NS - Earnings call transcript Q4 2021

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Operator

Good day, and thank you for standing by, and welcome to the Q4 2021 NuStar Energy LP Earnings Conference Call. [Operator Instructions] Please be advised that this call is being recorded. [Operator Instructions] I would now like to hand the conference over to your host today, Pam Schmidt, Vice President of Investor Relations.

You may begin.

Pam Schmidt

Good morning, and welcome to today's call.

are other LP's team. members today Brad and call and Barron, of the NuStar President Energy CEO, On our management

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

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

Brad Barron

Good morning. for Thank us. you all joining

for positive as both the full Before medical be want for XXXX started, typically let today you year XQ we discussion on procedure, that is my with out of the our office providing would well get so Tom you overview and I'll Tom's to be details results NuStar's as of know I outlook a what for the XXXX. and

excellence. from that lower demonstrated our our leverage, our fund of to as again this resilience achieving steps ESG strategic well our very once flows back NuStar's beginning the year. Looking take spending XXXX, At toward cash over plan that the we strength priorities generated promote I'm the to past we and progress you made commitment proud we've all of XXXX. and as told business internally to

lowered our the improvement the promised, spending, a divested at end course strong We the closed out controlled XXXX at we with assets noncore we XXXX. and from our we Over X.XXx leverage year, as debt-to-EBITDA and a of of significantly. X.XXx, the

also our over we in XXXX. and DCF, promised We cash from of from And our on we flows. we the of and strategic in sustainability significant our excess XXX% ESG to spending you, inaugural milestones XXXX our fund as is performance the generated delivered capital reporting our reached our solid up funded XX% adjusted page. In on which launch results issuance XXXX, report web sustainability of our commitment with

a XX-plus responsibility, a provides that NuStar safety our and over better with protecting that which as committed a for proud throughout of as terms caring to I'm outperformed our have our total pipeline always again, distinguished also once was industry XXXX, in great of environment. of than Our overview culture our industry communities Xx better bulk than been whole. sustainability recordable the stewardship injury and and the XXx rate other, has in our NuStar terminal industry report year each history employees the

stable performance XXXX strong, solid XXXX other the EBITDA divestitures last items, February impact While detrimental and XXXX. after and of for generated Uri, delivered comparable of storm challenges, Even share brought to results. its adjusting NuStar we year with winter

our Turning to Pipeline segment.

to compared XQ XXXX. XXXX XX% quarter the in X% over of up fourth grew throughput Our XXXX, with 'XX

the both during serve products and across our and markets waves, pipelines and of in the consistent assets Texas. and refined the Our the strength throughout our reflecting Delta delivered Omicron we Mid-Continent position strong results

XX% throughput was pipeline the up for quarter-over-quarter. and full product year XX% up 'XX refined Our

over 'XX XQ X% XXXX We for for pipelines, also saw XX% crude year up full higher throughputs up on 'XX. 'XX over our and XQ

system continued rebound Permian to Our grow. and

of new XXX,XXX volumes around record, and 'XX of XX% a fourth up the of fourth XXXX. third 'XX, day quarter quarter for systems quarter the over over per barrels averaged up Our X%

the pleased of grew system's average to exited Permian But Permian on Basin barrels is more And running over rig than XXXX's as systems running across rigs close our XXXX, same we system system average, average January. XX% over the Basin of core barrels average the day Permian outpaced the and impressive per is count XX, XXXX was Xx as represents by the higher XXXX the whole. exit, even than XXX,XXX over more period. our basin's more core X% is growth much day total which the per of per number In entire than of impressive. end I'm in of which day that how XXXX XX% the barrels Our over our a our

Looking ahead, XXXX exit. well as hearing seeing and the between above expect producers and XXX,XXX we're XXX,XXX as day XX% encouraged barrels to outlook, by price per or exit our our from to crude XXXX about what we we're

the our from Crude to on Permian Moving Corpus Christi System.

