Blueknight Energy Partners, L.P. (“Blueknight” or the
“Partnership”) (Nasdaq: BKEP and BKEPP) today reported its
financial results for the third quarter ended September
30, 2021. Income from continuing operations was $12.6 million
in the third quarter of 2021, compared to
$9.4 million for the same period in 2020. Adjusted
earnings before interest, taxes, depreciation and amortization
(“Adjusted EBITDA”) from continuing operations
was $16.9 million in the third quarter of
2021 compared to $13.8 million for the same period
in 2020. The year-over-year increase was due to higher asphalt
terminalling services operating margin, excluding depreciation and
amortization, improved general and administrative expense, and
other income of $2.1 million related to insurance claim
reimbursements.
“Our business continues to outperform our expectations, and we
had one of our best quarters to date,” commented Andrew Woodward,
Chief Executive Officer. Our income from continuing operations,
Adjusted EBITDA, and Distributable Cash Flow were up year-to-date
27%, 12% and 19%, respectively, while total volumes were in-line
with the prior year and slightly above the trailing three-year
average. We also achieved several milestones during the quarter,
including reaching or exceeding both our long-term leverage and
distribution coverage ratio targets, fully transitioning and
achieving our synergy targets related to our crude oil business
sale, and extending all 2021 contracts to date at current or
more favorable terms.
“Furthermore, last week Congress passed the largest federal
investment in infrastructure in more than a decade that includes
$110 billion for roads, bridges, and other major projects. This
historic capital infusion in our nation's roadways combined with
the strength and financial position of our current business,
provides for a favorable outlook for years to come,” added
Woodward.
QUARTERLY PERFORMANCE
Asphalt terminalling services total operating margin, excluding
depreciation and amortization, in the third quarter of
2021 was $17.4 million, up 6% compared to the same
period in 2020. Total asphalt throughput volumes for the third
quarter of 2021 were 7% higher compared to the same period in 2020.
Total revenue increased to $30.3 million, with approximately
90% categorized as fixed-fee, take-or-pay revenue after
excluding variable cost recovery revenue. Total variable throughput
revenue increased 6% compared to the same period in 2020 primarily
due to the timing of certain customers achieving excess volumes
over annual minimum thresholds during the third quarter.
Total operating expenses, excluding depreciation and
amortization, increased 3% to $12.9 million. Notable factors
contributing to this increase included certain contracts that
changed from a lease arrangement to an operating arrangement, and
higher utility costs, which are passed-through and have no
impact on total operating margin.
General and administrative expense in the third quarter of
2021 was $3.0 million, improved by 8% as compared to the
third quarter of 2020 due to lower corporate overhead
following completion of the crude oil divestitures in the first
quarter of 2021.
BALANCE SHEET AND CASH FLOW
Third quarter 2021 Distributable Cash Flow was $13.9
million compared to $11.5 million for the same period in
2020. The 21% increase was attributable to improved
business performance, other income, and lower cash
interest expense, which offset timing of higher maintenance
capital. The coverage ratio on all distributions was
1.73 times for the third quarter of 2021 versus
1.42 times for the same period in 2020. The coverage
ratio on common unit distributions was 4.35 times for
the third quarter of 2021 versus 2.96 times for
the same period in 2020.
During the third quarter of 2021, net capital expenditures
from continuing operations were $2.7 million, which included
$2.4 million of net maintenance capital.
As of September 30, 2021, total debt was $101.0 million,
and the leverage ratio was 1.87 times, versus
4.06 times as of September 30, 2020. At the end of
the third quarter of 2021, total availability under the credit
facility was $198.3 million, and availability subject to
covenant restrictions was $157.2 million.
As of November 4, 2021, total debt was $96.0 million
and total cash was $0.1 million.
CONFERENCE CALL DETAILS
The Partnership will discuss third quarter
2021 results during a conference call tomorrow, Thursday,
November 11, 2021, at 10:00 a.m. CST (11:00 a.m. EST). The
conference call will be accessible by telephone at 1-855-327-6837.
International participants will be able to access the conference
call at 1-631-891-4304. Participants are requested to dial in five
to ten minutes before the scheduled start time. An audio replay
will be available through the “Investors” section of the
Partnership’s website.
Additional information regarding the Partnership’s results of
operations will be provided in the Partnership’s
Quarterly Report on Form 10-Q for the three months
ended September 30, 2021, to be filed with the SEC on November
12, 2021.
