge. barrels and Bakken our expansion to Hewitt crude Plains crude for delivering and In began we another James Bayou two Falls the the facility, of into and Permian expansion; deliver we barrels Sunrise In transport Pipeline in low barrels Wichita refiners one our quarter, to

shipment II, to of transport received as from long-haul Permian big our NuStar South first mid-August, Christi. was of first Basin the pipeline completed to to from in well. our the project project the XX-inch Cactus Pipeline WTI August Texas a II three We connect month Permian for Crude Corpus Crude Cactus we the

We As service some truly XXXX of three you for single in our Xth a day into brought NuStar. of banner September projects key will day. remember, was pipeline a

the stage Christi is mentioned Valley second to the I our terminal. the In supply refining new Corpus of Christi diesel expand our which to to The to Taft products Christi double projects to pipeline that project Northern new I Corpus from our project in a Corpus transport capacity XX-inch our facility WTI of our of Nuevo pipeline Corpus Christi eight-mile Grand Mexico. of refined from Laredo the Rio from Phase complex Valley export our

throughout projects debottlenecking, and the gathering as as fuels, an regional And Coast projects, capacity targets. network third-party projects across necessary projects outlet. impressive teams XXXX, develop renewable West list. connections our our That's In executed the Permian, to expansion achieve on fuel for terminals, markets well low to team to logistics completed carbon our

is $XXX important got projects completed $XXX done capital well it. in them is completed on million we project to did what under to It Back spend We plan. we million we XXXX, between how on those all budget. January We we only our time. and you expected told not

was those big we of the midpoint announced they makes our strategic across total, spent those It barrels below year projects a by projects, transported safely. range the year of this me XX% that stored. is more XXXX. of our it all guidance CapEx at executed In throughout $XXX measures, and which employees the beginning which we proud even did this All footprint and did all all million

Once again safety performance industry. outpaced XXXX, the in NuStar

than was we XXXX it times XX Our Transfer the or lost pipeline the than time DART for average times Rate, average. rate better which call is terminal industry industry Days two Away/Restricted better and

also five the XX.X the industry better times recordable better average than incident We pipeline a average. it than TRIR almost year times terminal or the completed and industry total with rate was

results our and our safety project operational our another's Our assets to unitholders' statistics from Committed XXXX the our and one our hardworking protecting outperformance our safety, employees community, strong as to interest. illustrate as are solid our customers' execution committed. well stellar environment, to capable

to and to quarter our I'll on year some give that, XXXX… fourth full more Tom over XXXX turn With and results our specifics strong it you

Tom Shoaf

everyone. good and Brad, Thanks, morning,

For EBITDA of $XXX quarter continuing EBITDA $XXX continuing XXXX, $XX XX% million of from or we the from of up over million. operations XXXX million, quarter fourth generated operations fourth

generated For operations at EBITDA which of range from guidance over the our and continuing XXXX, we $XXX XXXX EBITDA continuing from was of high up of the operations XX% or $XXX million, million. end year full million $XX

X.XX operations partners available partners operations DCF XXXX. limited to quarter the Fourth times. compared continuing limited from limited the XXXX the up fourth from ratio coverage continuing XX% available was of to $XXX common operations million million partners to our from quarter common DCF And distribution continuing or for the $XX of $XX was to common million,

million, our $XXX distribution continuing Full up available partners to year continuing was DCF DCF common or XXXX up million compared available times, from to limited from XXXX limited ratio was to year. XX% operations operations from times $XXX of common $XX to X.XX million the X.XX continuing and partners last common from operations partners limited coverage XXXX

and the continued Corpus Crude pipeline due expansion. quarter $XX our was to pipeline up on year's XX-inch our from pipeline and of $XXX Valley Crude quarter EBITDA segment our System contribution Fourth XXXX XX% in or Permian Taft million, completion our full fourth quarter million Christi ramp from our System throughput XXXX the of volume in

connection volumes resulting Sunrise on Additionally, to our system, at Pipeline experience Falls. crude increased we continue to our Ardmore Wichita the from

the from EBITDA sorry, storage Corpus Crude North XXXX within pipeline, our our million as $XX fourth the XXXX terminal from I'm of $XX completion million. was Beach quarter segment quarter was result Mostly of of the or -- million, contribution our Christi System. fourth flows $XX of XX% Our $XX from Taft up million which XX-inch a into quarter's full EBITDA

