SAN ANTONIO--(BUSINESS WIRE)--NuStar GP Holdings, LLC (NYSE: NSH) today announced second quarter 2017 net income of $51.3 million, or $1.19 per unit. Distributable cash flow (DCF) available to unitholders for the second quarter of 2017 was $23.3 million.
With respect to the quarterly distribution to unitholders for the second quarter of 2017, NuStar GP Holdings, LLC announced that its board of directors has declared a distribution of $0.545 per unit. The second quarter 2017 distribution will be paid on August 15, 2017 to holders of record as of August 7, 2017.
“NuStar GP Holdings, LLC’s second quarter 2017 net income was positively impacted by NuStar Energy L.P.’s common equity offering in April, to finance a portion of NuStar Energy L.P.’s May 4, 2017 acquisition of Navigator Energy Services, LLC. This equity offering resulted in a non-cash gain of $41.6 million related to the increase in value of NuStar GP Holdings, LLC’s proportionate share of NuStar Energy L.P.’s capital,” said Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC.
Barron then added, “To demonstrate our strong support for NuStar Energy L.P.’s acquisition of Navigator, NuStar GP Holdings, LLC agreed to temporarily forgo the Incentive Distribution Rights, or IDRs, to which it would otherwise be entitled for any NuStar Energy L.P. common equity that will be issued from the date the acquisition agreement was signed and through the 10 quarters thereafter, which begins with the distribution for the second quarter of 2017. The waiver is capped at $22 million.”
Barron went on to say, “In the future NuStar GP Holdings, LLC should benefit from NuStar Energy L.P.’s acquisition of Navigator Energy Services, LLC. This acquisition provides NuStar Energy L.P. with a platform for future distribution growth, which in the long run should also translate into distribution growth for NuStar GP Holdings, LLC as well.”
A conference call with management is scheduled for 9:00 a.m. CT today, July 28, 2017, to discuss the financial and operational results for the second quarter of 2017. Investors interested in listening to the discussion may dial toll-free 844/889-7787, passcode 48213974. International callers may access the discussion by dialing 661/378-9931, passcode 48213974. The company intends to have a playback available following the discussion, which may be accessed by dialing toll-free 855/859-2056, passcode 48213974. International callers may access the playback by dialing 404/537-3406, passcode 48213974. The playback will be available until 12:00 p.m. CT on August 27, 2017.
Investors interested in listening to the live discussion or a replay via the internet may access the discussion directly at http://edge.media-server.com/m/p/kcc929bt or by logging on to NuStar GP Holdings, LLC’s website at www.nustargpholdings.com.
The discussion will disclose certain non-GAAP financial measures. Reconciliations of certain of these non-GAAP financial measures to U.S. GAAP may be found in this press release, with additional reconciliations located on the Financials page of the Investors section of NuStar GP Holdings, LLC’s website at www.nustargpholdings.com.
NuStar GP Holdings, LLC is a publicly traded limited liability company that owns the general partner interest, an approximate 11 percent common limited partner interest and the incentive distribution rights in NuStar Energy L.P., one of the largest independent liquids terminal and pipeline operators in the nation. NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and the United Kingdom. For more information, visit NuStar GP Holdings, LLC’s website at www.nustargpholdings.com.
This release serves as qualified notice to nominees under Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note that 100% of NuStar GP Holdings, LLC’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar GP Holdings, LLC’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals and corporations, as applicable. Nominees, and not NuStar GP Holdings, LLC, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes, and/or the related conference call will include, forward-looking statements regarding future events, such as the future performance of NuStar Energy L.P. and NuStar GP Holdings, LLC. All forward-looking statements are based on the company’s beliefs as well as assumptions made by and information currently available to the company. These statements reflect the company’s current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P.’s and NuStar GP Holdings, LLC’s 2016 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements.
| NuStar GP Holdings, LLC and Subsidiaries | ||||||||||||||||
| Consolidated Financial Information | ||||||||||||||||
| (Unaudited, Thousands of Dollars, Except Unit and Per Unit Data) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Statement of Income Data: | ||||||||||||||||
| Equity in earnings of NuStar Energy L.P. | $ | 10,963 | $ | 16,280 | $ | 29,075 | $ | 33,295 | ||||||||
| General and administrative expenses | (855 | ) | (841 | ) | (1,683 | ) | (1,673 | ) | ||||||||
| Other income, net | 41,603 | — | 41,603 | 613 | ||||||||||||
| Interest expense, net | (394 | ) | (267 | ) | (686 | ) | (513 | ) | ||||||||
| Income before income tax (expense) benefit | 51,317 | 15,172 | 68,309 | 31,722 | ||||||||||||
| Income tax (expense) benefit | (6 | ) | (99 | ) | (6 | ) | 27 | |||||||||
| Net income | $ | 51,311 | $ | 15,073 | $ | 68,303 | $ | 31,749 | ||||||||
