Business Wire News

PORTLAND, Ore.--(BUSINESS WIRE)--Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), reported financial results and highlights including:


  • Reported a net loss of $0.61 per share from continuing operations for the third quarter of 2020, compared to a net loss of $0.61 per share for the same period in 2019
  • Earned net income of $0.80 per share from continuing operations for the first nine months of 2020, compared to earnings of $0.91 per share and adjusted earnings1 of $1.13 per share for the same period in 2019
  • Continued to provide customers with essential natural gas and water utility services and assist our most vulnerable community members during COVID-19
  • Scored second in the West for large utilities in 2020 J.D. Power Gas Utility Residential Customer Satisfaction Study
  • Added more than 14,000 natural gas meters over the last 12 months equating to a 1.9% growth rate
  • Invested $193 million in our utility systems in the first nine months of 2020 for greater reliability and resiliency
  • Received Oregon general rate case order providing an estimated annual pre-tax earnings benefit of $45.1 million
  • Announced a public-private partnership that is working toward a renewable hydrogen facility in Oregon
  • Increased dividends for the 65th consecutive year with an annual indicated dividend rate of $1.92 per share
  • Reaffirmed 2020 GAAP earnings guidance from continuing operations in the range of $2.25 to $2.45 per share and guided toward the lower end of the range given effects from COVID-19

"This is a year of significant accomplishments despite the very unusual circumstances. We continued to execute on all aspects of our long-term strategy and taking care of our employees and customers when they need us the most. At the same time, we're building on our legacy of environmental stewardship and addressing the climate imperative. I'm proud of our efforts underway,” said David H. Anderson, president and CEO of NW Natural Holdings.

For the third quarter of 2020, net loss from continuing operations increased $0.2 million to a net loss of $18.7 million (or $0.61 per share), compared to a net loss from continuing operations of $18.5 million (or $0.61 per share) for the same period in 2019. Results reflect the seasonal nature of the gas utility's earnings, higher depreciation and general tax expenses as we continued to invest in our gas utility system, partially offset by the recognition of a regulatory deferral asset for certain COVID-19 expenses incurred during the first nine months of 2020 related to our Oregon utility operations and higher earnings at our water and wastewater utilities.

Year-to-date net income from continuing operations decreased $2.5 million to $24.5 million (or $0.80 per share), compared to $27.0 million (or $0.91 per share) for the same period in 2019. Results for 2019 included a regulatory pension disallowance of $10.5 million (or $6.6 million after-tax and $0.22 per share). Excluding this disallowance on a non-GAAP basis1, adjusted net income from continuing operations for 2019 was $33.6 million (or $1.13 per share). On this adjusted basis, net income declined $9.1 million to $24.5 million for the first nine months of 2020. Results reflected an increase in operations and maintenance expense, depreciation and property tax expenses as we continued to invest in our gas utility system, and the financial effects resulting from COVID-19.

__________

1

 

Adjusted 2019 metrics are non-GAAP financial measures and exclude the regulatory pension disallowance of $10.5 million pre-tax (or $6.6 million and $0.22 cents per share after-tax). See "Reconciliation to GAAP" for additional information.

KEY EVENTS AND INITIATIVES

Coronavirus (COVID-19) Implications

NW Natural Holdings continues to operate during the COVID-19 pandemic with a focus on the safety of our employees and customers, while providing essential services without interruption. To protect our customers and employees, we continue to follow CDC, OSHA, and state specific guidance.

We continue to benefit from our resilient business model with about 87% of our natural gas utility margin coming from the residential and commercial sectors and a majority of our utility margin decoupled and weather normalized. NW Natural has not seen a substantial reduction in overall sales volumes as of September 30, 2020 attributed to COVID-19. Customer growth from construction and conversions remained strong during 2020, and we experienced a lower level of customer losses as we suspended customer disconnections when the pandemic began. This lower level of disconnections is reflected in the customer growth rate of 1.9% for the twelve months ended September 30, 2020. We continued to forgo late and reconnection fee revenues from customers, and bad debt expense is higher than the prior period as we estimate the effects of COVID-19 on accounts receivable. Interest expense was elevated in the second quarter as a result of additional short-term financings undertaken to strengthen our liquidity position as the pandemic unfolded. For the first nine months of 2020, we estimate the combined financial effects of COVID-19 to be approximately $7 million pre-tax.

As of September 30, 2020, we estimated that $4.4 million pre-tax of the financial effects related to COVID-19 could be recoverable, including $4.1 million for Oregon. In September 2020, the Oregon Public Utility Commission (OPUC) approved a comprehensive solution for COVID with a term sheet outlining the types of costs that may be deferred. Subsequently in October the OPUC approved NW Natural's deferral application. Pursuant to the term sheet, we recorded a regulatory asset of $3.1 million pre-tax in the third quarter of 2020. We expect to recognize and recover an additional $1.0 million related to forgone late fee revenue approved by the OPUC in a future period when the amounts are billed to customers per accounting guidance.

Oregon General Rate Case Order

On Oct. 16, 2020, the OPUC issued an order approving the all-party settlement in NW Natural's general rate case, increasing the utility's revenue requirement by $45.1 million (or $33.1 million after-tax), compared to a requested $71.4 million. The order also approved a capital structure of 50% debt and 50% equity; a return on equity of 9.4%; and a cost of capital of 6.965%. In addition, the order approved an average rate base of $1.44 billion or an increase of $242.1 million compared to the last rate case. New rates in Oregon were effective beginning Nov. 1, 2020.

Renewable Hydrogen Project

NW Natural along with a local electric public utility district (PUD) in Eugene and the Bonneville Environmental Foundation have signed a memorandum of understanding (MOU) to explore developing a renewable hydrogen facility. The facility could demonstrate hydrogen's ability to help decarbonize heating and transportation loads.

The MOU contemplates the potential for a facility in Eugene, Oregon that could range in size from 30,000 up to 150,000 MMBtu per year (equivalent to 2 megawatts up to 10 megawatts). We believe renewable hydrogen will be critical to the long-term decarbonization of the world’s energy systems, including transportation, heating, manufacturing and other processes. For the Pacific Northwest, renewable hydrogen could help with grid balancing and long-term storage opportunities for renewable sources such as wind and hydro, which have significant seasonal variation.

2019 Environment, Social, and Governance (ESG) Report Issued

On October 6, 2020 we issued our inaugural ESG report, which outlines some of the important work NW Natural Holdings is focused on. The report highlights our longstanding commitments and progress related to safety, environmental stewardship, and taking care of our employees and communities. It also features goals that we're aggressively pursuing related to a renewable future and carbon neutral vision for our gas utility, diversifying into and growing our water and wastewater utility business, and actively continuing to advance diversity, equity and inclusion in our workplace and our wider community. In addition, we’ve provided the information recommended for our industry by the Sustainability Accounting Standards Board and the American Gas Association reporting template. Additional information is available at ir.nwnaturalholdings.com.

Water Utilities and Acquisitions

To date in 2020, NW Natural Water Company, LLC (NW Natural Water) has closed the following acquisitions: the Suncadia water and wastewater utilities in Washington, the T&W water utility in Texas, a water utility with two systems in Northern Idaho near our existing Gem State footprint, and our first water utility acquisition in the municipal sector with water and wastewater utilities near our Falls Water, Idaho systems. In July 2020, NW Natural Water signed a purchase and sale agreement to acquire another utility near Idaho Falls, which is expected to close in 2020.

NW Natural Water currently serves about 66,000 people through about 26,000 connections in the Pacific Northwest and Texas. NW Natural Water has invested approximately $110 million in the water sector to date.

THIRD QUARTER RESULTS

The following financial comparisons are for the third quarter of 2020 and 2019 with individual year-over-year drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted.

NW Natural Holdings' third quarter results are summarized by business segment in the table below:

 

Three Months Ended September 30,

 

2020

 

2019

 

Change

In thousands, except per share data

Amount

Per Share

 

Amount

Per Share

 

Amount

Per Share

Net income (loss) from continuing operations:

 

 

 

 

 

 

 

 

Natural Gas Distribution segment

$

(22,120

)

 

$

(0.72

)

 

 

$

(19,570

)

 

$

(0.64

)

 

 

$

(2,550

)

 

$

(0.08

)

 

Other

3,443

 

 

0.11

 

 

 

1,064

 

 

0.03

 

 

 

2,379

 

 

0.08

 

 

Consolidated

$

(18,677

)

 

$

(0.61

)

 

 

$

(18,506

)

 

$

(0.61

)

 

 

$

(171

)

 

$

 

 

 

 

 

 

 

 

 

 

 

Diluted Shares

 

30,555

 

 

 

 

30,429

 

 

 

 

126

 

 

Natural Gas Distribution Segment

Natural Gas Distribution segment net loss increased $2.6 million (or $0.08 per share) reflecting higher depreciation and general taxes as we invested in our natural gas system.

Margin decreased $0.3 million reflecting lower revenues from fees as we suspended collections processes and disconnections during the COVID-19 pandemic and lower usage from industrial and large commercial customers, partially offset by contributions from new rates in Washington and customer growth of 1.9% over the last 12 months.

Operations and maintenance expense increased $0.7 million as a result of higher expenses mainly from increased compensation costs and non-payroll expenses, partially offset by $1.1 million related to deferring to a regulatory asset a portion of COVID-19 expenses for our Oregon utility operations and $1.5 million related to temporary cost savings measures enacted to mitigate the unrecoverable financial implications of COVID-19. Of the $1.1 million deferred in the third quarter, $0.8 million was related to COVID-19 expenses incurred primarily during the second quarter of 2020.

Depreciation expense and general taxes increased $2.4 million related to higher property, plant, and equipment.

Interest expense decreased $1.2 million as a result of deferring to a regulatory asset $1.2 million of interest costs incurred on financings undertaken in March 2020 to strengthen our liquidity position as the pandemic unfolded. Of the $1.2 million deferred in the third quarter, $1.0 million was related to costs incurred primarily during the second quarter of 2020.

Other

Other net income increased $2.4 million (or $0.08 per share) primarily reflecting higher revenues from our water and wastewater utilities and lower holding company expenses.

YEAR-TO-DATE RESULTS

The following financial comparisons are for the first nine months of 2020 and 2019 with individual year-over-year drivers below presented on an after-tax basis using a statutory tax rate of 26.5% unless otherwise noted. Non-GAAP financial measures exclude the effects of the regulatory pension disallowance in 2019 as these adjusted metrics provide a clearer view of operations, reflect how Management views financial results, and provide comparability to prior year results. See "Reconciliation to GAAP" for a detailed reconciliation of adjusted amounts.

Financial Implications of March 2019 Regulatory Order

In March 2019, NW Natural received a regulatory order from the OPUC that outlined the recovery of a pension balancing deferral, a disallowance of a portion of this deferral, and the application of tax reform benefits.

NW Natural recognized a $10.5 million pre-tax (or $6.6 million after-tax) regulatory disallowance for amounts in the pension balancing account. This resulted in $3.9 million pre-tax ($2.8 million after-tax) of additional operations and maintenance expense, $6.6 million of pre-tax ($4.9 million after-tax) other expense, and an offsetting tax benefit of $3.9 million. In addition, as a result of beginning collections of the pension balancing account, $3.8 million of regulatory interest income ($2.8 million after-tax) was recognized related to the equity interest component of financing costs on the pension balancing account.

The order required the application of tax reform benefits to the pension balancing deferral account in March 2019, which resulted in the following offsetting adjustments with no material effect on net income:

  • $7.1 million pre-tax ($5.2 million after-tax) increase in margin;
  • $4.6 million pre-tax ($3.4 million after-tax) increase in operations and maintenance expense;
  • $7.9 million pre-tax ($5.8 million after-tax) increase in other expense; and
  • $5.9 million decrease in income tax expense.

NW Natural Holdings' year-to-date results are summarized by business segment in the table below:

 

Nine Months Ended September 30,

 

2020

 

2019

 

Change

In thousands, except per share data

Amount

Per Share

 

Amount

Per Share

 

Amount

Per Share

Net income from continuing operations:

 

 

 

 

 

 

 

 

Natural Gas Distribution segment

$

19,476

 

$

0.64

 

 

$

22,848

 

$

0.77

 

 

$

(3,372

)

 

$

(0.13

)

 

Regulatory pension disallowance, net

 

 

 

6,588

 

0.22

 

 

(6,588

)

 

(0.22

)

 

Adjusted Natural Gas Distribution segment1

$

19,476

 

$

0.64

 

 

$

29,436

 

$

0.99

 

 

$

(9,960

)

 

$

(0.35

)

 

 

 

 

 

 

 

 

 

 

Other

$

4,991

 

$

0.16

 

 

$

4,115

 

$

0.14

 

 

$

876

 

 

$

0.02

 

 

 

 

 

 

 

 

 

 

 

Consolidated

$

24,467

 

$

0.80

 

 

$

26,963

 

$

0.91

 

 

$

(2,496

)

 

$

(0.11

)

 

Adjusted Consolidated1

24,467

 

0.80

 

 

33,551

 

1.13

 

 

(9,084

)

 

(0.33

)

 

 

 

 

 

 

 

 

 

 

Diluted Shares

 

30,575

 

 

 

29,628

 

 

 

947

 

 

1

 

The 2019 adjusted natural gas distribution segment and adjusted consolidated net income from continuing operations are non-GAAP financial measures and exclude the effects of a regulatory disallowance of NW Natural's pension balancing account of $10.5 million pre-tax (or $6.6 million after-tax). See "Reconciliation to GAAP" for additional information.

Natural Gas Distribution Segment

Natural Gas Distribution segment net income decreased $3.4 million (or $0.13 per share). First quarter 2019 results include a $6.6 million non-cash after-tax regulatory disallowance of costs in NW Natural's pension balancing account. Excluding the effects of this disallowance, net income decreased $10.0 million (or $0.35 per share) reflecting higher operations and maintenance expense, depreciation expense, and the financial effects of COVID-19 including lower revenues from fees and lower commercial and industrial customer usage in rate schedules that are not decoupled. Earnings per share was affected by share issuances in June 2019.

Margin decreased $0.1 million related to several offsetting items including: a combined $4.8 million decrease in margin from lower entitlement and curtailment fees as the first quarter of 2019 included fees related to pipeline constraints and the effect of warmer than average weather in the first nine months of 2020 compared to the same period in 2019. Margin also declined $1.1 million related to lower fee revenues as we did not charge customers late or reconnection fees during the COVID-19 pandemic. New rates in Washington, customer growth of 1.9% over the last 12 months, and beginning North Mist storage services collectively contributed $10.4 million to margin. Finally, as a result of the Oregon order related to pension as described above, margin decreased $5.2 million with no significant effect on net income as offsetting adjustments were recognized through expenses and income taxes.

Operations and maintenance expense decreased $0.3 million as a result of 2019 incorporating several nonrecurring items related to the Oregon pension order described above, specifically a $2.8 million expense related to the disallowance of costs in the pension balancing account and $3.4 million of costs that were recognized with no significant effect on net income due to offsetting adjustments in margin and income taxes. Excluding these pension expenses, operations and maintenance expense increased $6.4 million related to higher compensation costs, contractor and professional service expenses, and moving costs to a new headquarter and operations center. This was partially offset by temporary cost savings measures intended to mitigate the financial implications of COVID-19 that are not expected to be recovered through our regulated rates.

Depreciation expense and general taxes increased $7.3 million related to higher property, plant, and equipment, including our North Mist gas storage facility.

Other expense, net decreased $6.1 million primarily due to several items related to the pension order in 2019 as described above including a $4.9 million expense related to the disallowance of costs in the pension balancing account, $5.8 million of costs that were offset with higher revenues and tax benefits in 2019, and $2.8 million of equity interest income recognized in 2019 when we began collecting deferred pension costs from customers. In addition, pension expenses increased $2.2 million in 2020 as this expense is recovered in rates instead of a portion recovered through the pension balancing account.

Tax expense reflected a $5.9 million detriment related to implementing the March 2019 order described above; however, as this offset higher expense, there was no significant resulting effect on net income.

Other

Other net income increased $0.9 million (or $0.02 per share) primarily reflecting higher revenues from our water and wastewater utilities and lower holding company expenses, partially offset by lower asset management revenues.

BALANCE SHEET AND CASH FLOWS

During the first nine months of 2020, the Company generated $148.5 million in operating cash flows and invested $193.3 million in utility capital expenditures and $38.1 million to acquire water and wastewater utilities. Net cash provided by financing activities was $104.5 million for the first nine months of 2020 or an increase of $36.6 million compared to the same period in 2019 primarily due to several financings undertaken in March 2020 that strengthened our liquidity position as a precaution as the COVID-19 pandemic unfolded. At September 30, 2020, NW Natural Holdings held cash of $35.9 million.

2020 GUIDANCE

NW Natural Holdings reaffirmed 2020 earnings guidance from continuing operations in the range of $2.25 to $2.45 per share and guided toward the lower end of the range due to potential implications from COVID-19. This guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or outcomes, or significant local, state or federal laws, legislation or regulations. The expected sale of Gill Ranch and the related gain, and any operating loss associated with it, are not included in this guidance range, as they are, and are expected to continue to be, reported as Discontinued Operations.

DIVIDEND DECLARED

NW Natural Holdings' Board of Directors previously declared a quarterly dividend of 48 cents per share on NW Natural Holdings' common stock. The dividend is payable on November 13, 2020 to shareholders of record on October 30, 2020, reflecting an annual indicated dividend rate of $1.92 per share.

CONFERENCE CALL AND WEBCAST

As previously announced, NW Natural Holdings will host a conference call and webcast today to discuss its third quarter and year-to-date 2020 financial and operating results.

Date and Time:

   

Thursday, November 5

8 a.m. PT (11 a.m. ET)

Phone Numbers:

   

United States: 1-866-267-6789

Canada: 1-855-669-9657

International: 1-412-902-4110

The call will also be webcast in a listen-only format for the media and general public and can be accessed at ir.nwnaturalholdings.com. A replay of the conference call will be available on our website and by dialing 1-877-344-7529 (U.S.), 1-855-669-9658 (Canada), and 1-412-317-0088 (international). The replay access code is 10148700.

ABOUT NW NATURAL HOLDINGS

Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), is headquartered in Portland, Oregon, and through its subsidiaries has been doing business for over 160 years in the Pacific Northwest. It owns NW Natural Gas Company (NW Natural), NW Natural Water Company (NW Natural Water), and other business interests and activities.

NW Natural is a local distribution company that currently provides natural gas service to approximately 2.5 million people in more than 140 communities through nearly 770,000 meters in Oregon and Southwest Washington with one of the most modern pipeline systems in the nation. NW Natural consistently leads the industry with high J.D. Power & Associates customer satisfaction scores.

NW Natural Holdings’ subsidiaries own and operate 35 Bcf of underground gas storage capacity with NW Natural operating 20 Bcf in Oregon.

NW Natural Water provides water distribution and wastewater services to communities throughout the Pacific Northwest and Texas. NW Natural Water currently serves approximately 66,000 people through about 26,000 connections. Learn more about our water business at nwnaturalwater.com.

Additional information is available at nwnaturalholdings.com.

Forward-Looking Statements

This report, and other presentations made by NW Holdings from time to time, may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "assumes," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, objectives, assumptions, estimates, expectations, timing, goals, strategies, commitments, future events, investments, capital expenditures, targeted capital structure, risks, risk profile, stability, acquisitions and timing, completion and integration thereof, dispositions and timing, completion and outcomes thereof, utility system and infrastructure investments, system modernization, reliability and resiliency, global, national and local economies, customer and business growth, customer satisfaction ratings, weather, customer rates or rate recovery and the timing and magnitude of potential rate changes, environmental remediation cost recoveries, environmental initiatives, decarbonization and the role of natural gas and the gas delivery system, including use of renewable sources, renewable hydrogen projects or investments and timing, magnitude and completion thereof, strategic goals and visions, the water utility strategy and financial effects of the related pending water acquisitions, diversity, equity and inclusion initiatives, operating plans of third parties, financial results, including estimated income, availability and sources of liquidity, expenses, positions, revenues, returns, cost of capital, timing, and earnings and earnings guidance, dividends, performance, timing, outcome, or effects of regulatory proceedings or mechanisms or approvals, regulatory prudence reviews, anticipated regulatory actions or filings, accounting treatment of future events, effects of changes in laws or regulations, effects, extent, severity and duration of COVID-19 and resulting economic disruption, the impact of mitigating factors and other efforts to mitigate risks posed by its spread, ability of our workforce, customers or suppliers to operate or conduct business, COVID-19 expenses, cost savings measures and cost recovery including through regulatory deferrals and the timing and magnitude thereof, impact on capital projects, governmental actions and timing thereof, including actions to reopen the economy, and other statements that are other than statements of historical facts.


Contacts

Investor Contact:
Nikki Sparley
Phone: 503-721-2530
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Media Contact:
Melissa Moore
Phone: 503-220-2436
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WALTHAM, Mass.--(BUSINESS WIRE)--Global Partners LP (NYSE: GLP) today reported financial results for the quarter ended September 30, 2020.


Global continues to perform well despite near-term uncertainties associated with COVID-19,” said Eric Slifka, the Partnership’s President and Chief Executive Officer. “Our vertically integrated portfolio of supply, terminaling storage and retail assets are part of the basic infrastructure necessary to power everyday life and the movement of goods, services and people across all of the markets we serve.

While the pandemic in the short-term has reduced fuel and in-store demand, our strong network and adaptability enables us to continue executing on our strategy while remaining focused on taking advantage of opportunities in the market to grow our business organically and through acquisitions. Throughout our network we are taking steps to increase our flexibility to move renewable fuels and diversify our offerings to serve increasing demand for those products,” said Slifka.

Financial Highlights

Net income attributable to the Partnership was $18.2 million, or $0.47 per diluted common limited partner unit, for the third quarter of 2020 compared with net income attributable to the Partnership of $15.1 million, or $0.38 per diluted common limited partner unit, for the same period of 2019.

Net income attributable to the Partnership, EBITDA, Adjusted EBITDA and DCF in the third quarter of 2019 included a $13.1 million loss on the early extinguishment of debt related to the Partnership's July 2019 repurchase of its 6.25% senior notes.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $65.0 million in the third quarter of 2020 compared with $65.1 million in the comparable period of 2019.

Adjusted EBITDA was $65.9 million in the third quarter of 2020 versus $66.1 million in the year-earlier period.

Distributable cash flow (DCF) was $31.3 million in the third quarter of 2020 compared with $30.4 million in the same period of 2019.

Gross profit in the third quarter of 2020 was $169.2 million compared with $187.8 million in the third quarter of 2019, due to lower product margins in all three segments. Combined product margin, which is gross profit adjusted for depreciation allocated to cost of sales, was $189.3 million in the third quarter of 2020 compared with $210.2 million in the third quarter of 2019.

Combined product margin, EBITDA, Adjusted EBITDA, and DCF are non-GAAP (Generally Accepted Accounting Principles) financial measures, which are explained in greater detail below under “Use of Non-GAAP Financial Measures.” Please refer to Financial Reconciliations included in this news release for reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures for the three and nine months ended September 30, 2020 and 2019.

GDSO segment product margin was $158.9 million in the third quarter of 2020 compared with $168.7 million in the same period of 2019. This result primarily reflected lower fuel volume and reduced convenience store activity due to COVID-19, partly offset by higher fuel margins.

Wholesale segment product margin was $27.6 million in the third quarter of 2020 compared with $34.2 million in the same period of 2019. This result primarily reflected less favorable market conditions in gasoline and gasoline blendstocks and other oils and related products.

Commercial segment product margin was $2.8 million in the third quarter of 2020 compared with $7.2 million in the third quarter of 2019, primarily reflecting a decrease in bunkering activity.

Sales were $2.0 billion in the third quarter of 2020 compared with $3.2 billion in the third quarter of 2019, due to decreases in prices and volume. Wholesale segment sales were $1.1 billion in the third quarter of 2020 compared with $1.8 billion in the third quarter of 2019. GDSO segment sales were $0.8 billion in the third quarter of 2020 compared with $1.1 billion in the third quarter of 2019. Commercial segment sales were $181.9 million in the third quarter of 2020 compared with $313.8 million in the third quarter of 2019.

Volume in the third quarter of 2020 was 1.4 billion gallons compared with 1.6 billion gallons in the same period of 2019. Wholesale segment volume was 837.8 million gallons in the third quarter of 2020 compared with 995.6 million gallons in the same period of 2019. GDSO volume was 376.3 million gallons in the third quarter of 2020 compared with 423.3 million gallons in the third quarter of 2019. Commercial segment volume was 139.9 million gallons in the third quarter of 2020 compared with 171.5 million gallons in the third quarter of 2019.

Recent Developments

  • Global announced a quarterly cash distribution of $0.50 per unit, or $2.00 per unit on an annualized basis, on all of its outstanding common units for the period from July 1 to September 30, 2020. The distribution will be paid November 13, 2020 to unitholders of record as of the close of business on November 9, 2020.
  • Robert W. Owens, retired President and Chief Executive Officer of Sunoco LP, was elected to serve as a member of the Board of Directors of the Partnership’s general partner, Global GP LLC, effective October 1, 2020. He brings a deep history of entrepreneurialism, innovation and success in leading and growing energy sector businesses.
  • Global completed the sale of its previously announced private offering of $350 million in aggregate principal amount of 6.875% senior unsecured notes due 2029. Global used the net proceeds from the offering to fund the redemption of its 7.00% senior notes due 2023 and to repay a portion of the borrowings outstanding under its credit agreement.

Business Outlook
Our 2020 performance remains largely dependent on the extent and duration of COVID-19,” Slifka said. “While we continue to see our integrated business model and diversified product portfolio as long-term strategic assets for the Partnership, ongoing uncertainty about the economic effects of COVID-19 continues to limit near-term visibility.”

Any COVID-19 related events or conditions, or other unforeseen consequences of COVID-19 could significantly adversely affect our business and financial condition and the business and financial condition of our customers, suppliers and counterparties. The ultimate extent of the impact of COVID-19 on our business, financial condition and results of operations depends in large part on future developments which are uncertain and cannot be predicted at this time. That uncertainty includes the duration (including its potential return) of the COVID-19 pandemic, the geographic regions so impacted, the extent of said impact within specific boundaries of those areas and, lastly, the impact to the local, state and national economies.

Financial Results Conference Call

Management will review the Partnership’s third-quarter 2020 financial results in a teleconference call for analysts and investors today.

Time:           

 

10:00 a.m. ET

Dial-in numbers:

 

(877) 709-8155 (U.S. and Canada)

 

 

(201) 689-8881 (International)

Due to the expected high demand on our conference call provider, please plan to dial in to the call at least 20 minutes prior to the start time.

The call also will be webcast live and archived on Global’s website, https://ir.globalp.com.

Use of Non-GAAP Financial Measures

Product Margin
Global Partners views product margin as an important performance measure of the core profitability of its operations. The Partnership reviews product margin monthly for consistency and trend analysis. Global Partners defines product margin as product sales minus product costs. Product sales primarily include sales of unbranded and branded gasoline, distillates, residual oil, renewable fuels, crude oil and propane, as well as convenience store sales, gasoline station rental income and revenue generated from logistics activities when the Partnership engages in the storage, transloading and shipment of products owned by others. Product costs include the cost of acquiring products and all associated costs including shipping and handling costs to bring such products to the point of sale as well as product costs related to convenience store items and costs associated with logistics activities. The Partnership also looks at product margin on a per unit basis (product margin divided by volume). Product margin is a non‑GAAP financial measure used by management and external users of the Partnership’s consolidated financial statements to assess its business. Product margin should not be considered an alternative to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP. In addition, product margin may not be comparable to product margin or a similarly titled measure of other companies.

EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP financial measures used as supplemental financial measures by management and may be used by external users of Global Partners’ consolidated financial statements, such as investors, commercial banks and research analysts, to assess the Partnership’s:

  • compliance with certain financial covenants included in its debt agreements;
  • financial performance without regard to financing methods, capital structure, income taxes or historical cost basis;
  • ability to generate cash sufficient to pay interest on its indebtedness and to make distributions to its partners;
  • operating performance and return on invested capital as compared to those of other companies in the wholesale, marketing, storing and distribution of refined petroleum products, gasoline blendstocks, renewable fuels, crude oil and propane, and in the gasoline stations and convenience stores business, without regard to financing methods and capital structure; and
  • viability of acquisitions and capital expenditure projects and the overall rates of return of alternative investment opportunities.

Adjusted EBITDA is EBITDA further adjusted for gains or losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income, and these measures may vary among other companies. Therefore, EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Distributable Cash Flow
Distributable cash flow is an important non-GAAP financial measure for the Partnership’s limited partners since it serves as an indicator of success in providing a cash return on their investment. Distributable cash flow as defined by the Partnership’s partnership agreement is net income plus depreciation and amortization minus maintenance capital expenditures, as well as adjustments to eliminate items approved by the audit committee of the board of directors of the Partnership’s general partner that are extraordinary or non-recurring in nature and that would otherwise increase distributable cash flow.

Distributable cash flow as used in our partnership agreement also determines our ability to make cash distributions on our incentive distribution rights. The investment community also uses a distributable cash flow metric similar to the metric used in our partnership agreement with respect to publicly traded partnerships to indicate whether or not such partnerships have generated sufficient earnings on a current or historic level that can sustain distributions on preferred or common units or support an increase in quarterly cash distributions on common units. Our partnership agreement does not permit adjustments for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.

Distributable cash flow should not be considered as an alternative to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP. In addition, distributable cash flow may not be comparable to distributable cash flow or similarly titled measures of other companies.