$X stronger margins marketing blending our of our EBITDA due business $X and from than $XX million, from XXXX bunkering segment performance operations. EBITDA Fourth million healthy was our quarter in to million, XXXX higher fourth our quarter fuels butane

ratio NuStar which for consecutive ratio X.XX Our billion debt XXXX, fourth $X.X and the EBITDA quarter under third of times times our quarter. X.XX times, X balance was December below XX of to our the puts debt-to-EBITDA was for debt

Turning to our full projections. year XXXX

$XXX EBITDA $XXX XX% to million to expect at operations from the of continue about XXXX We higher and continuing over since the results increase NuStar's midpoint be midpoint about an XXXX. than million, XXXX XX% to

capital, capital $XXX million reduction spend year-over-year. XXXX to still on we spending plan estimates, to to regard other XX% million With strategic and a $XXX

about coverage capital projections, expect be top reliability to on to these range our sheet ratio of we expect our to and focus delevering in $XX of we common unit X.X of for continue continue one to million we spending as on still million $XX in to XXXX. balance times will the addition, our priorities. Based XXXX times X.X In distribution

closing I'll his Brad that, turn for the remarks. with And over call to back

Brad Barron

Tom. Thanks,

we now bottom our in For are line. us, on XXXX focused behind We're XXXX focused.

assure to excess and order Our to employees in safeguard strategic XXXX dollar in our that increase fund more capital continue flow XX% distributable from to every and or we cash cash spend XXXX we of positioned are beyond. flow

projects And of to at complete But focused sweet growth capital we those XXXX, low plan on significantly $XXX our James dollars project XXXX, quarter. on just Christi, that plan We less our Corpus program in a the Laredo are focused, remains Permian, St. high-return phase in to that between smaller platforms spots. two existing Nuevo build spend Coast. and to $XXX the and million targeted in our like on We later upon this million. multiple spend West

focused focused, in our built We We flexible. XXXX. plan are for flexibility on staying

packages evaluate to sale our on every to flexibility while delever. And to require, scale we capital strong take community less protect to have whatever and every take year. coverage, employees our day and So to safely, other to continuing operate to the we protect conditions down as asset measures continuing our focused program core need we're our

metrics last like have we to improve unitholder build a and plan in our XXXX. Just year, value

so, like yet Just year. need beyond, was to the out when and XXXX we tell XXXX resources great even to all a looking have I'm to you, year, come. best confident the we execute. last But is I

With that, we'll open for Q&A. it up

Operator

first from UBS. Gershuni question you. comes Shneur Instructions] Thank from And [Operator our

open. now is line Your

Shneur Gershuni

morning good Hi, everyone.

Brad Barron

Good morning.

Shneur Gershuni

with your wanted of kind around to start sensitivities guidance. off I the

the the your to that in made a $X.X exceed have around talked prepared high high sensitivities bunch and that give in end you I hitting low forth. are you you about exit end pretty have give you was much guidance the of so Can records you at range So, you of of optimism remarks the listening how year? this color of what kind rate a us there Do any us just lot Permian a the your to of can in versus the range. end you for end up had

Danny Oliver

Oliver. Danny is this Shneur, Yes,

XXX way the beginning that's -- be the in I there We conservative of key the view think this year. yes think especially of Permian. given at we started the do the point would components hitting off out the a

System to of forecasted. currently operating Also less and those we're volumes above a seeing much so see above South MVCs have today MVCs out at Crude continuing the or which Texas day than we're our barrels XX,XXX what we

So, there. upside continuing on our trend be current would

when and crude also a unit Really James, then look I about at talked in. little the bit St. in -- trains coming we

our possibility and that there's MVCs the that. the year probably likely forecasted throughout have better Those We we think do biggest are a than three upsides.

we that really unexpected think see us. can hurt refinery out have don't I then a of unless some turnaround, And kind the there on downside lot we

Shneur Gershuni

the around a brown can sub-four somewhere color I Brad capital just you Okay. types Do returns. have you achieve you then. CapEx That I did for of give ask smaller noticed us XX% a a this year. you in multiple little of makes types think bit that that EBITDA tends about perfect higher imagine wondering Maybe projects? think the is on if to was question. of can those CapEx of times I neighborhood returns. down to -- you

contracting in in Could continue the of budget right the Is also we just down you that capacity labor did projects now? fluid some see in And and CapEx because on pool came actually talking market in available XXXX. ahead more thing more you type the of for there's of labor the of market? Everyone's XXXX.

