Oiltanking Partners, L.P. Reports Financial Results For The First Quarter Of 2013

HOUSTON, May 8, 2013 /PRNewswire/ -- Oiltanking Partners, L.P. (NYSE: OILT) (the "Partnership") today reported first quarter 2013 net income of $20.2 million, or $0.48 per unit, an increase of 26.7% over first quarter 2012 net income of $15.9 million, or $0.40 per unit.  Adjusted EBITDA increased 27.5% to $25.7 million for the first quarter of 2013, compared to $20.2 million for the first quarter of 2012.  Adjusted EBTIDA, which is a financial measure not presented in accordance with U.S. generally accepted accounting principles ("GAAP"), is defined and reconciled to net income below. 

"We are pleased to again deliver record revenue and Adjusted EBITDA in the first quarter of 2013," said Anne-Marie Ainsworth, President and Chief Executive Officer of the Partnership's general partner.  "Our solid results were driven by significant increases in capacity, dock utilization and hydrocarbon movement at our facilities.  Our terminals' throughput volumes were approximately 80 million barrels of crude oil, refined products and liquefied petroleum gas during first quarter of 2013.  As our customers' need for additional storage and handling services has continued to expand, we are successfully executing our organic growth plans to generate higher cash flow."

"Our announced expansion plans will continue to drive strong revenue growth that is backed by long-term, fixed-fee contracts and will generate accretive distributable cash flow per unit for our unitholders."

The Partnership's overall operating income for the first quarter of 2013 improved 31.1% compared to the prior year period primarily due to higher storage and throughput volumes that generated increased service fees, partially offset by lower ancillary service revenues and higher selling, general and administrative expenses. 

Revenues increased approximately $5.9 million, or 17.2%, to $40.2 million during the first quarter of 2013 compared to the same period in 2012, mainly due to higher storage and throughput fee revenues.  Storage service fee revenue grew $3.7 million due to new storage capacity placed into service in April 2012 and in the first quarter of 2013 and to an escalation in storage fees. Throughput fee revenues grew by $3.6 million during the first quarter of 2013 attributable to revenues from the new pipelines placed into service in the first quarter of 2013 and to higher liquefied petroleum gas exports and revenue from the new arrangement with Enterprise Products Partners L.P. ("Enterprise").  Ancillary services fee revenues decreased by $1.4 million during the quarter, largely attributable to a one-time pipeline-related construction project for a customer that was completed and recognized during the first quarter of 2012. 

Selling, general and administrative expenses during the first quarter of 2013 were $5.0 million, increasing $0.5 million compared to the same period in 2012, primarily due to higher accounting, auditing and professional fees. 

In Houston, during the first quarter of 2013, the Partnership placed into service 825,000 barrels of crude storage under long-term fixed-fee contracts and completed pipeline projects on-time and on-budget.  The final 275,000 barrel tank of this four tank expansion is in the final stages of construction and should be placed into service in the second quarter of 2013.  In Beaumont, we placed into service two new refined products storage tanks with a total capacity of 325,000 barrels. 

Based on our current plans, we expect to spend $135 million to $145 million on capital expenditures in 2013 as we continue construction on our previously announced growth projects.  The two crude storage expansion projects that we announced during 2012 are expected to add 3.2 million and 3.3 million barrels of new storage capacity by the end of 2013 and the end of 2014, respectively, bringing total capacity to over 25 million barrels by the end of 2014. 

In addition, on March 6, 2013, we announced a new $44 million project and an expansion of our relationship with Enterprise with plans to increase our ability to import and export liquefied petroleum gas at our terminal on the Houston Ship Channel.  In connection with the new multi-year agreement with Enterprise, we are constructing a new vessel dock and adding infrastructure to existing docks with the capability of handling significantly more liquefied petroleum gas vessels at multiple docks.

"We are pleased with the progress at our Appelt property with 6.5 million barrels of storage capacity currently in varying stages of construction with the first tanks expected to come on-line during the third quarter of this year, providing for further growth in distributable cash flow," continued Ainsworth.  "We are continuing to actively identify and evaluate additional expansion projects as well as alternate growth avenues that we believe will contribute to our EBITDA growth and position us to continue to increase distributable cash flow to our unitholders.  In addition to the organic crude oil logistics projects, we anticipate that the increased natural gas liquids production in the U.S. will drive more demand for the movement and export of liquefied petroleum gas from our facilities."

On April 22, 2013, the Partnership declared an increase in its cash distribution to $0.405 per unit, or $1.62 per unit on an annualized basis, for all of its outstanding limited partner units.  The first quarter distribution represents our sixth consecutive quarterly increase since going public in the third quarter of 2011 and a 3.8% increase over the distribution of $0.39 for the fourth quarter of 2012 and a 15.7% increase over the $0.35 in the first quarter of 2012.  The $16.2 million first quarter 2013 cash distribution will be paid on May 14, 2013.  Distributable cash flow for the first quarter of 2013 provided distribution coverage of 1.48 times the amount needed for the Partnership to fund the quarterly distribution to both the general and limited partners and incentive distribution rights.  Distributable cash flow and distribution coverage ratio, which are non-GAAP financial measures, are defined and reconciled to net income below.     

