EX-99.1 2 a08-20394_1ex99d1.htm EX-99.1

Exhibit 99.1

 

News Release

NYSE: BPL

 

Buckeye Partners, L.P.

Five TEK Park

9999 Hamilton Blvd.

Breinigsville, PA 18031

 

 

Contact:

 

Stephen R. Milbourne,

 

08-16

 

 

Manager, Investor Relations

 

 

 

 

smilbourne@buckeye.com

 

 

 

 

(800) 422-2825

 

 

 

BUCKEYE PARTNERS, L.P. REPORTS SECOND QUARTER 2008 RESULTS
AND INCREASES QUARTERLY DISTRIBUTION

 

Breinigsville, PA – July 29, 2008. . . Buckeye Partners, L.P. (NYSE: BPL) (the “Partnership”) today reported its financial results for the second quarter of 2008.  The Partnership’s net income for the second quarter of 2008 was $40.9 million, or $0.70 per LP unit, compared with net income of $34.5 million, or $0.70 per LP unit, reported for the second quarter of 2007.  The Partnership’s EBITDA (as defined below) for the second quarter of 2008 was $72.5 million, compared with EBITDA of $58.7 million in the second quarter of 2007.  Net income per LP unit in the second quarter of 2008 reflects an increase in the average number of LP units outstanding during the second quarter to 48.4 million from an average of 41.3 million LP units outstanding in the second quarter of 2007.

 

Revenue in the second quarter of 2008 was $492.5 million compared with revenue in the second quarter of 2007 of $125.0 million.  Revenue in the second quarter of 2008 includes $15.2 million generated by the Partnership’s Natural Gas Storage segment, which consists of the natural gas storage facility that was acquired in January 2008, and $347.8 million generated by the Partnership’s Energy Services segment, which consists principally of the wholesale operations of Farm & Home Oil Company LLC, which were acquired in February 2008.  Operating income in the second quarter of 2008 was $58.7 million compared with operating income of $46.3 million in the second quarter of 2007.  Operating income in the second quarter of 2008 includes $7.7 million from the Natural Gas Storage segment and a $0.2 million loss from the Energy Services segment.  In light of the second quarter results for the Energy Services segment and continuing volatility in the

 

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petroleum products markets, the Partnership is revising its full year 2008 EBITDA estimate for the Energy Services segment to a range of $10 million to $14 million.

 

The Board of Directors of Buckeye GP LLC, the general partner of the Partnership, declared a regular quarterly partnership cash distribution of $0.8625 per LP unit, payable August 29, 2008 to unitholders of record on August 8, 2008.  This cash distribution represents a quarterly increase in the distribution of $0.0125 per LP unit to an indicated annual cash distribution level of $3.45 per LP unit.  This is the 86th consecutive quarterly cash distribution paid by the Partnership.

 

Forrest E. Wylie, Chairman and CEO, stated, “We are pleased to report solid financial results for Buckeye for the second quarter and year to date 2008.  Although we experienced a decline of 2.6 percent in pipeline volumes in the second quarter compared to the same period last year, tariff rate increases and effective cost control resulted in a meaningful increase in operating income for the Pipeline Operations segment versus the second quarter of 2007.  In addition, our Terminaling and Storage segment continued to perform in excess of expectations.  With respect to our acquisitions made in early 2008, our Energy Services segment has not performed as well as we anticipated due to the compression in gross margins that resulted from the rapid escalation and overall volatility in petroleum product prices.  However, we are extremely pleased with the results of the Natural Gas Storage segment, which provided a meaningful contribution to our financial results.  Based on our overall financial performance in the second quarter, we are pleased to announce another increase in our quarterly cash distribution to unitholders.”

 

The Partnership will host a conference call to discuss the second quarter on Wednesday, July 30, 2008, at 11:00 a.m. Eastern Time.  Investors are invited to listen to the conference call via the Internet, on either a live or replay basis at: http://www.videonewswire.com/event.asp?id=49786.  Interested parties may participate in the call by joining the conference at (719) 325-4800 and referencing conference ID 4159877.  An audio replay of the conference call also will be available through August 3, 2008 by dialing (719) 457-0820 Code: 4159877.

 

Buckeye Partners, L.P. (www.buckeye.com) is a publicly traded partnership that owns and operates one of the largest independent refined petroleum products pipeline

 

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systems in the United Status in terms of volumes delivered, with approximately 5,400 miles of pipeline. Buckeye Partners, L.P. also owns 63 refined petroleum products terminals, operates and maintains approximately 2,200 miles of pipeline under agreements with major oil and chemical companies, owns a major natural gas storage facility in northern California, and markets refined petroleum products in certain of the geographic areas served by its pipeline and terminal operations.  The general partner of Buckeye Partners, L.P. is owned by Buckeye GP Holdings L.P. (NYSE: BGH).

