Form 8-K Western Refining Logisti For: May 03

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May 3, 2016 6:11 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 2016
 
WESTERN REFINING LOGISTICS, LP
(Exact name of Registrant as specified in its charter)
 
 
 
 
 
 
 
Delaware
 
001-36114
 
46-3205923
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification Number)
123 West Mills Ave., Suite 200
El Paso, Texas 79901
(Address of principal executive offices)
(915) 534-1400
(Registrant’s telephone number, including area code)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02
Results of Operations and Financial Condition.
On May 3, 2016, Western Refining Logistics, LP (“WNRL”) issued a press release announcing its results of operations for the first quarter ended March 31, 2016. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information contained in this Current Report on Form 8-K (including the exhibit) is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information contained in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01
Financial Statements and Exhibits.

(d)
Exhibits
Exhibit No.
 
Description
99.1
 
Press Release, dated May 3, 2016.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
   
 
WESTERN REFINING LOGISTICS, LP
By: Western Refining Logistics GP, LLC, its general partner
 
 
 
 
By:
/s/ Gary R. Dalke
Name:
Gary R. Dalke
Title:
Executive Vice President and Interim Chief Financial Officer
Dated: May 3, 2016





EXHIBIT INDEX
 
Exhibit No.
  
Description
99.1
  
Press Release, dated May 3, 2016.





FOR IMMEDIATE RELEASE
Exhibit 99.1
 
 
Investor and Analyst Contact:
Media Contact:
Michelle Clemente
Gary W. Hanson
(602) 286-1533
(602) 286-1777
 
 
Jeffrey S. Beyersdorfer
 
(602) 286-1530
 
        
WESTERN REFINING LOGISTICS, LP
REPORTS FIRST QUARTER 2016 RESULTS

EL PASO, Texas - May 3, 2016 - Western Refining Logistics, LP (NYSE: WNRL) today reported first quarter 2016 net income attributable to limited partners of $14.0 million, or $0.28 per common limited partner unit, which compares to $15.3 million and $0.33, respectively, in the first quarter of 2015. First quarter 2016 EBITDA was $28.5 million and distributable cash flow was $22.5 million; this compares to $24.2 million and $21.8 million, respectively, for the first quarter of 2015.
"We are pleased with the overall performance of WNRL and the strong distributable cash generated in the first quarter. Our Wholesale business continues to grow and perform well financially. In Logistics, first quarter crude oil volumes were impacted by the weather, planned maintenance at the Gallup refinery, storage and pipeline congestion, and an extended outage in local gas processing capacity," said WNRL Chief Executive Officer and President Jeff Stevens. “However, crude oil volumes in our Delaware Basin system grew throughout the quarter and we expect this growth to continue.”
On April 25, 2016, the board of directors declared a quarterly cash distribution for the first quarter of 2016 of $0.4025 per unit, or $1.61 per unit on an annualized basis. This distribution represents a 15.8% increase over the first quarter 2015 distribution of $0.3475 per unit and is the ninth consecutive increase in the quarterly distribution for WNRL unitholders.
Stevens concluded, “For our logistics business, we are encouraged by the activity we are seeing with crude oil producers in our area, especially the Delaware Basin. We continue to invest in the business, adding to our crude oil gathering system and storage capacity which positions us well to take advantage of increasing production.”
Conference Call Information
On Tuesday, May 3, 2016, at 4:00 p.m. ET, WNRL will hold a webcast and conference call to discuss the reported results and provide an update on partnership operations. The webcast can be accessed at Western Refining Logistics, LP's website, www.wnrl.com. The call can also be heard by dialing (844) 831-3028 or (315) 625-6887, pass code: 76840837. The audio replay will be available two hours after the end of the call through May 17, 2016 by dialing (855) 859-2056 or (404) 537-3406, pass code: 76840837.
About Western Refining Logistics, LP
Western Refining Logistics, LP is principally a fee-based, growth-oriented master limited partnership formed by Western Refining, Inc. (NYSE: WNR) to own, operate, develop and acquire terminals, storage tanks, pipelines and other logistics assets related to the terminalling, transportation and storage of crude oil and refined products. Headquartered in El Paso, Texas, Western Refining Logistics, LP's assets include approximately 685 miles of pipelines, approximately 8.2 million barrels of active storage capacity, distribution of wholesale petroleum products and crude oil trucking.




