TransMontaigne Announces Third Quarter Results

  • Achieved record levels of revenue, Consolidated EBITDA and
    distributable cash flow for the third quarter of 2018
  • Revenue for the third quarter of 2018 totaled $57.2 million, compared
    to $45.5 million in the prior year third quarter
  • Consolidated EBITDA totaled $36.1 million, compared to $25.4 million
    in the prior year third quarter
  • Distributable cash flow for the third quarter of 2018 totaled $24.7
    million, with aggregate distributions of $17.2 million, resulting in
    quarterly distribution coverage of 1.43x
  • Increased the quarterly cash distribution for the twelfth consecutive
    quarter to $0.805, reflecting a 6.6% increase over the prior year
    quarterly distribution
  • Leverage as of September 30, 2018 was 4.31x

DENVER–(BUSINESS WIRE)–TransMontaigne Partners L.P. (NYSE:TLP) (the Partnership, we, us, our)
today announced third quarter 2018 financial and operating results.

FINANCIAL RESULTS

Revenue for the third quarter of 2018 totaled $57.2 million, an increase
of $11.7 million, or approximately 26%, compared to $45.5 million for
the third quarter of 2017. Consolidated EBITDA totaled $36.1 million for
the third quarter of 2018, representing an increase of $10.7 million, or
approximately 42%, compared to $25.4 million for the third quarter of
2017. The improvement in revenue and Consolidated EBITDA compared to the
prior year was primarily attributed to the acquisition of the West Coast
terminals on December 15, 2017.

An overview of our financial performance for the third quarter of 2018
compared to the third quarter of 2017 includes:

  • Operating income for the third quarter 2018 was approximately $20.1
    million compared to $13.9 million for the third quarter 2017. Changes
    in the primary components of operating income are as follows:

    • Revenue increased approximately $11.7 million to $57.2 million
      driven by contributions from our acquisition of the West Coast
      terminals in December 2017, which added approximately $9.9 million
      to revenue. In addition, we experienced increases in revenue at
      our Gulf Coast, Midwest and Southeast terminals of approximately
      $0.5 million, $0.8 million and $1.3 million, respectively,
      partially offset by decreases in revenue at our Brownsville and
      River terminals of approximately $0.7 million and $0.1 million,
      respectively.
    • Direct operating costs and expenses increased approximately $2.2
      million to $19.9 million driven by our West Coast acquisition,
      which added approximately $3.5 million to expenses, partially
      offset by a decrease in direct operating costs and expenses at our
      Gulf Coast, Brownsville, River and Southeast terminals of
      approximately $0.2 million, $0.9 million, $0.1 million and $0.1
      million, respectively. Direct operating costs and expenses for the
      Midwest terminals were consistent with the prior year quarter.
    • Depreciation and amortization expenses increased approximately
      $3.4 million to $12.3 million primarily driven by an increased
      asset base associated with our acquisition of the West Coast
      terminals.
  • Net earnings were approximately $10.9 million for the third quarter
    2018 compared to $11.0 million for the third quarter 2017. The
    decrease was principally due to the increase in quarterly operating
    income discussed above, offset by increases in interest expense and
    amortization of deferred issuance costs of approximately $6.0 million
    and $0.3 million, respectively. The increase was primarily
    attributable to increased financing costs associated with financing
    our acquisition of the West Coast terminals, the issuance of senior
    notes in the first quarter of 2018 and increases in LIBOR based
    interest rates.
  • Quarterly net earnings per limited partner unit was $0.42 per unit for
    the third quarter 2018 compared to $0.47 per unit for the third
    quarter 2017.
  • Consolidated EBITDA for the third quarter 2018 was approximately $36.1
    million compared to $25.4 million for the third quarter 2017. The
    increase in Consolidated EBITDA was due to the changes in revenue and
    direct operating costs and expenses discussed above, as well as an
    increase in distributions from unconsolidated affiliates of
    approximately $0.8 million.
  • Distributable cash flow for the third quarter 2018 was approximately
    $24.7 million compared to $21.6 million for the third quarter 2017.
    The increase in distributable cash flow was due to the changes in
    EBITDA and interest expense discussed above, partially offset by an
    increase in capitalized maintenance expenditures of approximately $0.9
    million.

