Exhibit 99.1

 

News Release NYSE: BPL

Buckeye Partners, L.P. One Greenway Plaza Suite 600 Houston, TX 77046

 

Contact:	Kevin J. Goodwin
	Vice President and Treasurer
	irelations@buckeye.com
	(800) 422-2825

 

BUCKEYE PARTNERS, L.P. REPORTS RECORD FINANCIAL RESULTS

FOR SECOND QUARTER 2015

Announces Increase in Cash Distribution

 

HOUSTON, July 31, 2015 — Buckeye Partners, L.P. (“Buckeye”) (NYSE: BPL) today reported its financial results for the second quarter of 2015.  Buckeye reported income from continuing operations for the second quarter of 2015 of $91.3 million compared to income from continuing operations for the second quarter of 2014 of $61.9 million.

 

Adjusted EBITDA (as defined below) from continuing operations for the second quarter of 2015 was $206.5 million, representing a record second quarter Adjusted EBITDA for Buckeye, compared to $150.8 million for the second quarter of 2014.

 

Income from continuing operations attributable to Buckeye’s unitholders was $0.71 per diluted unit for the second quarter of 2015 compared to $0.53 per diluted unit for the second quarter of 2014.  The diluted weighted average number of units outstanding in the second quarter of 2015 was 128.2 million compared to 116.7 million in the second quarter of 2014.

 

“I am pleased to report another quarter of record financial results, which demonstrate the benefits of our diversified portfolio of assets,” said Clark C. Smith, Chairman, President and Chief Executive Officer.  “Our Global Marine Terminals and Merchant Services segments drove significant improvement compared to the prior year.  Our commercial and operating teams were successful in improving utilization and driving rate increases at our Global Marine Terminals segment, which also benefited from incremental cash flows from our interest in Buckeye Texas Partners LLC. Our Merchant Services segment continues to deliver positive contributions as our disciplined business strategy to optimize asset utilization and reduce commodity risk allowed us to capitalize on favorable market conditions in the quarter.  In our Pipelines & Terminals segment, we continued to benefit from growth capital investments that have expanded our domestic terminals network and increased our terminal throughput growth by nearly 10% year over year. Additionally, we saw solid performance from our pipelines producing volume growth of nearly 4% compared to prior year.”

 

“We remain focused on the construction of the new condensate splitter as well as refrigerated LPG storage capacity at our Buckeye Texas Partners facilities.  We expect both of these projects to be operational in the third quarter of 2015.  Once operational, these assets are expected to generate significant incremental cash flows,” continued Mr. Smith.

 

Buckeye announced in June that one of its operating subsidiaries, Buckeye Pipe Line Company, L.P., reached a settlement with certain airlines resolving all complaints filed with the Federal Energy Regulatory Commission (“FERC”) by those airlines challenging the rates for transportation of jet fuel

 

 

from New Jersey to the three New York City area airports and that the settlement had been submitted to FERC for approval.  “This settlement represents a positive resolution for Buckeye.  We expect FERC action on the settlement in the third quarter of 2015,” concluded Mr. Smith.

 

Distributable cash flow (as defined below) from continuing operations for the second quarter of 2015 was $144.9 million compared to $94.4 million for the second quarter of 2014.  Distribution coverage was 0.97 times for the second quarter of 2015.

 

Cash Distribution.  Buckeye also announced today that its general partner declared a cash distribution of $1.1625 per limited partner unit (“LP Unit”) for the quarter ended June 30, 2015.  The distribution will be payable on August 17, 2015 to unitholders of record on August 10, 2015.  This cash distribution represents a 4.5 percent increase over the $1.1125 per LP Unit distribution declared for the second quarter of 2014.  Buckeye has paid cash distributions in each quarter since its formation in 1986.

 

Conference Call.  Buckeye will host a conference call with members of executive management today, July 31, 2015, at 11:00 a.m. Eastern Time. To access the live webcast of the call, go to http://edge.media-server.com/m/p/v87xonj3 ten minutes prior to its start.  Interested parties may participate in the call by dialing 877-870-9226.  A replay will be archived and available at this link through September 30, 2015, and the replay also may be accessed by dialing 800-585-8367 and entering conference ID 83323662.

 

About Buckeye Partners, L.P.

