EX-99.01 2 ns3q218-kex9901.htm EXHIBIT-99.01 Document
Exhibit 99.01

NuStar Energy L.P. Reports Solid Third Quarter of 2021 Results

Completes Sale of Eastern U.S. Terminals; Proceeds Improve Leverage with Year-end Debt-to-EBITDA Ratio Target Below 4.0 Times

Expects to Self-fund all Spending from Internally Generated Cash Flows for 2021, 2022 and Beyond

Reports Comparable Quarter-Over-Quarter Results

Refined Product Systems Maintain 105 Percent of Pre-Pandemic Run Rate

Permian Crude System Volumes Hit Record-Breaking Average of 502,000 Barrels Per Day/On Track to Exit 2021 at Around 514,000 Barrels Per Day

2021 Full-Year Outlook Higher Than Previous Expectations

Sustainability Report Released

SAN ANTONIO, November 4, 2021 - NuStar Energy L.P. (NYSE: NS) today announced solid third quarter of 2021 results fueled by strong throughputs on its refined products and crude oil pipelines.

“In the third quarter, we completed the $250 million sale of our Eastern U.S. terminal facilities to Sunoco LP, which made it possible for us to execute on our plan to optimize our business and strengthen our balance sheet by deploying the sales proceeds to lower our leverage and focus 100 percent of our resources on our core asset footprint. As a result, we are now targeting a year-end debt metric below 4.0 times. We also continue to expect to self-fund all of our spending from our internally generated cash flows in 2021, 2022 and beyond,” said NuStar President and CEO Brad Barron.

“We are pleased to see the pieces of our plan coming into place and our ongoing core business performing solidly with a comparable, and in some cases, better quarter-over-quarter performance, despite the lingering effects of the pandemic on the global economy and the non-cash charges associated with the asset sale.”

Barron noted the quarter’s results include a $130 million non-cash charge related to the sale of its Eastern U.S. terminal assets and a $59 million non-cash impairment charge on a portion of NuStar’s Houston 12-inch pipeline, as well as a $9 million cash gain from insurance proceeds to rebuild tanks at its Selby terminal. As a result of the non-cash charges, NuStar reported a net loss of $125 million for the third quarter of 2021, or $1.48 net loss per unit, compared to a net loss of $97 million, or a $1.22 net loss per unit, for the third quarter of 2020, which was negatively impacted by a pandemic-related non-operational charge.

Excluding the effects of the non-cash charges, adjusted net income was $55 million for the third quarter of 2021, or $0.16 per unit, compared to adjusted net income of $45 million, or $0.08 per unit, for the third quarter of 2020.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $177 million for the third quarter of 2021, comparable to the third quarter of 2020 adjusted EBITDA of $180 million and up five percent over the pre-pandemic third quarter of 2019.

Distributable cash flow (DCF) available to common limited partners was $92 million for the third quarter of 2021, up $8 million, or 10 percent, compared to $84 million of adjusted DCF in the third quarter of






2020. The distribution coverage ratio to common limited partners was 2.10 times for the third quarter of 2021 and 2.05 times for the nine months ended September 30, 2021.

“We are pleased with the strong, stable results our business generated in the third quarter, as the world has continued to bounce back from the pandemic. And we are expecting our full-year 2021 results to demonstrate, once again, the strength and resilience of our assets, our employees and our business,” said Barron.

Refined Product Demand Maintains Resilience with 105 Percent of Pre-Pandemic Run Rate

“In the third quarter, we continued to see solid, steady refined product demand in the markets we serve, maintaining a strong 105 percent of pre-pandemic demand, which is on pace with the second quarter of this year,” said Barron. “Our third quarter refined product throughputs were up 16 percent over the third quarter of 2020 and up eight percent over the pre-pandemic third quarter of 2019.

“We continue to expect our refined products systems to perform at or above 100 percent of our pre-pandemic run-rate for the remainder of 2021.”

Permian Crude System Hits Record-Breaking Volumes

Barron continued, “Steady recovery in refined product demand has also continued to stoke a rebound in U.S. refiners’ demand for crude, which has contributed to higher throughputs for our crude pipelines in the third quarter, which are up 11 percent over the second quarter of 2021 and the third quarter of 2020.

“Thanks once again to our Permian Crude System’s premier ‘core of the core’ location, lowest producer costs and highest product quality, we have seen strong volume improvement. In the third quarter, our Permian system’s volumes grew to a record-breaking average of 502,000 barrels per day, up 12 percent over the second quarter of 2021; up 19 percent over the third quarter of 2020; and up 11 percent over the peak first quarter 2020 pre-COVID quarterly average.