    • The distribution declared per limited partner unit was $0.805 per
      unit for the third quarter 2018 compared to $0.755 per unit for
      the third quarter 2017, reflecting an increase of 6.6%.
    • Aggregate distributions totaled $17.2 million for the third
      quarter 2018, resulting in a quarterly distribution coverage ratio
      of 1.43x.

QUARTERLY DISTRIBUTION

The Partnership previously announced that it declared a quarterly cash
distribution of $0.805 per unit for the period from July 1, 2018 through
September 30, 2018. This $0.01 increase over the previous quarter
reflects the twelfth consecutive increase in the quarterly distribution
and represents annual growth of 6.6% over the prior year. The
distribution was paid on November 8, 2018 to unitholders of record on
October 31, 2018.

RECENT DEVELOPMENTS

Expansion of our Brownsville operations. The Frontera
joint venture has waived its right of first refusal to participate in
our previously announced Brownsville terminal expansion. Accordingly,
our Brownsville expansion project will be 100% constructed and owned by
TransMontaigne Partners. The project, which is underpinned by new
long-term agreements, includes the construction of approximately 630,000
barrels of additional liquids storage capacity and the conversion of our
Diamondback Pipeline to transport diesel and gasoline to the U.S./Mexico
border. The Diamondback Pipeline is comprised of an 8” pipeline that
previously transported propane approximately 16 miles from our
Brownsville facilities to the U.S./Mexico border, as well as a 6”
pipeline, which runs parallel to the 8” pipeline, that has been idle and
can be used to transport additional refined products. We expect the
first tanks of the additional liquids storage capacity under
construction to be completed and placed into commercial service during
the first quarter of 2019. We expect to recommission the Diamondback
Pipeline and resume operations on both the 8” pipeline and the
previously idle 6” pipeline by the end of 2019, with the remaining
additional liquids storage capacity being completed and placed into
commercial service at the same time. The anticipated aggregate cost of
the terminal expansion and pipeline recommissioning is estimated to be
approximately $55 million.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2018 total long-term debt was $591.0 million,
excluding $7.6 million of unamortized deferred issuance costs. Our
long-term debt amounts included $291.0 million of outstanding borrowings
on our $850 million revolving credit facility and $300 million of issued
senior notes. For the trailing twelve months, Consolidated EBITDA
combined with bank approved pro forma acquisition and project credit was
$137.2 million, resulting in a debt to Consolidated EBITDA ratio, or
total leverage ratio, of 4.31x. Consolidated EBITDA is a non-GAAP
financial performance measure used in the calculation of our leverage
and interest coverage ratio requirements under our revolving credit
facility. See Attachment B hereto for a reconciliation of Consolidated
EBITDA to net earnings. See also Attachment C hereto for the calculation
of our total leverage ratio and interest coverage ratio and a
reconciliation of Consolidated EBITDA to Cash flows provided by
operating activities.

For the third quarter of 2018 we reported $16.5 million in total capital
expenditures, which consisted of $2.9 million of maintenance
expenditures and $13.6 million in expansion expenditures. As of
September 30, 2018 remaining capital expenditures for approved expansion
projects are estimated to be approximately $100 million, which is
expected to be spent through the end of 2019. We expect to fund approved
expansion projects with cash flows from operations and additional
borrowings under our revolving credit facility. Approved expansion
projects are underpinned by new long-term agreements and primarily
include expansions at our Collins, Brownsville and Richmond terminals:

