Earnings call transcript Q2 2023

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Operator

Good day, and thank you for standing by. Welcome to the NuStar Energy LP Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, today’s conference is being recorded.

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

Pam Schmidt

Good to welcome morning, today’s and call.

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

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

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

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

Brad Barron

today strategic XXXX. about our hear of our our joining solid to the on our initiatives and Good us morning. positive for you Thank results, progress outlook all rest quarterly for

second of to quarter of Let’s in million quarter total results. comparable get second We second our the $XXX highlights EBITDA of $XXX started adjusted a generated EBITDA XXXX million. few with quarter,

the in around was the X% EBITDA second XXXX. quarter segment same over in pipeline up period Our

reflecting with in we position our assets and XXXX, throughout up the deliver system same throughputs strength the the Texas. systems around quarter second solid, markets of serve dependable in product and period and to compared in X% our revenue the the these contributions in to refined continues mid-Continent Our ammonia

same continued issues year as higher to perform demand System the increased in period last well maintenance throughput versus the system XXXX. XQ McKee with due customer's the Our to well as revenues and across

to on Permian Moving our System. Crude

Crude Permian slightly to day, quarter last compared same the barrels XXX,XXX down volumes per year. Our averaged Systems

specific Our volumes in delays the back issues reflected and Permian to XQ that some be the the producer resolved move we've we we operational half seen as as half expect year of into XXXX. of first

those pick producers As volumes those activity, to ramp we and up. issues are expect resolved up

averaging XXX,XXX fact, and seen near In already we've in day, to barrels XXX,XXX barrels yesterday's volumes per an were with volumes close day. July uptick per

to expect continue day. rate down to with mitigate to the to the volumes. comes would of at range We CapEx per we Since our if expect of reduced the in systems barrels our impact just scales XXX,XXX up our exit end in that under lower needs, XXX,XXX lower range, exit and of producers' XXXX CapEx

to -- Fuels Segment. Fuels quarter XXXX our our generating near XXXX breaking segment's $X record to Turning strong results. quarter million comparable EBITDA second After Marketing the --

turn I XXXX over few it With that Tom. before a observations about to

the for total generate has expect though a business to so Looking persisted even as this to to NuStar full our whole, year continues year, macroeconomic far uncertainty

EBITDA million million. $XXX adjusted $XXX of to

escalations results kicked tariffs linked $XXX provisions pipeline our from XXXX. the mitigated As calls, in inflation annual million off rate NuStar's some PPI the the year's XXXX we've in early proactively contracts will that prior through optimization mentioned provide in benefit expense FERC to preceding again the of we or of we for impact Index. and initiative of

D of one-third and still structure. schedule meaningfully our plan preferred issuance to a and another In outstanding. third remaining we only original we ahead careful units, able and the been optimization reduce leaving capital July, are June Series to planning, of repurchased we've leverage, Through our continue with about to our of simplify the

quarter, mentioned schedule. end to By of repayment units by of redeem accelerating planning the about this taking past to same demonstrated over XXXX, Series metric, year, debt-to-EBITDA original of our time, the all which preferred ahead D our the course remaining while we two D were the improve years balance we Series the our continuing we to protect steps sheet. of at Last have commitment was our healthy necessary to already

second and XXXX, continue to capital our the OpEx, our our also of can to ratio times. expect Once debt-to-EBITDA remain and including XXXX on or beyond. You all our metric improvement finish with to a expect four we distributions. XXXX we and expect healthy that And again, spending, all to us focused growth self-fund half in in of of below of year the all

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

Tom Shoaf

Thanks, Brad, morning, good and everyone.

distribution EBITDA adjusted As XXXX and adjusted and adjusted quarter Brad second mentioned, comparable EBITDA our coverage DCF X.XX was quarter. million, ratio second our second times. our was to $XX was our quarter

EBITDA segments. generated second In System our to $XXX ammonia pipeline as McKee thanks our over XXXX around annual Turning million million segment million, $XXX second pipelines and our large the escalations. in $X well our up of to EBITDA, quarter of now X% quarter, rate pipeline or as part

next Turning storage our to segment.

