NuStar Energy L.P. (NYSE: NS) today announced solid
results for the fourth quarter and full-year 2023 fueled by strong
revenues and volumes in its refined products pipelines and strong
performance in its Fuels Marketing Segment.
NuStar reported net income of $70 million for the fourth quarter
of 2023, or $0.37 per unit, compared to net income of $92 million,
or $0.18 per unit, for the fourth quarter of 2022. Results for the
fourth quarter of 2022 include a gain from insurance proceeds to
rebuild tanks at its Selby terminal. Earnings per unit (EPU) for
the fourth quarter of 2022 also included a $0.31 per unit premium
related to the repurchase of a portion of the Series D preferred
units. Excluding the effects of these items, adjusted net income
was $75 million for the fourth quarter of 2022, or $0.34 per unit.
For full-year 2023, NuStar reported net income of $274 million, or
$0.72 per unit, compared to net income of $223 million, or $0.36
per unit, for the year ended 2022.
Excluding the gain related to the sale of a portion of NuStar’s
corporate headquarters in 2023, non-cash charges and insurance
proceeds in 2022, as well as the EPU impact from the repurchases of
the Series D preferred units in 2023 and 2022, our full-year 2023
adjusted net income was $233 million, or $0.92 per unit, compared
to 2022 adjusted net income of $250 million, or $0.92 per unit.
It is important to note that earnings before interest, taxes,
depreciation and amortization (EBITDA) were not impacted by the
premium associated with the accelerated repurchase of the Series D
preferred units, and we reported EBITDA of $199 million for the
fourth quarter of 2023, compared to fourth quarter of 2022 adjusted
EBITDA of $197 million. Our adjusted EBITDA for full-year 2023 was
$735 million – up compared to 2022 adjusted EBITDA of $722
million.
Distributable Cash Flow (DCF) was $87 million for the fourth
quarter of 2023, compared to fourth quarter of 2022 adjusted DCF of
$89 million. The distribution coverage ratio was 1.73 times for the
fourth quarter of 2023.
Adjusted DCF was $354 million for full-year 2023, compared to
adjusted DCF of $357 million in 2022. The adjusted distribution
coverage ratio was 1.86 times for full-year 2023.
“I am pleased to report that we have delivered another quarter
of solid earnings results and made significant progress on many of
our strategic initiatives in 2023,” said NuStar Chairman and CEO
Brad Barron.
Operations Continue to Perform
Well
NuStar’s Pipeline Segment generated operating income of $130
million and EBITDA of $174 million in the fourth quarter of 2023,
compared to operating income of $132 million and EBITDA of $176
million in the fourth quarter of 2022, as increased revenues and
throughputs across refined products systems were offset by
decreases from the Permian Crude System and Corpus Christi Crude
System.
The Permian Crude System’s fourth quarter of 2023 volumes
averaged 528,000 BPD, down compared to the fourth quarter of 2022
but up slightly from the third quarter of 2023.
“As we have said on prior calls, our Permian volumes reflected
some producer-specific operational issues and delays in 2023, which
were largely resolved over the course of the year,” said
Barron.
For full-year 2023, NuStar’s Pipeline Segment generated
operating income of $483 million, compared to operating income of
$439 million in 2022, and EBITDA of $659 million in 2023, compared
to EBITDA of $617 million in 2022, an improvement of 7%.
“Our refined products systems, along with our Ammonia System,
generated solid, dependable revenue in 2023 as total throughputs
were up compared to 2022, reflecting the strength of these assets
and our strong position in the markets we serve in the
mid-Continent and throughout Texas,” said Barron.
“Our McKee System also performed very well this year, with
higher revenues and throughputs versus last year, and almost all
our pipeline systems benefitted from annual rate escalations linked
to either the FERC index or PPI.”
NuStar’s Storage Segment generated operating income of $26
million and EBITDA of $45 million in the fourth quarter of 2023,
compared to operating income of $22 million and EBITDA of $41
million in the fourth quarter of 2022, largely driven by the solid
performance of the West Coast region and the continuing growth from
our West Coast Renewables Strategy.
For full-year 2023, NuStar’s Storage Segment generated operating
income of $88 million and EBITDA of $163 million, compared to
operating income of $61 million and adjusted EBITDA of $180 million
in 2022. While West Coast region revenues continued to increase, an
amendment and an extension of a customer contract at the Corpus
Christi North Beach terminal combined with customer transitions and
required tank maintenance at the St. James terminal contributed to
the decrease in adjusted EBITDA.
