PITTSBURGH, Jan. 30, 2020
/PRNewswire/ -- CNX Midstream Partners LP (NYSE: CNXM)
("CNXM", "CNX Midstream" or the "Partnership") today reported
financial and operational results for the three months and the full
year ended December 31, 2019.(1)
Fourth Quarter and Full Year Results
The Partnership continued its solid financial performance during
the three months and year ended December 31, 2019.
Comparative results net to the Partnership, with the exception of
net cash provided by operating activities, which is presented on a
gross consolidated basis, were as follows:
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
|
$
|
48.5
|
|
|
$
|
42.6
|
|
|
$
|
174.3
|
|
|
$
|
134.0
|
|
Net cash provided by
operating activities
|
$
|
41.4
|
|
|
$
|
48.9
|
|
|
$
|
217.1
|
|
|
$
|
180.1
|
|
Adjusted EBITDA
(non-GAAP)(2)
|
$
|
61.7
|
|
|
$
|
53.5
|
|
|
$
|
232.0
|
|
|
$
|
174.7
|
|
Distributable cash
flow (non-GAAP)(2)
|
$
|
48.4
|
|
|
$
|
42.7
|
|
|
$
|
181.9
|
|
|
$
|
138.6
|
|
Distribution coverage
ratio(2)
|
1.30x
|
|
|
1.57x
|
|
|
1.41x
|
|
|
1.39x
|
|
Full year 2019 adjusted EBITDA of $232
million and distributable cash flow of $182 million exceeded the high-end of the
company's previously stated guidance of $220-$230 million
and $170-$180
million, respectively. For 2019, total gross capital
investment was $328 million, and
total capital investment net to the Partnership was $316 million, which were within the previously
stated guidance of $310-$330 million.
"The team finished the year with a strong quarter, capping
another year of growth and impressive financial and operating
performance for CNX Midstream," said Nicholas J. DeIuliis, Chief Executive Officer of
CNX Midstream GP LLC (the "General Partner"). "This marks the 19th
consecutive quarterly cash distribution increase at the targeted
15% annual growth rate. For the full year 2019, CNXM reported a 30%
increase in net income, a 33% increase in adjusted EBITDA, and
distributable cash flow grew by 31% over 2018 results."
Mr. DeIuliis continued, "In 2019 we completed a substantial
portion of major system upgrades consisting of increasing capacity,
adding multiple tiers of gathering pressures for CNX Resources
Corporation ("CNX"), and expanding our market outlets. These
upgrades included additional compression horsepower and capacity in
our McQuay system area, as well as new greenfield compressor
station projects, pipeline infrastructure, and transmission
pipeline interconnects in our Richhill field. This was a massive
undertaking and the team executed flawlessly. These system upgrades
will benefit CNXM and CNX for years to come. CNXM continues to
expect capital investments to decline significantly in 2020,
resulting in approximately $130
million in free cash flow(3). Over the past five
years, CNXM's EBITDA and distributable cash flow per LP unit grew
at a compound annual growth rate (CAGR) of approximately 30% and
24%, respectively. We expect continued EBITDA growth of
approximately 12% and 15% in 2020 and 2021(2),
respectively, compared to the midpoints of 2020 and 2021 guidance,
while we expect capital expenditures to decline over those same
time periods. Lastly, we are reaffirming our 15% annual
distribution growth target through 2023."
Incentive Distribution Rights (IDRs) Elimination
Transaction
On January 29, 2020, CNX and CNXM
entered into and closed definitive agreements to eliminate CNXM's
IDRs held by its general partner and to convert the 2.0% general
partner interest in CNXM into a non-economic general partnership
interest (collectively, the "IDR Elimination Transaction").
Pursuant to the IDR Elimination Transaction agreements, CNX will
receive the following consideration in exchange for the IDRs and
the 2% general partner interest:
- 26 million CNXM common units;
- 3 million new CNXM Class B units. The newly issued Class B
units will not receive or accrue distributions until January 1, 2022, at which time they will
automatically convert into CNXM common units; and
- $135 million cash, payable in
three installments of $50 million on
December 31, 2020, $50 million on December
31, 2021 and $35 million on
December 31, 2022.
As a result of the IDR Elimination Transaction, CNX now owns
47.7 million common units, or approximately 53.1%, of the
outstanding limited partner interests in CNXM, excluding the Class
B units. Upon conversion of the Class B units to CNXM common units
on January 1, 2022, CNX's ownership
will increase to 50.7 million units on a proforma basis.
The boards of directors of CNX and CNXM, as well as the CNXM
Conflicts Committee, which consists entirely of independent
directors of CNXM, unanimously approved the IDR Elimination
Transaction. Commenting on the transaction, Mr. DeIuliis
said: "This transaction simplifies our capital structure and sets
the midstream company up to excel during its next chapter. We have
reduced CNXM's cost of capital, further aligned CNX's equity
interest with common unitholders, and removed a key overhang
expressed by the investor base. This transaction is expected to be
immediately accretive to distributable cash flow (DCF) per unit in
the first year and gain further accretion in year two."
Jefferies Group LLC acted as financial advisor and Latham &
Watkins LLP acted as legal advisor to CNX. Evercore Group L.L.C.
acted as financial advisor and Baker Botts L.L.P. acted as legal
advisor to the CNXM Conflicts Committee. Citi acted as
financial advisor to the CNX board of directors.