About Global Partners LP
With approximately 1,550 locations primarily in the Northeast, Global Partners is one of the region’s largest independent owners, suppliers and operators of gasoline stations and convenience stores. Global Partners also owns, controls or has access to one of the largest terminal networks in New England and New York, through which it distributes gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers. In addition, Global Partners engages in the transportation of petroleum products and renewable fuels by rail from the mid-continental U.S. and Canada. Global Partners LP, a master limited partnership, trades on the New York Stock Exchange under the ticker symbol “GLP.” For additional information, visit www.globalp.com.

Forward-looking Statements
Certain statements and information in this press release may constitute “forward-looking statements.” The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on Global Partners’ current expectations and beliefs concerning future developments and their potential effect on the Partnership. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the Partnership will be those that it anticipates. All comments concerning the Partnership’s expectations for future revenues and operating results and otherwise are based on forecasts for its existing operations and do not include the potential impact of any future acquisitions. Forward-looking statements involve significant risks and uncertainties (some of which are beyond the Partnership’s control) including, without limitation, the impact and duration of the COVID-19 pandemic, uncertainty around the timing of an economic recovery in the United States which will impact the demand for the products we sell and the services we provide, uncertainty around the impact of the COVID-19 pandemic to our counterparties and our customers and their corresponding ability to perform their obligations and/or utilize the products we sell and/or services we provide, uncertainty around the impact and duration of federal, state and municipal regulations related to the COVID-19 pandemic, and assumptions that could cause actual results to differ materially from the Partnership’s historical experience and present expectations or projections.

For additional information regarding known material factors that could cause actual results to differ from the Partnership’s projected results, please see Global Partners’ filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The Partnership undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

GLOBAL PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
(Unaudited)
 
Three Months Ended Nine Months Ended
September 30, September 30,

2020

 

2019

 

2020

 

2019

Sales $

2,061,382

$

3,245,653

$

6,126,052

$

9,732,819

Cost of sales

1,892,141

3,057,884

5,571,126

9,221,063

Gross profit

169,241

187,769

554,926

511,756

 
Costs and operating expenses:
Selling, general and administrative expenses

43,218

45,333

143,158

127,391

Operating expenses

82,235

87,827

241,502

257,222

Lease exit and termination gain

-

-

-

(493)

Amortization expense

2,712

2,766

8,137

8,719

Net loss (gain) on sale and disposition of assets

691

323

623

(252)

Long-lived asset impairment

203

643

1,927

643

Total costs and operating expenses

129,059

136,892

395,347

393,230

 
Operating income

40,182

50,877

159,579

118,526

 
Interest expense

(19,854)

(22,091)

(62,544)

(68,113)

Loss on early extinguishment of debt

-

(13,080)

-

(13,080)

 
Income before income tax (expense) benefit

20,328

15,706

97,035

37,333

 
Income tax (expense) benefit

(2,136)

(813)

205

(1,275)

 
Net income

18,192

14,893

97,240

36,058

 
Net loss attributable to noncontrolling interest

38

187

528

637

 
Net income attributable to Global Partners LP

18,230

15,080

97,768

36,695

 
Less: General partner's interest in net income, including
incentive distribution rights

324

395

857

1,065

Less: Series A preferred limited partner interest in net income

1,682

1,682

5,046

5,046

 
Net income attributable to common limited partners $

16,224

$

13,003

$

91,865

$

30,584

 
Basic net income per common limited partner unit (1) $

0.48

$

0.38

$

2.71

$

0.91

 
Diluted net income per common limited partner unit (1) $

0.47

$

0.38

$

2.68

$

0.89

 
Basic weighted average common limited partner units outstanding

33,924

33,865

33,887

33,791

 
Diluted weighted average limited partner units outstanding

34,209

34,266

34,241

34,255

 
(1) Under the Partnership's partnership agreement, for any quarterly period, the incentive distribution rights ("IDRs") participate in net income only to the extent of the amount of cash distributions actually declared, thereby excluding the IDRs from participating in the Partnership's undistributed net income or losses. Accordingly, the Partnership's undistributed net income or losses is assumed to be allocated to the common unitholders and to the General Partner's general partner interest. Net income attributable to common limited partners is divided by the weighted average common units outstanding in computing the net income per limited partner unit.
GLOBAL PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
 

September 30,

 

December 31,

2020

 

2019

Assets
Current assets:
Cash and cash equivalents $

4,861

$

12,042

Accounts receivable, net

239,396

413,195

Accounts receivable - affiliates

5,282

7,823

Inventories

328,706

450,482

Brokerage margin deposits

23,455

34,466

Derivative assets

43,159

4,564

Prepaid expenses and other current assets

92,295

81,940

Total current assets

737,154

1,004,512

 
Property and equipment, net

1,070,251

1,104,863

Right of use assets, net

287,787

296,746

Intangible assets, net

38,627

46,765

Goodwill

323,889

324,474

Other assets

28,596

31,067

 
Total assets $

2,486,304

$

2,808,427

 
 
Liabilities and partners' equity
Current liabilities:
Accounts payable $

186,794

$

373,386

Working capital revolving credit facility - current portion

10,100

148,900

Lease liability - current portion

70,965

68,160

Environmental liabilities - current portion

5,009

5,009

Trustee taxes payable

30,077

42,932

Accrued expenses and other current liabilities

99,898

102,802

Derivative liabilities

6,589

12,698

Total current liabilities

409,432

753,887

 
Working capital revolving credit facility - less current portion

150,000

175,000

Revolving credit facility

188,000

192,700

Senior notes

691,765

690,533

Long-term lease liability - less current portion

229,307

239,349

Environmental liabilities - less current portion

50,416

54,262

Financing obligations

146,994

148,127

Deferred tax liabilities

56,399

42,879

Other long-term liabilities

54,926

52,451

Total liabilities

1,977,239

2,349,188

 
Partners' equity
Global Partners LP equity

509,065

458,065

Noncontrolling interest

-

1,174

Total partners' equity

509,065

459,239

 
Total liabilities and partners' equity $

2,486,304

$

2,808,427

GLOBAL PARTNERS LP
FINANCIAL RECONCILIATIONS
(In thousands)
(Unaudited)

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

2020

 

2019

 

2020

 

2019

Reconciliation of gross profit to product margin
Wholesale segment:
Gasoline and gasoline blendstocks $

16,318

$

20,194

$

83,241

$

76,568

Crude oil

(2,729)

(3,019)

2,004

(10,043)

Other oils and related products

14,031

17,071

58,764

40,566

Total

27,620

34,246

144,009

107,091

Gasoline Distribution and Station Operations segment:
Gasoline distribution

101,405

107,620

305,405

282,919

Station operations

57,462

61,109

154,904

169,621

Total

158,867

168,729

460,309

452,540

Commercial segment

2,855

7,213

11,773

18,217

Combined product margin

189,342

210,188

616,091

577,848

Depreciation allocated to cost of sales

(20,101)

(22,419)

(61,165)

(66,092)

Gross profit $

169,241

$

187,769

$

554,926

$

511,756

 
Reconciliation of net income to EBITDA and Adjusted EBITDA
Net income $

18,192

$

14,893

$

97,240

$

36,058

Net loss attributable to noncontrolling interest

38

187

528

637

Net income attributable to Global Partners LP

18,230

15,080

97,768

36,695

Depreciation and amortization, excluding the impact of noncontrolling interest

24,745

27,110

75,192

81,022

Interest expense, excluding the impact of noncontrolling interest

19,854

22,091

62,544

68,113

Income tax expense (benefit)

2,136

813

(205)

1,275

EBITDA

64,965

65,094

235,299

187,105

Net loss (gain) on sale and disposition of assets

691

323

623

(252)

Long-lived asset impairment

203

643

1,927

643

Adjusted EBITDA $

65,859

$

66,060

$

237,849

$

187,496

 
Reconciliation of net cash provided by operating activities to EBITDA and Adjusted EBITDA
Net cash provided by operating activities $

88,286

$

143,017

$

250,289

$

109,525

Net changes in operating assets and liabilities and certain non-cash items

(45,321)

(100,890)

(77,621)

8,077

Net cash from operating activities and changes in operating
assets and liabilities attributable to noncontrolling interest

10

63

292

115

Interest expense, excluding the impact of noncontrolling interest

19,854

22,091

62,544

68,113

Income tax expense (benefit)

2,136

813

(205)

1,275

EBITDA

64,965

65,094

235,299

187,105

Net loss (gain) on sale and disposition of assets

691

323

623

(252)

Long-lived asset impairment

203

643

1,927

643

Adjusted EBITDA $

65,859

$

66,060

$

237,849

$

187,496

 
Reconciliation of net income to distributable cash flow
Net income $

18,192

$

14,893

$

97,240

$

36,058

Net loss attributable to noncontrolling interest

38

187

528

637

Net income attributable to Global Partners LP

18,230

15,080

97,768

36,695

Depreciation and amortization, excluding the impact of noncontrolling interest

24,745

27,110

75,192

81,022

Amortization of deferred financing fees and senior notes discount

1,329

1,352

3,896

4,679

Amortization of routine bank refinancing fees

(1,008)

(902)

(2,933)

(2,814)

Maintenance capital expenditures, excluding the impact of noncontrolling interest

(11,963)

(12,235)

(24,789)

(33,301)

Distributable cash flow (1)(2)

31,333

30,405

149,134

86,281

Distributions to Series A preferred unitholders (3)

(1,682)

(1,682)

(5,046)

(5,046)

Distributable cash flow after distributions to Series A preferred unitholders $

29,651

$

28,723

$

144,088

$

81,235

 
Reconciliation of net cash provided by operating activities to distributable cash flow
Net cash provided by operating activities $

88,286

$

143,017

$

250,289

$

109,525

Net changes in operating assets and liabilities and certain non-cash items

(45,321)

(100,890)

(77,621)

8,077

Net cash from operating activities and changes in operating
assets and liabilities attributable to noncontrolling interest

10

63

292

115

Amortization of deferred financing fees and senior notes discount

1,329

1,352

3,896

4,679

Amortization of routine bank refinancing fees

(1,008)

(902)

(2,933)

(2,814)

Maintenance capital expenditures, excluding the impact of noncontrolling interest

(11,963)

(12,235)

(24,789)

(33,301)

Distributable cash flow (1)(2)

31,333

30,405

149,134

86,281

Distributions to Series A preferred unitholders (3)

(1,682)

(1,682)

(5,046)

(5,046)

Distributable cash flow after distributions to Series A preferred unitholders $

29,651

$

28,723

$

144,088

$

81,235

 
 

(1)

As defined by the Partnership's partnership agreement, distributable cash flow is not adjusted for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.

(2)

Distributable cash flow includes a net loss (gain) on sale and disposition of assets and long-lived asset impairment of $0.9 million for each of the three months ended September 30, 2020 and 2019, and $2.5 million and $0.3 million for the nine months ended September 30, 2020 and 2019, respectively. Excluding these charges, distributable cash flow would have been $32.2 million and $31.3 million for the three months ended September 30, 2020 and 2019, respectively, and $151.6 million and $86.6 million for the nine months ended September 30, 2020 and 2019, respectively.

(3)

Distributions to Series A preferred unitholders represent the distributions payable to the preferred unitholders during the period. Distributions on the Series A Preferred Units are cumulative and payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year.


Contacts

Daphne H. Foster
Chief Financial Officer
Global Partners LP
(781) 894-8800

Edward J. Faneuil
Executive Vice President, General Counsel and Secretary
Global Partners LP
(781) 894-8800


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HOUSTON--(BUSINESS WIRE)--Genesis Energy, L.P. (NYSE: GEL) today announced its third quarter results.


We generated the following financial results for the third quarter of 2020:

  • Net Loss Attributable to Genesis Energy, L.P. of $29.7 million for the third quarter of 2020, compared to Net Income Attributable to Genesis Energy, L.P. of $17.6 million for the same period in 2019.
  • Cash Flows from Operating Activities of $143.5 million for the third quarter of 2020 compared to $136.1 million for the same period in 2019.
  • Total Segment Margin in the third quarter of 2020 of $161.9 million.
  • Available Cash before Reserves to common unitholders of $70.7 million for the third quarter of 2020, which provided 3.84X coverage for the quarterly distribution of $0.15 per common unit attributable to the third quarter.
  • We declared cash distributions on our preferred units of $0.7374 for each preferred unit, which equates to a cash distribution of approximately $18.7 million and is reflected as a reduction to Available Cash before Reserves to common unitholders.
  • Adjusted EBITDA of $151.5 million in the third quarter of 2020. Our bank leverage ratio, calculated consistent with our credit agreement, is 5.25X as of September 30, 2020 and is discussed further in this release.

Grant Sims, CEO of Genesis Energy, said, "During the quarter, we paid down total outstanding debt by approximately $70 million, in spite of continuing, but improving, macro challenges from the worldwide Covid-19 pandemic as well as the most disruptive hurricane season since 2005. We are continuing to realize the benefits of the actions we took earlier this year to maintain and improve our financial flexibility. We have clear and defined opportunities to realize improving financial results in future periods as the upstream community gets back to normalized operations in the Gulf of Mexico and the demand for some of our goods and services continues its return to pre-pandemic levels, which will more than likely grow from there.

Hurricanes Marco and Laura combined for basically two weeks of complete temporary cessation of production in the central Gulf of Mexico during the quarter. As we have previously discussed, a platform that our CHOPS pipeline goes up and over incurred some limited structural issues which has required investigation and analyses. As a result, this quarter’s financial results include approximately $5 million of non-recurring expense associated with such efforts. We would not expect significant additional capital requirements, and any additional dollars required to be spent will in all likelihood be capitalized.

To date, we have been successful in routing affected volumes through our Poseidon pipeline system and are close to revenue neutral, although the financial impact from Poseidon is on a one month lag due to it being effectively a joint venture. We continue to work with the Bureau of Safety and Environmental Enforcement to determine how best to return to normal, safe and responsible operations on CHOPS as soon as practicable.

While we had Hurricanes Delta and Zeta disrupt producers’ operations for some 15 days in the fourth quarter, I would point everyone to the first quarter of this year’s financial results. Those results of approximately $85 million represent the normalized quarterly earning capability of our industry critical infrastructure assets in the Gulf of Mexico. Nothing has occurred to lose production or reserves or otherwise detract from that run rate. In fact, quite the contrary as we have seen increased achievable production from Atlantis and Katmai, both as anticipated. Also, we are now just some 12-18 months from initial flows from Argos and Kings Quay, which required minimal capital from us. These two fields alone, when fully ramped up, will likely generate in excess of $25 million a quarter, or over $100 million a year, in incremental segment margin, EBITDA and importantly cash flow to us in the very near future. We remain confident that the Gulf of Mexico will be an important producing province for the U.S. and the world as a whole for decades and decades to come.

Our sodium minerals and sulfur services segment continues to improve from the depths of the second quarter. Recent data points would suggest the soda ash market is definitely re-balancing and improving. Early indications would suggest we will be sold out this quarter from our Westvaco facility and continuing into and throughout 2021. Not only will we realize higher sales, but this is very important given the loss of fixed cost absorption and other inefficiencies of not running at full design capacity as we have over the last 6 months or so.

This near-term improvement in world-wide supply and demand balances for soda ash is currently occurring as the world’s economies begin to re-open along with certain supply responses, like our near-term furloughing of Granger and more permanent reductions in capacity in China as well as short-term supply disruptions from flooding in central China. In other words, the market is working through inventories and existing bulges in the soda ash supply chain that developed at the end of last year and became materially worse as a result of the economic reaction to Covid-19. While one would expect to see prices rise under these developing market conditions, we are taking a conservative view and expect price action to be reasonably muted entering 2021 but see prices increasing, perhaps meaningfully, as we move through next year, provided we do not see a second shut down of economic activity in response to the virus.

Longer term, it would be hard to conceive of a brighter future than what we envision for this segment. Whether it is general fiscal stimulus, general infrastructure expenditures or spending targeted at energy conservation and a lengthy process of transitioning from hydrocarbons as the primary transportation fuel, these businesses will materially benefit.

Soda ash, among others, is an essential component used in glass manufacturing and the production of lithium ion/phosphate batteries. Construction of new homes and new automobiles, as well as the retro-fitting of older buildings with new LEED certified glass windows, will continue to drive increasing soda ash demand. The demand from the production of new batteries to facilitate the storage and usage of developing renewable sources of energy is likely to be a major contributor to increasing demand for soda ash. By some accounts, the demand for soda ash to produce new batteries alone may be an additional 6 to 7 million tons a year by 2030. This alone represents more than a 15% increase in demand for soda ash outside of China relative to today. All of these growth drivers are in addition to the intrinsic growth of 2-3% per year we would expect as the developing countries resume their inexorable path of growth towards the per capita consumption levels of the more mature OECD economies. Mining for copper, the primary metal used in everything from phones to automobiles to bridges, is the primary market and use for the sodium and sulfur based product we make at refineries while helping them limit air pollution given our proprietary process is a closed chemical reaction as opposed to their conventional combustion processes to remove sulfur from their finished products.

Our marine segment performed in-line with our expectations for the quarter. We are starting to see the impact of lower refinery runs in the Midwest and Gulf Coast which is putting pressure on both rates and utilization, especially in the inland world. We do expect to see an acceleration in asset retirements beginning this year, into and throughout 2021, which will help balance supply with the current reduced demand for marine tonnage. At the end of the quarter, we successfully re-contracted the American Phoenix with a credit-worthy new customer, albeit at a lower rate. We only re-contracted her, inclusive of our customer’s options, through next year, as we believe the market will tighten given expected asset retirements and a recovery of demand as we move through 2021.

Our onshore facilities and transportation segment also performed in-line with our expectations. As previously disclosed, we received approximately $41 million in cash from a subsidiary of Denbury Inc. ("Denbury") which was included in segment margin and Adjusted Consolidated EBITDA in the quarter. As also previously disclosed, we have finalized an agreement with Denbury which allows us to totally exit the CO2 pipeline business, a non-core business for us. During the fourth quarter, we received proceeds of $22.5 million for the Free State CO2 pipeline and we are scheduled to receive an additional $70 million in cash, to be paid over four equal quarterly installments of $17.5 million, starting in the first quarter of 2021 for the remaining amounts owed under the NEJD financing lease. Combined, we will receive approximately $134 million in cash from Denbury which we will use to pay down debt. Additionally, we will recognize all of that $134 million as Adjusted Consolidated EBITDA under our bank revolving credit facility for purposes of complying with the two financial covenants therein.

We expect Adjusted Consolidated EBITDA for the full year to come in a range of $590-610 million, despite the active hurricane season and the continuing macroeconomic challenges presented by Covid-19. We will continue to evaluate additional sales of non-core assets and examine our general, administrative and operating expenses in the context of the economic operating environment.

Accordingly, we find it difficult to see any scenarios where we have the risk of not comfortably complying with all of our financial covenants, and look forward to the improving financial performance of our core businesses as previously described. With this accelerating ability to pay down debt and with relatively de minimus capital requirements to realize the financial benefits of these improving business conditions, we foresee no issues in extending our senior secured credit facility and re-financing our near-term un-secured maturity, which is still some two and a half years out.

I would like to once again recognize our entire workforce, and especially our miners, mariners and offshore personnel who live and work in close quarters during this time of social distancing. I am extremely proud to say we have safely operated our assets under our own Covid-19 safety procedures and protocols with no impact to our business partners and customers with limited confirmed cases amongst our some 2,000 employees and with no known cases of community transmission at any of our work locations. As always, we intend to be prudent, diligent and intelligent and focus on delivering long-term value for everyone in our capital structure without ever losing our commitment to safe, reliable and responsible operations."

Financial Results

Segment Margin

Variances between the third quarter of 2020 (the “2020 Quarter”) and the third quarter of 2019 (the “2019 Quarter”) in these components are explained below.

Segment margin results for the 2020 Quarter and 2019 Quarter were as follows:

 

Three Months Ended
September 30,

 

2020

 

2019

 

(in thousands)

Offshore pipeline transportation

$

57,380

 

 

$

81,060

 

Sodium minerals and sulfur services

27,592

 

 

55,258

 

Onshore facilities and transportation

61,298

 

 

24,829

 

Marine transportation

15,587

 

 

14,672

 

Total Segment Margin

$

161,857

 

 

$

175,819

 

Offshore pipeline transportation Segment Margin for the 2020 Quarter decreased $23.7 million, or 29%, from the 2019 Quarter, primarily due to lower overall volumes on our crude oil and natural gas pipeline systems and a relative increase in operating costs. During the 2020 Quarter, our Gulf of Mexico assets experienced unplanned downtime and interruption from Hurricanes Laura and Marco as a result of producers shutting in during the storm and us taking the necessary precautions to remove all personnel from the platform assets that we operate and maintain. While the 2019 Quarter was negatively impacted by Hurricane Barry, the effects during the 2020 Quarter on our assets were more significant and longer lasting. In addition to the majority of our assets being shut in for approximately one to two weeks, our 100% owned CHOPS pipeline, although not damaged, has been out of service since August 26, 2020 due to damage at a junction platform that the CHOPS system goes up and over. We are currently in the process of undergoing the required regulatory inspections and analysis to address any platform issues caused by Hurricane Laura in an effort to safely return our assets to operation as soon as possible, and we incurred approximately $5 million of incremental operating costs in the 2020 Quarter associated with these efforts. During this time, we have successfully diverted all CHOPS barrels to our 64% owned and operated Poseidon oil pipeline system and expect to continue so during the fourth quarter of 2020. We expect volumes on our other offshore pipeline transportation assets to return to normal pre-hurricane levels in the fourth quarter of 2020, with the exception of unexpected downtime we incurred in October due to Hurricanes Delta and Zeta that impacted our operations by some 15 days.

Sodium minerals and sulfur services Segment Margin for the 2020 Quarter decreased $27.7 million, or 50% from the 2019 Quarter, primarily due to lower volumes and pricing in our Alkali Business. During the 2020 Quarter, we experienced lower ANSAC and domestic sales volumes of soda ash relative to the 2019 Quarter due to the continued demand destruction from the worldwide economic shutdowns and uncertainty from the pandemic. This was coupled with lower export pricing due to supply and demand imbalances that existed at the time of our re-contracting phase in December 2019 and January 2020, which is expected to continue, to some extent, for at least the rest of 2020. While the soda ash volumes sold during the 2020 Quarter were relatively flat compared to the second quarter of 2020, we began to see an uptick in demand both domestically and on ANSAC volumes throughout the 2020 Quarter as certain regions of the world are beginning to re-open their economies and we expect continued recovery throughout the rest of 2020 and into 2021. In our refinery services business, we experienced a slight increase in NaHS volumes during the 2020 Quarter due to higher demand from certain of our domestic pulp and paper customers. Additionally, in South America (primarily in Peru), we began to see some recovery in demand from previous customer shut-ins amidst the spread of Covid-19 and we expect these volumes to continue recovering to their normal levels throughout the rest of 2020.

Onshore facilities and transportation Segment Margin for the 2020 Quarter increased by $36.5 million, or 146.9%, from the 2019 Quarter primarily due to the 2020 Quarter including the receipt of a cash payment of approximately $41 million associated with the exercise of a letter of credit we had issued to us as beneficiary from a customer that defaulted under a twenty year term agreement. This increase was partially offset by lower volumes throughout our onshore facilities and transportation asset base, primarily in Louisiana at our Baton Rouge corridor assets and our Raceland rail facility. Due to the decline in crude oil prices and the collapse in the differential of Western Canadian Select (WCS) to the Gulf Coast, which has made crude-by-rail to the Gulf Coast uneconomic, the volumes at our Baton Rouge facilities were below our minimum take-or-pay levels and we were only able to recognize our minimum volume commitment in segment margin during the 2020 Quarter. We expect to only recognize our minimum volume commitment in segment margin through the rest of 2020 and as we enter 2021 due to the lower anticipated volumes and the prepaid transportation credits that our customer has accumulated over the last six months.

Marine transportation Segment Margin for the 2020 Quarter increased $0.9 million, or 6%, from the 2019 Quarter. During the 2020 Quarter, in our offshore barge operation, we benefited from the continual improving rates in the spot and short term markets coupled with increased utilization relative to the 2019 Quarter. This was partially offset by lower utilization and day rates in our inland business. We expect to see continued pressure on our utilization, and to an extent, the spot rates in our inland business as Midwest and Gulf Coast refineries continue to lower their utilization rates to better align with overall demand as a result of Covid-19 and the current operating environment. Additionally, the five year contract associated with our M/T American Phoenix tanker ended on September 30, 2020. We have re-contracted the tanker beginning in the fourth quarter of 2020 at a marginally lower rate and shorter term. We have continued to enter into short term contracts (less than a year) in both the inland and offshore (including the M/T American Phoenix) markets because we believe the day rates currently being offered by the market have yet to fully recover from their cyclical lows.

Other Components of Net Income

In the 2020 Quarter, we recorded Net Loss Attributable to Genesis Energy, L.P. of $29.7 million compared to Net Income Attributable to Genesis Energy, L.P. of $17.6 million in the 2019 Quarter. Net Loss Attributable to Genesis Energy, L.P. in the 2020 Quarter was negatively impacted, relative to the 2019 Quarter, by: (i) lower segment margin of $14.0 million, which is inclusive of approximately $41 million of incremental cash receipts received in the 2020 Quarter and included in the 2020 Quarter's segment margin, associated with principal repayments on our direct financing lease; and (ii) lower non-cash revenues of $11.8 million within our offshore pipeline transportation and onshore facilities and transportation segments as a result of how we recognize revenue in accordance with GAAP on certain contracts. These decreases were partially offset by (i) lower depreciation, depletion and amortization expense of $15.8 million during the 2020 Quarter due to lower depreciation expense on our rail logistics assets as they were impaired during the second quarter of 2020; and (ii) lower interest expense of $3.4 million during the 2020 Quarter.

Earnings Conference Call

We will broadcast our Earnings Conference Call on Thursday, November 5, 2020, at 8:30 a.m. Central time (9:30 a.m. Eastern time). This call can be accessed at www.genesisenergy.com. Choose the Investor Relations button. For those unable to attend the live broadcast, a replay will be available beginning approximately one hour after the event and remain available on our website for 30 days. There is no charge to access the event.

Genesis Energy, L.P. is a diversified midstream energy master limited partnership headquartered in Houston, Texas. Genesis’ operations include offshore pipeline transportation, sodium minerals and sulfur services, onshore facilities and transportation and marine transportation. Genesis’ operations are primarily located in Texas, Louisiana, Arkansas, Mississippi, Alabama, Florida, Wyoming and the Gulf of Mexico.

GENESIS ENERGY, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

(in thousands, except per unit amounts)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

REVENUES

$

443,125

 

 

 

$

621,697

 

 

 

$

1,371,515

 

 

 

$

1,876,491

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

Costs of sales and operating expenses

356,957

 

 

 

470,389

 

 

 

1,037,647

 

 

 

1,394,117

 

 

General and administrative expenses

11,072

 

 

 

14,999

 

 

 

45,858

 

 

 

40,097

 

 

Depreciation, depletion and amortization

67,733

 

 

 

83,522

 

 

 

222,210

 

 

 

240,513

 

 

Impairment expense

3,331

 

 

 

 

 

 

280,826

 

 

 

 

 

OPERATING INCOME (LOSS)

4,032

 

 

 

52,787

 

 

 

(215,026

)

 

 

201,764

 

 

Equity in earnings of equity investees

14,439

 

 

 

11,830

 

 

 

41,216

 

 

 

39,873

 

 

Interest expense

(51,312

)

 

 

(54,673

)

 

 

(157,895

)

 

 

(165,881

)

 

Other income, net

7,406

 

 

 

7,974

 

 

 

13,114

 

 

 

306

 

 

INCOME (LOSS) BEFORE INCOME TAXES

(25,435

)

 

 

17,918

 

 

 

(318,591

)

 

 

76,062

 

 

Income tax expense

(145

)

 

 

(111

)

 

 

(575

)

 

 

(656

)

 

NET INCOME (LOSS)

(25,580

)

 

 

17,807

 

 

 

(319,166

)

 

 

75,406

 

 

Net loss (income) attributable to noncontrolling interests

12

 

 

 

22

 

 

 

38

 

 

 

(1,503

)

 

Net income attributable to redeemable noncontrolling interests

(4,149

)

 

 

(272

)

 

 

(12,394

)

 

 

(272

)

 

NET INCOME (LOSS) ATTRIBUTABLE TO GENESIS ENERGY, L.P.

$

(29,717

)

 

 

$

17,557

 

 

 

$

(331,522

)

 

 

$

73,631

 

 

Less: Accumulated distributions attributable to Class A Convertible Preferred Units

(18,684

)

 

 

(18,684

)

 

 

(56,052

)

 

 

(55,783

)

 

NET INCOME (LOSS) AVAILABLE TO COMMON UNITHOLDERS

$

(48,401

)

 

 

$

(1,127

)

 

 

$

(387,574

)

 

 

$

17,848

 

 

NET INCOME (LOSS) PER COMMON UNIT:

 

 

 

 

 

 

 

Basic and Diluted

$

(0.39

)

 

 

$

(0.01

)

 

 

$

(3.16

)

 

 

$

0.15

 

 

WEIGHTED AVERAGE OUTSTANDING COMMON UNITS:

 

 

 

 

 

 

 

Basic and Diluted

122,579

 

 

 

122,579

 

 

 

122,579

 

 

 

122,579

 

 

GENESIS ENERGY, L.P.