began XXX,XXX around our reversal crude growth, demand, increase XQ which We day we're WTI the across MVCs. sustained healthy happy improve XXXX from volumes to in barrels Eagle St. with to report should our James continue our Capline. U.S. forecasting in MVCs over also of shale volumes combined we're and demand inbound at barrels with our System. also from increased Crude Corpus Ford time, receiving our January, drive and should activity to U.S. terminal, see global should Improving 'XX, Improving commitments throughput revenue we above per Christi exports averaging slightly at closer production but

was pipeline Throughput XQ ammonia system. over our up XX% 'XX to of XX% next system on about 'XX. and up to compared ammonia our Turning XQ

even supporting to provisionary to and increase short safe, existing and power new augments uses to profitability later providing our future and U.S. food renewable projects develop potential term for system cell our projects would the to customers our we're high-return extend applications calls, and with fertilizer to connect corn projects utilization partnering production forward customers current As longer ammonia for customers. These electricity supply ammonia more these needs we've details that future. more mentioned fuel production on for also systems expand ammonia's the utilization to prior opportunities low-spend, through as like look well this projects vehicles. We for We're traditional Midwest. as year as the across ethanol hydrogen and and ammonia like transportation green increase generation and we traditional of in renewable with by today our utilization to ammonia participating in system and working efficient

facilitating Renewable significantly renewable NuStar Moving to continuing Coast our an reduce already West transportation. low-carbon is Network. over in fuels, West In role which Coast to integral are from playing the emissions Fuels generated which from was to X/X Coast fuel-related our divestitures, services. of derived XX% over asset West over our segment total renewable our storage exclusively of as Storage adjusted assets XXXX, reflect revenue

continue as NuStar's in to fuel to to capital business We the leadership develop renewable West continues in projects our grow We plan there. transition the as projects expand complete fuels and across to continue grow. to we to expect customer our Coast low-carbon continue to demand California

network, results. for some the performance, NuStar's energy our the to a addition also XXXX our In and quarterly few growing find ability anticipate to to With innovative demonstrates Coast profitable ways and financial we overview of contribution shift changing I on gears nation's provide want West our that believe evolve our detail more priorities. network minutes renewables of to

Backing Adjusted 'XX XXXX our in Selby XQ that rebuild that million XQ 'XX to successful $XX XXXX. XQ mind comparable 'XX tanks comparability, gain received net income was our due to XXXX terminal. out, a EBITDA $XXX that with include common $XXX For $XX we gain to partners was of was million limited compared at DCF of over largely $X And XQ limited is our which available to coverage million, net distribution $XX results from XQ our million, NuStar's was up million common proceeds X% adjusted XQ ratio to divestitures. million, XQ X.XXx. $X keep income down million. insurance of delta partners our XXXX adjusted EBITDA

EBITDA million, Permian throughput Our our we Thanks up $XX increases XQ XQ and to ammonia to $XXX 'XX. our Pipeline system our solid was compared Pipeline segment's volumes million $XXX XQ XX% compared XQ both XXXX. in million and or XXXX had XQ large part 'XX to in system, XXXX in segment's

Our factors, Texas due compared recovery and XQ fourth U.S. of 'XX terminals which of customer the of Eastern was quarter at was to XXXX XXXX, down December in transitions several sale economic October tank City million, XXXX terminal and the global certain segment the EBITDA in $XX Storage including timing to challenges. terminals maintenance $XX residual million of and

of butane $X the XX% our XXXX from due billion. was of Our debt our reduce the the up fourth over in to year, year-end prior XXXX. able stronger our At the Marketing blending the quarter of by fourth quarter fourth segment Thanks end EBITDA reduction XXXX to made That's an also the to million fourth Fuels $X balance was million, $X.X million expense XXXX, margins. balance progress to $X lowering quarter we the quarter we of in the were course debt interest year. compared from

I an lowering introduction, made and a a revolver. in debt-to-EBITDA of ratio $X oversubscribed, additional of is maintain facility X-K our April of months XXXX an us our extend unsecured announcing filed $XXX very in billion progress, maturity note, on debt-to-EBITDA substantial related to million allowing revolving available unsecured We as pleased and we the had noted on our in with renewed On X.XXx promised, our As revolver we my that 'XX, renewal that billion finishing credit Monday, $X ratio with our we XXXX. to the were XX facility.

on what strategic when $XXX growth we priorities We're to $XXX by advance signs We the a items. XXXX, what XXXX the to 'XX we're Eastern economic for the expect accomplished terminals and of of other over to represents this which see to range the the midpoint year. EBITDA U.S. in generate continuing in we to rebound. million, year of encouraged Moving full currently our working of XXXX continue X% hard million sale for adjusted from horizon

to spending. to to year. million We scalable our million Renewable with West allocating to $XXX XXXX approximately Permian which needs system, spend to this our about Coast is $XX our our Of million strategic million total plan Moving expand producer's and that Network. we're Fuels $XX spending, volume $XXX growing throughput capital

improve NuStar's to plan committed million our XXXX In to in we resilience remain spending internally did and XXXX. $XX footprint to spend $XX ratio continue our million cash as addition, we to of continuing We we to And this XXXX. generated debt-to-EBITDA on year, to our all just from innovate to we self-fund across to expect in up financial optimize and build XXXX in flows each are Once expect communities again, every XXXX. enhance reliably And for value and open sustainable and operating our the call we're employees, focused XXXX NuStar, and is year hard our and safely, sure on better. responsibly strength day make that, and working a planet. our already that we for protecting strong our was and across I'll Q&A. unitholders. even for footprint With to on reliability our