  • Collins, Mississippi Phase II terminal expansion includes the
    construction of an additional 870,000 barrels of liquids storage
    capacity and improvements to the Colonial Pipeline receipt and
    delivery manifolds. Total capital expenditures for this project are
    expected to be approximately $55 million, of which approximately $13.2
    million has been spent though September 30, 2018. We expect the first
    of the new tanks to be placed into commercial service in the fourth
    quarter of 2018, with the remaining capacity and the manifold
    improvements to be placed into commercial service in the second
    quarter of 2019.
  • Brownsville, Texas terminal expansion and pipeline recommissioning is
    discussed above under “Recent Developments”. As of September 30, 2018
    we have spent approximately $5.7 million on this project.
  • Richmond, California terminal includes the construction of an
    additional 125,000 barrels of liquids storage capacity. Total capital
    expenditures for this project is expected to be approximately $8
    million, of which, approximately $2.2 million has been spent though
    September 30, 2018. We expect the first of the new tank capacity to be
    placed into commercial service in the fourth quarter of 2018, with the
    remaining capacity to be placed into commercial service in the first
    quarter of 2019.

CONFERENCE CALL

On Thursday, November 8, 2018, the Partnership will hold a conference
call for analysts and investors at 12:00 p.m. Eastern Time to discuss
our third quarter results. Hosting the call will be Fred Boutin, Chief
Executive Officer, and Rob Fuller, Chief Financial Officer. The call can
be accessed live over the telephone by dialing (877) 407-4018, or for
international callers (201) 689-8471. A replay will be available shortly
after the call and can be accessed by dialing (844) 512-2921, or for
international callers (412) 317-6671. The passcode for the replay is
13684763. The replay will be available until November 22, 2018.

Interested parties may also listen to a simultaneous webcast of the
conference call by logging onto TLP’s website at www.transmontaignepartners.com
under the Investor Information section. A replay of the webcast will
also be available until November 22, 2018.

ABOUT TRANSMONTAIGNE PARTNERS L.P.

TransMontaigne Partners L.P. is a terminaling and transportation company
based in Denver, Colorado with operations in the United States along the
Gulf Coast, in the Midwest, in Houston and Brownsville, Texas, along the
Mississippi and Ohio Rivers, in the Southeast and on the West Coast. We
provide integrated terminaling, storage, transportation and related
services for customers engaged in the distribution and marketing of
light refined petroleum products, heavy refined petroleum products,
crude oil, chemicals, fertilizers and other liquid products. Light
refined products include gasolines, diesel fuels, heating oil and jet
fuels, and heavy refined products include residual fuel oils and
asphalt. We do not purchase or market products that we handle or
transport. News and additional information about TransMontaigne Partners
L.P. is available on our website: www.transmontaignepartners.com.

FORWARD-LOOKING STATEMENTS

This press release includes statements that may constitute
forward-looking statements made pursuant to the safe harbor provision of
the Private Securities Litigation Reform Act of 1995. Although the
company believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, such statements are
subject to risks and uncertainties that could cause actual results to
differ materially from those projected. Important factors that could
cause actual results to differ materially from the Partnership’s
expectations and may adversely affect its business and results of
operations are disclosed in “Item 1A. Risk Factors” in the Partnership’s
Annual Report on Form 10-K for the year ended December 31, 2017, filed
with the Securities and Exchange Commission on March 15, 2018. The
forward-looking statements speak only as of the date made, and, other
than as may be required by law, the Partnership undertakes no obligation
to update or revise any forward looking statements, whether as a result
of new information, future events or otherwise.

ATTACHMENT A
SELECTED FINANCIAL INFORMATION AND RESULTS
OF OPERATIONS

Our terminaling services agreements are structured as either throughput
agreements or storage agreements. Our throughput agreements contain
provisions that require our customers to make minimum payments, which
are based on contractually established minimum volumes of throughput of
the customer’s product at our facilities over a stipulated period of
time. Due to this minimum payment arrangement, we recognize a fixed
amount of revenue from the customer over a certain period of time, even
if the customer throughputs less than the minimum volume of product
during that period. In addition, if a customer throughputs a volume of
product exceeding the minimum volume, we would recognize additional
revenue on this incremental volume. Our storage agreements require our
customers to make minimum payments based on the volume of storage
capacity available to the customer under the agreement, which results in
a fixed amount of recognized revenue.