2020 Guidance
Based on current expectations,
management reaffirms the following guidance:
($ in
millions)
|
2020E
|
|
Reaffirmed
|
Throughput
(BBtu/d)*
|
1,600
|
-
|
1,750
|
Capital
Expenditures
|
$80
|
-
|
$100
|
Adjusted
EBITDA(2)
|
$250
|
-
|
$270
|
Distributable Cash
Flow(2)
|
$185
|
-
|
$205
|
Distribution
Coverage(2)
|
1.2x
|
-
|
1.3x
|
LP Distribution
Growth Target
|
15%
|
*Excludes third-party volumes under high-pressure
short-haul agreements.
The Partnership expects EBITDA to grow approximately 15% in
2021, compared to the midpoint of 2020 guidance(2). The
Partnership expects capital expenditures to decline meaningfully in
2021, compared to 2020.
Quarterly Distribution
As previously announced, the
Board of Directors of CNXM's general partner, CNX Midstream GP LLC,
has declared a cash distribution of $0.4143 per unit with
respect to the fourth quarter of 2019. The distribution will be
made on February 13, 2020 to
unitholders of record as of the close of business on February 5, 2020. Given the record date, for the
quarter ended December 31, 2019, CNX
will receive distributions on the new CNXM common units and not on
the IDR's or 2.0% general partner interest. The distribution, which
equates to an annual rate of $1.6572 per unit, represents
an increase of 3.6% over the prior quarter, and an increase of 15%
over the distribution paid with respect to the fourth quarter of
2018.
Capital Investment and Resources
For full year 2019,
CNX Midstream's total capital investment net to the Partnership was
$316 million, which includes
investment in expansion projects of $295
million and maintenance capital of $21 million.
As of December 31, 2019, CNX Midstream had outstanding
borrowings of $312 million under its
$600 million revolving credit
facility.
Fourth Quarter and Full Year 2019 Financial and Operational
Results Conference Call
A conference call and webcast,
during which management will discuss fourth quarter and full year
2019 financial and operational results and guidance for 2020, is
scheduled for January 30, 2020 at
11:00 a.m. Eastern Time. Prepared
remarks by members of management will be followed by a question and
answer period. Interested parties may listen via webcast at
www.cnxmidstream.com. Participants who would like to ask questions
may join the conference by phone at 888-349-0097 (international
412-902-0126) five to ten minutes prior to the scheduled start time
(reference the CNX Midstream call). An on-demand replay of the
webcast will be also be available at www.cnxmidstream.com shortly
after the conclusion of the conference call. A telephonic replay
will be available through February 13,
2020 by dialing 877-344-7529 (international: 412-317-0088)
and using the conference playback number 10137952.
_______________
(1)
|
Unless otherwise
indicated, the reporting measures included in this news release
reflect the unallocated total activity of the three development
companies that have or had been jointly owned, as applicable, by
the Partnership and CNX Gathering LLC ("CNX Gathering") since
completion of the Partnership's initial public offering ("IPO") in
September 2014. In connection with the previously announced
transaction with HG Energy in May 2018, the Partnership distributed
its 5% interest in the Growth System to CNX Gathering and has no
remaining interests in the Growth Systems. The Partnership's
current financial interests in the development companies are: 100%
in the Anchor Systems and 5% in the Additional Systems. Because the
Partnership owns a controlling interest in each of these two
development companies, it fully consolidates their financial
results. CNX Gathering, which is wholly owned by CNX Resources
Corporation, owns a 95% noncontrolling interest in the Additional
Systems of the Partnership.
|
|
|
(2)
|
EBITDA, Adjusted
EBITDA, distributable cash flow (DCF), and cash distribution
coverage are not measures or ratios that are recognized under
accounting principles generally accepted in the U.S.
("GAAP"). Definitions and reconciliations of these non-GAAP
measures to GAAP reporting measures appear in the financial tables
which follow.
|
|
|
(3)
|
Free cash flow (FCF)
calculated as Adjusted EBITDA of $260 million less interest expense
of $40 million less capital expenditures of $90 million.
|
* * * * *
CNX Midstream is a growth-oriented master limited partnership
that owns, operates, develops and acquires gathering and other
midstream energy assets to service natural gas production in the
Appalachian Basin in Pennsylvania and West
Virginia. Our assets include natural gas gathering pipelines
and compression and dehydration facilities, as well as condensate
gathering, collection, separation and stabilization
facilities. More information is available at our website
www.cnxmidstream.com.
* * * * *
This press release is intended to be a qualified notice to
nominees as provided for under Treasury Regulation Section
1.1446-4(b). Brokers and nominees should treat one hundred percent
(100.0%) of CNX Midstream's distributions to non-U.S.
investors as being attributed to income that is effectively
connected with a United States
trade or business. Accordingly, CNX Midstream's distributions
to non-U.S. investors are subject to federal income tax withholding
at the highest applicable effective tax rate. Nominees, and
not CNX Midstream, are treated as withholding agents responsible
for withholding on the distributions received by them on behalf of
foreign investors.
* * * * *
This press release contains forward-looking statements within
the meaning of the federal securities laws. Statements that
are predictive in nature, that depend upon or refer to future
events or conditions or that include the words "will," "believe,"
"expect," "anticipate," "intend," "estimate" and other expressions
that are predictions of or indicate future events and trends and
that do not relate to historical matters identify forward-looking
statements. You should not place undue reliance on forward-looking
statements. Forward-looking statements include, among others,
statements regarding the payment of our quarterly distribution for
the quarter ended December 31, 2019
and our anticipated 2020 financial performance.
