Market Overview

Andeavor Logistics LP Reports First-Quarter 2019 Results

Share:

FINDLAY, Ohio, May 8, 2019 /PRNewswire/ --

  • Reported first-quarter net earnings of $157 million and EBITDA of $319 million, which provided 1.06x distribution coverage and resulted in 3.9x leverage
  • Terminalling and Transportation segment operating income of $152 million and EBITDA of $191 million driven by drop downs and strong pipeline transportation volumes
  • Gathering and Processing segment operating income of $63 million and EBITDA of $129 million impacted by lower Rockies volumes, offset by Permian crude oil and Bakken natural gas volume growth
  • Reported net cash from operating activities of $219 million and DCF attributable to common unitholders of $255 million
  • Announced agreement to be acquired by MPLX

Andeavor Logistics LP (NYSE:ANDX) today reported first-quarter 2019 net earnings of $157 million, compared with $131 million in 2018. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $319 million, compared with $275 million in first-quarter 2018. The increase in earnings and EBITDA was driven by the 2018 Drop Down completed in August 2018, which contributed $33 million of net earnings and $47 million of EBITDA in 2019, and the SLC Core Pipeline System acquisition completed in May 2018. Terminalling and Transportation reported segment operating income of $152 million and segment EBITDA of $191 million for the quarter, up $48 million for both, respectively, on a year-over-year basis. Gathering and Processing reported segment operating income of $63 million and segment EBITDA of $129 million for the quarter, down $14 million and $4 million, respectively, versus the first-quarter of last year.

The company also announced that MPLX LP (NYSE:MPLX) and Andeavor Logistics have entered into a definitive merger agreement whereby MPLX will acquire ANDX in a unit-for-unit exchange. "This merger creates a leading, large-scale, diversified midstream company anchored by fee-based cash flows," said Gary R. Heminger, chairman and chief executive officer. "The combined entity will have an expanded geographic footprint with enhanced long-term growth opportunities. We are confident about the midstream growth and value-creation opportunities that exist across this combined platform in the best basins in the U.S.

"Andeavor Logistics' first-quarter results increased year-over-year, driven by the 2018 Drop Down, higher pipeline transportation volumes, and increased crude oil volumes in the Permian," added Heminger. "The positives in first quarter offset headwinds associated with lower Rockies natural gas gathering and processing volumes, lower NGL sales from ethane rejection, and extreme winter weather impacting Bakken crude oil gathering volumes.

"Looking forward, we expect solid results in the Terminalling and Transportation segment, driven by the 2018 Drop Down and seasonally strong demand through our terminal and pipeline assets," Heminger continued. "We also expect strong results in the Gathering and Processing segment from continued growth in Permian crude, Bakken gas, and full operations on our NGL Logistics Hub project."

The company generated $219 million in net cash from operating activities and distributable cash flow (DCF) attributable to common unitholders of $255 million during the quarter. On April 29, 2019, Andeavor Logistics announced a quarterly cash distribution of $1.03 per limited partnership unit, or $4.12 on an annualized basis, which was flat with the prior quarter, and finished the quarter with coverage of 1.06x and leverage of 3.9x.

First-Quarter Results


Three Months Ended

March 31,

($ in millions)

2019


2018 (a)

Net Earnings

$

157


$

131

Segment Operating Income




Terminalling and Transportation

$

152


$

104

Gathering and Processing

63


77

Wholesale

5


4





EBITDA (b)

$

319


$

275

Segment EBITDA (b)




Terminalling and Transportation

$

191


$

143

Gathering and Processing

129


133

Wholesale

8


7





Net Cash From Operating Activities

$

219


$

266

Distributable Cash Flow Attributable to Common Unitholders (b)

$

255


$

199





Total Distributions to be Paid to Common Unitholders

$

240


$

205

Distribution Coverage Ratio (b)

1.06x


0.97x



(a)

Adjusted to include the historical results of the Predecessors. See "Items Impacting Comparability."

