First quarter 2019 results drive net income of $14.1 million,
Adjusted EBITDA of $115.3 million, a 13% year-over-year increase, and
Distributable Cash Flow of $68.3 million, a 28% year-over-year increase
Strong business fundamentals, execution and financial discipline
generated coverage and leverage ratios of 1.6x and 4.1x, respectively
Crestwood’s inaugural sustainability report, prepared in accordance
with the Global Reporting Initiative, is on-track for June 2019 issuance
HOUSTON--(BUSINESS WIRE)--
Crestwood Equity Partners LP (NYSE: CEQP) (“Crestwood”) reported today
its financial and operating results for the three months ended March 31,
2019.
First Quarter 2019 Highlights
(1)
-
First quarter 2019 net income of $14.1 million, compared to net income
of $34.1 million in first quarter 2018
-
First quarter 2019 Adjusted EBITDA of $115.3 million, an increase of
13% compared to $101.7 million in the first quarter 2018
-
First quarter 2019 distributable cash flow to common unitholders of
$68.3 million; First quarter 2019 coverage ratio was 1.6x
-
Ended March 31, 2019, with approximately $1.8 billion in total debt
and a 4.1x leverage ratio; Crestwood has substantial liquidity
available under its $1.25 billion revolver with $593 million drawn as
of March 31, 2019
-
Announced first quarter 2019 cash distribution of $0.60 per common
unit, or $2.40 per common unit on an annualized basis, payable on May
15, 2019, to unitholders of record as of May 8, 2019
Recent Events
-
On April 9, 2019, Crestwood Niobrara LLC (“Crestwood Niobrara”)
acquired a 50% interest in Jackalope Gas Gathering Services, L.L.C.
(“Jackalope”) from The Williams Companies, Inc. (NYSE: WMB)
(“Williams”) for approximately $485 million; Jackalope assets are
expected to generate cash flow of $100 million in 2019 growing to $150
million in 2021
-
Crestwood funded the Jackalope acquisition through a combination of
the issuance of an additional $235 million of preferred equity to
Crestwood Niobrara’s existing preferred equity investors and
borrowings under its revolving credit facility
-
On April 11, 2019, Crestwood issued $600 million of senior notes at
5.625% due 2027; Proceeds were used to repay borrowings under
revolving credit facility; Pro forma for the issuance, the balance on
the revolving credit facility was approximately $250 million as of
March 31, 2019
-
Following the Jackalope acquisition, Crestwood updated its full-year
2019 Adjusted EBITDA range to $500 million to $530 million, which
excludes $20 million of PRB cash received in excess of recognized
revenues in Q2-Q4 2019
Management Commentary
“During the first quarter, Crestwood’s operational execution and the
strong fundamentals across our growth assets drove a 13% increase in
Adjusted EBITDA, and a 28% increase in DCF per unit and Distributable
Cash Flow compared to the same period in 2018,” said Robert G. Phillips,
Chairman, President and Chief Executive Officer of Crestwood’s general
partner. “These consistent results achieved our target financial
metrics, with first quarter 2019 coverage and leverage ratios of 1.6x
and 4.1x, respectively, while we made significant progress on our
capital expansion programs in the Bakken and Powder River Basin.”
Mr. Phillips, continued, “Additionally, we completed an important
strategic step to expand our growth portfolio, with the recent purchase
of Williams’ interest in the Jackalope joint venture, which allows us to
consolidate ownership and assume operatorship of premium gathering and
processing (G&P) assets in the fast growing Powder River Basin. The
transaction, partially funded by our existing Niobrara preferred equity
partners, also positioned us to execute a successful long-term debt
issuance that enhances our financial flexibility, lowers our long-term
cost of capital and positions Crestwood to continue its important Bakken
and expanded Powder River Basin capital programs without the need to
access public equity markets.”
Mr. Phillips, concluded, “With increased confidence in underlying
customer activity in the Bakken and Powder River Basin, we have
meaningfully increased our 2019 earnings guidance and expect to generate
a 20% annual DCF per unit growth rate through 2020. Looking forward,
Crestwood’s strategy of growth through financial discipline will
continue to focus on its core areas and businesses, investments that
deliver returns above our long-term cost of capital and transactions
that are accretive to DCF per unit while maintaining balance sheet
strength and flexibility.”
First Quarter 2019 Segment Results and Outlook
Gathering and Processing segment EBITDA totaled $77.0 million in the
first quarter 2019 compared to $82.0 million in the first quarter 2018.
First quarter 2019 segment results were impacted by $4.0 million of
non-cash losses on the sale and retirement of property, plant and
equipment in the Granite Wash and Delaware Basin. During the first
quarter 2019, segment EBITDA benefitted from a 34% increase in Bakken
processing volumes, a 44% increase in Bakken produced water volumes and
a 36% increase in Delaware Basin gas gathering volumes, offset by
natural field declines on the SW Marcellus, Barnett and Fayetteville
gathering systems. Crestwood expects Bakken and Powder River Basin
gathering system expansions, continuing producer well connects, and the
Bear Den II processing plant, to be completed in the third quarter, to
drive segment EBITDA growth in the second half of 2019.