OPERATING DATA - UNAUDITED

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Offshore Pipeline Transportation Segment

 

 

 

 

 

 

 

Crude oil pipelines (barrels/day unless otherwise noted):

 

 

 

 

 

 

 

CHOPS

98,626

 

 

231,635

 

 

178,962

 

 

234,070

 

Poseidon (1)

274,008

 

 

249,209

 

 

268,862

 

 

255,811

 

Odyssey (1)

84,902

 

 

144,995

 

 

117,100

 

 

148,945

 

GOPL

1,266

 

 

9,796

 

 

3,706

 

 

10,046

 

Offshore crude oil pipelines total

458,802

 

 

635,635

 

 

568,630

 

 

648,872

 

 

 

 

 

 

 

 

 

Natural gas transportation volumes (MMbtus/d) (1)

265,465

 

 

396,408

 

 

337,039

 

 

420,595

 

 

 

 

 

 

 

 

 

Sodium Minerals and Sulfur Services Segment

 

 

 

 

 

 

 

NaHS (dry short tons sold)

28,105

 

 

26,806

 

 

80,129

 

 

97,076

 

Soda Ash volumes (short tons sold)

588,949

 

 

951,172

 

 

2,006,006

 

 

2,646,582

 

NaOH (caustic soda) volumes (dry short tons sold) (2)

20,922

 

 

18,844

 

 

57,551

 

 

60,171

 

 

 

 

 

 

 

 

 

Onshore Facilities and Transportation Segment

 

 

 

 

 

 

 

Crude oil pipelines (barrels/day):

 

 

 

 

 

 

 

Texas

64,635

 

 

51,492

 

 

70,444

 

 

47,265

 

Jay

9,731

 

 

10,292

 

 

8,276

 

 

10,644

 

Mississippi

5,523

 

 

6,015

 

 

5,605

 

 

5,988

 

Louisiana (3)

73,482

 

 

115,519

 

 

99,490

 

 

114,337

 

Onshore crude oil pipelines total

153,371

 

 

183,318

 

 

183,815

 

 

178,234

 

 

 

 

 

 

 

 

 

Free State- CO2 Pipeline (Mcf/day)

90,649

 

 

76,914

 

 

106,530

 

 

86,294

 

 

 

 

 

 

 

 

 

Crude oil and petroleum products sales (barrels/day)

29,284

 

 

33,244

 

 

25,772

 

 

32,593

 

 

 

 

 

 

 

 

 

Rail unload volumes (barrels/day) (4)

3,860

 

 

78,696

 

 

33,907

 

 

87,745

 

 

 

 

 

 

 

 

 

Marine Transportation Segment

 

 

 

 

 

 

 

Inland Fleet Utilization Percentage (5)

74.0

%

 

97.2

%

 

85.0

%

 

97.5

%

Offshore Fleet Utilization Percentage (5)

95.7

%

 

92.4

%

 

97.3

%

 

94.2

%

(1)

Volumes for our equity method investees are presented on a 100% basis. We own 64% of Poseidon and 29% of Odyssey, as well as equity interests in various other entities.

(2)

Caustic soda sales volumes include volumes sold from our Alkali and Refinery Services businesses.

(3)

Total daily volume for the three and nine months ended September 30, 2020 includes 33,874 and 35,676 barrels per day of intermediate refined products associated with our Port of Baton Rouge Terminal pipelines. Total daily volume for the three and nine months ended September 30, 2019 includes 45,657 and 54,153 barrels per day of intermediate refined products associated with our Port of Baton Rouge Terminal pipelines.

(4)

Indicates total barrels for which fees were charged for unloading at all rail facilities.

(5)

Utilization rates are based on a 365 day year, as adjusted for planned downtime and dry-docking.

GENESIS ENERGY, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(in thousands, except number of units)

 

 

September 30,
2020

 

December 31,
2019

ASSETS

 

 

 

Cash, cash equivalents and restricted cash

$

44,016

 

 

 

$

56,405

 

 

Accounts receivable - trade, net

247,819

 

 

 

417,002

 

 

Inventories

89,811

 

 

 

65,137

 

 

Investment in direct financing leases, net

69,370

 

 

 

9,293

 

 

Other current assets

65,576

 

 

 

45,237

 

 

Total current assets

516,592

 

 

 

593,074

 

 

Fixed assets and mineral leaseholds, net

4,467,166

 

 

 

4,850,300

 

 

Investment in direct financing leases, net

 

 

 

107,702

 

 

Equity investees

321,541

 

 

 

334,523

 

 

Intangible assets, net

129,178

 

 

 

138,927

 

 

Goodwill

301,959

 

 

 

301,959

 

 

Right of use assets, net

159,488

 

 

 

177,071

 

 

Other assets, net

57,426

 

 

 

94,085

 

 

Total assets

$

5,953,350

 

 

 

$

6,597,641

 

 

LIABILITIES AND CAPITAL

 

 

 

Accounts payable - trade

$

151,762

 

 

 

$

218,737

 

 

Accrued liabilities

181,840

 

 

 

196,758

 

 

Total current liabilities

333,602

 

 

 

415,495

 

 

Senior secured credit facility

984,800

 

 

 

959,300

 

 

Senior unsecured notes, net of debt issuance costs

2,373,928

 

 

 

2,469,937

 

 

Deferred tax liabilities

12,665

 

 

 

12,640

 

 

Other long-term liabilities

378,870

 

 

 

393,850

 

 

Total liabilities

4,083,865

 

 

 

4,251,222

 

 

Mezzanine capital:

 

 

 

Class A convertible preferred units

790,115

 

 

 

790,115

 

 

Redeemable noncontrolling interests

137,475

 

 

 

125,133

 

 

 

 

 

 

Partners' capital:

 

 

 

Common unitholders

951,554

 

 

 

1,443,320

 

 

Accumulated other comprehensive loss

(8,066

)

 

 

(8,431

)

 

Noncontrolling interests

(1,593

)

 

 

(3,718

)

 

Total partners' capital

941,895

 

 

 

1,431,171

 

 

Total liabilities, mezzanine capital and partners' capital

$

5,953,350

 

 

 

$

6,597,641

 

 

 

 

 

 

Common Units Data:

 

 

 

Total common units outstanding

122,579,218

 

 

 

122,579,218

 

 


Contacts

Genesis Energy, L.P.
Ryan Sims
SVP - Finance and Corporate Development
(713) 860-2521


Read full story here

DUBLIN--(BUSINESS WIRE)--The "Bio-alcohols Market - Growth, Trends, and Forecast (2020-2025)" report has been added to ResearchAndMarkets.com's offering.


The global bio-alcohols market is expected to grow with a CAGR greater than 8% during the forecast period. One of the major factors driving the market is the growing demand for bio-based products. However, the declining automotive production is hindering the growth of the market studied.

Key Market Trends

Bio-ethanol to Dominate the Market

  • Bio-ethanol offers higher-octane fuel alternative and is also used for energy oriented applications, such as power generation.
  • Its applications in trucks, buses, airplanes, medical industry, and fuel cells are to lift the growth in the market.
  • The blending of bio-ethanol with petrol can increase the life span of diminishing oil supplies and ensure greater fuel security globally.
  • The demand for bio-ethanol is also boosted by its biodegradability and low toxicity than fossil fuels.
  • Hence, owing to the above-mentioned factors, bio-ethanol is likely to dominate the market studied during the forecast period.

Asia-Pacific to Witness the Highest Growth Rate

  • Asia Pacific region is expected to be the fastest-growing market for bio-alcohols owing to the ongoing growth in the end-user industries like construction, and electronics.
  • The region has the presence of a large population and is witnessing a continuously growing demand for high-performance products with an increase in the income of the middle class.
  • The countries in the region including China, India, and Indonesia are investing highly in the construction and infrastructure projects.
  • However, the declining automotive industry may hinder the demand for bio-alcohols in the region in the coming years.
  • Hence, owing to the above-mentioned factors, Asia-Pacific is likely to witness the highest growth rate during the forecast period.

Competitive Landscape

The global bio-alcohols market is moderately consolidated as the market of the market share is divided among few players. Some of the key players in the market include BASF SE, Asahi Kasei Corporation, INVISTA, Evonik Industries AG, and Toray Industries, Inc., among others.

Key Topics Covered:

1 INTRODUCTION

2 RESEARCH METHODOLOGY

3 EXECUTIVE SUMMARY

4 MARKET DYNAMICS

4.1 Drivers

4.1.1 Growing Demand for Bio-based Products

4.1.2 Other Drivers

4.2 Restraints

4.2.1 Declining Automotive Production

4.2.2 Impact of COVID-19 Pandemic

4.3 Industry Value-chain Analysis

4.4 Porter's Five Forces Analysis

4.4.1 Bargaining Power of Suppliers

4.4.2 Bargaining Power of Consumers

4.4.3 Threat of New Entrants

4.4.4 Threat of Substitute Products and Services

4.4.5 Degree of Competition

5 MARKET SEGMENTATION

5.1 Product Type

5.1.1 Bio-methanol

5.1.2 Bio-ethanol

5.1.3 Bio-butanol

5.1.4 Bio-BDO

5.1.5 Other Product Types

5.2 Application

5.2.1 Transportation

5.2.2 Construction

5.2.3 Electronics

5.2.4 Pharmaceutical

5.2.5 Other Applications

5.3 Geography

6 COMPETITIVE LANDSCAPE

6.1 Mergers and Acquisitions, Joint Ventures, Collaborations, and Agreements

6.2 Market Share/Ranking Analysis

6.3 Strategies Adopted by Leading Players

6.4 Company Profiles

7 MARKET OPPORTUNITIES AND FUTURE TRENDS

Companies Mentioned

  • BASF SE
  • Braskem
  • Cargill, Incorporated.
  • DSM
  • Fulcrum BioEnergy
  • Harvest Power
  • Mascoma LLC
  • Mitsubishi Chemical Corporation
  • Valero Marketing and Supply Company.
  • Venture Center

For more information about this report visit https://www.researchandmarkets.com/r/kxbola

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Contacts

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DUBLIN--(BUSINESS WIRE)--The "Oil & Gas Engineering Services Market - Growth, Trends, and Forecasts (2020 - 2025)" report has been added to ResearchAndMarkets.com's offering.


The Oil & Gas Engineering Services Market is expected to register a CAGR of approximately 7% during the forecast period (2020 - 2025).

The significant adoption of automation technologies in the Oil & Gas industry is the primary factor driving the adoption of engineering services in the industry.

Companies Mentioned

  • Stress Engineering Services Inc.
  • Toyo Engineering Corporation
  • Element Materials Technology
  • L&T Technology Services Limited
  • Arseal Technologies
  • Citec Group Oy Ab
  • WSP Global Inc.
  • Wood PLC
  • Tetra Tech, Inc.
  • Mannvit Consulting Engineers
  • QuEST Global Services Pte. Ltd.
  • M&H
  • Hatch Ltd.
  • Lloyd's Register Group Services Limited

Key Market Trends

Downstream Segment to Exhibit Significant Growth

The Downstream sector of the Oil & Gas Industry includes the operations that occur after the production phase until the point of sale. Certain downstream operations include refining, processing, transportation, and sale of petroleum products. The increasing demand for safe and reliable operations, while minimizing the total cost of operations, is expected to drive the adoption of downstream oil and gas services in the industry.

  • Downstream oil and gas services play an important role in maximizing the refining process while impacting the desirability and marketability of the finished product. The downstream supply chain involves major operations such as effective database management, marketing by-products, and effective management of distribution.
  • Certain downstream oil and gas services include asset integrity management, industrial technical inspection, petroleum testing, refining and distribution, hazardous location equipment testing, and database software solutions. Some of them also include Enterprise Asset Management (EAM) solutions, which address core Asset Information Management and Plant Asset Maintenance Management applications.
  • In April 2020, Stress Engineering Services developed a sustainability scorecard with RPS to assess the emissions, carbon footprint and environmental impact of systems, sub-systems and facilities in the upstream, downstream and midstream sectors, in addition to manufacturing plants, power plants, wastewater systems, and processing systems.

North America Expected to Dominate the Market

North America is expected to dominate the Oil and Gas Engineering Services Market, due to the increasing number of oil & gas projects in countries such as the United States and Canada. The United States is one of the largest producers of crude oil and natural gas, according to the study in 2018, the United States accounted for approximately 14.1% to 20.0% of the global production of crude oil and natural gas respectively.

  • The country is witnessing a significant number of strategic collaborations as a lucrative path to grab the opportunities provided by the oil and gas industry in the region. For instance, in June 2020, US-based engineering companies, KBR and L&T Hydrocarbon Engineering (LTHE), signed a Memorandum of Understanding (MoU) aimed to build modular process plants for refinery and petrochemical projects. Under the terms of the MoU, KBR will provide license proprietary technology and engineering services such as solid acid alkylation technology (K-SAAT), solvent de-asphalting technology (ROSE), and catalytic olefins technology (K-COT). Additionally, LTHE will serve at the EPC provider.
  • Also, Canada is one of the largest producers of oil and gas globally, as the industry plays an important role in the country's economy. As per the Canadian Association of Petroleum Producers (CAPP), the oil production in the country is expected to reach 5.4 billion bbl/d in 2030, and oil sands are expected to account for 70.7% of the total production.

Key Topics Covered:

1 INTRODUCTION

1.1 Study Assumptions & Market Definition

1.2 Scope of the Study

2 RESEARCH METHODOLOGY

3 EXECUTIVE SUMMARY

4 MARKET DYNAMICS

4.1 Market Overview

4.2 Market Drivers

4.2.1 Growing Adoption of Automation in the Oil & Gas Industry to Aid Growth of Design and Engineering Services

4.2.2 Ongoing Efforts to Enhance Cost & Operational Efficiency in the Oil & Gas Industry

4.2.3 Industry 4.0 Practices Such as Extended Reality & BIM 4D to Reduce TTM

4.3 Market Restraints

4.3.1 The Market is Susceptible to Fluctuations in the Oil & Gas Prices as Well as Other Macro-economic Changes

4.3.2 Operational and Compliance-related Challenges

4.4 Industry Stakeholder and Business Model Analysis

4.5 Industry Attractiveness - Porter's Five Forces Analysis?

4.5.1 Bargaining Power of Suppliers

4.5.2 Bargaining Power of Buyers/Consumers

4.5.3 Threat of New Entrants

4.5.4 Threat of Substitute Products

4.5.5 Intensity of Competitive Rivalry

4.6 Comparative Analysis of In-house and Outsourced Engineering Services Industry

4.7 Cost Breakdown Analysis

4.8 Comparative Analysis of the Adoption Trends Between Oil & Gas and Other Major Process Industries

4.9 Impact of COVID-19 on the Engineering Services Industry

5 MARKET SEGMENTATION

5.1 By Type

5.1.1 Downstream

5.1.2 Midstream

5.1.3 Upstream

5.2 Geography

5.2.1 North America

5.2.2 Europe

5.2.3 Asia-Pacific

5.2.4 Latin America

5.2.5 Middle East & Africa

6 COMPETITIVE LANDSCAPE

6.1 Company Profiles*

7 INVESTMENT ANALYSIS

8 MARKET OPPORTUNITIES AND FUTURE TRENDS

For more information about this report visit https://www.researchandmarkets.com/r/5xuw9u


Contacts

ResearchAndMarkets.com
Laura Wood, Senior Press Manager
This email address is being protected from spambots. You need JavaScript enabled to view it.
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900

LONDON--(BUSINESS WIRE)--#CommandandControlSystemsMarket--Technavio has been monitoring the command and control systems market and it is poised to grow by USD 3.28 billion during 2020-2024, progressing at a CAGR of over 3% during the forecast period. The report offers an up-to-date analysis regarding the current market scenario, latest trends and drivers, and the overall market environment.



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The market is fragmented, and the degree of fragmentation will accelerate during the forecast period. BAE Systems Plc, General Dynamics Corp., L3Harris Technologies Inc., Leonardo Spa, Lockheed Martin Corp., Northrop Grumman Corp., Raytheon Technologies Corp., Saab AB, Thales Group, and The Boeing Co. are some of the major market participants. To make the most of the opportunities, market vendors should focus more on the growth prospects in the fast-growing segments, while maintaining their positions in the slow-growing segments.

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Rising need for integrated situation awareness system has been instrumental in driving the growth of the market. However, barriers to adopting new technology and equipment might hamper market growth.

Technavio's custom research reports offer detailed insights on the impact of COVID-19 at an industry level, a regional level, and subsequent supply chain operations. This customized report will also help clients keep up with new product launches in direct & indirect COVID-19 related markets, upcoming vaccines and pipeline analysis, and significant developments in vendor operations and government regulations. Download a Free Sample Report on COVID-19 Impacts

Command and Control Systems Market 2020-2024: Segmentation

Command and Control Systems Market is segmented as below:

  • End-user
    • Land
    • Airborne
    • Naval
    • Space
  • Geography
    • North America
    • Europe
    • APAC
    • MEA
    • South America

Command and Control Systems Market 2020-2024: Scope

Technavio presents a detailed picture of the market by the way of study, synthesis, and summation of data from multiple sources. The command and control systems market report covers the following areas:

  • Command and Control Systems Market Size
  • Command and Control Systems Market Trends
  • Command and Control Systems Market Industry Analysis

This study identifies rising investments in satellite navigation programs as one of the prime reasons driving the Command and Control Systems Market growth during the next few years.

Technavio suggests three forecast scenarios (optimistic, probable, and pessimistic) considering the impact of COVID-19. Technavio’s in-depth research has direct and indirect COVID-19 impacted market research reports.

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Command and Control Systems Market 2020-2024: Key Highlights

  • CAGR of the market during the forecast period 2020-2024
  • Detailed information on factors that will assist command and control systems market growth during the next five years
  • Estimation of the command and control systems market size and its contribution to the parent market
  • Predictions on upcoming trends and changes in consumer behavior
  • The growth of the command and control systems market
  • Analysis of the market’s competitive landscape and detailed information on vendors
  • Comprehensive details of factors that will challenge the growth of command and control systems market vendors

Table of Contents:

Executive Summary

Market Landscape

  • Market ecosystem
  • Market characteristics
  • Value chain analysis

Market Sizing

  • Market definition
  • Market segment analysis
  • Market size 2019
  • Market outlook: Forecast for 2019 - 2024

Five Forces Analysis

  • Five forces summary
  • Bargaining power of buyers
  • Bargaining power of suppliers
  • Threat of new entrants
  • Threat of substitutes
  • Threat of rivalry
  • Market condition

Market Segmentation by Platform

  • Market segments
  • Comparison by Platform
  • Land - Market size and forecast 2019-2024
  • Airborne - Market size and forecast 2019-2024
  • Naval - Market size and forecast 2019-2024
  • Space - Market size and forecast 2019-2024
  • Market opportunity by Platform

Customer landscape

  • Customer landscape

Geographic Landscape

  • Geographic segmentation
  • Geographic comparison
  • North America - Market size and forecast 2019-2024
  • Europe - Market size and forecast 2019-2024
  • APAC - Market size and forecast 2019-2024
  • MEA - Market size and forecast 2019-2024
  • South America - Market size and forecast 2019-2024
  • Key leading countries
  • Market opportunity by geography
  • Market drivers
  • Market challenges
  • Market trends

Vendor Landscape

  • Competitive scenario
  • Vendor landscape
  • Landscape disruption
  • Industry risks

Vendor Analysis

  • Vendors covered
  • Market positioning of vendors
  • BAE Systems Plc
  • General Dynamics Corp.
  • L3Harris Technologies Inc.
  • Leonardo Spa
  • Lockheed Martin Corp.
  • Northrop Grumman Corp.
  • Raytheon Technologies Corp.
  • Saab AB
  • Thales Group
  • The Boeing Co.

Appendix

  • Scope of the report
  • Currency conversion rates for US$
  • Research methodology
  • List of abbreviations

About Us

Technavio is a leading global technology research and advisory company. Their research and analysis focus on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions. With over 500 specialized analysts, Technavio’s report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio’s comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.


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  • Reported net loss attributable to HollyFrontier stockholders of $(2.4) million, or $(0.01) per diluted share, and adjusted net loss of $(66.9) million, or $(0.41) per diluted share, for the third quarter
  • Reported EBITDA of $157.0 million and adjusted EBITDA of $65.6 million for the third quarter
  • Raised $750.0 million in a public bond offering in the third quarter to enhance liquidity and fund expansion into renewable diesel production

DALLAS--(BUSINESS WIRE)--HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”) today reported third quarter net loss attributable to HollyFrontier stockholders of $(2.4) million, or $(0.01) per diluted share, for the quarter ended September 30, 2020, compared to net income of $261.8 million, or $1.58 per diluted share, for the quarter ended September 30, 2019.


The third quarter results reflect special items that collectively increased net income by a total of $64.5 million. On a pre-tax basis, these items include HollyFrontier's pro-rata share of a gain recognized upon the settlement of the Company's business interruption claim with its insurance carrier related to a loss at the Woods Cross Refinery totaling $77.1 million and a lower of cost or market inventory valuation adjustment of $62.8 million, partially offset by charges related to the Cheyenne Refinery conversion to renewable diesel production, including last-in, first-out (“LIFO”) inventory liquidation costs of $33.8 million, decommissioning charges of $12.3 million and severance charges totaling $2.4 million. Excluding these items, net loss for the current quarter was $(66.9) million ($(0.41) per diluted share) compared to net income of $278.0 million ($1.68 per diluted share) for the third quarter of 2019, which excludes certain items that collectively decreased net income by $16.2 million.

HollyFrontier’s President & CEO, Michael Jennings, commented, “Despite the difficult operating environment, HollyFrontier delivered solid results in the third quarter, led by resilient financial performances from our lubricants and midstream businesses. In August, we ran the last barrel of crude oil at Cheyenne and began the conversion to renewable diesel production. I would like to thank all of the employees at Cheyenne for safely achieving this milestone. In September, we reinforced our strong liquidity position through the successful $750.0 million bond offering, providing us the necessary capital to fully fund the previously announced renewable diesel projects at our Artesia, New Mexico and Cheyenne, Wyoming facilities.”

The COVID-19 pandemic caused a decline in U.S. and global economic activity starting in the first quarter of 2020. This decrease reduced both volumes and unit margins across the Company's businesses, resulting in lower gross margins and earnings. During the third quarter of 2020, demand for transportation fuels remained challenged while lubricants and specialties saw meaningful improvement in industrial and transportation-related markets and increased global demand for base oils.

The Refining segment reported adjusted EBITDA of $(53.6) million for the third quarter of 2020 compared to $424.6 million for the third quarter of 2019. This decrease was primarily due to continued weak demand for gasoline and diesel coupled with compressed crude differentials. Refinery gross margin for the third quarter of 2020 was $4.93 per produced barrel, a 71% decrease compared to $17.23 for the third quarter of 2019. Crude oil charge averaged 390,580 barrels per day (“BPD”) for the current quarter compared to 476,030 BPD for the third quarter of 2019.

The Lubricants and Specialty Products segment reported EBITDA of $60.6 million for the third quarter of 2020 compared to $38.0 million in the third quarter of 2019. This increase was driven by the strong recovery in global demand for finished lubricants and base oils, resulting in higher sales volumes and margins during the quarter.

Holly Energy Partners, L.P. (“HEP”) reported EBITDA of $55.3 million for the third quarter of 2020 compared to $123.1 million in the third quarter of 2019. Reported EBITDA for the third quarter of 2020 included a $35.7 million goodwill impairment charge, and reported EBITDA for the third quarter of 2019 included a $35.2 million gain on sales-type leases, both of which eliminated on the Company's consolidation.

For the third quarter of 2020, net cash provided by operations totaled $81.7 million. During the period, HollyFrontier declared and paid a dividend of $0.35 per share to shareholders totaling $57.2 million. At September 30, 2020, the Company's cash and cash equivalents totaled $1,524.9 million, a $622.4 million increase over cash and cash equivalents of $902.5 million at June 30, 2020. Additionally, the Company's consolidated debt was $3,176.3 million. The Company’s debt, exclusive of HEP debt, which is nonrecourse to HollyFrontier, was $1,736.5 million at September 30, 2020.

The Company has scheduled a webcast conference call for today, November 5, 2020, at 8:30 AM Eastern Time to discuss third quarter financial results. This webcast may be accessed at: https://event.on24.com/wcc/r/2628168/9BE4DA1E13C98135F6352CD76762D475. An audio archive of this webcast will be available using the above noted link through November 19, 2020.

HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier owns and operates refineries located in Kansas, Oklahoma, New Mexico and Utah and markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier produces base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57% limited partner interest and a non-economic general partner interest in Holly Energy Partners, L.P., a master limited partnership that provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HollyFrontier Corporation subsidiaries.

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are “forward-looking statements” based on management’s beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Any differences could be caused by a number of factors, including, but not limited to, the extraordinary market environment and effects of the COVID-19 pandemic, including the continuation of a material decline in demand for refined petroleum products in markets the Company serves; risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products or lubricant and specialty products in the Company’s markets; the spread between market prices for refined products and market prices for crude oil; the possibility of constraints on the transportation of refined products or lubricant and specialty products; the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, whether due to infection in the workforce or in response to reductions in demand; effects of governmental and environmental regulations and policies, including the effects of current restrictions on various commercial and economic activities in response to the COVID-19 pandemic; the availability and cost of financing to the Company; the effectiveness of the Company’s capital investments and marketing strategies; the Company’s efficiency in carrying out and consummating construction projects, including the Company's ability to complete announced capital projects, such as the conversion of the Cheyenne Refinery to a renewable diesel facility and the construction of the Artesia renewable diesel unit and pretreatment unit, on time and within budget; the Company's ability to timely obtain or maintain permits, including those necessary for operations or capital projects; the ability of the Company to acquire refined or lubricant product operations or pipeline and terminal operations on acceptable terms and to integrate any existing or future acquired operations; the possibility of terrorist or cyberattacks and the consequences of any such attacks; general economic conditions, including uncertainty regarding the timing, pace and extent of an economic recovery in the United States; further deterioration in gross margins or a prolonged economic slowdown due to COVID-19 could result in an impairment of goodwill and / or additional long-lived asset impairments; and other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission filings. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

RESULTS OF OPERATIONS

 

Financial Data (all information in this release is unaudited)

 

 

Three Months Ended
September 30,

 

Change from 2019

 

2020

 

2019

 

Change

 

Percent

 

(In thousands, except per share data)

Sales and other revenues

$

2,819,400

 

 

 

$

4,424,828

 

 

 

$

(1,605,428

)

 

 

(36

)%

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of products sold:

 

 

 

 

 

 

 

Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

2,377,238

 

 

 

3,403,767

 

 

 

(1,026,529

)

 

 

(30

)

Lower of cost or market inventory valuation adjustment

(62,849

)

 

 

34,062

 

 

 

(96,911

)

 

 

(285

)

 

2,314,389

 

 

 

3,437,829

 

 

 

(1,123,440

)

 

 

(33

)

Operating expenses

332,496

 

 

 

345,578

 

 

 

(13,082

)

 

 

(4

)

Selling, general and administrative expenses

74,453

 

 

 

87,626

 

 

 

(13,173

)

 

 

(15

)

Depreciation and amortization

125,280

 

 

 

127,016

 

 

 

(1,736

)

 

 

(1

)

Total operating costs and expenses

2,846,618

 

 

 

3,998,049

 

 

 

(1,151,431

)

 

 

(29

)

Income (loss) from operations

(27,218

)

 

 

426,779

 

 

 

(453,997

)

 

 

(106

)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Earnings of equity method investments

1,316

 

 

 

1,334

 

 

 

(18

)

 

 

(1

)

Interest income

1,011

 

 

 

6,164

 

 

 

(5,153

)

 

 

(84

)

Interest expense

(30,589

)

 

 

(36,027

)

 

 

5,438

 

 

 

(15

)

Gain on business interruption insurance settlement

81,000

 

 

 

 

 

 

81,000

 

 

 

 

Gain on foreign currency transactions

1,030

 

 

 

395

 

 

 

635

 

 

 

161

 

Other, net

1,368

 

 

 

2,356

 

 

 

(988

)

 

 

(42

)

 

55,136

 

 

 

(25,778

)

 

 

80,914

 

 

 

(314

)

Income before income taxes

27,918

 

 

 

401,001

 

 

 

(373,083

)

 

 

(93

)

Income tax expense

4,573

 

 

 

103,021

 

 

 

(98,448

)

 

 

(96

)

Net income

23,345

 

 

 

297,980

 

 

 

(274,635

)

 

 

(92

)

Less net income attributable to noncontrolling interest

25,746

 

 

 

36,167

 

 

 

(10,421

)

 

 

(29

)

Net income (loss) attributable to HollyFrontier stockholders

$

(2,401

)

 

 

$

261,813

 

 

 

$

(264,214

)

 

 

(101

)%

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to HollyFrontier stockholders:

 

 

 

 

 

 

 

Basic

$

(0.01

)

 

 

$

1.60

 

 

 

$

(1.61

)

 

 

(101

)%

Diluted

$

(0.01

)

 

 

$

1.58

 

 

 

$

(1.59

)

 

 

(101

)%

Cash dividends declared per common share

$

0.35

 

 

 

$

0.33

 

 

 

$

0.02

 

 

 

6

%

Average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

162,015

 

 

 

163,676

 

 

 

(1,661

)

 

 

(1

)%

Diluted

162,015

 

 

 

165,011

 

 

 

(2,996

)

 

 

(2

)%

 

 

 

 

 

 

 

 

EBITDA

$

157,030

 

 

 

$

521,713

 

 

 

$

(364,683

)

 

 

(70

)%

Adjusted EBITDA

$

65,638

 

 

 

$

523,082

 

 

 

$

(457,444

)

 

 

(87

)%

 

Nine Months Ended
September 30,

 

Change from 2019

 

2020

 

2019

 

Change

 

Percent

 

(In thousands, except per share data)

Sales and other revenues

$

8,282,875

 

 

 

$

13,104,690

 

 

 

$

(4,821,815

)

 

 

(37

)%

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of products sold:

 

 

 

 

 

 

 

Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment)

6,647,960

 

 

 

10,307,856

 

 

 

(3,659,896

)

 

 

(36

)

Lower of cost or market inventory valuation adjustment

227,711

 

 

 

(150,483

)

 

 

378,194

 

 

 

(251

)

 

6,875,671

 

 

 

10,157,373

 

 

 

(3,281,702

)

 

 

(32

)

Operating expenses

964,200

 

 

 

1,010,422

 

 

 

(46,222

)

 

 

(5

)

Selling, general and administrative expenses

237,559

 

 

 

260,977

 

 

 

(23,418

)

 

 

(9

)

Depreciation and amortization

396,033

 

 

 

375,345

 

 

 

20,688

 

 

 

6

 

Long-lived asset and goodwill impairments

436,908

 

 

 

152,712

 

 

 

284,196

 

 

 

186

 

Total operating costs and expenses

8,910,371

 

 

 

11,956,829

 

 

 

(3,046,458

)

 

 

(25

)

Income (loss) from operations

(627,496

)

 

 

1,147,861

 

 

 

(1,775,357

)

 

 

(155

)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Earnings of equity method investments

5,186

 

 

 

5,217

 

 

 

(31

)

 

 

(1

)

Interest income

6,590

 

 

 

17,127

 

 

 

(10,537

)

 

 

(62

)

Interest expense

(85,923

)

 

 

(106,938

)

 

 

21,015

 

 

 

(20

)

Gain on business interruption insurance settlement

81,000

 

 

 

 

 

 

81,000

 

 

 

 

Gain on sales-type leases

33,834

 

 

 

 

 

 

33,834

 

 

 

 

Loss on early extinguishment of debt

(25,915

)

 

 

 

 

 

(25,915

)

 

 

 

Gain (loss) on foreign currency transactions

(918

)

 

 

4,873

 

 

 

(5,791

)

 

 

(119

)

Other, net

4,790

 

 

 

3,005

 

 

 

1,785

 

 

 

59

 

 

18,644

 

 

 

(76,716

)

 

 

95,360

 

 

 

(124

)

Income (loss) before income taxes

(608,852

)

 

 

1,071,145

 

 

 

(1,679,997

)

 

 

(157

)

Income tax expense (benefit)

(188,504

)

 

 

279,862

 

 

 

(468,366

)

 

 

(167

)

Net income (loss)

(420,348

)

 

 

791,283

 

 

 

(1,211,631

)

 

 

(153

)

Less net income attributable to noncontrolling interest

63,353

 

 

 

79,500

 

 

 

(16,147

)

 

 

(20

)

Net income (loss) attributable to HollyFrontier stockholders

$

(483,701

)

 

 

$

711,783

 

 

 

$

(1,195,484

)

 

 

(168

)%

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to HollyFrontier stockholders:

 

 

 

 

 

 

 

Basic

$

(2.99

)

 

 

$

4.23

 

 

 

$

(7.22

)

 

 

(171

)%

Diluted

$

(2.99

)

 

 

$

4.20

 

 

 

$

(7.19

)

 

 

(171

)%

Cash dividends declared per common share

$

1.05

 

 

 

$

0.99

 

 

 

$

0.06

 

 

 

6

%

Average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

161,927

 

 

 

167,935

 

 

 

(6,008

)

 

 

(4

)%

Diluted

161,927

 

 

 

169,125

 

 

 

(7,198

)

 

 

(4

)%

 

 

 

 

 

 

 

 

EBITDA

$

(196,839

)

 

 

$

1,456,801

 

 

 

$

(1,653,640

)

 

 

(114

)%

Adjusted EBITDA

$

434,118

 

 

 

$

1,451,864

 

 

 

$

(1,017,746

)

 

 

(70

)%

Balance Sheet Data

 

 

September 30,

 

December 31,

 

2020

 

2019

 

(In thousands)

Cash and cash equivalents

$

1,524,888

 

 

$

885,162

 

Working capital

$

2,081,978

 

 

$

1,620,261

 

Total assets

$

11,579,741

 

 

$

12,164,841

 

Long-term debt

$

3,176,349

 

 

$

2,455,640

 

Total equity

$

5,876,569

 

 

$

6,509,426

 

Segment Information

Our operations are organized into three reportable segments, Refining, Lubricants and Specialty Products and HEP. Our operations that are not included in the Refining, Lubricants and Specialty Products and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under the Corporate, Other and Eliminations column.