Forward-looking statements are not guarantees of future performance
and involve certain risks, uncertainties and assumptions that are
difficult to predict, and there can be no assurance that actual
outcomes and results will not differ materially from those expected
by our management. You should not place undue reliance on
forward-looking statements. Although forward-looking statements
reflect our good faith beliefs at the time they are made, they
involve known and unknown risks, uncertainties and other
factors. While our management considers these expectations
and assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory and other
risks, contingencies and uncertainties, most of which are difficult
to predict and many of which are beyond our control. These risks,
contingencies and uncertainties relate to, among other matters, the
following: if either or both of our two largest customers, who
account for substantially all of our revenue, change their business
strategies, or take actions that otherwise significantly reduce the
volumes of natural gas and condensate transported through our
gathering systems, our revenue would decline and we could be
materially and adversely affected; under our gathering agreements,
our customers may transfer their leasehold, working and mineral fee
interests in their dedicated acreage; we may not generate
sufficient distributable cash flow to make the payment of the
minimum quarterly distribution to our unitholders; because of the
natural decline in production from existing wells, our success, in
part, depends on our ability to maintain or increase natural gas
and condensate throughput volumes on our midstream systems, which
depends on the level of development and completion activity on
acreage dedicated to us; many of our gathering agreements do not
include minimum volume commitments; certain of our dedicated
acreage is either not held by production by our customers or has
not yet been earned by them; the highly competitive nature of our
industry may adversely impact our ability to attract dedications of
third-party volumes, which could limit our ability to grow and
continue our dependence on our existing customers; increased
competition from other companies that provide midstream services
could have a negative impact on the demand for our services, which
could adversely affect our financial results; we may not be able to
make attractive offers to CNX Resources Corporation ("CNX") on our
ROFO acreage; our only assets are controlling ownership
interests in our operating subsidiaries, so our cash flow will
depend entirely on the performance of our operating subsidiaries
and their ability to distribute cash to us; some of our gathering
agreements with our customers provide for the release of dedicated
acreage or fee credits in certain situations; we are responsible
for any mine subsidence costs in the future; our midstream systems
are exclusively located in the Appalachian Basin, making us
vulnerable to risks associated with operating in a single
geographic area; we may be unable to grow by acquiring the
noncontrolling interests in, or assets of, our operating
subsidiaries owned by CNX Gathering or CNX, which could limit our
ability to increase our distributable cash flow; we may be unable
to acquire additional properties from third parties in the future
and any acquired properties may not provide the anticipated
benefits; if third-party pipelines, whether upstream or downstream,
or other midstream facilities interconnected to our gathering
systems become partially or fully unavailable, our operating
margin, cash flow and ability to make cash distributions to our
unitholders could be adversely affected; to maintain and grow our
business, we will be required to make substantial capital
expenditures; if we are unable to obtain needed capital or
financing on satisfactory terms, our ability to make cash
distributions may be diminished or our financial leverage could
increase; the amount of cash we have available for distribution to
our unitholders depends primarily on our cash flow and not solely
on our profitability, which may prevent us from making
distributions, even during periods in which we record net income;
our construction of new gathering, compression, dehydration,
treating or other midstream assets may not result in revenue
increases and may be subject to regulatory, environmental,
political, legal and economic risks, which could adversely affect
our cash flows, results of operations and financial condition and,
as a result, our ability to distribute cash to our unitholders; the
provisions and restrictions in our revolving credit facility and
other debt agreements, and the risks associated therewith, could
adversely affect our business, financial condition, results of
operations and ability to make quarterly cash distributions to our
unitholders; environmental regulations can increase costs and
introduce uncertainty that could adversely impact our or our
customers' operations; existing and future governmental laws,
regulations and other legal requirements and judicial decisions
that govern our business may increase our costs of doing business
and may restrict our operations; we may incur significant costs and
liabilities as a result of pipeline operations and related
increases in the regulation of gas gathering pipelines; climate
change laws and regulations restricting emissions of greenhouse
gases at the federal or state level could result in increased
operating costs and reduced demand for the natural gas that we
gather, while potential physical effects of climate change could
disrupt our production and cause us to incur significant costs in
preparing for or responding to those effects; our business involves
many hazards and operational risks, some of which may not be fully
covered by insurance, and the occurrence of a significant accident
or other event that is not fully insured could curtail our
operations and have a material adverse effect on our ability to
distribute cash and, accordingly, the market price for our common
units; cyber-incidents could have a material adverse effect on our
business, financial condition or results of operations; we may not
own in fee the land on which our pipelines and facilities are
located, which could result in disruptions to our operations; a
shortage of equipment and skilled labor in the Appalachian Basin
could reduce equipment availability and labor productivity and
increase labor and equipment costs, which could have a material
adverse effect on our business and results of operations; we do not
have any officers or employees and rely on officers of our general
partner and employees of CNX; our success depends on key members of
our general partner's senior management team and our ability to
attract and retain experienced technical and other professional
personnel; increases in interest rates could adversely
impact our business, common unit price, our ability to issue equity
or incur debt for acquisitions, capital expenditures or other
purposes and our ability to make cash distributions at our intended
levels; terrorist activities could materially and adversely affect
our business and results of operations; negative public perception
regarding our industry could have an adverse effect on our
operations; our general partner and its affiliates, including CNX,
have conflicts of interest with us and limited fiduciary duties to
us and our unitholders, and they may favor their own interests to
our detriment and that of our unitholders; we have no control over
the business decisions and operations of CNX, and CNX is under no
obligation to adopt a business strategy that favors us; our general
partner's discretion in establishing cash reserves may reduce the
amount of cash we have available to distribute to unitholders;
affiliates of our general partner, including CNX and CNX Gathering,
may compete with us, and neither our general partner nor its
affiliates have any obligation to present business opportunities to
us except with respect to rights of first offer contained in our
omnibus agreement; our tax treatment depends on our status as a
partnership for federal income tax purposes; as a result of
investing in our common units, you may become subject to state and
local taxes and return filing requirements in jurisdictions where
we operate or own or acquire properties.