RESULTS OF OPERATIONS
The following table summarizes the Partnership’s financial
results for the three and nine months ended September 30,
2020 and 2021 (in thousands, except per unit data):
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
2021 |
|
2020 |
|
2021 |
Fixed fee revenue |
|
$ |
23,494 |
|
|
$ |
24,413 |
|
|
$ |
67,572 |
|
|
$ |
73,195 |
|
Variable cost recovery revenue |
|
|
2,870 |
|
|
|
3,126 |
|
|
|
9,736 |
|
|
|
8,658 |
|
Variable throughput and other revenue |
|
|
2,631 |
|
|
|
2,800 |
|
|
|
3,128 |
|
|
|
3,320 |
|
Total revenue |
|
|
28,995 |
|
|
|
30,339 |
|
|
|
80,436 |
|
|
|
85,173 |
|
Operating expenses, excluding depreciation and amortization |
|
|
(12,517 |
) |
|
|
(12,917 |
) |
|
|
(36,137 |
) |
|
|
(38,880 |
) |
Total operating margin,
excluding depreciation and amortization |
|
|
16,478 |
|
|
|
17,422 |
|
|
|
44,299 |
|
|
|
46,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,054 |
|
|
|
2,919 |
|
|
|
10,324 |
|
|
|
8,919 |
|
General and administrative expense |
|
|
3,237 |
|
|
|
2,967 |
|
|
|
10,501 |
|
|
|
9,921 |
|
(Gain)loss on disposal of assets |
|
|
(324 |
) |
|
|
129 |
|
|
|
(250 |
) |
|
|
129 |
|
Operating income |
|
|
10,511 |
|
|
|
11,407 |
|
|
|
23,724 |
|
|
|
27,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income(expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
176 |
|
|
|
2,187 |
|
|
|
969 |
|
|
|
2,529 |
|
Interest expense |
|
|
(1,302 |
) |
|
|
(968 |
) |
|
|
(4,417 |
) |
|
|
(3,996 |
) |
Provision for income taxes |
|
|
- |
|
|
|
(10 |
) |
|
|
1 |
|
|
|
(30 |
) |
Income from continuing
operations |
|
|
9,385 |
|
|
|
12,616 |
|
|
|
20,277 |
|
|
|
25,827 |
|
Income(loss) from discontinued operations(1) |
|
|
5,008 |
|
|
|
(20 |
) |
|
|
(4,533 |
) |
|
|
75,705 |
|
Net income |
|
$ |
14,393 |
|
|
$ |
12,596 |
|
|
$ |
15,744 |
|
|
$ |
101,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income(loss)
for calculation of earnings per unit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General partner interest in net income |
|
$ |
228 |
|
|
$ |
200 |
|
|
$ |
249 |
|
|
$ |
1,608 |
|
Preferred interest in net income |
|
$ |
6,278 |
|
|
$ |
6,177 |
|
|
$ |
18,836 |
|
|
$ |
18,674 |
|
Net income(loss) available to limited partners |
|
$ |
7,887 |
|
|
$ |
6,219 |
|
|
$ |
(3,341 |
) |
|
$ |
81,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net
income(loss) from discontinued operations per common unit |
|
$ |
0.12 |
|
|
$ |
- |
|
|
$ |
(0.11 |
) |
|
$ |
1.74 |
|
Basic and diluted net income
from continuing operations per common unit |
|
$ |
0.07 |
|
|
$ |
0.14 |
|
|
$ |
0.03 |
|
|
$ |
0.15 |
|
Basic and diluted net
income(loss) per common unit |
|
$ |
0.19 |
|
|
$ |
0.14 |
|
|
$ |
(0.08 |
) |
|
$ |
1.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common units
outstanding - basic and diluted |
|
|
41,166 |
|
|
|
41,514 |
|
|
|
41,072 |
|
|
|
41,471 |
|
(1 |
) |
On December 21,
2020, Blueknight announced it had entered into multiple
definitive agreements to sell its (i) crude oil terminalling, (ii)
crude oil pipeline, and (iii) crude oil trucking segments. The
sales of these segments closed in the first quarter of 2021. As
such, these segments are presented as discontinued operations in
the Partnership’s financial statements. |
Non-GAAP Financial Measures
This press release contains the non-GAAP financial measures of
Adjusted EBITDA from continuing operations, Distributable Cash Flow
from continuing operations, and total operating margin, excluding
depreciation and amortization. Adjusted EBITDA from continuing
operations is defined as earnings before interest, income taxes,
depreciation and amortization, non-cash equity-based compensation,
asset impairment charges, gains and losses on asset disposals, and
other select items which management feels decreases the
comparability of results among periods. Distributable Cash Flow
from continuing operations is defined as Adjusted EBITDA from
continuing operations minus cash paid for interest, cash paid for
taxes, and maintenance capital expenditures. Operating margin,
excluding depreciation and amortization is defined as revenues from
related parties and external customers less operating expenses,
excluding depreciation and amortization. The use of Adjusted EBITDA
from continuing operations, Distributable Cash Flow from continuing
operations and operating margin, excluding depreciation and
amortization should not be considered as alternatives to GAAP
measures such as operating income, net income or cash flows from
operating activities. Adjusted EBITDA from continuing operations,
Distributable Cash Flow from continuing operations and
operating margin, excluding depreciation and amortization are
presented because the Partnership believes they provide additional
information with respect to its business activities and are used as
supplemental financial measures by management and external users of
the Partnership’s financial statements, such as investors,
commercial banks and others to assess, among other things, the
Partnership’s operating performance and return on capital as
compared to those of other companies in the midstream energy
sector, without regard to financing or capital structure.