 

* * * * *

 

EBITDA, a measure not defined under generally accepted accounting principles (“GAAP”), is defined by the Partnership as income from continuing operations before interest expense (including amortization and write-off of deferred debt financing costs), income taxes, depreciation, and amortization.  EBITDA should not be considered an alternative to net income, operating profit, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP.  Because EBITDA excludes some items that affect net income and these items may vary among other companies, the EBITDA data presented may not be comparable to similarly titled measures at other companies.  Management of the Partnership uses EBITDA as a performance measure to assist in the analysis and assessment of the Partnership’s operations, to evaluate the viability of proposed projects, and to determine overall rates of return on alternative investment opportunities.  The Partnership believes that investors benefit from having access to the same financial measures used by the Partnership’s management.  Please see the attached reconciliation of EBITDA to income from continuing operations, the most directly comparable GAAP measure.  In addition, the Partnership is forecasting net income, a GAAP measure, in a range of $4.2 million to $8.2 million in 2008 for its Energy Services segment, based on projected EBITDA in a range of $10 million to $14 million, less estimated interest expense associated with working capital financing of approximately $4.1 million and depreciation of approximately $1.7 million.  Actual interest expense for 2008 will vary for many reasons, including general market conditions and the amount of working capital required by the Energy Services segment.  Actual depreciation will vary depending on the values and useful lives assigned to the various assets acquired in the Energy Services segment as well as the amount of capital expenditures to be incurred by the Energy Services segment in 2008.

 

* * * * *

 

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that we believe to be reasonable as of today’s date. Such statements are identified by use of the words “anticipates”, “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 the control of the Partnership.  Among them are (1) changes in laws or regulations to which we are subject, including those that permit the treatment of us as a partnership for federal income tax purposes, (2) terrorism, adverse weather conditions, environmental releases, and natural disasters, (3) changes in the marketplace for our products or services, such as increased competition, better energy efficiency, or general reductions in demand, (4) adverse regional or national economic conditions or adverse capital market conditions, (5) shutdowns or interruptions at the source points for the products we transport, store, or sell, (6) unanticipated capital expenditures in connection with the construction, repair, or replacement of our assets, and (7) volatility in the price of refined petroleum products

 

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and the value of natural gas storage services. You should read our Annual Report on Form 10-K and our most recently filed Quarterly Report on Form 10-Q 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.

 

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BUCKEYE PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per unit amounts)

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2008

 

2007

 

2008

 

2007

 

Revenues:

 

 

 

 

 

 

 

 

 

Product sales

 

$

346,436

 

$

1,035

 

$

587,482

 

$

5,950

 

Transportation and other

 

146,112

 

123,916

 

285,342

 

243,945

 

Total revenue

 

492,548

 

124,951

 

872,824

 

249,895

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of product sales

 

341,591

 

1,032

 

578,203

 

5,876

 

Operating expenses

 

69,112

 

61,405

 

134,440

 

115,271

 

Depreciation and amortization

 

13,460

 

11,098

 

25,958

 

21,905

 

General and administrative

 

9,717

 

5,159

 

17,423

 

10,313

 

Total costs and expenses

 

433,880

 

78,694

 

756,024

 

153,365

 

Operating income

 

58,668

 

46,257

 

116,800

 

96,530

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Investment and equity income

 

1,573

 

2,570

 

4,213

 

4,636

 

Interest and debt expense

 

(18,021

)

(12,773

)

(35,955

)

(26,260

)

Minority interests and other

 

(1,360

)

(1,509

)

(2,794

)

(2,627

)

Total other (expense)

 

(17,808

)

(11,712

)

(34,536

)

(24,251

)

Income from continuing operations

 

40,860

 

34,545

 

82,264

 

72,279

 

(Loss) income from discontinued operations

 

(8

)

—

 

1,405

 

—

 

Net income

 

$

40,852

 

$

34,545

 

$

83,669

 

$

72,279

 

Allocation of net income:

 

 

 

 

 

 

 

 

 

Net income allocated to general partner:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

6,869

 

$

5,801

 

$

14,171

 

$

12,618

 

(Loss) income from discontinued operations

 

$

(2

)

$

—

 

$

423

 

$

—

 

Net income allocated to limited partners:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

33,991

 

$

28,744

 

$

68,093

 

$

59,661

 

(Loss) income from discontinued operations

 

$

(6

)

$

—

 

$

982

 

$

—

 

Earnings per limited partner unit-basic:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.70

 

$

0.70

 

$

1.45

 

$

1.47

 

Income from discontinued operations

 

—

 

—

 

0.02

 

—

 

Earnings per limited partner unit-basic

 

$

0.70

 

$

0.70

 

$

1.47

 

$

1.47

 

Earnings per limited partner unit-diluted:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.70

 

$

0.70

 

$

1.44

 

$

1.47

 

Income from discontinued operations

 

—

 

—

 

0.02

 

—

 

Earnings per limited partner unit-diluted

 

$

0.70

 

$

0.70

 

$

1.46

 

$

1.47

 

Weighted average number of limited partner units outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

48,368

 

41,201

 

47,116

 

40,579

 

Diluted

 

48,394

 

41,253

 

47,144

 

40,634

 

 


 

BUCKEYE PARTNERS, L.P.