(b)

For more information on EBITDA, Segment EBITDA, Distributable Cash Flow Attributable to Common Unitholders and Distribution Coverage Ratio, see "Non-GAAP Measures."

Segment Results
Terminalling and Transportation
Terminalling and Transportation segment operating income was $152 million for the first-quarter 2019, an increase of $48 million from the prior year, and segment EBITDA was $191 million, an increase of $48 million from the prior year. The year-over-year increase was primarily attributable to contributions from the 2018 Drop Down, stronger year-over-year pipeline transportation volumes associated with lower refinery turnaround activity, and the SLC Core Pipeline System acquisition. During the quarter, the 2018 Drop Down contributed $19 million of segment operating income and $26 million of segment EBITDA.

Gathering and Processing
Gathering and Processing segment operating income was $63 million for the first-quarter 2019, a decrease of $14 million from the prior year, and segment EBITDA was $129 million, a decrease of $4 million from the prior year. The decrease was primarily attributable to lower natural gas gathering, processing, and NGL sales volumes in the Rockies as well as an expiration of a natural gas gathering contract in the Rockies. This was partially offset by Permian Basin crude oil volume growth and higher natural gas gathering and processing volumes in the Bakken from the expanded capacity at the Robinson Lake processing facility. Results were also impacted by a non-cash accrual due to a legal reserve associated with an ongoing contract dispute. During the quarter, the 2018 Drop Down contributed $17 million of segment operating income and $21 million of segment EBITDA.

Wholesale
Wholesale segment operating income was $5 million for the first-quarter 2019, an increase of $1 million from the prior year, and segment EBITDA for the first-quarter 2019 was $8 million, an increase of $1 million from the prior year. The slight year-over-year increase was driven by higher volumes and a favorable wholesale margin environment.

Balance Sheet and Cash Flow
Net cash from operating activities was $219 million in the first-quarter 2019, and distributable cash flow attributable to common unitholders for the first-quarter was $255 million. As of March 31, 2019, Andeavor Logistics had $29 million of cash and $1.2 billion of availability under its credit facilities and intercompany loan with Marathon Petroleum Corporation (NYSE:MPC). Total debt of $5.2 billion resulted in a leverage ratio of 3.9x at March 31, 2019.

Net capital expenditures for the first-quarter 2019 were $106 million, which included $100 million of net growth investments and $6 million of net maintenance capital.

Conference Call
Andeavor Logistics' previously announced first-quarter 2019 earnings conference call and webcast, which had been scheduled for Wednesday, May 8, at 1 p.m. EDT has been canceled. MPLX and ANDX will hold a conference call and webcast at 8:30 a.m. EDT today to discuss the transaction. Interested parties may listen to the conference call by dialing 1-888-455-2707 (confirmation number 2634753) or by visiting MPLX's website at http://www.mplx.com and clicking on the "Events and Presentations" link in the "Investor Center" tab or ANDX's website at http://www.andeavorlogistics.com and clicking on the "Events and Presentations" link in the "Investor" tab. A replay of the webcast will be available on MPLX's and ANDX's websites for two weeks. An investor presentation will also be available online prior to the conference call and webcast at http://ir.mplx.com or http://ir.andeavorlogistics.com. Financial information, including the earnings release and other investor-related material, will also be available online prior to the conference call and webcast at http://www.ir.andeavorlogistics.com.

About Andeavor Logistics LP
Andeavor Logistics LP is a fee-based, full-service, diversified midstream logistics company, with integrated assets across the western and mid-continent regions of the United States. Andeavor Logistics operates through three business segments: Terminalling and Transportation, Gathering and Processing and Wholesale. The Terminalling and Transportation segment consists of marine terminals, refined product truck terminals, rail terminals, dedicated storage facilities and transportation pipelines. The Gathering and Processing segment consists of crude oil gathering systems and pipelines as well as natural gas gathering pipelines, processing facilities and fractionation facilities. The Wholesale segment consists of a fee-based fuel wholesale business. Andeavor Logistics is a Delaware limited partnership headquartered in Findlay, Ohio.

View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com