Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the NuStar Energy L.P.

First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised, today's conference is being recorded.

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

Pam Schmidt

welcome and call. Good to morning, today's

of the CEO, Brad today CFO, well Shoaf; Vice as NuStar Oliver, of Engineering, Vice are and Chairman Tom President Executive our management L.P.'s other Energy and Development Barron; as and and Danny On President call Business our and team. members Executive our

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

results described Actual from materially statements. may differ those forward-looking in the

will we also financial GAAP call, this refer These certain measures. financial as of course should the measures alternatives non-GAAP non-GAAP be measures. not considered to to During

certain Reconciliations located the our of non-GAAP GAAP in to measures found website Investors additional of may be applicable, release of may nustarenergy.com. page at of these if our the Financials reconciliations press U.S. earnings section financial and on be

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

Brad Barron

first Good positive as all morning. us great joining I'm well to Thank tell rest our about as for excited our of the outlook you for today. XXXX. you quarter

than the with quarter get Let's in of is EBITDA started of quarter We the strong adjusted 'XX, in of first total XXXX. 'XX higher first from results. X% EBITDA our adjusted a first few highlights million generated quarter which $XXX

quarter same in XX% the segment EBITDA period of the was 'XX Pipeline up by first Our in XXXX. over

'XX, dependable first first ammonia markets we deliver X% our and the to the the 'XX, and with and in in product of the position quarter reflecting of of throughput Mid-Continent in contributions the strength these up our solid Our serve refined Texas. over quarter throughout revenue continue assets systems system

year. particularly with throughputs the quarter last Pipeline higher our performed System, West versus Central same revenues and systems, period Our McKee well last

systems volumes over crude day, Permian is our up barrels same per which averaged Additionally, year. XXX,XXX the last X% quarter

pleased XXX,XXX our After record Christi with XXXX our strong we're higher which day generating fuels Texas, system averaged is $X first Corpus quarter South in System 'XX throughputs marketing that first Crude our off for per X% quarter In and MVCs that than of to the strong near XXXX, kicked breaking first a above quarter, segment the first our a million volumes. EBITDA comparable results. XXXX segment's quarter, barrels

the over of With that, turn a I observations before few 'XX Tom. rest about it to

First, the looking Permian. at

lumpiness on we've some mentioned of some our schedules far so our call, previous in seen producer As year. we this

volumes to expect able We're XXXX barrels exit per pick day. But of in of to range ramp We we they're forecast to rate than just under producers those so, quickly we depending could activity. see do up up the our on XXX,XXX lower how original forecasted. our up slightly as XXX,XXX

varies, we There's needs, lot of with volumes. see frequently our expect in our exit but emphasize, change CapEx, would we the fortunately, a commensurate down also our would that in as should rate still reduction fact CapEx our counterbalance and left, systems given scales any up producers' the if potential year which a we

of this inflation to for the whole, of EBITDA generate that $XXX though Looking continues 'XX persisted to at and have NuStar even expect our $XXX year, so far total year as million. 'XX the million adjusted business full high distinguished a volatility to

including that tariffs annual initiative of the expense our we prior again healthy in optimization PPI provide 'XX of mentioned to below we As preceding linked self-fund of rate And with proactively impact for also of all expect in from a growth once the year, we our we metric have This the finish early Xx. distributions, in and XXXX. and contracts and cash to benefit off expect FERC kicked requirements, our Index. will year's provisions we debt-to-EBITDA through mitigated spending year pipeline well capital also our NuStar some inflation escalations the or the results all to of calls,

I'll turn the over that, Tom. with And call to

Tom Shoaf

Brad, everyone. good Thanks, and morning,

Brad adjusted was X% first As up or of over $XX quarter million mentioned the our first quarter 'XX. EBITDA

Our quarter ratio coverage first up And million, 'XX adjusted first XXXX. adjusted quarter over DCF X.XXx. distribution was XX% $XXX was of our

EBITDA, turning EBITDA up over In our McKee quarter our Pipeline System, of and Permian quarter but million. from and across 'XX, throughputs $XXX or segment XX% System million $XXX our the segments. first our first robust $XX 'XX in part Now Pipelines to EBITDA Pipeline generated Crude also most systems. to million Thanks in large of increases of