Storage and Transportation segment EBITDA totaled $17.5 million in the
first quarter 2019 compared to $12.0 million in the first quarter 2018.
First quarter 2019 natural gas storage and transportation volumes
averaged 1.9 Bcf/d, compared to 2.2 Bcf/d in the first quarter 2018.
Effective July 1, 2018, Crestwood began receiving a 40% cash
distribution from the Stagecoach joint venture. The final step up to 50%
will occur on July 1, 2019 and will result in an estimated $10 million
in incremental EBITDA, or an annual increase of 20% over 2018. At the
COLT Hub, crude by rail loading volumes increased 63% from the first
quarter 2018 driven by wider WTI to Brent spreads, increased Bakken
crude production and favorable economics for Bakken crude with refinery
customers in the East and West Coast markets.
Marketing, Supply and Logistics (MS&L) segment EBITDA totaled $22.5
million in the first quarter 2019, compared to $13.2 million in the
first quarter 2018. Both periods exclude the non-cash change in fair
value of commodity inventory-related derivative contracts. First quarter
2018 results included $3.3 million of EBITDA from Crestwood’s West Coast
business, which was sold in late 2018. During the first quarter 2019,
Crestwood’s northeast NGL team benefitted from the seasonal spreads
captured from low-cost storage inventories built throughout 2018
combined with seasonal winter weather creating increased propane demand
in the northeast markets. Additionally, Crestwood’s Bakken focused crude
marketing team continued to utilize excess COLT storage capacity and its
MS&L transportation assets to capture low-risk margin opportunities
created by increased North Dakota crude production, COLT connectivity
and wider regional basis differentials.
Combined O&M and G&A expenses, net of non-cash unit based compensation,
in the first quarter 2019 were $48.5 million compared to $51.2 million
in the first quarter 2018. Crestwood reduced combined O&M and G&A
expenses by approximately $2.7 million, or 5.3%, primarily driven by
Crestwood’s efforts to streamline its MS&L segment operations (including
the sale of Crestwood’s West Coast business) and lower personnel
expenses.
First Quarter 2019 Business Update
Bakken Update
During the first quarter 2019, the Arrow system averaged crude oil
volumes of 93 MBbls/d, 16% above first quarter 2018, natural gas volumes
of 75 MMcf/d, 18% above first quarter 2018, and water volumes of 56
MBbls/d, or 44% above first quarter 2018. During the first quarter 2019,
Arrow completed 19 new well connections and producers remain on-track to
deliver approximately 100 new well connections by the end of 2019. First
quarter crude oil, natural gas, and water gathering volumes exceeded
Crestwood’s internal budget due to higher than forecasted initial
production rates. The remaining 2019 well connections are expected to be
driven primarily by WPX Energy and XTO Energy, which typically utilize
Arrow’s DAPL interconnect to deliver barrels to the LLS market.
In the first quarter 2019, Crestwood invested approximately $57 million
of growth capital on the Bear Den II processing plant expansion,
incremental Arrow debottlenecking projects and expansion of the Arrow
water system for the previously announced Enerplus contract. The Bear
Den II expansion will increase Crestwood’s total Bakken processing
capacity to 150 MMcf/d and provide Arrow producers with better flow
assurance, higher net-backs and access to premium priced downstream NGL
markets through the ONEOK Elk Creek pipeline expansion. Once Bear Den II
is completed, Crestwood will process 100% of the natural gas gathered on
the Arrow system, which will provide a meaningful step-up in Arrow cash
flow for the fourth quarter of 2019 and full year 2020.
Powder River Basin Update
On April 9, 2019, Crestwood Niobrara acquired Williams’ 50% interest in
the Jackalope joint venture in the Powder River Basin for approximately
$485 million. As a result of the transaction, Crestwood Niobrara now
owns 100% of Jackalope and has taken over full operations of the assets.
Crestwood funded the acquisition through the issuance of an additional
$235 million of preferred equity to Crestwood Niobrara’s existing
preferred equity investors, led by Global Infrastructure Partners, and
borrowings under its revolving credit facility. Crestwood expects the
transaction to be leverage neutral to the Crestwood balance sheet and
immediately accretive to distributable cash flow per unit in 2019, with
growing accretion thereafter based upon Chesapeake Energy’s (NYSE: CHK)
(“Chesapeake”) current development activity.
The Jackalope assets are located in Converse County, Wyoming, and
provide gathering, compression and processing services and include the
Jackalope Gas Gathering System and the Bucking Horse Processing Plant.
The system is supported by a 358,000 acreage dedication from Chesapeake
and a 30,000 acreage dedication from Panther Energy. The Bucking Horse
and Jackalope assets are currently undergoing extensive expansion
projects to increase gathering and processing capacity to 345 MMcf/d.
These expansion projects, including the Bucking Horse II plant,
gathering system line looping and additional compression, are expected
to be substantially complete in the first quarter 2020.
