VALERO ENERGY PARTNERS LP SAN ANTONIO, Aug. 5, 2015 /PRNewswire/ -- Valero Energy Partners LP (NYSE: VLP, the Partnership), today reported second quarter 2015 net income attributable to partners of $33.7 million, or $0.54 per common limited partner unit. The Partnership generated earnings before interest, income taxes, depreciation, and amortization (EBITDA) of $42.7 million and distributable cash flow of $40.1 million. VLP's coverage ratio for the second quarter of 2015 was 2.17x.
"We're pleased with our growth trajectory," said Joe Gorder, Chairman and Chief Executive Officer of VLP's general partner. "We're advancing our plans for the next acquisition and remain on course to reach Valero's target for $1 billion of drop downs in 2015."
On July 24, 2015, the board of directors of VLP's general partner declared a second quarter 2015 cash distribution of $0.2925 per unit. This distribution represents a 5.4 percent increase from the first quarter of 2015 and an increase of 31.5 percent from the second quarter of 2014.
Financial Results
Second quarter 2015 revenues were $60.2 million, an increase of $28.4 million versus second quarter 2014 revenues. Primary contributors to the increase were revenues generated from the newly acquired Houston and St. Charles terminals and higher throughput volumes in the Memphis logistics system.
Operating expenses in the second quarter of 2015 were $14.4 million, general and administrative expenses were $3.2 million, and depreciation expense was $7.7 million.
Liquidity and Financial Position
As of June 30, 2015, the Partnership had $152 million of total liquidity consisting of $52 million in cash and cash equivalents and $100 million available on its revolving credit facility. Capital expenditures attributable to the Partnership in the second quarter of 2015 were $1.1 million, including $0.9 million for maintenance and $0.2 million for expansion. For 2015, capital expenditures attributable to the Partnership are expected to total $11.6 million, of which $6.1 million is for maintenance.
Conference Call
The Partnership's senior management will host a conference call at 3 p.m. ET today to discuss this earnings release. A live broadcast of the conference call will be available on the Partnership's website at www.valeroenergypartners.com.
About Valero Energy Partners LP
Valero Energy Partners LP is a fee-based master limited partnership formed by Valero Energy Corporation to own, operate, develop and acquire crude oil and refined products pipelines, terminals, and other transportation and logistics assets. With headquarters in San Antonio, the Partnership's assets include crude oil and refined petroleum products pipeline and terminal systems in the Gulf Coast and Mid-Continent regions of the United States that are integral to the operations of seven of Valero's refineries. Please visit www.valeroenergypartners.com for more information.
Contacts
Investors:
John Locke, Vice President - Investor Relations, 210-345-3077
Karen Ngo, Manager - Investor Relations, 210-345-4574
Media:
Bill Day, Vice President - Communications, 210-345-2928
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Safe-Harbor Statement
This release contains forward-looking statements within the meaning of federal securities laws. These statements discuss future expectations, contain projections of results of operations or of financial condition or state other forward-looking information. You can identify forward-looking statements by words such as "anticipate," "believe," "estimate," "expect," "forecast," "project," "could," "may," "should," "would," "will" or other similar expressions that convey the uncertainty of future events or outcomes. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Partnership's control and are difficult to predict. These statements are often based upon various assumptions, many of which are based, in turn, upon further assumptions, including examination of historical operating trends made by the management of the Partnership. Although the Partnership believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies, which are difficult or impossible to predict and are beyond its control, the Partnership cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements contained in the Partnership's filings with the U.S. Securities and Exchange Commission, including the Partnership's annual reports on Form 10-K and quarterly reports on Form 10-Q, available on the Partnership's website at www.valeroenergypartners.com. These risks could cause the Partnership's actual results to differ materially from those contained in any forward-looking statement.
Use of Non-GAAP Financial Information
This earnings release includes the terms "EBITDA," "distributable cash flow," and "coverage ratio." These terms are supplemental financial measures that are not defined under U.S. generally accepted accounting principles (GAAP). We reconcile these non-GAAP measures to the most directly comparable GAAP measures in the tables that accompany this release. In note (k) to the tables that accompany this release, we disclose the reasons why we believe our use of the non-GAAP financial measures in this release provides useful information.