The Refining segment includes the operations of our El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross refineries and HollyFrontier Asphalt Company LLC (“HFC Asphalt”) (aggregated as a reportable segment). Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. HFC Asphalt operates various terminals in Arizona, New Mexico and Oklahoma.

The Lubricants and Specialty Products segment involves Petro-Canada Lubricants Inc.’s (“PCLI”) production operations, located in Mississauga, Ontario, that include lubricant products such as base oils, white oils, specialty products and finished lubricants and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States, Europe and China. Additionally, the Lubricants and Specialty Products segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America, the operations of Red Giant Oil, one of the largest suppliers of locomotive engine oil in North America and the operations of Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

The HEP segment involves all of the operations of HEP, a consolidated variable interest entity, which owns and operates logistics assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. The HEP segment also includes a 75% interest in UNEV Pipeline, LLC (an HEP consolidated subsidiary), and a 50% ownership interest in each of Osage Pipeline Company, LLC, Cheyenne Pipeline LLC and Cushing Connect Pipeline & Terminal LLC. Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations. Due to certain basis differences, our reported amounts for the HEP segment may not agree to amounts reported in HEP's periodic public filings.

 

 

Refining

 

Lubricants
and Specialty
Products

 

HEP

 

Corporate,
Other and
Eliminations

 

Consolidated
Total

 

 

(In thousands)

Three Months Ended September 30, 2020

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

2,339,782

 

 

$

452,878

 

$

26,740

 

$

 

 

$

2,819,400

 

Intersegment revenues

 

56,331

 

 

2,164

 

100,991

 

(159,486

)

 

 

 

 

$

2,396,113

 

 

$

455,042

 

$

127,731

 

$

(159,486

)

 

$

2,819,400

 

Cost of products sold (exclusive of lower of cost or market inventory)

 

$

2,211,342

 

 

$

302,703

 

$

 

$

(136,807

)

 

$

2,377,238

 

Lower of cost or market inventory valuation adjustment

 

$

(62,849

)

 

$

 

$

 

$

 

 

$

(62,849

)

Operating expenses

 

$

256,079

 

 

$

54,488

 

$

40,003

 

$

(18,074

)

 

$

332,496

 

Selling, general and administrative expenses

 

$

30,866

 

 

$

36,773

 

$

2,332

 

$

4,482

 

 

$

74,453

 

Depreciation and amortization

 

$

79,146

 

 

$

17,432

 

$

24,109

 

$

4,593

 

 

$

125,280

 

Income (loss) from operations

 

$

(118,471

)

 

$

43,646

 

$

61,287

 

$

(13,680

)

 

$

(27,218

)

Income (loss) before interest and income taxes

 

$

(118,471

)

 

$

43,120

 

$

70,067

 

$

62,780

 

 

$

57,496

 

Net income attributable to noncontrolling interest

 

$

 

 

$

 

$

2,293

 

$

23,453

 

 

$

25,746

 

Earnings of equity method investments

 

$

 

 

$

 

$

1,316

 

$

 

 

$

1,316

 

Capital expenditures

 

$

41,740

 

 

$

6,995

 

$

7,902

 

$

26,635

 

 

$

83,272

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

3,865,399

 

 

$

529,561

 

$

29,868

 

$

 

 

$

4,424,828

 

Intersegment revenues

 

81,571

 

 

8,157

 

106,027

 

(195,755

)

 

 

 

 

$

3,946,970

 

 

$

537,718

 

$

135,895

 

$

(195,755

)

 

$

4,424,828

 

Cost of products sold (exclusive of lower of cost or market inventory)

 

$

3,177,167

 

 

$

397,926

 

$

 

$

(171,326

)

 

$

3,403,767

 

Lower of cost or market inventory valuation adjustment

 

$

34,062

 

 

$

 

$

 

$

 

 

$

34,062

 

Operating expenses

 

$

276,869

 

 

$

57,974

 

$

44,924

 

$

(34,189

)

 

$

345,578

 

Selling, general and administrative expenses

 

$

31,707

 

 

$

43,875

 

$

2,714

 

$

9,330

 

 

$

87,626

 

Depreciation and amortization

 

$

76,765

 

 

$

22,700

 

$

24,121

 

$

3,430

 

 

$

127,016

 

Income (loss) from operations

 

$

350,400

 

 

$

15,243

 

$

64,136

 

$

(3,000

)

 

$

426,779

 

Income (loss) before interest and income taxes

 

$

350,400

 

 

$

15,325

 

$

100,778

 

$

(35,639

)

 

$

430,864

 

Net income attributable to noncontrolling interest

 

$

 

 

$

 

$

1,004

 

$

35,163

 

 

$

36,167

 

Earnings of equity method investments

 

$

 

 

$

 

$

1,334

 

$

 

 

$

1,334

 

Capital expenditures

 

$

53,506

 

 

$

8,697

 

$

6,076

 

$

6,310

 

 

$

74,589

 

 

 

Refining

 

Lubricants
and Specialty
Products

 

HEP

 

Corporate,
Other and
Eliminations

 

Consolidated
Total

 

 

(In thousands)

Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

6,880,444

 

 

$

1,330,021

 

 

$

72,410

 

$

 

 

$

8,282,875

 

Intersegment revenues

 

178,039

 

 

8,911

 

 

297,982

 

(484,932

)

 

 

 

 

$

7,058,483

 

 

$

1,338,932

 

 

$

370,392

 

$

(484,932

)

 

$

8,282,875

 

Cost of products sold (exclusive of lower of cost or market inventory)

 

$

6,113,530

 

 

$

952,430

 

 

$

 

$

(418,000

)

 

$

6,647,960

 

Lower of cost or market inventory valuation adjustment

 

$

227,711

 

 

$

 

 

$

 

$

 

 

$

227,711

 

Operating expenses

 

$

754,612

 

 

$

156,459

 

 

$

109,721

 

$

(56,592

)

 

$

964,200

 

Selling, general and administrative expenses

 

$

94,677

 

 

$

121,654

 

 

$

7,569

 

$

13,659

 

 

$

237,559

 

Depreciation and amortization

 

$

251,019

 

 

$

59,260

 

 

$

72,095

 

$

13,659

 

 

$

396,033

 

Long-lived asset impairment

 

$

215,242

 

 

$

204,708

 

 

$

16,958

 

$

 

 

$

436,908

 

Income (loss) from operations

 

$

(598,308

)

 

$

(155,579

)

 

$

164,049

 

$

(37,658

)

 

$

(627,496

)

Income (loss) before interest and income taxes

 

$

(598,308

)

 

$

(155,847

)

 

$

185,593

 

$

39,043

 

 

$

(529,519

)

Net income attributable to noncontrolling interest

 

$

 

 

$

 

 

$

4,158

 

$

59,195

 

 

$

63,353

 

Earnings of equity method investments

 

$

 

 

$

 

 

$

5,186

 

$

 

 

$

5,186

 

Capital expenditures

 

$

106,856

 

 

$

20,387

 

 

$

38,642

 

$

47,123

 

 

$

213,008

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

Sales and other revenues:

 

 

 

 

 

 

 

 

 

 

Revenues from external customers

 

$

11,446,841

 

 

$

1,568,241

 

 

$

89,388

 

$

220

 

 

$

13,104,690

 

Intersegment revenues

 

244,799

 

 

8,157

 

 

311,755

 

(564,711

)

 

 

 

 

$

11,691,640

 

 

$

1,576,398

 

 

$

401,143

 

$

(564,491

)

 

$

13,104,690

 

Cost of products sold (exclusive of lower of cost or market inventory)

 

$

9,598,539

 

 

$

1,202,296

 

 

$

 

$

(492,979

)

 

$

10,307,856

 

Lower of cost or market inventory valuation adjustment

 

$

(150,483

)

 

$

 

 

$

 

$

 

 

$

(150,483

)

Operating expenses

 

$

794,081

 

 

$

170,655

 

 

$

123,045

 

$

(77,359

)

 

$

1,010,422

 

Selling, general and administrative expenses

 

$

88,322

 

 

$

125,681

 

 

$

7,322

 

$

39,652

 

 

$

260,977

 

Depreciation and amortization

 

$

227,405

 

 

$

65,891

 

 

$

72,192

 

$

9,857

 

 

$

375,345

 

Goodwill impairment

 

$

 

 

$

152,712

 

 

$

 

$

 

 

$

152,712

 

Income (loss) from operations

 

$

1,133,776

 

 

$

(140,837

)

 

$

198,584

 

$

(43,662

)

 

$

1,147,861

 

Income (loss) before interest and income taxes

 

$

1,133,776

 

 

$

(140,518

)

 

$

238,910

 

$

(71,212

)

 

$

1,160,956

 

Net income attributable to noncontrolling interest

 

$

 

 

$

 

 

$

3,524

 

$

75,976

 

 

$

79,500

 

Earnings of equity method investments

 

$

 

 

$

 

 

$

5,217

 

$

 

 

$

5,217

 

Capital expenditures

 

$

129,167

 

 

$

25,887

 

 

$

23,828

 

$

16,175

 

 

$

195,057

 

 

 

Refining

 

Lubricants
and Specialty
Products

 

HEP

 

Corporate,
Other and
Eliminations

 

Consolidated
Total

 

 

(In thousands)

September 30, 2020

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,085

 

 

$

211,646

 

 

$

18,091

 

 

$

1,289,066

 

 

$

1,524,888

 

Total assets

 

$

6,197,301

 

 

$

1,933,482

 

 

$

2,193,770

 

 

$

1,255,188

 

 

$

11,579,741

 

Long-term debt

 

$

 

 

$

 

 

$

1,439,874

 

 

$

1,736,475

 

 

$

3,176,349

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

9,755

 

 

$

169,277

 

 

$

13,287

 

 

$

692,843

 

 

$

885,162

 

Total assets

 

$

7,189,094

 

 

$

2,223,418

 

 

$

2,205,437

 

 

$

546,892

 

 

$

12,164,841

 

Long-term debt

 

$

 

 

$

 

 

$

1,462,031

 

 

$

993,609

 

 

$

2,455,640

 


Contacts

Richard L. Voliva III, Executive Vice President and Chief Financial Officer
Craig Biery, Vice President, Investor Relations
HollyFrontier Corporation
214-954-6510


Read full story here

Value creation and cost-cutting measures in a hard-oil and gas market create demand for document digitization

HOUSTON--(BUSINESS WIRE)--Quorum Software (Quorum), the leader in digital transformation for the oil and gas industry, today announced recent product enhancements and adoption data for myQuorum DynamicDocs, the company's cloud-based document management system purpose-built for oil and gas. In the 12 months since Quorum first announced its introduction, DynamicDocs has experienced strong industry adoption, now classifying and managing more than 10 million documents, spanning more than 200,000 assets, and 1,500 software users. Value creation and cost-cutting are the primary drivers behind document digitization initiatives during a historically tumultuous year for the industry.


DynamicDocs is now natively integrated into the myQuorum platform, providing robust, industry-specific document management alongside the most comprehensive suite of transactional, operational and accounting solutions. The integration bridges the Upstream paper-to-digital divide seamlessly and continues to build out unique workflows made possible only with the breadth of Quorum’s full suite of offerings. Within context of their standard business processes and applications, users have access to source documents, easy-to-use search options and a host of other capabilities.

"Security, agility, and compliance are the main reasons why an energy CIO or chief data officer would take on digital transformations under normal circumstances," said Tyson Greer, chief product officer of Quorum Software. "In an exceedingly volatile year, the bar is higher for projects to get greenlit. Digitizing document-based workflows is in demand because it increases business agility and operational efficiency; when paired with native integrations to other Quorum apps, it accelerates time to value for Quorum customers looking to advance their digitization significantly."

Across any industry, companies look to digitization for lower real estate costs related to the storage and retention of physical files, greater access to documents from anywhere, anytime, in a secure environment and greater efficiency in document-related workflows that save time and resources. Reasons unique to oil and gas include lower administration costs from time saved scanning, classifying, searching, and maintaining complex industry characteristics. Moreover, current market conditions have increased acquisition and divestiture activity; therefore, digital documents underpin virtual data rooms where assets are being analyzed and valued.

DynamicDocs provides a single source for storing documents, eliminating the proliferation of files across physical and digital storage. Because DynamicDocs is designed for oil and gas, it classifies industry-specific documents with a level of precision unmatched by other document management systems. Easy-to-use features allow upstream companies to set up document-level security, onboarding or divesting assets quickly and reducing risk while saving time and money.

Because DynamicDocs is a cloud-based SaaS solution, oil and gas companies benefit from an accelerated release schedule for faster access to new capabilities. Recent enhancements include:

  • Data Analysis for the quick, at-a-glance discovery of documents across attributes including people, organizations, dates, quantities, and key phrases
  • "Google-like" Search across all documents based on attributes
  • Integration with Quorum solutions for accounting and land management
  • Virtual Data Room for secure, project-based collaboration between parties
  • Document Reminders for users to stay on top of any document-related tasks

Customer Testimonials:

  • "We had 30,000 lease documents imported with a section-by-section review all in the first week with DynamicDocs," Camino Natural Resources.
  • "We reduced time spent looking for well information by as much as 60% with DynamicDocs," independent oil and natural gas company.
  • "DynamicDocs extends our technology stack with valuable tools to help business users organize and find critical data while allowing IT staff to customize and standardize metadata across the company easily. This federated search allows our staff to analyze our data instead of wasting time trying to find it," Crestone Peak Resources.
  • "The DynamicDocs team and product are a pleasure to work with, and we envision additional departments adopting DynamicDocs in the coming months for streamlining their records management," Tourmaline Oil Corp.

Throughout November, Quorum is hosting a three-part webinar series on document management for the oil and gas industry, "Cloud Rescue: Digital Strategies to Eliminate Document Chaos." Speakers include industry leaders from Merit Energy and Camino Natural Resources and digitization experts from DataBank and Quorum.

About Quorum Software
Quorum Software offers an industry-leading portfolio of finance, operations and accounting solutions that empower our customers to streamline operations that drive growth and profitability across the energy value chain. From supermajors to startups, from the wellhead to the city gate, energy businesses rely on Quorum. Designed for digital transformation, the myQuorum software platform delivers open standards, mobile-first design and cloud technologies to drive innovation. We're helping visionary leaders transform their companies into modern energy workplaces. For more information, visit https://www.quorumsoftware.com/.


Contacts

Media Contact:
Jenna Billings
This email address is being protected from spambots. You need JavaScript enabled to view it.
978-618-8424

  • As of September 30, 2020, cash and cash equivalents of $80.3 million
  • During and subsequent to Q3, purchased additional bonds with a face value of $23.6 million for a total purchase price of $7.2 million, leaving $346.7 million of senior notes outstanding
  • Revenue, net loss and adjusted EBITDAA of $49.5 million, $(18.5) million and $(11.1) million, respectively, for the third quarter of 2020
  • Third quarter basic loss per share of $(0.62)

HOUSTON--(BUSINESS WIRE)--Nine Energy Service, Inc. ("Nine" or the "Company") (NYSE: NINE) reported third quarter 2020 revenues of $49.5 million, net loss of $(18.5) million and adjusted EBITDA of $(11.1) million. For the third quarter 2020, adjusted net lossB was $(33.8) million, or $(1.13) adjusted basic loss per shareC.


“The US market remained very challenged in Q3 with total US completions and new wells drilled down again quarter over quarter,” said Ann Fox, President and Chief Executive Officer, Nine Energy Service. “That said, we believe that we have passed through the trough during the May-June timeframe and we saw sequential activity and revenue increases month over month throughout the course of Q3, but did not reach April revenue or activity levels. Although the percentage basis increases appear very robust, the absolute activity levels remain bleak with increases coming off a very low base. We do expect Q4 to be better sequentially than Q3 from an activity and revenue perspective. As activity returns, however many competitors are trying to buy market share, driving down prices and offsetting much of the revenue increases.”

“This quarter, our team capitalized on opportunities that better position the company from a financial and operational perspective. Once again, we saw an opportunity to purchase additional bonds on the open market at a significant discount, lowering our annual cash interest expense, while reducing our overall debt outstanding. During and subsequent to Q3, the Company repurchased $23.6 million par value of bonds for $7.2 million of cash. To date, Nine has repurchased approximately $53.3 million of bonds for $14.6 million leaving $346.7 million of bonds outstanding and an undrawn ABL. We have been very purposeful in balancing near and medium-term liquidity needs with the refinancing of our debt and our top priority continues to be the preservation of cash. On the operational side, we organically expanded cementing into the Haynesville, adding size and scale to the cementing service line without increasing our 2020 capex guidance of $10-$15 million.”

“On the technology side, I remain extremely happy with the performance of our dissolvable plugs and the customers’ appetite for a dissolvable option. We are currently running trials with some of the largest acreage holders with over 80% of the tools deployed run by public operators across multiple basins. We also continue to penetrate the cold temperature markets, running approximately 35% of the low-temp Stinger products in the Permian and approximately 46% in the Northeast. We are confident once we see a real recovery in activity, the dissolvable tools will begin generating growth.”

“Our operational team once again demonstrated their ability to gain market share, growing our percentage of stages completed from approximately 16% in Q3 of 2019 to approximately 22% in Q3 of 2020. I am confident we can continue to differentiate through our service execution and technology and be well positioned as activity increases.”

Operating Results

During the third quarter of 2020, the Company reported revenues of $49.5 million with adjusted gross lossD of $(3.0) million. During the third quarter, the Company generated ROICE of (29)%.

During the third quarter of 2020, the Company reported selling, general and administrative (“SG&A”) expense of $10.7 million, compared to $11.3 million for the second quarter of 2020. Depreciation and amortization expense ("D&A") in the third quarter of 2020 was $11.9 million, compared to $12.6 million for the second quarter of 2020.

The Company’s tax benefit for the three and nine months ended September 30, 2020 was less than $0.1 million and $2.3 million, respectively. The Company’s year-to-date tax benefit was primarily a result of the discrete tax benefit recorded in the first quarter of 2020 related to the Coronavirus Aid, Relief, and Economic Security Act as well as the release of valuation allowance due to the goodwill impairment which was also recorded in the first quarter of 2020.

Liquidity and Capital Expenditures

During the third quarter of 2020, the Company reported net cash provided by operating activities of $2.3 million, compared to $1.6 million for the second quarter of 2020. Capital expenditures totaled $2.2 million during the third quarter of 2020.

As of September 30, 2020, Nine’s cash and cash equivalents were $80.3 million, and the Company had $39.5 million of availability under the revolving credit facility, which remains undrawn, resulting in a total liquidity position of $119.8 million as of September 30, 2020. Availability under the revolving credit facility decreased as compared to June 30, 2020 due to a reduction in accounts receivable and inventory balances.

During the third quarter, the Company repurchased approximately $23.1 million of the senior notes for a repurchase price of approximately $7.0 million in cash. As a result, the Company recorded a $15.8 million gain on extinguishment of debt with no cash tax obligation. Subsequent to September 30, 2020, the Company repurchased an additional $0.5 million of the senior notes for a repurchase price of approximately $0.2 million in cash. To date, the Company has repurchased approximately $53.3 million of the senior notes for a repurchase price of approximately $14.6 million in cash, leaving $346.7 million of bonds outstanding.

ABCDESee end of press release for definitions

Conference Call Information

The call is scheduled for Thursday, November 5, 2020 at 9:00 am Central Time. Participants may join the live conference call by dialing U.S. (Toll Free): (877) 524-8416 or International: (412) 902-1028 and asking for the “Nine Energy Service Earnings Call”. Participants are encouraged to dial into the conference call ten to fifteen minutes before the scheduled start time to avoid any delays entering the earnings call.

For those who cannot listen to the live call, a telephonic replay of the call will be available through November 19, 2020 and may be accessed by dialing U.S. (Toll Free): (877) 660-6853 or International: (201) 612-7415 and entering the passcode of 13707026.

About Nine Energy Service

Nine Energy Service is an oilfield services company that offers completion solutions within North America and abroad. The Company brings years of experience with a deep commitment to serving clients with smarter, customized solutions and world-class resources that drive efficiencies. Serving the global oil and gas industry, Nine continues to differentiate itself through superior service quality, wellsite execution and cutting-edge technology. Nine is headquartered in Houston, Texas with operating facilities in the Permian, Eagle Ford, SCOOP/STACK, Niobrara, Barnett, Bakken, Marcellus, Utica and Canada.

For more information on the Company, please visit Nine’s website at nineenergyservice.com.

Forward Looking Statements

The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. Forward-looking statements also include statements that refer to or are based on projections, uncertain events or assumptions. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, the severity and duration of the COVID-19 pandemic, related economic repercussions and the resulting negative impact on demand for oil and gas; the current significant surplus in the supply of oil and the ability of the OPEC+ countries to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; pricing pressures, reduced sales, or reduced market share as a result of intense competition in the markets for the Company’s dissolvable plug products; the Company’s ability to implement and commercialize new technologies, services and tools; the Company’s ability to grow its completion tool business; the Company’s ability to reduce capital expenditures; the Company’s ability to accurately predict customer demand; the loss of, or interruption or delay in operations by, one or more significant customers; the loss of or interruption in operations of one or more key suppliers; the adequacy of the Company’s capital resources and liquidity; the incurrence of significant costs and liabilities resulting from litigation; the loss of, or inability to attract, key personnel; the Company’s ability to successfully integrate recently acquired assets and operations and realize anticipated revenues, cost savings or other benefits thereof; and other factors described in the “Risk Factors” and “Business” sections of the Company’s most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and, except as required by law, the Company undertakes no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.

NINE ENERGY SERVICE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

Three Months Ended

September 30,
2020

June 30,
2020

 

Revenues

$

49,521

 

$

52,735

 

Cost and expenses

Cost of revenues (exclusive of depreciation and

amortization shown separately below)

 

52,483

 

 

56,703

 

General and administrative expenses

 

10,701

 

 

11,284

 

Depreciation

 

7,763

 

 

8,449

 

Amortization of intangibles

 

4,091

 

 

4,116

 

Loss on revaluation of contingent liabilities

 

297

 

 

910

 

Gain on sale of property and equipment

 

(535

)

 

(1,790

)

Loss from operations

 

(25,279

)

 

(26,937

)

Interest expense

 

9,130

 

 

9,186

 

Interest income

 

(43

)

 

(179

)

Gain on extinguishment of debt

 

(15,798

)

 

(11,587

)

Other income

 

(29

)

 

-

 

Loss before income taxes

 

(18,539

)

 

(24,357

)

Benefit for income taxes

 

(37

)

 

(186

)

Net loss

$

(18,502

)

$

(24,171

)

Loss per share

Basic

$

(0.62

)

$

(0.81

)

Diluted

$

(0.62

)

$

(0.81

)

Weighted average shares outstanding

Basic

 

29,849,753

 

 

29,844,240

 

Diluted

 

29,849,753

 

 

29,844,240

 

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments, net of tax of $0 and $0

$

132

 

$

207

 

Total other comprehensive income, net of tax

 

132

 

 

207

 

Total comprehensive loss

$

(18,370

)

$

(23,964

)

NINE ENERGY SERVICE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

(Unaudited)

 

September 30,
2020

June 30,
2020

 

Assets

Current assets

Cash and cash equivalents

$

80,338

 

$

88,678

 

Accounts receivable, net

 

34,805

 

 

39,376

 

Income taxes receivable

 

1,246

 

 

630

 

Inventories, net

 

52,683

 

 

59,333

 

Prepaid expenses and other current assets

 

19,526

 

 

19,291

 

Total current assets

 

188,598

 

 

207,308

 

Property and equipment, net

 

108,986

 

 

115,258

 

Intangible assets, net

 

136,615

 

 

140,706

 

Other long-term assets

 

4,260

 

 

5,587

 

Total assets

$

438,459

 

$

468,859

 

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

10,022

 

$

11,114

 

Accrued expenses

 

23,236

 

 

16,056

 

Current portion of long-term debt

 

844

 

 

563

 

Current portion of capital lease obligations

 

1,067

 

 

1,043

 

Total current liabilities

 

35,169

 

 

28,776

 

Long-term liabilities

Long-term debt

 

343,036

 

 

365,632

 

Long-term capital lease obligations

 

1,391

 

 

1,667

 

Other long-term liabilities

 

5,264

 

 

2,834

 

Total liabilities

 

384,860

 

 

398,909

 

 

Stockholders’ equity

Common stock (120,000,000 shares authorized at $.01 par value; 31,570,926 and 31,652,635 shares issued and outstanding at September 30, 2020 and June 30, 2020, respectively)

 

316

 

 

317

 

Additional paid-in capital

 

766,402

 

 

764,382

 

Accumulated other comprehensive loss

 

(4,731

)

 

(4,863

)

Accumulated deficit

 

(708,388

)

 

(689,886

)

Total stockholders’ equity

 

53,599

 

 

69,950

 

Total liabilities and stockholders’ equity

$

438,459

 

$

468,859

 

NINE ENERGY SERVICE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

 

Three Months Ended

September 30,
2020

June 30,
2020

 

Cash flows from operating activities

Net loss

$

(18,502

)

$

(24,171

)

Adjustments to reconcile net loss to net cash provided by operating activities

Depreciation

 

7,763

 

 

8,449

 

Amortization of intangibles

 

4,091

 

 

4,116

 

Amortization of deferred financing costs

 

705

 

 

710

 

Provision for doubtful accounts

 

668

 

 

1,741

 

Provision for inventory obsolescence

 

1,407

 

 

241

 

Stock-based compensation expense

 

2,020

 

 

2,105

 

Gain on extinguishment of debt

 

(15,798

)

 

(11,587

)

Gain on sale of property and equipment

 

(535

)

 

(1,790

)

Loss on revaluation of contingent liabilities

 

297

 

 

910

 

Changes in operating assets and liabilities, net of effects from acquisitions

Accounts receivable, net

 

3,921

 

 

51,585

 

Inventories, net

 

5,285

 

 

3,610

 

Prepaid expenses and other current assets

 

201

 

 

(4,067

)

Accounts payable and accrued expenses

 

9,083

 

 

(32,943

)

Income taxes receivable/payable

 

(616

)

 

180

 

Other assets and liabilities

 

2,291

 

 

2,525

 

Net cash provided by operating activities

 

2,281

 

 

1,614

 

Cash flows from investing activities

Proceeds from sales of property and equipment

 

1,843

 

 

3,213

 

Proceeds from property and equipment casualty losses

 

-

 

 

127

 

Purchases of property and equipment

 

(4,161

)

 

(2,107

)

Net cash provided by (used in) investing activities

 

(2,318

)

 

1,233

 

Cash flows from financing activities

Purchases of senior notes

 

(6,996

)

 

(3,959

)

Payments on capital leases

 

(252

)

 

(246

)

Payments of contingent liability

 

(1,125

)

 

(108

)

Vesting of restricted stock

 

(1

)

 

(42

)

Net cash used in financing activities

 

(8,374

)

 

(4,355

)

Impact of foreign currency exchange on cash

 

71

 

 

70

 

Net decrease in cash and cash equivalents

 

(8,340

)

 

(1,438

)

Cash and cash equivalents

Beginning of period

 

88,678

 

 

90,116

 

End of period

$

80,338

 

$

88,678

 

NINE ENERGY SERVICE, INC.