Currently, the Jackalope system is averaging gathering volumes of
approximately 150 MMcf/d, an increase of 20%, compared to 125.5 MMcf/d
in the fourth quarter 2018. Crestwood expects continued volume growth on
the system as Chesapeake recently added a sixth rig in the basin
primarily targeting the highly prolific Turner formation. Recent
industry research forecasts the Powder River Basin to be developed into
a mature basin over the next five years as the Turner formation has been
identified as a Tier 1 formation across all plays in the lower 48. In
2019, Chesapeake previously announced it expects to invest approximately
$400 million on drilling and completion costs to bring an estimated 65
wells online. Based on current rig activity and growing initial
production volumes, Chesapeake expects to double system volumes in 2019.
Powder River Basin Minimum Revenue Guarantee and Revenue Recognition
The Jackalope assets are supported by a 20-year fixed fee gathering and
processing agreement with Chesapeake that includes a minimum revenue
guarantee provision that allows for a higher fixed fee until a certain
cash flow threshold is obtained. Once the minimum revenue guarantee
threshold is achieved, the fixed rate will adjust to a lower fee. Based
on Chesapeake’s current development activity and long-term outlook,
Crestwood forecasts this to occur in the second half of 2021.
Under FASB’s ASC 606 revenue recognition guidance, Crestwood utilizes an
average blended flat rate over the life of the contract to recognize
revenue in its GAAP financial statements. As a result, in 2019, the
actual cash Crestwood receives from Jackalope will be substantially
higher than what it will recognize in consolidated revenues and Adjusted
EBITDA. For 2019, that variance between actual cash flows and recognized
revenues is expected to be approximately $20 million. While Crestwood
will not adjust for this difference in its reported Adjusted EBITDA,
Crestwood will adjust its calculation of distributable cash flow
available to common unitholders for this difference going forward as it
provides a more accurate depiction of Crestwood’s available cash. In
addition, beginning with second quarter 2019 results, when reporting its
financial leverage ratio, Crestwood will make the same adjustment for
actual cash flow from Jackalope, instead of reported Adjusted EBITDA, in
accordance with the covenants under its credit agreement.
Updated 2019 Financial Guidance
Following the acquisition of the Powder River Basin joint venture
announced on April 10, 2019, Crestwood provided the revised 2019
guidance is provided below. These projections are subject to risks and
uncertainties as described in the “Forward-Looking Statements” section
at the end of this release.
-
Net income of $125 million to $155 million
-
Adjusted EBITDA of $500 million to $530 million, excluding $20 million
of PRB cash received in excess of recognized revenues in Q2-Q4 2019
-
Contribution by operating segment is set forth below:
|
$US millions
|
|
FY 2019 Range
|
|
Operating Segment
|
|
Low
|
|
High
|
|
Gathering & Processing
|
|
$425
|
-
|
$445
|
|
Storage & Transportation
|
|
85
|
-
|
90
|
|
Marketing, Supply & Logistics
|
|
55
|
-
|
60
|
|
Less: Corporate G&A
|
|
(65)
|
|
(65)
|
|
Adjusted EBITDA*
|
|
$500
|
-
|
$530
|
|
Plus: PRB cash received in excess of recognized revenues
|
|
20
|
|
20
|
|
Less: Maintenance Capital
|
|
(20)
|
|
(25)
|
|
Less: Interest Expense
|
|
(130)
|
|
(135)
|
|
Less: Other
|
|
(5)
|
|
(5)
|
|
Distributable Cash Flow
|
|
$365
|
|
$395
|
|
Less: Distributions to Niobrara Preferred
|
|
(30)
|
|
(30)
|
|
Less: Distributions to Series A Preferred
|
|
(60)
|
|
(60)
|
|
Distributable Cash Flow Available to Common Unitholders
|
|
$275
|
|
$305
|
|
*Note: Excludes approximately $20 million of Powder River Basin
deferred revenue. PRB deferred revenue is calculated as the
difference between the actual cash generated by the PRB assets’
minimum revenue commitment and revenue recognized under ASC 606.
|
|
|
-
Full-year 2019 coverage ratio increases to 1.5x to 1.7x
-
Full-year 2019 leverage ratio unchanged between 4.0x and 4.5x
-
Growth project capital spending and joint venture contributions in the
range of $425 million to $475 million; Growth capital increases driven
by Williams’ full-year 2019 portion of the Bucking Horse and Jackalope
expansion capital
Capitalization and Liquidity Update
Crestwood invested approximately $98 million in consolidated growth
capital projects and joint venture contributions during the first
quarter 2019. As of March 31, 2019, Crestwood had approximately $1.8
billion of debt outstanding, comprised of $1.2 billion of fixed-rate
senior notes and $593 million outstanding under its $1.25 billion
revolving credit facility. Crestwood’s leverage ratio was 4.1x as of
March 31, 2019. Based on the current outlook for 2019, Crestwood expects
to continue to utilize excess retained DCF, significant availability
under its revolving credit facility, and evaluate non-core asset
divestitures to fund its capital program. Crestwood currently has 71.3
million preferred units outstanding (par value of $9.13 per unit) which
pay a fixed-rate annual cash distribution of 9.25%, payable quarterly.
