Plains All American Pipeline, L.P. Reports Strong First-Quarter 2013 Results

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Plains All American Pipeline, L.P. Reports Strong First-Quarter 2013 Results

HOUSTON--(BUSINESS WIRE)-- Plains All American Pipeline, L.P. (NYSE: PAA) reported strong first-quarter 2013 results as summarized below:

     

Summary Financial Information(1)

(in millions, except per unit data)

Three Months Ended

March 31,

  2013  2012  % Change
Net income attributable to Plains$528$230130%
Diluted net income per limited partner unit$1.27$0.51149%
EBITDA $748  $382  96%
 
Three Months Ended

March 31,

  2013  2012  % Change
Adjusted net income attributable to Plains$524$32064%
Diluted adjusted net income per limited partner unit$1.26$0.7959%
Adjusted EBITDA $739  $472  57%
Distribution declared for the period $0.5750  $0.5225  10.0%

(1)

 

The Partnership's reported results include the impact of items that affect comparability between reporting periods. The impact of these items is excluded from adjusted results. See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding selected items that the Partnership believes impact comparability of financial results between reporting periods, as well as for information regarding non-GAAP financial measures (such as adjusted EBITDA) and their reconciliation to the most directly comparable GAAP measures.

 

"PAA reported very strong first-quarter results, which meaningfully exceeded 2012's comparable results as well as our guidance," said Greg L. Armstrong, Chairman and CEO of Plains All American. "This performance was underpinned by solid fee-based results in our Transportation and Facilities segments and outstanding execution in our margin-based Supply and Logistics segment. We have increased our 2013 adjusted EBITDA guidance by $135 million, representing an approximate 7% increase over our guidance issued at the beginning of the year. This updated guidance incorporates the benefit of our strong first-quarter performance as well as a slightly improved outlook for the second quarter of 2013.


"As of the distribution payable next week, PAA will have increased year-over-year distributions by 10%. PAA ended the quarter with solid distribution coverage, a strong balance sheet, credit metrics favorable to our targets and approximately $2.8 billion in committed liquidity.

"Looking forward, PAA's 2013 capital program and multi-billion dollar project portfolio provide visibility for continued distribution growth. As a result of advancements in several attractive projects over the last few months, we are also increasing our 2013 capital program by $300 million to $1.4 billion. These new projects include our recently announced Cactus pipeline that will connect our Permian Basin and Eagle Ford assets. Furthermore, we continue to make progress on a number of other projects across the US and Canada. "

The following table summarizes selected financial information by segment for the first quarter of 2013:

       

Summary of Selected Financial Data by Segment(1)

(in millions)
Three Months EndedThree Months Ended
March 31, 2013March 31, 2012
Transportation Facilities 

Supply and
Logistics

Transportation Facilities 

Supply and
Logistics

Reported segment profit$164$150$434$162$90$128

Selected items impacting the comparability of segment profit (2)

 11  6  (27) 11 10 69
Adjusted segment profit$175 $156 $407 $173$100$197
Percentage change in adjusted segment profit over 2012 1% 56% 107%

(1)

 

The Partnership's reported results include the impact of items that affect comparability between reporting periods. The impact of these items is excluded from adjusted results. See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding selected items that the Partnership believes impact comparability of financial results between reporting periods.

(2)

Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

 

First-quarter 2013 Transportation adjusted segment profit increased 1% over comparable 2012 results. This slight increase was primarily related to benefits from the BP NGL acquisition and increased pipeline volumes, which were largely offset by higher operating expenses related to response and remediation costs from two pipeline releases and costs incurred inspecting idled pipelines to determine if these pipelines could be placed into service.

First-quarter 2013 Facilities adjusted segment profit increased 56% over comparable 2012 results. This increase was primarily related to capacity additions from the BP NGL and rail terminal acquisitions and recently completed organic growth projects.

