NuStar Energy L.P. announced second quarter distributable cash flow available to limited partners of $16.9 million, or $0.24 per unit, compared to 2011 second quarter distributable cash flow of $119.4 million, or $1.85 per unit. Second quarter earnings before interest, taxes, depreciation and amortization (EBITDA) was negative $161.2 million compared to second quarter 2011 EBITDA of $160.0 million.
The company reported a second quarter net loss applicable to limited partners of $251.6 million, or $3.56 per unit, compared to net income applicable to limited partners of $81.8 million, or $1.27 per unit, earned in the second quarter of 2011. Without certain adjustments in the second quarters of both years, as described below, the second quarter of 2012 would have generated adjusted net income applicable to limited partners of $4.4 million, or $0.06 per unit, compared to the second quarter 2011 adjusted net income applicable to limited partners of $86.4 million, or $1.34 per unit.
For the six months ended June 30, 2012, the company reported a net loss applicable to limited partners of $235.6 million, or $3.33 per unit, compared to net income applicable to limited partners of $101.1 million, or $1.57 per unit, for the six months ended June 30, 2011.
"We have several transactions and internal growth projects in the works that we're confident will improve our earnings going forward," said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC. "We remain committed to growing our distributions to our unitholders so we have been very focused on minimizing our earnings volatility and reducing our debt in order to invest in more stable, high-return pipeline and terminal projects."
Anastasio went on to say, "The asphalt joint venture that we are forming with Lindsay Goldberg is expected to deconsolidate our asphalt operations, while allowing us to maintain a 50% interest in a business that has the potential to generate significant cash flows as the U.S. economy improves. The closing for the transaction is still expected to be completed by September 30, 2012. As a result of this transaction, NuStar expects to reduce its debt levels by $400 to $500 million subject to the joint venture's working capital requirements.
"We also have completed several high-return growth projects in our storage and transportation segments, and we have many more in various stages of development that are expected to contribute significantly to our earnings going forward. All of these initiatives should position the company well for the coming years."
Second Quarter Adjustments
The second quarter 2012 results included $271.8 million, or $3.77 per unit, of non-cash expenses related to asset impairments. These asset impairment charges relate primarily to a write down of PP&E, Goodwill and other intangible assets associated with the company's asphalt operations. This charge is a result of the expected sale of 50% of these operations to an affiliate of Lindsay Goldberg LLC. As noted above, excluding this item and other adjustments, second quarter 2012 adjusted net income applicable to limited partners would have been $4.4 million, or $0.06 per unit.
The second quarter 2011 results included $4.0 million, or $0.06 per unit, net of tax, of expenses related primarily to the write-off of project costs associated with certain capital projects cancelled during the quarter. As noted above, excluding this item and other adjustments, second quarter 2011 adjusted net income applicable to limited partners would have been $86.4 million, or $1.34 per unit
Earnings Outlook for the Remainder of 2012
In the last half of 2012 the company expects to benefit from the July 1, 2012 FERC tariff adjustment, the completion of two new pipeline projects in the Eagle Ford Shale region and the completion of a one million barrel expansion project at the St. Eustatius terminal facility. These projects should contribute to higher EBITDA in the last half of 2012 when compared to the last half of 2011.
In regard to the full-year outlook for NuStar Energy L.P.'s business segments Anastasio commented, "We expect EBITDA in both our storage and transportation segments to be higher than last year. Storage segment EBITDA is expected to be $25 to $35 million higher than 2011 while EBITDA in our transportation segment should be $10 to $20 million higher than last year."
Anastasio then stated, "Lower earnings in our asphalt operations as well as our fuels marketing operations should cause EBITDA in our asphalt and fuels marketing segment to be significantly lower than last year."
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