 

Buckeye Partners, L.P. (NYSE: BPL) is a publicly traded master limited partnership and owns and operates a diversified network of integrated assets providing midstream logistic solutions, primarily consisting of the transportation, storage, and marketing of liquid petroleum products.  Buckeye is one of the largest independent liquid petroleum products pipeline operators in the United States in terms of volumes delivered with approximately 6,000 miles of pipeline and more than 120 liquid petroleum products terminals with aggregate storage capacity of over 110 million barrels across our portfolio of pipelines, inland terminals and an integrated network of marine terminals located primarily in the East Coast and Gulf Coast regions of the United States and in the Caribbean.  Buckeye has a controlling interest in a company with a vertically integrated system of marine midstream assets in Corpus Christi and the Eagle Ford play in Texas.  Buckeye’s flagship marine terminal, BORCO, is in The Bahamas and is one of the largest marine crude oil and refined petroleum products storage facilities in the world and provides an array of logistics and blending services for the global flow of petroleum products.  Buckeye’s network of marine terminals enables it to facilitate global flows of crude oil, refined petroleum products, and other commodities, and to offer its customers connectivity to some of the world’s most important bulk storage and blending hubs.  Buckeye is also a wholesale distributor of refined petroleum products in areas served by its pipelines and terminals.  Finally, Buckeye also operates and/or maintains third-party pipelines under agreements with major oil and gas, petrochemical and chemical companies, and performs certain engineering and construction management services for third parties.  More information concerning Buckeye can be found at www.buckeye.com.

 

* * * * *

 

Adjusted EBITDA and distributable cash flow are measures not defined by GAAP.  Adjusted EBITDA is the primary measure used by our senior management, including our Chief Executive Officer, to (i) evaluate our consolidated operating performance and the operating performance of our business segments, (ii) allocate resources and capital to business segments, (iii) evaluate the viability of proposed projects, and (iv) determine overall rates of return on alternative investment opportunities.  Distributable

 

 

cash flow is another measure used by our senior management to provide a clearer picture of Buckeye’s cash available for distribution to its unitholders.  Adjusted EBITDA and distributable cash flow eliminate (i) non-cash expenses, including, but not limited to, depreciation and amortization expense resulting from the significant capital investments we make in our businesses and from intangible assets recognized in business combinations, (ii) charges for obligations expected to be settled with the issuance of equity instruments, and (iii) items that are not indicative of our core operating performance results and business outlook.

 

Buckeye believes that investors benefit from having access to the same financial measures used by senior management and that these measures are useful to investors because they aid in comparing Buckeye’s operating performance with that of other companies with similar operations.  The Adjusted EBITDA and distributable cash flow data presented by Buckeye may not be comparable to similarly titled measures at other companies because these items may be defined differently by other companies. Please see the attached reconciliations of each of Adjusted EBITDA and distributable cash flow to income from continuing operations.

 

* * * * *

 

This press release includes forward-looking statements that we believe to be reasonable as of today’s date.  Such statements are identified by use of the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “should,” and similar expressions.  Actual results may differ significantly because of risks and uncertainties that are difficult to predict and that may be beyond our control.  Among them are (i) changes in federal, state, local, and foreign laws or regulations to which we are subject, including those governing pipeline tariff rates and those that permit the treatment of us as a partnership for federal income tax purposes, (ii) terrorism and other security risks, including cyber risk, adverse weather conditions, including hurricanes, environmental releases, and natural disasters, (iii) changes in the marketplace for our products or services, such as increased competition, better energy efficiency, or general reductions in demand, (iv) adverse regional, national, or international economic conditions, adverse capital market conditions, and adverse political developments, (v) shutdowns or interruptions at our pipeline, terminal, and storage assets or at the source points for the products we transport, store, or sell, (vi) unanticipated capital expenditures in connection with the construction, repair, or replacement of our assets, (vii) volatility in the price of liquid petroleum products, (viii) nonpayment or nonperformance by our customers, (ix) our ability to integrate acquired assets with our existing assets and to realize anticipated cost savings and other efficiencies and benefits, (x) our inability to realize the expected benefits of the Buckeye Texas Partners transaction, and (xi) our ability to successfully complete our organic growth projects and to realize the anticipated financial benefits.  You should read our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2014 and our most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, for a more extensive list of factors that could affect results.  We undertake no obligation to revise our forward-looking statements to reflect events or circumstances occurring after today’s date.

 

* * * * *

 

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of Buckeye’s distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business.  Accordingly, Buckeye’s distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

 

####

 

 

BUCKEYE PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit amounts)

(Unaudited)

 