Brad Barron

across really. country the Yes. seen that of I across think sort We've the right. absolutely that's

me the beginning question. your remind So, of

Danny Oliver

can -- get times. multiple Multiples

Brad Barron

Yes.

always definitely So, will I mentioned below the lookout for number higher say you four been projects. But we're be really mean just on tend for necessity mean as Board. looking smaller out we projects two of our times. historically have to projects multiple some down multiples three we're trimming I been those our what projects. times the higher or multiple projects or and for so across We've looking the I that would high-grading of have moving and we're

XX% CapEx in helps fund about that. Also program we DCF. since call of remember us we really free out what that a our it way That with

fund delevering these and projects with your with still accretive these debt XXX% multiples can low be program. You on

to bolt-on slated to So, it average all on But we be projects these they're very the these than expect multiples. current and an all our four higher low little might times. a we brownfield have that projects system be those

Shneur Gershuni

but distributable saying are XXX% flow doing you're could you fund just clarify leverage, with XX%? Tom, to cash at theoretically but actually you it retained least with for

Tom Shoaf

that's from cash do debt. still Well, XX% coming I'm would what to be saying. your The and that accretive retained remainder And you delevering. flows. can is be

Shneur Gershuni

Okay.

right labor and cost in capital are budget words potential now. returns And spending of maybe below just in up guy’s But the are putting where that you're going market your I'm be just actually to things basically come in so on the mouth. the there's because going CapEx the that can

Brad Barron

think the I latter is true.

is projects higher, were XXXX had return in I mean return the as that some very far we high As completed. getting

we're be think pattern I going going So into that following to XXXX.

Shneur Gershuni

Thank very All Really appreciate you Perfect. the color much guys. right. today.

Operator

comes our Moreen next Thank Mizuho. from you. Gabe question And from

Your now line is open.

Gabe Moreen

Hi, morning, everyone. good

couple able also activity contracts Just to potentially converting that how can train to to just on activity storage you longer-term Are XXXX. of into wondering us at in me that St. questions this may you at some point? at can play had James? you And a increase St. extent, unit of what James, in remind if expanding activity you down mentioned to you expect I frame the for was

Danny Oliver

Gabe. Yeah,

a major have three-year we've one the producers that of we with. that contract oil earlier XXXX we I Canadian think So mentioned have in

a And originating the So contract. these that. initial have barrels some on day. to going beyond on of years there increasing the the that X.X We're are Western currently XX,XXX actually We're is contract about We a left even started talk where Canada. barrels some three-year are of that barrels off about extending of day. XX,XXX we nature out due -- minimums at at looking

with haven't but we be we're a the considering line either storage new Unless that We're driven moment at cap future. or talked by driven yet. in volumes the that will help not reversal, long-term careful We get about very by dictate that. to going adding commitment that

Gabe Moreen

maybe other of some undertook. can curious? expansions and those I those in Are you that still know difficulty Danny. that's expansions the you're considering opportunities into propane about just were product Thanks, there fairly those but It Midwest that also like reports about of either in ask the huge tight media lot the are markets. market I for of in November a was there getting upper regions budget seemed planned assets? not your expansion December, or

Danny Oliver

Nothing currently on the drawing board.

Brad was such year of at the up in the But from the and it. followed getting a Central a we that a big his the ago beat the hoped quarter one looking we in are We had acquisition that comments But was reasons big had we fourth of acquisition everything a had mentioned over out quarter little as that We're that East. part fourth that there. for. that the projects of in CHS

Gabe Moreen

lastly And that you blending And for some, all? XXXX butane done at do for of me, if kind how have of if do does you much any you then do you hedging any? -- Great.

Danny Oliver

speaking, of So, well back. all in back it's a manner to

gasoline. when we buy So we butane, sell the

a So no transaction. risk it's back-to-back

Gabe Moreen

sold XXXX? a you actually transaction can margins it's locked back, Okay. and -- And but you about Danny have have may for anything in back you what talk I know forward

Danny Oliver

the go you into months. little blended bit typically it we fourth contango, gasoline the had rolled we and cheapest we'll that it, in little season purchases. as those with We during the the XXXX that we bit, most into a time summer blending in as when But the quarter the -- bought and and do, we the gasoline sell store a fall butane in because of forwards summer along it's

Gabe Moreen

Great. Thanks everyone.

Operator

next And question Tonet [Operator from from Jeremy JPMorgan. comes Instructions] our

now line Your is open.