On April 11, 2019, Crestwood issued $600 million of fixed-rate senior
notes at 5.625% due 2027. Proceeds from the offering were used to repay
outstanding borrowings under the revolving credit facility, including
$250 million utilized to fund the Jackalope acquisition. Pro forma for
the issuance, Crestwood’s debt outstanding is comprised of $1.8 billion
in fixed-rate senior notes and approximately $250 million outstanding
under the revolving credit facility as of March 31, 2019. Crestwood is
committed to maintaining a leverage ratio between 4.0x to 4.5x in 2019
and expects to achieve a leverage ratio between 3.5x and 4.0x by the
first half of 2020.
Sustainability Program Update
Crestwood continues to make strides in the implementation of an MLP
industry leading sustainability program. Following the most recent Board
of Directors Sustainability committee meeting, a three-year
sustainability strategy was approved that will help guide Crestwood’s
long-term sustainability program development. During the first quarter
2019, Crestwood completed a Materiality Assessment that identified key
content to address in its 2018 report and the company remains on track
to publish its inaugural sustainability report, prepared in accordance
with the Global Reporting Initiative, in June 2019. Following the
issuance of its inaugural sustainability report, Crestwood’s three-year
strategy will be to enhance reporting metrics and further integrate
sustainability into the business. For up to date information on
Crestwood’s on-going commitment to sustainability please visit www.crestwoodlp.com/sustainability.
Upcoming Conference Participation
Crestwood’s management will participate in the following upcoming
investor conferences. Prior to the start of each conference, new
presentation materials may be posted to the Investors section of
Crestwood’s website at www.crestwoodlp.com.
-
The 2019 MLP & Energy Infrastructure Conference (MEIC) on May 14-16,
2019 in Las Vegas, NV
-
SunTrust Robinson Humphrey 2nd Annual Midstream Summit on
June 12, 2019 in New York, NY
-
JPMorgan 2019 Energy Equity Investor Conference on June 18-19, 2019 in
New York, NY
Earnings Conference Call Schedule
Management will host a conference call for investors and analysts of
Crestwood today at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) which
will be broadcast live over the internet. Investors will be able to
connect to the webcast via the Investors page of Crestwood’s website at www.crestwoodlp.com.
Please log in at least 10 minutes in advance to register and download
any necessary software. A replay will be available shortly after the
call for 90 days.
Non-GAAP Financial Measures
Adjusted EBITDA and distributable cash flow are non-GAAP financial
measures. The accompanying schedules of this news release provide
reconciliations of these non-GAAP financial measures to their most
directly comparable financial measures calculated and presented in
accordance with GAAP. Our non-GAAP financial measures should not be
considered as alternatives to GAAP measures such as net income or
operating income, or any other GAAP measure of liquidity or financial
performance.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995 and Section
21E of the Securities and Exchange Act of 1934. The words “expects,”
“believes,” “anticipates,” “plans,” “will,” “shall,” “estimates,” and
similar expressions identify forward-looking statements. Forward-looking
statements are subject to risks and uncertainties and are based on the
beliefs and assumptions of management, based on information currently
available to them. Although Crestwood believes that these
forward-looking statements are based on reasonable assumptions, it can
give no assurance that any such forward-looking statements will
materialize. Important factors that could cause actual results to differ
materially from those expressed in or implied by these forward-looking
statements include the risks and uncertainties described in Crestwood’s
reports filed with the Securities and Exchange Commission, including its
Annual Report on Form 10-K and its subsequent reports, which are
available through the SEC’s EDGAR system at www.sec.gov
and on our website. Readers are cautioned not to place undue reliance on
forward-looking statements, which reflect management’s view only as of
the date made, and Crestwood assumes no obligation to update these
forward-looking statements.
About Crestwood Equity Partners LP
Houston, Texas, based Crestwood Equity Partners LP (NYSE: CEQP) is a
master limited partnership that owns and operates midstream businesses
in multiple shale resource plays across the United States. Crestwood
Equity is engaged in the gathering, processing, treating, compression,
storage and transportation of natural gas; storage, transportation,
terminalling, and marketing of NGLs; gathering, storage, terminalling
and marketing of crude oil; and gathering and disposal of produced water.
|
(1) Please see non-GAAP reconciliation table included at
the end of the press release.