Operator

[Operator Theresa Instructions] from Chen question And first Barclays. our from comes

Theresa Chen

the comments, export wanted the follow all crude to Brad. appreciate I up I side. on

Specifically, given early you blend-and-extend believe outlook have that volumes seen the with option recent I the that North And and Christi if time know what could you uptick data, macro talk I can tariff mid-XXXX the would there's be? at about frame. to over Corpus any the Beach? sort re-contracting some like turning potentially in love we've of

Brad Barron

customer nothing We've at to there, time. with engaged we're but and big discussions there's this our Yes. them, having with announce

Daniel Oliver

contracts, other that one. time that line. Most beyond well working We're on of our just 'XX Theresa, are

Theresa Chen

some Would just with plans? there anticipated Got giving your shifting to you growth robust it. positive outlook. Permian, mind color conversations just producers And very results, and more the about

Daniel Oliver

Sure.

what So of terms more anticipate we we saw in XXXX in of activity.

won't I volume of the level growth, think before. about of same yield activity, the because just this we've of That nature but exact growth. still curves, decline of talked

public's going terms that's potential -- And not as market, for out the our going see to they to 'XX. we same to discipline would guidance. of is In year. way and something not assuming the have change, in I it's would have still be communicated the that in that the that play in upside are yet us if But

Brad Barron

is forecast public said, side saw echo the which on more. we our the smaller what and last Danny to we is discipline have of what then Yes, producers more producing what in year,

that, change and So feel to good publics obviously benefit were big from that balancing too. we that ranks were to more, And we'd break we're way. start the producing and if something

Theresa Chen

conversion on the to And and to there, There's Got lack gas the capacity increasing on potential maybe situation side, given on excess and of takeaway been crude there the could of on a the rationalization it. opine crude you potential side capacity natural pipe. come around changes if the gas the of lot out takeaway commentary side. concern

of Just just basin, on presence likelihood given your producers something your relationship as to well opine you happen? like the that with the as the can in

Daniel Oliver

haven't is thing you start side. hearing think they in we're already don't than half on capacity gas. outbound We're going out more probably but discussions don't are to some some that about second some what time the looking know you the there we've But that at I crude read, I about gas constraints same know anything know are. read. anything 'XX on I in where all I of some rationalizing see natural

Theresa Chen

Okay.

alter there? should So your of that? rationalize points, How make alter to from that think I currently out the you way, Would do maybe that -- about the it your contracts different way can Danny. would that ask one you if delivery potentially? producers pipes structure to we a make were to business with have If your have you

Daniel Oliver

is to exit virtually system every of our Because out connected basin. No. the

X places go the go in if outlets. and so pipeline X main to if more shut going just any can And City, they down, to Colorado places other we’ll – see we we so the to – Midland one

Operator

Fargo. our Blum And from comes question from next Michael Wells

Michael Blum

contract about renewals to ask wanted terminal XXXX. I in

rates of to and renewal is for for the want up upon how of are your kind know Just what renewal? much portfolio expectations

Daniel Oliver

been not in So and next revenues have those at change backwardated in our XX a we've we've for long. We've is the of rates. any up about really issue. sweating, of renew We we're so renewal we're which market got in for any Most don't got anything without months. -- looking that I'm XX% expecting typical,

markets All backwardated of already. our have renewed in contracts

markets on I really apple we the so the short, focused is contracts thing we're The don't our any get at just to keep So see bite terms relatively if can if downside. we -- further on now -- try the our improve. another

Michael Blum

leverage. ask Got that. about to I I Super it. appreciate helpful. Great. also wanted

You in good last some obviously there years. made progress few years, the couple of

do leverage do longer-term where -- a you you think kind take you do you of sort could of you're for? that XXXX, For have to? And target angling

Brad Barron

here, are overall. not on but leverage not target. they on a And I’ll in due our And is in so we say What that. we XXXX Tom – redeemable published XXXX. is is have focused that we’re the – addressing So focused come become due leverage answer what lowering haven’t don’t Series I’d Ds we so particularly

and are to within to levers also optimization So organization be continuing spending. laser-focused that the probably biggest reducing we the on have EBITDA and increase our then

after – So available and use that. can then every we dollar to reduce leverage

Operator

question And our comes next from from Tonet Jeremy JPMorgan.

