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NuStar Energy L.P. 2011 Full Year Distributable Cash Flow, EBITDA and Operating Income Higher than 2010

Fourth Quarter 2011 Results Benefit from the Completion of Internal Growth Projects

Expect Results to Continue to Improve in 2012

SAN ANTONIO--(BUSINESS WIRE)--Jan. 27, 2012-- NuStar Energy L.P. (NYSE: NS) today announced its fourth quarter distributable cash flow available to limited partners was $63.1 million, or $0.95 per unit, compared to 2010 fourth quarter distributable cash flow of $66.7 million, or $1.03 per unit. For the year ended December 31, 2011, distributable cash flow available to limited partners was $307.9 million, or $4.74 per unit, up from the $280.7 million, or $4.43 per unit earned in 2010.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $98.7 million for the fourth quarter of 2011 compared to $113.6 million for the fourth quarter of 2010. For the year ended December 31, 2011, EBITDA was $490.4 million, higher than the $482.8 million in 2010.

Operating income was $47.9 million for the fourth quarter of 2011 compared to $70.5 million for the fourth quarter of 2010. For the year ended December 31, 2011, operating income was $314.0 million, outpacing the $302.6 million generated in 2010.

Net income applicable to limited partners for the fourth quarter was $19.8 million, or $0.30 per unit, compared to $41.9 million, or $0.65 per unit, earned in the fourth quarter of 2010. For the year ended December 31, 2011, net income applicable to limited partners was $180.7 million, or $2.78 per unit, compared to $200.9 million, or $3.19 per unit, in 2010.

The partnership also announced that its board of directors has declared a fourth quarter 2011 distribution of $1.095 per unit. This fourth quarter 2011 distribution will be paid on February 10, 2012, to holders of record as of February 7, 2012. For 2011, NuStar Energy L.P. declared a distribution of $4.36 per unit, which was $0.08 per unit or approximately 2% higher than the $4.28 per unit distribution declared in 2010. Distributable cash flow available to limited partners covers the distribution to the limited partners by 0.87 times for the fourth quarter of 2011 and 1.09 times for the year ended December 31, 2011.

"Even though the U.S. and global economic conditions continued to be very challenging this past year and oil and gas volatility remained high, NuStar was able to generate more distributable cash flow, EBITDA and operating income in 2011 than in 2010," said Curt Anastasio, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “Additional earnings produced by the completion of several internal growth projects, the acquisition of the San Antonio refinery and crude oil trading in our fuels marketing operations more than offset the negative impact of reduced pipeline throughput volumes and lower than expected asphalt demand.”

With regard to fourth quarter 2011 results Anastasio added, “Results in both our storage and transportation segments were higher than last year’s fourth quarter. Our storage segment benefited primarily from the 3rd quarter 2011 completion of a storage expansion project at our St. James, Louisiana terminal facility. Increased tariffs and new revenue streams from two Eagle Ford shale internal growth projects contributed to improved results in our transportation segment.”

Anastasio noted that, “While lower results in our asphalt and fuels marketing segment, primarily due to lower margins in our asphalt operations, offset the increased fourth quarter results in our storage and transportation segments, the non-recurring hedging gains associated with our San Antonio refinery, of approximately $16.4 million helped partially offset the negative impact of the lower asphalt operations margins.”

2012 Outlook

Commenting on the 2012 outlook for NuStar Energy L.P., Anastasio said, “We expect NuStar's EBITDA to be higher than 2011. EBITDA in all three of our segments is also expected to exceed 2011 results."

In regard to internal growth spending Anastasio added, “NuStar continues to identify internal growth projects that should contribute to our EBITDA growth over the next several years. Currently we expect to spend $350 - $400 million on internal growth projects during 2012.”

A conference call with management is scheduled for 10:00 a.m. ET (9:00 a.m. CT) today, January 27, 2012, to discuss the financial and operational results for the fourth quarter of 2011. Investors interested in listening to the presentation may call 800/622-7620, passcode 39023181. International callers may access the presentation by dialing 706/645-0327, passcode 39023181. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 39023181. A live broadcast of the conference call will also be available on the company’s Web site at http://www.nustarenergy.com.