VALERO ENERGY PARTNERS LP
EARNINGS RELEASE
(In Thousands, Except per Unit Amounts, per Barrel Amounts, and Ratios)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2015 2014 2015 2014
---- ---- ---- ----
Statement of income data (a):
Operating revenues - related
party (b) $60,245 $31,843 $102,131 $61,332
------- ------- -------- -------
Costs and expenses:
Operating expenses (c) 14,374 16,315 32,238 32,552
General and administrative
expenses (d) 3,160 3,361 6,725 6,458
Depreciation expense (e) 7,715 6,132 15,203 12,048
----- ----- ------ ------
Total costs and expenses 25,249 25,808 54,166 51,058
------ ------ ------ ------
Operating income 34,996 6,035 47,965 10,274
Other income, net (f) 26 493 137 1,159
Interest and debt expense, net of
capitalized interest (g) (1,411) (221) (2,012) (449)
------ ---- ------ ----
Income before income taxes 33,611 6,307 46,090 10,984
Income tax expense (benefit) (h) (51) 150 (177) 307
--- --- ---- ---
Net income 33,662 6,157 46,267 10,677
Less: Net loss attributable to
Predecessor - (6,043) (9,516) (12,005)
--- ------ ------ -------
Net income attributable to
partners 33,662 12,200 55,783 22,682
Less: General partner's interest
in net income 1,357 244 2,209 454
----- --- ----- ---
Limited partners' interest in net
income $32,305 $11,956 $53,574 $22,228
======= ======= ======= =======
Net income per limited partner
unit (basic and diluted):
Common units $0.54 $0.21 $0.91 $0.39
Subordinated units $0.54 $0.21 $0.90 $0.39
Weighted-average limited partner
units outstanding (basic and
diluted):
Common units - public 17,250 17,250 17,250 17,250
Common units - Valero 13,448 11,540 12,816 11,540
Subordinated units - Valero 28,790 28,790 28,790 28,790
See Notes to Earnings Release on Table Page 7.
VALERO ENERGY PARTNERS LP
EARNINGS RELEASE
(In Thousands, Except per Unit Amounts, per Barrel Amounts, and Ratios)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Operating highlights (a):
Pipeline transportation:
Pipeline transportation revenues
(b) $19,967 $16,006 $39,842 $31,240
======= ======= ======= =======
Pipeline transportation
throughput (BPD) (i) 953,123 870,341 966,399 840,512
Average pipeline transportation
revenue per barrel (j) $0.23 $0.20 $0.23 $0.21
Terminaling:
Terminaling revenues (b) $40,143 $15,549 $62,019 $29,516
======= ======= ======= =======
Terminaling throughput (BPD) 1,379,757 632,614 1,095,173 600,911
Average terminaling revenue per
barrel (j) $0.32 $0.27 $0.31 $0.27
Storage revenues $135 $288 $270 $576
==== ==== ==== ====
Total operating revenues -
related party $60,245 $31,843 $102,131 $61,332
======= ======= ======== =======
Capital expenditures (a):
Maintenance $863 $4,570 $4,223 $8,348
Expansion 211 15,155 1,829 33,853
--- ------ ----- ------
Total capital expenditures 1,074 19,725 6,052 42,201
Less: Capital expenditures
attributable to Predecessor - 17,365 3,693 38,977
Capital expenditures
attributable to Partnership $1,074 $2,360 $2,359 $3,224
====== ====== ====== ======
Other financial information:
Distribution declared per unit $0.2925 $0.2225 $0.5700 $0.4350
EBITDA attributable to
Partnership (k) $42,737 $15,565 $70,547 $29,423
Distributable cash flow (k) $40,051 $15,650 $67,503 $29,215
Distribution declared:
Limited partner units - public $5,048 $3,839 $9,838 $7,506
Limited partner units - Valero 12,355 8,974 24,076 17,544
General partner units - Valero 1,053 261 1,808 511
Total distribution declared $18,456 $13,074 $35,722 $25,561
======= ======= ======= =======
Coverage ratio (k) 2.17x 1.20x 1.89x 1.14x
June 30, December 31,
2015 2014
---- ----
Balance sheet data (a):
Cash and cash equivalents $52,042 $236,579
Total assets 709,955 891,764
Current portion of debt and
capital lease obligations 26,284 1,200
Debt and capital lease
obligations, less current
portion 335,675 1,519
Total debt and capital lease
obligations 361,959 2,719
Partners' capital 340,227 880,910
Working capital 35,108 238,365
See Notes to Earnings Release on Table Page 7.