More information about Western Refining Logistics, LP is available at www.wnrl.com.
Non-GAAP Financial Measures
In addition to our financial information presented in accordance with U.S. generally accepted accounting principles (GAAP), management utilizes non-GAAP measures to facilitate comparisons of past performance. This press release and supporting schedules include the non-GAAP measures Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Distributable Cash Flow. We believe certain investors and financial analysts use EBITDA and Distributable Cash Flow to evaluate WNRL’s financial performance between periods and to compare WNRL's performance to certain competitors. We believe certain investors and financial analysts use Distributable Cash Flow to determine the amount of cash generated from the partnership's operations and available for distribution to its unitholders. These additional financial measures are reconciled from the most directly comparable measures as reported in accordance with GAAP and should be viewed in addition to, and not in lieu of, financial information that we report in accordance with GAAP.
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements. The forward-looking statements reflect WNRL’s current expectation regarding future events, results or outcomes. The forward-looking statements contained herein include statements related to, among other things: growth and performance of WNRL’s wholesale business; crude oil volumes in the Delaware Basin system; crude oil producer activity; WNRL’s investment in its business, including additions to the crude oil gathering system and storage capacity; and WNRL’s positioning. These statements are subject to the general risks inherent in WNRL’s business. These expectations may or may not be realized and some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, WNRL’s business and operations involve numerous risks and uncertainties, many of which are beyond its control, which could result in WNRL’s expectations not being realized, or otherwise materially affect WNRL’s financial condition, results of operations, and cash flows. Additional information relating to the uncertainties affecting WNRL’s business is contained in its filings with the Securities and Exchange Commission to which you are referred. The forward-looking statements are only as of the date made. Except as required by law, WNRL does not undertake any obligation to (and expressly disclaims any obligation to) update any forward-looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence of unanticipated events.








Results of Operations
The following tables set forth WNRL's summary historical financial and operating data for the periods indicated below:
 
Three Months Ended
 
March 31,
 
2016
 
2015
 
(Unaudited)
 
(In thousands, except per unit data)
Revenues:
 
 
 
Fee based:
 
 
 
Affiliate
$
51,928

 
$
45,478

Third-party
690

 
623

Sales based:
 
 
 
Affiliate
97,529

 
132,771

Third-party
317,892

 
428,524

Total revenues
468,039

 
607,396

Operating costs and expenses:
 
 
 
Cost of products sold:
 
 
 
Affiliate
95,149

 
130,508

Third-party
300,441

 
411,193

Operating and maintenance expenses
38,901

 
36,371

Selling, general and administrative expenses
5,065

 
5,955

Gain on disposal of assets, net
(99
)
 
(84
)
Depreciation and amortization
7,144

 
5,892

Total operating costs and expenses
446,601

 
589,835

Operating income
21,438

 
17,561

Other income (expense):
 

 
 

Interest and debt expense
(7,052
)
 
(3,964
)
Other, net
(118
)
 
17

Net income before income taxes
14,268

 
13,614

Provision for income taxes
(261
)
 
(203
)
Net income
14,007

 
13,411

Less net loss attributable to General Partner
—

 
(1,912
)
Net income attributable to limited partners
$
14,007

 
$
15,323

 
 
 
 
Net income per limited partner unit:
 
 
 
Common - basic
$
0.28

 
$
0.33

Common - diluted
0.28

 
0.33

Subordinated - basic and diluted
0.28

 
0.33

 
 
 
 
Weighted average limited partner units outstanding:
 
 
 