Reconciliations of operating margin, excluding depreciation and
amortization to its most directly comparable GAAP measure is
included in the results of operations table above.
The following table presents a reconciliation of Adjusted EBITDA
from continuing operations and Distributable Cash Flow from
continuing operations to income from continuing operations for
the periods shown (in thousands, except ratios):
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
2021 |
|
2020 |
|
2021 |
Income from continuing operations |
|
$ |
9,385 |
|
|
$ |
12,616 |
|
|
$ |
20,277 |
|
|
$ |
25,827 |
|
Interest expense |
|
|
1,302 |
|
|
|
968 |
|
|
|
4,417 |
|
|
|
3,996 |
|
Income taxes |
|
|
- |
|
|
|
10 |
|
|
|
(1 |
) |
|
|
30 |
|
Depreciation and non-cash amortization |
|
|
3,048 |
|
|
|
2,916 |
|
|
|
10,305 |
|
|
|
8,909 |
|
Non-cash equity-based compensation |
|
|
188 |
|
|
|
214 |
|
|
|
651 |
|
|
|
561 |
|
(Gain)loss on disposal of assets |
|
|
(324 |
) |
|
|
129 |
|
|
|
(250 |
) |
|
|
129 |
|
Other |
|
|
160 |
|
|
|
- |
|
|
|
697 |
|
|
|
808 |
|
Adjusted EBITDA from
continuing operations |
|
$ |
13,759 |
|
|
$ |
16,853 |
|
|
$ |
36,096 |
|
|
$ |
40,260 |
|
Cash paid for interest |
|
|
(960 |
) |
|
|
(619 |
) |
|
|
(3,647 |
) |
|
|
(2,671 |
) |
Cash paid for income taxes |
|
|
(35 |
) |
|
|
- |
|
|
|
(36 |
) |
|
|
(50 |
) |
Maintenance capital expenditures, net of reimbursable
expenditures |
|
|
(1,266 |
) |
|
|
(2,372 |
) |
|
|
(4,966 |
) |
|
|
(4,927 |
) |
Distributable cash flow from
continuing operations |
|
$ |
11,498 |
|
|
$ |
13,862 |
|
|
$ |
27,447 |
|
|
$ |
32,612 |
|
Less: Distributions declared on preferred units |
|
|
(6,379 |
) |
|
|
(6,249 |
) |
|
|
(19,139 |
) |
|
|
(18,759 |
) |
Distributable cash flow
available for common unit distributions |
|
$ |
5,119 |
|
|
$ |
7,613 |
|
|
$ |
8,308 |
|
|
$ |
13,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared on common units |
|
$ |
1,730 |
|
|
$ |
1,750 |
|
|
$ |
5,187 |
|
|
$ |
5,249 |
|
Distributions declared on preferred units |
|
|
6,379 |
|
|
|
6,249 |
|
|
|
19,139 |
|
|
|
18,759 |
|
Total Distributions
declared |
|
$ |
8,109 |
|
|
$ |
7,999 |
|
|
$ |
24,326 |
|
|
$ |
24,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coverage ratio - common unit
distributions |
|
|
2.96 |
|
|
|
4.35 |
|
|
|
1.60 |
|
|
|
2.64 |
|
Coverage ratio - all
distributions |
|
|
1.42 |
|
|
|
1.73 |
|
|
|
1.13 |
|
|
|
1.36 |
|
Forward-Looking Statements
This release includes forward-looking statements. Statements
included in this release that are not historical facts (including,
without limitation, any statements about future financial and
operating results, guidance, projected or forecasted financial
results, objectives, project timing, expectations and intentions
and other statements that are not historical facts) are
forward-looking statements. Such forward-looking statements are
subject to various risks and uncertainties. These risks and
uncertainties include, among other things, uncertainties relating
to the Partnership’s debt levels and restrictions in its credit
agreement, its exposure to the credit risk of our third-party
customers, the Partnership’s future cash flows and operations,
future market conditions, current and future governmental
regulation, future taxation and other factors discussed in the
Partnership’s filings with the Securities and Exchange Commission.
If any of these risks or uncertainties materializes, or should
underlying assumptions prove incorrect, actual results or outcomes
may vary materially from those expected. The Partnership undertakes
no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
About Blueknight
Blueknight (Nasdaq: BKEP and BKEPP) is a publicly traded master
limited partnership that owns the largest independent asphalt
terminalling network in the country. Operations include 8.7 million
barrels of liquid asphalt storage capacity across 53 terminals and
26 states throughout the U.S. Blueknight is focused on providing
integrated terminalling solutions for tomorrow’s infrastructure and
transportation end markets. More information is available at
www.bkep.com.
Investor Relations Contact:
Matthew Lewis, Chief Financial Officer(918)
237-4032investor@bkep.com
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