“We are now forecasting we will exit 2021 at around 514,000 barrels per day, which is up from the 500,000 barrels per day we forecasted in the second quarter. Looking back to the beginning of 2021, we are even more encouraged by the fact that our Permian system is up an impressive nine percent from the 470,000 barrels per day we expected back in February.”

West Coast Renewable Fuels Network Continues to Handle Impressive Share of California’s Market

Barron also reiterated the importance of NuStar’s West Coast Renewable Fuels Network, which plays an integral role in facilitating the low-carbon renewable fuels that significantly reduce emissions from transportation.

“NuStar currently handles an impressive share of California’s renewable fuels. According to the latest available data from the state of California, for the second quarter of 2021 NuStar handled about seven percent of California’s total biodiesel volumes; over 20 percent of the state’s ethanol; and close to 30 percent of its renewable diesel volumes, which does not yet include the growing proportion of renewable jet fuel volumes that we handle in the region.

“We expect NuStar’s leadership in the low-carbon fuel transition, in California and across the West Coast, to continue to grow as we complete our planned tank conversion projects, and we plan to continue to develop projects to expand our renewable fuel logistics services as low-carbon fuel legislative mandates proliferate and customer demand increases,” said Barron.







Exciting Opportunities for Utilization of Ammonia System

Barron mentioned that throughput on NuStar’s Ammonia System was up 39 percent over the third quarter of 2020. Barron said NuStar is working to increase its Ammonia System’s utilization even more through low-spend, high-return projects to connect and extend the system to new and current customers.

“These projects would supply ammonia for current applications, like the fertilizer that augments U.S. food production, as well as corn for ethanol production, across the Midwest, as well as provide safe, efficient transportation for hydrogen to power fuel-cell vehicles.

“We look forward to providing more details on these projects to increase our Ammonia System’s utilization and profitability at multiple locations on our 2,000-mile system,” Barron added.

2021 Full-Year Outlook

NuStar CFO Tom Shoaf said after taking into account the Eastern U.S. terminals sale, NuStar expects its 2021 adjusted EBITDA to be in the range of $685 to $715 million, which is slightly higher than previous expectations.

“We also expect to spend $140 to $160 million on strategic capital and $35 to $45 million on reliability capital in 2021.

“Based on these projections, we continue to target our year-end debt-to-EBITDA ratio to be below 4.0 times. And we will be achieving these solid results while generating internal cash flows to meet all of our spending needs,” said Shoaf.

Sustainability Report Released

Barron closed by discussing NuStar’s newly posted sustainability report, which can be found on the company’s website.

“You will see in our recently posted sustainability report that our record demonstrates our commitment to sustainability.

“While traditional sources of energy, like the petroleum products we transport and store, will continue to be an important part of our energy supply, both in the U.S. and across the globe, for many decades to come, we are working to assure NuStar is instrumental in emerging energy opportunities that lower emissions and generate solid returns,” said Barron.

Conference Call Details

A conference call with management is scheduled for 10:00 a.m. CT today, November 4, 2021. The partnership plans to discuss the third quarter 2021 earnings results, which will be released earlier that day. Investors interested in listening to the discussion may dial toll-free 844/889-7787, passcode 9989773. International callers may access the discussion by dialing 661/378-9931, passcode 9989773. The partnership intends to have a playback available following the discussion, which may be accessed by dialing toll-free 855/859-2056, passcode 9989773. International callers may access the playback by dialing 404/537-3406, passcode 9989773. The playback will be available until 12:00 p.m. CT on December 4, 2021.



Investors interested in listening to the live discussion or a replay via the internet may access the discussion directly at https://edge.media-server.com/mmc/p/qiscvwwz or by logging on to NuStar Energy L.P.’s website at www.nustarenergy.com.

NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, Texas, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar currently has approximately 10,000 miles of pipeline and 64 terminal and storage facilities that store and distribute crude oil, refined products, renewable fuels, ammonia and specialty liquids. The partnership’s combined system has approximately 57 million barrels of storage capacity, and NuStar has operations in the United States, Canada and Mexico. For more information, visit NuStar Energy L.P.’s website at www.nustarenergy.com and its Sustainability page at www.nustarenergy.com/Sustainability.