$X fuel terminal. Coast our talked an Christi terminal XXXXX due customer North the contract a a about. West and of by maintenance at decrease our Coast And offset That strategy. to region million, and St. for performance as of than due our tank Beach quarter $XX required solid amendment we've was our EBITDA were transitions James was West EBITDA. That renewable customer lower of extension which second about Our million second XXXX at mostly was quarter is Corpus to

diesel. fuels thanks market handle -- almost renewable portion built. are three fuel in network, our of renewable Sustainable the logistics a its of nearly renewable In including second of leadership aviation our that have fuels region's large We quarter, the to renewable quarters fuels one-third we California we and

higher quarter XX% generated Coast Our than about second region XXXX. revenue second -- quarter our West

in great results deliver to segment, breaking second XXXX, in near Marketing quarter. continue Our the Fuels which had record year a

Fuels by also and driven strong quarter Marketing and of financial showing comparable pleased million our margins. strength blending our to flexibility. which I'm segment's generated is in strong continued on report XXXX to butane EBITDA building and and $X the in progress second bunkering

As $X.X Series repurchased billion million million July, of Brad we We $XXX mentioned, facility. June revolving $X preferred another debt-to-EBITDA credit second X.XX of our in our a ratio units. D and unsecured and with with ended available on quarter times

on As $X facility, XXXX. facility billion you of we maturity that June our to renewed extending the and January credit unsecured we the facilities seen, maintaining the may XX, revolving have announced capacity

our to now Moving outlook 'XX. for

the expect in EBITDA capital to of the year. million. to to generate to full We million $XXX million As strategic this plan $XXX Brad $XXX we to continue mentioned, on adjusted $XXX spend range for million year, now

While we our now for forecasting with in West $XX lower system continue to network. the Permian million spend to to our are $XX expand to spending between the expect Permian volumes and XXX,XXX of exit we continue to day, around expect $XX we to fuels our XXX,XXX And million range Coast per year barrels million. renewable

of with we're year on 'XX. the Series still finish $XX expect redemption Terms our million acceleration still healthy to between even -- the and $XX million spend we B We of with a And reliability track in still on reliability to capital.

ratio below Xx. debt-to-EBITDA

the turn to back Brad. I'll Now over call

Brad Barron

to Last long-term and year. track in solid track As ammonia be our in by next facility quarter, we're to to service That commitment. supported on a year. is project ammonia announced you've another project Iowa, OCI quarter, a to solid product heard, we connect we had deliver a second state-of-the-art system on revenue

be return, healthy this opportunities. potential ammonia customers expect across hope year our to to for meaningfully low variety our as we When of increasing this to system begin footprint capital interested connection a actively we with other continue announcing projects utilization system. in working of We project our several

blue As fertilizer, we calls, and past the to ammonia. need supply products. mentioned carbon production company interest burgeoning and the as of make that interested lower facilities DEF is we're market seeing other from green access interest ammonia well ammonia -- from lower in in as in company's important carbon developing

carbon new uses including safe a for of transport lower fuel. are We're talking potential who customers to way a as looking for also number ammonia, hydrogen at to low-cost,

greening interest here is the logistics In demand produced of in ammonia the in ammonia ammonia driving ammonia International addition building export to States. converting market, the United or also in to domestic

system growing years. and We're the beyond generating export. pipeline footprint about opportunities capabilities this near could currently the in actionable several export ammonia excited interest next is nation's interest breadbasket additional also of Our potentially drive facility, capacity supplies ammonia the with pipeline primarily only in growing but our domestically and that James ammonia to our not which in over ammonia system system and that got ammonia utilization for but and produced has St. pipeline interest ammonia our and storage term a support

our potential are Rest to unitholder flows in projects our strategic work and continuing to as through assured, business. through cash -- we we meantime, our with advancing objectives: organic customers, core work increasing of the optimization build ammonia value

our financial that strength with look energy healthy our improving We providing the fuels talking our next by capital of you metric about most safest, progress. lives. structure quarter and reliable transportation a the debt while Fortifying and forward essential maintaining storage our to

call the open With Q&A. I'll to that, up

Operator

[Operator instructions] question comes Blum First Fargo. from with Wells Michael

is open. line Your

Michael Blum

everyone. Good morning, Great.

Tom Shoaf

Morning.

