Oiltanking Partners, L.P. Reports Financial Results For The Third Quarter 2012

HOUSTON, Nov. 7, 2012 /PRNewswire/ -- Oiltanking Partners, L.P. (NYSE: OILT) (the "Partnership") today reported third quarter 2012 net income of $14.9 million, or $0.38 per unit on a basic and diluted basis, compared to third quarter 2011 net income of $35.3 million.  The third quarter of 2011 includes an income tax benefit of $27.3 million as a result of the elimination of deferred tax accounts related to the conversion to a non-taxable entity in connection with the Partnership's initial public offering.  Net income for the third quarter of 2011, excluding this benefit and other gains and losses, was $13.8 million.  Net income excluding gains and losses, 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. 

Adjusted EBITDA for the third quarter of 2012 was $19.5 million, an increase of 8.1% over $18.1 million for the third quarter of 2011. Adjusted EBITDA, which is a financial measure not presented in accordance with GAAP, is defined and reconciled to net income below.

The Partnership's overall operating results for the third quarter of 2012 improved compared to the prior year period primarily due to higher storage and throughput volumes generating increased service fees, and to higher ancillary service fees, partially offset by higher operating and selling, general and administrative expenses.  Revenues increased approximately $4.5 million, or 15.5%, to $33.3 million during the 2012 quarter, mainly due to additional revenues from new storage capacity placed into service in December 2011 and in April 2012 and to an escalation in storage fees, resulting in an increase in storage service fee revenue of $2.2 million, higher throughput fee revenue of $1.4 million, largely attributable to higher liquefied petroleum gas exports during the 2012 period, and an increase in ancillary services fee revenue of $0.8 million.

Operating expenses during the third quarter of 2012 were $9.0 million, increasing $2.1 million compared to the same period in 2011, primarily due to higher property taxes resulting partially from increased property values in the 2012 period and a refund of property taxes in the 2011 period and to higher employee-related costs due to increases in benefit costs and higher operational labor.  Selling, general and administrative expenses increased by $0.9 million primarily due to increased costs associated with being a publicly traded company. 

"We are pleased to report strong results for the third quarter as the Partnership continues to benefit from the positive impact of an additional 1,045,000 barrels of crude storage capacity placed into service since the end of 2011," said Carlin Conner, Chairman, President and Chief Executive Officer of the Partnership's general partner.  "Our current crude storage expansion projects and crude pipeline project are on budget and ahead of schedule with an additional 1.1 million barrels of new storage capacity and the pipelines expected to be placed into service by early January of 2013."

"Yesterday we announced that Anne-Marie Ainsworth has been selected to succeed me as CEO, effective November 26, 2012.  We are highly confident that Anne-Marie has the right leadership skills and industry experience to lead Oiltanking Partners through to its next phase of growth.  Anne-Marie and the entire Oiltanking team believe that the Partnership continues to have compelling growth opportunities primarily due to the changing crude oil logistics currently underway in North America.  We intend to continue to pursue these opportunities as our existing customer base, as well as new customers, continue to express strong interest in making future commitments," added Conner.

On October 18, 2012, the Partnership declared an increase in its cash distribution to $0.375 per unit, or $1.50 per unit on an annualized basis, for all of its outstanding limited partner units.  The third quarter distribution represents a 4.2% increase over the prior quarter distribution of $0.36 per limited partnership unit.  The $14.9 million cash distribution will be paid on November 14, 2012 to all unitholders of record as of November 2, 2012.  Distributable cash flow for the third quarter of 2012 provided distribution coverage of 1.19 times the amount needed for the Partnership to fund the quarterly distribution to both the general and limited partners.  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 third quarter 2012 financial results on November 8, 2012 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time).  To participate in the call, dial (480) 629-9819 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 November 15, 2012 by calling (303) 590-3030 and using the pass code 4568713#.

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, net income excluding gains and losses, 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, net income excluding gains and losses, 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, net income excluding gains and losses, 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, net income excluding gains and losses, 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, net income excluding gains and losses, 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) and depreciation and amortization expense, as further adjusted to exclude certain other non-cash and non-recurring items, including gains and losses on disposals of fixed assets, property casualty indemnification and early extinguishment of debt.  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.

This press release also includes the non-GAAP measure net income excluding gains and losses.  The Partnership defines net income excluding gains and losses as net income excluding gains and losses from (i) the disposal of fixed assets; (ii) property casualty indemnification; and (iii) early extinguishment of debt, and excluding income tax benefit due to the elimination of deferred tax account balances, which occurred upon the change in tax status of the entity.  The Partnership's management believes net income excluding gains and losses from the disposal of fixed assets, property casualty indemnification and early extinguishment of debt, and income tax benefit due to the elimination of deferred tax account balances is a useful measure for investors because it allows comparison of the Partnership's results from core operations from period to period.

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 property casualty indemnification; (iii) loss on early extinguishment of debt; (iv) other (income) expense; and (v) income tax expense (benefit); 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 and the general partner interest.

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, net income excluding gains and losses, 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, net income excluding gains and losses, distributable cash flow, distribution coverage ratio and the ratio of debt to Adjusted EBITDA.

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

Jack Lascar / [email protected]
Lisa Elliott / [email protected]
DRG&L / (713) 529-6600

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SOURCE Oiltanking Partners, L.P.

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