NS - Earnings call 3 2023 | NuStar Energy L.P.

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Operator

Good day, and thank you for standing by. Welcome to the NuStar Energy LP Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, Pam Schmidt, Vice President of Investor Relations. Please go ahead.

Pam Schmidt

Good morning and welcome to today's call.

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

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

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

Brad Barron

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

'XX few $XXX highlights to up total compared a EBITDA our $X with of quarter, of EBITDA generated million. third started get third million quarter of the quarter. the Let's of third We in $XXX million

same to in the segment EBITDA pipeline was Our XXXX. in almost XX% period third compared quarter the up

around serve the continued solid our of with reflecting Texas. compared markets assets the we systems, in X% the XXXX, strong position our Mid-Continent revenue up strength to in And total ammonia along throughout in product throughputs same refined in the to the were generate period system, third quarter. these dependable and Our and

year, Our Three throughputs higher refined revenues system well last product revenues our and 'XX. McKee period over increased same performed Rivers and XQ throughputs saw system with and versus the also

all price or benefited our to rate annual index producer the the either pipeline almost addition, FERC index. In from escalations systems linked

Crude to on Permian our System. Moving

Our per in volumes same of up quarter to averaged quarter XXX,XXX per Systems Permian down the barrels versus compared second day Crude year, day, of barrels last XXX,XXX XXXX. the volumes but

reflected resolved, volumes As and issues we have some calls, our around quarter volumes average to in October said be expect and But Permian day. of our per on XXX,XXX barrels we've barrels some seen so XXX,XXX per operational average been fourth have prior issues far delays. now as day, producer-specific 'XX those we

come also the to expect system's to comparable full revenue in year We XXXX. 'XX

segment our turn marketing Turning of has comparable fuels about breaking a in After to generating marketing strong in that, to to our million 'XX, strong $X XXXX near it segment's fuels quarter, few observations third results. With record a quarter third of 'XX, quarter quarter, over 'XX the EBITDA before turned Tom. I another segment. the

as with business derisk turn million growth of that, successfully a below reduce ratio Tom. years X Once for macroeconomic target and After distributions. Series million. our XXXX, preferred to debt-to-EBITDA of the our OpEx, $XXX whole, full to our finishing plan to a adjusted our the has And original year, to we the capital self-fund healthy continue again, about over the all expect ahead several our to our so D total this years I'll also have Xx. With hard our though and $XXX expects sheet all business, of of in leverage, our persisted to Looking to we generate year redeem working EBITDA call spending schedule. XXXX balance completed to year strengthen uncertainty far even NuStar our we

Tom Shoaf

Thanks, Brad, everyone. morning, good and

mentioned, quarter was third quarter million to EBITDA $X million. up 'XX the third EBITDA compared As $XXX our million of XXXX Brad of $XXX

Our our coverage distribution third was DCF X.XXx. $XX quarter adjusted was ratio million, adjusted and XXXX

our EBITDA, In rate 'XX, our System refined quarter quarter Three part generated $XXX River systems segment 'XX as our the our and third our a million in pipelines escalations. turning third Now $XX McKee around million $XXX system well up EBITDA over as thanks annual pipelines pipeline million, segments. to to XX% product of or of including large

our storage segment. Turning to next

terminal higher the to extension That West where third due to the was for fuel $XX million million, quarter, In EBITDA lower was the of at our amendment 'XX St. large over of region network. third region, tank contract talked the renewable West the to Coast is generated quarter than maintenance offset was market leadership $X solid in than performance James due customer decrease terminal, quarter logistics Coast strategy, another region's have renewable third fuels required that and we before. But Coast our revenues 'XX and we've fuels and and a XX% renewable our from our Corpus our of portion fuels about years, quarter as our yet 'XX. our Beach which we transitions built handled thanks EBITDA. West of Our renewable Christi about customer an by quarter mostly North third the at

to continued to in on a had continued Fuels is in comparable 'XX strong to also the 'XX, which financial near flexibility. $X and building in quarter. in our EBITDA, which driven segment, our strength pleased generated of and third record quarter showing report marketing million strong breaking progress great results deliver third of year by Marketing the fuels segment's Our margins. I'm the

all a sales to have continue we our over of year. And of X to flows, preferred which the units and monetization the quarter $X unsecured issued debt-to-EBITDA X.XXx real credit $X.X such the outstanding fuels remaining And July to below ratio common utilized projects our corporate from $XXX equity of structure towards X investments, us of D D their of Series with while years, enabled renewable this our we redemption the redeemed Fitch our revolving notch estate organic of facility, few by to gives the our units, strategy upgraded our D further past raising positive. the third Series flexibility ratio ahead on BB successfully while maintaining and Global and in billion target some our proceeds stable on preferred September we September. growth reduce and of believe Series the fees, $XXX applied rating balances, related which Series S&P repurchase We our from focus outlook Xx. We year credit debt-to-EBITDA previously cash ended D already of from units debt X/X 'XX Over available to million announced about redemption net million preferred with asset our through produced August, assets million as we that of preferred strategic to Series rating elimination cap us the has fruit. in D After ammonia to delevering. the upgraded

to our outlook for 'XX. now Moving

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

as expand for range fuels for $XX $XX million spending to spend our well West of continue to network we as continue projects to million and to million our million, expect $XX Permian Coast around expect on to in ammonia our renewable We around to be system the $XX pipeline.

