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Plains All American Reports Third-Quarter 2021 Results

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  • PAA
  • PAGP

HOUSTON, Nov. 02, 2021 (GLOBE NEWSWIRE) -- Plains All American Pipeline, L.P. (Nasdaq: PAA) and Plains GP Holdings (Nasdaq: PAGP) today reported third-quarter 2021 results and provided the following updates:

  • Successfully completed formation of Plains Oryx Permian Basin strategic joint venture (closed October 5th); cashless transaction, debt-free entity, near-term free cash flow accretive to Plains and Oryx, with targeted JV synergies of $50–$100 million or more

  • Reported a net loss for the period of $59 million, including the non-cash impact of an approximately $220 million asset impairment charge

  • Reported third-quarter Adjusted EBITDA of $519 million and maintained full-year 2021 Adjusted EBITDA guidance of +/- $2.175 billion (includes approximately $40 million impact of Fort Saskatchewan incident and other timing-related items)

  • Increased forecasted 2021 Free Cash Flow after Distributions by $50 million to +/- $1.4 billion, or +/- $500 million excluding proceeds from asset sales

  • Reduced 2021 capital (investment and maintenance) guidance by an additional $50 million to +/- $455 million, approximately 30% below February guidance

  • Reduced total debt by approximately $650 million in the period and by approximately $1 billion since year-end 2020

  • Continued utilizing the November 2020 repurchase authorization during the period, bringing total cumulative repurchases to $167 million, or 18.1 million PAA common units

“We delivered third-quarter results that exceeded our expectations, increased our full-year Free Cash Flow outlook and maintained full-year Adjusted EBITDA guidance despite the impact of non-recurring and timing-related items,” stated Willie Chiang, Chairman and CEO of Plains. “Importantly, we continue to execute across multiple key initiatives, all of which are aimed at maximizing free cash flow to reinforce our balance sheet and generate attractive returns for our equity holders. Integration of the Plains Oryx Permian Basin joint venture is well underway, and we are increasingly confident in the synergies the JV is positioned to capture, the value of the operating leverage embedded within our system, and the magnitude of production growth the basin is positioned to deliver over the next several years.”

Plains All American Pipeline

Summary Financial Information (unaudited)
(in millions, except per unit data)

Three Months Ended
September 30,

%

Nine Months Ended
September 30,

%

GAAP Results

2021

2020

Change

2021

2020

Change

Net income/(loss) attributable to PAA (1)

$

(59

)

$

143

**

$

143

$

(2,562

)

**

Diluted net income/(loss) per common unit

$

(0.15

)

$

0.13

**

$

(0.01

)

$

(3.72

)

**

Diluted weighted average common units outstanding

715

728

(2

)

%

719

728

(1

)

%

Net cash provided by operating activities

$

336

$

282

19

%

$

1,361

$

1,256

8

%

Distribution per common unit declared for the period

$

0.18

$

0.18

%

$

0.54

$

0.54

%

________________________
** Indicates that variance as a percentage is not meaningful.

(1) Reported results for the nine months ended September 30, 2021 include aggregate non-cash asset impairments of approximately $695 million related to the sale of our gas storage assets and the write-down of certain crude oil terminal assets. Reported results for the nine months ended September 30, 2020 include aggregate non-cash goodwill and asset impairments and the write-down of certain of our investments in unconsolidated entities totaling $3.3 billion, representing a nine-month net loss of $4.55 after tax per common unit.


Three Months Ended
September 30,

%

Nine Months Ended
September 30,

%

Non-GAAP Results (1)

2021

2020

Change

2021

2020

Change

Adjusted net income attributable to PAA

$

208

$

382

(46

)

%

$

653

$

1,070

(39

)

%

Diluted adjusted net income per common unit

$

0.22

$

0.46

(52

)

%

$

0.70

$

1.26

(44

)

%

Adjusted EBITDA

$

519

$

682

(24

)

%

$

1,643

$

2,001

(18

)

%

Implied DCF per common unit and common unit equivalent

$

0.48

$

0.63

(24

)

%

$

1.51

$

1.84

(18

)

%

Free Cash Flow

$

1,093

$

73

**

$

1,830

$

195

**

Free Cash Flow after Distributions

$

927

$

(95

)

**

$

1,304

$

(466

)

**

________________________
** Indicates that variance as a percentage is not meaningful.


(1) See the section of this release entitled “Non-GAAP Financial Measures and Selected Items Impacting Comparability” and the tables attached hereto for information regarding our Non-GAAP financial measures, including their reconciliation to the most directly comparable measures as reported in accordance with GAAP, and certain selected items that PAA believes impact comparability of financial results between reporting periods.


