News Column

Buckeye Partners, L.P. Reports Financial Results for 2014 First Quarter

May 2, 2014

HOUSTON, May 2, 2014 (GLOBE NEWSWIRE) -- Buckeye Partners, L.P. ("Buckeye") (NYSE:BPL) today reported income from continuing operations for the first quarter of 2014 of $101.5 million compared to income from continuing operations for the first quarter of 2013 of $94.8 million.

Income from continuing operations attributable to Buckeye's unitholders was $0.87 per diluted unit for the first quarter of 2014 compared to $0.90 per diluted unit for the first quarter of 2013. The diluted weighted average of units outstanding in the first quarter of 2014 was 115.8 million compared to 103.6 million in the first quarter of 2013. The increase in units is primarily the result of our unit offering in October 2013.

Adjusted EBITDA (as defined below) from continuing operations for the first quarter of 2014 was $188.6 million compared to $160.2 million for the first quarter of 2013.

"The contribution from the terminals recently acquired from Hess Corporation as well as returns on growth capital investments drove strong financial results from our Pipelines & Terminals and Global Marine Terminals segments," said Clark C. Smith, President and Chief Executive Officer. "This was the first full quarter contribution from the Hess terminals as the acquisition closed in December 2013. Work remains to be done on our Hess integration and commercialization efforts to realize the full benefit from this acquisition, but we are pleased with our results to date," continued Mr. Smith. "Growth capital investments across our legacy assets were also a key driver of improved performance over the year-ago quarter. Investments in crude rail operations at our Chicago Complex and the expansion of crude oil storage at our BORCO terminal contributed to the uplift."

"We remain focused on our expansion opportunities by continuing to make progress on our growth capital projects at our Perth Amboy terminal and Chicago Complex," said Mr. Smith. "I am pleased to report that our Perth Amboy pipeline connection is now operational, effective May 1. Product is moving to our Linden hub and from there our terminal customers have a variety of options, including access to end markets across our Eastern products system. This provides our Perth Amboy terminal with connectivity and capacity that we believe is a competitive advantage in the New York Harbor. Construction on our crude rail facility at Perth Amboy continues and is expected to be operational in the third quarter," commented Mr. Smith. "We also reached a key milestone in our project to add 1.1 million barrels of crude oil storage at our Chicago Complex, as the first of three tanks was placed in service this week. We expect the remaining tanks to be operational in the third quarter. We also have an additional project underway to further expand the Chicago Complex by completing a bi-directional connection to an underutilized Buckeye terminal to make its 600,000 barrels of storage accessible to the complex's customers. In total, we expect to make growth capital investments of approximately $300 million during 2014 that we believe will generate attractive financial returns for our unitholders in the future," concluded Mr. Smith.

Distributable cash flow (as defined below) from continuing operations for the first quarter of 2014 was $131.8 million compared to $125.6 million for the first quarter of 2013. Buckeye also reported distribution coverage of 1.03 times for the first quarter of 2014.       

Cash Distribution. Buckeye also announced today that its general partner declared a cash distribution of $1.10 per limited partner unit ("LP Unit") for the quarter ended March 31, 2014. The distribution will be payable on May 19, 2014, to unitholders of record on May 12, 2014. This cash distribution represents an almost five percent increase over the $1.05 per LP Unit distribution declared for the quarter ended March 31, 2013. 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, May 2, 2014, at 11:00 a.m. Eastern Time. To access the live webcast of the call, go to http://www.media-server.com/m/p/2jboicbo 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 until June 30, 2014, and the replay also may be accessed by dialing 800-585-8367 and entering conference ID 27961143. 

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. In addition to its pipelines and inland terminals, Buckeye owns an integrated network of marine terminals located primarily on the U.S. East Coast and in the Caribbean. Buckeye's flagship marine terminal in The Bahamas, BORCO, is one of the largest marine crude oil and 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 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 net income.