Barron also highlighted the strong performance of NuStar’s Fuels
Marketing Segment.
“After a near record-breaking 2022, our Fuels Marketing Segment
has turned in another strong quarter, generating operating income
and EBITDA of $12 million in the fourth quarter of 2023, which is
comparable to the segment’s strong fourth quarter of 2022 results,”
said Barron. For full-year 2023, NuStar’s Fuels Marketing Segment
generated operating income and EBITDA of $33 million, comparable to
2022 operating income and EBITDA of $34 million.
Even with the acceleration of our Series D redemptions in 2023,
we ended the fourth quarter of 2023 with a healthy debt-to-EBITDA
ratio of 3.85 times and $652 million available on our $1.0 billion
unsecured revolving credit facility.
Positive Outlook for
2024
Although the pending merger with Sunoco LP is expected to close
as early as the second quarter of 2024, we want to provide our 2024
financial expectations for NuStar on a stand-alone basis. We expect
to generate full-year 2024 net income in the range of $220 to $260
million and full-year 2024 EBITDA in the range of $720 to $780
million.
NuStar once again expects to self-fund all of its operational
expenses, growth capital and distributions, and continues to target
a healthy year-end debt-to-EBITDA ratio below four times.
Conference Call Details
In light of the merger announced on January 22, 2024, NuStar no
longer plans to host its previously scheduled earnings call.
About NuStar Energy L.P.
NuStar Energy L.P., through its subsidiaries (collectively,
“NuStar” or the “Partnership”), is an independent liquids terminal
and pipeline operator. NuStar has approximately 9,500 miles of
pipeline and 63 terminal and storage facilities that store and
distribute crude oil, refined products, renewable fuels, ammonia
and specialty liquids. The Partnership’s combined system has
approximately 49 million barrels of storage capacity, and NuStar
has operations in the United States and Mexico. For more
information, visit NuStar Energy L.P.’s website at
www.nustarenergy.com and its Sustainability page at
https://sustainability.nustarenergy.com/.
Cautionary Statement Regarding
Forward-Looking Statements
This press release includes forward-looking statements regarding
future events and expectations, such as NuStar’s future
performance, plans and expenditures. All forward-looking statements
are based on NuStar’s beliefs as well as assumptions made by and
information currently available to NuStar. These statements reflect
NuStar’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 2022 annual report 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.
Except as required by law, NuStar does not intend, or undertake any
obligation, to update or revise its forward-looking statements,
whether as a result of new information, future events or
otherwise.
NuStar Energy L.P. and
Subsidiaries
Consolidated Financial
Information
(Unaudited, Thousands of
Dollars, Except Unit, Per Unit and Ratio Data)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Statement of Income Data:
Revenues:
Service revenues
$
304,989
$
299,497
$
1,155,567
$
1,120,249
Product sales
146,697
130,463
478,620
562,974
Total revenues
451,686
429,960
1,634,187
1,683,223
Costs and expenses:
Costs associated with service
revenues:
Operating expenses
95,112
92,353
371,689
364,989
Depreciation and amortization expense
63,183
63,195
250,982
251,878
Total costs associated with service
revenues
158,295
155,548
622,671
616,867
Costs associated with product sales
125,846
108,730
407,793
486,947
Impairment loss
—
—
—
46,122
General and administrative expenses
34,418
34,460
129,846
117,116
Other depreciation and amortization
expense
1,056
1,776
4,728
7,358
Total costs and expenses
319,615
300,514
1,165,038
1,274,410
Gain on sale of assets
—
—
41,075
—
Operating income
132,071
129,446
510,224
408,813
Interest expense, net
(62,698
)
(55,956
)
(241,364
)
(209,009
)
Other income, net
2,917
19,024
10,215
26,182
Income before income tax expense
72,290
92,514
279,075
225,986
Income tax expense
1,899
911
5,412
3,239
Net income
$
70,391
$
91,603
$
273,663
$
222,747
Basic and diluted net income per common
unit
$
0.37
$
0.18
$
0.72
$
0.36
Basic and diluted weighted-average common