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
|
|
Consolidated Statements of Operations
|
|
(in millions, except unit and per unit data)
|
|
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
|
2018
|
|
|
Revenues:
|
|
|
|
|
|
Gathering and processing
|
|
$
|
182.3
|
|
|
$
|
340.3
|
|
|
Storage and transportation
|
|
|
7.8
|
|
|
|
4.2
|
|
|
Marketing, supply and logistics
|
|
|
643.9
|
|
|
|
770.2
|
|
|
Related party
|
|
|
1.2
|
|
|
|
0.3
|
|
|
Total revenues
|
|
|
835.2
|
|
|
|
1,115.0
|
|
|
Cost of products/services sold
|
|
|
695.6
|
|
|
|
965.8
|
|
|
|
|
|
|
|
Operating expenses and other:
|
|
|
|
|
|
Operations and maintenance
|
|
|
28.6
|
|
|
|
34.5
|
|
|
General and administrative
|
|
|
37.2
|
|
|
|
23.9
|
|
|
Depreciation, amortization and accretion
|
|
|
39.8
|
|
|
|
45.1
|
|
|
(Gain) loss on long-lived assets, net
|
|
|
2.0
|
|
|
|
(0.3
|
)
|
|
|
|
107.6
|
|
|
|
103.2
|
|
|
Operating income
|
|
|
32.0
|
|
|
|
46.0
|
|
|
Earnings from unconsolidated affiliates, net
|
|
|
6.9
|
|
|
|
12.4
|
|
|
Interest and debt expense, net
|
|
|
(24.9
|
)
|
|
|
(24.4
|
)
|
|
Other income, net
|
|
|
0.1
|
|
|
|
0.1
|
|
|
Net income
|
|
|
14.1
|
|
|
|
34.1
|
|
|
Net income attributable to non-controlling partners
|
|
|
4.0
|
|
|
|
4.0
|
|
|
Net income attributable to Crestwood Equity Partners LP
|
|
|
10.1
|
|
|
|
30.1
|
|
|
Net income attributable to preferred units
|
|
|
15.0
|
|
|
|
15.0
|
|
|
Net income (loss) attributable to partners
|
|
$
|
(4.9
|
)
|
|
$
|
15.1
|
|
|
|
|
|
|
|
Subordinated unitholders' interest in net income
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
Common unitholders' interest in net income (loss)
|
|
$
|
(4.9
|
)
|
|
$
|
15.0
|
|
|
|
|
|
|
|
Net income (loss) per limited partner unit:
|
|
|
|
|
|
Basic
|
|
$
|
(0.07
|
)
|
|
$
|
0.21
|
|
|
Diluted
|
|
$
|
(0.07
|
)
|
|
$
|
0.21
|
|
|
|
|
|
|
|
Weighted-average limited partners’ units outstanding (in thousands):
|
|
|
|
|
|
Basic
|
|
|
71,833
|
|
|
|
71,165
|
|
|
Dilutive units
|
|
|
—
|
|
|
|
789
|
|
|
Diluted
|
|
|
71,833
|
|
|
|
71,954
|
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
|
|
Selected Balance Sheet Data
|
|
(in millions)
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
0.5
|
|
$
|
0.9
|
|
|
|
|
|
|
Outstanding debt:
|
|
|
|
|
|
Revolving Credit Facility
|
|
$
|
593.0
|
|
$
|
578.2
|
|
Senior Notes
|
|
|
1,200.0
|
|
|
1,200.0
|
|
Other
|
|
|
1.2
|
|
|
1.5
|
|
Subtotal
|
|
|
1,794.2
|
|
|
1,779.7
|
|
Less: deferred financing costs, net
|
|
|
25.2
|
|
|
26.4
|
|
Total debt
|
|
$
|
1,769.0
|
|
$
|
1,753.3
|
|
|
|
|
|
|
Partners' capital
|
|
|
|
|
|
Total partners' capital
|
|
$
|
1,996.5
|
|
$
|
2,033.8
|
|
Common units outstanding
|
|
|
72.3
|
|
|
71.7
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
|
|
Reconciliation of Non-GAAP Financial Measures
|
|
(in millions)
|
|
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
|
2018
|
|
|
EBITDA
|
|
|
|
|
|
Net income
|
|
$
|
14.1
|
|
|
$
|
34.1
|
|
|
Interest and debt expense, net
|
|
|
24.9
|
|
|
|
24.4
|
|
|
Depreciation, amortization and accretion
|
|
|
39.8
|
|
|
|
45.1
|
|
|
EBITDA
(a)
|
|
$
|
78.8
|
|
|
$
|
103.6
|
|
|
Significant items impacting EBITDA:
|
|
|
|
|
|
Unit-based compensation charges
|
|
|
17.3
|
|
|
|
7.2
|
|
|
(Gain) loss on long-lived assets, net
|
|
|
2.0
|
|
|
|
(0.3
|
)
|
|
Earnings from unconsolidated affiliates, net
|
|
|
(6.9
|
)
|
|
|
(12.4
|
)
|
|
Adjusted EBITDA from unconsolidated affiliates, net
|
|
|
19.6
|
|
|
|
22.1
|
|
|
Change in fair value of commodity inventory-related derivative
contracts
|
|
|
1.1
|
|
|
|
(20.2
|
)
|
|
Significant transaction and environmental related costs and other
items
|
|
|
3.4
|
|
|
|
1.7
|
|
|
Adjusted EBITDA
(a)
|
|
$
|
115.3
|
|
|
$
|
101.7
|
|
|
|
|
|
|
|
Distributable Cash Flow
|
|
|
|
|
|
Adjusted EBITDA (a) |
|
$
|
115.3
|
|
|
$
|
101.7
|
|
|
Cash interest expense (b) |
|
|
(26.2
|
)
|
|
|
(23.1
|
)
|
|
Maintenance capital expenditures (c) |
|
|
(1.4
|
)
|
|
|
(6.0
|
)
|
|
Adjusted EBITDA from unconsolidated affiliates, net
|
|
|
(19.6
|
)
|
|
|
(22.1
|
)
|
|
Distributable cash flow from unconsolidated affiliates
|
|
|
18.5
|
|
|
|
21.2
|
|
|
Distributable cash flow attributable to CEQP
|
|
|
86.6
|
|
|
|
71.7
|
|
|
Distributions to preferred
|
|
|
(15.0
|
)
|
|
|
(15.0
|
)
|
|
Distributions to Niobrara preferred
|
|
|
(3.3
|
)
|
|
|
(3.3
|
)
|
|
Distributable cash flow attributable to CEQP common