First-quarter 2013 Supply and Logistics adjusted segment profit increased 107% over comparable 2012 results. This increase was primarily related to solid execution during favorable crude oil market conditions, higher lease gathering volumes and margins and increased NGL sales volumes and margins.

The Partnership will hold a conference call on May 7, 2013 (see details below). Prior to this conference call, the Partnership will furnish a current report on Form 8-K, which will include material in this news release as well as financial and operational guidance for the second quarter and full year of 2013. A copy of the Form 8-K will be available on the Partnership's website at www.paalp.com, where PAA routinely posts important information about the Partnership.

Conference Call

The Partnership's conference call will be held at 11:00 a.m. EDT on Tuesday, May 7, 2013 to discuss the following items:

1. The Partnership's first-quarter 2013 performance;

2. The status of major expansion projects;

3. Capitalization and liquidity;

4. Financial and operating guidance for the second quarter and full year of 2013; and

5. The Partnership's outlook for the future.

Conference Call Access Instructions

To access the Internet webcast of the conference call, please go to the Partnership's website at www.paalp.com, choose "Investor Relations," and then choose "Conference Calls." Following the live webcast, the call will be archived for a period of sixty (60) days on the Partnership's website.

Alternatively, access to the live conference call is available by dialing toll free (800) 230-1059. International callers should dial (612) 234-9959. No password is required. The slide presentation accompanying the conference call will be available a few minutes prior to the call under the "Conference Call Summaries" portion of the "Conference Calls" tab of the "Investor Relations" section of the PAA website at www.paalp.com.

Telephonic Replay Instructions

To listen to a telephonic replay of the conference call, please dial (800) 475-6701 (or, for international callers, (320) 365-3844), and enter replay access code 285955. The replay will be available beginning Tuesday, May 7, 2013, at approximately 1:00 p.m. EDT and will continue until 12:59 a.m. EDT on June 8, 2013.

Non-GAAP Financial Measures and Selected Items Impacting Comparability

To supplement our financial information presented in accordance with GAAP, management uses additional measures that are known as "non-GAAP financial measures" (such as adjusted EBITDA and implied distributable cash flow) in its evaluation of past performance and prospects for the future. Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) the mark-to-market of derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), (iii) items that are not indicative of our core operating results and business outlook and/or (iv) other items that we believe should be excluded in understanding our core operating performance. We have defined all such items as "selected items impacting comparability." We consider an understanding of these selected items impacting comparability to be material to our evaluation of our operating results and prospects.

Although we present selected items that we consider in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions and numerous other factors. These types of variations are not separately identified in this release, but will be discussed, as applicable, in management's discussion and analysis of operating results in our Quarterly Report on Form 10-Q.

Adjusted EBITDA and other non-GAAP financial measures are reconciled to the most directly comparable GAAP measures for the periods presented in the tables attached to this release, and should be viewed in addition to, and not in lieu of, our condensed consolidated financial statements and notes thereto. In addition, the Partnership maintains on its website (www.paalp.com) a reconciliation of adjusted EBITDA and certain commonly used non-GAAP financial information to the most comparable GAAP measures. To access the information, investors should click on the "Investor Relations" link on the Partnership's home page and then the "Non-GAAP Reconciliation" link on the Investor Relations page.

