Form 8-K Western Refining Logisti For: Nov 01

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November 1, 2016 6:10 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): November 1, 2016
 
wnrlcolora06.jpg
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 November 1, 2016, Western Refining Logistics, LP (“WNRL”) issued a press release announcing its results of operations for the third quarter ended September 30, 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 November 1, 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/ Karen B. Davis
Name:
Karen B. Davis
Title:
Executive Vice President and Chief Financial Officer 
Dated: November 1, 2016





EXHIBIT INDEX
 
Exhibit No.
  
Description
99.1
  
Press Release, dated November 1, 2016.





FOR IMMEDIATE RELEASE
 
Exhibit 99.1
 
 
 
Investor and Analyst Contact:
Retail Investors Contact:
Media Contact:
Michelle Clemente
Alpha IR Group
Gary W. Hanson
(602) 286-1533
Dylan Schweitzer
(602) 286-1777
 
Chris Hodges
 
Jeffrey S. Beyersdorfer
(312) 445-2870
 
(602) 286-1530
 
        

WESTERN REFINING LOGISTICS, LP
REPORTS THIRD QUARTER 2016 RESULTS
• Net income attributable to limited partners, $14.0 million; Distributable cash flow of $24.7 million
• Increased quarterly distribution to $0.4225 per unit; 11th consecutive increase since IPO
• Completed purchase of St. Paul Park refinery logistics assets for $210 million
• Completed $193 million equity offering; increased revolver to $500 million
EL PASO, Texas - November 1, 2016 - Western Refining Logistics, LP (NYSE: WNRL) today reported third quarter 2016 net income attributable to limited partners of $14.0 million, or $0.23 per common limited partner unit, which compares to $16.5 million and $0.35, respectively, in the third quarter of 2015. Third quarter 2016 EBITDA was $29.1 million and distributable cash flow was $24.7 million; this compares to $27.7 million and $18.6 million, respectively, for the third quarter of 2015.
"During the quarter, we acquired St. Paul Park refinery storage and terminalling assets, which expands our geographical diversity," said Jeff Stevens, President and Chief Executive Officer of WNRL's general partner. "We successfully completed an equity offering to fund the acquisition and expanded our revolver to $500 million to position us for further growth. We believe we have sufficient liquidity to fund our business plan for the foreseeable future.
"WNRL delivered good results for the quarter, demonstrating the locational advantage of our asset base in the Delaware Basin. We've completed pipeline connections to new production, which will help increase our pipeline and gathering volumes. This not only benefits WNRL, but our sponsor Western Refining also benefits from increased volumes of high quality, advantaged crude oil," continued Stevens.
On October 24, 2016, the board of directors declared a quarterly cash distribution for the third quarter 2016 of $0.4225 per unit, or $1.69 per unit, on an annualized basis. This distribution represents a 15% compound annual growth rate since WNRL's October 2013 initial public offering.
Stevens concluded, “Delaware Basin rig activity and crude oil production growth estimates continue to be encouraging. We believe we are well-positioned to increase EBITDA and distributions as crude oil production increases. Additionally, WNRL will benefit from the geographic diversification and growth potential as a result of the St. Paul Park logistics assets acquisition. We continue to be excited about the strategic locations of our assets and the growth potential of WNRL.”
Conference Call Information
On Tuesday, November 1, 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: 83728384. The audio replay will be available two hours after the end of the call through November 15, 2016 by dialing (855) 859-2056 or (404) 537-3406, pass code: 83728384.




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 692 miles of pipelines, approximately 12.4 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 available for distribution to our 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: WNRL’s positioning for continued growth; WNRL’s ability to fund its business plan in the future; the locational advantage of WNRL’s assets in the Delaware Basin; the ability of WNRL’s new pipeline connections to increase its pipeline and gathering volumes; growing rig activity and crude oil production in the Delaware Basin and WNRL's ability to increase EBITDA and distributions as crude oil production increases; and WNRL’s ability to benefit from the St. Paul Park logistics assets acquisition. 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
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
 
(In thousands, except per unit data)
Revenues:
 
 
 
 
 
 
 
Fee based:
 
 
 
 
 
 
 
Affiliate
$
51,749

 
$
58,111

 
$
157,642

 
$
151,054

Third-party
814

 
787

 
2,181

 
2,089

Sales based:
 
 
 
 
 
 
 
Affiliate
131,405

 
158,848

 
355,459

 
456,195

Third-party
385,293

 
462,924

 
1,100,620

 
1,414,632

Total revenues
569,261

 
680,670

 
1,615,902

 
2,023,970

Operating costs and expenses:
 
 
 
 
 
 
 
Cost of products sold:
 
 
 
 
 
 
 
Affiliate
128,792

 
156,388

 
347,811

 
449,087

Third-party
366,744

 
445,169

 
1,047,571

 
1,358,197

Operating and maintenance expenses
43,454

 
45,927

 
131,103

 
131,156

Selling, general and administrative expenses
6,483

 
5,812

 
17,854

 
18,517

Gain on disposal of assets, net
(62
)
 