Although forward-looking statements reflect our good faith
beliefs at the time they are made, they involve known and unknown
risks, uncertainties and other factors. For more information
concerning factors that could cause actual results to differ
materially from those conveyed in the forward-looking statements,
including, among others, that our business plans may change as
circumstances warrant, please refer to the "Risk Factors" and
"Forward-Looking Statements" sections of our Annual Report on Form
10-K and Quarterly Reports on Form 10-Q. We undertake no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events,
changed circumstances or otherwise, unless required by law.
CNX MIDSTREAM
PARTNERS LP
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Dollars in
thousands, except per unit data)
|
(Unaudited)
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue
|
|
|
|
|
|
|
|
Gathering revenue —
related party
|
$
|
63,048
|
|
|
$
|
50,720
|
|
|
$
|
231,482
|
|
|
$
|
167,048
|
|
Gathering revenue —
third party
|
18,453
|
|
|
20,097
|
|
|
74,315
|
|
|
89,620
|
|
Total
Revenue
|
81,501
|
|
|
70,817
|
|
|
305,797
|
|
|
256,668
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
Operating expense —
related party
|
4,776
|
|
|
5,169
|
|
|
22,943
|
|
|
19,814
|
|
Operating expense —
third party
|
6,190
|
|
|
6,599
|
|
|
23,964
|
|
|
27,343
|
|
General and
administrative expense — related party
|
4,361
|
|
|
3,575
|
|
|
15,928
|
|
|
13,867
|
|
General and
administrative expense — third party
|
1,633
|
|
|
1,956
|
|
|
5,769
|
|
|
8,595
|
|
Loss on asset sales
and abandonments
|
—
|
|
|
—
|
|
|
7,229
|
|
|
2,501
|
|
Depreciation
expense
|
6,677
|
|
|
5,334
|
|
|
24,371
|
|
|
21,939
|
|
Interest
expense
|
7,668
|
|
|
6,751
|
|
|
30,293
|
|
|
23,614
|
|
Total
Expense
|
31,305
|
|
|
29,384
|
|
|
130,497
|
|
|
117,673
|
|
Net
Income
|
50,196
|
|
|
41,433
|
|
|
175,300
|
|
|
138,995
|
|
Less: Net income
(loss) attributable to noncontrolling interest
|
1,700
|
|
|
(1,118)
|
|
|
989
|
|
|
4,953
|
|
Net Income
Attributable to General and Limited Partner Ownership Interest in
CNX Midstream Partners LP
|
$
|
48,496
|
|
|
$
|
42,551
|
|
|
$
|
174,311
|
|
|
$
|
134,042
|
|
|
|
|
|
|
|
|
|
Calculation of
Limited Partner Interest in Net Income:
|
|
|
|
|
|
|
|
Net Income
Attributable to General and Limited Partner Ownership Interest in
CNX Midstream Partners LP
|
$
|
48,496
|
|
|
$
|
42,551
|
|
|
$
|
174,311
|
|
|
$
|
134,042
|
|
Less: General partner
interest in net income, including incentive distribution
rights(1)
|
—
|
|
|
4,635
|
|
|
18,707
|
|
|
13,387
|
|
Limited partner
interest in net income
|
$
|
48,496
|
|
|
$
|
37,916
|
|
|
$
|
155,604
|
|
|
$
|
120,655
|
|
|
|
|
|
|
|
|
|
Earnings per
limited partner unit:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.76
|
|
|
$
|
0.60
|
|
|
$
|
2.44
|
|
|
$
|
1.90
|
|
Diluted
|
$
|
0.76
|
|
|
$
|
0.59
|
|
|
$
|
2.44
|
|
|
$
|
1.89
|
|
|
|
|
|
|
|
|
|
Weighted average
number of limited partner units outstanding (in
thousands):
|
|
|
|
|
|
|
|
Basic
|
63,737
|
|
|
63,640
|
|
|
63,726
|
|
|
63,635
|
|
Diluted
|
63,796
|
|
|
63,732
|
|
|
63,769
|
|
|
63,694
|
|
(1)
|
For the purposes of
calculating net income attributable to the General Partner in the
Consolidated Statements of Operations, the financial impact of IDRs
was recognized in respect of the quarter for which the
distributions were declared.