Storage our to segment. next Turning

last EBITDA amendment and transitions customer and is as required tank our adjusted well Christi first of That $XX extension quarter quarter the was million, Our quarter St. James we million customer which an mostly $X terminal. that lower first as EBITDA. Corpus was about than at for 'XX at of due contract Beach North mentioned decrease 'XX to a terminal our maintenance

quarter, part delivered about with Our by over quarter first XX% West West Coast large up Coast strong driven revenues 'XX. another in strategy our region renewable

strong And blending margins comparable in for periods. EBITDA segment, million was our driven Fuels to and the Marketing quarter by both first butane 'XX, $X bunker

of so, D another $XXX year. able which doing this the million redemption the headquarters, strength in our which into at estate entered a lower to later a monetize deploy were By pleased financial of to our we our corporate priced also financing. and our on In approximately arrangement our debt report March, proceeds progress units real of continued finance debt, provided reducing and Series flexibility. our portion structured to reduce to of we building portion I'm facilitates

by of schedule. transaction, D EBITDA. the Series about in Thanks to redeem We or as the we original debt-to-EBITDA That's we since to a have been with ended ahead XXXX. strong quarter of end it's calls, along mentioned first quarter with of lowest the the the 'XX first are that prior X.XXx. XXXX of years ratio all And X remaining planning

end of billion $X 'XX, quarter of total the capacity. revolving was $X.X was our billion, facility's the our balance and the debt first $XXX facility availability At million

for now XXXX. our Moving outlook to

As Brad to $XXX in to continue mentioned, adjusted the to million expect for range first EBITDA generate year, million. of we $XXX the

plan strategic in continue million We to in our 'XX. million expect upon continue Coast spend our the to capital the activity And as Brad Depending and we of around the million our year, of to $XXX between Renewable expand to million $XXX to West producers, system. rest Fuels to spend Network. Permian to growing $XX million Permian allocate $XX we $XX to expect discussed,

$XX with our planned expect below between 'XX. D in even track million we're capital. reliability to spend healthy redemption XXXX to ratio Xx. on And reliability We finish Turning still with on debt-to-EBITDA this Series to a year, million later $XX and still

I'll now over back Brad. turn And call to the

Brad Barron

Thanks, Tom.

we heard, a first you've As quarter. strong EBITDA had up, up. was was DCF

pace XXXX about was Fuels Our near Marketing segment track kept We're up, what year. holds. with record-breaking its the solid and our to on also results. another we're future excited deliver Pipeline segment And

cars that fertilizer announced also heavy to have and XXXX. is trucks, light connect equipment state-of-the-art dramatically Iowa, supported our uses as a in farming heavy-duty to and produce ammonia diesel to OCI well product ammonia machinery. engines make reduces commitment, a as which and in to OCI's emissions long-term we service from project Yesterday, to DEF, other ammonia by expect facility early products which revenue in system we a facility in

in meaningfully just variety project of interested actively return, our And several of We customers a this XXXX. be with potential as project our system low our expect starting capital we for opportunities. are this utilization first of in healthy ammonia will working connection across several increase footprint expect system different to the we to

is by As this or ammonia lower make as more process you increasing product, such half ammonia. on key support product. is focus Because referred emissions about to, is is and may an production solar to the respectively, agricultural important on ammonia wind than capturing food XX% electrolysis by used world's used by emissions, dependent either the or production know, fueled there of 'blue' 'green' to utilizing decarbonizing it, and to

from products, who in supply looking new company's including seeking a seeing lower make carbon transport from safe low-cost, We're of fertilizer the customers way ammonia developing important uses fuel. and DES to carbon lower in ammonia, are facilities interest for lower production to other at as growing hydrogen company's interest market ammonia for the from potential and access, carbon

addition also is In demand to interest driving international the domestically, greening expanding ammonia ammonia the market in export. of

only Our our also system capacity capabilities ammonia the facility, U.S. the not produced export. but primarily and additional which supplies ammonia support interest domestically with currently dock spread Midwest, system growing ammonia, St. basket could of has that utilization also drive James our potentially could in export but

increase attractive as is footprint next and opportunities our return, we ammonia forward reduce talking emissions This across supply next We to to significantly to are opportunities confident utilization we more years. will talking growing projects in look over generating look spend these that to we about for low you the interest forward quarter. system the several progress, our globe and

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

Operator

Instructions] with from first [Operator Our comes Gabriel question Mizuho. Moreen

Chris Jeffrey

Chris is on Gabe. for This

customers rates, we you the seeing market, looking some different West near the as outlook for are different enter And talk could competition if more just wondering for the term around far participants about market. Just that? of and we're Coast kind as contracts, as starting that see in to