units outstanding
126,205,999
110,566,272
116,851,373
110,341,206
Non-GAAP Data (Note 1):
Adjusted net income
$
70,391
$
75,237
$
232,588
$
249,795
Adjusted net income per common unit
$
0.37
$
0.34
$
0.92
$
0.92
EBITDA
$
199,227
$
213,441
$
776,149
$
694,231
Adjusted EBITDA
$
199,227
$
197,075
$
735,074
$
722,423
DCF
$
87,337
$
69,937
$
287,061
$
337,482
Adjusted DCF
$
87,337
$
89,216
$
353,756
$
356,761
Distribution coverage ratio
1.73x
1.58x
1.51x
1.91x
Adjusted distribution coverage ratio
1.73x
2.01x
1.86x
2.02x
For the Four Quarters Ended
December 31,
2023
2022
Consolidated Debt Coverage Ratio
3.85x
3.98x
NuStar Energy L.P. and
Subsidiaries
Consolidated Financial
Information - Continued
(Unaudited, Thousands of
Dollars, Except Barrel Data)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Pipeline:
Crude oil pipelines throughput
(barrels/day)
1,299,866
1,410,966
1,234,051
1,319,360
Refined products and ammonia pipelines
throughput (barrels/day)
617,909
611,011
602,913
579,240
Total throughput (barrels/day)
1,917,775
2,021,977
1,836,964
1,898,600
Throughput and other revenues
$
228,621
$
229,935
$
873,869
$
828,191
Operating expenses
54,754
53,609
214,751
210,719
Depreciation and amortization expense
44,294
44,726
175,930
178,802
Segment operating income
$
129,573
$
131,600
$
483,188
$
438,670
Storage:
Throughput (barrels/day)
489,206
512,504
448,331
480,129
Throughput terminal revenues
$
31,473
$
26,288
$
104,495
$
110,591
Storage terminal revenues
54,056
53,165
215,104
223,958
Total revenues
85,529
79,453
319,599
334,549
Operating expenses
40,358
38,744
156,938
154,270
Depreciation and amortization expense
18,889
18,469
75,052
73,076
Impairment loss
—
—
—
46,122
Segment operating income
$
26,282
$
22,240
$
87,609
$
61,081
Fuels Marketing:
Product sales
$
137,540
$
120,574
$
440,725
$
520,486
Cost of goods
125,401
107,850
405,992
484,477
Gross margin
12,139
12,724
34,733
36,009
Operating expenses
449
882
1,807
2,473
Segment operating income
$
11,690
$
11,842
$
32,926
$
33,536
Consolidation and Intersegment
Eliminations:
Revenues
$
(4
)
$
(2
)
$
(6
)
$
(3
)
Cost of goods
(4
)
(2
)
(6
)
(3
)
Total
$
—
$
—
$
—
$
—
Consolidated Information:
Revenues
$
451,686
$
429,960
$
1,634,187
$
1,683,223
Costs associated with service
revenues:
Operating expenses
95,112
92,353
371,689
364,989
Depreciation and amortization expense
63,183
63,195
250,982
251,878
Total costs associated with service
revenues
158,295
155,548
622,671
616,867
Costs associated with product sales
125,846
108,730
407,793
486,947
Impairment loss
—
—
—
46,122
Segment operating income
167,545
165,682
603,723
533,287
Gain on sale of assets
—
—
41,075
—
General and administrative expenses
34,418
34,460
129,846
117,116
Other depreciation and amortization
expense
1,056
1,776
4,728
7,358
Consolidated operating income
$
132,071
$
129,446
$
510,224
$
408,813
NuStar Energy L.P. and Subsidiaries
Reconciliation of Non-GAAP Financial Information
(Unaudited, Thousands of Dollars, Except Ratio Data)
Note 1: NuStar Energy L.P. (the Partnership) utilizes
financial measures, such as earnings before interest, taxes,
depreciation and amortization (EBITDA), distributable cash flow
(DCF) and distribution coverage ratio, which are not defined in
U.S. generally accepted accounting principles (GAAP). Management
believes these financial measures provide useful information to
investors and other external users of our financial information
because (i) they provide additional information about the operating
performance of the Partnership’s assets and the cash the business
is generating, (ii) investors and other external users of our
financial statements benefit from having access to the same
financial measures being utilized by management and our board of
directors when making financial, operational, compensation and
planning decisions and (iii) they highlight the impact of
significant transactions. We present segment EBITDA to facilitate
period-over-period comparisons of the operational performance of
our business segments and to understand our business segments’
relative contributions to our consolidated performance. We may also
adjust these measures to enhance the comparability of our
performance across periods.