Common - basic
24,448

 
23,985

Common - diluted
24,454

 
23,996

Subordinated - basic and diluted
22,811

 
22,811






 
Three Months Ended
 
March 31,
 
2016
 
2015
 
(Unaudited)
 
(In thousands)
Cash Flow Data
 
 
 
Net cash provided by (used in):
 
 
 
Operating activities
$
24,790

 
$
32,732

Investing activities
(6,122
)
 
(26,527
)
Financing activities
(34,620
)
 
27,669

Capital expenditures
6,241

 
26,644

Other Data
 
 
 
EBITDA (1)
$
28,464

 
$
24,228

Distributable cash flow (1)
22,528

 
21,769

Balance Sheet Data (at end of period)
 
 
 
Cash and cash equivalents
$
28,653

 
$
88,172

Property, plant and equipment, net
324,342

 
306,104

Total assets
487,326

 
550,643

Total liabilities
561,011

 
454,887

Division equity
—

 
123,194

Partners' capital
(73,685
)
 
(27,438
)
Total liabilities, division equity and partners' capital
487,326

 
550,643

(1)
We define EBITDA as earnings before interest and debt expense, provision for income taxes and depreciation and amortization. We define Distributable Cash Flow as EBITDA plus the change in deferred revenues, less debt interest accruals, income taxes paid, maintenance capital expenditures and distributions declared on our TexNew Mex units.
EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
•
EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
•
EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;
•
EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and
•
EBITDA, as we calculate it, may differ from the EBITDA calculations of our affiliates or other companies in our industry, thereby limiting its usefulness as a comparative measure.
EBITDA and Distributable Cash Flow are used as supplemental financial measures by management and by external users of our financial statements, such as investors and commercial banks, to assess:
•
our operating performance as compared to those of other companies in the midstream energy industry, without regard to financial methods, historical cost basis or capital structure;
•
the ability of our assets to generate sufficient cash to make distributions to our unitholders;
•
our ability to incur and service debt and fund capital expenditures; and
•
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
Distributable Cash Flow is also a quantitative standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is, in part, measured by its yield. Yield is based on the amount of cash distributions a partnership can pay to a unitholder.




We believe that the presentation of these non-GAAP measures provides useful information to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to EBITDA and Distributable Cash Flow is net income attributable to limited partners. These non-GAAP measures should not be considered as alternatives to net income or any other measure of financial performance presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income attributable to limited partners. These non-GAAP measures may vary from those of other companies. As a result, EBITDA and Distributable Cash Flow as presented herein may not be comparable to similarly titled measures of other companies.
The calculation of EBITDA and Distributable Cash Flow includes the results of operations for the TexNew Mex Pipeline System for the three months ended March 31, 2016.
The following table reconciles net income attributable to limited partners to EBITDA for the periods presented and Distributable Cash Flow for the three months ended March 31, 2016 and 2015, respectively.
 
Three Months Ended
 
March 31,
 
2016
 
2015
 
(Unaudited)
 
(In thousands)
Net income attributable to limited partners
$
14,007

 
$
15,323

Interest and debt expense
7,052

 
3,964

Provision for income taxes
261

 
203

Depreciation and amortization
7,144

 
4,738

EBITDA
28,464

 
24,228

 
 
 
 
Change in deferred revenues
2,232

 
1,232

Debt interest accruals
(6,709
)
 
(725
)
Income taxes paid
(30
)
 
(1
)
Maintenance capital expenditures
(1,429
)
 
(2,965
)
Distributions on TexNew Mex Units
—

 
—

Distributable cash flow
$
22,528

 
$
21,769





Logistics Segment
 
Three Months Ended
 
March 31,
 
2016
 
2015
 
(Unaudited)
 
(In thousands, except key operating statistics)
Statement of Operations Data:
 
 
 
Fee based revenues:
 
 
 
Affiliate
$
40,916

 
$
34,775

Third-party
690

 
623

Total revenues
41,606

 
35,398

Operating costs and expenses:
 

