Sunoco Logistics Partners L.P. Reports Earnings for the Third Quarter 2009 and
Declares Increased Third Quarter Distribution
PHILADELPHIA, Oct. 26 /PRNewswire-FirstCall/ -- Sunoco Logistics Partners L.P.
(NYSE: SXL) (the "Partnership") today announced net income for the third
quarter ended September 30, 2009 of $48.5 million, or $1.13 per limited
partner unit on a diluted basis, compared with $50.3 million, or $1.41 per
limited partner unit on a diluted basis, for the third quarter ended September
30, 2008. Operating income for the third quarter ended September 30, 2009
increased by $2.0 million from the prior year's third quarter. Distributable
cash flow ("DCF"), which represents the cash generated during the quarter
which is available to pay distributions, increased $1.9 million to $54.4
million compared to the third quarter of 2008.
For the nine months ended September 30, 2009, net income increased 40.9
percent to $196.0 million compared to the same period in 2008. Operating
income for this period increased $66.2 million, or 40.8 percent, when compared
to the prior year period. DCF for the first nine months of 2009 increased 34.6
percent to $216.0 million compared to the prior year period.
Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P.,
declared a cash distribution for the third quarter of 2009 of $1.065 per
common partnership unit ($4.26 annualized), which is an 10.4 percent increase
over the third quarter of 2008 and a 2.4 percent increase over the prior
quarter. The distribution is payable November 13, 2009 to unit holders of
record on November 6, 2009.
"Distributable cash flow for the third quarter continues to be strong and is
an excellent indicator of the health of our business," said Deborah M. Fretz,
President and Chief Executive Officer. "Quarterly net income was negatively
impacted by timing of contango crude oil inventory positions and will reverse
in the next two quarters."
"The addition of two acquisitions during the quarter, the Excel crude oil
pipeline in Oklahoma and the refined products terminal in Romulus, Michigan,
will provide additional opportunities for cash flow growth. In addition, we
completed construction on a new pipeline from our Nederland terminal to
Motiva's Port Arthur refinery, as well as new tanks at the Nederland terminal.
We continue to invest in organic growth opportunities across our system which
will translate to growing cash flows. The increase in our distribution
continues to affirm our confidence in the future of the business. This is the
twenty-fifth distribution increase in the past twenty-six quarters."
Segmented Third Quarter Results
Refined Products Pipeline System
Operating income for the Refined Products Pipeline System increased $3.8
million to $13.3 million for the third quarter ended September 30, 2009
compared to the prior year's third quarter. Sales and other operating revenue
increased by $6.3 million to $32.0 million due primarily to results from the
Partnership's acquisition of the MagTex refined products pipeline and
terminals system in November 2008 and increased pipeline fees. Other income
increased $1.6 million due primarily to increased income associated with the
Partnership's joint venture interests. Operating expenses increased $3.3
million to $14.4 million for the third quarter 2009 due primarily to the
MagTex acquisition and a reduction in refined product operating gains.
Depreciation and amortization expense increased for the three months ended
September 30, 2009 primarily due to the MagTex acquisition.
Terminal Facilities
Operating income for the Terminal Facilities segment increased by $7.0 million
to $20.7 million for the third quarter ended September 30, 2009 compared to
the prior year's third quarter. Sales and other operating revenue increased
by $5.6 million to $46.2 million due primarily to increased throughput, higher
fees and additional tankage at the Nederland terminal facility. Results from
the MagTex refined products terminals further contributed to the increase in
revenues. Cost of goods sold and operating expenses decreased by $2.2 million
to $15.7 million for the third quarter of 2009 due to absence of charges
associated with hurricane damages recognized in 2008, which was partially
offset by cost associated with the MagTex acquisition. Depreciation and
amortization expense increased to $5.2 million for the third quarter of 2009
due to increased tankage at the Nederland facility and the MagTex acquisition.
Crude Oil Pipeline System
Operating income for the Crude Oil Pipeline system decreased $8.8 million to
$26.0 million for the third quarter of 2009 compared to the prior year's third
quarter due to lower lease acquisition results and lower operating gains.