SELECTED FINANCIAL AND OPERATING DATA

(Financial data in thousands)

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2008

 

2007

 

2008

 

2007

 

Revenue:

 

 

 

 

 

 

 

 

 

Pipeline Operations

 

$

98,887

 

$

92,427

 

$

195,277

 

$

186,178

 

Terminalling and Storage

 

27,114

 

23,948

 

54,746

 

47,536

 

Natural Gas Storage

 

15,186

 

—

 

26,650

 

—

 

Energy Services

 

347,768

 

—

 

582,315

 

—

 

Other Operations

 

10,757

 

8,576

 

21,626

 

16,181

 

Intersegment eliminations

 

(7,164

)

—

 

(7,790

)

—

 

Total

 

$

492,548

 

$

124,951

 

$

872,824

 

$

249,895

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

Pipeline Operations

 

$

38,953

 

$

35,046

 

$

75,641

 

$

72,956

 

Terminalling and Storage

 

10,297

 

8,773

 

23,267

 

18,919

 

Natural Gas Storage

 

7,691

 

—

 

12,560

 

—

 

Energy Services

 

(231

)

—

 

1,495

 

—

 

Other Operations

 

1,958

 

2,438

 

3,837

 

4,655

 

Total

 

$

58,668

 

$

46,257

 

$

116,800

 

$

96,530

 

 

 

 

 

 

 

 

 

 

 

Operating, general & administrative expenses:

 

 

 

 

 

 

 

 

 

Pipeline Operations

 

$

59,934

 

$

57,381

 

$

119,636

 

$

113,222

 

Terminalling and Storage

 

16,817

 

15,175

 

31,479

 

28,617

 

Natural Gas Storage

 

7,495

 

—

 

14,090

 

—

 

Energy Services

 

347,999

 

—

 

580,820

 

—

 

Other Operations

 

8,799

 

6,138

 

17,789

 

11,526

 

Intersegment eliminations

 

(7,164

)

—

 

(7,790

)

—

 

Total

 

$

433,880

 

$

78,694

 

$

756,024

 

$

153,365

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

Pipeline Operations

 

$

9,365

 

$

9,316

 

$

18,613

 

$

18,405

 

Terminalling and Storage

 

1,516

 

1,434

 

3,004

 

2,739

 

Natural Gas Storage

 

1,702

 

—

 

2,750

 

—

 

Energy Services

 

444

 

—

 

734

 

—

 

Other Operations

 

433

 

348

 

857

 

761

 

Total

 

$

13,460

 

$

11,098

 

$

25,958

 

$

21,905

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

Pipeline Operations

 

 

 

 

 

$

13,844

 

$

29,375

 

Terminalling and Storage

 

 

 

 

 

7,217

 

6,075

 

Natural Gas Storage

 

 

 

 

 

10,020

 

—

 

Energy Services

 

 

 

 

 

1,420

 

—

 

Other Operations

 

 

 

 

 

—

 

1,516

 

Total

 

 

 

 

 

$

32,501

 

$

36,966

 

 

 

 

 

 

 

 

 

 

 

Operating Data

 

 

 

 

 

 

 

 

 

Pipeline Throughput (b/d - 000s)

 

1,406.7

 

1,443.8

 

1,395.1

 

1,449.3

 

Pipeline Average Tariff (Cents/bbl.)

 

67.7

 

64.9

 

65.7

 

63.3

 

Terminal Throughput (b/d - 000s)

 

554.0

 

570.1

 

538.1

 

553.1

 

 


 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2008

 

2007

 

2008

 

2007

 

EBITDA Reconciliation:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

40,860

 

$

34,545

 

$

82,264

 

$

72,279

 

Interest and debt expense

 

18,021

 

12,773

 

35,955

 

26,260

 

Income tax expense

 

198

 

236

 

426

 

438

 

Depreciation and amortization

 

13,460

 

11,098

 

25,958

 

21,905

 

EBITDA

 

$

72,539

 

$

58,652

 

$

144,603

 

$

120,882