Michael Blum

lower going that end the First think slightly. Permian question suggest to and you've million? $XXX the Does fact for The million I the just about that of in you that Permian year. towards of to ask come volumes wanted you're the $XXX to CapEx lowered range that

Tom Shoaf

Yes.

now, better what I midpoint is well surprised than be I'm downside. see probably can as the but upside think we -- the we're the sometimes as no to we

I within range. up tighten but next So, think we'll possible that probably anything quarter, is that

Michael Blum

wanted to returns then invested extremely just great. look this you the just the seem possibilities size of if about of about capital could the whatever Okay, like bracket wondering you can over the opportunity I'm frame you timeframe ammonia there. ask that? And to could here -- what and kind want potential spend just excited you I

Tom Shoaf

I little deal mentioned we capital, announce probably line deal to think Well, our that we a there's amount small of expand we the think I low do this actually pretty with other for that OCI year. announced XX% then could the we to up current line. about above certainly get a the We're some We'd and -- cost still line, capacities. expect and some Right. the and later projects can running build currently relatively Brad that the

gets. Brad and and And be And as significant. new it a even and St. then refrigerated line lot increase going there's James to see on bigger and it's if just -- But it it's some all, it bigger. then if to problem -- mentioned, get going to capacities, these fill conversations of into current could not we how we're we'll much the them export there's a building we to it have than products -- take move multiple not of did CapEx and start just more could going storage

Michael Blum

Got it. much. Thank you very

Tom Shoaf

you Michael. Thank

next comes Operator: with Mizuho. Gabriel Our from question Marie

open. Your line is

Chris Jeffrey

Gabe. this is for everyone, Hi on Chris

early Just but gauging you're carry similar it of up your conversation. the days, through expect you Permian look year? up flexibility and of kind or maybe on do Maybe volume kind you following at for that how your have that pick with expectations XXXX, to to as

Tom Shoaf

Yes.

CapEx, up. volumes are before, pick of as to the is this Brad said CapEx to our We course, going on. And based on activity that's expecting it scalable relates

we'll next So, we little a did year. -- I I than think think year do but we'll this better

Chris Jeffrey

Great.

Tom Shoaf

side, sorry, had we've our half bunch in but gas and several bunch also gas on really not our spring, year We've outages issues -- side well. that unanticipated in unusual our first as this either issues, operational playing the I'm or a by hampered plant a operational of volumes of plants. some the on since Also producer been

Chris Jeffrey

kind know you ago. are an the just seeing inflationary well? a theme prices any on for like still seeing equipment CapEx of well. coming Got that it. -- picture that, few that was of And of impacts more years in you're maybe kind elevated a I maybe kind update and as that then of into system as But

Tom Shoaf

level with deal longer supply down. can't side. to seen certainly we've some chain we've not come but on Yes. off. how leads on certain something equipment, since significantly Generally really the costs starting calm beginning of types the still that have to electrical off We Labor speaking, the we year. those, But learned started costs issues, get of there's to mostly pipe it's have

I really gone not away, flattened think it's but out. it's so And

Chris Jeffrey

as quotas renewable And the from from PPA Great. the update the on fuels maybe just the business. last far diesel. then RFS with as one, renewable

if producers any curious California? far you're as Just and as supply hearing impact changes demand from in

Tom Shoaf

want Generally, more speaking, storage. they

Chris Jeffrey

That's it everyone. for me. Thanks,

Tom Shoaf

Thanks.

Operator

moment question. One for next

Next Selman question with comes from Stifel. Akyol

open. is line Your

Selman Akyol

storage. for comment last more Thank your on you demand you. Danny, talked about up just there, following

You're opportunities California to in in seeing additional XXXX. invest renewables in

Tom Shoaf

We've several Yes, we got are. comps.

assets. Some are repurposing existing

to transition storage. into But growth West the least I we in That Coast think build see environment of we'll being potentially to in of is the that you're EBITDA regardless come, challenging, to even more state there's kind I in terms years of of which said, as to the could permitting locations a say we for build segment assets. these think new higher-margin products. just continue couple

Selman Akyol

guys benefits optimization your then you program. pursue from there. also wondering opportunities? And more talked there is your continuing or you do you. to expense realize Thank And Understood. more Are optimization, I'm if to guys finding about

Tom Shoaf

that cycle. and that we'll be the XXXX go at, into hard as something we're budgeting continually at That's looking we looking

So more I do expect there, though. there's can be done that

Selman Akyol

much. very you thank Okay,

Tom Shoaf

Thank you.

Operator

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

Pam Schmidt

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

Operator

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

You

and now disconnect, a wonderful may have day.

NuStar Energy (NS) 3 Aug 232023 Q2 Earnings call transcript