VALERO ENERGY PARTNERS LP
EARNINGS RELEASE
(In Thousands, Except per Unit Amounts, per Barrel Amounts, and Ratios)
(Unaudited)
Three Months Ended June 30, Six Months Ended
June 30,
--------
2015 2014 2015 2014
---- ---- ---- ----
Reconciliation of net income to EBITDA
and distributable cash flow (a)(k):
Net income $33,662 $6,157 $46,267 $10,677
Plus:
Depreciation expense 7,715 6,132 15,203 12,048
Interest and debt expense, net of
capitalized interest 1,411 221 2,012 449
Income tax expense (benefit) (51) 150 (177) 307
--- ----
EBITDA 42,737 12,660 63,305 23,481
Less: EBITDA attributable to
Predecessor - (2,905) (7,242) (5,942)
--- ------ ------ ------
EBITDA attributable to Partnership 42,737 15,565 70,547 29,423
Plus:
Adjustments related to minimum
throughput commitments 24 475 4 507
Projects prefunded by Valero - 853 589 1,628
Other - - 384 -
Less:
Cash interest paid 1,406 229 1,578 465
Income taxes paid 441 9 441 9
Maintenance capital expenditures 863 1,005 2,002 1,869
Distributable cash flow $40,051 $15,650 $67,503 $29,215
======= ======= ======= =======
Reconciliation of net cash provided by
operating activities to EBITDA and
distributable cash flow (a)(k):
Net cash provided by operating
activities $42,954 $10,121 $55,461 $23,299
Plus:
Changes in current assets and current
liabilities (1,682) 2,191 6,073 (580)
Changes in deferred charges and
credits and other operating
activities, net (41) (19) (459) 54
Interest and debt expense, net of
capitalized interest 1,411 221 2,012 449
Current income tax expense 95 146 218 259
EBITDA 42,737 12,660 63,305 23,481
Less: EBITDA attributable to
Predecessor - (2,905) (7,242) (5,942)
--- ------ ------ ------
EBITDA attributable to Partnership 42,737 15,565 70,547 29,423
Plus:
Adjustments related to minimum
throughput commitments 24 475 4 507
Projects prefunded by Valero - 853 589 1,628
Other - - 384 -
Less:
Cash interest paid 1,406 229 1,578 465
Income taxes paid 441 9 441 9
Maintenance capital expenditures 863 1,005 2,002 1,869
Distributable cash flow $40,051 $15,650 $67,503 $29,215
======= ======= ======= =======
See Notes to Earnings Release on Table Page 7.
VALERO ENERGY PARTNERS LP
EARNINGS RELEASE
(In Thousands, Except per Unit Amounts, per Barrel Amounts, and Ratios)
(Unaudited)
Three Months Ended June 30, Six Months Ended
June 30,
--------
2015 2014 2015 2014
---- ---- ---- ----
Comparison of ratio of net
income attributable to
partners divided by total
distribution declared to
coverage ratio (k):
Net income attributable to
partners $33,662 $12,200 $55,783 $22,682
Total distribution declared $18,456 $13,074 $35,722 $25,561
Ratio of net income
attributable to partners
divided by total
distribution declared 1.82x 0.93x 1.56x 0.89x
Coverage ratio:
Distributable cash flow
divided by total
distribution declared 2.17x 1.20x 1.89x 1.14x
The following tables present our consolidated statements of income for the six months ended June 30, 2015 and the three and six months ended June 30, 2014, giving effect to the acquisition of the Houston and St. Charles Terminal Services Business for periods prior to March 1, 2015 and the acquisition of the Texas Crude Systems Business for periods prior to July 1, 2014. See Note (a) of Notes to Earnings Release for a discussion of the basis of this presentation.