We refer to the fixed amount of revenue recognized pursuant to our
terminaling services agreements as being “firm commitments.” Revenue
recognized in excess of firm commitments and revenue recognized based
solely on the volume of product distributed or injected are referred to
as “ancillary.” In addition “ancillary” revenue also includes fees
received from ancillary services including heating and mixing of stored
products, product transfer, railcar handling, butane blending, proceeds
from the sale of product gains, wharfage and vapor recovery.

The “firm commitments” and “ancillary” revenue included in terminaling
services fees were as follows (in thousands):

               
Three months ended Nine months ended
September 30, September 30,
2018 2017 2018 2017
Terminaling services fees:
Firm commitments $ 43,220 $ 33,857 $ 128,051 $ 99,590
Ancillary   11,132   8,123   31,870   24,640
Total terminaling services fees 54,352 41,980 159,921 124,230
Pipeline transportation fees 774 1,091 2,437 4,603
Management fees   2,024   2,378   6,580   6,830
Total revenue $ 57,150 $ 45,449 $ 168,938 $ 135,663
 

The amount of revenue recognized as “firm commitments” based on the
remaining contractual term of the terminaling services agreements that
generated “firm commitments” for the three months ended September 30,
2018 was as follows (in thousands):

       
Remaining terms on terminaling services agreements that generated
“firm commitments”:
Less than 1 year remaining $ 9,932 23%
1 year or more, but less than 3 years remaining 12,952 30%
3 years or more, but less than 5 years remaining 11,063 26%
5 years or more remaining (1)   9,273 21%
Total firm commitments for the three months ended September 30, 2018 $ 43,220

(1) We have a terminaling services agreement with a third
party relating to our Southeast terminals that will continue in effect
through February 1, 2023, after which it shall automatically continue
unless and until the third party provides at least 24 months’ prior
notice of its intent to terminate the agreement. Effective at any time
from and after July 31, 2040, we have the right to terminate the
agreement by providing at least 24 months’ prior notice of our intent to
terminate the agreement. We do not believe the third party will
terminate the agreement prior to July 31, 2040; therefore we have
presented the firm commitments related to this terminaling services
agreement in the 5 years or more remaining category in the table above.

The following selected financial information is extracted from our
quarterly report on Form 10-Q for the quarter ended September 30, 2018,
which was filed on November 8, 2018 with the Securities and Exchange
Commission (in thousands, except per unit amounts):

               
Three months ended Nine months ended
September 30, September 30,
2018 2017 2018 2017

Income Statement Data

Revenue $ 57,150 $ 45,449 $ 168,938 $ 135,663
Direct operating costs and expenses (19,910 ) (17,719 ) (59,330 ) (50,214 )
General and administrative expenses (4,957 ) (5,247 ) (14,557 ) (13,298 )
Earnings from unconsolidated affiliates 1,862 1,884 7,195 6,564
Operating income 20,125 13,942 58,283 46,616
Interest expense (8,608 ) (2,656 ) (23,342 ) (7,333 )
Net earnings 10,895 10,966 32,529 38,398
Net earnings allocable to limited partners 4,058 3,270 11,696 9,218
Net earnings per limited partner unit—basic $ 0.42 $ 0.47 $ 1.28 $ 1.79
 
       
September 30, December 31,
2018 2017

Balance Sheet Data

Property, plant and equipment, net $ 662,819 $ 655,053
Investments in unconsolidated affiliates 228,622 233,181
Goodwill 9,428 9,428
Customer relationships, net 45,130 47,136
Total assets 976,587 987,003
Long-term debt 583,420 593,200
Partners’ equity 349,485 364,217
 

Selected results of operations data for each of the quarters in the
years ended December 31, 2018 and 2017 are summarized below (in
thousands):