|
CNX MIDSTREAM
PARTNERS LP
|
CONSOLIDATED
BALANCE SHEETS
|
(Dollars in
thousands, except number of units)
|
|
|
(Unaudited)
|
|
|
|
December 31,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash
|
$
|
31
|
|
|
$
|
3,966
|
|
Receivables — related
party
|
21,076
|
|
|
17,073
|
|
Receivables — third
party
|
7,935
|
|
|
7,028
|
|
Other current
assets
|
1,976
|
|
|
2,383
|
|
Total Current
Assets
|
31,018
|
|
|
30,450
|
|
Property and
Equipment:
|
|
|
|
Property and
equipment
|
1,302,566
|
|
|
974,394
|
|
Less — accumulated
depreciation
|
106,975
|
|
|
82,619
|
|
Property and
Equipment — Net
|
1,195,591
|
|
|
891,775
|
|
Other
Assets:
|
|
|
|
Operating lease
right-of-use assets
|
4,731
|
|
|
—
|
|
Other
assets
|
3,262
|
|
|
3,203
|
|
Total Other
Assets
|
7,993
|
|
|
3,203
|
|
|
|
|
|
TOTAL
ASSETS
|
$
|
1,234,602
|
|
|
$
|
925,428
|
|
|
|
|
|
LIABILITIES AND
PARTNERS' CAPITAL
|
|
|
|
Current
Liabilities:
|
|
|
|
Trade accounts
payable
|
$
|
15,683
|
|
|
$
|
9,401
|
|
Accrued interest
payable
|
7,973
|
|
|
7,761
|
|
Accrued
liabilities
|
43,634
|
|
|
26,757
|
|
Due to related
party
|
4,787
|
|
|
4,980
|
|
Total Current
Liabilities
|
72,077
|
|
|
48,899
|
|
Other
Liabilities:
|
|
|
|
Revolving credit
facility
|
311,750
|
|
|
84,000
|
|
Long-term
debt
|
394,162
|
|
|
393,215
|
|
Total Other
Liabilities
|
705,912
|
|
|
477,215
|
|
|
|
|
|
Total
Liabilities
|
777,989
|
|
|
526,114
|
|
|
|
|
|
Partners' Capital
and Noncontrolling Interest:
|
|
|
|
Limited partner units
(63,736,622 units issued and outstanding at December 31, 2019
and
63,639,676 units issued and outstanding at December 31,
2018)
|
380,473
|
|
|
320,543
|
|
General partner
interest
|
7,280
|
|
|
10,900
|
|
Partners' capital
attributable to CNX Midstream Partners LP
|
387,753
|
|
|
331,443
|
|
Noncontrolling
interest
|
68,860
|
|
|
67,871
|
|
Total Partners'
Capital and Noncontrolling Interest
|
456,613
|
|
|
399,314
|
|
TOTAL LIABILITIES
AND PARTNERS' CAPITAL
|
$
|
1,234,602
|
|
|
$
|
925,428
|
|
CNX MIDSTREAM
PARTNERS LP
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Dollars in
thousands)
|
(Unaudited)
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
|
Net Income
|
$
|
50,196
|
|
|
$
|
41,433
|
|
|
$
|
175,300
|
|
|
$
|
138,995
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation expense
and amortization of debt issuance costs
|
7,149
|
|
|
5,811
|
|
|
26,256
|
|
|
23,540
|
|
Unit-based
compensation
|
399
|
|
|
636
|
|
|
1,880
|
|
|
2,411
|
|
Loss on asset sales
and abandonments
|
—
|
|
|
—
|
|
|
7,229
|
|
|
2,501
|
|
Other
|
—
|
|
|
—
|
|
|
49
|
|
|
388
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Due to/from
affiliate
|
(2,252)
|
|
|
(1,704)
|
|
|
(3,874)
|
|
|
(1,580)
|
|
Receivables — third
party
|
(1,861)
|
|
|
157
|
|
|
(907)
|
|
|
1,223
|
|
Other current and
non-current assets
|
1,231
|
|
|
471
|
|
|
(4,070)
|
|
|
475
|
|
Accounts payable and
other accrued liabilities
|
(13,480)
|
|
|
2,104
|
|
|
15,199
|
|
|
12,162
|
|
Net Cash Provided
by Operating Activities
|
41,382
|
|
|
48,908
|
|
|
217,062
|
|
|
180,115
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(76,459)
|
|
|
(59,503)
|
|
|
(327,615)
|
|
|
(145,331)
|
|
Proceeds from sale of
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
6,462
|
|
Net Cash Used in
Investing Activities
|
(76,459)
|
|
|
(59,503)
|
|
|
(327,615)
|
|
|
(138,869)
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
Contributions from
(distributions to) general partner and noncontrolling interest
holders, net
|
—
|
|
|
—
|
|
|
31
|
|
|
(3,505)
|
|
Quarterly
distributions to unitholders
|
(32,371)
|
|
|
(25,679)
|
|
|
(119,216)
|
|
|
(94,044)
|
|
Net payments on
unsecured $250.0 million credit facility
|
—
|
|
|
—
|
|
|
—
|
|
|
(149,500)
|
|
Net borrowings on
secured $600.0 million credit facility
|
65,750
|
|
|
40,000
|
|
|
227,750
|
|
|
84,000
|
|
Proceeds from
issuance of long-term debt, net of discount
|
—
|
|
|
—
|
|
|
—
|
|
|
394,000
|
|
Debt issuance
costs
|
—
|
|
|
(710)
|
|
|
(1,251)
|
|
|
(6,077)
|
|
Vested units withheld
for unitholder taxes
|
(6)
|
|
|
—
|
|
|
(696)
|
|
|
(348)
|
|
Acquisition of
Shirley-Penns System
|
—
|
|
|
—
|
|
|
—
|
|
|
(265,000)
|
|
Net Cash Provided
by (Used in) Financing Activities
|
33,373
|
|
|
13,611
|
|
|
106,618
|
|
|
(40,474)
|
|
|
|
|
|
|
|
|
|
Net (Decrease)
Increase in Cash
|
(1,704)
|
|
|
3,016
|
|
|
(3,935)
|
|
|
772
|
|
Cash at Beginning
of Period
|
1,735
|
|
|
950
|
|
|
3,966
|
|
|
3,194
|
|
Cash at End of
Period
|
$
|
31
|
|
|
$
|
3,966
|
|
|
$
|
31
|
|
|
$
|
3,966
|
|
CNX MIDSTREAM PARTNERS
LP
RECONCILIATION OF NET INCOME TO EBITDA AND
DISTRIBUTABLE CASH FLOW
(Dollars in
thousands)
(Unaudited)
Definition of Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) before net interest
expense, depreciation and amortization, and Adjusted EBITDA as
EBITDA adjusted for gains or losses on asset sales and abandonments
and other non-cash items which should not be included in the
calculation of distributable cash flow. EBITDA and Adjusted EBITDA
are used as supplemental financial measures by management and by
external users of our financial statements, such as investors,
industry analysts, lenders and ratings agencies, to assess:
- our operating performance as compared to those of other
companies in the midstream energy industry, without regard to
financing methods, historical cost basis or capital structure;
- the ability of our assets to generate sufficient cash flow to
make distributions to our partners;
- 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.