Summary of Selected Financial Data by Segment (unaudited)
(in millions)

Segment Adjusted EBITDA

Transportation

Facilities

Supply and
Logistics

Three Months Ended September 30, 2021

$

427

$

114

$

(23

)

Three Months Ended September 30, 2020

$

444

$

176

$

61

Percentage change in Segment Adjusted EBITDA versus 2020 period

(4

)

%

(35

)

%

**

Percentage change in Segment Adjusted EBITDA versus 2020 period further adjusted for impact of divested assets (1)

(4

)

%

(26

)

%

N/A

Segment Adjusted EBITDA

Transportation

Facilities

Supply and
Logistics

Nine Months Ended September 30, 2021

$

1,248

$

425

$

(31

)

Nine Months Ended September 30, 2020

$

1,233

$

560

$

205

Percentage change in Segment Adjusted EBITDA versus 2020 period

1

%

(24

)

%

**

Percentage change in Segment Adjusted EBITDA versus 2020 period further adjusted for impact of divested assets (1)

1

%

(20

)

%

N/A

________________________
** Indicates that variance as a percentage is not meaningful.


(1) Estimated impact of divestitures completed during 2020 and 2021, assuming an effective date of January 1, 2020. Divested assets primarily included certain NGL storage terminals, Los Angeles Basin crude oil storage terminals and natural gas storage facilities that were previously included in our Facilities segment and the sale of a portion of our interest in a joint venture pipeline that was previously reported in our Transportation segment.

Third-quarter 2021 Transportation Segment Adjusted EBITDA decreased 4% versus comparable 2020 results primarily due to lower tariffs on certain long-haul volumes partially offset by an overall increase in tariff volumes.

Third-quarter 2021 Facilities Segment Adjusted EBITDA decreased 35% versus comparable 2020 results primarily due to the impact of asset sales and reduced NGL intersegment fees.

Third-quarter 2021 Supply and Logistics Segment Adjusted EBITDA decreased versus comparable 2020 results primarily due to contango margins realized in the third quarter of 2020, partially offset by reduced NGL intersegment fees.

Financial and Operating Guidance (unaudited)
(in millions, except volumes, per unit and per barrel data)

Twelve Months Ended December 31,

2019

2020

2021 (G)

+ / -

Segment Adjusted EBITDA

Transportation

$

1,722

$

1,616

$

1,670

Facilities

705

731

530

Fee-Based

$

2,427

$

2,347

$

2,200

Supply and Logistics

803

210

(25

)

Adjusted other income/(expense), net (1)

7

3

Adjusted EBITDA (2)

$

3,237

$

2,560

$

2,175

Interest expense, net of certain non-cash items (3)

(407

)

(415

)

(405

)

Maintenance capital

(287

)

(216

)

(180

)

Current income tax expense

(112

)

(51

)

(15

)

Other

(55

)

3

(10

)

Implied DCF (2)

$

2,376

$

1,881

$

1,565

Preferred unit distributions paid (4)

(198

)

(198

)

(200

)

Implied DCF Available to Common Unitholders

$

2,178

$

1,683

$

1,365

Implied DCF per Common Unit and Common Unit Equivalent (2)

$

2.91

$

2.29

$

1.92

Distributions per Common Unit (5)

$

1.38

$

0.90

$

0.72

Common Unit Distribution Coverage Ratio

2.17x

2.57x

2.64x

Diluted Adjusted Net Income per Common Unit (2)

$

2.51

$

1.55

$

0.92

Operating Data

Transportation

Average daily volumes (MBbls/d)

6,893

6,340

6,250

Segment Adjusted EBITDA per barrel

$

0.68

$

0.70

$

0.73

Facilities

Average capacity (MMBbls/Mo)