 
 

Operating and maintenance expenses
21,000

 
18,252

General and administrative expenses
715

 
979

Depreciation and amortization
5,961

 
4,815

Total operating costs and expenses
27,676

 
24,046

Operating income
$
13,930

 
$
11,352

Key Operating Statistics:
 
 
 
Pipeline and gathering (bpd):
 
 
 
Mainline movements (1):
 
 
 
Permian/Delaware Basin system
49,486

 
36,512

Four Corners system
52,467

 
45,841

Tex New Mex system
12,544

 
—

Gathering (truck offloading):
 
 
 
Permian/Delaware Basin system
20,533

 
22,605

Four Corners system
12,761

 
10,662

Pipeline Gathering and Injection system:
 
 
 
Permian/Delaware Basin system
7,885

 
1,615

Four Corners system
24,437

 
20,565

Tank storage capacity (bbls) (2)
828,202

 
620,506

Terminalling, transportation and storage:
 
 
 
Shipments into and out of storage (bpd) (includes asphalt)
388,258

 
391,318

Terminal storage capacity (bbls) (2)
7,385,543

 
7,490,569

(1)
Some barrels of crude oil in route to Western's Gallup refinery and Permian/Delaware Basin are transported on more than one of our mainlines. Mainline movements for the Four Corners and Delaware Basin systems include each barrel transported on each mainline. During the second quarter of 2015, we began shipping crude oil from the Four Corners system, through the TexNew Mex Pipeline System, to the Permian/Delaware system.
(2)
Storage shell capacities represent weighted-average capacities for the periods indicated.
 





Wholesale Segment
 
Three Months Ended
 
March 31,
 
2016
 
2015
 
(Unaudited)
 
(In thousands, except key operating stats)
Statement of Operations Data:
 
 
 
Fee based revenues (1):
 
 
 
Affiliate
$
11,012

 
$
10,703

Sales based revenues (1):
 
 
 
Affiliate
97,529

 
132,771

Third-party
317,892

 
428,524

Total revenues
426,433

 
571,998

Operating costs and expenses:
 

 
 

Cost of products sold:
 
 
 
Affiliate
95,149

 
130,508

Third-party
300,441

 
411,193

Operating and maintenance expenses
17,901

 
18,119

Selling, general and administrative expenses
1,905

 
2,196

Gain on disposal of assets, net
(99
)
 
(84
)
Depreciation and amortization
1,183

 
1,077

Total operating costs and expenses
416,480

 
563,009

Operating income
$
9,953

 
$
8,989

Key Operating Statistics:
 
 
 
Fuel gallons sold (in thousands)
314,943

 
303,431

Fuel gallons sold to retail (included in fuel gallons sold above) (in thousands)
79,841

 
75,263

Fuel margin per gallon (2)
$
0.028

 
$
0.027

Lubricant gallons sold (in thousands)
2,201

 
2,957

Lubricant margin per gallon (3)
$
0.69

 
$
0.66

Crude oil trucking volume (bpd)
35,111

 
43,050

Average crude oil revenue per barrel
$
2.24

 
$
2.76

(1)
All wholesale fee based revenues are generated through fees charged to Western's refining segment for truck transportation and delivery of crude oil and asphalt. Affiliate and third-party sales based revenues result from sales of refined products to Western and third-party customers at a delivered price that includes charges for product transportation.
(2)
Fuel margin per gallon is a measurement calculated by dividing the difference between fuel sales, net of transportation charges, and cost of fuel sales for our wholesale segment by the number of gallons sold. Fuel margin per gallon is a measure frequently used in the petroleum products wholesale industry to measure operating results related to fuel sales.
(3)
Lubricant margin per gallon is a measurement calculated by dividing the difference between lubricant sales, net of transportation charges, and lubricant cost of products sold by the number of gallons sold. Lubricant margin is a measure frequently used in the petroleum products wholesale industry to measure operating results related to lubricant sales.





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