Dan Walk

on were the how Walk could customers talk very comments if early opportunities you of it's just partnering Dan just could know And I is sense on talks green advanced hydrogen This those future around see customers, days, you potential if but and wondering you how the also, mentioned us system with traditional the I trending Jeremy. thought more are. a give you ammonia uses. on wondering about for demand And your for interesting.

Daniel Oliver

is again. Danny over This all Sure.

Obviously, in is our that. an agriculture strong. of traditional partly ethanol very there's terms behind driver So demand demand,

of we're hydrogen. terms who the of that We to interest What in from the or are to use into business continue. ammonia as source ammonia plan have will seeing -- and particular they our the a a expect blue green ammonia that ship -- new to blue and Mid-Continent customers green up system is

to they'll So are at fleet converted the hydrogen split from that being the the fuel destination supply use hydrogen hydrogen and nitrogen cell. to vehicles

in conversations quite last actually those So few months. the are progressed

they space model. this the their fact, support make year, that able details some with first have share sure line the you hopefully be that -- they on have, half more more to in on work new I In to as business to some of to hope

that it's an So than though we'll from some couple probably I date. have definition of a think around sooner rather later, out even in-service years

Dan Walk

it. Got

any you project the just you order Okay. outlay couple what a just quick on mentioned of the but And know years like for then I that? of magnitude that. is give a And can on a us follow-up capital just out, it's of -- sense

Daniel Oliver

do be anything we’ll be pipeline, So We connections. it just to the to need don’t significant won’t making capital.

So don’t X to that’s the we do. on be really these all pipeline. fully not But making think We But see we’ll have expand to I connections. ways. yet exactly have where upside on capacity will that’s vetted we in

for demand. as additional the the one, well. premium Just it space, on volume new be the given then And a guaranteed that also is market around firm discussion space line, should

Operator

Stifel. from And Selman comes from Akyol our question next

Selman Akyol

of couple follow-ups. a Just quick

at thinking 'XX where and to rig say rigs, what of the terms year terms In about expect of you the you XX you exit count in referenced you or assuming? Permian, guys can at you're exited

Daniel Oliver

forecast by XXX that to I'll volumes. tell takes connections as or they our forecasting really at that level, about so, around think you producers. we XX that us We're We to this that. are just our don't it communicated at But rigs maintain

we're throw we And -- fair And than our system. so when that's that. share do that more above our XX on of And have rig there, DUCs. number without out I that's DUCs

So the of be will the rig will is -- DUCs that us count, along year, course converted that with forecasting. over the what's growth the we're giving the

Brad Barron

seen the to keep thing terms through One that and over just the it's years the continued, we've of mind has rig about Permian X last the in efficiency is also pandemic. Yes. in continued progress

more getting So more the efficient. rigs and are

Daniel Oliver

Good point.

Selman Akyol

with Appreciate that. that? And producers having issues that? the of wouldn't seismic your activity, any no anticipate over aren't this, It's -- but I concerns any

Daniel Oliver

No.

Brad Barron

No.

Selman Akyol

are I the we how think build about should this But just with about the due tough forward? here? And going storage, quarter. being bottomed mean little we but think about should asset you comparisons as maybe I know about from I here this this bit can point we know, Okay. a we you low sales. then talked obviously, And to think

Daniel Oliver

anything that. the that so. see on in had we in fourth the movement Yes, I don't would horizon We I contracts. think some of had, quarter change customer 'XX,

customers locations. where had a we switching couple so were of And at we

so so we And we shouldn't some of on other. that transition storage from now, to year. see had done has some that of And gaps we as revenue one a this and the transition coverage repeat that been

Brad Barron

Yes.

of I is X/X storage Another Coast or business, predominance the over you sort thing of is West West to business. dominance which of our biofuels our now direct would Coast, our

Daniel Oliver

long term. And that's all

Brad Barron

It’s long going term, and not diminish. that’s to

Operator

turn words. I to would no for you. And questions. Pam the I closing further thank And Schmidt like to over am call now back showing

Pam Schmidt

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

Operator

you concludes participating, This call. may for and disconnect. now today's Thank you conference

NuStar Energy (NS) 3 Feb 222021 Q4 Earnings call transcript