Our board of directors and management use EBITDA and/or DCF when
assessing the following: (i) the performance of our assets, (ii)
the viability of potential projects, (iii) our ability to fund
distributions, (iv) our ability to fund capital expenditures and
(v) our ability to service debt. In addition, our board of
directors uses EBITDA, DCF and a distribution coverage ratio, which
is calculated based on DCF, as some of the factors in its
compensation determinations. DCF is a financial indicator used by
the master limited partnership (MLP) investment community to
compare partnership performance. DCF is used by the MLP investment
community, in part, because the value of a partnership unit is
partially based on its yield, and its yield is based on the cash
distributions a partnership can pay its unitholders.
None of these financial measures are presented as an alternative
to net income. They should not be considered in isolation or as
substitutes for a measure of performance prepared in accordance
with GAAP.
The following is a reconciliation of net income to EBITDA, DCF
and distribution coverage ratio.
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net income
$
70,391
$
91,603
$
273,663
$
222,747
Interest expense, net
62,698
55,956
241,364
209,009
Income tax expense
1,899
911
5,412
3,239
Depreciation and amortization expense
64,239
64,971
255,710
259,236
EBITDA
199,227
213,441
776,149
694,231
Interest expense, net
(62,698
)
(55,956
)
(241,364
)
(209,009
)
Reliability capital expenditures
(7,504
)
(8,118
)
(27,995
)
(32,775
)
Income tax expense
(1,899
)
(911
)
(5,412
)
(3,239
)
Long-term incentive equity awards (a)
3,242
3,337
12,919
11,434
Preferred unit distributions
(23,335
)
(32,511
)
(114,729
)
(127,589
)
Impairment loss
—
—
—
46,122
Income tax benefit related to impairment
loss
—
—
—
(1,144
)
Premium on redemption/repurchase of Series
D Cumulative Convertible Preferred Units
—
(49,600
)
(107,770
)
(49,600
)
Other items
(19,696
)
255
(4,737
)
9,051
DCF
$
87,337
$
69,937
$
287,061
$
337,482
Distributions applicable to common limited
partners
$
50,607
$
44,328
$
189,724
$
176,746
Distribution coverage ratio (b)
1.73x
1.58x
1.51x
1.91x
(a)
We intend to satisfy the vestings
of these equity-based awards with the issuance of our common units.
As such, the expenses related to these awards are considered
non-cash and added back to DCF. Certain awards include distribution
equivalent rights (DERs). Payments made in connection with DERs are
deducted from DCF.
(b)
Distribution coverage ratio is
calculated by dividing DCF by distributions applicable to common
limited partners.
NuStar Energy L.P. and Subsidiaries
Reconciliation of Non-GAAP Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio and Per Unit
Data)
The following is the reconciliation for the
calculation of our Consolidated Debt Coverage Ratio, as defined in
our revolving credit agreement (the Revolving Credit
Agreement).
Year Ended December
31,
2023
2022
Operating income
$
510,224
$
408,813
Depreciation and amortization expense
255,710
259,236
Impairment loss
—
46,122
Amortization expense of equity-based
awards
15,547
13,781
Pro forma effect of disposition (a)
—
(1,760
)
Other
(6,087
)
(3,607
)
Consolidated EBITDA, as defined in the
Revolving Credit Agreement
$
775,394
$
722,585
Long-term debt, less current portion of
finance leases
$
3,410,338
$
3,293,415
Long-term portion of finance leases
(50,707
)
(51,127
)
Unamortized debt issuance costs
27,809
33,252
NuStar Logistics’ floating rate
subordinated notes
(402,500
)
(402,500
)
Consolidated Debt, as defined in the
Revolving Credit Agreement
$
2,984,940
$
2,873,040
Consolidated Debt Coverage Ratio
(Consolidated Debt to Consolidated EBITDA)
3.85x
3.98x
(a)
This adjustment represents the pro forma
effect of the disposition of the Point Tupper terminal, which was
sold in April 2022.
The following are reconciliations of net income / net income per
common unit to adjusted net income / adjusted net income per common
unit.