Six Months Ended June 30, 2015
------------------------------
Valero Energy Houston and
St. Valero Energy
Partners LP Charles
Terminal Partners LP
Services (Currently
Business Reported)
(January 1,
2015 to
February 28,
2015)
------------
Operating revenues - related
party (b) $102,131 $ - $102,131
-------- --- --- --------
Costs and expenses:
Operating expenses 25,043 7,195 32,238
General and administrative
expenses 6,678 47 6,725
Depreciation expense 12,929 2,274 15,203
------ -----
Total costs and expenses 44,650 9,516 54,166
------ ----- ------
Operating income (loss) 57,481 (9,516) 47,965
Other income, net 137 - 137
Interest and debt expense, net of
capitalized interest (2,012) - (2,012)
------ --- ------
Income (loss) before income taxes 55,606 (9,516) 46,090
Income tax benefit (177) - (177)
---- --- ----
Net income (loss) 55,783 (9,516) 46,267
Less: Net loss attributable to
Predecessor - (9,516) (9,516)
--- ------ ------
Net income attributable to
partners $55,783 $ - $55,783
======= === === =======
See Notes to Earnings Release on Table Page 7.
VALERO ENERGY PARTNERS LP
EARNINGS RELEASE
(In Thousands, Except per Unit Amounts, per Barrel Amounts, and Ratios)
(Unaudited)
Three Months Ended June 30, 2014
--------------------------------
Valero Energy Texas Crude Houston and
St. Valero Energy
Partners LP Systems Business Charles
Terminal Partners LP
(Previously (April 1, 2014 Services
Business (Currently
Reported) to June 30, (April 1,
2014) 2014 Reported)
to June 30,
2014)
------------
Operating revenues - related
party (b) $23,660 $8,183 $ - $31,843
------- ------ --- --- -------
Costs and expenses:
Operating expenses 5,738 2,108 8,469 16,315
General and administrative
expenses 2,848 447 66 3,361
Depreciation expense 3,024 844 2,264 6,132
-----
Total costs and expenses 11,610 3,399 10,799 25,808
------ ----- ------ ------
Operating income (loss) 12,050 4,784 (10,799) 6,035
Other income, net 491 2 - 493
Interest and debt expense, net of
capitalized interest (221) - - (221)
---- --- --- ----
Income (loss) before income taxes 12,320 4,786 (10,799) 6,307
Income tax expense 120 30 - 150
Net income (loss) 12,200 4,756 (10,799) 6,157
Less: Net income (loss)
attributable to Predecessor - 4,756 (10,799) (6,043)
--- ----- ------- ------
Net income attributable to
partners $12,200 $ - $ - $12,200
======= === === === === =======
Six Months Ended June 30, 2014
------------------------------
Valero Energy Texas Crude Houston and
St. Valero Energy
Partners LP Systems Business Charles
Terminal Partners LP
(Previously (January 1, 2014 Services
Business (Currently
Reported) to June 30, (January 1,
2014) 2014 Reported)
to June 30,
2014)
------------
Operating revenues - related
party (b) $45,191 $16,141 $ - $61,332
------- ------- --- --- -------
Costs and expenses:
Operating expenses 11,464 4,010 17,078 32,552
General and administrative
expenses 5,443 884 131 6,458
Depreciation expense 6,082 1,687 4,279 12,048
-----
Total costs and expenses 22,989 6,581 21,488 51,058
------ ----- ------ ------
Operating income (loss) 22,202 9,560 (21,488) 10,274
Other income, net 1,139 20 - 1,159
Interest and debt expense, net of
capitalized interest (449) - - (449)
---- --- --- ----
Income (loss) before income taxes 22,892 9,580 (21,488) 10,984
Income tax expense 210 97 - 307
Net income (loss) 22,682 9,483 (21,488) 10,677
Less: Net income (loss)
attributable to Predecessor - 9,483 (21,488) (12,005)
--- ----- ------- -------
Net income attributable to
partners $22,682 $ - $ - $22,682
======= === === === === =======
See Notes to Earnings Release on Table Page 7.