Conference Call
The Partnership will hold a conference call to discuss its first quarter 2013 financial results on May 9, 2013 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).  To participate in the call, dial (480) 629-9835 and ask for the Oiltanking call ten minutes prior to the start time, or access it live over the internet at www.oiltankingpartners.com on the "Investor Relations" page of the Partnership's website.

A replay of the audio webcast will be available shortly after the call on the Partnership's website.  A telephonic replay will be available through May 15, 2013 by calling (303) 590-3030 and using the pass code 4613363#.

Oiltanking Partners is a master limited partnership engaged in independent storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas.  We provide our services to a variety of customers, including major integrated oil companies, distributors, marketers and chemical and petrochemical companies. Our assets are located along the Gulf Coast of the United States.  For more information, visit www.oiltankingpartners.com.

Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements reflect the Partnership's current expectations, opinions, views or beliefs with respect to future events, based on what it believes are reasonable assumptions. No assurance can be given, however, that these events will occur.  Important factors that could cause actual results to differ from forward-looking statements include, but are not limited to:  adverse economic or market conditions, changes in demand for the products that we handle or for our services, increased competition, changes in the availability and cost of capital, operating hazards and the effects of existing and future government regulations.  These and other significant risks and uncertainties are described more fully in the Partnership's filings with the U.S. Securities and Exchange Commission (the "SEC"), available at the SEC's website at www.sec.gov.  The Partnership has no obligation and, except as required by law, does not undertake any obligation, to update or revise these statements or provide any other information relating to such statements.

Use of Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-GAAP financial measures of Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the ratio of debt to Adjusted EBITDA, which may be used periodically by management when discussing our financial results with investors and analysts.  The accompanying schedules of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP.  Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the ratio of debt to Adjusted EBITDA are presented because management believes these metrics provide additional information and metrics relative to the performance of our business, such as the cash distributions we expect to pay to our unitholders.  These metrics are commonly employed by financial analysts and investors to evaluate the operating and financial performance of the Partnership from period to period and to compare it with the performance of other publicly traded partnerships within the industry.  You should not consider Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the ratio of debt to Adjusted EBITDA in isolation or as a substitute for analysis of the Partnership's results as reported under GAAP.  Because Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the ratio of debt to Adjusted EBITDA may be defined differently by other companies in the Partnership's industry, the Partnership's presentation of Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the ratio of debt to Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

The Partnership defines Adjusted EBITDA as net income (loss) before net interest expense, income tax expense (benefit), depreciation and amortization expense and other income, as further adjusted to exclude certain other non-cash and non-recurring items, including gains and losses on disposals of fixed assets.  Adjusted EBITDA is not a presentation made in accordance with GAAP.  Adjusted EBITDA is a non-GAAP supplemental financial performance measure management and external users of the consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess: (i) the Partnership's financial performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or financing methods, and (ii) the viability of proposed projects and acquisitions and determine overall rates of returns on investment in various opportunities.  The GAAP measure most directly comparable to Adjusted EBITDA is net income.  Adjusted EBITDA has important limitations as an analytical tool because it excludes some but not all items affecting net income.

Distributable cash flow, which is a financial measure included in the schedules to this press release, is another non-GAAP financial measure used by the Partnership's management.  The Partnership defines distributable cash flow as the Partnership's net income (loss) before (i) depreciation and amortization expense; (ii) gains or losses on disposal of fixed assets; and (iii) other (income) expense; less maintenance capital expenditures.  The Partnership's management believes distributable cash flow is useful to investors because it removes non-cash items from net income and provides a clearer picture of the Partnership's cash available for distribution to its unitholders. 

The Partnership defines distribution coverage ratio for any given period as the ratio of distributable cash flow during such period to the total quarterly distribution payable to all common and subordinated unitholders, the general partner interest and incentive distribution rights.

The Partnership defines the ratio of debt to Adjusted EBITDA for any given period as the ratio of total outstanding debt, including the current portion at the end of such period to Adjusted EBITDA for the latest twelve month period. 

Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the ratio of debt to Adjusted EBITDA should not be considered alternatives to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP.

The Partnership believes investors benefit from having access to the same financial measures used by its management.  Further, the Partnership believes these measures are useful to investors because these measures are one of the bases for comparing the Partnership's operating and financial performance with that of other companies with similar operations, although the Partnership's measures may not be directly comparable to similar measures used by other companies.  Please see the attached reconciliations of Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the ratio of debt to Adjusted EBITDA.

—  Tables to Follow  —

Contacts:
Mark Buscovich, Manager FP&A and IR
[email protected]
(855) 866-6458

Dennard ▪ Lascar Associates
Jack Lascar / Lisa Elliott

SOURCE Oiltanking Partners, L.P.

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