                   
Three months ended Year ending
March 31, June 30, September 30, December 31, December 31,
2018 2018 2018 2018 2018
Revenue $ 56,444 $ 55,344 $ 57,150 $ $ 168,938
Direct operating costs and expenses (20,145 ) (19,275 ) (19,910 ) (59,330 )
General and administrative expenses (4,981 ) (4,619 ) (4,957 ) (14,557 )
Insurance expenses (1,246 ) (1,271 ) (1,227 ) (3,744 )
Equity-based compensation expense (2,017 ) (441 ) (483 ) (2,941 )
Depreciation and amortization (11,808 ) (13,160 ) (12,310 ) (37,278 )
Earnings from unconsolidated affiliates   2,889     2,444     1,862       7,195  
Operating income 19,136 19,022 20,125 58,283
Interest expense (6,461 ) (8,273 ) (8,608 ) (23,342 )
Amortization of deferred issuance costs   (501 )   (1,289 )   (622 )     (2,412 )
Net earnings $ 12,174   $ 9,460   $ 10,895   $ $ 32,529  
 
                   
Three months ended Year ending
March 31, June 30, September 30, December 31, December 31,
2017 2017 2017 2017 2017
Revenue $ 44,850 $ 45,364 $ 45,449 $ 47,609 $ 183,272
Direct operating costs and expenses (16,511 ) (15,984 ) (17,719 ) (17,486 ) (67,700 )
General and administrative expenses (3,971 ) (4,080 ) (5,247 ) (6,135 ) (19,433 )
Insurance expenses (1,006 ) (1,002 ) (999 ) (1,057 ) (4,064 )
Equity-based compensation expense (1,817 ) (352 ) (544 ) (286 ) (2,999 )
Depreciation and amortization (8,705 ) (8,792 ) (8,882 ) (9,581 ) (35,960 )
Earnings from unconsolidated affiliates   2,560     2,120     1,884     507     7,071  
Operating income 15,400 17,274 13,942 13,571 60,187
Interest expense (2,152 ) (2,525 ) (2,656 ) (3,140 ) (10,473 )
Amortization of deferred issuance costs   (294 )   (271 )   (320 )   (336 )   (1,221 )
Net earnings $ 12,954   $ 14,478   $ 10,966   $ 10,095   $ 48,493  
 

ATTACHMENT B
DISTRIBUTABLE CASH FLOW

The following summarizes our distributable cash flow for the period
indicated (in thousands):

         
July 1, 2018 January 1, 2018
through through
September 30, 2018   September 30, 2018  
Net earnings $ 10,895 $ 32,529
Depreciation and amortization 12,310 37,278
Earnings from unconsolidated affiliates (1,862 ) (7,195 )
Distributions from unconsolidated affiliates 5,007 12,168
Equity-based compensation expense 483 2,941
Settlement of tax withholdings on equity-based compensation (658 )
Interest expense 8,608 23,342
Amortization of deferred issuance costs   622     2,412  
Consolidated EBITDA (1) (2) 36,063 102,817
Interest expense (8,608 ) (23,342 )
Unrealized loss on derivative instruments 144 271
Amortization of deferred issuance costs (622 ) (2,412 )
Amounts due under long-term terminaling services agreements, net 171 375
Project amortization of deferred revenue under GAAP (185 ) (1,247 )
Project amortization of deferred revenue for DCF 581 2,433
Capitalized maintenance   (2,853 )   (10,017 )
“Distributable cash flow”, or DCF, generated during the period (2) $ 24,691   $ 68,878  
 
Actual distribution for the period on all common units and the
general partner interest including incentive distribution rights
$ 17,243   $ 50,732  
Distribution coverage ratio (2)  

1.43

x

 