NuStar Energy L.P. is a publicly traded, limited partnership based in San Antonio, with 8,417 miles of pipeline; 89 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; and two asphalt refineries and a fuels refinery with a combined throughput capacity of 118,500 barrels per day. The partnership’s combined system has approximately 98 million barrels of storage capacity. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey. For more information, visit NuStar Energy L.P.'s Web site at http://www.nustarenergy.com.

This release serves as qualified notice to nominees under Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note that 100% of NuStar’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals and corporations, as applicable. Nominees, and not NuStar, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding future events. All forward-looking statements are based on the partnership and company's beliefs as well as assumptions made by and information currently available to the partnership and company. These statements reflect the partnership and company's current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P. and NuStar GP Holdings, LLC’s 2010 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.

 
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit Data and Per Unit Data)
           
 
 
Three Months Ended Year Ended
December 31, December 31,
2011 2010 2011 2010
Statement of Income Data:
Revenues:
Services revenues $ 217,249 $ 205,542 $ 825,938 $ 791,314
Product sales   1,709,856     988,670     5,749,317     3,611,747  
Total revenues 1,927,105 1,194,212 6,575,255 4,403,061
 
Costs and expenses:
Cost of product sales 1,663,096 927,678 5,460,520 3,350,429
Operating expenses 138,522 123,004 529,002 486,032
General and administrative expenses 33,620 33,917 103,453 110,241
Depreciation and amortization expense   43,932     39,149     168,286     153,802  
Total costs and expenses   1,879,170     1,123,748     6,261,261     4,100,504  
Operating income 47,935 70,464 313,994 302,557
Equity in earnings of joint venture 4,461 2,929 11,458 10,500
Interest expense, net (21,037 ) (20,221 ) (83,681 ) (78,280 )
Other income (expense), net   2,408     1,052     (3,291 )   15,934  
Income before income tax expense 33,767 54,224 238,480 250,711
Income tax expense   3,568     2,689     16,879     11,741  
Net income $ 30,199   $ 51,535   $ 221,601   $ 238,970  
 
Net income applicable to limited partners $ 19,782   $ 41,936   $ 180,714   $ 200,886  
 
Net income per unit applicable to limited partners: $ 0.30   $ 0.65   $ 2.78   $ 3.19  
 
Weighted average limited partner units outstanding 66,226,386 64,610,549 65,018,301 62,946,987
 
EBITDA (Note 1) $ 98,736 $ 113,594 $ 490,447 $ 482,793
 
Distributable cash flow (Note 1) $ 74,739 $ 76,854 $ 351,263 $ 320,226
 
 
 

December 31,

December 31,

2011 2010
Balance Sheet Data:
Debt, including current portion (a) $ 2,293,030 $ 2,137,080
Partners' equity (b) 2,864,335 2,702,700
Debt-to-capitalization ratio (a) / ((a)+(b)) 44.5 % 44.2 %
 
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Barrel Data)
             
 
Three Months Ended Year Ended
December 31, December 31,
2011 2010 2011 2010
 
Segment Data:
Storage:
Throughput (barrels/day) 735,521 677,736 693,269 669,435
Throughput revenues $ 21,858 $ 19,520 $ 80,246 $ 75,605
Storage lease revenues   126,705     113,740     486,525     444,233  
Total revenues 148,563 133,260 566,771 519,838
Operating expenses 72,409 65,634 285,639 263,820
Depreciation and amortization expense   23,081     20,067     87,737     77,071  
Segment operating income $ 53,073   $ 47,559   $ 193,395   $ 178,947  
 
Transportation:
Refined products pipelines throughput (barrels/day) 528,818 531,626 514,261 529,946
Crude oil pipelines throughput (barrels/day)   333,899     342,417     305,890     371,726  
Total throughput (barrels/day) 862,717 874,043 820,151 901,672
Revenues $ 85,043 $ 83,255 $ 311,514 $ 316,072
Operating expenses 29,345 28,100 114,726 116,884
Depreciation and amortization expense   12,893     12,588     51,175     50,617  
Segment operating income $ 42,805   $ 42,567   $ 145,613   $ 148,571  
 
