U.S. Markets close in 3 hrs 18 mins

Edited Transcript of WNRL earnings conference call or presentation 28-Feb-17 8:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 Western Refining Logistics LP Earnings Call

El Paso Feb 28, 2017 (Thomson StreetEvents) -- Edited Transcript of Western Refining Logistics LP earnings conference call or presentation Tuesday, February 28, 2017 at 8:00:00pm GMT

TEXT version of Transcript

================================================================================

Transcript

--------------------------------------------------------------------------------

Editor: [1]

--------------------------------------------------------------------------------

Please stand by for realtime transcript.

Good day ladies and gentlemen.

And welcome to the Western Refining Logistics fourth quarter conference call.

(Operator instructions) . As a reminder this conference call is being recorded.

I would now like to turn the call over to Ms. Michelle Clemente.

You may begin.

--------------------------------------------------------------------------------

Unknown Speaker* [2]

--------------------------------------------------------------------------------

Thank you Lacey.

Good afternoon and thank you for joining us today from the earnings conference call for Western Refining Logistics.

Joining me for today's call are just Stephens, President and CEO , Karen Davis our CFO, Matt Reuter our senior Vice President of operations and other members of our senior management team.

As you know Tesoro Corporation has announced the pending acquisition of Western Refining.

As a result we will be only be taking questions relative to WNRL operations.

As a reminder today's presentation will contain forward-looking statements for both WNRL and our sponsor Western Refining.

I refer you to the forward-looking statements section and recent filings with the SEC for both WNRL and WNR.

We assume no obligation to update or revise any forward-looking statements to reflect new or changing events or circumstances.

In addition to reporting financial results in accordance with generally accepted accounting principles or GAAP, we report certain non-GAAP financial results.

Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results which can be found in the press release which is posted on the investor relations section of our website.

I will now turn the call over to just Stephens.

--------------------------------------------------------------------------------

Unknown Speaker* [3]

--------------------------------------------------------------------------------

Thanks Michelle and welcome to WNRL's fourth quarter 2016 earnings conference call.

After my opening remarks Karen will review our Q4 results in more detail , then we will open up the call for your questions.

We are pleased with the performance of WNRL in the fourth quarter.

We continue to successfully grow our presence in the Permian Basin, and with the acquisition of the St. Paul Park logistics assets in September now have a presence in the upper Midwest.

Our priorities remain consistent, to optimize our existing portfolio, to grow both organically and with acquisitions.

Let me summarize our 2016 results.

First, we've organically grown our asset base with construction of asset gathering lines in the Delaware basin which will lead to more mainline movement.

We expect that as producers announce new pretty -- crude oil production growth we will have opportunities to build additional gathering lines.

In the fourth quarters we did bottlenecked the crude flow into the TexNew in New Mexico.

In the Delaware we added about 130,000 barrels of crude oil storage in 2016, and expect to add additional tanks for blending and segregating crude oil in order to maximize the value of our system.

As I mentioned we completed the acquisition of the St. Paul Park logistics assets in September and we also completed two equity issuance during 2016 in anticipation of future drop-down transactions from WNR in 2017. Western Refining completed the buildout of crude oil terminals at link, Mason stations and two stations along the TexNew pipeline.

These are candidates for dropdowns in the future.

Western also is in advanced negotiations with producers about construction and operating additional pipeline infrastructure in the Delaware basin.

All of these initiatives allow us to grow cash flow and deliver LP producing growth of 11% for the year.

We continue to believe that significant growth opportunity exists particularly in the Permian, and that we expect to grow distributions by 12% to 15% through 2018. Turning to the quarter in our logistics segment total mainline movement for truck gathering volumes were relatively flat with Q3. However, Permian, mainline and gathering volumes were up, reflecting strong growth in the basin.

At Western's crude oil terminal we completed third-party connections which will facilitate blending of additional light barrels of crude oil accessed in the field and sent to wing via WNR pipelines.

In the fourth quarters we expect that one working begin service at the end of last year crude oil production will continue to grow.

In our wholesale segment fuel volumes were strong at 82,300 barrels per day.

Total crude oil and asphalt tracking volumes were also up from Q3 about 10%, near the high levels we experienced in 2015. Our board approved a 2017 capital budget of $43 million, of which $27 million is for discretionary projects.

Most of these projects will be constructed of additional gathering lines that will feed our mainline system in the Delaware.

As we previously stated our expectation is that Western will offer us the opportunity to purchase additional logistics assets in 2017. We expect these assets will have an estimated annual EBITDA of approximately $50 million, which can be funded under the WNRL revolver.

Wrapping up, we are pleased with WNRL's 2016 performance.

Going forward organic growth combined with drop-down opportunities from Western will and out enable us to continue to grow distributions for our unitholders, while maintaining a solid balance sheet.

Now I will turn the call over to Karen who will go through our fourth quarter financials in more detail.

--------------------------------------------------------------------------------

Unknown Speaker* [4]

--------------------------------------------------------------------------------

Thanks, Jeff.

For the fourth quarter of 2016, the company reported net income attributable to limited partners of $20.8 million, or $0.31 per diluted common unit.

EBITDA for the fourth quarter was $36.8 million, an increase of 33% over last year.

And cash available for distribution the fourth quarter was $27.7 million, up 34% versus last year's fourth quarter.

For full year 2016, net income attributable to limited partners was $66.7 million, or $1.16 per diluted common unit.

EBITDA for the full year 2016 was $126.2 million, an increase of 18% versus full year 2015. And cash available for distribution was $100.1 million, which compares to $78.6 million in full-year 2015, an increase of 27%.

Maintenance CapEx miniatures were $3.6 million for the fourth quarter and $9.4 million for the full year 2016. Cash receipts from contract minimum shortfall payments is reflected in change and deferred revenue, and was $900,000 for the fourth quarter.

This is not reflected in revenue or EBITDA, but it increases cash available for distribution.

As of December 31 we had cash on hand of $14.7 million and availability under our revolver of $479 million.

On January 31, our Board of Directors declared a cash distribution for the fourth quarter of 43.75 cents per unit or $1.75 per unit on an annualized basis.

This distribution represents an 11.5% increase over the fourth quarter 2015 distribution.

And now I will turn the call back over to just.

--------------------------------------------------------------------------------

Unknown Speaker* [5]

--------------------------------------------------------------------------------

Thanks, Karen.

I would like to thank our employees for their hard work which allowed WNRL to deliver a strong year financially and operationally.

We continue to be focused on executing our plans and growing the business.

Now Gracie, I will open up the call if there are any questions.

--------------------------------------------------------------------------------

Unknown Speaker* [6]

--------------------------------------------------------------------------------

(Operator instructions)

--------------------------------------------------------------------------------

Unknown Speaker* [7]

--------------------------------------------------------------------------------

Gracie, with that we will conclude today's call and once again we appreciate everybody's interest in WNRL.

Have a great day.

--------------------------------------------------------------------------------

Unknown Speaker* [8]

--------------------------------------------------------------------------------

Ladies and gentlemen thank you for participating in today's conference.

This concludes today's program.

You may all disconnect.

Everyone have a great day.

[End