		Three Months Ended June 30,						Six Months Ended June 30,
		2015			2014			2015			2014
Revenue:
Product sales		$	458,613		$	1,492,697		$	1,198,831		$	3,170,439
Transportation, storage and other services		338,170			316,254			686,052			630,341
Total revenue		796,783			1,808,951			1,884,883			3,800,780
Costs and expenses:
Cost of product sales		448,534			1,510,043			1,166,073			3,175,422
Operating expenses		141,339			133,018			283,704			257,847
Depreciation and amortization		55,598			43,394			109,374			86,385
General and administrative		20,293			20,330			42,911			37,687
Total costs and expenses		665,764			1,706,785			1,602,062			3,557,341
Operating income		131,019			102,166			282,821			243,439
Other income (expense):
Earnings from equity investments		2,446			2,170			4,580			3,436
Interest and debt expense		(41,975		)	(42,012		)	(83,684		)	(83,225		)
Other income (expense)		77			(232		)	110			(96		)
Total other expense, net		(39,452		)	(40,074		)	(78,994		)	(79,885		)
Income from continuing operations before taxes		91,567			62,092			203,827			163,554
Income tax expense		(241		)	(153		)	(480		)	(76		)
Income from continuing operations		91,326			61,939			203,347			163,478
Loss from discontinued operations		—			(38,186		)	(857		)	(48,228		)
Net income		91,326			23,753			202,490			115,250
Less: Net loss (income) attributable to noncontrolling interests		254			(733		)	701			(1,762		)
Net income attributable to Buckeye Partners, L.P.		$	91,580		$	23,020		$	203,191		$	113,488
Basic earnings (loss) per unit attributable to Buckeye Partners, L.P.:
Continuing operations		$	0.72		$	0.53		$	1.60		$	1.40
Discontinued operations		—			(0.33		)	(0.01		)	(0.42		)
Total		$	0.72		$	0.20		$	1.59		$	0.98
Diluted earnings (loss) per unit attributable to Buckeye Partners, L.P.:
Continuing operations		$	0.71		$	0.53		$	1.60		$	1.39
Discontinued operations		—			(0.33		)	(0.01		)	(0.41		)
Total		$	0.71		$	0.20		$	1.59		$	0.98
Weighted average units outstanding:
Basic		127,650			116,078			127,414			115,701
Diluted		128,198			116,652			127,904			116,226

 

 

BUCKEYE PARTNERS, L.P.

SELECTED FINANCIAL AND OPERATING DATA

(In thousands)

(Unaudited)

 

		Three Months Ended June 30,						Six Months Ended June 30,
		2015			2014			2015			2014
Revenue:
Pipelines & Terminals		$	206,980		$	218,624		$	432,236		$	437,163
Global Marine Terminals		124,590			90,791			245,574			179,560
Merchant Services		460,156			1,495,441			1,200,316			3,173,743
Development & Logistics		18,208			18,802			37,057			35,634
Intersegment		(13,151		)	(14,707		)	(30,300		)	(25,320		)
Total revenue		$	796,783		$	1,808,951		$	1,884,883		$	3,800,780
Total costs and expenses: (1)
Pipelines & Terminals		$	126,352		$	125,810		$	248,362		$	239,569
Global Marine Terminals		79,609			58,652			163,198			117,762
Merchant Services		459,257			1,523,740			1,192,562			3,200,013
Development & Logistics		13,697			13,290			28,240			25,317
Intersegment		(13,151		)	(14,707		)	(30,300		)	(25,320		)
Total costs and expenses		$	665,764		$	1,706,785		$	1,602,062		$	3,557,341
Depreciation and amortization:
Pipelines & Terminals		$	20,235		$	17,452		$	37,510		$	34,854
Global Marine Terminals		33,623			24,007			68,501			47,604
Merchant Services		1,308			1,507			2,504			3,012
Development & Logistics		432			428			859			915
Total depreciation and amortization		$	55,598		$	43,394		$	109,374		$	86,385
Operating income:
Pipelines & Terminals		$	80,628		$	92,814		$	183,874		$	197,594
Global Marine Terminals		44,981			32,139			82,376			61,798
Merchant Services		899			(28,299		)	7,754			(26,270		)
Development & Logistics		4,511			5,512			8,817			10,317
Total operating income		$	131,019		$	102,166		$	282,821		$	243,439
Adjusted EBITDA from continuing operations:
Pipelines & Terminals		$	120,241		$	115,679		$	245,792		$	242,399
Global Marine Terminals		78,705			55,559			153,123			109,262
Merchant Services		2,763			(26,169		)	11,205			(23,036		)
Development & Logistics		4,772			5,719			9,271			10,787
Adjusted EBITDA from continuing operations		$	206,481		$	150,788		$	419,391		$	339,412
Capital additions, net: (2)
Pipelines & Terminals		$	53,038		$	49,610		$	99,471		$	108,487
Global Marine Terminals		110,748			41,522			198,090			92,299
Merchant Services		302			67			417			100
Development & Logistics		302			362			436			441
Total segment capital additions, net		164,390			91,561			298,414			201,327
Natural Gas Storage disposal group		—			90			—			188
Total capital additions, net		$	164,390		$	91,651		$	298,414		$	201,515
Summary of capital additions, net: (2)
Maintenance capital expenditures		$	23,584		$	17,229		$	43,014		$	35,933
Expansion and cost reduction		140,806			74,422			255,400			165,582
Total capital additions, net		$	164,390		$	91,651		$	298,414		$	201,515

 

		June 30, 2015			December 31, 2014
Key Balance Sheet Information:
Cash and cash equivalents		$	8,577		$	8,208
Long-term debt, total (3)		3,574,555			3,388,986

 

(1) Includes depreciation and amortization.