125

124

110

Segment Adjusted EBITDA per barrel

$

0.47

$

0.49

$

0.40

Supply and Logistics

Average daily volumes (MBbls/d)

1,369

1,318

1,475

Segment Adjusted EBITDA per barrel

$

1.61

$

0.43

$

(0.05

)

Investment Capital

$

1,340

$

921

$

275

________________________
(G) 2021 Guidance forecasts are intended to be + / - amounts.


(1) Represents “Other income, net” as reported on our Condensed Consolidated Statements of Operations, adjusted for selected items impacting comparability of $(17) million and $(36) million for the twelve months ended December 31, 2019 and 2020, respectively. See the “Selected Items Impacting Comparability” table for additional information.

(2) See the section of this release entitled “Non-GAAP Financial Measures and Selected Items Impacting Comparability” for information regarding non-GAAP financial measures and, for the historical 2019 and 2020 periods, see the Non-GAAP Reconciliation tables attached hereto for a reconciliation of such non-GAAP financial measures to the most directly comparable measures as reported in accordance with GAAP. We do not provide a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures on a forward-looking basis as it is impractical to forecast certain items that we have defined as “Selected Items Impacting Comparability” without unreasonable effort, due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of such items and the periods in which such items may be recognized. Thus, a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures could result in disclosure that could be imprecise or potentially misleading.

(3) Excludes certain non-cash items impacting interest expense such as amortization of debt issuance costs and terminated interest rate swaps.

(4) Cash distributions paid to our preferred unitholders during 2019 and 2020. 2021(G) reflects the current annualized distribution requirement of $2.10 per Series A preferred unit and the current annualized distribution requirement of $61.25 per Series B preferred unit.

(5) Cash distributions per common unit paid during 2019 and 2020. 2021(G) reflects the current annualized distribution rate of $0.72 per common unit.


Plains GP Holdings

PAGP owns an indirect non-economic controlling interest in PAA’s general partner and an indirect limited partner interest in PAA. As the control entity of PAA, PAGP consolidates PAA’s results into its financial statements, which is reflected in the condensed consolidating balance sheet and income statement tables attached hereto.

Conference Call

PAA and PAGP will hold a joint conference call at 4:00 p.m. CT on Tuesday, November 2, 2021 to discuss the following items:

  1. PAA’s third-quarter 2021 performance;

  2. Capitalization and liquidity; and

  3. Financial and operating guidance.

Conference Call Webcast Instructions

To access the internet webcast, please go to https://edge.media-server.com/mmc/p/mharyy4f.

Alternatively, the webcast can be accessed on our website (www.plainsallamerican.com) under Investor Relations (Navigate to: Investor Relations / either “PAA” or “PAGP” / News & Events / Quarterly Earnings). Following the live webcast, an audio replay in MP3 format will be available on our website within two hours after the end of the call and will be accessible for a period of 365 days. A transcript will also be available after the call at the above referenced website.

Non-GAAP Financial Measures and Selected Items Impacting Comparability

To supplement our financial information presented in accordance with GAAP, management uses additional measures known as “non-GAAP financial measures” in its evaluation of past performance and prospects for the future and to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes.

The primary additional measures used by management are earnings before interest, taxes, depreciation and amortization (including our proportionate share of depreciation and amortization and write-downs related to cancelled projects of unconsolidated entities), gains and losses on asset sales and asset impairments, goodwill impairment losses and gains on and impairments of investments in unconsolidated entities, adjusted for certain selected items impacting comparability (“Adjusted EBITDA”), Implied Distributable Cash Flow (“DCF”), Free Cash Flow and Free Cash Flow after Distributions. Our definition and calculation of certain non-GAAP financial measures may not be comparable to similarly-titled measures of other companies. Adjusted EBITDA, Implied DCF and certain other non-GAAP financial performance measures are reconciled to Net Income/(Loss), and Free Cash Flow and Free Cash Flow after Distributions are reconciled to Net Cash Provided by Operating Activities (the most directly comparable measures as reported in accordance with GAAP) for the historical 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 accompanying notes. In addition, we encourage you to visit our website at www.plainsallamerican.com (in particular the section under “Financial Information” entitled “Non-GAAP Reconciliations” within the Investor Relations tab), which presents a reconciliation of our commonly used non-GAAP and supplemental financial measures.