RECONCILIATION OF ADJUSTED GROSS PROFIT (LOSS)

(In Thousands)

(Unaudited)

 

Three Months Ended

September 30,
2020

June 30,
2020

Calculation of gross loss

Revenues

$

49,521

 

$

52,735

 

Cost of revenues (exclusive of depreciation and

amortization shown separately below)

 

52,483

 

 

56,703

 

Depreciation (related to cost of revenues)

 

7,219

 

 

7,858

 

Amortization of intangibles

 

4,091

 

 

4,116

 

Gross loss

$

(14,272

)

$

(15,942

)

 

Adjusted gross loss reconciliation

Gross loss

$

(14,272

)

$

(15,942

)

Depreciation (related to cost of revenues)

 

7,219

 

 

7,858

 

Amortization of intangibles

 

4,091

 

 

4,116

 

Adjusted gross loss

$

(2,962

)

$

(3,968

)

NINE ENERGY SERVICE, INC.

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA

(In Thousands)

(Unaudited)

 

Three Months Ended

September 30,
2020

 

June 30,
2020

EBITDA reconciliation:

Net loss

$

(18,502

)

$

(24,171

)

Interest expense

 

9,130

 

 

9,186

 

Interest income

 

(43

)

 

(179

)

Depreciation

 

7,763

 

 

8,449

 

Amortization of intangibles

 

4,091

 

 

4,116

 

Benefit for income taxes

 

(37

)

 

(186

)

EBITDA

$

2,402

 

$

(2,785

)

Loss on revaluation of contingent liabilities (1)

 

297

 

 

910

 

Gain on extinguishment of debt

 

(15,798

)

 

(11,587

)

Restructuring charges

 

459

 

 

2,094

 

Stock-based compensation expense

 

2,020

 

 

2,105

 

Gain on sale of property and equipment

 

(535

)

 

(1,790

)

Legal fees and settlements (2)

 

15

 

 

20

 

Adjusted EBITDA

$

(11,140

)

$

(11,033

)

(1) Amounts relate to the revaluation of contingent liabilities associated with the Company's 2018 acquisitions.

(2) Amounts represent fees and legal settlements associated with legal proceedings brought pursuant to the

Fair Labor Standards Act and/or similar state laws.

NINE ENERGY SERVICE, INC.

RECONCILIATION OF ROIC CALCULATION

(In Thousands)

(Unaudited)

 

Three Months Ended

September 30,
2020

June 30,
2020

 

Net loss

$

(18,502

)

$

(24,171

)

Add back:

Interest expense

 

9,130

 

 

9,186

 

Interest income

 

(43

)

 

(179

)

Restructuring charges

 

459

 

 

2,094

 

Gain on extinguishment of debt

 

(15,798

)

 

(11,587

)

After-tax net operating loss

$

(24,754

)

$

(24,657

)

 

Total capital as of prior period-end:

Total stockholders' equity

$

69,950

 

$

91,851

 

Total debt

 

372,584

 

 

386,171

 

Less cash and cash equivalents

 

(88,678

)

 

(90,116

)

Total capital as of prior period-end

$

353,856

 

$

387,906

 

 

Total capital as of period-end:

Total stockholders' equity

$

53,599

 

$

69,950

 

Total debt

 

349,418

 

 

372,584

 

Less: cash and cash equivalents

 

(80,338

)

 

(88,678

)

Total capital as of period-end:

$

322,679

 

$

353,856

 

 

 

Average total capital

$

338,268

 

$

370,881

 

ROIC

 

-29

%

 

-27

%

NINE ENERGY SERVICE, INC.

RECONCILIATION OF ADJUSTED BASIC EARNINGS (LOSS) PER SHARE CALCULATION

(In Thousands)

(Unaudited)

 

Three Months Ended

September 30,
2020

June 30,
2020

Reconciliation of adjusted net loss:

Net loss

$

(18,502

)

$

(24,171

)

Add back:

Restructuring charges

 

459

 

 

2,094

 

Gain on extinguishment of debt (a)

 

(15,798

)

 

(11,587

)

Less: Tax benefit from add-backs

 

-

 

 

-

 

 

Adjusted net loss

$

(33,841

)

$

(33,664

)

 

Weighted average shares

Weighted average shares outstanding for basic and

 

29,849,753

 

 

29,844,240

 

adjusted basic earnings (loss) per share

 

Loss per share:

Basic loss per share

$

(0.62

)

$

(0.81

)

Adjusted basic loss per share

$

(1.13

)

$

(1.13

)

(a) Amounts primarily represent the difference between the repurchase price and the carrying

amount of senior notes repurchased during the respective period.

AAdjusted EBITDA is defined as net income (loss) before interest, taxes, and depreciation and amortization, further adjusted for (i) property and equipment, goodwill, and/or intangible asset impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) loss or gain on revaluation of contingent liabilities, (iv) gain on the extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi) restructuring charges, (vii) stock-based compensation expense, (viii) loss or gain on sale of property and equipment, and (ix) other expenses or charges to exclude certain items which we believe are not reflective of ongoing performance of our business, such as legal expenses and settlement costs related to litigation outside the ordinary course of business. Management believes Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure and helps identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments, acquisitions and dispositions and costs that are not reflective of the ongoing performance of our business.

BAdjusted Net Income (Loss) is defined as net income (loss) adjusted for (i) property and equipment, goodwill, and/or intangible asset impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) restructuring charges, (iv) loss or gain on the sale of subsidiaries, (v) gain on the extinguishment of debt and (vi) tax impact of such adjustments. Management believes Adjusted Net Income (Loss) is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period and helps identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments and acquisitions.

CAdjusted Basic Earnings (Loss) Per Share is defined as adjusted net income (loss), divided by weighted average basic shares outstanding. Management believes Adjusted Basic Earnings (loss) Per Share is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period and help identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments and acquisitions.

DAdjusted Gross Profit (Loss) is defined as revenues less cost of revenues excluding depreciation and amortization. This measure differs from the GAAP definition of gross profit (loss) because we do not include the impact of depreciation and amortization, which represent non-cash expenses. Our management uses adjusted gross profit (loss) to evaluate operating performance. We prepare adjusted gross profit (loss) to eliminate the impact of depreciation and amortization because we do not consider depreciation and amortization indicative of our core operating performance.

EReturn on Invested Capital (“ROIC”) is defined as after-tax net operating profit (loss), divided by average total capital. We define after-tax net operating profit (loss) as net income (loss) plus (i) property and equipment, goodwill, and/or intangible asset impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) interest expense (income), (iv) restructuring charges, (v) loss or gain on the sale of subsidiaries, (vi) gain on extinguishment of debt, and (vii) the provision or benefit for deferred income taxes. We define total capital as book value of equity plus the book value of debt less balance sheet cash and cash equivalents. We compute the average of the current and prior period-end total capital for use in this analysis. Management believes ROIC is a meaningful measure because it quantifies how well we generate operating income relative to the capital we have invested in our business and illustrates the profitability of a business or project taking into account the capital invested. Management uses ROIC to assist them in making capital resource allocation decisions and in evaluating business performance.


Contacts

Nine Energy Service Investor Contact:

Heather Schmidt
Vice President, Strategic Development, Investor Relations and Marketing
(281) 730-5113
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Portions of Funding to Support 7 Tribal Communities, Residents in 3 Counties Affected by Recent Wildfires

Funding Includes $25,000 to American Red Cross for Evacuation Shelters

SAN FRANCISCO--(BUSINESS WIRE)--As part of an ongoing commitment to supporting residents displaced and impacted by wildfires during this historic California wildfire season, Pacific Gas and Electric Company (PG&E) and The PG&E Corporation Foundation (The Foundation) will contribute $250,000 to tribal communities and organizations assisting residents affected by recent wildfires. These charitable contributions are part of an overall pledge of $1 million for wildfire relief and recovery efforts during this fire season.

This latest phase of funding will support seven tribal communities in Butte, Fresno, Glenn, Humboldt, Madera and Siskiyou counties. The grants will be used for food distribution programs and general relief efforts.

“The Enterprise Rancheria Estom Yumeka Maidu Tribe was heavily impacted by the recent North Complex fires that swept through our communities. Our entire trust land in Butte County and surrounding ancestral homeland was completely burned over, in addition, we had nine tribal member homes destroyed, several dozen members evacuated for weeks and power is still disrupted to our housing community above Lake Oroville. The generous donation from PG&E is essential in assisting our tribal members with the necessities to start on the path to recovery from the devastation from losing their homes and in some cases, their livelihoods. We thank PG&E for their commitment to help our tribal community and truly uphold the value of ‘We are better together,’” said Glenda Nelson, Tribal Chairwoman.

The contributions also will assist residents and communities recovering from recent wildfires in Napa, Sonoma and Shasta counties. This includes a total of $150,000 to support initial relief and recovery efforts on the Glass Fire and Zogg Fire.

“This wildfire season continues to challenge first-responders, volunteers and organizations focused on helping Californians, including members of tribal communities, as they recover from disasters. We’re grateful for their service and will continue to look for ways to support their mission of caring for those affected by these devastating wildfires,” said Robert Kenney, PG&E Vice President of Regulatory and External Affairs.

Included in the contributions announced today, PG&E is providing $25,000 to the American Red Cross to support emergency assistance to people impacted by wildfires, including a place to sleep, warm meals, clothing and counseling.

Continuing Support for Affected Communities

As part of the combined PG&E and The Foundation total commitment of $1 million for wildfire relief and recovery efforts this year, PG&E previously made the following contributions:

  • In August, provided $100,000 in contributions to the American Red Cross’ California Wildfire Relief Fund for shelters and community support, and $50,000 in grants to the California Association of Food Banks’ Rapid Response Fund to support food insecurity relief.
  • In September, contributed $250,000 to 20 community organizations responding to food insecurity in vulnerable communities already impacted this wildfire season; local Community Foundations providing immediate relief to displaced and impacted residents; and volunteer fire departments.
  • Additionally, The Foundation has committed to matching up to $50,000 in PG&E employee contributions to wildfire relief. The Foundation will match employee contributions to five featured charities supporting wildfire assistance. The employee contributions and 1:1 matching funds total up to $100,000.

These charitable contributions come either from shareholder funds or The Foundation, not PG&E customers.

About PG&E
Pacific Gas and Electric Company, a subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combined natural gas and electric energy companies in the United States. Based in San Francisco, with more than 23,000 employees, the company delivers some of the nation's cleanest energy to 16 million people in Northern and Central California. For more information, visit pge.com and pge.com/news.


Contacts

MEDIA RELATIONS:
415-973-5930

PITTSBURGH--(BUSINESS WIRE)--Wabtec Corporation (NYSE: WAB) has been notified of an unsolicited “mini-tender offer” by TRC Capital Investment Corporation, a private Canadian investment company, to purchase up to two million shares of Wabtec’s common stock at a price of $59.25 per share in cash. TRC Capital’s offer price is approximately 4.53% lower than the $62.06 closing price of Wabtec’s common stock on October 23, 2020, the last trading day prior to the date of the offer (October 26, 2020).

Wabtec is not associated in any way with TRC Capital or its mini-tender offer.

Wabtec does not endorse TRC Capital’s unsolicited mini-tender offer and recommends stockholders do not tender their shares because the offer is at a price below the current market value of Wabtec’s shares and is subject to numerous conditions. In addition, mini-tender offers, such as this one by TRC Capital, avoid many of the investor protections afforded to larger tender offers, including the filing of disclosure and other tender offer documents with the U.S. Securities and Exchange Commission (SEC), as well as other procedures mandated by U.S. securities laws. TRC Capital has made similar, unsolicited min-tender offers for shares of other publicly traded companies.

The SEC has issued “Tips for Investors” regarding mini-tender offers, noting that some bidders, in making offers at below-market prices, are “hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price.” The SEC’s advisory may be found on the SEC website at http://www.sec.gov/investor/pubs/minitend.htm

TRC Capital has made its offer subject to numerous conditions and can terminate the offer if the price of Wabtec’s common stock on the New York Stock Exchange decreases below the $59.25 offer price before the offer expires at 12:01 AM EST on November 24, 2020.

Wabtec urges stockholders to obtain current market quotations for their shares of common stock, consult their broker or financial advisor, and exercise caution with respect to TRC Capital’s offer.

Wabtec recommends that stockholders who have not responded to TRC Capital’s offer take no action. Wabtec stockholders who have already tendered their shares may withdraw their shares by providing the written notice described in the TRC Capital offering documents prior to the expiration of the offer. Wabtec urges brokers, dealers and other market participants to review the SEC’s recommendations to broker-dealers in these circumstances, which can be found on the SEC website at http://www.sec.gov/divisions/marketreg/minitenders/sia072401.htm.

Wabtec requests that a copy of this news release be included with the distribution of any materials relating to TRC Capital’s mini-tender offer.

About Wabtec Corporation
Wabtec Corporation is a leading global provider of equipment, systems, digital solutions and value-added services for freight and transit rail. Drawing on nearly four centuries of collective experience across Wabtec, GE Transportation and Faiveley Transport, the company has unmatched digital expertise, technological innovation, and world-class manufacturing and services, enabling the digital-rail-and-transit ecosystems. Wabtec is focused on performance that drives progress, creating transportation solutions that move and improve the world. The freight portfolio features a comprehensive line of locomotives, software applications and a broad selection of mission-critical controls systems, including Positive Train Control (PTC). The transit portfolio provides highly engineered systems and services to virtually every major rail transit system around the world, supplying an integrated series of components for buses and all train-related market segments that deliver safety, efficiency and passenger comfort. Along with its industry-leading portfolio of products and solutions for the rail and transit industries, Wabtec is a leader in mining, marine, and industrial solutions. Based in Pittsburgh, PA, Visit: www.WabtecCorp.com


Contacts

Wabtec Investor Contact
Kristine Kubacki, CFA / This email address is being protected from spambots. You need JavaScript enabled to view it. / 412-450-2033

Wabtec Media Contact
Deia Campanelli / This email address is being protected from spambots. You need JavaScript enabled to view it. / 773-297-0482

Multi-Emmy award-winning journalist Val Zavala to moderate conversation focused on one of the most pressing issues of the day – climate change, from an ocean perspective

LOS ANGELES--(BUSINESS WIRE)--AltaSea at the Port of Los Angeles announces an upcoming webinar with three of the leading scientists in the field of ocean innovation and conservation. The webinar will focus on the impacts that climate change is having on the ocean and ocean ecosystems, and the innovations that are leading the 21st century approach to find solutions. The webinar will take place on November 13 at 10 AM PST. Pre-registration is required, and space is limited. The link to sign up for the event is: AltaSea-Project-Blue.org/webinars/.


The webinar will feature Dr. Jennifer Smith and Dr. Sarah Purkey from Scripps Institution of Oceanography at the University of California San Diego, and Dr. Cara Field from The Marine Mammal Center in the Bay Area. The three accomplished scientists are recognized leaders in ocean health, conservation, and innovation – from the reefs to the mammals.

“The issue of climate change is increasingly becoming more central to the everyday lives of Americans – from dinner table conversations to presidential debates,” said AltaSea Founding Executive Director Jenny Krusoe. “These three women know it best – they’re on the frontlines of the fight every single day, and they see firsthand how it affects the ocean that Californians love.”

Krusoe will offer opening remarks to kick off the webinar.

Dr. Jennifer Smith is a professor in marine ecology and conservation in the Center for Marine Biodiversity and Conservation at Scripps Institution of Oceanography at UC San Diego. Smith’s research focuses on understanding the factors that influence community structure in marine ecosystems. Her research often goes beyond basic ecology by integrating conservation, restoration, management, and sustainability.

Dr. Sarah Purkey is an assistant professor of climate and atmospheric science and physical oceanography at Scripps Institution of Oceanography. As an oceanographer, her research is focused on quantifying temperature, salinity, and circulation changes in the global ocean, including the deep and abyssal layers – the regions of the ocean that are difficult to access with current technology. Much of her current research is focused on explaining the causes of deep warming, and advancing data collection and measurement in the global ocean.

Dr. Cara Field is the medical director at The Marine Mammal Center in Sausalito, the world’s largest marine mammal hospital. Dr. Field earned the status of Diplomate with a specialization in aquatic marine medicine – one of only 30 veterinarians in the nation to earn that distinction. Her work is focused on managing the care and health of the Center's marine mammal patients, spearheading numerous research projects, and teaching and mentoring the next generation of veterinarians and marine scientists.

The November 13 webinar is the latest in a series of webinars that AltaSea has hosted in 2020 following their launch of Project Blue, a digital education platform designed to provide science-based programming through webinars and live chats and inspire the next generation of explorers.

“This webinar is a prime example of what AltaSea is all about – to convene the greatest minds in the field of ocean conservation and innovation, all fighting for a common goal,” said Krusoe.

AltaSea and Scripps Institution of Oceanography recently joined forces in August to connect Scripps students, innovators, and scientists with AltaSea’s blue economy entrepreneurs for a broad-based research, education, public outreach, and workforce development partnership that is designed to bring about a greater understanding of the ocean and to advance the Blue Economy in Southern California.

Moderating the November 13 webinar will be the multi-Emmy award-winning journalist, Val Zavala. Zavala spent 30 years as a broadcast journalist at KCET in Los Angeles, winning numerous journalism awards. During her career, Zavala has covered a broad spectrum of Southern California issues, including politics, the environment, and the economy.

About AltaSea at the Port of Los Angeles

AltaSea at the Port of Los Angeles is dedicated to accelerating scientific collaboration, advancing an emerging blue economy through business innovation and job creation, and inspiring the next generation, all for a more sustainable, just, and equitable world.

For more information on AltaSea, please see our website: https://altasea.org


Contacts

Jacob Scott
This email address is being protected from spambots. You need JavaScript enabled to view it.

Operating Income Increases 5 Percent Quarter Over Quarter

Proceeds From Sale of its Texas City Terminals to be Used to Improve Debt Metrics and Help Self-fund Capital Program

Outlines Commitment to West Coast Renewable Energy

Provides Updated 2020 and 2021 Outlook

SAN ANTONIO--(BUSINESS WIRE)--NuStar Energy L.P. (NYSE: NS) today reported operating income of $105 million for the third quarter of 2020, up $5 million, or 5 percent, from $100 million in the third quarter of 2019.


“The improvement in our operating income during these historically challenging times for our country and our industry demonstrate the resilience of our business and the quality of our assets,” said NuStar President and CEO Brad Barron.

“During the third quarter, when a window opened in high-yield bond markets, we were able to successfully issue $1.2 billion of new notes at attractive rates to repay the $500 million term loan we obtained in April to assure liquidity for our near-term debt maturities in the midst of pandemic-related second quarter 2020 bond market headwinds, as well as all of the outstanding borrowings under our revolving credit agreement,” said NuStar CFO Tom Shoaf.

“Our bond issuance not only allowed us to significantly reduce our interest expense, it also cleared our bond maturity runway for the next five years,” Shoaf noted.

NuStar’s repayment of the $500 million term loan required NuStar to record a $138 million non-operational charge, which resulted in a third quarter 2020 net loss of $96.6 million, or ($1.22) per unit, compared to net income from continuing operations of $52.6 million, or $0.15 per unit, in the third quarter of 2019.

“While the loan repayment resulted in the non-operational charge, the loan itself bridged us through a tough time period with mission-critical liquidity to weather the storm in the first half of 2020, and we are pleased to have put this COVID-related issue behind us,” Shoaf said.

Excluding the charge, third quarter 2020 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $180 million, an increase of $11 million, or 7 percent, over third quarter 2019 EBITDA from continuing operations.

 

Three Months Ended September 30,

 

2020 -
Unadjusted

 

2020 -
Adjusted

 

2019

 

 

(Thousands of Dollars, Except Per Unit and Ratio Data)

From continuing operations:

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

105,044

 

 

$

105,044

 

 

$

99,972

 

(Loss) income

$

(96,640

)

 

$

45,227

 

 

$

52,588

 

EPU

$

(1.22

)

 

$

0.08

 

 

$

0.15

 

EBITDA

$

38,327

 

 

$

180,194

 

 

$

169,128

 

DCF

$

(53,950

)

 

$

83,954

 

 

$

87,842

 

Distribution coverage ratio

n/a

 

 

1.92x

 

 

1.36x

 

“To provide an ‘apples-to-apples’ comparison with third quarter 2019 results, without the non-operational charge, NuStar’s third quarter 2020 adjusted net income was $45 million and adjusted earnings per unit (EPU) were $0.08 per unit. As mentioned previously, our adjusted EBITDA from continuing operations were $180 million for the third quarter of 2020, up $11 million or 7 percent from $169 million of EBITDA from continuing operations for the third quarter of 2019.

“Adjusted distributable cash flow (DCF) from continuing operations was $84 million for the third quarter of 2020, compared to $88 million in the third quarter of 2019, and the adjusted distribution coverage ratio to common limited partners from continuing operations was 1.92 times for the current period,” Shoaf concluded.

Barron commented, “Despite the many challenges that COVID-19 has posed for us, I continue to take tremendous pride in how well our employees have persevered in maintaining profitable and safe operations, while also ensuring that our nation has reliable access to the energy needed to overcome this pandemic and re-build our economy.

“Over the course of the third quarter and through October, we have continued to see demand rebound and return to levels at or near normal, pre-COVID levels in the markets we serve. In the third quarter alone, we moved 204 million barrels of crude oil and refined products through our pipelines and terminals, safely and responsibly. We saw refined product demand improve throughout the summer, and we have continued to see stable progress in October and thus far in November. On average, across our refined product systems, so far this quarter, we have returned to 100% of typical demand.

“Seeing sustained demand rebound on our refined products assets bodes well for our crude oil pipeline assets, as recovery in refined product demand should increase refinery utilization, which, in turn, should increase crude prices and production. We are pleased that our Permian crude volumes have remained steady. We averaged around 420,000 barrels per day in October, and our throughputs increased from an average of 401,000 barrels per day (BPD) in the second quarter to 422,000 BPD in the third quarter and November nominations are at 428,000 BPD. These numbers reflect the impact of our Permian system’s geological advantages, lower production costs and higher product quality, which distinguish our core-of-the-core assets in the Midland basin from other shale plays and also other gathering systems in the Permian.

“We are also seeing some indications of recovery in Corpus Christi exports as well, with throughputs increasing from an average of 306,000 BPD in the second quarter to 380,000 in the third quarter, which is above our minimum volume commitments of 377,000 BPD.”

Financial Strength and Resilience

Barron also noted, “While we are encouraged by the hopeful signs we see, we are also keenly aware of the uncertain environment we are facing, here in the U.S. and around the globe. But for the rest of this year and through 2021, we plan to remain focused on our strategic priorities to ensure we continue to build our financial strength and resilience by lowering our leverage and maximizing our ability to fund our spending with internally generated cash flow -- goals which have been aided by the following actions:

  • On Monday, we announced we have signed an agreement to sell our Texas City terminals for $106 million, a purchase price that implies a healthy, double-digit multiple, and should allow us to improve our debt metrics and help self-fund our capital program;
  • Second, we have reduced our spending significantly, and we plan to continue to do so, in order to maximize our ability to fund all of our spending, including all of our capital expenditures, from our internally generated cash flows. To that end, we have cut our strategic capital, we have reduced our operating expenses, and we have reduced our financing costs. In total, we have reduced our costs in 2020 by $340 million, or 22 percent. These cuts are part of a structural transformation that allows us to fund our operations from internally generated cash flows. As such, we expect these cuts to continue and to benefit us well past 2021;
  • We have reduced our 2020 strategic capital to a range of $165 to $185 million, which, midpoint-to-midpoint, is a $150 million reduction from our pre-pandemic guidance, which translates to an approximate 45 percent reduction in our 2020 strategic capital spending and is 63 percent below our 2019 spending;
  • We had identified about $40-$50 million of controllable and operating expense reductions for the full-year 2020, but, due to cost optimization across our organization, we are now expecting to reduce controllable and operating expense by an additional $7.5 million; and
  • We are continuing to exercise financial discipline, control costs and look for ways to preserve cash and increase efficiency across our footprint and throughout our organization, without sacrificing safety or reliability.”

Commitment to West Coast Renewable Energy

Barron also discussed NuStar’s commitment to renewable fuels. “Our West Coast renewable fuels logistics network is a great example of the opportunities we are finding embedded in unfolding energy challenges,” Barron noted. “We have developed a series of low-multiple projects across our West Coast terminals in partnership with some of the largest renewables producers in the world to facilitate adoption of low-carbon fuel standards.”

Barron noted that NuStar’s West Coast renewable fuels projects play a significant a role in the low-carbon transition of the largest driving state in the nation. He further noted that in the first quarter of 2020, NuStar handled about 5 percent of California’s total biodiesel volumes; over 15 percent of its ethanol; and close to 30 percent of its renewable diesel volumes. “That’s an impressive share of a key market that we have achieved with a relatively modest investment,” Barron said. “And our market share, along with our associated EBITDA, will continue to ramp up through 2023.

“Our West Coast renewables initiative reflects our Business Development department’s ability to identify and find creative solutions for energy dislocations, adapting as our customers’ needs evolve. That ingenuity and innovation will continue to be the key to NuStar’s ability to thrive as we all navigate the nation’s energy future,” said Barron.

2020 and 2021 Outlook

Barron noted that given the resilience of NuStar’s business and the continued recovery in product demand, NuStar is raising its 2020 adjusted EBITDA outlook to be in the range of $690 to $730 million, which at the mid-point is six percent above its 2019 EBITDA from continuing operations.

“We expect NuStar’s 2021 EBITDA to be comparable to our 2020 results,” said Barron. “That is pretty impressive given that the pre-pandemic first quarter of 2020 was a record-breaker for NuStar on several fronts.

“We also expect our strategic and reliability capital spending for 2021 to be comparable to 2020.”

Barron closed by saying, “I am very proud that our business has continued to perform so well in this difficult year, as evidenced by our operating income and our segment operating income both being up this quarter, and not only outperforming our second quarter of 2020, but also outperforming the same period in 2019. These third quarter results once again demonstrate the diversity and resilience of our asset base even under challenging circumstances.”

Conference Call Details

A conference call with management is scheduled for 9:00 a.m. CT today, November 5, 2020. The partnership plans to discuss the third quarter 2020 earnings results, which will be released earlier that day. Investors interested in listening to the discussion may dial toll-free 844/889-7787, passcode 3097533. International callers may access the discussion by dialing 661/378-9931, passcode 3097533. The partnership intends to have a playback available following the discussion, which may be accessed by dialing toll-free 855/859-2056, passcode 3097533. International callers may access the playback by dialing 404/537-3406, passcode 3097533. The playback will be available until 12:00 p.m. CT on December 5, 2020.

Investors interested in listening to the live discussion or a replay via the internet may access the discussion directly at https://edge.media-server.com/mmc/p/bsztt3hp or by logging on to NuStar Energy L.P.’s website at www.nustarenergy.com.

NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar currently has approximately 10,000 miles of pipeline and 75 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids. The partnership’s combined system has approximately 75 million barrels of storage capacity, and NuStar has operations in the United States, Canada and Mexico. For more information, visit NuStar Energy L.P.'s website at www.nustarenergy.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes, and the related conference call will include, forward-looking statements regarding future events and expectations, such as NuStar’s future performance, plans, capital expenditures, expense reductions and the timing of, expected use of proceeds from and the other anticipated benefits from the sale of NuStar’s Texas City business. All forward-looking statements are based on NuStar’s beliefs as well as assumptions made by and information currently available to NuStar. These statements reflect NuStar’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.’s 2019 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements. Except as required by law, NuStar does not intend, or undertake any obligation, to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

NuStar Energy L.P. and Subsidiaries

Consolidated Financial Information

(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Statement of Income Data:

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Service revenues

$

295,621

 

 

$

289,258

 

 

$

896,518

 

 

$

830,757

 

Product sales

66,970

 

 

88,798

 

 

198,404

 

 

267,570

 

Total revenues

362,591

 

 

378,056

 

 

1,094,922

 

 

1,098,327

 

Costs and expenses:

 

 

 

 

 

 

 

Costs associated with service revenues:

 

 

 

 

 

 

 

Operating expenses

95,528

 

 

100,852

 

 

296,788

 

 

297,358

 

Depreciation and amortization expense

70,480

 

 

66,332

 

 

207,755

 

 

196,141

 

Total costs associated with service revenues

166,008

 

 

167,184

 

 

504,543

 

 

493,499

 

Cost of product sales

63,977

 

 

80,880

 

 

182,103

 

 

253,451

 

Goodwill impairment loss

 

 

 

 

225,000

 

 

 

General and administrative expenses

25,457

 

 

27,804

 

 

72,128

 

 

78,363

 

Other depreciation and amortization expense

2,105

 

 

2,216

 

 

6,462

 

 

6,154

 

Total costs and expenses

257,547

 

 

278,084

 

 

990,236

 

 

831,467

 

Operating income

105,044

 

 

99,972

 

 

104,686

 

 

266,860

 

Interest expense, net

(64,165)

 

 

(46,902)

 

 

(171,158)

 

 

(136,886)

 

Loss on extinguishment of debt

(137,904)

 

 

 

 

(141,746)

 

 

 

Other (expense) income, net

(1,398)

 

 

608

 

 

(5,671)

 

 

2,020

 

(Loss) income from continuing operations

before income tax expense

(98,423)

 

 

53,678

 

 

(213,889)

 

 

131,994

 

Income tax (benefit) expense

(1,783)

 

 

1,090

 

 

626

 

 

3,568

 

(Loss) income from continuing operations

(96,640)

 

 

52,588

 

 

(214,515)

 

 

128,426

 

Loss from discontinued operations, net of tax

 

 

(4,777)

 

 

 

 

(312,527)

 

Net (loss) income

$

(96,640)

 

 

$

47,811

 

 

$

(214,515)

 

 

$

(184,101)

 

 

 

 

 

 

 

 

 

Basic net (loss) income per common unit:

 

 

 

 

 

 

 

Continuing operations

$

(1.22)

 

 

$

0.15

 

 

$

(2.96)

 

 

$

0.20

 

Discontinued operations

 

 

(0.04)

 

 

 

 

(2.90)

 

Total net (loss) income per common unit

$

(1.22)

 

 

$

0.11

 

 

$

(2.96)

 

 

$

(2.70)

 

 

 

 

 

 

 

 

 

Basic weighted-average common units outstanding

109,195,358

 

 

107,763,870

 

 

109,096,190

 

 

107,687,019

 

NuStar Energy L.P. and Subsidiaries

Consolidated Financial Information

(Unaudited, Thousands of Dollars, Except Per Unit and Ratio Data)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Other Data, from continuing operations (Note 1):

 

 

 

 

 

 

 

Adjusted net income

$

45,227

 

 

$

52,588

 

 

$

156,194

 

 

$

128,426

 

Adjusted net income per common unit

$

0.08

 

 

$

0.15

 

 

$

0.44

 

 

$

0.20

 

EBITDA

$

38,327

 

 

$

169,128

 

 

$

171,486

 

 

$

471,175

 

Adjusted EBITDA

$

180,194

 

 

$

169,128

 

 

$

542,195

 

 

$

471,175

 

DCF

$

(53,950)

 

 

$

87,842

 

 

$

130,860

 

 

$

238,159

 

Adjusted DCF

$

83,954

 

 

$

87,842

 

 

$

272,606

 

 

$

238,159

 

Distribution coverage ratio

n/a

 

1.36x

 

1.00x

 

1.23x

Adjusted distribution coverage ratio

1.92x

 

1.36x

 

2.08x

 

1.23x

 

 

For the Four Quarters Ended September 30,

 

2020

 

2019

Consolidated Debt Coverage Ratio

4.13x

 

3.96x

NuStar Energy L.P. and Subsidiaries

Consolidated Financial Information - Continued

(Unaudited, Thousands of Dollars, Except Barrel Data)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Pipeline:

 

 

 

 

 

 

 

Crude oil pipelines throughput (barrels/day)

1,235,176

 

 

1,218,913

 

 

1,276,834

 

 

1,109,856

 

Refined products and ammonia pipelines throughput

(barrels/day)

516,295

 

 

554,276

 

 

521,118

 

 

542,713

 

Total throughput (barrels/day)

1,751,471

 

 

1,773,189

 

 

1,797,952

 

 

1,652,569

 

Throughput and other revenues

$

176,210

 

 

$

179,173

 

 

$

537,999

 

 

$

507,917

 

Operating expenses

47,121

 

 

49,409

 

 

147,466

 

 

150,437

 

Depreciation and amortization expense

45,268

 

 

41,946

 

 

132,655

 

 

123,646

 

Goodwill impairment loss

 

 

 

 

225,000

 

 

 

Segment operating income

$

83,821

 

 

$

87,818

 

 

$

32,878

 

 

$

233,834

 

Storage:

 

 

 

 

 

 

 

Throughput (barrels/day)

466,229

 

 

438,999

 

 

497,634

 

 

400,060

 

Throughput terminal revenues

$

29,260

 

 

$

26,333

 

 

$

100,182

 

 

$

71,189

 

Storage terminal revenues

93,175

 

 

87,402

 

 

264,877

 

 

256,449

 

Total revenues

122,435

 

 

113,735

 

 

365,059

 

 

327,638

 

Operating expenses

48,407

 

 

51,443

 

 

149,322

 

 

146,921

 

Depreciation and amortization expense

25,212

 

 

24,386

 

 

75,100

 

 

72,495

 

Segment operating income

$

48,816

 

 

$

37,906

 

 

$

140,637

 

 

$

108,222

 

Fuels Marketing:

 

 

 

 

 

 

 

Product sales

$

63,946

 

 

$

85,148

 

 

$

191,873

 

 

$

262,776

 

Cost of goods

63,161

 

 

80,046

 

 

180,230

 

 

251,349

 

Gross margin

785

 

 

5,102

 

 

11,643

 

 

11,427

 

Operating expenses

816

 

 

834

 

 

1,882

 

 

2,074

 

Segment operating (loss) income

$

(31)

 

 

$

4,268

 

 

$

9,761

 

 

$

9,353

 

Consolidation and Intersegment Eliminations:

 

 

 

 

 

 

 

Revenues

$

 

 

$

 

 

$

(9)

 

 

$

(4)

 

Cost of goods

 

 

 

 

(9)

 

 

28

 

Total

$

 

 

$

 

 

$

 

 

$

(32)

 

Consolidated Information:

 

 

 

 

 

 

 

Revenues

$

362,591

 

 

$

378,056

 

 

$

1,094,922

 

 

$

1,098,327

 

Costs associated with service revenues:

 

 

 

 

 

 

 

Operating expenses

95,528

 

 

100,852

 

 

296,788

 

 

297,358

 

Depreciation and amortization expense

70,480

 

 

66,332

 

 

207,755

 

 

196,141

 

Total costs associated with service revenues

166,008

 

 

167,184

 

 

504,543

 

 

493,499

 

Cost of product sales

63,977

 

 

80,880

 

 

182,103

 

 

253,451

 

Goodwill impairment loss

 

 

 

 

225,000

 

 

 

Segment operating income

132,606

 

 

129,992

 

 

183,276

 

 

351,377

 

General and administrative expenses

25,457

 

 

27,804

 

 

72,128

 

 

78,363

 

Other depreciation and amortization expense

2,105

 

 

2,216

 

 

6,462

 

 

6,154

 

Consolidated operating income

$

105,044

 

 

$

99,972

 

 

$

104,686

 

 

$

266,860

 

NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio Data)

Note 1: NuStar Energy L.P. utilizes financial measures, such as earnings before interest, taxes, depreciation and amortization (EBITDA), distributable cash flow (DCF) and distribution coverage ratio, which are not defined in U.S. generally accepted accounting principles (GAAP). Management believes these financial measures provide useful information to investors and other external users of our financial information because (i) they provide additional information about the operating performance of the partnership’s assets and the cash the business is generating, (ii) investors and other external users of our financial statements benefit from having access to the same financial measures being utilized by management and our board of directors when making financial, operational, compensation and planning decisions and (iii) they highlight the impact of significant transactions. We may also adjust these measures and/or calculate them based on continuing operations, to enhance the comparability of our performance across periods.

Our board of directors and management use EBITDA and/or DCF when assessing the following: (i) the performance of our assets, (ii) the viability of potential projects, (iii) our ability to fund distributions, (iv) our ability to fund capital expenditures and (v) our ability to service debt. In addition, our board of directors uses EBITDA, DCF and a distribution coverage ratio, which is calculated based on DCF, as some of the factors in its compensation determinations. DCF is a financial indicator used by the master limited partnership (MLP) investment community to compare partnership performance. DCF is used by the MLP investment community, in part, because the value of a partnership unit is partially based on its yield, and its yield is based on the cash distributions a partnership can pay its unitholders.

None of these financial measures are presented as an alternative to net income, or for any periods presented reflecting discontinued operations, income from continuing operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with GAAP.

The following is a reconciliation of (loss) income from continuing operations to EBITDA from continuing operations, DCF from continuing operations and distribution coverage ratio from continuing operations.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

(Loss) income from continuing operations

$

(96,640)

 

 

$

52,588

 

 

$

(214,515)

 

 

$

128,426

 

Interest expense, net

64,165

 

 

46,902

 

 

171,158

 

 

136,886

 

Income tax (benefit) expense

(1,783)

 

 

1,090

 

 

626

 

 

3,568

 

Depreciation and amortization expense

72,585

 

 

68,548

 

 

214,217

 

 

202,295

 

EBITDA from continuing operations

38,327

 

 

169,128

 

 

171,486

 

 

471,175

 

Interest expense, net

(64,165)

 

 

(46,902)

 

 

(171,158)

 

 

(136,886)

 

Reliability capital expenditures

(7,279)

 

 

(11,838)

 

 

(18,330)

 

 

(20,385)

 

Income tax benefit (expense)

1,783

 

 

(1,090)

 

 

(626)

 

 

(3,568)

 

Long-term incentive equity awards (a)

2,416

 

 

3,111

 

 

6,402

 

 

7,646

 

Preferred unit distributions

(31,888)

 

 

(30,423)

 

 

(92,995)

 

 

(91,269)

 

Goodwill impairment loss (b)

 

 

 

 

225,000

 

 

 

Other items

6,856

 

 

5,856

 

 

11,081

 

 

11,446

 

DCF from continuing operations

$

(53,950)

 

 

$

87,842

 

 

$

130,860

 

 

$

238,159

 

 

 

 

 

 

 

 

 

Distributions applicable to common limited partners

$

43,678

 

 

$

64,660

 

 

$

131,086

 

 

$

194,008

 

Distribution coverage ratio from continuing operations (c)

n/a

 

1.36x

 

1.00x

 

1.23x

  1. We intend to satisfy the vestings of these equity-based awards with the issuance of our common units. As such, the expenses related to these awards are considered non-cash and added back to DCF. Certain awards include distribution equivalent rights (DERs). Payments made in connection with DERs are deducted from DCF.
  2. Represents a non-cash goodwill impairment charge related to our crude oil pipelines reporting unit.
  3. Distribution coverage ratio is calculated by dividing DCF by distributions applicable to common limited partners.

NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio Data)

The following is the reconciliation for the calculation of our Consolidated Debt Coverage Ratio, as defined in our revolving credit agreement (the Revolving Credit Agreement). The reconciliation of net loss to EBITDA includes reconciling items from continuing and discontinued operations on a combined basis.

 

For the Four Quarters Ended September 30,

 

2020

 

2019

Net loss

$

(136,107)

 

 

$

(181,975)

 

Interest expense, net

217,342

 

 

181,558

 

Income tax expense

1,812

 

 

4,599

 

Depreciation and amortization expense

284,846

 

 

285,126

 

EBITDA

367,893

 

 

289,308

 

Impairment losses (a)

225,000

 

 

 

Loss on extinguishment of debt (b)

141,746

 

 

 

Other expense (income) (c)

3,949

 

 

(3,674)

 

Equity awards (d)

12,424

 

 

12,742

 

Pro forma effect of dispositions (e)

 

 

335,995

 

Material project adjustments and other items (f)

12,727

 

 

95,479

 

Consolidated EBITDA, as defined in the Revolving Credit Agreement

$

763,739

 

 

$

729,850

 

 

 

 

 

Total consolidated debt

$

3,585,140

 

 

$

3,331,040

 

NuStar Logistics' floating rate subordinated notes

(402,500)

 

 

(402,500)

 

Proceeds held in escrow associated with the Gulf Opportunity Zone Revenue Bonds

 

 

(41,476)

 

Available Cash Netting Amount, as defined in the Revolving Credit Agreement

(30,494)

 

 

 

Consolidated Debt, as defined in the Revolving Credit Agreement

$

3,152,146

 

 

$

2,887,064

 

 

 

 

 

Consolidated Debt Coverage Ratio (Consolidated Debt to Consolidated EBITDA)

4.13x

 

3.96x


Contacts

NuStar Energy, L.P., San Antonio
Investors, Tim Delagarza, Manager, Investor Relations
Investor Relations: 210-918-INVR (4687)
or
Media, Mary Rose Brown, Executive Vice President and Chief Administrative Officer,
Corporate Communications: 210-918-2314
website: http://www.nustarenergy.com


Read full story here

MADISON, Wis.--(BUSINESS WIRE)--MGE Energy, Inc. (Nasdaq: MGEE) today reported financial results for the third quarter of 2020.


MGE Energy's earnings for the third quarter of 2020 were $31.8 million, or 88 cents per share, compared to $30.7 million, or 88 cents per share, for the same period in the prior year.

During the third quarter of 2020, electric net income increased $1.0 million compared to the same period in the prior year. This increase was primarily due to AFUDC equity earned from the construction of Two Creeks and Badger Hollow I and II as well as savings in operating and maintenance costs. AFUDC equity for the Two Creeks and Badger Hollow I and II solar projects increased $0.9 million compared to the same period in the prior year. The Two Creeks and Badger Hollow solar projects will provide MGE electric customers with renewable energy, advancing the company's commitment to achieving net-zero carbon electricity for all customers by 2050. A foundational objective in MGE's ongoing transition toward deep decarbonization is ensuring all customers benefit from new technologies and greater sustainability.

COVID-19 and associated governmental regulations led to a reduction of retail sales and negatively impacted electric earnings in the third quarter of 2020. Electric commercial retail sales dropped approximately 8% in the third quarter of 2020 compared to the same period in the prior year. However, ongoing remote work arrangments contributed to higher electric residential sales, which partially mitigated the impact of COVID-19. Third quarter electric residential sales increased by approximately 9% compared to the third quarter of 2020.

Gas net income in the third quarter of 2020 remained relatively flat compared to the third quarter of 2019.

The situation around the COVID-19 pandemic remains fluid. We have been subject to, and are following, local, state and federal public health and safety regulations and guidance to address the pandemic. We have operated continuously throughout the pandemic and have not suffered any material disruptions in service or employment. We continue to monitor the situation and manage our response.

 

 

MGE Energy, Inc.

 

 

(In thousands, except per share amounts)

 

 

(Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended September 30,

2020

 

2019

 

 

Operating revenue

$135,211

 

$138,198

 

 

Operating income

$38,325

 

$38,738

 

 

Net income

$31,794

 

$30,657

 

 

Earnings per share (basic and diluted)

$0.88

 

$0.88

 

 

Weighted average shares outstanding (basic and diluted)

36,163

 

34,668

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

2020

 

2019

 

 

Operating revenue

$402,124

 

$427,914

 

 

Operating income

$91,284

 

$89,032

 

 

Net income

$76,622

 

$70,212

 

 

Earnings per share (basic and diluted)

$2.16

 

$2.03

 

 

Weighted average shares outstanding (basic and diluted)

35,427

 

34,668

 

About MGE Energy

MGE Energy is a public utility holding company. Its principal subsidiary, Madison Gas and Electric, generates and distributes electricity to 155,000 customers in Dane County, Wis., and purchases and distributes natural gas to 163,000 customers in seven south-central and western Wisconsin counties. MGE's roots in the Madison area date back more than 150 years.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements include the risks and uncertainties related to the COVID-19 pandemic. Such forward-looking statements are based on MGE Energy's current expectations, estimates and assumptions regarding future events, which are inherently uncertain. We caution you not to place undue reliance on any forward-looking statements, which are made as of the date of this press release. We undertake no obligation to revise or update publicly any such forward-looking statements to reflect any change in expectations or in events, conditions or circumstances on which any such statements may be based. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to our business in general, please refer to the "Risk Factors" sections in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q during the three and nine months ended September 30, 2020, filed with the Securities and Exchange Commission.


Contacts

Steve B. Schultz
Corporate Communications Manager
608-252-7219 | This email address is being protected from spambots. You need JavaScript enabled to view it.

Ken Frassetto
Investor Relations
608-252-4723 | This email address is being protected from spambots. You need JavaScript enabled to view it.

DUBLIN--(BUSINESS WIRE)--The "Photovoltaic Market with COVID-19 Impact, by Component (Modules, Inverters), Material (Silicon, Compounds), Installation Type (Ground Mounted, BIPV), Application (Residential, Commercial & Industrial, Utilities) and Region - Global Forecast to 2025" report has been added to ResearchAndMarkets.com's offering.


The photovoltaic market has a promising growth potential due to several factors, including supportive government policies and initiatives, increasing demand for PV systems for residential applications, and decreasing cost of PV systems and energy storage devices.

The major factor restraining the growth of the photovoltaic market is the lack of a skilled workforce for PV installation and maintenance. PV installation requires a spectrum of skilled workers, ranging from PhD level scholars in R&D to technicians requiring specialized training and certification to a wide variety of other professionals for supporting all aspects of the PV industry. The industry does not have enough trained installers to handle the implementation of this technology, and the availability of appropriately skilled manpower has been one of the most prominent challenges in the PV arena. This is expected to impact the photovoltaic market negatively in the coming years.

The market is expected to decline in 2020, mainly due to the impact of COVID-19. The photovoltaic supply chain was disrupted in March and April 2020 due to the lockdown imposed by various governments and labor shortages in the PV industry due to travel restrictions, which would affect the photovoltaic market. Though the market is expected to be impacted in 2020, it is expected to start to recover by 2021 and will fully recover by 2022.

Silicon-based PV systems: The fastest-growing segment of the photovoltaic market, by material

Silicon-based PV systems are the fastest-growing segment of the photovoltaic market by material. Silicon-based photovoltaic solar panels are cost-effective. Ongoing advancements in silicon solar cell technology is the primary factor boosting the growth of the photovoltaic market. The increasing focus of players on manufacturing advanced silicon modules is also fostering market growth. Many players are making efforts to manufacture advanced silicon modules with greater efficiency. These developments are expected to propel the demand for silicon-based PV systems during the forecast period.

Ground-mounted: The largest segment of the photovoltaic market, by installation type

The photovoltaic market for the ground-mounted type is expected to hold the largest market share from 2019 to 2025. With an increasing number of utility-scale projects worldwide, the market for ground-mounted PV systems is expected to witness significant growth during the forecast period. According to the Solar Energy Industries Association (SEIA), there are more than 37,000 MW utility-scale solar projects currently operating in the US, with another 112,000 MW under development. The majority of these projects have ground-mounted installations of PV modules. This is expected to propel the market for ground-mounted type.

Asia Pacific: The fastest-growing region in the photovoltaic market

The APAC region is expected to dominate the photovoltaic market and is projected to grow at the highest CAGR during the forecast period. APAC is home to most top players in the photovoltaic market, including JinkoSolar, JA Solar, Trina Solar, and LONGi. Also, the region has countries like China and India that are at the forefront in terms of the adoption of PV systems. Moreover, the region is the largest producer and consumer of PV modules and related components. These factors are expected to propel the photovoltaic market in APAC.

Key Topics Covered:

1 Introduction

2 Research Methodology

3 Executive Summary

4 Premium Insights

5 Market Overview

5.1 Introduction

5.2 Market Dynamics

5.2.1 Drivers

5.2.1.1 Supportive Government Policies and Initiatives

5.2.1.2 Increasing Demand for PV Systems for Residential Applications

5.2.1.3 Decreasing Cost of PV Systems and Energy Storage Devices

5.2.2 Restraints

5.2.2.1 Lack of Skilled Workforce for PV Installation and Maintenance

5.2.3 Opportunities

5.2.3.1 Upsurge in Demand for Renewable Energy

5.2.3.2 Technological Advancements in Solar Cell Manufacturing

5.2.4 Challenges

5.2.4.1 Lack of Operational Land

5.3 Value Chain Analysis

5.4 Technology Analysis

5.5 Average Selling Price Trend

5.6 Case Study Analysis

5.7 Ecosystem

5.8 Patent Analysis

5.9 Regulations in Various Regions Pertaining to Photovoltaic Market

6 Photovoltaic Market, by Component

7 Photovoltaic Market, by Material

8 Photovoltaic Market, by Cell Type

9 Photovoltaic Market, by Installation Type

10 Photovoltaic Market, by Application

11 Photovoltaic Concentration Systems

12 Photovoltaic System, by Power Capacity

13 Geographic Analysis

14 Competitive Landscape

15 Company Profiles

  • Array Technologies
  • Canadian Solar
  • Chint Solar (Astronergy)
  • First Solar
  • GCL System Integration Technology
  • Hanwha Q Cells
  • Huawei
  • JA Solar
  • Jinkosolar
  • LG Electronics
  • Longi
  • Mitsubishi Electric
  • Nextracker
  • Risen Energy
  • Sharp
  • SMA Solar Technology
  • Sungrow Power Supply
  • Tongwei Solar
  • Trina Solar
  • Wuxi Suntech Power
  • Yingli Solar

For more information about this report visit https://www.researchandmarkets.com/r/p1zj06

About ResearchAndMarkets.com

ResearchAndMarkets.com is the world's leading source for international market research reports and market data. We provide you with the latest data on international and regional markets, key industries, the top companies, new products and the latest trends.


Contacts

ResearchAndMarkets.com
Laura Wood, Senior Press Manager
This email address is being protected from spambots. You need JavaScript enabled to view it.
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900

MIDLAND, Texas--(BUSINESS WIRE)--Ring Energy, Inc. (NYSEAM: REI) (“Ring”) (“Company”) has scheduled a conference call on Tuesday, November 10, 2020 at 11:00 a.m. ET to discuss the third quarter 2020 financial and operating results. Ring expects to issue a press release summarizing these results after the close of market on Monday, November 9, 2020.


To participate, dial 877-709-8150 at least five minutes before the call is to begin. Please reference the Ring Energy conference call. International callers may also participate by dialing 201-689-8354. A telephone replay will also be available for one week beginning two hours after the completion of the live call, and can be accessed by dialing 877-660-6853, or 201-612-7415 for international callers, and entering the conference ID 13713036 when prompted. The results will also be available via live and a 3 month archived webcast at https://public.viavid.com/index.php?id=142384.

About Ring Energy, Inc.

Ring Energy, Inc. is an oil and gas exploration, development and production company with current operations in Texas and New Mexico.
www.ringenergy.com

Safe Harbor Statement

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve a wide variety of risks and uncertainties, and include, without limitations, statements with respect to the Company’s strategy and prospects. Such statements are subject to certain risks and uncertainties which are disclosed in the Company’s reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2019, its Form 10Q for the quarter ended June 30, 2020 and its other filings with the SEC. Readers and investors are cautioned that the Company’s actual results may differ materially from those described in the forward-looking statements due to a number of factors, including, but not limited to, the Company’s ability to acquire productive oil and/or gas properties or to successfully drill and complete oil and/or gas wells on such properties, general economic conditions both domestically and abroad, and the conduct of business by the Company, and other factors that may be more fully described in additional documents set forth by the Company.


Contacts

Bill Parsons
K M Financial, Inc.
(702) 489-4447

DUBLIN--(BUSINESS WIRE)--The "Gas Utility Customer Analysis Ed 1 2020" database has been added to ResearchAndMarkets.com's offering.


Analyse the world population of natural gas distribution utilities by country and size. The purpose of this database report is to provide a tool to segment and target utility markets.

This database is designed as a practical resource for marketers of equipment, technology or services for gas transmission and distribution utilities.

If you sell any products, technology or services to utilities this database will enable you to target your market efficiently, whether you seek the largest utilities with expensive high-end systems or small utilities with low-cost basic products.

This database segments the world natural gas utility market:

  • 4,089 million gas distribution utilities listed
  • 380 gas transcos
  • 582 million gas customers
  • A resource to target utilities by customer base

Save money by zeroing straight in on your prime targets, the utilities which purchase these and other products and services. Some products or services involve high investment and are designed for large utilities. Many more are in the intermediate or small range. Whichever category you are in, this database provides a basic marketing resource to segment and target your market. 380 natural gas transmission utilities and 4,089 distribution utilities are listed by country and analysed by size.

Globally, there are 4 gas distribution utilities with more than 10 million customers, 12 with 5-10 million, 602 with 1-5 million and 3,471 with under 1 million.

The report is presented in Excel with 12 spreadsheets: - two summarising the global data and analysis and one for each of ten regions; Europe, CIS, Middle East, North Africa, sub-Saharan Africa, Asia, Pacific, North America, South America, and Central America.

For more information about this database visit https://www.researchandmarkets.com/r/5gvcyl

About ResearchAndMarkets.com

ResearchAndMarkets.com is the world's leading source for international market research reports and market data. We provide you with the latest data on international and regional markets, key industries, the top companies, new products and the latest trends.


Contacts

ResearchAndMarkets.com
Laura Wood, Senior Press Manager
This email address is being protected from spambots. You need JavaScript enabled to view it.
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900

Highlights


  • Third quarter net income of $14.4 million, operating income of $16.7 million and Adjusted EBITDA of $18.6 million
  • Distributable cash flow up 26% year-over-year with coverage and leverage ratios improving to 1.87 times and 4.06 times, respectively
  • Asphalt terminalling operating margin and volumes year-to-date consistent with prior year
  • Crude oil pipeline operating margin driven by a $3.6 million non-cash gain and $1.5 million cash gain from commodity derivative contracts that settled during the quarter
  • Chief Financial Officer role successfully filled with an experienced and proven financial leader
  • Partnership expects to exceed 2020 guidance

TULSA, Okla.--(BUSINESS WIRE)--Blueknight Energy Partners, L.P. (“Blueknight” or the “Partnership”) (Nasdaq: BKEP and BKEPP) today announced its financial results for the three and nine months ended September 30, 2020. Net income was $14.4 million in the third quarter 2020, compared to net income of $7.0 million for the same period in 2019. The increase in third quarter 2020 net income was the result of higher operating margins, which included a $3.6 million non-cash mark-to-market (“MTM”) gain on commodity activities related to short-term storage contracts that settled during the quarter, lower general and administrative costs, and lower interest expense. Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $18.6 million in third quarter 2020 compared to $18.1 million for the same period in 2019. Adjusted EBITDA in the third quarter 2020 excluded the non-cash MTM gain of $3.6 million and $0.2 million in transaction legal fees related to the new Ergon seven-year agreements executed during the quarter.

Our business had another solid quarter and our performance year-to-date continues to outpace last year. For the first nine months of the year, net income, Adjusted EBITDA, and distributable cash flow were higher by $1.7 million, $2.1 million and $8.0 million, respectively, versus the same period in 2019. With these results and our outlook for fourth quarter, we now expect to meet or exceed our 2020 guidance for Adjusted EBITDA, distribution coverage, and leverage,” said Andrew Woodward, Chief Executive Officer.

As we look forward, we continue to advance our strategy to transform Blueknight into a pure-play, downstream terminalling company focused on infrastructure and transportation end markets. We believe this strategy will further emphasize Blueknight’s unique and differentiated position in the market and better position the business for success over the long-term. A key step in that direction continues to be our evaluation and possible sale of all or a portion of our crude oil business, which we remain committed to progressing despite a challenging market backdrop. We expect an uncertain macroenvironment to persist into next year and are proactively managing our business and cash flow to offset any unforeseen impacts,” added Woodward.

SEGMENT RESULTS

Asphalt Terminalling Services. Total operating margin, excluding depreciation and amortization, in third quarter 2020 was $16.5 million, down 3% compared to the same period last year primarily due to lower excess throughput revenue and higher insurance premiums. Year-to-date, total throughput volumes across the Partnership’s 53 asphalt sites were essentially flat as some regions experienced near record levels of volume while others were either flat or down year-over-year. The weighted average remaining contract term for our asphalt sites was approximately six years following the successful execution of a new seven-year agreement with Ergon effective in August 2020.

Crude Oil Terminalling Services. Total operating margin, excluding depreciation and amortization, in third quarter 2020 was $3.0 million, down $0.3 million compared to the same period last year. Third quarter 2019 included revenue of $0.3 million related to an intersegment storage contract for 0.5 million barrels that ended during the fourth quarter 2019. Average third-party storage volumes increased year-over-year as the segment continues to benefit from the current contango environment. Notably, the Partnership successfully renewed one storage contract during the quarter representing 2.0 million barrels, or approximately 30% of total capacity. The storage contract was previously set to expire on December 31, 2020, and now extends through December 31, 2021, at more favorable terms.

Crude Oil Pipeline Services. Total operating margin, excluding depreciation and amortization, in third quarter 2020 was $5.7 million, up $5.0 million compared to the same period last year. Pipeline earnings were favorably impacted by a $3.6 million non-cash gain on commodity derivative transactions that settled in August 2020, which offset a corresponding unrealized loss recognized during the second quarter 2020. The Partnership realized a $1.5 million net cash gain from the related product sales during third quarter 2020. This gain offset lower pipeline volumes year-over-year, which averaged 15 thousand barrels per day during third quarter 2020.

Crude Oil Trucking Services. Total operating loss, excluding depreciation and amortization, in third quarter 2020 was $0.1 million, down $0.2 million compared to the same period last year as declines in trucking volumes tracked closely with the crude oil pipeline segment. Average trucking volumes for third quarter 2020 were 16 thousand barrels per day.

BALANCE SHEET AND CASH FLOW

Third quarter distributable cash flow was $15.2 million compared to $12.1 million for the same period in 2019. The 26% increase was attributable to lower cash interest payments, lower maintenance capital expenditures, and improved business performance. The calculated coverage ratio on all distributions was 1.87 times for third quarter of 2020 versus 1.49 times for the same period in 2019.