VALERO ENERGY PARTNERS LP
EARNINGS RELEASE
(In Thousands, Except per Unit Amounts, per Barrel Amounts, and Ratios)
(Unaudited)
The following table presents our balance sheet data as of December 31, 2014, giving effect to the acquisition of the Houston and St. Charles Terminal Services Business. See Note (a) of Notes to Earnings Release for a discussion of the basis of this presentation.
December 31, 2014
-----------------
Valero Energy Houston and
St. Valero Energy
Partners LP Charles
Terminal Partners LP
(Previously Services
Business (Currently
Reported) Reported)
-------- --------
Cash and cash
equivalents $236,579 $ - $236,579
Total assets 596,073 295,691 891,764
Current portion of
debt and capital
lease obligations 1,200 - 1,200
Debt and capital lease
obligations, less
current portion 1,519 - 1,519
Total debt and capital
lease obligations 2,719 - 2,719
Partners' capital 585,219 295,691 880,910
Working capital 238,365 - 238,365
See Notes to Earnings Release on Table Page 7.
VALERO ENERGY PARTNERS LP
NOTES TO EARNINGS RELEASE
(a) References to the
"Partnership,"
"we," "us," or
"our" refer to
Valero Energy
Partners LP, one
or more of its
subsidiaries, or
all of them
taken as a whole
for periods
after December
16, 2013, the
date the
Partnership
completed its
initial public
offering (IPO).
For periods
prior to the IPO
and periods
prior to the
Acquisitions
(defined below),
those terms
refer to Valero
Energy Partners
LP Predecessor,
our Predecessor
for accounting
purposes.
References in
these notes to
"Valero" may
refer to Valero
Energy
Corporation, one
or more of its
subsidiaries, or
all of them
taken as a
whole, other
than Valero
Energy Partners
LP, any of its
subsidiaries, or
its general
partner.
Effective March
1, 2015, we
acquired the
Houston and St.
Charles Terminal
Services
Business from
Valero (the
Houston and St.
Charles Terminal
Acquisition) for
total
consideration of
$671.2 million
consisting of
(i) cash of
$571.2 million
and (ii) the
issuance of
1,908,100 common
units
representing
limited partner
interests in us
and 38,941
general partner
units
representing
general partner
interests in us
having an
aggregate value,
collectively, of
$100.0 million.
We funded the
cash
distribution to
Valero with
$211.2 million
of our cash on
hand, $200.0
million of
borrowings under
our revolving
credit facility,
and $160.0
million of
proceeds from a
subordinated
credit agreement
with Valero. We
began receiving
fees for
services
provided by this
business
commencing on
March 1, 2015.
Effective July 1,
2014, we
acquired the
Texas Crude
Systems Business
from Valero (the
Texas Crude
Systems
Acquisition) for
total cash
consideration of
$154.0 million,
and we began
receiving fees
for services
provided by this
business
commencing on
July 1, 2014.
The Texas Crude
Systems
Acquisition and
the Houston and
St. Charles
Terminal
Acquisition
(collectively,
the
Acquisitions)
were each
accounted for as
transfers of a
business between
entities under
the common
control of
Valero. As
entities under
the common
control of
Valero, we
recorded the
Acquisitions on
our balance
sheet at
Valero's
carrying value
rather than fair
value. Transfers
between entities
under common
control are
accounted for as
though the
transfer
occurred as of
the beginning of
the period of
transfer, and
prior period
financial
statements and
financial
information are
retrospectively
adjusted to
furnish
comparative
information.
Accordingly, the
statement of
income data and
operating
highlights and
capital
expenditures
data have been
retrospectively
adjusted to
include the
historical
results of
operations of
the Texas Crude
Systems Business
for periods
presented prior
to July 1, 2014
and the
historical
results of
operations of
the Houston and
St. Charles
Terminal
Services
Business for
periods
presented prior
to March 1,
2015. In
addition, the
balance sheet
data as of
December 31,
2014 has been
retrospectively
adjusted to
include the
assets and
liabilities of
the Houston and
St. Charles
Terminal
Services
Business.
(b) Operating
revenues include
amounts
attributable to
our Predecessor.