1.36

x

(1)   Reflects the calculation of Consolidated EBITDA in accordance with
the definition for such financial metric in our revolving credit
facility.
(2) Consolidated EBITDA, Distributable cash flow and the distribution
coverage ratio are not computations based upon generally accepted
accounting principles. The amounts included in the computations of
our distributable cash flow and Consolidated EBITDA are derived from
amounts separately presented in our consolidated financial
statements, notes thereto and “Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in our
quarterly report on Form 10-Q for the quarter ended September 30,
2018, which was filed with the Securities and Exchange Commission on
November 8, 2018. Distributable cash flow and Consolidated EBITDA
should not be considered in isolation or as an alternative to net
earnings or operating income, as an indication of our operating
performance, or as an alternative to cash flows from operating
activities as a measure of liquidity. Distributable cash flow and
Consolidated EBITDA are not necessarily comparable to similarly
titled measures of other companies. Distributable cash flow and
Consolidated EBITDA are presented here because they are widely
accepted financial indicators used to compare partnership
performance. Further, Consolidated EBITDA is calculated consistent
with the provisions of our credit facility and is a financial
performance measure used in the calculation of our leverage and
interest coverage ratio requirements. We believe that these measures
provide investors an enhanced perspective of the operating
performance of our assets, the cash we are generating and our
ability to make distributions to our unitholders and our general
partner.
 

ATTACHMENT C
CREDIT FACILITY FINANCIAL COVENANTS

The primary financial covenants contained in our revolving credit
facility are (i) a total leverage ratio test (not to exceed 5.25 to
1.0), (ii) a senior secured leverage ratio test (not to exceed 3.75 to
1.0), and (iii) a minimum interest coverage ratio test (not less than
2.75 to 1.0). These financial covenants are based on a non-GAAP, defined
financial performance measure within our revolving credit facility known
as “Consolidated EBITDA.” The following provides the calculation of
“total leverage ratio”, “senior secured leverage ratio” and “interest
coverage ratio” as such terms are used in our revolving credit facility
for certain financial covenants (in thousands, except ratios):

                   
Twelve months
Three months ended ended
December 31, March 31, June 30, September 30, September 30,
2017 2018 2018 2018 2018
Financial performance covenant tests:
Consolidated EBITDA (1) $ 26,963 $ 32,921 $ 33,833 $ 36,063 $ 129,780
Permitted Acquisition credit (2) 5,900 5,900
Material Project credit (3)           854     663     1,517  
Consolidated EBITDA for the leverage ratios (1) $ 32,863   $ 32,921   $ 34,687   $ 36,726   $ 137,197  
Revolving credit facility debt 291,000
6.125% senior notes due in 2026 300,000  
Consolidated funded indebtedness $ 591,000  
Senior secured leverage ratio 2.12

x

 

Total leverage ratio 4.31

x

 

Consolidated EBITDA for the interest coverage ratio (1) $ 26,963 $ 32,921 $ 33,833 $ 36,063 $ 129,780
Consolidated interest expense (1) (4) $ 3,217 $ 6,419 $ 8,188 $ 8,464 $ 26,288
Interest coverage ratio 4.94

x

 

Reconciliation of consolidated EBITDA to cash flows provided by
operating activities:
Consolidated EBITDA for the total leverage ratio (1) $ 32,863 $ 32,921 $ 34,687 $ 36,726 $ 137,197
Permitted Acquisition credit (2) (5,900 ) (5,900 )
Material Project credit (3) (854 ) (663 ) (1,517 )
Interest expense (3,140 ) (6,461 ) (8,273 ) (8,608 ) (26,482 )
Unrealized loss (gain) on derivative instruments (77 ) 42 85 144 194
Amortization of deferred revenue (122 ) (187 ) (149 ) (119 ) (577 )
Settlement of tax withholdings on equity-based compensation 341 317 658
Change in operating assets and liabilities   (3,709 )   (2,262 )   9,656     3,122     6,807  
Cash flows provided by operating activities $ 19,915   $ 24,394   $ 35,469   $ 30,602   $ 110,380  

Contacts

TransMontaigne Partners L.P.
Frederick W. Boutin,
303-626-8200
Chief Executive Officer
or
Robert T. Fuller,
303-626-8200
Chief Financial Officer

Read full story here

Leave a Reply

Sky Optics Media drone video