We believe that the presentation of EBITDA and Adjusted EBITDA
provides information that is useful to investors in assessing our
financial condition and results of operations. The GAAP measures
most directly comparable to EBITDA and Adjusted EBITDA are net
income and net cash provided by operating activities. EBITDA and
Adjusted EBITDA should not be considered an alternative to net
income, net cash provided by operating activities or any other
measure of financial performance or liquidity presented in
accordance with GAAP. EBITDA and Adjusted EBITDA exclude
some, but not all, items that affect net income or net cash, and
these measures may vary from those of other companies. As a result,
EBITDA and Adjusted EBITDA as presented herein may not be
comparable to similarly titled measures of other companies.
Distributable Cash Flow
We define distributable cash flow as Adjusted EBITDA less net
income attributable to noncontrolling interest, cash interest
expense and maintenance capital expenditures, each net to the
Partnership. Distributable cash flow does not reflect changes in
working capital balances.
Distributable cash flow is used as a supplemental financial
measure by management and by external users of our financial
statements, such as investors, industry analysts, lenders and
ratings agencies, to assess:
- the ability of our assets to generate cash sufficient to
support our indebtedness and make future cash distributions to our
unitholders; and
- the attractiveness of capital projects and acquisitions and the
overall rates of return on alternative investment
opportunities.
We believe that the presentation of distributable cash flow in
this release provides information useful to investors in assessing
our financial condition and results of operations. The GAAP
measures most directly comparable to distributable cash flow are
net income and net cash provided by operating activities.
Distributable cash flow should not be considered an alternative to
net income, net cash provided by operating activities or any other
measure of financial performance or liquidity presented in
accordance with GAAP. Distributable cash flow excludes some,
but not all, items that affect net income or net cash, and these
measures may vary from those of other companies. As a result, our
distributable cash flow may not be comparable to similarly titled
measures that other companies may use.
Distribution Coverage Ratio
We define distributable coverage ratio as distributable cash
flow divided by cash distributions declared or paid.
CNX MIDSTREAM
PARTNERS LP
|
RECONCILIATION OF
NET INCOME AND NET CASH PROVIDED BY OPERATING ACTIVITIES TO
ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW
|
(Dollars in
thousands)
|
(Unaudited)
|
|
The following table
presents a reconciliation of the non-GAAP measures Adjusted EBITDA
and distributable cash flow with the most directly comparable GAAP
financial measures of net income and net cash provided by operating
activities.
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
Income
|
$
|
50,196
|
|
|
$
|
41,433
|
|
|
$
|
175,300
|
|
|
$
|
138,995
|
|
Depreciation
expense
|
6,677
|
|
|
5,334
|
|
|
24,371
|
|
|
21,939
|
|
Interest
expense
|
7,668
|
|
|
6,751
|
|
|
30,293
|
|
|
23,614
|
|
EBITDA
|
64,541
|
|
|
53,518
|
|
|
229,964
|
|
|
184,548
|
|
Non-cash unit-based
compensation expense
|
399
|
|
|
636
|
|
|
1,880
|
|
|
2,411
|
|
Loss on asset sales
and abandonments
|
—
|
|
|
—
|
|
|
7,229
|
|
|
2,501
|
|
Adjusted
EBITDA
|
64,940
|
|
|
54,154
|
|
|
239,073
|
|
|
189,460
|
|
Less:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to noncontrolling interest
|
1,700
|
|
|
(1,118)
|
|
|
989
|
|
|
4,953
|
|
Depreciation expense
attributable to noncontrolling interest
|
399
|
|
|
393
|
|
|
1,580
|
|
|
3,128
|
|
Other expenses
attributable to noncontrolling interest
|
1,136
|
|
|
1,389
|
|
|
4,506
|
|
|
4,329
|
|
Loss on asset sales
attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
2,375
|
|
Adjusted EBITDA
Attributable to General and Limited Partner Ownership Interest in
CNX Midstream Partners LP
|
$
|
61,705
|
|
|
$
|
53,490
|
|
|
$
|
231,998
|
|
|
$
|
174,675
|
|
Less: cash interest
expense, net to the Partnership
|
7,812
|
|
|
6,040
|
|
|
29,226
|
|
|
19,221
|
|
Less: maintenance
capital expenditures, net to the Partnership
|
5,494
|
|
|
4,735
|
|
|
20,885
|
|
|
16,892
|
|
Distributable Cash
Flow
|
$
|
48,399
|
|
|
$
|
42,715
|
|
|
$
|
181,887
|
|
|
$
|
138,562
|
|
|
|
|
|
|
|
|
|
Net Cash Provided
by Operating Activities
|
$
|
41,382
|
|
|
$
|
48,908
|
|
|
$
|
217,062
|
|
|
$
|
180,115
|
|
Interest
expense
|
7,668
|
|
|
6,751
|
|
|
30,293
|
|
|
23,614
|
|
Loss on asset sales
and abandonments
|
—
|
|
|
—
|
|
|
7,229
|
|
|
2,501
|
|
Other, including
changes in working capital
|
15,890
|
|
|
(1,505)
|
|
|
(15,511)
|
|
|
(16,770)
|
|
Adjusted
EBITDA
|
64,940
|
|
|
54,154
|
|
|
239,073
|
|
|
189,460
|
|
Less:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to noncontrolling interest
|
1,700
|
|
|
(1,118)
|
|
|
989
|
|
|
4,953
|
|
Depreciation expense
attributable to noncontrolling interest
|
399
|
|
|
393
|
|
|
1,580
|
|
|
3,128
|
|
Other expenses
attributable to noncontrolling interest
|
1,136
|
|
|
1,389
|
|
|
4,506
|
|
|
4,329
|
|
Loss on asset sales
attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
2,375
|
|
Adjusted EBITDA
Attributable to General and Limited Partner Ownership Interest in
CNX Midstream Partners LP
|
$
|
61,705
|
|
|
$
|
53,490
|
|
|
$
|
231,998
|
|
|
$
|
174,675
|
|
Less: cash interest
expense, net to the Partnership
|
7,812
|
|
|
6,040
|
|
|
29,226
|
|
|
19,221
|
|
Less: maintenance
capital expenditures, net to the Partnership
|
5,494
|
|
|
4,735
|
|
|
20,885
|
|
|
16,892
|
|
Distributable Cash
Flow
|
$
|
48,399
|
|
|
$
|
42,715
|
|
|
$
|
181,887
|
|
|
$
|
138,562
|
|
The following table
presents a reconciliation of the non-GAAP measures Adjusted EBITDA
and distributable cash flow by quarter and for the most recently
completed twelve month period with the most directly comparable
GAAP financial measures, which are net income and net cash provided
by operating activities.
