NGL Energy Partners LP Announces Third Quarter Results and Filing of Form 10-Q

TULSA, Okla.--(BUSINESS WIRE)--

NGL Energy Partners LP NGL today reported Adjusted EBITDA of $85.0 million for the three months ended December 31, 2013 (exclusive of $5.1 million of costs related to acquisitions), compared to Adjusted EBITDA of $74.0 million during the three months ended December 31, 2012 (exclusive of $0.8 million of costs related to acquisitions). NGL reported net income of $24.1 million for the three months ended December 31, 2013, compared to net income of $40.5 million for the three months ended December 31, 2012. Net income per limited partner common unit for the three months ended December 31, 2013 was $0.27, compared to net income per limited partner common unit of $0.75 for the three months ended December 31, 2012.

For the nine months ended December 31, 2013, NGL reported Adjusted EBITDA of $154.5 million (exclusive of $6.5 million of costs related to acquisitions), compared to an Adjusted EBITDA of $98.3 million during the nine months ended December 31, 2012 (exclusive of $5.2 million of costs related to acquisitions). NGL reported net income of $5.6 million for the nine months ended December 31, 2013, compared to net income of $25.8 million for the nine months ended December 31, 2012. Net loss per limited partner common unit was $(0.03) for the nine months ended December 31, 2013 and net income per limited partner common unit was $0.53 for the nine months ended December 31, 2012.

NGL's recent activities included the following:

• The acquisition of the diversified midstream energy business of Gavilon, LLC in December 2013;
• Amendments to NGL's revolving credit facility in November and December 2013 that expanded the capacity to $1.721 billion, extended the maturity date to late 2018, and reduced the interest rate;
• The sale of $240 million of common units in a private placement in December 2013;
• The sale of $450 million of senior unsecured notes in a private placement in October 2013;
• The continuation of internal growth initiatives, with $83.3 million of organic growth capital spending during the nine months ended December 31, 2013, primarily to expand water solutions and natural gas liquids terminal capabilities; and
• Declaring a distribution of $0.53125 per limited partner unit ($2.125 on an annualized basis) in January 2014. This distribution represents a 3.9% increase over the previous quarter and a 14.9% increase over the same quarter of the prior fiscal year.

NGL also announced that it has filed its quarterly report on Form 10-Q for its fiscal quarter ended December 31, 2013 with the Securities and Exchange Commission. NGL has posted a copy of the Form 10-Q on its website at www.nglenergypartners.com.

A conference call to discuss NGL's results of operations is scheduled for 3:00pm Eastern Time (2:00pm Central Time) on February 11, 2014. Analysts, investors, and other interested parties may access the conference call by dialing (877) 546-5019 and providing access code 27969660. An archived audio replay of the conference call will be available for 7 days beginning at 7:00pm Eastern Time (6:00pm Central Time) on February 11, 2014 and can be accessed by dialing (888) 286-8010 and providing access code 25990037.

NGL defines EBITDA as net income (loss) attributable to parent equity, plus income taxes, interest expense and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding the unrealized gain or loss on derivative contracts, the gain or loss on the disposal of assets, and share-based compensation expenses. For purposes of its Adjusted EBITDA calculation, NGL draws a distinction between unrealized gains and losses on derivatives and realized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract is settled, NGL reverses the previously-recorded unrealized gain or loss and records a realized gain or loss. The realized gain or loss is equal to the amount received or paid on the contract. NGL acquired Gavilon, LLC in December 2013 and is still in the process of developing procedures to calculate unrealized gains and losses for the Gavilon, LLC operations in the same way NGL calculates them for its other operations. The unrealized gain or loss reported in the table below excludes any unrealized gains or losses related to Gavilon, LLC other than $2.6 million of unrealized losses associated with certain specifically identifiable derivative contracts.

EBITDA and Adjusted EBITDA should not be considered an alternative to net income, income before income taxes, 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. NGL believes that EBITDA provides additional information for evaluating its ability to make quarterly distributions to its unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information for evaluating its financial performance without regard to its financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA and Adjusted EBITDA or similarly titled measures used by other entities. A reconciliation of Adjusted EBITDA to net income attributable to parent equity is shown below.

This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes its expectations as reflected in the forward-looking statements are reasonable, NGL can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL's annual report on Form 10-K, quarterly reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

About NGL Energy Partners LP

NGL Energy Partners LP is a Delaware limited partnership. NGL owns and operates a vertically integrated energy business with four primary businesses: NGL-Water Solutions, NGL-Crude Logistics, NGL-Liquids and Retail. NGL completed its initial public offering in May 2011. For further information visit the Partnership's website at www.nglenergypartners.com.