Joe Greff

Hi. of ask progressing, what also longer and levels This wanted first the XXXX? is Joe kind on year the of I maybe And see throughout you the then press to term? for leverage including leverage by end on of how Jeremy. you reduction see then

Brad Barron

we've our three finished as years couple beaten and so. actually as last X.X. Yes. Well, for a times consecutive year, lot made we the We progress under of of last said, delevering. at year said, that's we've quarters And guidance X.XX over the leverage or the we

will as delevering be and wisely forward, our Going in to spend continue capital said, main focus, we XXXX. we'll

Capital spend than guidance XXXX. is about XX% less

room for if further And XX% with have we're We capital needed. excess I cuts, of funding growth capital DCF. as our about said,

So the have also continue forecast. we'd to in by. asset any we'll goes to we'll And upsides we of EBITDA. evaluate non-core as We'll use smaller -- continue year sales, advantage continue grow to take our the stuff,

in delevering So kind XXXX. our for of that's plan

Joe Greff

helpful. there's Anything see throughout area, also system. volumes Wanted crude bit. And some can you talk also in dynamics. Corpus That's then, see But there? how export the a while the in to volume Okay. growing bit volumes I competition grown there's also XXXX. to They've Christi your should continue growing wanted at that say facility trending how progress to a about you

Danny Oliver

to system. either us, Permian. our off Ford in I of Most over Danny about Corpus can Cactus to the lines commitments there that mentioned Yes, to are tell Eagle and us -- Oliver, again. We those barrels MVCs grow. XXX,XXX XXX,XXX Joe, other a coming our barrels did this some we in little of continue in have or committed volumes the of is January December. from through we you that results Brad had some coming

MVC in barrels tell relation we will our that, those have in you what levels. forecast is I Permian to our

concerned losing do And upside barrels not any kind that we committed about to So us. They're some there's we're there. of those kind competition. of to any think really of

Joe Greff

me. That's all helpful. Thank for you. That’s

Operator

you. comes from Ryan from question Thank And our Citi. Levine next

open. is line Your now

Ryan Levine

helped able And were guidance? drivers to what some labor? other below color provide Good that it any CapEx to the Or are being morning. components that? Would mostly as drive for be is XXXX there the you

Brad Barron

That's certainly, of probably, but really labor, general, projects coming a it's bunch that of had In under things. some we of in mix is a just budget.

Tom Shoaf

Yes.

labor, was Some some scope were changes.

So that couple a a quite bit. we projects scope and reduced helped of of the

Ryan Levine

you're Texas day seeing as then guide? Any is kind to? XX,XXX in average an Is provide terms your that And South recent anticipating be what color over quarter? Okay. to XXXX you of -- of that barrels on MVC the you're can that Or refers system. color above number the per in what helpful. a would What most your little that

Tom Shoaf

Yes absolutely.

running Texas just see from don't XXX,XXX. in System, would We've MVCs we we of I And know reason the level XXX,XXX are on going the going And our forward. below the see any year. or South reason XXX,XXX. So, I February it's XXX,XXX, have been mid-XXX,XXXs I here any see forecasted volumes Crude throughout XXX,XXX, but don't January

Ryan Levine

you it forecasting below going XXX,XXX, see you're heard don't I but So, correct if you XXX,XXX?

Tom Shoaf

Right. We're very the budget. conservative on

Ryan Levine

Okay. Thank you.

Operator

And Gabe follow-up Moreen Mizuho. you. question have Thank from from we a

now Your open. line is

Gabe Moreen

are your the for Just if might what what that's like storage turner? focus pretty recently to only there, context out seems it at want clearly same that assets time, maybe some sales of about to seeing asset further? multiple a needed. how delevering. the are still of some you value transaction is in on following happen And this about storage if sounds would going me. just delevering your Can there's fit assets like But follow-up might it good for your year talk know I competitor thoughts that might

Brad Barron

think on most low-hanging I fruit had care of already sales. we've of we taken the asset

price of smaller can for continue these assets. core about some do assets it's or delevering that whatever to for we and what one-off less could need. the get else we you all needed But identified multiple if multiple have We

be finance out that seen in A people's capital coming on of down we've to is them of there. have lot by these seen over assets driven markets. that and sales those we some time ability multiples the And asset to able just buy

at this asset point of is look for at to we'll us. So, sales in but imminent things, terms nothing continue

Gabe Moreen

Thanks Tom.

Operator

now would Schmidt, over I further turn And like of And President Pam to the back call remarks. Vice to Investor Relations thank for you.

Pam Schmidt

Justin. We everyone the have and like to call great If questions, Investor a free once Thank Relations. has additional contact today. us again any anyone thank to again you, day. please NuStar on feel Thanks would for joining

Operator

Ladies gentlemen, this today's Thank and call. participating. concludes for conference you

disconnect. now may You

NuStar Energy (NS) 5 Feb 202019 Q4 Earnings call transcript