Daniel Oliver

short, is the outlook in there say, is this storage I Well, Oliver. Danny is Yes. -- The California. short would

in interest storage of lot a have we there. So

it's been for contracts. very long-term have We are But storage. positive healthy. very Rates

Chris Jeffrey

Great. the Corpus quarter And then were maybe volumes row. second switching in for at seems Christi those the to a solid like

they're bringing wondering of volumes kind kind those how the of for Just the drivers behind to year? back system what's and trending

Daniel Oliver

those exported, Corpus export in general be and the continues Yes, to area. barrels just be the growth continued need oilfield preferred to and

come And in so we see customers. volumes our through those

Chris Jeffrey

in Great. one any or or impacts in product more. And weather for either Were the there quarter Permian maybe anything? the quick usage then just refined

Daniel Oliver

weather little in the January side. impact products Permian. on a had refined We Nothing the in

year, outpacing the the year since we've beginning volumes our fact, pandemic on pre-pandemic refined product since every of in the In demand. been

Operator

comes Michael question [Operator next Instructions] Our Blum Fargo. with from Wells

Michael Blum

I about talk Permian. wanted the to

sequentially So I were X%. down volumes think about

ask, you could And volume XXX,XXX today? to target going on about 'XX wanted there? of still with comfortable are just you talk if the what's just I So then

Daniel Oliver

Yes.

Danny So again. this is

think think I this been early I rates lumpy don't used we so below exit year. term and And into and Brad think last slightly usual lumpy. Brad read volumes far anymore somewhere the But also that acreage, have and I it. been between are our still always activity Permian So I of than XXX,XXX. core XXX,XXX. said And It's it's that XXX,XXX little core mentioned a The the than time more lumpy. anything

it So materially. changed hadn't

Brad Barron

is some of have lumpiness producers What about the big may production. you the in heard talked

of towards the up over ramp of volumes expect as the that year. to year, we to itself back So we out the work expect half our course the

Daniel Oliver

think I do again, going Yes. That's was mentioned activity in see second up that to to last And Brad's ramp I comments, the We in we -- mention. quarter. half. expect

Brad Barron

most and the and CapEx Probably emphasize, our up every volumes. on that say down with important we is thing this to call, ramps

our volumes so -- a vary, And so CapEx, whatever does however offset. which good our is

Michael Blum

I interesting to be and Okay. pipeline that? wanted bit do when -- just about is And it this promising. then how spend spent? going the I ask project, pretty about And be to is And capital this a for ammonia seems returns? we what's to going which think little guess capital

Daniel Oliver

Yes.

We capital. It's specific. haven't given specifics on any contract

will to make connections. the you some required contributing tell However, that is capital I OCI of these

would is than it have So our less been. out-of-pocket

Brad Barron

Yes. CapEx budget. already in what we've disclosed is this our Any for is capital

Operator

comes Our from Selman next with question Stifel. Akyol

Selman Stifel

quick. Real

Just a couple of follow-ups.

good you mentioned to rates. additional there? California, storage and short storage relates to I'm build out there, more curious, capital see opportunities do out it deploy you As

Daniel Oliver

of We around we've done XXXX now. since has biofuel dozen we're that that projects strategy. our of completing. been projects a had still a got lot completed couple A We've

renewable think terms carb what see CapEx. into be I low the going storage forward, doing diesel very as just us dictates. It's diesel transitioning demand the are storage in projects very, you'll cost of some

Selman Stifel

and should Or Got kind of then there over repurposing as a we to for about St. any of presume of requiring going ammonia. just it. that having thinking to be anything handled And is James that? special CapEx lot assets? I be ammonia would and back be just

Daniel Oliver

Yes.

contemplating So Pipeline some on -- think I side, we've well, we're several more mentioned, got the projects. Brad

of does we'll crude talking But it one storage require which announce much that storage. It years, this later you work. James, there. year. If would storage think our about I to Pipeline the it a tanks probably than won't requires and be involve at different the different we'll over St. be next oil several

Operator

And questions this to Schmidt. I'm time. like I'd back over not the at turn showing any to call further Pam

Pam Schmidt

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

Operator

presentation. conclude gentlemen, this does and Ladies today's

disconnect, now a may and You wonderful have day.

NuStar Energy (NS) 4 May 232023 Q1 Earnings call transcript