Net capital expenditures in third quarter 2020 were $4.5 million, which included $1.2 million of net maintenance capital and $1.7 million related to the buy-out of operating leases for our crude oil transportation trucks. At September 30, 2020, total debt was $260.6 million. This resulted in a leverage ratio of 4.06 times versus 4.24 times for the same period last year. At September 30, 2020, total availability under the credit facility was approximately $137.7 million, and availability subject to covenant restrictions was $44.8 million. As of October 30, 2020, total debt was $255.6 million.

CONFERENCE CALL DETAILS

The Partnership will discuss third quarter 2020 results during a conference call tomorrow, Thursday, November 5, 2020, at 10:00 a.m. CDT (11:00 a.m. EDT). The conference call will be accessible by telephone at 1-855-327-6837. International participants will be able to access the conference call at 1-631-891-4304. Participants are requested to dial in five to ten minutes before the scheduled start time. An audio replay will be available through the “Investors” section of the Partnership’s website at investor.bkep.com.

Additional information regarding the Partnership’s results of operations will be provided in the Partnership’s Quarterly Report on Form 10-Q for the three months ended September 30, 2020, to be filed with the SEC on November 5, 2020.

Results of Operations

The following table summarizes the Partnership’s financial results for the three and nine months ended September 30, 2019 and 2020 (in thousands, except per unit data):

 

 

 

Three Months ended
September 30,

 

Nine Months ended
September 30,

 

 

2019

 

2020

 

2019

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third-party revenue

 

$

15,716

 

 

$

12,886

 

 

$

47,318

 

 

$

39,935

 

Related-party revenue

 

 

3,934

 

 

 

4,849

 

 

 

12,189

 

 

 

12,945

 

Lease revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third-party revenue

 

 

11,444

 

 

 

9,142

 

 

 

31,004

 

 

 

27,051

 

Related-party revenue

 

 

5,427

 

 

 

7,490

 

 

 

15,179

 

 

 

19,239

 

Product sales revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third-party revenue

 

 

55,213

 

 

 

51,390

 

 

 

173,773

 

 

 

119,068

 

Total revenue

 

 

91,734

 

 

 

85,757

 

 

 

279,463

 

 

 

218,238

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense

 

 

25,215

 

 

 

23,715

 

 

 

78,432

 

 

 

73,066

 

Cost of product sales

 

 

18,972

 

 

 

19,833

 

 

 

64,069

 

 

 

41,133

 

Cost of product sales from related party

 

 

32,691

 

 

 

22,627

 

 

 

99,886

 

 

 

63,671

 

General and administrative expense

 

 

3,840

 

 

 

3,401

 

 

 

10,495

 

 

 

11,008

 

Asset impairment expense

 

 

83

 

 

 

-

 

 

 

2,316

 

 

 

6,417

 

Total costs and expenses

 

 

80,801

 

 

 

69,576

 

 

 

255,198

 

 

 

195,295

 

Gain (loss) on disposal of assets

 

 

(40

)

 

 

509

 

 

 

1,765

 

 

 

426

 

Operating income

 

 

10,893

 

 

 

16,690

 

 

 

26,030

 

 

 

23,369

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

69

 

 

 

176

 

 

 

475

 

 

 

969

 

Interest expense

 

 

(3,989

)

 

 

(2,472

)

 

 

(12,394

)

 

 

(8,586

)

Income before income taxes

 

 

6,973

 

 

 

14,394

 

 

 

14,111

 

 

 

15,752

 

Provision for income taxes

 

 

14

 

 

 

1

 

 

 

39

 

 

 

8

 

Net income

 

$

6,959

 

 

$

14,393

 

 

$

14,072

 

 

$

15,744

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allocation of net income(loss) for calculation of earnings per unit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General partner interest in net income

 

$

110

 

 

$

228

 

 

$

268

 

 

$

249

 

Preferred interest in net income

 

$

6,278

 

 

$

6,278

 

 

$

18,836

 

 

$

18,836

 

Net income (loss) available to limited partners

 

$

571

 

 

$

7,887

 

 

$

(5,032

)

 

$

(3,341

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per common unit

 

$

0.01

 

 

$

0.19

 

 

$

(0.12

)

 

$

(0.08

)

Diluted net income (loss) per common unit(1)

 

$

0.01

 

 

$

0.18

 

 

$

(0.12

)

 

$

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common units outstanding - basic

 

 

40,811

 

 

 

41,166

 

 

 

40,735

 

 

 

41,072

 

Weighted average common units outstanding - diluted(1)

 

 

40,811

 

 

 

77,646

 

 

 

40,735

 

 

 

41,072

 

(1)

Diluted earnings per unit is calculated by adding the Preferred interest in net income to the Net income(loss) available to limited partners and dividing by the total number of common and preferred units outstanding. This amount is only reported if the result is lower than the basic earnings per unit calculation.

 

The table below summarizes the Partnership’s financial results by segment operating margin, excluding depreciation and amortization for the three and nine months ended September 30, 2019 and 2020 (dollars in thousands):

 

 

 

Three Months ended

 

Nine Months ended

 

Favorable/(Unfavorable)

Operating results

 

September 30,

 

September 30,

 

Three Months

 

Nine Months

 

 

2019

 

2020

 

2019

 

2020

 

$

 

%

 

$

 

%

Operating margin, excluding depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asphalt terminalling services

 

$

17,068

 

 

$

16,477

 

 

$

44,274

 

 

$

44,297

 

 

$

(591

)

 

 

(3

)%

 

$

23

 

 

 

0

%

Crude oil terminalling services

 

 

3,286

 

 

 

2,967

 

 

 

9,146

 

 

 

9,456

 

 

 

(319

)

 

 

(10

)%

 

 

310

 

 

 

3

%

Crude oil pipeline services

 

 

614

 

 

 

5,661

 

 

 

2,738

 

 

 

4,473

 

 

 

5,047

 

 

 

822

%

 

 

1,735

 

 

 

63

%

Crude oil trucking services

 

 

128

 

 

 

(85

)

 

 

129

 

 

 

(160

)

 

 

(213

)

 

 

(166

)%

 

 

(289

)

 

 

(224

)%

Total operating margin, excluding depreciation and amortization

 

$

21,096

 

 

$

25,020

 

 

$

56,287

 

 

$

58,066

 

 

$

3,924

 

 

 

19

%

 

$

1,779

 

 

 

3

%

Non-GAAP Financial Measures

This press release contains the non-GAAP financial measures of Adjusted EBITDA, distributable cash flow and total operating margin, excluding depreciation and amortization. Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, non-cash equity-based compensation, asset impairment charges, gains and losses on asset sales, and other select items which management feels decreases the comparability of results among periods. Distributable cash flow is defined as Adjusted EBITDA minus cash paid for interest, maintenance capital expenditures, cash paid for taxes, and other select items which management feels decreases the comparability of results among periods. Operating margin, excluding depreciation and amortization is defined as revenues from related parties and external customers less operating expenses, excluding depreciation and amortization. The use of Adjusted EBITDA, distributable cash flow and operating margin, excluding depreciation and amortization should not be considered as alternatives to GAAP measures such as operating income, net income or cash flows from operating activities. Adjusted EBITDA, distributable cash flow and operating margin, excluding depreciation and amortization are presented because the Partnership believes they provide additional information with respect to its business activities and are used as supplemental financial measures by management and external users of the Partnership’s financial statements, such as investors, commercial banks and others to assess, among other things, the Partnership’s operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure. Reconciliations of these measures to their most directly comparable GAAP measures are included in the following tables.

The following table presents a reconciliation of Adjusted EBITDA and distributable cash flow to net income for the periods shown (in thousands, except ratios):

 

 

 

Three Months ended
September 30,

 

Nine Months ended
September 30,

 

 

2019

 

2020

 

2019

 

2020

Net income

 

$

6,959

 

 

$

14,393

 

 

$

14,072

 

 

$

15,744

 

Interest expense

 

 

3,989

 

 

 

2,472

 

 

 

12,394

 

 

 

8,586

 

Income taxes

 

 

14

 

 

 

1

 

 

 

39

 

 

 

8

 

Depreciation and amortization

 

 

6,240

 

 

 

5,438

 

 

 

19,211

 

 

 

17,698

 

Non-cash equity-based compensation

 

 

286

 

 

 

220

 

 

 

879

 

 

 

750

 

Asset impairment expense

 

 

83

 

 

 

-

 

 

 

2,316

 

 

 

6,417

 

(Gain) loss on disposal of assets

 

 

40

 

 

 

(509

)

 

 

(1,765

)

 

 

(426

)

Non-cash gain on commodity derivatives(1)

 

 

-

 

 

 

(3,589

)

 

 

-

 

 

 

-

 

Other

 

 

443

 

 

 

160

 

 

 

443

 

 

 

895

 

Adjusted EBITDA

 

$

18,054

 

 

$

18,586

 

 

$

47,589

 

 

$

49,672

 

Cash paid for interest

 

 

(3,844

)

 

 

(2,131

)

 

 

(11,817

)

 

 

(7,817

)

Cash paid for income taxes

 

 

(1

)

 

 

(54

)

 

 

(219

)

 

 

(55

)

Maintenance capital expenditures, net of reimbursable expenditures

 

 

(2,127

)

 

 

(1,224

)

 

 

(7,256

)

 

 

(5,514

)

Distributable cash flow

 

$

12,082

 

 

$

15,177

 

 

$

28,297

 

 

$

36,286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared(2)

 

 

8,083

 

 

 

8,109

 

 

 

24,248

 

 

 

24,326

 

Distribution coverage ratio

 

 

1.49

 

 

 

1.87

 

 

 

1.17

 

 

 

1.49

 

__________________________

(1)

Derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The Partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and the related products are sold. In the third quarter of 2020, the derivative transactions were settled and the related products were sold, thus, the net impact of the derivatives was included in DCF.

(2)

Inclusive of preferred and common unit declared cash distributions.

The following table presents a reconciliation of total operating margin, excluding depreciation and amortization to operating income for the periods shown (dollars in thousands):

 

 

 

Three Months ended

 

Nine Months ended

 

Favorable/(Unfavorable)

 

 

September 30,

 

September 30,

 

Three Months

 

Nine Months

 

 

2019

 

2020

 

2019

 

2020

 

$

 

%

 

$

 

%

Total operating margin, excluding depreciation and amortization

 

$

21,096

 

 

$

25,020

 

 

$

56,287

 

 

$

58,066

 

 

$

3,924

 

 

 

19

%

 

$

1,779

 

 

 

3

%

Depreciation and amortization

 

 

(6,240

)

 

 

(5,438

)

 

 

(19,211

)

 

 

(17,698

)

 

 

802

 

 

 

13

%

 

 

1,513

 

 

 

8

%

General and administrative expense

 

 

(3,840

)

 

 

(3,401

)

 

 

(10,495

)

 

 

(11,008

)

 

 

439

 

 

 

11

%

 

 

(513

)

 

 

(5

)%

Asset impairment expense

 

 

(83

)

 

 

-

 

 

 

(2,316

)

 

 

(6,417

)

 

 

83

 

 

 

100

%

 

 

(4,101

)

 

 

(177

)%

Gain (loss) on disposal of assets

 

 

(40

)

 

 

509

 

 

 

1,765

 

 

 

426

 

 

 

549

 

 

 

1,373

%

 

 

(1,339

)

 

 

(76

)%

Operating income

 

$

10,893

 

 

$

16,690

 

 

$

26,030

 

 

$

23,369

 

 

$

5,797

 

 

 

53

%

 

$

(2,661

)

 

 

(10

)%

Forward-Looking Statements

This release includes forward-looking statements. Statements included in this release that are not historical facts (including, without limitation, any statements about future financial and operating results, guidance, projected or forecasted financial results, objectives, project timing, expectations and intentions and other statements that are not historical facts) are forward-looking statements. Such forward-looking statements are subject to various risks and uncertainties. These risks and uncertainties include, among other things, uncertainties relating to the Partnership’s debt levels and restrictions in its credit agreement, its exposure to the credit risk of our third-party customers, the Partnership’s future cash flows and operations, future market conditions, current and future governmental regulation, future taxation and other factors discussed in the Partnership’s filings with the Securities and Exchange Commission. If any of these risks or uncertainties materializes, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those expected. The Partnership undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

About Blueknight Energy Partners, L.P.

Blueknight owns and operates a diversified portfolio of complementary midstream energy assets consisting of:

  • 8.8 million barrels of liquid asphalt storage located at 53 terminals in 26 states;
  • 6.9 million barrels of above-ground crude oil storage capacity located primarily in Oklahoma, approximately 6.6 million barrels of which are located at the Cushing Interchange terminalling facility in Cushing, Oklahoma;
  • 604 miles of crude oil pipeline located primarily in Oklahoma; and
  • 63 crude oil transportation vehicles deployed in Oklahoma and Texas.

Blueknight provides integrated terminalling, gathering and transportation services for companies engaged in the production, distribution and marketing of liquid asphalt and crude oil. Blueknight is headquartered in Tulsa, Oklahoma. For more information, visit the Partnership’s website at www.bkep.com.


Contacts

Blueknight Investor Relations
Chase Jacobson, (918) 237-4032
This email address is being protected from spambots. You need JavaScript enabled to view it.

  • Narrowing 2020 Adjusted EBITDA and increasing FCFbG guidance; maintaining 2021 Adjusted EBITDA and lowering FCFbG guidance due to deferral of certain items into 2021
  • Direct Energy acquisition on track to close by year end; updated financing plan no longer requires new equity issuance
  • Ongoing portfolio optimization, targeting a minimum $250 million equity proceed over next 6-12 months

PRINCETON, N.J.--(BUSINESS WIRE)--$NRG #earnings--NRG Energy, Inc. (NYSE: NRG) today reported third quarter 2020 income from continuing operations of $249 million, or $1.02 per diluted common share and Adjusted EBITDA for the Third quarter of $752 million.

“Our business performed well during the important summer months, delivering stable results amid the COVID-19 pandemic,” said Mauricio Gutierrez, NRG President and Chief Executive Officer. "As we move towards the end of the year, we look forward to closing the Direct Energy acquisition and continue advancing our customer-centric strategy.”

Consolidated Financial Resultsa

 

 

Three Months Ended

 

 

Nine Months Ended

($ in millions)

 

9/30/2020

 

9/30/2019

 

 

9/30/2020

 

9/30/2019

Income from Continuing Operations

 

$

249

 

 

$

374

 

 

 

$

683

 

 

$

657

 

Cash provided by Continuing Operations

 

$

694

 

 

$

472

 

 

 

$

1,386

 

 

$

889

 

Adjusted EBITDA

 

$

752

 

 

$

792

 

 

 

$

1,674

 

 

$

1,593

 

Free Cash Flow Before Growth Investments (FCFbG)

 

$

630

 

 

$

433

 

 

 

$

1,199

 

 

$

673

 

a. In accordance with GAAP, 2019 results have been recast to reflect the discontinued operations of the South Central Portfolio and Carlsbad Energy Center

Segments Results

Table 1: Income/(Loss) from Continuing Operations

($ in millions)

 

Three Months Ended

 

Nine Months Ended

Segment

 

9/30/2020

 

9/30/2019

 

9/30/2020

 

9/30/2019

Texas

 

$

288

 

 

$

348

 

 

$

800

 

 

$

757

 

East

 

149

 

 

121

 

 

319

 

 

280

 

West/Othera

 

(188)

 

 

(95)

 

 

(436)

 

 

(380)

 

Income from Continuing Operationsb

 

$

249

 

 

$

374

 

 

$

683

 

 

$

657

 

a. Includes Corporate segment

b. In accordance with GAAP, 2019 results have been recast to reflect the discontinued operations of the South Central Portfolio and Carlsbad Energy Center.

Table 2: Adjusted EBITDA

($ in millions)

 

Three Months Ended

 

Nine Months Ended

Segment

 

9/30/2020

 

9/30/2019

 

9/30/2020

 

9/30/2019

Texas

 

$

514

 

 

$

581

 

 

$

1,087

 

 

$

1,085

 

East

 

146

 

 

143

 

 

374

 

 

380

 

West/Othera

 

92

 

 

68

 

 

213

 

 

128

 

Adjusted EBITDAb

 

$

752

 

 

$

792

 

 

$

1,674

 

 

$

1,593

 

a. Includes Corporate segment

b. In accordance with GAAP, 2019 results have been recast to reflect the discontinued operations of the South Central Portfolio and Carlsbad Energy Center.

Texas: Third quarter Adjusted EBITDA was $514 million, $67 million lower than third quarter of 2019. This decrease is driven by a reduction of load due to weather and COVID-19 partially offset by lower supply costs resulting from reductions in power and fuel prices.

East: Third quarter Adjusted EBITDA was $146 million, $3 million higher than third quarter of 2019. This increase is driven by higher gross margins and increased sales of portable power products; partially offset by lower capacity revenues and higher operating expenses.

West/Other: Third quarter Adjusted EBITDA was $92 million, $24 million higher than third quarter of 2019. This increase is driven by higher gross margin primarily due to MISO uplift payments resulting from out-of-market dispatch during an extreme weather event and increased California resource adequacy pricing, partially offset by lower realized pricing in the West, lower generation from forced outages at Cottonwood facility in 2020 and the sales of emissions in 2019.

Liquidity and Capital Resources
Table 3: Corporate Liquidity

($ in millions)

 

09/30/20

 

12/31/19

Cash and Cash Equivalents

 

$

697

 

 

$

345

 

Restricted Cash

 

6

 

 

8

Total

 

$

703

 

 

$

353

 

Total credit facility availability

 

2,815

 

 

1,794

 

Total Liquidity, excluding collateral received

 

$

3,518

 

 

$

2,147

 

As of September 30, 2020, NRG cash was at $0.7 billion, and $2.8 billion was available under the Company’s credit facilities. Total liquidity was $3.5 billion, including restricted cash. Overall liquidity as of the end of the third quarter 2020 was approximately $1.4 billion higher than at the end of 2019, driven by improved cash from operations and the increase in credit facilities of approximately $0.9 billion during the third quarter. This increase in credit facilities reflects mainly the additional liquidity associated with the new Receivables Securitization and Repurchase facilities but excludes the additional commitments to the Company's existing revolving credit facility which become available coincident with the closing of the Direct Energy acquisition.

NRG Strategic Developments

Acquisition of Direct Energy

On July 24, 2020, the Company entered into a definitive purchase agreement with Centrica to acquire Direct Energy. Direct Energy is a leading retail provider of electricity, natural gas, and home and business energy related products and services in North America.

The Company will pay an aggregate purchase price of $3.625 billion in cash, subject to purchase price adjustment, including a working capital adjustment. The Company updated its financing plan and is now expecting to fund the purchase price using a combination of increased cash on hand and approximately $2.9 billion in newly-issued secured and unsecured corporate debt — a $0.5 billion increase from the previous estimate. The portion of the purchase price previously expected to be funded by $750 million in equity/equity-linked securities is now expected to be funded with a combination of the expected increases of 2020 cash on hand and debt to be repaid in 2021 with future targeted asset sale proceeds.

As part of NRG’s ongoing portfolio optimization strategy, NRG expects to realize a minimum $250 million net proceeds (net of debt repayment associated with assets sold) over the next 6-12 months from ongoing and prospective monetization of non-core assets and businesses. The first $200 million in net proceeds will be used to repay a portion of the increased leverage associated with Direct Energy acquisition in order to maintain investment grade metrics in 2021 and any additional proceeds will be available for capital allocation.

The acquisition remains on track to close by year end 2020. The shareholders of Centrica approved the acquisition on August 20, 2020. The transaction has received approvals under the Canadian Competition Act and early termination of the waiting period under the HSR Act has been granted. The transaction remains subject to customary closing conditions, including the receipt of approval under the Federal Power Act.

Increase in collateral facilities to support the acquisition of Direct Energy

During the third quarter, the Company amended its existing credit agreement to, among other things, increase the existing revolving commitments by an aggregate amount of $1,075 million. The increase will become effective upon closing of the Direct Energy acquisition and total revolving commitments available at that time, and subject to usage, will be $3.7 billion.

In September 2020, the Company also entered into a revolving accounts receivable financing facility for an amount up to $750 million, subject to adjustments on a seasonal basis, and an uncommitted repurchase facility related to the Receivable Securitization for up to $75 million.

Finally, as of November 5, 2020, the Company had extended and increased its existing $80 million CDS LC facility by an incremental $87 million.

The incremental liquidity available under these facilities will cover approximately $2.0 billion of the $3.5 billion of incremental collateral needs associated with the Direct Energy acquisition.

Midwest Generation lease buyout

On September 29, 2020, Midwest Generation, LLC closed on the purchase agreement and acquired all of the ownership interests in the Powerton facility and Units 7 and 8 of the Joliet facility, which were being leased through 2034 and 2030, respectively, for approximately $260 million. The Company has initially funded the purchase with cash on hand and expects that before year end NRG will borrow under its Revolving Credit Facility in an amount equal to the operating lease liability of $148 million.

COVID-19

In March 2020, the World Health Organization categorized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency. Electricity was deemed a 'critical and essential business operation' under various state and federal governmental COVID-19 mandates. NRG had activated its Crisis Management Team ("CMT") in January 2020 to proactively manage the Company's response to the impacts of COVID-19.

NRG continues to remain focused on protecting the health and well-being of its employees, while supporting its customers and the communities in which it operates and assuring the continuity of its operations. In June 2020, summer-critical office employees returned to the offices and safety protocols were successfully implemented. The Company will continue to evaluate additional return to normal work operations on a location by location basis as COVID-19 conditions evolve.

The Company continues to maintain certain restrictions on business travel and face-to-face sales channels, remote work practices remain in place and there are enhanced cleaning and hygiene protocols in all of its facilities. In addition, select essential employees and contractors are continuing to report to plant and certain office locations. The Company also continues to require pre-entry screening, including temperature checks, separation of work crews, additional personal protective equipment for employees and contractors when social distancing cannot be maintained, and a ban on all non-essential visitors. The Company has not experienced any material disruptions in its ability to continue its business operations to date.

2020 and 2021 Guidance

NRG has narrowed the range of its Adjusted EBITDA guidance, while increasing Cash From Operations and Free Cash Flow before Growth Investments (FCFbG) guidance for 2020; NRG is maintaining its Adjusted EBITDA guidance for fiscal year 2021 while lowering its Cash Flow From Operations and FCFbG guidance due to the deferral of certain cash flow items into 2021.

Table 4: 2020 and 2021 Adjusted EBITDA, Cash from Operations, and FCFbG Guidance

 

2020

 

2021

($ in millions)

Narrowed Guidance

 

Updated Guidance

Adjusted EBITDAa

$1,950-$2,050

 

$1,900-$2,100

Cash From Operations

$1,590-$1,690

 

$1,350-$1,550

FCFbG

$1,450-$1,550

 

$1,200-$1,400

a. Non-GAAP financial measure; see Appendix Tables A-5 for GAAP Reconciliation to Net Income that excludes fair value adjustments related to derivatives. The Company is unable to provide guidance for Net Income due to the impact of such fair value adjustments related to derivatives in a given year

Capital Allocation Update

As part of the Company's long-term capital allocation policy, the return of capital to shareholders during the nine months ending September 30, 2020 was comprised of a quarterly dividend of $.30 per share, or $221 million, and share repurchases of $228 million through August 6, 2020 at an average price of $33.05 per share. Upon completion of the previously announced November 2020 dividend, the total amount of capital returned to shareholders during 2020 will be $523 million.

The Company does not anticipate executing any further share repurchases over the remainder of 2020 and has allocated all of its remaining 2020 excess capital to fund the Direct Energy acquisition.

The Company's common stock dividend, debt reduction and share repurchases are subject to available capital, market conditions and compliance with associated laws and regulations.

Earnings Conference Call

On November 5, 2020, NRG will host a conference call at 9:00 a.m. Eastern to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials by logging on to NRG’s website at www.nrg.com and clicking on “Investors” then "Presentations & Webcasts." The webcast will be archived on the site for those unable to listen in real time.

About NRG

At NRG, we’re bringing the power of energy to people and organizations by putting customers at the center of everything we do. We generate electricity and provide energy solutions and natural gas to more than 3.7 million residential, small business, and commercial and industrial customers through our diverse portfolio of retail brands. A Fortune 500 company, operating in the United States and Canada, NRG delivers innovative solutions while advocating for competitive energy markets and customer choice, and by working towards a sustainable energy future. More information is available at www.nrg.com. Connect with NRG on Facebook, LinkedIn and follow us on Twitter @nrgenergy.

Forward-Looking Statements

In addition to historical information, the information presented in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These statements involve estimates, expectations, projections, goals, assumptions, known and unknown risks and uncertainties and can typically be identified by terminology such as “may,” “should,” “could,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,” “intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,” “predict,” “target,” “potential” or “continue” or the negative of these terms or other comparable terminology. Such forward-looking statements include, but are not limited to, statements about the Company’s future revenues, income, indebtedness, capital structure, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.

Although NRG believes that its expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated herein include, among others, the potential impact of COVID-19 or any other pandemic on the Company’s operations, financial position, risk exposure and liquidity, general economic conditions, hazards customary in the power industry, weather conditions, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulations, the condition of capital markets generally, our ability to access capital markets, cyberterrorism and inadequate cybersecurity, unanticipated outages at our generation facilities, adverse results in current and future litigation, failure to identify, execute or successfully implement acquisitions, repowerings or asset sales, our ability to implement value enhancing improvements to plant operations and companywide processes, our ability to achieve margin enhancement under our publicly announced transformation plan, our ability to achieve our net debt targets, our ability to maintain investment grade credit metrics, our ability to proceed with projects under development or the inability to complete the construction of such projects on schedule or within budget, the inability to maintain or create successful partnering relationships, our ability to operate our business efficiently, our ability to retain retail customers, our ability to realize value through our commercial operations strategy, the ability to consummate the Direct Energy acquisition, the ability to successfully integrate businesses of acquired companies including Direct Energy, our ability to realize anticipated benefits of transactions (including expected cost savings and other synergies) or the risk that anticipated benefits may take longer to realize than expected, and our ability to execute our Capital Allocation Plan. Achieving investment grade credit metrics is not a indication of or guarantee that the Company will receive investment grade credit ratings. Debt and share repurchases may be made from time to time subject to market conditions and other factors, including as permitted by United States securities laws. Furthermore, any common stock dividend is subject to available capital and market conditions.

NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The adjusted EBITDA, free cash flow guidance and excess cash guidance are estimates as of November 5, 2020. These estimates are based on assumptions the company believed to be reasonable as of that date. NRG disclaims any current intention to update such guidance, except as required by law. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this press release should be considered in connection with information regarding risks and uncertainties that may affect NRG's future results included in NRG's filings with the Securities and Exchange Commission at www.sec.gov.

NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 

Three months ended
September 30,

 

Nine months ended
September 30,

(In millions, except for per share amounts)

2020

 

2019

 

2020

 

2019

Operating Revenues

 

 

 

 

 

 

 

Total operating revenues

$

2,809

 

 

$

2,996

 

 

$

7,066

 

 

$

7,626

 

Operating Costs and Expenses

 

 

 

 

 

 

 

Cost of operations

2,034

 

 

2,153

 

 

4,925

 

 

5,649

 

Depreciation and amortization

99

 

 

91

 

 

318

 

 

261

 

Impairment losses

29

 

 

 

 

29

 

 

1

 

Selling, general and administrative costs

253

 

 

210

 

 

670

 

 

615

 

Reorganization costs

 

 

1

 

 

3

 

 

16

 

Development costs

1

 

 

1

 

 

6

 

 

5

 

Total operating costs and expenses

2,416

 

 

2,456

 

 

5,951

 

 

6,547

 

Gain on sale of assets

 

 

 

 

6

 

 

2

 

Operating Income

393

 

 

540

 

 

1,121

 

 

1,081

 

Other Income/(Expense)

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates

36

 

 

29

 

 

37

 

 

8

 

Impairment losses on investments

 

 

(107)

 

 

(18)

 

 

(107)

 

Other income, net

11

 

 

17

 

 

52

 

 

49

 

Loss on debt extinguishment, net

 

 

 

 

(1)

 

 

(47)

 

Interest expense

(99)

 

 

(99)

 

 

(292)

 

 

(318)

 

Total other expense

(52)

 

 

(160)

 

 

(222)

 

 

(415)

 

Income from Continuing Operations Before Income Taxes

341

 

 

380

 

 

899

 

 

666

 

Income tax expense

92

 

 

6

 

 

216

 

 

9

 

Income from Continuing Operations

249

 

 

374

 

 

683

 

 

657

 

(Loss)/income from discontinued operations, net of income tax

 

 

(2)

 

 

 

 

399

 

Net Income

249

 

 

372

 

 

683

 

 

1,056

 

Less: Net income attributable to redeemable noncontrolling interests

 

 

 

 

 

 

1

 

Net Income Attributable to NRG Energy, Inc

$

249

 

 

$

372

 

 

$

683

 

 

$

1,055

 

Earnings per Share

 

 

 

 

 

 

 

Weighted average number of common shares outstanding — basic

244

 

 

254

 

 

246

 

 

266

 

Income from continuing operations per weighted average common share — basic

$

1.02

 

 

$

1.47

 

 

$

2.78

 

 

$

2.47

 

(Loss)/income from discontinued operations per weighted average common share — basic

$

 

 

$

(0.01)

 

 

$

 

 

$

1.50

 

Earnings per Weighted Average Common Share — Basic

$

1.02

 

 

$

1.46

 

 

$

2.78

 

 

$

3.97

 

Weighted average number of common shares outstanding — diluted

245

 

 

256

 

 

247

 

 

268

 

Income from continuing operations per weighted average common share — diluted

$

1.02

 

 

$

1.46

 

 

$

2.77

 

 

$

2.45

 

(Loss)/income from discontinued operations per weighted average common share — diluted

$

 

 

$

(0.01)

 

 

$

 

 

$

1.49

 

Earnings per Weighted Average Common Share — Diluted

$

1.02

 

 

$

1.45

 

 

$

2.77

 

 

$

3.94

 

NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

2020

 

2019

 

2020

 

2019

 

(In millions)

Net Income

$

249

 

 

$

372

 

 

$

683

 

 

$

1,056

 

Other Comprehensive Income/(Loss)

 

 

 

 

 

 

 

Foreign currency translation adjustments

4

 

 

(4)

 

 

2

 

 

(4)

 

Available-for-sale securities

 

 

(14)

 

 

 

 

(13)

 

Defined benefit plans

 

 

(41)

 

 

 

 

(47)

 

Other comprehensive income/(loss)

4

 

 

(59)

 

 

2

 

 

(64)

 

Comprehensive Income

253

 

 

313

 

 

685

 

 

992

 

Less: Comprehensive income attributable to redeemable noncontrolling interest

 

 

 

 

 

 

1

 

Comprehensive Income Attributable to NRG Energy, Inc

$

253

 

 

$

313

 

 

$

685

 

 

$

991

 

 

 

 

 

 

 

 

 

NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

 

September 30, 2020

 

December 31, 2019

(In millions, except share data)

(Unaudited)

 

(Audited)

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

$

697

 

 

$

345

 

Funds deposited by counterparties

15

 

 

32

 

Restricted cash

6

 

 

8

 

Accounts receivable, net

1,126

 

 

1,025

 

Inventory

330

 

 

383

 

Derivative instruments

578

 

 

860

 

Cash collateral paid in support of energy risk management activities

77

 

 

190

 

Prepayments and other current assets

258

 

 

245

 

Total current assets

3,087

 

 

3,088

 

Property, plant and equipment, net

2,573

 

 

2,593

 

Other Assets

 

 

 

Equity investments in affiliates

376

 

 

388

 

Operating lease right-of-use assets, net

345

 

 

464

 

Goodwill

579

 

 

579

 

Intangible assets, net

721

 

 

789

 

Nuclear decommissioning trust fund

828

 

 

794

 

Derivative instruments

315

 

 

310

 

Deferred income taxes

3,087

 

 

3,286

 

Other non-current assets

314

 

 

240

 

Total other assets

6,565

 

 

6,850

 

Total Assets

$

12,225

 

 

$

12,531

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current Liabilities

 

 

 

Current portion of long-term debt

$

3

 

 

$

88

 

Current portion of operating lease liabilities

69

 

 

73

 

Accounts payable

753

 

 

722

 

Derivative instruments

495

 

 

781

 

Cash collateral received in support of energy risk management activities

15

 

 

32

 

Accrued expenses and other current liabilities

651

 

 

663

 

Total current liabilities

1,986

 

 

2,359

 

Other Liabilities

 

 

 

Long-term debt

5,792

 

 

5,803

 

Non-current operating lease liabilities

297

 

 

483

 

Nuclear decommissioning reserve

311

 

 

298

 

Nuclear decommissioning trust liability

508

 

 

487

 

Derivative instruments

318

 

 

322

 

Deferred income taxes

17

 

 

17

 

Other non-current liabilities

1,062

 

 

1,084

 

Total other liabilities

8,305

 

 

8,494

 

Total Liabilities

10,291

 

 

10,853

 

Redeemable noncontrolling interest in subsidiaries

 

 

20

 

Commitments and Contingencies

 

 

 

Stockholders' Equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 423,041,349 and 421,890,790 shares issued and 244,147,420
and 248,996,189 shares outstanding at September 30, 2020 and December 31, 2019, respectively

4

 

 

4

 

Additional paid-in-capital

8,511

 

 

8,501

 

Accumulated deficit

(1,157)

 

 

(1,616)

 

Less treasury stock, at cost - 178,893,929 and 172,894,601 shares at September 30, 2020 and December 31, 2019, respectively

(5,234)

 

 

(5,039)

 

Accumulated other comprehensive loss

(190)

 

 

(192)

 

Total Stockholders' Equity

1,934

 

 

1,658

 

Total Liabilities and Stockholders' Equity

$

12,225

 

 

$

12,531

 

NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

Nine months ended September 30,

(In millions)

2020

 

2019

Cash Flows from Operating Activities

 

 

 

Net Income

$

683

 

 

$

1,056

 

Income from discontinued operations, net of income tax

 

 

399

 

Income from continuing operations

683

 

 

657

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

Distributions from and equity in losses/(earnings) of unconsolidated affiliates

6

 

 

(5)

 

Depreciation and amortization

318

 

 

261

 

Accretion of asset retirement obligations

46

 

 

31

 

Provision for credit losses

74

 

 

87

 

Amortization of nuclear fuel

40

 

 

40

 

Amortization of financing costs and debt discount/premiums

23

 

 

20

 

Loss on debt extinguishment, net

1

 

 

47

 

Amortization of emissions allowances and energy credits

60

 

 

28

 

Amortization of unearned equity compensation

17

 

 

15

 

Gain on sale and disposal of assets

(22)

 

 

(20)

 

Impairment losses

47

 

 

108

 

Changes in derivative instruments

(7)

 

 

36

 

Changes in deferred income taxes and liability for uncertain tax benefits

202

 

 

(3)

 

Changes in collateral deposits in support of energy risk management activities

96

 

 

129

 

Changes in nuclear decommissioning trust liability

39

 

 

27

 

Changes in other working capital

(237)

 

 

(569)

 

Cash provided by continuing operations

1,386

 

 

889

 

Cash provided by discontinued operations

 

 

8

 

Net Cash Provided by Operating Activities

1,386

 

 

897

 

Cash Flows from Investing Activities

 

 

 

Payments for acquisitions of assets and businesses

(277)

 

 

(348)

 

Capital expenditures

(167)

 

 

(183)

 

Net proceeds from notes receivable

 

 

2

 

Net (purchases)/sales of emission allowances

(15)

 

 

14

 

Investments in nuclear decommissioning trust fund securities

(360)

 

 

(295)

 

Proceeds from the sale of nuclear decommissioning trust fund securities

318

 

 

271

 

Proceeds from sale of assets, net of cash disposed and sale of discontinued operations, net of fees

15

 

 

1,293

 

Changes in investments in unconsolidated affiliates

2

 

 

(94)

 

Contributions to discontinued operations

 

 

(44)

 

Cash (used)/provided by continuing operations

(484)

 

 

616

 

Cash used by discontinued operations

 

 

(2)

 

Net Cash (Used)/Provided by Investing Activities

(484)

 

 

614

 

Cash Flows from Financing Activities

 

 

 

Payments of dividends to common stockholders

(221)

 

 

(24)

 

Payments for share repurchase activity

(229)

 

 

(1,322)

 

Payments for debt extinguishment costs

 

 

(24)

 

Purchase of and distributions to noncontrolling interests from subsidiaries

(2)

 

 

(1)

 

Proceeds from issuance of common stock

1

 

 

3

 

Proceeds from issuance of long-term debt

59

 

 

2,668

 

Payments of debt issuance costs

(24)

 

 

(34)

 

Repayments of long-term debt

(62)

 

 

(2,892)

 

Net repayments of Revolving Credit Facility

(83)

 

 

(215)

 

Other

(6)

 

 

 

Cash used by continuing operations

(567)

 

 

(1,841)

 

Cash provided by discontinued operations

 

 

43

 

Net Cash Used by Financing Activities

(567)

 

 

(1,798)

 

Effect of exchange rate changes on cash and cash equivalents

(2)

 

 

 

Change in Cash from discontinued operations

 

 

49

 

Net Increase/(Decrease) in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash..

333

 

 

(336)

 

Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period

385

 

 

613

 

Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period

$

718

 

 

$

277

 


Contacts

Media:
Candice Adams
609.524.5428

Investors:
Kevin L. Cole, CFA
609.524.4526


Read full story here

HOUSTON--(BUSINESS WIRE)--SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or the “Company”) today announced operating and financial results for the third quarter of 2020. Highlights include:


  • Net production averaged approximately 183 million cubic feet of natural gas equivalent per day (“MMcfe/d”), above the high end of guidance
  • Reported a net loss of approximately $7 million, Adjusted EBITDA of $36 million and free cash flow ("FCF") of $9 million. Adjusted EBITDA and FCF are non-GAAP measures defined and reconciled in the tables below
  • Anticipate full year 2020 FCF of approximately $50 million, a $5 million increase at the midpoint from previously stated guidance range of $40-$50 million1
  • Reduced total debt by $17 million compared to prior quarter and $37 million compared to first quarter 2020; leverage ratio2 of 2.5x and liquidity of $78 million at quarter-end
  • Completed and brought online eight deferred wells one month ahead of schedule due to operational efficiency gains and timing of favorable marketing agreements. Drilling and completion costs for five drilled but uncompleted (“DUC”) wells $8 million below budget
  • All previously curtailed net oil production returned to sales. Approximately 20 million cubic feet per day ("MMcf/d") of net gas production remained shut-in at quarter-end, but was brought back online in late October
  • Commenced nine-well gas development program on October 1st; poised to capture favorable gas prices in 2021
  • Implemented corporate cost reduction initiatives representing annualized savings of $2.5 million starting in 2021
  • Cash general and administrative ("G&A") costs of $4.8 million (a non-GAAP measure calculated as $5.8 million in net G&A costs less $1.1 million of share-based compensation), a 5% decrease from the prior quarter

MANAGEMENT COMMENTS

Sean Woolverton, SilverBow’s Chief Executive Officer, commented, "As year-end quickly approaches, SilverBow is well-positioned to benefit from higher natural gas prices with exposure to unconstrained, premium Gulf Coast markets. Our team continues to execute on the factors within our control by driving down costs, optimizing our production and generating free cash flow to reduce absolute debt. 2020 has presented unique challenges to the oil and gas industry due to the ongoing global pandemic and extreme volatility in commodity prices, and these challenges are not likely to abate in the near term. In the face of it all, SilverBow generated $9 million of free cash flow during the third quarter, marking our third consecutive quarter of positive free cash flow, and we are on pace to deliver full year free cash flow of approximately $50 million. During the third quarter, we completed and turned to sales eight wells one month ahead of schedule. Compared to the first quarter of 2020, we have reduced our revolver borrowings by $37 million to $253 million at quarter-end."

Mr. Woolverton commented further, "As we look ahead, we began our nine-well gas development program in October, targeting our high-rate-of-return Webb County dry gas assets. Our strategy of maintaining a balanced portfolio and low-cost structure has allowed us to generate significant free cash flow and pay down debt while organically funding these high-return gas projects. We see favorable underlying supply and demand factors supporting a sustained improvement of natural gas prices and stand to benefit from our gas development, mix of collars, and unhedged production. Our returns-focused mindset remains at the core of our business strategy. Given our current scale and balance sheet, we will continue to prioritize debt reduction as our primary use of cash flow over the near-term. Based on preliminary estimates for next year, we expect to achieve modest production growth, sustain a maintenance level of capex, and generate a meaningful amount of free cash flow. As always, we are opportunistic in identifying accretive transactions, large or small, that further support our mission to be the premier Eagle Ford oil and gas company. I want to thank our stakeholders who underpin SilverBow's success."

OPERATIONS HIGHLIGHTS

During the third quarter of 2020, SilverBow resumed completion activity by bringing online eight wells in its McMullen Oil area. The Company completed three of these wells in the first quarter of 2020, but deferred bringing them online due to prevailing market conditions. The remaining five wells were drilled but uncompleted during the first quarter of 2020. As planned, all eight of these oil-weighted wells were placed on production in the third quarter of 2020, with the five DUCs completed nearly one month ahead of schedule. SilverBow's total well costs for the five DUCs were $8 million below budget, collectively. In addition to resuming capital activity, all remaining curtailed oil volumes were returned to sales during the third quarter. Approximately 20 MMcf/d of net gas production remained shut-in at quarter-end. The Company recently returned these volumes to production in late October to align with favorable natural gas prices.

To date, wells that have been returned to sales have not experienced any degradation and in some cases have exhibited higher production rates compared to pre-shut-in levels, as noted last quarter. SilverBow continues to monitor and analyze well data in real-time and implement choke management practices that optimize and preserve the integrity of each well. The Company believes these are primary drivers for the strong performance of the wells returned to sales.

The operations team carried out significant pre-planning and contingency practices, and engaged in rigorous vendor bidding activities, to ensure continuation of the Company’s low-cost platform and operational efficiencies given the activity hiatus in the second quarter of 2020. The team also performed regular, in-depth reviews of operating and capital costs. On the operating cost side, labor, compression, salt-water disposal and chemicals were the notable areas that led to further lease operating expense ("LOE") savings. On the capital side, service-pricing remains in a deflationary environment and the SilverBow team has been able to capture further savings through selective de-bundling of capital costs and process efficiencies.

At the beginning of October, the Company resumed drilling activity in the Webb County Gas area. SilverBow drilled the first three wells in the Upper Eagle Ford at Fasken with first production expected towards year-end. The other six wells comprise the second, co-developed La Mesa pad. The first pad was drilled and completed last year and has demonstrated some of the strongest returns in the Company's portfolio. SilverBow expects to finish the drilling and completion of the six-well La Mesa pad in early 2021, with first sales expected by the end of the first quarter.

PRODUCTION VOLUMES, OPERATING COSTS AND REALIZED PRICES

SilverBow's total net production for the third quarter averaged approximately 183 MMcfe/d. Production mix for the third quarter consisted of approximately 71% natural gas, 17% oil and 12% natural gas liquids ("NGLs"). Natural gas comprised 51% of total oil and gas sales for the third quarter, compared to 73% in the second quarter of 2020.

LOE were $0.31 per million cubic feet of natural gas equivalent ("Mcfe") for the third quarter. After deducting $1.1 million of non-cash compensation expense, cash G&A costs were $4.8 million for the third quarter, with a per unit cash cost of $0.28 per Mcfe. Transportation and processing expenses ("T&P") came in at $0.30 per Mcfe and production and ad valorem taxes were 5.5% of oil and gas revenue for the third quarter. Total production expenses, which include LOE, T&P and production taxes, were $0.76 per Mcfe for the quarter. The Company's all-in cash operating expenses for the quarter, which includes cash G&A costs, were $1.05 per Mcfe. Beginning in 2021, SilverBow expects to save approximately $2.5 million in annualized G&A costs as a result of corporate cost initiatives.

The Company continues to benefit from strong basis pricing in the Eagle Ford, while recent conditions have impacted historical oil averages. Crude oil and natural gas realizations in the third quarter were 92% of West Texas Intermediate ("WTI") and 100% of Henry Hub, respectively, excluding hedging. SilverBow’s average realized natural gas price, excluding the effect of hedging, was $1.98 per thousand cubic feet of natural gas ("Mcf") compared to $2.32 per Mcf in the third quarter of 2019. The average realized crude oil selling price, excluding the effect of hedging, was $37.45 per barrel compared to $57.14 per barrel in the third quarter of 2019. The average realized NGLs selling price in the quarter was $12.79 per barrel (31% of WTI benchmark) compared to $11.99 per barrel (21% of WTI benchmark) in the third quarter of 2019.

FINANCIAL RESULTS

SilverBow reported total oil and gas sales of $45.7 million and a net loss of $6.9 million for the third quarter. Included in the third quarter’s net loss is an unrealized loss on the value of the SilverBow's derivative contracts of $19.2 million and a $0.6 million net tax benefit.

For the third quarter, SilverBow generated Adjusted EBITDA (a non-GAAP measure) of $36.0 million and FCF (a non-GAAP measure) of $9.1 million.

At quarter-end, the Company's net debt was $451.8 million, calculated as total long-term debt of $453.0 million less $1.2 million of cash, a $25.9 million reduction compared to year-end 2019.

Capital expenditures during the third quarter, excluding acquisition and divestiture activity, totaled $20.2 million on an accrual basis.

2020 GUIDANCE AND PRELIMINARY 2021 OUTLOOK

For the fourth quarter, SilverBow is guiding for estimated production of 170-183 MMcfe/d, with natural gas volumes expected to comprise 125-133 MMcf/d, although commodity prices or other impacts from the Coronavirus Disease 2019 ("COVID-19") pandemic could affect production guidance. The Company carefully considers the production economics and the net benefit to its borrowing base and its financials before committing to future capital investment.

For the full year 2020, SilverBow's capital expenditure guidance of $95-$100 million is $3 million lower at the midpoint compared to prior guidance of $95-$105 million. As planned, the Company added a rig at the beginning of the fourth quarter, commencing the nine-well gas development program in Webb County. For the full year, SilverBow is guiding to a production range of 181-184 MMcfe/d with natural gas volumes expected to comprise 138-140 MMcf/d. Commodity prices or other impacts from the COVID-19 pandemic could result in lower full year production and adversely affect the Company's ability to achieve FCF and other guidance. SilverBow anticipates FCF to be approximately $50 million, at the high end of its previously stated guidance range of $40-$50 million for the full year.

While still finalizing the 2021 budget, SilverBow is planning for single digit production growth, capital expenditures consistent with 2020 levels, and FCF1 generation of $20-$40 million, implying a greater than 50% FCF yield with strip pricing.

Additional detail concerning SilverBow's fourth quarter and full year 2020 guidance can be found in the table included with today’s news release and the Corporate Presentation uploaded to the Investor Relations section of the Company’s website.

HEDGING UPDATE

Hedging continues to be an important element of SilverBow's strategy to protect cash flow. The Company's active hedging program provides greater predictability of cash flows and preserves exposure to higher commodity prices. In conjunction with unwinding oil derivative contracts in 2020 and 2021, SilverBow is amortizing the $38 million of cash inflow it received in discrete amounts for each month over the same time period. The amortized hedge gains will factor into the Company's calculation of Adjusted EBITDA for covenant compliance purposes through the end of 2021.

As of October 31, 2020, the Company had 71% of total estimated production volumes hedged for the remainder of 2020, using the midpoint of production guidance. For the remainder of 2020, SilverBow has 95 MMcf/d of natural gas production hedged at an average price of $2.67 per million British thermal units ("MMBtu") and 5,094 barrels per day ("Bbls/d") of oil hedged at an average price of $44.88 per barrel. For 2021, the Company has 67 MMcf/d of natural gas production hedged at an average price of $2.87 per MMBtu and 3,294 Bbls/d of oil hedged at an average price of $47.43 per barrel. Notably, SilverBow's hedges are a combination of swaps and collars with the weighted average price factoring in the ceiling price of the collars.

Please see SilverBow's Form 10-Q filing for the third quarter of 2020, which the Company expects to file on Thursday, November 5, 2020, for a detailed summary of its derivative contracts.

CAPITAL STRUCTURE AND LIQUIDITY

As of September 30, 2020, SilverBow's liquidity position was $78.2 million, consisting of $1.2 million of cash and $77.0 million of availability under the Company’s credit facility, which had a $330 million borrowing base as of such date prior to the November 2, 2020 redetermination. SilverBow’s net debt was $451.8 million, calculated as total long-term debt of $453.0 million less $1.2 million of cash, a 5% decrease from December 31, 2019. Subsequent to quarter end, the borrowing base under the Company's credit facility was redetermined as of November 2, 2020 to be $310 million, and the maximum leverage ratio2 was decreased to 3.5x from 4.0x. As of October 28, 2020, SilverBow had 11.9 million total common shares outstanding.

CONFERENCE CALL AND UPDATED INVESTOR PRESENTATION

SilverBow will host a conference call for investors on Thursday, November 5, 2020, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). Investors and participants can register for the call in advance by visiting http://www.directeventreg.com/registration/event/5165505. After registering, instructions and dial-in information will be provided on how to join the call. A simultaneous webcast of the call may be accessed over the internet by visiting SilverBow's website at www.sbow.com, clicking on “Investor Relations” and “Events and Presentations” and then clicking on the “Third Quarter 2020 Earnings Conference Call” link. The webcast will be archived for replay on the Company's website for 14 days. Additionally, an updated Corporate Presentation will be uploaded to the Investor Relations section of SilverBow's website before the conference call.

ABOUT SILVERBOW RESOURCES, INC.

SilverBow Resources, Inc. (NYSE: SBOW) is a Houston-based energy company actively engaged in the exploration, development, and production of oil and gas in the Eagle Ford Shale in South Texas. With over 30 years of history operating in South Texas, the Company possesses a significant understanding of regional reservoirs which it leverages to assemble high quality drilling inventory while continuously enhancing its operations to maximize returns on capital invested. For more information, please visit www.sbow.com.

FORWARD-LOOKING STATEMENTS

This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent management's expectations or beliefs concerning future events, and it is possible that the results described in this release will not be achieved. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from the results discussed in the forward-looking statements, including among other things: the severity and duration of world health events, including the COVID-19 pandemic, related economic repercussions and the resulting severe disruption in the oil and gas industry and negative impact on demand for oil and gas, which is negatively impacting our business; the current significant surplus in the supply of crude oil and actions by the members of the Organization of the Petroleum Exporting Countries (“OPEC”) and Russia (together with OPEC and other allied producing countries, “OPEC+”) with respect to oil production levels and announcements of potential changes in such levels, including the ability of the OPEC+ countries to agree on and comply with supply limitations; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; shut-in or curtailment of production due to decreases in available storage capacity or other factors; oil, natural gas and NGL price levels and volatility; our ability to satisfy our short- or long-term liquidity needs; our ability to execute our business strategy, including the success of our drilling and development efforts; timing, cost and amount of future production of oil and natural gas; expectations regarding future FCF; and other factors discussed in the Company’s reports filed with the Securities and Exchange Commission ("SEC"), including its Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed thereafter. All statements, other than historical facts included in this press release, regarding our strategy, future operations, financial position, future cash flows, estimated production levels, expected oil and natural gas pricing, estimated oil and natural gas reserves or the present value thereof, reserve increases, capital expenditures, budget, projected costs, prospects, plans and objectives of management are forward-looking statements.

All forward-looking statements speak only as of the date of this news release. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this release are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. The risk factors and other factors noted herein and in the Company's SEC filings could cause its actual results to differ materially from those contained in any forward-looking statement. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to publicly release the results of any revisions to any such statements that may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all such factors.

(Footnotes)

1 A forward-looking estimate of net income (loss) is not provided with the forward-looking estimate of FCF (a non-GAAP measure) because the items necessary to estimate net income (loss) are not accessible or estimable at this time.

2 Leverage ratio is defined as total long-term debt, before unamortized discounts, divided by Adjusted EBITDA for Leverage Ratio (a non-GAAP measure defined and reconciled in the tables included with today’s news release) for the trailing twelve-month period.

(Financial Highlights to Follow)

Condensed Consolidated Balance Sheets (Unaudited)

SilverBow Resources, Inc. and Subsidiary (in thousands, except share amounts)

 

 

September 30, 2020

 

December 31, 2019

ASSETS

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

1,222

 

 

$

1,358

 

Accounts receivable, net

 

28,884

 

 

 

36,996

 

Fair value of commodity derivatives

 

11,850

 

 

 

12,833

 

Other current assets

 

2,628

 

 

 

2,121

 

Total Current Assets

 

44,584

 

 

 

53,308

 

Property and Equipment:

 

 

 

Property and equipment, full cost method, including $30,661 and $41,201, respectively, of unproved property costs not being amortized at the end of each period

 

1,323,789

 

 

 

1,247,717

 

Less – Accumulated depreciation, depletion, amortization & impairment

 

(787,830

)

 

 

(380,728

)

Property and Equipment, Net

 

535,959

 

 

 

866,989

 

Right of Use Assets

 

6,093

 

 

 

9,374

 

Fair Value of Long-Term Commodity Derivatives

 

2,291

 

 

 

3,854

 

Deferred Tax Asset

 

 

 

 

22,669

 

Other Long-Term Assets

 

1,752

 

 

 

3,622

 

Total Assets

$

590,679

 

 

$

959,816

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current Liabilities:

 

 

 

Accounts payable and accrued liabilities

$

22,707

 

 

$

39,343

 

Fair value of commodity derivatives

 

10,420

 

 

 

6,644

 

Accrued capital costs

 

4,915

 

 

 

17,889

 

Accrued interest

 

892

 

 

 

1,397

 

Current lease liability

 

4,807

 

 

 

6,707

 

Undistributed oil and gas revenues

 

8,619

 

 

 

9,166

 

Total Current Liabilities

 

52,360

 

 

 

81,146

 

Long-Term Debt, Net

 

447,644

 

 

 

472,900

 

Non-Current Lease Liability

 

1,392

 

 

 

2,813

 

Deferred Tax Liabilities

 

 

 

 

1,582

 

Asset Retirement Obligations

 

4,344

 

 

 

4,055

 

Fair Value of Long-Term Commodity Derivatives

 

4,045

 

 

 

1,613

 

Other Long-Term Liabilities

 

292

 

 

 

 

Commitments and Contingencies

 

 

 

Stockholders' Equity:

 

 

 

Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued

 

 

 

 

 

Common stock, $0.01 par value, 40,000,000 shares authorized, 12,053,763 and 11,895,032 shares issued, respectively, and 11,936,679 and 11,806,679 shares outstanding, respectively

 

121

 

 

 

119

 

Additional paid-in capital

 

296,629

 

 

 

292,916

 

Treasury stock, held at cost, 117,084 and 88,353 shares, respectively

 

(2,372

)

 

 

(2,282

)

(Accumulated deficit) Retained earnings

 

(213,776

)

 

 

104,954

 

Total Stockholders’ Equity

 

80,602

 

 

 

395,707

 

Total Liabilities and Stockholders’ Equity

$

590,679

 

 

$

959,816

 

 

 

 

 

Condensed Consolidated Statements of Operations (Unaudited)

SilverBow Resources, Inc. and Subsidiary (in thousands, except per-share amounts)

 

 

Three Months Ended
September 30, 2020

 

Three Months Ended
September 30, 2019

Revenues:

 

 

 

Oil and gas sales

$

45,699

 

 

$

72,014

 

 

 

 

 

Operating Expenses:

 

 

 

General and administrative, net

 

5,833

 

 

 

6,247

 

Depreciation, depletion, and amortization

 

13,975

 

 

 

24,937

 

Accretion of asset retirement obligations

 

90

 

 

 

88

 

Lease operating costs

 

5,211

 

 

 

5,507

 

Workovers

 

8

 

 

 

93

 

Transportation and gas processing

 

5,094

 

 

 

6,782

 

Severance and other taxes

 

2,512

 

 

 

3,778

 

Write-down of oil and gas properties

 

 

 

 

 

Total Operating Expenses

 

32,723

 

 

 

47,432

 

 

 

 

 

Operating Income (Loss)

 

12,976

 

 

 

24,582

 

 

 

 

 

Non-Operating Income (Expense)

 

 

 

Gain (loss) on commodity derivatives, net

 

(12,944

)

 

 

13,409

 

Interest expense, net

 

(7,444

)

 

 

(9,435

)

Other income (expense), net

 

(56

)

 

 

134

 

 

 

 

 

Income (Loss) Before Income Taxes

 

(7,468

)

 

 

28,690

 

 

 

 

 

Provision (Benefit) for Income Taxes

 

(572

)

 

 

1,039

 

 

 

 

 

Net Income (Loss)

$

(6,896

)

 

$

27,651

 

 

 

 

 

Per Share Amounts

 

 

 

 

 

 

 

Basic: Net Income (Loss)

$

(0.58

)

 

$

2.35

 

 

 

 

 

Diluted: Net Income (Loss)

$

(0.58

)

 

$

2.35

 

 

 

 

 

Weighted-Average Shares Outstanding - Basic

 

11,935

 

 

 

11,762

 

 

 

 

 

Weighted-Average Shares Outstanding - Diluted

 

11,935

 

 

 

11,780

 

Condensed Consolidated Statements of Operations (Unaudited)

SilverBow Resources, Inc. and Subsidiary (in thousands, except per-share amounts)

 

 

Nine Months Ended
September 30, 2020

 

Nine Months Ended
September 30, 2019

Revenues:

 

 

 

Oil and gas sales

$

123,921

 

 

$

218,781

 

 

 

 

 

Operating Expenses:

 

 

 

General and administrative, net

 

17,926

 

 

 

19,146

 

Depreciation, depletion, and amortization

 

51,130

 

 

 

70,771

 

Accretion of asset retirement obligations

 

263

 

 

 

257

 

Lease operating costs

 

16,023

 

 

 

15,074

 

Workovers

 

8

 

 

 

613

 

Transportation and gas processing

 

16,291

 

 

 

19,917

 

Severance and other taxes

 

7,513

 

 

 

11,044

 

Write-down of oil and gas properties

 

355,948

 

 

 

 

Total Operating Expenses

 

465,102

 

 

 

136,822

 

 

 

 

 

Operating Income (Loss)

 

(341,181

)

 

 

81,959

 

 

 

 

 

Non-Operating Income (Expense)

 

 

 

Gain (loss) on commodity derivatives, net

 

66,884

 

 

 

34,312

 

Interest expense, net

 

(23,876

)

 

 

(27,500

)

Other income (expense), net

 

50

 

 

 

173

 

 

 

 

 

Income (Loss) Before Income Taxes

 

(298,123

)

 

 

88,944

 

 

 

 

 

Provision (Benefit) for Income Taxes

 

20,607

 

 

 

(19,464

)

 

 

 

 

Net Income (Loss)

$

(318,730

)

 

$

108,408

 

 

 

 

 

Per Share Amounts

 

 

 

 

 

 

 

Basic: Net Income (Loss)

$

(26.81

)

 

$

9.24

 

 

 

 

 

Diluted: Net Income (Loss)

$

(26.81

)

 

$

9.21

 

 

 

 

 

Weighted-Average Shares Outstanding - Basic

 

11,890

 

 

 

11,739

 

 

 

 

 

Weighted-Average Shares Outstanding - Diluted

 

11,890

 

 

 

11,776

 


Contacts

Jeff Magids
Director of Finance & Investor Relations
(281) 874-2700, (888) 991-SBOW


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