(d)
|
|
$
|
68.3
|
|
|
$
|
53.4
|
|
|
|
|
|
(a)
|
|
EBITDA is defined as income before income taxes, plus interest and
debt expense, net and depreciation, amortization and accretion
expense. Adjusted EBITDA considers the adjusted earnings impact of
our unconsolidated affiliates by adjusting our equity earnings or
losses from our unconsolidated affiliates to reflect our
proportionate share (based on the distribution percentage) of their
EBITDA, excluding impairments. Adjusted EBITDA also considers the
impact of certain significant items, such as unit-based compensation
charges, gains or losses on long-lived assets, third party costs
incurred related to potential and completed acquisitions, certain
environmental remediation costs, the change in fair value of
commodity inventory-related derivative contracts, costs associated
with the realignment of our Marketing, Supply and Logistics
operations and Corporate operations and other transactions
identified in a specific reporting period. The change in fair value
of commodity inventory-related derivative contracts is considered in
determining Adjusted EBITDA given that the timing of recognizing
gains and losses on these derivative contracts differs from the
recognition of revenue for the related underlying sale of inventory
to which these derivatives relate. Changes in the fair value of
other derivative contracts is not considered in determining Adjusted
EBITDA given the relatively short-term nature of those derivative
contracts. EBITDA and Adjusted EBITDA are not measures calculated in
accordance with generally accepted accounting principles (GAAP), as
they do not include deductions for items such as depreciation,
amortization and accretion, interest and income taxes, which are
necessary to maintain our business. EBITDA and Adjusted EBITDA
should not be considered alternatives to net income, operating cash
flow or any other measure of financial performance presented in
accordance with GAAP. EBITDA and Adjusted EBITDA calculations may
vary among entities, so our computation may not be comparable to
measures used by other companies.
|
|
(b)
|
|
Cash interest expense less amortization of deferred financing costs.
|
|
(c)
|
|
Maintenance capital expenditures are defined as those capital
expenditures which do not increase operating capacity or revenues
from existing levels.
|
|
(d)
|
|
Distributable cash flow is defined as Adjusted EBITDA, adjusted for
cash interest expense, maintenance capital expenditures, income
taxes, and our proportionate share (based on the distribution
percentage) of our unconsolidated affiliates' distributable cash
flow. Distributable cash flow should not be considered an
alternative to cash flows from operating activities or any other
measure of financial performance calculated in accordance with GAAP
as those items are used to measure operating performance, liquidity,
or the ability to service debt obligations. We believe that
distributable cash flow provides additional information for
evaluating our ability to declare and pay distributions to
unitholders. Distributable cash flow, as we define it, may not be
comparable to distributable cash flow or similarly titled measures
used by other companies.
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
|
|
Reconciliation of Non-GAAP Financial Measures
|
|
(in millions)
|
|
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
|
|
2018
|
|
|
EBITDA
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
130.9
|
|
|
$
|
148.7
|
|
|
Net changes in operating assets and liabilities
|
|
|
(52.8
|
)
|
|
|
(61.5
|
)
|
|
Amortization of debt-related deferred costs
|
|
|
(1.4
|
)
|
|
|
(1.8
|
)
|
|
Interest and debt expense, net
|
|
|
24.9
|
|
|
|
24.4
|
|
|
Unit-based compensation charges
|
|
|
(17.3
|
)
|
|
|
(7.2
|
)
|
|
Gain (loss) on long-lived assets, net
|
|
|
(2.0
|
)
|
|
|
0.3
|
|
|
Earnings from unconsolidated affiliates, net, adjusted for cash
distributions received
|
|
|
(3.3
|
)
|
|
|
0.6
|
|
|
Deferred income taxes
|
|
|
(0.2
|
)
|
|
|
0.2
|
|
|
Other non-cash income
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
EBITDA
(a)
|
|
$
|
78.8
|
|
|
$
|
103.6
|
|
|
Unit-based compensation charges
|
|
|
17.3
|
|
|
|
7.2
|
|
|
(Gain) loss on long-lived assets, net
|
|
|
2.0
|
|
|
|
(0.3
|
)
|
|
Earnings from unconsolidated affiliates, net
|
|
|
(6.9
|
)
|
|
|
(12.4
|
)
|
|
Adjusted EBITDA from unconsolidated affiliates, net