NGL ENERGY PARTNERS LP
Unaudited Condensed Consolidated Balance Sheets
At December 31, 2013 and March 31, 2013
(U.S. Dollars in Thousands, except unit amounts)
			December 31,					March 31,
			2013					2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	8,901				$	11,561
Accounts receivable - trade, net of allowance for doubtful accounts of $2,881 and $1,760, respectively				1,099,833					562,889
Accounts receivable - affiliates				6,375					22,883
Inventories				443,171					126,895
Prepaid expenses and other current assets				96,719					37,891
Total current assets				1,654,999					762,119
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $90,655 and $50,127, respectively				806,437					516,937
GOODWILL				1,037,237					563,146
INTANGIBLE ASSETS, net of accumulated amortization of $91,121 and $44,155, respectively				713,974					442,603
INVESTMENTS IN UNCONSOLIDATED ENTITIES				248,376					-
OTHER NONCURRENT ASSETS				15,955					6,542
Total assets			$	4,476,978				$	2,291,347
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable			$	1,152,530				$	535,687
Accrued expenses and other payables				141,950					85,703
Advance payments received from customers				62,045					22,372
Accounts payable - affiliates				18,077					6,900
Current maturities of long-term debt				7,799					8,626
Total current liabilities				1,382,401					659,288
LONG-TERM DEBT, net of current maturities				1,517,519					740,436
OTHER NONCURRENT LIABILITIES				39,471					2,205
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
General Partner — 0.1% interest; 79,406 and 53,676 notional units outstanding at
December 31, 2013 and March 31, 2013, respectively				(46,781	)				(50,497	)
Limited Partners — 99.9% interest —
Common units — 73,407,732 and 47,703,313 units outstanding at
December 31, 2013 and March 31, 2013, respectively				1,574,842					920,998
Subordinated units — 5,919,346 units outstanding at December 31, 2013 and March 31, 2013				2,444					13,153
Accumulated other comprehensive income (loss)				(106	)				24
Noncontrolling interests				7,188					5,740
Total partners' equity				1,537,587					889,418
Total liabilities and partners' equity			$	4,476,978				$	2,291,347

NGL ENERGY PARTNERS LP
Unaudited Condensed Consolidated Statements of Operations
For the Three Months and Nine Months Ended December 31, 2013 and 2012
(U.S. Dollars in Thousands, except unit and per unit amounts)
			Three Months Ended								Nine Months Ended
			December 31,								December 31,
			2013				2012				2013				2012
REVENUES:
Crude oil logistics			$	1,316,060			$	677,985			$	3,260,862			$	1,462,523
Water solutions				41,772				22,806				96,475				40,557
Natural gas liquids logistics				800,917				508,131				1,646,750				1,050,116
Retail propane				161,537				127,905				293,134				244,116
Other				423,159				1,381				426,118				2,842
Total Revenues				2,743,445				1,338,208				5,723,339				2,800,154
COST OF SALES:
Crude oil logistics				1,300,911				654,976				3,202,265				1,425,546
Water solutions				2,571				1,499				6,936				4,169
Natural gas liquids logistics				745,894				470,621				1,555,539				982,949
Retail propane				105,394				77,449				181,956				144,556
Other				421,259				-				421,259				-
Total Cost of Sales				2,576,029				1,204,545				5,367,955				2,557,220
OPERATING COSTS AND EXPENSES:
Operating				69,261				50,518				174,075				113,287
General and administrative				21,492				14,175				54,258				34,578
Depreciation and amortization				35,494				18,747				83,279				41,335
Operating Income				41,169				50,223				43,772				53,734
OTHER INCOME (EXPENSE):
Interest expense				(16,745	)			(9,762	)			(38,427	)			(22,254	)
Loss on early extinguishment of debt				-				-				-				(5,769	)
Other, net				154				261				623				919
Income Before Income Taxes				24,578				40,722				5,968				26,630
INCOME TAX PROVISION				(526	)			(245	)			(356	)			(781	)
Net Income				24,052				40,477				5,612				25,849
Net Income Allocated to General Partner				(4,260	)			(942	)			(8,399	)			(1,731	)
Net Income Attributable to Noncontrolling Interests				(154	)			(301	)			(288	)			(250	)
Net Income (Loss) Attributable to Parent Equity
Allocated to Limited Partners			$	19,638			$	39,234			$	(3,075	)		$	23,868
Basic and Diluted Income (Loss) per Common Unit			$	0.27			$	0.75			$	(0.03	)		$	0.53
Basic and Diluted Income (Loss) per Subordinated Unit			$	0.23			$	0.75			$	(0.22	)		$	0.51
Basic and Diluted Weighted Average Units Outstanding:
Common				67,941,726				46,364,381				58,222,924				39,288,012
Subordinated				5,919,346				5,919,346				5,919,346				5,919,346

OPERATIONAL DATA

The following table summarizes the volume of product sold and wastewater delivered for the three and nine months ended December 31, 2013 and 2012. Gallons sold by the natural gas liquids logistics segment shown in the table below include sales to the retail segment.

			Three Months Ended					Nine Months Ended
			December 31,					December 31,
Segment			2013		2012			2013		2012
			(in thousands)
Crude oil logistics
Crude oil sold (barrels)			13,466		7,461			32,001		15,922
Water solutions
Water delivered (barrels)			18,255		9,818			44,753		16,593
Natural gas liquids logistics
Propane sold (gallons)			410,286		275,598			721,120		532,353
Other products sold (gallons)			207,473		161,258			581,195		370,365
Retail propane
Propane sold (gallons)			50,623		42,122			94,615		81,449
Distillates sold (gallons)			10,442		8,818			18,618		15,091

ADJUSTED EBITDA RECONCILIATION

The following table reconciles net income attributable to parent equity to EBITDA and Adjusted EBITDA, each of which are non-GAAP financial measures, for the periods indicated:

			Three Months Ended									Nine Months Ended
			December 31,									December 31,
			2013				2012					2013			2012
			(in thousands)
EBITDA:
Net income attributable to parent equity			$	23,898			$	40,176				$	5,324		$	25,599
Provision (benefit) for income taxes				526				245					356			781
Interest expense				16,745				9,762					38,427			22,254
Loss on early extinguishment of debt				-				-					-			5,769
Depreciation and amortization expense				36,251				20,494					85,199			44,607
EBITDA				77,420				70,677					129,306			99,010
Unrealized (gain) loss on derivative contracts				(1,954	)			159					1,791			(11,246	)
Loss (gain) on disposal of assets				340				(11	)				2,503			(34	)
Share-based compensation expense				4,078				2,365					14,370			5,322
Adjusted EBITDA			$	79,884			$	73,190				$	147,970		$	93,052