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, 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 refined petroleum products and the value of natural gas storage services, (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 ability to successfully complete our organic growth projects and to realize the anticipated financial benefits, and (xi) an unfavorable outcome with respect to the proceedings pending before the Federal Energy Regulatory Commission ("FERC") regarding Buckeye Pipe Line Company, L.P.'s transportation of jet fuel to the New York City airports. 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, 2013, 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 
 March 31,
 20142013
 Revenue:     
 Product sales   $ 1,677,742  $ 1,069,217
 Transportation, storage and other services   314,087  261,861
 Total revenue   1,991,829  1,331,078
     
 Costs and expenses:     
 Cost of product sales   1,665,379  1,063,298
 Operating expenses   124,829  92,352
 Depreciation and amortization   42,991  35,699
 General and administrative   17,357  16,253
 Total costs and expenses   1,850,556  1,207,602
 Operating income   141,273  123,476
     
 Other income (expense):     
 Earnings from equity investments   1,266  1,629
 Interest and debt expense   (41,213)  (30,249)
 Other income   136  101
 Total other expense, net   (39,811)  (28,519)
     
 Income from continuing operations before taxes   101,462  94,957
 Income tax benefit (expense)   77  (131)
 Income from continuing operations   101,539  94,826
 Loss from discontinued operations   (10,042)  (4,327)
 Net income   91,497  90,499
 Less: Net income attributable to noncontrolling interests   (1,029)  (1,158)
 Net income attributable to Buckeye Partners, L.P.   $ 90,468  $ 89,341
     
     
 Basic earnings (loss) per unit attributable to Buckeye Partners, L.P.    
     
 Continuing operations   $ 0.87  $ 0.91
 Discontinued operations   (0.09)  (0.04)
 Total   $ 0.78  $ 0.87
     
 Diluted earnings (loss) per unit attributable to Buckeye Partners, L.P.    
     
 Continuing operations   $ 0.87  $ 0.90
 Discontinued operations   (0.09)  (0.04)
 Total   $ 0.78  $ 0.86
     
 Weighted average units outstanding:     
     
 Basic   115,319  103,247
 Diluted   115,796  103,571
     
 BUCKEYE PARTNERS, L.P. 
 SELECTED FINANCIAL AND OPERATING DATA 
 (In thousands) 
 (Unaudited) 
     
  Three Months Ended 
 March 31,
 20142013
Revenue:    
 Pipelines & Terminals  $ 218,539  $ 189,575
 Global Marine Terminals  88,769  61,137
 Merchant Services  1,678,302  1,076,157
 Development & Logistics  16,832  11,912
 Intersegment  (10,613)  (7,703)
 Total revenue  $ 1,991,829  $ 1,331,078
     
Total costs and expenses: (1)    
 Pipelines & Terminals  $ 113,759  $ 91,754
 Global Marine Terminals  59,110  42,654
 Merchant Services  1,676,273  1,071,995
 Development & Logistics  12,027  8,902
 Intersegment  (10,613)  (7,703)
 Total costs and expenses  $ 1,850,556  $ 1,207,602
     
Depreciation and amortization:    
 Pipelines & Terminals  $ 17,402  $ 14,654
 Global Marine Terminals  23,597  19,170
 Merchant Services  1,505  1,396
 Development & Logistics  487  479
 Total depreciation and amortization  $ 42,991  $ 35,699
     
Operating income:    
 Pipelines & Terminals  $ 104,780  $ 97,821
 Global Marine Terminals  29,659  18,483
 Merchant Services  2,029  4,162
 Development & Logistics  4,805  3,010
 Total operating income  $ 141,273  $ 123,476
     
Adjusted EBITDA from continuing operations:    
 Pipelines & Terminals  $ 126,720  $ 115,385
 Global Marine Terminals  53,703  35,479
 Merchant Services  3,133  6,194
 Development & Logistics  5,068  3,173
 Adjusted EBITDA from continuing operations  $ 188,624  $ 160,231
     