Lower lease acquisition income resulted from minimal income during the quarter
from the contango market structure due to timing of inventory accounting.
However, contango inventory positions put in place during the quarter will
result in $10.0 million of additional income which is expected to be
recognized over the next two quarters. Other income increased $0.9 million
compared to the prior year's quarter due primarily to increased equity income
associated with the Partnership's joint venture interests.
Lower crude oil prices were a key driver of the overall decrease in total
revenue, cost of products sold and operating expenses from the prior year's
quarter. The average price of West Texas Intermediate crude oil at Cushing,
Oklahoma decreased to $68.29 per barrel for the third quarter of 2009 from
$118.13 per barrel for the third quarter of 2008.
Segmented Nine Month Results
Refined Products Pipeline System
Operating income for the Refined Products Pipeline System increased $9.7
million to $34.4 million for the nine months ended September 30, 2009 compared
to the prior year period. Sales and other operating revenue increased by $21.1
million to $94.6 million due primarily to results from the MagTex acquisition
described above, along with increased pipeline fees. Other income increased
$2.7 million compared to the prior year period as a result of an increase in
equity income associated with the Partnership's joint venture interests.
Operating expenses increased by $10.1 million to $43.7 million due primarily
to the MagTex acquisition, a reduction in refined products operating gains and
increased environmental remediation expenses. Depreciation and amortization
expense increased $2.9 million during the first nine months of 2009 due
primarily to the MagTex acquisition.
Terminal Facilities
Operating income for the Terminal Facilities segment increased by $20.3
million to $63.1 million for the nine months ended September 30, 2009 compared
to the prior year period. Sales and other operating revenue increased by
$20.1 million to $139.4 million due primarily to increased terminal fees,
additional tankage at the Nederland terminal facility, along with the MagTex
acquisition. Other income increased $0.6 million from the first nine months
of 2009 as a result of an insurance recovery associated with the Partnership's
refinery terminals. Cost of goods sold and operating expenses increased by
$2.9 million to $48.4 million for the period ended September 30, 2009 due
primarily to the MagTex acquisition partially offset by reduced expenses
associated with hurricane damages noted above. Depreciation and amortization
expense increased to $14.5 million for the first nine months of 2009 due to
the MagTex acquisition and increased tankage at the Nederland facility.
During 2008, a $5.7 million non-cash impairment charge was recognized related
to the Partnership's decision to discontinue efforts to expand LPG storage
capacity at its Inkster, Michigan facility.
Crude Oil Pipeline System
Operating income for the Crude Oil Pipeline system increased $36.2 million to
$131.1 million for the first nine months of 2009 compared to the prior year
period due primarily to significantly higher lease acquisition earnings
primarily as a result of the contango market structure and increased pipeline
fees, which were partially offset by a reduction in pipeline operating gains.
Other income decreased $1.8 million compared to the prior year's quarter due
primarily to decreased equity income associated with the Partnership's joint
venture interests and an insurance gain recognized in 2008.
Lower crude oil prices were a key driver of the overall decrease in total
revenue, cost of products sold and operating expenses from the prior year
period. The average price of West Texas Intermediate crude oil at Cushing,
Oklahoma decreased to $57.13 per barrel for the first nine months of 2009 from
$113.38 per barrel for the first nine months of 2008.
Other Analysis
Financing Costs
Net interest expense increased $9.4 million to $32.6 million for the nine
months ended September 30, 2009, compared to the prior year period. The
increase was due primarily to higher borrowings associated with the $185.4
million MagTex acquisition, increased contango inventory positions and organic
growth projects.
At September 30, 2009, the Partnership had total debt outstanding of $889.4
million, which consisted of $599.4 million of Senior Notes and $290.0 million
of borrowings under the Partnership's credit facilities as compared to $747.6
million at December 31, 2008. The Partnership had available borrowing
capacity of $167.5 million under its credit facilities as of September 30,
2009 and a Debt to EBITDA ratio of 2.5x for the twelve months ended September
30, 2009.
Capital Expenditures
Maintenance capital expenditures for the nine months ended September 30, 2009
were $15.3 million. The Partnership expects that maintenance capital spending
will be approximately $32.0 million for the full year.