|
|
|
19.6
|
|
|
|
22.1
|
|
|
Change in fair value of commodity inventory-related derivative
contracts
|
|
|
1.1
|
|
|
|
(20.2
|
)
|
|
Significant transaction and environmental related costs and other
items
|
|
|
3.4
|
|
|
|
1.7
|
|
|
Adjusted EBITDA
(a)
|
|
$
|
115.3
|
|
|
$
|
101.7
|
|
|
|
|
|
(a)
|
|
EBITDA is defined as income before income taxes, plus interest and
debt expense, net and depreciation, amortization and accretion
expense. Adjusted EBITDA considers the adjusted earnings impact of
our unconsolidated affiliates by adjusting our equity earnings or
losses from our unconsolidated affiliates to reflect our
proportionate share (based on the distribution percentage) of their
EBITDA, excluding impairments. Adjusted EBITDA also considers the
impact of certain significant items, such as unit-based compensation
charges, gains or losses on long-lived assets, third party costs
incurred related to potential and completed acquisitions, certain
environmental remediation costs, the change in fair value of
commodity inventory-related derivative contracts, costs associated
with the realignment of our Marketing, Supply and Logistics
operations and Corporate operations and other transactions
identified in a specific reporting period. The change in fair value
of commodity inventory-related derivative contracts is considered in
determining Adjusted EBITDA given that the timing of recognizing
gains and losses on these derivative contracts differs from the
recognition of revenue for the related underlying sale of inventory
to which these derivatives relate. Changes in the fair value of
other derivative contracts is not considered in determining Adjusted
EBITDA given the relatively short-term nature of those derivative
contracts. EBITDA and Adjusted EBITDA are not measures calculated in
accordance with generally accepted accounting principles (GAAP), as
they do not include deductions for items such as depreciation,
amortization and accretion, interest and income taxes, which are
necessary to maintain our business. EBITDA and Adjusted EBITDA
should not be considered alternatives to net income, operating cash
flow or any other measure of financial performance presented in
accordance with GAAP. EBITDA and Adjusted EBITDA calculations may
vary among entities, so our computation may not be comparable to
measures used by other companies.
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
|
|
Segment Data
|
|
(in millions)
|
|
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
|
Gathering and Processing
|
|
|
|
|
|
Revenues
|
|
$
|
235.1
|
|
|
$
|
381.6
|
|
|
Costs of product/services sold
|
|
|
138.0
|
|
|
|
287.7
|
|
|
Operations and maintenance expenses
|
|
|
18.1
|
|
|
|
17.7
|
|
|
Gain (loss) on long-lived assets
|
|
|
(1.8
|
)
|
|
|
0.1
|
|
|
Earnings (loss) from unconsolidated affiliates, net
|
|
|
(0.2
|
)
|
|
|
5.7
|
|
|
EBITDA
|
|
$
|
77.0
|
|
|
$
|
82.0
|
|
|
|
|
|
|
|
Storage and Transportation
|
|
|
|
|
|
Revenues
|
|
$
|
11.4
|
|
|
$
|
6.2
|
|
|
Costs of product/services sold
|
|
|
—
|
|
|
|
0.1
|
|
|
Operations and maintenance expenses
|
|
|
1.0
|
|
|
|
0.8
|
|
|
Earnings from unconsolidated affiliates, net
|
|
|
7.1
|
|
|
|
6.7
|
|
|
EBITDA
|
|
$
|
17.5
|
|
|
$
|
12.0
|
|
|
|
|
|
|
|
|
Marketing, Supply and Logistics
|
|
|
|
|
|
Revenues
|
|
$
|
588.7
|
|
|
$
|
727.2
|
|
|
Costs of product/services sold
|
|
|
557.6
|
|
|
|
678.0
|
|
|
Operations and maintenance expenses
|
|
|
9.5
|
|
|
|
16.0
|
|
|
Gain (loss) on long-lived assets, net
|
|
|
(0.2
|
)
|
|
|
0.2
|
|
|
EBITDA
|
|
$
|
21.4
|
|
|
$
|
33.4
|
|
|
|
|
|
|
|
Total Segment EBITDA
|
|
$
|
115.9
|
|
|
$
|
127.4
|
|
|
Corporate
|
|
|
(37.1
|
)
|
|
|
(23.8
|
)
|
|
EBITDA
|
|
$
|
78.8
|
|
|
$
|
103.6
|
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
|
|
Operating Statistics
|
|
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
|
2018
|
|
|
Gathering and Processing (MMcf/d)
|
|
|
|
|
|
Bakken - Arrow
|
|
74.9
|
|
|
63.3
|
|
|
Marcellus
|
|
316.8
|
|
|
432.3
|
|
|
Barnett
|
|
262.3
|
|
|
288.4
|
|
|
Delaware (a) |
|
176.4
|
|
|
129.5
|
|
|
PRB Niobrara - Jackalope Gas Gathering (a) |
|
131.7
|
|
|
75.1
|
|
|
Other
|
|
40.1
|
|
|
49.3
|
|
|
Total gas gathering volumes
|
|
1,002.2
|
|
|
1,037.9
|
|
|
Processing volumes
|
|
309.8
|
|
|
273.9
|
|
|
Compression volumes
|
|
371.2
|
|
|
469.2
|
|
|
Arrow Midstream
|
|
|
|
|
|
Bakken Crude Oil (MBbls/d)
|
|
92.8
|
|
|
80.2
|