capital. reliability to Turning

I'll finish We to expect redemptions on back And the we're in million. targeting with spend ratio 'XX, turn still year of $XX our reliability to D Brad. between a call million the debt-to-EBITDA to over million to the in XX with healthy that, $XX Xx. With acceleration even below Series

Brad Barron

Thanks, Tom.

potential and ammonia to in you've with results future track in the our see our XXXX. had ammonia is on and track on outlook we're also state-of-the-art ammonia horizon products NuStar we St. see James ammonia especially the for to pleased OCI for system which XXXX a As at and heard, quarter storage and and be solid January. opportunities low-carbon we deliver export We're on our you about on the facility. We for to solid for service Iowa, beyond, for for third we in to our system told facility connection pipeline growth

utilization to increasing low project this our We meaningfully capital healthy system. expect return, begin on

has ammonia. Similar in that a XXXX, in made augment early other low-carbon producer. project us for projects these to to continue promising are strategy to cash platform significant that transportation, next we leader large Rest provider where export healthy that the the our our fuels low-multiple, continuing Q&A. priorities: to we premier as debt And essential we West over ammonia expect flow, are Coast, the projects our the and on renewable storage maximizing lives. With maintaining provide growth low-carbon energy connection, will and we for a core global free fuel low-carbon to to provide we number though, strong and of metric network announce transportation a position U.S. half in storage and and I'll our call ammonia reliable high-return, for a logistics expect region, addition the logistics In the strategic renewable that, ammonia safest up built a have to most fuels of our the organic and decade. assured, the committed open our NuStar for providing advance

Operator

Our Citi. comes first Irwin, Instructions] question Doug from [Operator

Douglas Irwin

balance want with start just I the to sheet.

discussions Can great have of up that a And delevering the allowing You discussions to you kind obviously further agencies, rating as you recent that D to talk upgrades. to longer kind rating these those paydown you trying the maybe target mentioned leverage just hit? in certain you're of the see Series maybe for where well with term? leverage as about comes there want some agency is see and

Tom Shoaf

or stop all going today. good now. we the out very a delevering we're to enough target a redemption that do to better, in having efforts. our and We giving us many we've where we our there. to it's successful. that. And on targeting certainly, going But us that's That's delevering behind mind put Xx to efforts I what say not need question. Yes, years we're there of and headroom D think was continuing be, spent Series and Certainly, We're

I we'll So think continue sure that with that work happens. make to on and that,

really is, And below of kind target so that's what I'd Xx. our say,

Douglas Irwin

there? can barrel trajectory year-end kind see the you issues sounds maybe my for as That's are And day frame operational second approaching rate expectations maybe XXX,XXX Permian Great. that 'XX? kind then And still volumes are rebound the of quarter, you've some guidance in we see here. to a just range kind being fourth of the the talked then about into what your Could we helpful. the barrel to past? XXX,XXX maybe Okay. think of on into help resolved. you It exit XXX,XXX question Great those of versus XQ. like about an gave And

Daniel Oliver

Yes.

summer. going issues by -- lower Danny most we're XXX,XXX we're the rate, going to some to felt short from expect between of of little be -- be But be that think this but that is operational to way. I a we're XXX,XXX, with XXX,XXX because the is like -- on to throughout a about We're exit we've rate that the somewhere partly exit average we point mentioned, to going the we likely. starting

Operator

Our question Jeremy from next comes Tonet JPMorgan. with

Noah Katz

Jeremy. on This for is Noah

quick have increase me. wanted the handle any rate And touch How increase an in business one Just by interest to sensitivity. one affected for rates? been to interest has on I rates? an offsets NuStar in NuStar's does

Tom Shoaf

rate Yes. securities. the lion's comes from by Primarily rates. impacted I been have floating hybrids, increased our we share interest they're mean

on we seen rates So up climb have the those.

so the have guidance into year-over-year. we that there. increase our And expense is have seen all out we built that And interest

factored to other the that the in capital. itself, efforts offsets do So like obviously primarily business of done in. Offsets, that reduce yes, have you mean have that spending things and we to we've I some and

in that realize segments and and pipeline benefit rates to FERC doing can there that storage do to continue as from we offsets. and well. we indexing, on the So climbed, that. And pretty sure of indexing some We manage also our that a our we we're are got what all have specifically, assets good the interest FERC make