Expansion capital expenditures for the first nine months of 2009 were $143.5
million compared to $73.4 million for the first nine months of 2008.
Expansion capital for 2009 includes the acquisitions of a refined products
terminal in Romulus, MI and Excel Pipeline LLC, the owner of a crude oil
pipeline which services Gary Williams' Wynnewood, OK refinery. Expansion
capital also includes construction costs associated with the completed project
to connect the Nederland terminal to Motiva's Port Arthur, Texas refinery,
construction of two additional storage tanks at Nederland and refined products
terminal optimization projects.
Sunoco Logistics Partners L.P.
Financial Highlights
(in thousands, except units and per unit amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Income Statement
Sales and other
operating revenue $1,420,064 $2,829,507 $3,740,794 $8,539,317
Other income 8,759 6,245 21,298 19,854
----- ----- ------ ------
Total Revenues 1,428,823 2,835,752 3,762,092 8,559,171
--------- --------- --------- ---------
Cost of products sold
and operating expenses 1,342,002 2,752,609 3,450,490 8,316,720
Depreciation and
amortization 12,240 10,010 35,328 29,499
Selling, general and
administrative expenses 14,700 15,270 47,616 44,827
Impairment Charge - - - 5,674
--- --- --- -----
Total costs and expenses 1,368,942 2,777,889 3,533,434 8,396,720
--------- --------- --------- ---------
Operating income 59,881 57,863 228,658 162,451
Interest cost and debt
expense, net 12,592 8,506 36,278 25,904
Capitalized interest (1,171) (977) (3,629) (2,613)
------ ---- ------ ------
Net Income $48,460 $50,334 $196,009 $139,160
======= ======= ======== ========
Calculation of Limited
Partners' interest:
Net Income $48,460 $50,334 $196,009 $139,160
Less: General
Partner's interest (1) (13,368) (9,724) (38,885) (26,185)
------- ------ ------- -------
Limited Partners'
interest in Net Income $35,092 $40,610 $157,124 $112,975
======= ========== ======== ========
Net Income per
Limited Partner unit (1)
Basic $1.13 $1.42 $5.22 $3.94
===== ===== ===== =====
Diluted $1.13 $1.41 $5.19 $3.92
===== ===== ===== =====
Weighted average Limited
Partners' units
outstanding:
Basic 30,981,265 28,657,485 30,084,613 28,647,578
========== ========== ========== ==========
Diluted 31,190,187 28,845,559 30,288,345 28,830,653
========== ========== ========== ==========
Capital Expenditure
Data:
Maintenance capital
expenditures $6,304 $7,884 $15,326 $15,655
Expansion capital
expenditures 82,100 28,665 143,477 73,389
------ ------ ------- ------
Total $88,404 $36,549 $158,803 $89,044
======= ======= ======== =======
September 30, December 31,
2009 2008
---- ----
Balance Sheet Data (at period end):
Cash and cash equivalents $2,000 $2,000
Total Debt 889,374 747,631
Total Partners' Capital 852,993 669,900
(1) Effective January 1, 2009, the Partnership changed its calculation
of earnings per unit to conform to updated accounting guidance that
requires undistributed earnings to be allocated to the limited
partner and general partner interests in accordance with the
Partnership agreement. Prior period amounts have been restated for
comparative purposes. This change resulted in an increase in net
income per diluted LP unit of $0.22 and $0.56 for the three and nine
months ended September 30, 2008 respectively.
Sunoco Logistics Partners L.P.