|
|
(Unaudited)
|
Q1
2019
|
|
Q2
2019
|
|
Q3
2019
|
|
Q4
2019
|
|
Twelve
Months
Ended
December 31, 2019
|
Net
Income
|
$
|
34,976
|
|
|
$
|
46,463
|
|
|
$
|
43,665
|
|
|
$
|
50,196
|
|
|
$
|
175,300
|
|
Depreciation
expense
|
5,650
|
|
|
5,860
|
|
|
6,184
|
|
|
6,677
|
|
|
24,371
|
|
Interest
expense
|
7,339
|
|
|
7,685
|
|
|
7,601
|
|
|
7,668
|
|
|
30,293
|
|
EBITDA
|
47,965
|
|
|
60,008
|
|
|
57,450
|
|
|
64,541
|
|
|
229,964
|
|
Non-cash unit-based
compensation expense
|
612
|
|
|
541
|
|
|
328
|
|
|
399
|
|
|
1,880
|
|
Loss on asset sales
and abandonments
|
7,229
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,229
|
|
Adjusted
EBITDA
|
55,806
|
|
|
60,549
|
|
|
57,778
|
|
|
64,940
|
|
|
239,073
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to noncontrolling interest
|
(131)
|
|
|
(282)
|
|
|
(298)
|
|
|
1,700
|
|
|
989
|
|
Depreciation expense
attributable to noncontrolling interest
|
394
|
|
|
395
|
|
|
392
|
|
|
399
|
|
|
1,580
|
|
Other expenses
attributable to noncontrolling interest
|
1,120
|
|
|
1,098
|
|
|
1,152
|
|
|
1,136
|
|
|
4,506
|
|
Adjusted EBITDA
Attributable to General and Limited Partner Ownership Interest in
CNX Midstream Partners LP
|
$
|
54,423
|
|
|
$
|
59,338
|
|
|
$
|
56,532
|
|
|
$
|
61,705
|
|
|
$
|
231,998
|
|
Less: cash interest
expense, net to the Partnership
|
6,604
|
|
|
7,282
|
|
|
7,528
|
|
|
7,812
|
|
|
29,226
|
|
Less: maintenance
capital expenditures, net to the Partnership
|
4,835
|
|
|
5,168
|
|
|
5,388
|
|
|
5,494
|
|
|
20,885
|
|
Distributable Cash
Flow
|
$
|
42,984
|
|
|
$
|
46,888
|
|
|
$
|
43,616
|
|
|
$
|
48,399
|
|
|
$
|
181,887
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided
by Operating Activities
|
$
|
49,913
|
|
|
$
|
74,753
|
|
|
$
|
51,014
|
|
|
$
|
41,382
|
|
|
$
|
217,062
|
|
Interest
expense
|
7,339
|
|
|
7,685
|
|
|
7,601
|
|
|
7,668
|
|
|
30,293
|
|
Loss on asset sales
and abandonments
|
7,229
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,229
|
|
Other, including
changes in working capital
|
(8,675)
|
|
|
(21,889)
|
|
|
(837)
|
|
|
15,890
|
|
|
(15,511)
|
|
Adjusted
EBITDA
|
55,806
|
|
|
60,549
|
|
|
57,778
|
|
|
64,940
|
|
|
239,073
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to noncontrolling interest
|
(131)
|
|
|
(282)
|
|
|
(298)
|
|
|
1,700
|
|
|
989
|
|
Depreciation expense
attributable to noncontrolling interest
|
394
|
|
|
395
|
|
|
392
|
|
|
399
|
|
|
1,580
|
|
Other expenses
attributable to noncontrolling interest
|
1,120
|
|
|
1,098
|
|
|
1,152
|
|
|
1,136
|
|
|
4,506
|
|
Adjusted EBITDA
Attributable to General and Limited Partner Ownership Interest in
CNX Midstream Partners LP
|
$
|
54,423
|
|
|
$
|
59,338
|
|
|
$
|
56,532
|
|
|
$
|
61,705
|
|
|
$
|
231,998
|
|
Less: cash interest
expense, net to the Partnership
|
6,604
|
|
|
7,282
|
|
|
7,528
|
|
|
7,812
|
|
|
29,226
|
|
Less: maintenance
capital expenditures, net to the Partnership
|
4,835
|
|
|
5,168
|
|
|
5,388
|
|
|
5,494
|
|
|
20,885
|
|
Distributable Cash
Flow
|
$
|
42,984
|
|
|
$
|
46,888
|
|
|
$
|
43,616
|
|
|
$
|
48,399
|
|
|
$
|
181,887
|
|
Distributions
Declared
|
$
|
28,940
|
|
|
$
|
30,637
|
|
|
$
|
32,371
|
|
|
$
|
37,197
|
|
|
$
|
129,145
|
|
Distribution
Coverage Ratio - Declared
|
1.49
|
x
|
|
1.53
|
x
|
|
1.35
|
x
|
|
1.30
|
x
|
|
1.41
|
x
|
|
|
|
|
|
|
|
|
|
|
Distributable Cash
Flow
|
$
|
42,984
|
|
|
$
|
46,888
|
|
|
$
|
43,616
|
|
|
$
|
48,399
|
|
|
$
|
181,887
|
|
Distributions
Paid
|
$
|
27,268
|
|
|
$
|
28,940
|
|
|
$
|
30,637
|
|
|
$
|
32,371
|
|
|
$
|
119,216
|
|
Distribution
Coverage Ratio - Paid
|
1.58
|
x
|
|
1.62
|
x
|
|
1.42
|
x
|
|
1.50
|
x
|
|
1.53
|
x
|
The following table
presents a reconciliation of the non-GAAP measures of the