Cautionary Statement Regarding Forward-Looking Statements
This press release includes, and the related conference call will include, forward-looking statements regarding future events and expectations, such as NuStar’s future performance, plans and expenditures. All forward-looking statements are based on NuStar’s beliefs as well as assumptions made by and information currently available to NuStar. These statements reflect NuStar’s current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P.’s 2020 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements. Except as required by law, NuStar does not intend, or undertake any obligation, to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.








NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit, Per Unit and Ratio Data)
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Statement of Income Data:
Revenues:
Service revenues$296,473 $295,621 $869,144 $896,518 
Product sales115,872 66,970 331,940 198,404 
Total revenues412,345 362,591 1,201,084 1,094,922 
Costs and expenses:
Costs associated with service revenues:
Operating expenses
100,143 95,528 287,923 296,788 
Depreciation and amortization expense66,126 70,480 203,508 207,755 
Total costs associated with service revenues166,269 166,008 491,431 504,543 
Costs associated with product sales107,047 63,977 300,801 182,103 
Asset impairment losses154,908 — 154,908 — 
Goodwill impairment losses34,060 — 34,060 225,000 
General and administrative expenses27,365 25,457 79,334 72,128 
Other depreciation and amortization expense1,881 2,105 5,841 6,462 
Total costs and expenses491,530 257,547 1,066,375 990,236 
Operating (loss) income(79,185)105,044 134,709 104,686 
Interest expense, net(53,513)(64,165)(162,211)(171,158)
Loss on extinguishment of debt— (137,904)— (141,746)
Other income (expense), net8,450 (1,398)11,744 (5,671)
Loss before income tax expense (benefit)(124,248)(98,423)(15,758)(213,889)
Income tax expense (benefit)685 (1,783)3,535 626 
Net loss$(124,933)$(96,640)$(19,293)$(214,515)
Basic and diluted net loss per common unit$(1.48)$(1.22)$(1.18)$(2.96)
Basic and diluted weighted-average common units outstanding109,532,381 109,195,358 109,522,849 109,096,190 
Other Data (Note 1):
Adjusted net income$54,663 $45,227 $160,303 $156,194 
Adjusted net income per common unit $0.16 $0.08 $0.46 $0.44 
EBITDA
$(2,728)$38,327 $355,802 $171,486 
Adjusted EBITDA
$176,868 $180,194 $535,398 $542,195 
DCF
$92,067 $(53,950)$269,987 $130,860 
Adjusted DCF
$92,067 $83,954 $269,987 $272,606 
Distribution coverage ratio
2.10xn/a2.05x1.00x
Adjusted distribution coverage ratio
2.10x1.92x2.05x2.08x
For the Four Quarters Ended September 30,
20212020
Consolidated Debt Coverage Ratio
4.10x4.13x




NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Barrel Data)
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Pipeline:
Crude oil pipelines throughput (barrels/day)1,374,909 1,235,176 1,241,152 1,276,834 
Refined products and ammonia pipelines throughput (barrels/day)599,423 516,295 572,040 521,118 
Total throughput (barrels/day)1,974,332 1,751,471 1,813,192 1,797,952 
Throughput and other revenues$196,207 $176,210 $558,341 $537,999 
Operating expenses51,303 47,121 147,762 147,466 
Depreciation and amortization expense45,506 45,268 135,290 132,655 
Asset impairment loss59,197 — 59,197 — 
Goodwill impairment loss— — — 225,000 
Segment operating income$40,201 $83,821 $216,092 $32,878 
Storage:
Throughput (barrels/day)462,094 466,229 416,288 497,634 
Throughput terminal revenues$30,771 $29,260 $90,708 $100,182 
Storage terminal revenues77,371 93,175 245,256 264,877 
Total revenues108,142 122,435 335,964 365,059 
Operating expenses48,840 48,407 140,161 149,322 
Depreciation and amortization expense20,620 25,212 68,218 75,100 
Asset impairment loss95,711 — 95,711 — 
Goodwill impairment loss34,060 — 34,060 — 
Segment operating (loss) income$(91,089)$48,816 $(2,186)$140,637 
Fuels Marketing:
Product sales$107,996 $63,946 $306,790 $191,873 
Cost of goods106,478 63,161 300,944 180,230 
Gross margin1,518 785 5,846 11,643 
Operating expenses569 816 (132)1,882 
Segment operating income (loss)$949 $(31)$5,978 $9,761 
Consolidation and Intersegment Eliminations:
Revenues$— $— $(11)$(9)
Cost of goods— — (11)(9)
Total$— $— $— $— 
Consolidated Information:
Revenues$412,345 $362,591 $1,201,084 $1,094,922 
Costs associated with service revenues:
Operating expenses100,143 95,528 287,923 296,788 
Depreciation and amortization expense66,126 70,480 203,508 207,755 
Total costs associated with service revenues166,269 166,008 491,431 504,543 
Cost of product sales107,047 63,977 300,801 182,103 
Asset impairment losses154,908 — 154,908 — 
Goodwill impairment losses34,060 — 34,060 225,000 
Segment operating (loss) income(49,939)132,606 219,884 183,276 
General and administrative expenses27,365 25,457 79,334 72,128 
Other depreciation and amortization expense1,881 2,105 5,841 6,462 
Consolidated operating (loss) income$(79,185)$105,044 $134,709 $104,686 


NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio Data)
Note 1: NuStar Energy L.P. utilizes financial measures, such as earnings before interest, taxes, depreciation and amortization (EBITDA), distributable cash flow (DCF) and distribution coverage ratio, which are not defined in U.S. generally accepted accounting principles (GAAP). Management believes these financial measures provide useful information to investors and other external users of our financial information because (i) they provide additional information about the operating performance of the partnership’s assets and the cash the business is generating, (ii) investors and other external users of our financial statements benefit from having access to the same financial measures being utilized by management and our board of directors when making financial, operational, compensation and planning decisions and (iii) they highlight the impact of significant transactions. We may also adjust these measures to enhance the comparability of our performance across periods.
Our board of directors and management use EBITDA and/or DCF when assessing the following: (i) the performance of our assets, (ii) the viability of potential projects, (iii) our ability to fund distributions, (iv) our ability to fund capital expenditures and (v) our ability to service debt. In addition, our board of directors uses EBITDA, DCF and a distribution coverage ratio, which is calculated based on DCF, as some of the factors in its compensation determinations. DCF is a financial indicator used by the master limited partnership (MLP) investment community to compare partnership performance. DCF is used by the MLP investment community, in part, because the value of a partnership unit is partially based on its yield, and its yield is based on the cash distributions a partnership can pay its unitholders.
None of these financial measures are presented as an alternative to net income (loss). They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with GAAP.
Included in the tables below are the following items: In the the third quarter of 2021, we recorded a non-cash asset impairment loss of $95.7 million and a non-cash goodwill impairment loss of $34.1 million associated with our Eastern U.S. Terminal Operations, which were sold in October 2021 and classified as held for sale as of September 30, 2021, a non-cash asset impairment loss of $59.2 million related to our Houston pipeline and a gain from insurance recoveries of $9.4 million related to damage caused by a fire in 2019 at our Selby terminal. In the second and third quarters of 2020, we recognized losses on extinguishment of debt of $3.8 million and $137.9 million, respectively, mainly related to the repayment of our $750.0 million unsecured term loan credit agreement on September 16, 2020. In the first quarter of 2020, we recorded a non-cash goodwill impairment loss of $225.0 million related to our crude oil pipelines reporting unit.
The following is a reconciliation of net loss to EBITDA, DCF and distribution coverage ratio.
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net loss$(124,933)$(96,640)$(19,293)$(214,515)
Interest expense, net53,513 64,165 162,211 171,158 
Income tax expense (benefit)685 (1,783)3,535 626 
Depreciation and amortization expense68,007 72,585 209,349 214,217 
EBITDA(2,728)38,327 355,802 171,486 
Interest expense, net(53,513)(64,165)(162,211)(171,158)
Reliability capital expenditures(10,806)(7,279)(28,238)(18,330)
Income tax (expense) benefit(685)1,783 (3,535)(626)
Long-term incentive equity awards (a)2,730 2,416 8,737 6,402 
Preferred unit distributions(31,889)(31,888)(95,663)(92,995)
Asset impairment losses154,908 — 154,908 — 
Goodwill impairment losses34,060 — 34,060 225,000 
Other items(10)6,856 6,127 11,081 
DCF$92,067 $(53,950)$269,987 $130,860 
Distributions applicable to common limited partners$43,814 $43,678 $131,462 $131,086 
Distribution coverage ratio (b)2.10xn/a2.05x1.00x
(a)We intend to satisfy the vestings of these equity-based awards with the issuance of our common units. As such, the expenses related to these awards are considered non-cash and added back to DCF. Certain awards include distribution equivalent rights (DERs). Payments made in connection with DERs are deducted from DCF.
(b)Distribution coverage ratio is calculated by dividing DCF by distributions applicable to common limited partners.



NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio Data)
The following is the reconciliation for the calculation of our Consolidated Debt Coverage Ratio, as defined in our revolving credit agreement (the Revolving Credit Agreement).
For the Four Quarters Ended September 30,Projected for the
Year Ended
December 31, 2021
20212020
Operating income$239,125 $228,742 $ 225,000 - 245,000
Depreciation and amortization expense280,233 284,846 270,000 - 278,000
Asset impairment losses154,908 — 155,000 
Goodwill impairment losses34,060 225,000 34,000 
Equity awards (a)13,842 12,424 12,000 - 15,000
Other5,814 12,727 (13,000) - (3,000)
Consolidated EBITDA, as defined in the Revolving Credit Agreement$727,982 $763,739 $ 683,000 - 724,000
Total consolidated debt$3,387,240 $3,585,140 $ 3,100,000 - 3,300,000
NuStar Logistics' floating rate subordinated notes
(402,500)(402,500)(402,500)
Available Cash Netting Amount, as defined in the Revolving Credit Agreement— (30,494)— 
Consolidated Debt, as defined in the Revolving Credit Agreement
$2,984,740 $3,152,146 $ 2,697,500 - 2,897,500
Consolidated Debt Coverage Ratio (Consolidated Debt to Consolidated EBITDA)
4.10x4.13x3.95x - 4.0x
(a)This adjustment represents the non-cash expense related to the vestings of equity-based awards with the issuance of our common units.


























NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Per Unit and Ratio Data)
The following are reconciliations of net loss / net loss per common unit to adjusted net income / adjusted net income per common unit.
Three Months Ended September 30,Nine Months Ended September 30,
20212021
Net loss / net loss per common unit$(124,933)$(1.48)$(19,293)$(1.18)
Asset impairment losses154,908 1.41 154,908 1.41 
Goodwill impairment loss34,060 0.31 34,060 0.31 
Gain from insurance recoveries(9,372)(0.08)(9,372)(0.08)
Adjusted net income / adjusted net income per common unit$54,663 $0.16 $160,303 $0.46 

Three Months Ended September 30,Nine Months Ended September 30,
20202020
Net loss / net loss per common unit$(96,640)$(1.22)$(214,515)$(2.96)
Goodwill impairment loss— — 225,000 2.06 
Loss on extinguishment of debt137,904 1.26 141,746 1.30 
Other3,963 0.04 3,963 0.04 
Adjusted net income / adjusted net income per common unit$45,227 $0.08 $156,194 $0.44 

The following is a reconciliation of EBITDA to adjusted EBITDA.
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
EBITDA$(2,728)$38,327 $355,802 $171,486 
Asset impairment losses154,908 — 154,908 — 
Goodwill impairment losses34,060 — 34,060 225,000 
Loss on extinguishment of debt— 137,904 — 141,746 
Gain from insurance recoveries(9,372)— (9,372)— 
Other— 3,963 — 3,963 
Adjusted EBITDA$176,868 $180,194 $535,398 $542,195 

The following is a reconciliation of DCF to adjusted DCF and adjusted distribution coverage ratio.
Three Months EndedNine Months Ended
September 30, 2020
DCF$(53,950)$130,860 
Loss on extinguishment of debt137,904 141,746 
Adjusted DCF$83,954 $272,606 
Distributions applicable to common limited partners$43,678 $131,086 
Adjusted distribution coverage ratio (a)1.92x2.08x
(a)Adjusted distribution coverage ratio is calculated by dividing adjusted DCF by distributions applicable to common limited partners.



NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars)
The following is a reconciliation of net income to EBITDA and adjusted EBITDA.
Projected for the Year Ended December 31, 2021
Net income$ 23,000 - 32,000
Interest expense, net210,000 - 220,000
Income tax expense2,000 - 5,000
Depreciation and amortization expense270,000 - 278,000
EBITDA           505,000 - 535,000
Asset impairment losses155,000 
Goodwill impairment loss34,000 
Gain from insurance recoveries(9,000)
Adjusted EBITDA          $ 685,000 - 715,000

The following is a reconciliation of net income to EBITDA and adjusted EBITDA.
 Three Months Ended September 30, 2019
 
Net income$47,811 
Interest expense, net46,902 
Income tax expense1,090 
Depreciation and amortization expense68,548 
EBITDA164,351 
Other3,942 
Adjusted EBITDA$168,293