Capital additions, net: (2)    
 Pipelines & Terminals  $ 58,877  $ 34,739
 Global Marine Terminals  50,777  31,819
 Merchant Services  33  73
 Development & Logistics  79  546
 Total segment capital additions, net  109,766  67,177
 Natural Gas Storage disposal group (3)  98  9
 Total capital additions, net  $ 109,864  $ 67,186
     
Summary of capital additions, net: (2) (3)    
 Maintenance capital expenditures  $ 18,704  $ 5,133
 Expansion and cost reduction  91,160  62,053
 Total capital additions, net  $ 109,864  $ 67,186
     
 March 31, December 31, 
Key Balance Sheet Information:20142013
 Cash and cash equivalents  $ 31,314  $ 4,950
 Long-term debt, total (4)  3,234,002  3,092,711
     


(1) Includes depreciation and amortization.

(2) Amounts exclude accruals for capital expenditures.

(3) Includes Natural Gas Storage disposal group capital expenditures as follows: (i) maintenance capital expenditures of $71 thousand and $9 thousand for the three months ended March 31, 2014 and 2013, respectively, and (ii) expansion and cost reduction capital of $27 thousand for the three months ended March 31, 2014.

(4) Includes long-term debt portion of Buckeye Partners L.P. Credit Facility of $170 million and $29 million as of March 31, 2014 and December 31, 2013, respectively.

 BUCKEYE PARTNERS, L.P. 
 SELECTED FINANCIAL AND OPERATING DATA - Continued 
 (Unaudited) 
     
  Three Months Ended 
  March 31, 
 20142013
     
Pipelines & Terminals (average bpd in thousands):    
 Pipelines:    
 Gasoline  656.7  681.0
 Jet fuel  305.6  321.3
 Middle distillates (1)  405.0  368.8
 Other products (2)  31.1  29.3
 Total pipelines throughput  1,398.4  1,400.4
 Terminals:    
 Products throughput  1,122.4  953.8
     
Pipeline Average Tariff (cents/bbl)  83.1  78.9
     
Merchant Services (in millions of gallons):    
 Sales volumes  569.0  357.6
     


(1) Includes diesel fuel and heating oil.

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

 BUCKEYE PARTNERS, L.P. 
 SELECTED FINANCIAL AND OPERATING DATA 
 Non-GAAP Reconciliations 
 (In thousands, except coverage ratio) 
 (Unaudited) 
     
  Three Months Ended 
 March 31,
 20142013
     
Income from continuing operations  $ 101,539  $ 94,826
Less: Net income attributable to noncontrolling interests  (1,029)  (1,158)
Income from continuing operations attributable to Buckeye Partners, L.P.  100,510  93,668
Add: Interest and debt expense  41,213  30,249
 Income tax (benefit) expense  (77)  131
 Depreciation and amortization  42,991  35,699
 Non-cash unit-based compensation expense  3,122  3,232
 Hess acquisition and transition expense  3,633  --
Less: Amortization of unfavorable storage contracts (1)  (2,768)  (2,748)
Adjusted EBITDA from continuing operations  $ 188,624  $ 160,231
Less: Interest and debt expense, excluding amortization of deferred financing costs, debt discounts and other  (38,273)  (29,382)
 Income tax benefit (expense), excluding non-cash taxes  77  (131)
 Maintenance capital expenditures  (18,633)  (5,124)
Distributable cash flow from continuing operations  $ 131,795  $ 125,594
     
Distributions for coverage ratio (2)  $ 128,046  $ 102,681
     
Coverage ratio from continuing operations  1.03  1.22
     


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

(2) Represents cash distributions declared for limited partner units ("LP Units") outstanding as of each respective period. Amount for 2014 reflects estimated cash distributions for LP Units for the quarter ended March 31, 2014.

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

Source: Buckeye Partners, L.P.


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