(13
)
 
(963
)
 
(257
)
Depreciation and amortization
10,579

 
8,963

 
29,470

 
25,816

Total operating costs and expenses
555,990

 
662,246

 
1,572,846

 
1,982,516

Operating income
13,271

 
18,424

 
43,056

 
41,454

Other income (expense):
 

 
 

 
 

 
 

Interest and debt expense
(6,148
)
 
(6,204
)
 
(19,614
)
 
(16,416
)
Other, net
17

 
16

 
(87
)
 
51

Net income before income taxes
7,140

 
12,236

 
23,355

 
25,089

Provision for income taxes
(282
)
 
(3
)
 
(760
)
 
(354
)
Net income
6,858

 
12,233

 
22,595

 
24,735

Less net loss attributable to General Partner
(7,165
)
 
(4,260
)
 
(23,309
)
 
(22,996
)
Net income attributable to limited partners
$
14,023

 
$
16,493

 
$
45,904

 
$
47,731

 
 
 
 
 
 
 
 
Net income per limited partner unit:
 
 
 
 
 
 
 
Common - basic
$
0.23

 
$
0.35

 
$
0.83

 
$
1.01

Common - diluted
0.23

 
0.35

 
0.83

 
1.01

Subordinated - basic and diluted
0.25

 
0.35

 
0.89

 
1.01

 
 
 
 
 
 
 
 
Weighted average limited partner units outstanding:
 
 
 
 
 
 
 
Common - basic
30,884

 
24,017

 
27,260

 
24,006

Common - diluted
30,901

 
24,024

 
27,274

 
24,024

Subordinated - basic and diluted
22,811

 
22,811

 
22,811

 
22,811






 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
 
(In thousands)
Cash Flow Data
 

 
 
 
 
 
 
Net cash provided by (used in):
 

 
 
 
 
 
 
Operating activities
$
33,293

 
$
17,253

 
$
80,709

 
$
53,410

Investing activities
(8,502
)
 
(11,395
)
 
(23,613
)
 
(53,255
)
Financing activities
(25,811
)
 
(13,036
)
 
(85,159
)
 
16,919

Capital expenditures
8,530

 
11,558

 
24,618

 
53,708

Other Data
 

 
 
 
 
 
 
EBITDA (1)
$
29,090

 
$
27,683

 
$
89,384

 
$
78,959

Distributable cash flow (1)
24,704

 
18,648

 
72,322

 
57,857

Balance Sheet Data (at end of period)
 

 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
$
16,542

 
$
71,372

Property, plant and equipment, net
 
 
 
 
422,006

 
426,093

Total assets
 
 
 
 
582,730

 
643,385

Total liabilities
 
 
 
 
478,287

 
434,940

Division equity
 
 
 
 
—

 
236,503

Partners' capital
 
 
 
 
104,443

 
(28,058
)
Total liabilities, division equity and partners' capital
 
 
 
 
582,730

 
643,385

(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 interest accruals, income taxes paid, maintenance capital expenditures and distributions declared on our TexNew Mex units. The GAAP performance measure most directly comparable to EBITDA is net income. The GAAP liquidity measure most directly comparable to EBITDA and distributable cash flow is net cash provided by operating activities. These non-GAAP financial measures should not be considered alternatives to GAAP net income or net cash provided by operating activities.
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 a 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. Although distributable cash flow is a liquidity measure, it is presented in this reconciliation to net income as supplemental information.
We believe that the presentation of these non-GAAP measures provides useful information to investors in assessing our financial condition and results of operations. 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 St. Paul Park Logistics Assets subsequent to the St. Paul Park Logistics Transaction and the TexNew Mex Pipeline System for the three and nine months ended September 30, 2016. The results of operations for the St. Paul Park Logistics Assets and the TexNew Mex Pipeline System are excluded from the EBITDA and Distributable Cash Flow calculations for the comparable periods in the prior year because a retrospective adjustment of these performance measures is not a representative measure of performance results.
The following table reconciles net income attributable to limited partners to EBITDA for the periods presented and Distributable Cash Flow for the three and nine months ended September 30, 2016 and 2015, respectively.
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
 
(In thousands)
Net income attributable to limited partners
$
14,023

 
$
16,493

 
$
45,904

 
$
47,731

Interest and debt expense
6,148

 
6,204

 
19,614

 
16,416

Provision for income taxes
282

 
3

 
760

 
354

Depreciation and amortization
8,637

 
4,983

 
23,106

 
14,458

EBITDA
29,090

 
27,683

 
89,384

 
78,959

 
 
 
 
 
 
 
 
Change in deferred revenues
4,460

 
(218
)
 
8,138

 
2,229

Interest accruals
(6,377
)
 
(5,858
)
 
(19,158
)
 
(15,491
)
Income taxes paid
(150
)
 