Asphalt and fuels marketing:
Product sales $ 1,710,020 $ 989,896 $ 5,759,099 $ 3,615,890
Cost of product sales   1,669,005     933,151     5,490,384     3,371,854  
Gross margin 41,015 56,745 268,715 244,036
Operating expenses 47,344 35,994 160,850 132,918
Depreciation and amortization expense   6,131     5,003     22,636     20,257  
Segment operating (loss) income $ (12,460 ) $ 15,748   $ 85,229   $ 90,861  
 
Consolidation and intersegment eliminations:
Revenues $ (16,521 ) $ (12,199 ) $ (62,129 ) $ (48,739 )
Cost of product sales (5,909 ) (5,473 ) (29,864 ) (21,425 )
Operating expenses   (10,576 )   (6,724 )   (32,213 )   (27,590 )
Total $ (36 ) $ (2 ) $ (52 ) $ 276  
 
Consolidated Information:
Revenues $ 1,927,105 $ 1,194,212 $ 6,575,255 $ 4,403,061
Cost of product sales 1,663,096 927,678 5,460,520 3,350,429
Operating expenses 138,522 123,004 529,002 486,032
Depreciation and amortization expense   42,105     37,658     161,548     147,945  
Segment operating income 83,382 105,872 424,185 418,655
General and administrative expenses 33,620 33,917 103,453 110,241
Other depreciation and amortization expense   1,827     1,491     6,738     5,857  
Consolidated operating income $ 47,935   $ 70,464   $ 313,994   $ 302,557  
 
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Per Unit Data)
           
 
Notes:
1.

NuStar Energy L.P. utilizes two financial measures, EBITDA and distributable cash flow, which are not defined in United States generally accepted accounting principles. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare partnership performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the partnership's assets and the cash that the business is generating. Neither EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

 
 
The following is a reconciliation of net income to EBITDA and distributable cash flow:
 
Three Months Ended Year Ended
December 31, December 31,
2011 2010 2011 2010
 
Net income $ 30,199 $ 51,535 $ 221,601 $ 238,970
Plus interest expense, net 21,037 20,221 83,681 78,280
Plus income tax expense 3,568 2,689 16,879 11,741
Plus depreciation and amortization expense   43,932     39,149     168,286     153,802  
EBITDA 98,736 113,594 490,447 482,793

Less equity in earnings of joint venture

(4,461 ) (2,929 ) (11,458 ) (10,500 )
Less interest expense, net (21,037 ) (20,221 ) (83,681 ) (78,280 )
Less reliability capital expenditures (9,082 ) (15,704 ) (50,339 ) (54,031 )
Less income tax expense (3,568 ) (2,689 ) (16,879 ) (11,741 )
Plus distributions from joint venture 4,977 2,125 14,374 9,625
Mark-to-market impact on hedge transactions (a) 9,174 2,678 456 (17,640 )
Contingent loss adjustment - - 3,250 -
Other non-cash items   -     -     5,093     -  
Distributable cash flow $ 74,739 $ 76,854 $ 351,263 $ 320,226
 
EBITDA $ 98,736 $ 113,594 $ 490,447 $ 482,793
EBITDA attributable to noncontrolling interest   29     -     415     -  
EBITDA attributable to NuStar Energy L.P. $ 98,707 $ 113,594 $ 490,032 $ 482,793
 
Distributable cash flow $ 74,739 $ 76,854 $ 351,263 $ 320,226
Distributable cash flow attributable to noncontrolling interest   53     -     441     -  
Distributable cash flow attributable to NuStar Energy L.P. $ 74,686 $ 76,854 $ 350,822 $ 320,226
 
General partner's interest in distributable cash flow   11,598     10,160     42,956     39,531  
Limited partners' interest in distributable cash flow $ 63,088   $ 66,694   $ 307,866   $ 280,695  
 
Distributable cash flow per limited partner unit $ 0.95 $ 1.03 $ 4.74 $ 4.43
 

(a) Distributable cash flow excludes the impact of unrealized mark-to-market gains and losses that arise from valuing certain derivative
contracts, as well as the associated hedged inventory. The gain or loss associated with these contracts is realized in distributable cash
flow when the contracts are settled.

Source: NuStar Energy L.P.

NuStar Energy, L.P., San Antonio
Investors, Chris Russell, Vice President
Investor Relations: 210-918-3507
or
Media, Mary Rose Brown, Senior Vice President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com

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