Earnings Contribution by Business Segment
(in thousands, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Refined Products Pipeline
System:
Sales and other operating
revenue $32,032 $25,685 $94,648 $73,578
Other income 3,844 2,271 9,191 6,521
----- ----- ----- -----
Total Revenues 35,876 27,956 103,839 80,099
------ ------ ------- ------
Operating expenses 14,425 11,102 43,747 33,608
Depreciation and amortization 3,201 2,215 9,593 6,649
Selling, general and
administrative expenses 4,970 5,156 16,057 15,092
----- ----- ------ ------
Operating Income $13,280 $9,483 $34,442 $24,750
======= ====== ======= =======
Terminal Facilities:
Sales and other operating
revenues $46,198 $40,634 $139,389 $119,290
Other Income 12 - 1,404 825
-- --- ----- ---
Total Revenues 46,210 40,634 140,793 120,115
------ ------ ------- -------
Cost of products sold and
operating expenses 15,714 17,938 48,438 45,539
Depreciation and amortization 5,151 4,198 14,489 12,191
Selling, general and
administrative expenses 4,635 4,760 14,721 13,853
Impairment Charge - - - 5,674
--- --- --- -----
Operating Income $20,710 $13,738 $63,145 $42,858
======= ======= ======= =======
Crude Oil Pipeline System:
Sales and other operating
revenue $1,341,834 $2,763,188 $3,506,757 $8,346,449
Other income 4,903 3,974 10,703 12,508
----- ----- ------ ------
Total Revenues 1,346,737 2,767,162 3,517,460 8,358,957
--------- --------- --------- ---------
Cost of products sold and
operating expenses 1,311,863 2,723,569 3,358,305 8,237,573
Depreciation and amortization 3,888 3,597 11,246 10,659
Selling, general and
administrative expenses 5,095 5,354 16,838 15,882
----- ----- ------ ------
Operating Income $25,891 $34,642 $131,071 $94,843
======= ======= ======== =======
Sunoco Logistics Partners L.P.
Operating Highlights
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Refined Products Pipeline
System: (1)(2)(3)
Total shipments (barrel
miles per day) (4) 56,848,807 43,769,684 58,145,900 44,128,921
Revenue per barrel mile (cents) 0.612 0.638 0.595 0.609
Terminal Facilities:
Terminal throughput (bpd):
Refined product terminals (3) 465,206 437,018 462,969 428,146
Nederland terminal 559,874 545,105 619,297 541,517
Refinery terminals (5) 609,020 646,478 597,191 647,891
Crude Oil Pipeline System:
(1)(2)(6)
Crude oil pipeline throughput
(bpd) 611,000 649,274 648,232 672,877
Crude oil purchases at wellhead
(bpd) 176,643 176,739 183,047 175,209
Gross margin per barrel of
pipeline throughput (cents) (7) 46.5 57.2 77.6 52.2
(1) Excludes amounts attributable to equity ownership interests in
corporate joint ventures.
(2) Effective January 1, 2009, the Partnership realigned its operating
segments as discussed above. Prior period amounts have been recast
to reflect the current operating segments.
(3) Includes results from the Partnership's purchase of the Romulus, MI
terminal and the MagTex refined products pipeline and terminals system
from the acquisition date.
(4) Represents total average daily pipeline throughput multiplied by the
number of miles of pipeline through which each barrel has been
shipped.
(5) Consists of the Partnership's Fort Mifflin Terminal Complex, the
Marcus Hook Tank Farm and the Eagle Point Dock.
(6) Includes results from the Partnership's purchase of the Excel
pipeline from the acquisition date.
(7) Represents total segment sales minus cost of products sold and
operating expenses and depreciation and amortization divided by crude
oil pipeline throughput.
Sunoco Logistics Partners L.P.