Prior to being
acquired by us,
the Texas Crude
Systems Business
generated
revenues by
providing fee-
based
transportation
and terminaling
services to
Valero, but the
Houston and St.
Charles Terminal
Services
Business did not
charge Valero
for services
provided and did
not generate
revenues.
Effective with
the date of each
of the
Acquisitions, we
entered into
additional
schedules to our
commercial
agreements with
Valero with
respect to the
services we
provide to
Valero using the
assets of the
acquired
businesses. This
resulted in (i)
changes to
pipeline and
terminaling
throughput fees
previously
charged to
Valero by the
Texas Crude
Systems Business
and (ii) the
recognition of
terminaling
revenues by the
Houston and St.
Charles Terminal
Services
Business.
(c) The decrease in
operating
expenses for the
three months
ended June 30,
2015 compared to
the three months
ended June 30,
2014 was due
primarily to
lower
maintenance
expense of $2.3
million at the
St. Charles and
Houston
terminals and
the Memphis
logistics
system. The
decrease in
maintenance
expense was
partially offset
by an increase
in insurance
expense of
$765,000 as a
result of the
assets of the
Acquisitions
being covered
under our own
insurance
policies. Prior
to the
Acquisitions,
our Predecessor
was allocated a
portion of
Valero's
insurance costs.
(d) The decrease in
general and
administrative
expenses for the
three months
ended June 30,
2015 compared to
the three months
ended June 30,
2014 was due
primarily to
transaction
costs of
$308,000
incurred during
the three months
ended June 30,
2014 related to
the July 1, 2014
acquisition of
the Texas Crude
Systems
Business.
The increase in
general and
administrative
expenses for the
six months ended
June 30, 2015
compared to the
six months ended
June 30, 2014
was due
primarily to
higher
transaction
costs of
$238,000 during
the six months
ended June 30,
2015. In 2015,
we incurred
transaction
costs of
$546,000 in
connection with
the March 1,
2015 acquisition
of the Houston
and St. Charles
Terminal
Services
Business. In
2014, we
incurred
$308,000 in
connection with
the July 1, 2014
acquisition of
the Texas Crude
Systems
Business.
(e) The increase in
depreciation
expense for the
three and six
months ended
June 30, 2015
compared to the
three and six
months ended
June 30, 2014
was due
primarily to the
effect of assets
placed in
service during
2014, including
the expansion of
the St. Charles
terminal, the
enhancement of
pipeline and
terminal
monitoring
systems at the
Memphis products
system, and the
interconnection
with
TransCanada's
Cushing
Marketlink
pipeline at the
Lucas crude
system.
(f) The decrease in
"other income,
net" for the
three and six
months ended
June 30, 2015
compared to the
three and six
months ended
June 30, 2014
was due
primarily to a
decrease in
interest income
(net of bank
fees) of
$229,000 and
$418,000,
respectively,
attributable to
a reduced cash
balance during
the three and
six months ended
June 30, 2015.
In addition,
right-of-way
fees decreased
$143,000 and
$141,000,
respectively,
and scrap metal
sales decreased
$42,000 and
$410,000,
respectively.
(g) The increase in
"interest and
debt expense,
net of
capitalized
interest" for
the three and
six months ended
June 30, 2015
compared to the
three and six
months ended
June 30, 2014
was due
primarily to
interest expense
incurred on
borrowings of
$200.0 million
under our
revolving credit
facility and
$160.0 million
under a
subordinated
credit agreement
with Valero in
connection with
the acquisition
of the Houston
and St. Charles
Terminal
Services
Business.
Interest expense
on this
indebtedness was
$1.3 million and
$1.7 million for
the three and
six months ended
June 30, 2015,
respectively.
(h) Our income tax
expense
(benefit) is
associated with
the Texas margin
tax. In June
2015, the Texas
margin tax rate
was reduced from
1 percent to
0.75 percent.
The impact of
this rate
reduction
resulted in a
tax benefit for
the three and
six months ended
June 30, 2015.