|
|
Bakken Water (MBbls/d)
|
|
55.9
|
|
|
38.8
|
|
|
|
|
|
|
|
Storage and Transportation
|
|
|
|
|
|
Northeast Storage - firm contracted capacity (Bcf) (a) |
|
33.7
|
|
|
31.5
|
|
|
% of operational capacity contracted
|
|
97
|
%
|
|
82
|
%
|
|
Firm storage services (MMcf/d) (a) |
|
250.8
|
|
|
356.1
|
|
|
Interruptible storage services (MMcf/d) (a) |
|
8.5
|
|
|
0.8
|
|
|
Northeast Transportation - firm contracted capacity (MMcf/d) (a) |
|
1,566.1
|
|
|
1,492.1
|
|
|
% of operational capacity contracted
|
|
86
|
%
|
|
82
|
%
|
|
Firm services (MMcf/d) (a) |
|
1,236.0
|
|
|
1,368.0
|
|
|
Interruptible services (MMcf/d) (a) |
|
15.4
|
|
|
41.4
|
|
|
Gulf Coast Storage - firm contracted capacity (Bcf) (a) |
|
29.9
|
|
|
28.5
|
|
|
% of operational capacity contracted
|
|
78
|
%
|
|
74
|
%
|
|
Firm storage services (MMcf/d) (a) |
|
334.6
|
|
|
354.8
|
|
|
Interruptible services (MMcf/d) (a) |
|
65.1
|
|
|
102.9
|
|
|
COLT Hub
|
|
|
|
|
|
Rail loading (MBbls/d)
|
|
58.8
|
|
|
36.0
|
|
|
Outbound pipeline (MBbls/d) (b) |
|
17.2
|
|
|
12.1
|
|
|
|
|
|
|
|
Marketing, Supply and Logistics
|
|
|
|
|
|
NGL Operations
|
|
|
|
|
|
NGL volumes sold or processed (MBbls/d)
|
|
116.8
|
|
|
169.0
|
|
|
NGL volumes trucked (MBbls/d)
|
|
44.4
|
|
|
50.0
|
|
|
Crude Operations
|
|
|
|
|
|
Crude barrels trucked (MBbls/d)
|
|
8.8
|
|
|
7.5
|
|
|
(a)
|
|
Represents 50% owned joint venture, operational data reported is at
100%.
|
|
(b)
|
|
Represents only throughput leaving the terminal.
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
|
|
Revised Full Year 2019 Adjusted EBITDA and Distributable Cash
Flow Guidance
|
|
Reconciliation to Net Income
|
|
(in millions)
|
|
(unaudited)
|
|
|
Expected 2019 Range
Low - High
(f)
|
|
Net income
|
|
$125 - $155
|
|
Interest and debt expense, net
|
|
125 - 130
|
|
Depreciation, amortization and accretion
|
|
175 - 180
|
|
Unit-based compensation charges
|
|
25 - 30
|
|
Earnings from unconsolidated affiliates
|
|
(50) - (55)
|
|
Adjusted EBITDA from unconsolidated affiliates
|
|
90 - 95
|
|
Adjusted EBITDA
|
|
$500 - $530
|
|
|
|
|
Cash interest expense (a) |
|
(130) - (135)
|
|
Maintenance capital expenditures (b) |
|
(20) - (25)
|
|
PRB cash received in excess of recognized revenues (c) |
|
20
|
|
Adjusted EBITDA from unconsolidated affiliates
|
|
(90) - (95)
|
|
Distributable cash flow from unconsolidated affiliates
|
|
85 - 90
|
|
Cash distributions to preferred unitholders (d) |
|
(90)
|
|
Distributable cash flow attributable to CEQP common unitholders
(e)
|
|
$275 - $305
|
|
|
|
|
(a)
|
|
Cash interest expense less amortization of deferred financing costs.
|
|
(b)
|
|
Maintenance capital expenditures are defined as those capital
expenditures which do not increase operating capacity or revenues
from existing levels.
|
|
(c)
|
|
Cash received from our customers of our Powder River Basin
operations pursuant to certain contractual minimum revenue
commitments in excess of related revenue recognized under FASB ASC
606.
|
|
(d)
|
|
Includes cash distributions to preferred unit holders and Crestwood
Niobrara preferred unitholders.
|
|
(e)
|
|
Distributable cash flow is defined as Adjusted EBITDA, adjusted for
cash interest expense, maintenance capital expenditures, income
taxes, the cash received from our Powder River Basin operations in
excess of revenue recognized, and our proportionate share of our
unconsolidated affiliates' distributable cash flow. Distributable
cash flow should not be considered an alternative to cash flows from
operating activities or any other measure of financial performance
calculated in accordance with generally accepted accounting
principles as those items are used to measure operating performance,
liquidity, or the ability to service debt obligations. We believe
that distributable cash flow provides additional information for
evaluating our ability to declare and pay distributions to
unitholders. Distributable cash flow, as we define it, may not be
comparable to distributable cash flow or similarly titled measures
used by other companies.
|
|
(f)
|
|
Excludes the initial impact of the Jackalope acquisition and the
issuance of the 2027 senior notes.
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190430005170/en/
Crestwood Equity Partners LP
Investor Contact
Josh
Wannarka, 713-380-3081
josh.wannarka@crestwoodlp.com
Vice
President, Investor Relations
Source: Crestwood Equity Partners LP