Three Months Ended December
31,
2023
2022
Net income / net income per common
unit
$
70,391
$
0.37
$
91,603
$
0.18
Gain from insurance recoveries
—
—
(16,366
)
(0.15
)
Premium on repurchase of Series D
Cumulative Convertible Preferred Units
—
—
—
0.31
Adjusted net income / adjusted net income
per common unit
$
70,391
$
0.37
$
75,237
$
0.34
Year Ended December
31,
2023
2022
Net income / net income per common
unit
$
273,663
$
0.72
$
222,747
$
0.36
Premium on redemption/repurchase of Series
D Cumulative Convertible Preferred Units
—
0.55
—
0.31
Gain on sale of assets
(41,075
)
(0.35
)
—
—
Impairment loss
—
—
46,122
0.42
Income tax benefit related to impairment
loss
—
—
(1,144
)
(0.01
)
Gain from insurance recoveries
—
—
(16,366
)
(0.15
)
Other
—
—
(1,564
)
(0.01
)
Adjusted net income / adjusted net income
per common unit
$
232,588
$
0.92
$
249,795
$
0.92
NuStar Energy L.P. and Subsidiaries
Reconciliation of Non-GAAP Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio Data)
The following is a reconciliation of EBITDA to adjusted
EBITDA.
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
EBITDA
$
199,227
$
213,441
$
776,149
$
694,231
Gain on sale of assets
—
—
(41,075
)
—
Gain from insurance recoveries
—
(16,366
)
—
(16,366
)
Impairment loss
—
—
—
46,122
Other
—
—
—
(1,564
)
Adjusted EBITDA
$
199,227
$
197,075
$
735,074
$
722,423
The following is a reconciliation of DCF to adjusted DCF and
adjusted distribution coverage ratio.
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
DCF
$
87,337
$
69,937
$
287,061
$
337,482
Premium on repurchase/redemption of Series
D Cumulative Convertible Preferred Units
—
49,600
107,770
49,600
Gain from insurance recoveries
—
(16,366
)
—
(16,366
)
Gain on sale of assets
—
—
(41,075
)
—
Other
—
(13,955
)
—
(13,955
)
Adjusted DCF
$
87,337
$
89,216
$
353,756
$
356,761
Distributions applicable to common limited
partners
$
50,607
$
44,328
$
189,724
$
176,746
Adjusted distribution coverage ratio
(a)
1.73x
2.01x
1.86x
2.02x
(a)
Adjusted distribution coverage ratio is
calculated by dividing adjusted DCF by distributions applicable to
common limited partners.
NuStar Energy L.P. Reconciliation of
Non-GAAP Financial Information - Continued (Unaudited,
Thousands of Dollars)
The following are reconciliations for our reported segments of
operating income to segment EBITDA and adjusted segment EBITDA.
Three Months Ended December
31, 2023
Pipeline
Storage
Fuels Marketing
Operating income
$
129,573
$
26,282
$
11,690
Depreciation and amortization expense
44,294
18,889
—
Segment EBITDA
$
173,867
$
45,171
$
11,690
Three Months Ended December
31, 2022
Pipeline
Storage
Fuels Marketing
Operating income
$
131,600
$
22,240
$
11,842
Depreciation and amortization expense
44,726
18,469
—
Segment EBITDA
$
176,326
$
40,709
$
11,842
Year Ended December 31,
2023
Pipeline
Storage
Fuels Marketing
Operating income
$
483,188
$
87,609
$
32,926
Depreciation and amortization expense
175,930
75,052
—
Segment EBITDA
$
659,118
$
162,661
$
32,926
Year Ended December 31,
2022
Pipeline
Storage
Fuels Marketing
Operating income
$
438,670
$
61,081
$
33,536
Depreciation and amortization expense
178,802
73,076
—
Segment EBITDA
617,472
134,157
33,536
Impairment loss
—
46,122
—
Adjusted segment EBITDA
$
617,472
$
180,279
$
33,536
The following is a reconciliation of projected net income to
EBITDA.
Projected for the Year Ended
December 31, 2024
Net income
$
220,000 - 260,000
Interest expense, net
242,000 - 249,000
Income tax expense
3,000 - 6,000
Depreciation and amortization expense
255,000 - 265,000
EBITDA
$
720,000 - 780,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240214468139/en/
Media: Mary Rose Brown 210-918-2314
maryrose.brown@nustarenergy.com
Investors: Pam Schmidt 210-918-2854
pam.schmidt@nustarenergy.com
Grafico Azioni NuStar Energy (NYSE:NS)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni NuStar Energy (NYSE:NS)
Storico
Da Giu 2023 a Giu 2024