Non-GAAP Financial Measures
(in thousands, unaudited)
Distributable Cash Flow ("DCF") Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
-------- -------- -------- --------
Net Income $48,460 $50,334 $196,009 $139,160
Add: Interest cost and debt
expense; net 11,421 7,529 32,649 23,291
Add. Depreciation and
amortization 12,240 10,010 35,328 29,499
Add: Impairment charge - - - 5,674
--- --- --- -----
EBITDA 72,121 67,873 263,986 197,624
Less: Interest cost and debt
expense; net (11,421) (7,529) (32,649) (23,291)
Less: Maintenance Capital (6,304) (7,884) (15,326) (15,655)
Add: Sunoco reimbursements - - - 1,851
--- --- --- -----
Distributable Cash Flow
("DCF") $54,396 $52,460 $216,011 $160,529
======= ======= ======== ========
Earnings before interest, taxes,
depreciation and amortization Twelve Months Ended
("EBITDA") September 30, 2009
------------------
Net Income $271,329
Add: Interest cost and debt expense,
net 45,341
Less: Capitalized interest (4,871)
Add: Depreciation and amortization 45,883
------
EBITDA $357,682
========
Total Debt as of September 30, 2009 $889,374
Total Debt to EBITDA Ratio 2.5x
An investor call with management regarding the third-quarter results is
scheduled for Monday afternoon, October 26 at 2:00 pm EDT. Those wishing to
listen can access the call by dialing (USA toll free) 1-877-297-3442;
International (USA toll) 1-706-643-1335 and request "Sunoco Logistics Partners
Earnings Call, Conference Code 34719298". This event may also be accessed by
a webcast, which will be available at www.sunocologistics.com. A number of
presentation slides will accompany the audio portion of the call and will be
available to be viewed and printed shortly before the call begins.
Individuals wishing to listen to the call on the Partnership's web site will
need Windows Media Player, which can be downloaded free of charge from
Microsoft or from Sunoco Logistics Partners' conference call page. Please
allow at least fifteen minutes to complete the download.
Audio replays of the conference call will be available for two weeks after the
conference call beginning approximately two hours following the completion of
the call. To access the replay, dial 1-800-642-1687. International callers
should dial 1-706-645-9291. Please enter Conference ID #34719298
Sunoco Logistics Partners L.P. (NYSE: SXL), headquartered in Philadelphia, is
a master limited partnership formed to acquire, own and operate refined
product and crude oil pipelines and terminal facilities. The Refined Products
Pipeline System consists of approximately 2,200 miles of refined product
pipelines located in the Northeastern and Midwestern United States, the
recently acquired MagTex Pipeline System, and interests in four refined
products pipelines, consisting of a 9.4 percent interest in Explorer Pipeline
Company, a 31.5 percent interest in Wolverine Pipe Line Company, a 12.3
percent interest in West Shore Pipe Line Company and a 14.0 percent interest
in Yellowstone Pipe Line Company. The Terminal Facilities consist of
approximately 10.1 million shell barrels of refined products terminal capacity
and approximately 22.4 million shell barrels of crude oil terminal capacity
(including approximately 19.0 million shell barrels of capacity at the Texas
Gulf Coast Nederland Terminal). The Crude Oil Pipeline System consists of
approximately 3,850 miles of crude oil pipelines, located principally in
Oklahoma and Texas, a 55.3 percent interest in Mid-Valley Pipeline Company, a
43.8 percent interest in the West Texas Gulf Pipe Line Company and a 37.0
percent interest in the Mesa Pipe Line System. For additional information
visit Sunoco Logistics' web site at www.sunocologistics.com.
Portions of this document constitute forward-looking statements as defined by
federal law. Although Sunoco Logistics Partners L.P. believes that the
assumptions underlying these statements are reasonable, investors are
cautioned that such forward-looking statements are inherently uncertain and
necessarily involve risks that may affect the Partnership's business prospects
and performance causing actual results to differ from those discussed in the
foregoing release. Such risks and uncertainties include, by way of example and
not of limitation: whether or not the transactions described in the foregoing
news release will be cash flow accretive; increased competition; changes in
demand for crude oil and refined products that we store and distribute;
changes in operating conditions and costs; changes in the level of
environmental remediation spending; potential equipment malfunction; potential
labor issues; the legislative or regulatory environment; plant
construction/repair delays; nonperformance by major customers or suppliers;
and political and economic conditions, including the impact of potential
terrorist acts and international hostilities. These and other applicable risks
and uncertainties have been described more fully in the Partnership's Form
10-Q filed with the Securities and Exchange Commission on August 5, 2009. The
Partnership undertakes no obligation to update any forward-looking statements
in this release, whether as a result of new information or future events.
SOURCE Sunoco Logistics Partners L.P.
Thomas Golembeski (media), +1-215-977-6298, Neal Murphy (investors),
+1-215-977-6322, both of Sunoco Logistics Partners L.P.