Performance Measures

Management believes that the presentation of Adjusted EBITDA and Implied DCF provides useful information to investors regarding our performance and results of operations because these measures, when used to supplement related GAAP financial measures, (i) provide additional information about our core operating performance and ability to fund distributions to our unitholders through cash generated by our operations and (ii) provide investors with the same financial analytical framework upon which management bases financial, operational, compensation and planning/budgeting decisions. We also present these and additional non-GAAP financial measures, including adjusted net income attributable to PAA and basic and diluted adjusted net income per common unit, as they are measures that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These non-GAAP measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) gains and losses on derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are related to investing activities (such as the purchase of linefill) and inventory valuation adjustments, as applicable, (iii) long-term inventory costing adjustments, (iv) items that are not indicative of our core operating results and/or (v) other items that we believe should be excluded in understanding our core operating performance. These measures may be further adjusted to include amounts related to deficiencies associated with minimum volume commitments whereby we have billed the counterparties for their deficiency obligation and such amounts are recognized as deferred revenue in “Other current liabilities” in our Condensed Consolidated Financial Statements. We also adjust for amounts billed by our equity method investees related to deficiencies under minimum volume commitments. All such amounts are presented net of applicable amounts subsequently recognized into revenue. Furthermore, the calculation of these measures contemplates tax effects as a separate reconciling item, where applicable. We have defined all such items as “selected items impacting comparability.” Due to the nature of the selected items, certain selected items impacting comparability may impact certain non-GAAP financial measures, referred to as adjusted results, but not impact other non-GAAP financial measures. We do not necessarily consider all of our selected items impacting comparability to be non-recurring, infrequent or unusual, but we believe that an understanding of these selected items impacting comparability is material to the evaluation of our operating results and prospects. Although we present selected items impacting comparability that management considers 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, divestitures, investment capital projects and numerous other factors. These types of variations may not be 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.

Liquidity Measures

Management also uses the non-GAAP financial measures Free Cash Flow and Free Cash Flow after Distributions to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. Free Cash Flow is defined as Net Cash Provided by Operating Activities, less Net Cash Used in Investing Activities, which primarily includes acquisition, investment and maintenance capital expenditures, investments in unconsolidated entities and the impact from the purchase and sale of linefill and base gas, net of proceeds from the sales of assets and further impacted by cash received from or paid to noncontrolling interests. Free Cash Flow is further reduced by cash distributions paid to our preferred and common unitholders to arrive at Free Cash Flow after Distributions.


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
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

REVENUES

$

10,776

$

5,833

$

29,089

$

17,327

COSTS AND EXPENSES

Purchases and related costs

10,074

5,107

26,743

15,000

Field operating costs

274

254

746

811

General and administrative expenses

67

61

205

201

Depreciation and amortization

178

160

551

493

(Gains)/losses on asset sales and asset impairments, net

221

(2

)

592

617

Goodwill impairment losses

2,515

Total costs and expenses

10,814

5,580

28,837

19,637

OPERATING INCOME/(LOSS)

(38

)

253

252

(2,310

)

OTHER INCOME/(EXPENSE)

Equity earnings in unconsolidated entities

69

89

190

280

Gain on/(impairment of) investments in unconsolidated entities, net

(91

)

(182

)

Interest expense, net

(106

)

(113

)

(319

)

(329

)

Other income/(expense), net

(10

)

5

13

(7

)

INCOME/(LOSS) BEFORE TAX

(85

)

143

136

(2,548

)

Current income tax expense

(8

)

(17

)

(11

)

(39

)

Deferred income tax benefit

38

20

27

32

NET INCOME/(LOSS)

(55

)

146

152

(2,555

)

Net income attributable to noncontrolling interests

(4

)

(3

)

(9

)

(7

)

NET INCOME/(LOSS) ATTRIBUTABLE TO PAA

$

(59

)

$

143

$

143

$

(2,562

)

NET INCOME/(LOSS) PER COMMON UNIT:

Net income/(loss) allocated to common unitholders — Basic and Diluted

$

(109

)

$

93

$

(7

)

$

(2,712

)

Basic and diluted weighted average common units outstanding

715

728

719

728

Basic and diluted net income/(loss) per common unit

$

(0.15

)

$

0.13

$

(0.01

)

$

(3.72

)


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

CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in millions)

September 30,
2021

December 31,
2020

ASSETS

Current assets (including Cash and cash equivalents of $191 and $22, respectively)

$

4,874

$

3,665

Property and equipment, net

13,084

14,611

Investments in unconsolidated entities

3,710

3,764

Linefill and base gas

901

982

Long-term operating lease right-of-use assets, net

374

378

Long-term inventory

221

130

Other long-term assets, net

1,033

967

Total assets

$

24,197

$

24,497

LIABILITIES AND PARTNERS’ CAPITAL

Current liabilities

$

5,397

$

4,253

Senior notes, net

8,327

9,071

Other long-term debt, net

61

311

Long-term operating lease liabilities

326

317

Other long-term liabilities and deferred credits

789

807

Total liabilities

14,900

14,759

Partners’ capital excluding noncontrolling interests

9,152

9,593

Noncontrolling interests

145

145

Total partners’ capital

9,297

9,738

Total liabilities and partners’ capital

$

24,197

$

24,497

DEBT CAPITALIZATION RATIOS
(in millions)

September 30,
2021

December 31,
2020

Short-term debt

$

808

$

831

Long-term debt

8,388

9,382

Total debt

$

9,196

$

10,213

Long-term debt

$

8,388

$

9,382

Partners’ capital

9,297

9,738

Total book capitalization

$

17,685

$

19,120

Total book capitalization, including short-term debt

$

18,493

$

19,951

Long-term debt-to-total book capitalization

47

%

49

%

Total debt-to-total book capitalization, including short-term debt

50

%

51

%


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

COMPUTATION OF BASIC AND DILUTED NET INCOME/(LOSS) PER COMMON UNIT (1)
(in millions, except per unit data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Basic and Diluted Net Income/(Loss) per Common Unit

Net income/(loss) attributable to PAA

$

(59

)

$

143

$

143

$

(2,562

)

Distributions to Series A preferred unitholders

(37

)

(37

)

(112

)

(112

)

Distributions to Series B preferred unitholders

(12

)

(12

)

(37

)

(37

)

Other

(1

)

(1

)

(1

)

(1

)

Net income/(loss) allocated to common unitholders

$

(109

)

$

93

$

(7

)

$

(2,712

)

Basic and diluted weighted average common units outstanding (2) (3)

715

728

719

728

Basic and diluted net income/(loss) per common unit

$

(0.15

)

$

0.13

$

(0.01

)

$

(3.72

)

________________________
(1) We calculate net income/(loss) allocated to common unitholders based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to common unitholders and participating securities in accordance with the contractual terms of our partnership agreement in effect for the period and as further prescribed under the two-class method.

(2) The possible conversion of our Series A preferred units was excluded from the calculation of diluted net income/(loss) per common unit for the three and nine months ended September 30, 2021 and 2020 as the effect was antidilutive.

(3) Our equity-indexed compensation plan awards that contemplate the issuance of common units are considered dilutive unless (i) they become vested only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. Equity-indexed compensation plan awards that are deemed to be dilutive are reduced by a hypothetical common unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB. For the three and nine months ended September 30, 2021 and 2020, the effect of equity-indexed compensation plan awards was antidilutive, or did not change the presentation of diluted weighted average common units outstanding or diluted net income/(loss) per common unit.


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

NON-GAAP RECONCILIATIONS
COMPUTATION OF BASIC AND DILUTED ADJUSTED NET INCOME PER COMMON UNIT (1)
(in millions, except per unit data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Basic Adjusted Net Income per Common Unit

Net income/(loss) attributable to PAA

$

(59

)

$

143

$

143

$

(2,562

)

Selected items impacting comparability - Adjusted net income attributable to PAA (2)

267

239

510

3,632

Adjusted net income attributable to PAA

$

208

$

382

$

653

$

1,070

Distributions to Series A preferred unitholders

(37

)