| Net income per unit | $ | 1.19 | $ | 0.35 | $ | 1.58 | $ | 0.74 | ||||||||
| Weighted average number of common units outstanding | 42,951,749 | 42,931,059 | 42,951,749 | 42,930,804 | ||||||||||||
| Equity in Earnings of NuStar Energy L.P.: | ||||||||||||||||
| General partner interest | $ | 108 | $ | 834 | $ | 912 | $ | 1,766 | ||||||||
| General partner incentive distribution | 10,912 | 10,805 | 23,824 | 21,610 | ||||||||||||
| General partner’s interest in earnings and incentive distributions of NuStar Energy L.P. | 11,020 | 11,639 | 24,736 | 23,376 | ||||||||||||
| Limited partner interest in earnings of NuStar Energy L.P. | 664 | 5,362 | 5,781 | 11,361 | ||||||||||||
| Amortization of step-up in basis related to NuStar Energy L.P.’s assets and liabilities | (721 | ) | (721 | ) | (1,442 | ) | (1,442 | ) | ||||||||
| Equity in earnings of NuStar Energy L.P. | $ | 10,963 | $ | 16,280 | $ | 29,075 | $ | 33,295 | ||||||||
| Cash Flow Data: | ||||||||||||||||
| Net cash provided by operating activities | $ | 9,951 | $ | 12,967 | $ | 26,826 | $ | 27,350 | ||||||||
| Net cash provided by investing activities | $ | 1,874 | $ | 7,670 | $ | 7,839 | $ | 15,766 | ||||||||
| Net cash used in financing activities | $ |
(12,126 |
) |
$ | (23,438 | ) | $ | (34,585 | ) | $ | (42,835 | ) | ||||
| Distributable Cash Flow (Note 1): | ||||||||||||||||
| Cash distributions from NuStar Energy L.P. associated with: | ||||||||||||||||
| General partner interest | $ | 2,302 | $ | 1,961 | $ | 4,645 | $ | 3,922 | ||||||||
| General partner incentive distribution | 10,912 | 10,805 | 23,824 | 21,610 | ||||||||||||
| Limited partner interest – common units | 11,185 | 11,185 | 22,370 | 22,329 | ||||||||||||
| Total cash distributions expected from NuStar Energy L.P. | 24,399 | 23,951 | 50,839 | 47,861 | ||||||||||||
| Adjustments: | ||||||||||||||||
| General and administrative expenses | (855 | ) | (841 | ) | (1,683 | ) | (1,673 | ) | ||||||||
| Income tax (expense) benefit | (6 | ) | (99 | ) | (6 | ) | 27 | |||||||||
| Interest expense, net | (394 | ) | (267 | ) | (686 | ) | (513 | ) | ||||||||
| Unit-based compensation | 153 | 131 | 305 | 245 | ||||||||||||
| DCF | $ | 23,297 | $ | 22,875 | $ | 48,769 | $ | 45,947 | ||||||||
| Total distribution to unitholders | $ | 23,408 | $ | 23,398 | $ | 46,817 | $ | 46,795 | ||||||||
|
NuStar GP Holdings, LLC and Subsidiaries |
|
Consolidated Financial Information - Continued |
|
(Unaudited, Thousands of Dollars) |
|
Note 1: NuStar GP Holdings, LLC utilizes distributable cash flow (DCF) as a financial measure, although it is not defined in U.S. generally accepted accounting principles. Management believes DCF provides useful information to investors and other external users of our financial information because (i) DCF provides additional information about the cash the business is generating and (ii) investors and other external users of our financial statements benefit from having access to the same financial measure being utilized by management and our board of directors when making financial and planning decisions. Our board of directors and management use DCF when assessing our ability to fund distributions and our ability to service debt. DCF is a widely accepted financial indicator used by our industry’s investment community to compare company performance. DCF is used by our industry’s investment community, in part, because the value of our company’s units is partially based on its yield, and its yield is based on the cash distributions a company can pay its unitholders. |
| DCF is not intended to represent cash flows from operations, and is not presented as an alternative to net income. DCF should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with U.S. generally accepted accounting principles. The following is a reconciliation of net income to DCF and net cash provided by operating activities: |
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net income | $ | 51,311 | $ | 15,073 | $ | 68,303 | $ | 31,749 | ||||||||
| Less equity in earnings of NuStar Energy L.P. | (10,963 | ) | (16,280 | ) | (29,075 | ) | (33,295 | ) | ||||||||
| Plus cash distributions expected from NuStar Energy L.P. | 24,399 | 23,951 | 50,839 | 47,861 | ||||||||||||
| Gain related to NuStar Energy L.P.’s issuance of common limited partner units | (41,603 | ) | — | (41,603 | ) | |||||||||||
| Unit-based compensation items (a) | 153 | 131 | 305 | (368 | ) | |||||||||||
| DCF | 23,297 | 22,875 | 48,769 | 45,947 | ||||||||||||
| Less cash distributions expected from NuStar Energy L.P. | (24,399 | ) | (23,951 | ) | (50,839 | ) | (47,861 | ) | ||||||||
| Distributions of equity in earnings of NuStar Energy L.P. | 10,963 | 16,280 | 29,075 | 33,295 | ||||||||||||
| Changes in current assets and liabilities | (11 | ) | (2,422 | ) | (373 | ) | (4,413 | ) | ||||||||
| Changes in noncurrent assets and liabilities and other items | 101 | 185 | 194 | 382 | ||||||||||||
| Net cash provided by operating activities | $ | 9,951 | $ | 12,967 | $ | 26,826 | $ | 27,350 | ||||||||
| (a) | We intend to satisfy the vestings of equity-based awards with the issuance of our units. As such, the expenses related to these awards are considered non-cash and added back to DCF. These awards include distribution equivalent rights (DERs). Payments made in connection with DERs are deducted from DCF. Also included in this item are gains and losses resulting from the satisfaction of certain long-term incentive awards prior to the employee transfer on March 1, 2016. | |