In addition,
during the six
months ended
June 30, 2015,
we reduced our
deferred income
tax liabilities
due to a
reduction in the
relative amount
of revenue we
generate in
Texas compared
to our total
revenue. This
reduction was a
result of the
acquisition of
the Houston and
St. Charles
Terminal
Services
Business (which
includes
operations in
Louisiana).
(i) Represents the
sum of volumes
transported
through each
separately
tariffed
pipeline
segment.
(j) Management uses
average revenue
per barrel to
evaluate
performance and
compare
profitability to
other companies
in the industry.
There are a
variety of ways
to calculate
average revenue
per barrel;
different
companies may
calculate it in
different ways.
We calculate
average revenue
per barrel as
revenue divided
by throughput
for the period.
Throughput can
be derived by
multiplying the
throughput
barrels per day
(BPD) by the
number of days
in the period.
Investors and
analysts use
this financial
measure to help
analyze and
compare
companies in the
industry on the
basis of
operating
performance.
This financial
measure should
not be
considered as an
alternative to
revenues
presented in
accordance with
U.S. generally
accepted
accounting
principles
(GAAP).
(k) We define EBITDA
as net income
before income
tax expense,
interest
expense, and
depreciation
expense. We
define
distributable
cash flow as
EBITDA less cash
payments during
the period for
interest, income
taxes, and
maintenance
capital
expenditures,
plus adjustments
related to
minimum
throughput
commitments,
capital projects
prefunded by
Valero, and
certain other
items. We define
coverage ratio
as the ratio of
distributable
cash flow to the
total
distribution
declared.
EBITDA,
distributable
cash flow, and
coverage ratio
are supplemental
financial
measures that
are not defined
under GAAP. They
may be used by
management and
external users
of our financial
statements, such
as industry
analysts,
investors,
lenders, and
rating agencies,
to:
-- describe our expectation of
forecasted earnings;
-- assess our operating performance
as compared to other publicly
traded limited partnerships in
the transportation and logistics
industry, without regard to
historical cost basis or, in the
case of EBITDA, financing
methods;
-- assess the ability of our business
to generate sufficient cash to
support our decision to make
distributions to our unitholders;
-- assess our ability to incur and
service debt and fund capital
expenditures; and
-- assess the viability of
acquisitions and other capital
expenditure projects and the
returns on investment of various
investment opportunities.
We believe that
the presentation
of EBITDA
provides useful
information to
investors in
assessing our
financial
condition and
results of
operations. The
GAAP measures
most directly
comparable to
EBITDA are net
income and net
cash provided by
operating
activities.
EBITDA should
not be
considered an
alternative to
net income or
net cash
provided by
operating
activities
presented in
accordance with
GAAP. EBITDA has
important
limitations as
an analytical
tool because it
excludes some,
but not all,
items that
affect net
income or net
cash provided by
operating
activities.
EBITDA should
not be
considered in
isolation or as
a substitute for
analysis of our
results as
reported under
GAAP.
Additionally,
because EBITDA
may be defined
differently by
other companies
in our industry,
our definition
of EBITDA may
not be
comparable to
similarly titled
measures of
other companies,
thereby
diminishing its
utility.
We use
distributable
cash flow to
measure whether
we have
generated from
our operations,
or "earned," an
amount of cash
sufficient to
support the
payment of the
minimum
quarterly
distributions.
Our partnership
agreement
contains the
concept of
"operating
surplus" to
determine
whether our
operations are
generating
sufficient cash
to support the
distributions
that we are
paying, as
opposed to
returning
capital to our
partners.
Because
operating
surplus is a
cumulative
concept
(measured from
the IPO date and
compared to
cumulative
distributions
from the IPO
date), we use
the term
distributable
cash flow to
approximate
operating
surplus on a
quarterly or
annual, rather
than a
cumulative,
basis. As a
result,
distributable
cash flow is not
necessarily
indicative of
the actual cash
we have on hand
to distribute or
that we are
required to
distribute.
We use the
coverage ratio
to reflect the
relationship
between our
distributable
cash flow and
the total
distribution
declared. We
have also
provided the
ratio of net
income
attributable to
partners, the
most directly
comparable GAAP
measure to
distributable
cash flow, to
the total
distribution
declared.
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SOURCE Valero Energy Partners LP