Forward Looking Statements

Except for the historical information contained herein, the matters discussed in this release are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from results anticipated in the forward-looking statements. These risks and uncertainties include, among other things, failure to implement or capitalize, or delays in implementing or capitalizing, on planned internal growth projects; unanticipated changes in crude oil market structure, grade differentials and volatility (or lack thereof); the availability of, and our ability to consummate, acquisition or combination opportunities; the successful integration and future performance of acquired assets or businesses and the risks associated with operating in lines of business that are distinct and separate from our historical operations; the occurrence of a natural disaster, catastrophe, terrorist attack or other event, including attacks on our electronic and computer systems; tightened capital markets or other factors that increase our cost of capital or limit our access to capital; maintenance of our credit rating and ability to receive open credit from our suppliers and trade counterparties; continued creditworthiness of, and performance by, our counterparties, including financial institutions and trading companies with which we do business; the effectiveness of our risk management activities; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; declines in the volumes of crude oil, refined product and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of our facilities, whether due to declines in production from existing oil and gas reserves, failure to or slowdown in the development of additional oil and gas reserves or other factors; shortages or cost increases of supplies, materials or labor; fluctuations in refinery capacity in areas supplied by our mainlines and other factors affecting demand for various grades of crude oil, refined products and natural gas and resulting changes in pricing conditions or transportation throughput requirements; our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; the impact of current and future laws, rulings, governmental regulations, accounting standards and statements and related interpretations; non-utilization of our assets and facilities; the effects of competition; interruptions in service on third-party pipelines; increased costs or lack of availability of insurance; fluctuations in the debt and equity markets, including the price of our units at the time of vesting under our long-term incentive plans; the currency exchange rate of the Canadian dollar; weather interference with business operations or project construction; risks related to the development and operation of natural gas storage facilities; factors affecting demand for natural gas and natural gas storage services and rates; general economic, market or business conditions and the amplification of other risks caused by volatile financial markets, capital constraints and pervasive liquidity concerns; and other factors and uncertainties inherent in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the storage of natural gas and the processing, transportation, fractionation, storage and marketing of natural gas liquids discussed in the Partnership's filings with the Securities and Exchange Commission.

Plains All American Pipeline, L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the processing, transportation, fractionation, storage and marketing of natural gas liquids. Through its general partner interest and majority equity ownership position in PAA Natural Gas Storage, L.P. (NYS: PNG) , PAA also owns and operates natural gas storage facilities. PAA is headquartered in Houston, Texas.

 
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
  

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per unit data)
 
Three Months Ended
March 31,
20132012
 
REVENUES$10,620$9,218
 
COSTS AND EXPENSES
Purchases and related costs9,4378,502
Field operating costs340249
General and administrative expenses10694
Depreciation and amortization 82  60 
Total costs and expenses 9,965  8,905 
 
OPERATING INCOME655313
 
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities117
Interest expense, net(77)(65)
Other income, net -  2 
 
INCOME BEFORE TAX589257
Current income tax expense(46)(17)
Deferred income tax expense (7) (3)
 
NET INCOME536237
Net income attributable to noncontrolling interests (8) (7)
NET INCOME ATTRIBUTABLE TO PLAINS$528 $230 
 
NET INCOME ATTRIBUTABLE TO PLAINS:
LIMITED PARTNERS$433 $162 
GENERAL PARTNER$95 $68 
 
BASIC NET INCOME PER LIMITED PARTNER UNIT$1.28 $0.52 
 
DILUTED NET INCOME PER LIMITED PARTNER UNIT$1.27 $0.51 
 
BASIC WEIGHTED AVERAGE UNITS OUTSTANDING 336  314 
 
DILUTED WEIGHTED AVERAGE UNITS OUTSTANDING 339  316 
 
 

ADJUSTED RESULTS:

(in millions, except per unit data)Three Months Ended
March 31,
20132012
 
ADJUSTED NET INCOME ATTRIBUTABLE TO PLAINS$524 $320 
 
DILUTED ADJUSTED NET INCOME PER LIMITED PARTNER UNIT$1.26 $0.79 
 
ADJUSTED EBITDA$739 $472 
  
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
 

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(in millions)
March 31,December 31,
20132012
ASSETS
Current assets$5,140$5,147
Property and equipment, net9,8839,643
Goodwill2,5202,535
Linefill and base gas704707
Long-term inventory244274
Investments in unconsolidated entities392343
Other, net 557  586 
Total assets$19,440 $19,235 
 
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities$5,022$5,183
Senior notes, net of unamortized discount6,0106,010
Long-term debt under credit facilities and other321310
Other long-term liabilities and deferred credits
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