(2) Amounts exclude accruals for capital expenditures.

(3) Includes long-term debt portion of Buckeye Partners L.P. Credit Facility of $185.0 million as of June 30, 2015.

 

 

BUCKEYE PARTNERS, L.P.

SELECTED FINANCIAL AND OPERATING DATA - Continued

(Unaudited)

 

		Three Months Ended June 30,				Six Months Ended June 30,
		2015		2014		2015		2014
Pipelines & Terminals (average bpd in thousands):
Pipelines:
Gasoline		764.1		721.4		729.7		679.9
Jet fuel		374.0		340.4		355.5		323.1
Middle distillates (1)		308.9		326.2		361.0		374.7
Other products (2)		40.6		45.0		34.1		38.1
Total pipelines throughput		1,487.6		1,433.0		1,480.3		1,415.8
Terminals:
Products throughput		1,255.7		1,144.7		1,226.0		1,126.2
Pipeline average tariff (cents/bbl)		82.4		86.4		83.1		84.8
Global Marine Terminals (percent of capacity):
Average capacity utilization rate (3)		96	%	82	%	95	%	84	%
Merchant Services (in millions of gallons):
Sales volumes		247.7		538.5		672.4		1,107.5

 

(1)         Includes diesel fuel and heating oil.

(2)         Includes liquefied petroleum gas, intermediate petroleum products and crude oil.

(3)         Represents the ratio of contracted capacity to capacity available to be contracted.  Based on total capacity (i.e., including out of service capacity), average capacity utilization rates are approximately 84% and 72% for the three months ended June 30, 2015 and 2014, respectively, and approximately 82% and 72% for the six months ended June 30, 2015 and 2014, respectively.

 

 

BUCKEYE PARTNERS, L.P.

SELECTED FINANCIAL AND OPERATING DATA

Non-GAAP Reconciliations

(In thousands, except coverage ratio)

(Unaudited)

 

		Three Months Ended June 30,						Six Months Ended June 30,
		2015			2014			2015			2014
Income from continuing operations		$	91,326		$	61,939		$	203,347		$	163,478
Less: Net loss (income) attributable to noncontrolling interests		254			(733		)	701			(1,762		)
Income from continuing operations attributable to Buckeye Partners, L.P.		91,580			61,206			204,048			161,716
Add: Interest and debt expense		41,975			42,012			83,684			83,225
Income tax expense		241			153			480			76
Depreciation and amortization (1)		55,598			43,394			109,374			86,385
Non-cash unit-based compensation expense		5,895			4,799			10,981			7,921
Acquisition and transition expense (2)		460			1,992			2,860			5,625
Litigation contingency accrual (3)		13,500			—			13,500			—
Less: Amortization of unfavorable storage contracts (4)		(2,768		)	(2,768		)	(5,536		)	(5,536		)
Adjusted EBITDA from continuing operations		$	206,481		$	150,788		$	419,391		$	339,412
Less: Interest and debt expense, excluding amortization of deferred financing costs, debt discounts and other		(37,760		)	(39,073		)	(75,253		)	(77,346		)
Income tax expense, excluding non-cash taxes		(241		)	(153		)	(480		)	(76		)
Maintenance capital expenditures (5)		(23,584		)	(17,139		)	(43,014		)	(35,772		)
Distributable cash flow from continuing operations		$	144,896		$	94,423		$	300,644		$	226,218
Distributions for coverage ratio (6)		$	149,483		$	129,815		$	296,568		$	257,981
Coverage ratio from continuing operations		0.97			0.73			1.01			0.88

 

(1)         Includes 100% of the depreciation and amortization expense of $10.8 million and $22.5 million for Buckeye Texas Partners LLC for the three and six months ended June 30, 2015.

(2)         Acquisition and transition expense consists of transaction costs, costs for transitional employees, and other employee and third party costs related to the integration of the acquired assets that are non-recurring in nature.

(3)         Represents an adjustment to the FERC litigation accrual.

(4)         Represents the amortization of the negative fair values allocated to certain unfavorable storage contracts acquired in connection with the BORCO acquisition.

(5)         Represents expenditures that maintain the operating, safety and/or earnings capacity of our existing assets.

(6)         Represents cash distributions declared for LP Units outstanding as of each respective period.  Amount for 2015 reflects actual cash distributions paid on LP Units for the quarter ended March 31, 2015 and estimated cash distributions for LP Units for the quarter ended June 30, 2015.