(156
)
 
(244
)
 
(737
)
Maintenance capital expenditures
(2,319
)
 
(2,803
)
 
(5,798
)
 
(7,885
)
Other
—

 
—

 
—

 
782

Distributable cash flow
$
24,704

 
$
18,648

 
$
72,322

 
$
57,857





Logistics Segment
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
 
(In thousands, except key operating statistics)
Statement of Operations Data:
 
 
 
 
 
 
 
Fee based revenues:
 
 
 
 
 
 
 
Affiliate
$
42,319

 
$
46,669

 
$
126,288

 
$
117,723

Third-party
814

 
787

 
2,181

 
2,089

Total revenues
43,133

 
47,456

 
128,469

 
119,812

Operating costs and expenses:
 

 
 

 
 

 
 

Operating and maintenance expenses
25,241

 
26,063

 
75,732

 
73,621

General and administrative expenses
629

 
303

 
2,000

 
2,168

Loss (gain) on disposal of assets, net
(12
)
 
124

 
(17
)
 
124

Depreciation and amortization
8,581

 
7,817

 
25,083

 
22,486

Total operating costs and expenses
34,439

 
34,307

 
102,798

 
98,399

Operating income
$
8,694

 
$
13,149

 
$
25,671

 
$
21,413

Key Operating Statistics:
 
 
 
 
 
 
 
Pipeline and gathering (bpd):
 
 
 
 
 
 
 
Mainline movements (1):
 
 
 
 
 
 
 
Permian/Delaware Basin system
49,709

 
56,745

 
51,709

 
45,784

Four Corners system
53,070

 
66,602

 
54,523

 
54,719

TexNew Mex system
7,504

 
14,834

 
10,132

 
6,131

Gathering (truck offloading):
 
 
 
 
 
 
 
Permian/Delaware Basin system
15,514

 
25,961

 
17,948

 
24,207

Four Corners system
9,577

 
16,487

 
11,151

 
13,387

Pipeline Gathering and Injection system:
 
 
 
 
 
 
 
Permian/Delaware Basin system
15,229

 
8,458

 
11,486

 
5,353

Four Corners system
21,776

 
28,841

 
24,470

 
23,859

TexNew Mex system
1,669

 
—

 
674

 
—

Tank storage capacity (bbls) (2)
959,087

 
651,545

 
877,899

 
630,761

Terminalling, transportation and storage:
 
 
 
 
 
 
 
Shipments into and out of storage (bpd) (includes asphalt)
416,761

 
408,787

 
399,415

 
396,506

Terminal storage capacity (bbls) (2)
8,082,734

 
7,420,754

 
7,619,637

 
7,464,236

(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
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
 
(In thousands, except key operating stats)
Statement of Operations Data:
 
 
 
 
 
 
 
Fee based revenues (1):
 
 
 
 
 
 
 
Affiliate
$
9,430

 
$
11,442

 
$
31,354

 
$
33,331

Sales based revenues (1):
 
 
 
 
 
 
 
Affiliate
131,405

 
158,848

 
355,459

 
456,195

Third-party
385,293

 
462,924

 
1,100,620

 
1,414,632

Total revenues
526,128

 
633,214

 
1,487,433

 
1,904,158

Operating costs and expenses:
 

 
 

 
 

 
 

Cost of products sold:
 
 
 
 
 
 
 
Affiliate
128,792

 
156,388

 
347,811

 
449,087

Third-party
366,744

 
445,169

 
1,047,571

 
1,358,197

Operating and maintenance expenses
18,213

 
19,864

 
55,371

 
57,535

Selling, general and administrative expenses
2,065

 
2,269

 
6,123

 
6,715

Gain on disposal of assets, net
(50
)
 
(137
)
 
(946
)
 
(381
)
Depreciation and amortization
1,998

 
1,146

 
4,387

 
3,330

Total operating costs and expenses
517,762

 
624,699

 
1,460,317

 
1,874,483

Operating income
$
8,366

 
$
8,515

 
$
27,116

 
$
29,675

Key Operating Statistics:
 
 
 
 
 
 
 
Fuel gallons sold (in thousands)
313,600

 
305,566

 
940,029

 
919,808

Fuel gallons sold to retail (included in fuel gallons sold above) (in thousands)
87,131

 
81,538

 
250,693

 
235,824

Fuel margin per gallon (2)
$
0.030

 
$
0.029

 
$
0.028

 
$
0.031

Lubricant gallons sold (in thousands)
1,355

 
2,998

 
5,402

 
8,969

Lubricant margin per gallon (3)
$
1.05

 
$
0.70

 
$
0.85

 
$
0.71

Asphalt trucking volume (bpd)
5,620

 
—

 
4,461

 
—

Crude oil trucking volume (bpd)
36,144

 
49,620

 
37,909

 
47,245

Average crude oil revenue per barrel
$
2.11

 
$
2.51

 
$
2.17

 
$
2.58

(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 business 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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