Partnership's projected adjusted EBITDA and projected distributable
cash flow with the most directly comparable GAAP financial measure,
which is projected net income. The following
projections represent the approximate midpoint of the
announced full year 2020 expected guidance ranges of adjusted
EBITDA ($250-$270 million) and full year distributable
cash flow ($185-$205 million) attributable to the
Partnership. CNX Midstream's financial guidance is based on
numerous assumptions about future events and conditions and,
therefore, could vary materially from actual results. These
estimates are meant to provide guidance only and are subject to
revision for acquisitions or operating environment
changes.
|
|
(unaudited) (in
millions)
|
2020
Guidance
|
|
2021
Guidance
|
Net
Income
|
$
|
194
|
|
|
$
|
235
|
|
Depreciation
expense
|
29
|
|
|
31
|
|
Interest
expense
|
43
|
|
|
39
|
|
EBITDA
|
266
|
|
|
305
|
|
Non-cash unit-based
compensation expense
|
3
|
|
|
3
|
|
Adjusted
EBITDA
|
269
|
|
|
308
|
|
Less:
|
|
|
|
Net income
attributable to noncontrolling interest
|
7
|
|
|
6
|
|
Depreciation and
other expenses attributable to noncontrolling interest
|
2
|
|
|
2
|
|
Adjusted EBITDA
Attributable to General and Limited Partner Ownership Interest in
CNX Midstream Partners LP
|
$
|
260
|
|
|
$
|
300
|
|
Less: cash interest
expense, net to the Partnership
|
40
|
|
|
n/a
|
Less: maintenance
capital expenditures, net to the Partnership
|
25
|
|
|
n/a
|
Distributable Cash
Flow
|
$
|
195
|
|
|
n/a
|
The Partnership is
unable to project net cash provided by operating activities or
provide the related reconciliation of projected net cash provided
by operating activities to projected distributable cash flow, the
most comparable financial measure calculated in accordance with
GAAP, because net cash provided by operating activities includes
the impact of changes in operating assets and liabilities. Changes
in operating assets and liabilities relate to the timing of the
Partnership's cash receipts and disbursements that may not relate
to the period in which the operating activities occurred, and the
Partnership is unable to project these timing differences with any
reasonable degree of accuracy.
|
Development
Companies Jointly Owned by CNX Gathering LLC and CNX Midstream
Partners LP
|
Operating Income
Summary, Selected Operating Statistics and Capital
Investment
|
(Dollars in
thousands)
|
(Unaudited)
|
|
|
Year Ended
December 31, 2019
|
|
Anchor
|
|
Additional
|
|
Total
|
Income
Summary
|
|
|
|
|
|
Revenue
|
$
|
296,109
|
|
|
$
|
9,688
|
|
|
$
|
305,797
|
|
Expenses
|
121,850
|
|
|
8,647
|
|
|
130,497
|
|
Net
Income
|
$
|
174,259
|
|
|
$
|
1,041
|
|
|
$
|
175,300
|
|
|
|
|
|
|
|
Operating
Statistics - Gathered Volumes
|
|
|
|
|
|
Dry gas
(BBtu/d)
|
859
|
|
|
22
|
|
|
881
|
|
Wet gas
(BBtu/d)
|
659
|
|
|
60
|
|
|
719
|
|
Other
(BBtu/d)*
|
221
|
|
|
—
|
|
|
221
|
|
Total Gathered
Volumes
|
1,739
|
|
|
82
|
|
|
1,821
|
|
|
|
|
|
|
|
Capital
Investment
|
|
|
|
|
|
Maintenance
capital
|
$
|
20,828
|
|
|
$
|
1,130
|
|
|
$
|
21,958
|
|
Expansion
capital
|
294,076
|
|
|
11,581
|
|
|
305,657
|
|
Total Capital
Investment
|
$
|
314,904
|
|
|
$
|
12,711
|
|
|
$
|
327,615
|
|
|
|
|
|
|
|
Capital Investment
Net to CNX Midstream Partners LP
|
|
|
|
|
|
Maintenance
capital
|
$
|
20,828
|
|
|
$
|
57
|
|
|
$
|
20,885
|
|
Expansion
capital
|
294,076
|
|
|
579
|
|
|
294,655
|
|
Total Capital
Investment Net to CNX Midstream Partners LP
|
$
|
314,904
|
|
|
$
|
636
|
|
|
$
|
315,540
|
|
*Includes condensate
handling and third-party volumes we gather under high-pressure
short-haul agreements.
|
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SOURCE CNX Midstream Partners LP