So definitely offsets that. to

we're overly say would concerned. So I

We at it. are looking

it, we'll forward. rates what going and We with are just monitoring happens see

Operator

Gabriel question Mizuho. from Our comes next Moreen with

Christopher Jeffrey

mentioned, Chris maintenance. customer looking at is on St. Maybe results contract, the James This the for transitions for the North and storage tank Jeffrey Beach quarter the release Gabe. -- customer just and

it kind and should return we looking was puts those Just it curious we where that of the what's rate you're XQ, of level kind expect XQ? where expect run Or given takes? kind of to Should into now? XQ, to as

Daniel Oliver

I improvement. think be there slight might some

QX, continue in that Some seeing into we're QX. will far pick do our of up. with reset and But that so has the in in MVC actually the to levels Corpus, volumes

MVC above levels. back So

still left better So we've a right go. now, I'm of anticipating couple but to months got a QX,

Christopher Jeffrey

as just or jump related G&A Great. a was maybe if to seems be of takeout. the I There's curious for be at looking we XQ, And Anything there. then typical quarter bit modest There of kind which was thing XQ. to maybe just a a timing press that's the should in lift. that aware of well. a in

Tom Shoaf

was What that? line item

Pam Schmidt

G&A.

Christopher Jeffrey

G&A.

Tom Shoaf

we Yes, an this quarter. G&A. had Yes, in increase G&A

is increases which and our that type each expenses, annual salary-related, comp-related of we year. Some things are that normal see

Another piece that would of rent. headquarters be our

You -- operating that or we we we part our proceeds when turned lease. of recall into proceeds an building, monetized that of the did the that headquarter all

of moves into of since the kind moved G&A that so And -- that refinancing, were kind category. from we

in professional And you'd well up see increase G&A. due bit fees a were So an little that as as well. to

there, it combination benefit lease, that lease we that the we less certainly actually things. to the that though the has reclassified, were Ds less substantially we're on than market D. out those So been paying was a use that rate that and Series could than proceeds of because bond actually And remember, those in get do Series a staying really the even redeem on is X we think I the what just headquarters of

that So reclassification interest it call category expense, just income change to have a kind you distributions where of have there. from we'll savings goes even up still you expense though It's statement this or thing. a it

Christopher Jeffrey

way. to question a just the Permian -- in maybe ask different then And it. Got look

of And of thinking year. for how how on the based the kind progresses you're XX for kind that that to similarly 'XX for is XX to capital this flexible the volume compared year? Just of

Daniel Oliver

guidance next XXXX, have on any that think yet we'll given the I call. probably in of for haven't but We some you

Brad Barron

up on down the What every volume. and say with Permian is and the capital we've I is as said would Yes. that, call, scale

bit can connection. we'll see see for volume, And expect a be higher if -- so you is you'll which Lower volume, there, to offset little it higher have you capital an beneficial.

Operator

comes Selman Stifel. next from Akyol Instructions] Our question with [Operator

Selman Akyol

a Just me. ones couple of quick for

guys quarter, the marketing is the just how going Just having you and guess quarter about strong fuels outlook I'm fourth wondering a for I on. talked

Daniel Oliver

our now, year. has just I So outlook last near year year think the there's right -- full below record us

current quarter. the how able to But I very volume business forecast, think some and just there's mostly given fourth will around the room also of but QX for still in butane in our pool be in strong much seeing into butane both gasoline upside marketing blending. get margins our bunker

Selman Akyol

then and you And But of Or here. -- look that. guess the written in over talked see that's business, out million over you you years, to project years Appreciate had several in a to is you require I'm prepared large about and of think about amount I it. in the going real investments. talked out about $XX capital? there significant you of you growth investments strong continue organic Got as curious, smaller talked look into I of guys the just comments, and next next chewable? notes we my a kind And the being growth should be to that that going as sort of several the ammonia

Daniel Oliver

or a Yes. got several be We've think few a former. operational and OCI over that years. lot No, leverage out got to -- I got will the work spread the spend We've with, of years. project. We've

service into frame. in go that of a announced. in we've go service 'XX, we'll Brad green then the 'XX we'll referring blue time mentioned, to, And Brad already was kind that As projects 'XX and and early into

over X years. So be out will or that X spending spread

Brad Barron

think we're have would of that add comments focused I Danny's The projects. would that multiple low this is infrastructure area, I the Danny's the -- Brad. because we to in is add The to thing on really

low so other multiple I develops. ammonia we play opportunities out and think And have small, as further good several there's opportunity projects to

Operator

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

Pam Schmidt

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

Operator

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

may now and a wonderful day. have disconnect, You

NuStar Energy (NS) 2 Nov 232023 Q3 Earnings call transcript