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NuStar GP Holdings, LLC Reports Increase in Second Quarter 2013 Distributable Cash Flows

Quarterly Distribution Remains at $0.545 Per Unit

SAN ANTONIO--(BUSINESS WIRE)--Jul. 26, 2013-- NuStar GP Holdings, LLC (NYSE: NSH) today announced that distributable cash flow available to unitholders for the second quarter of 2013 was $23.2 million, or $0.54 per unit, compared to $22.1 million, or $0.52 per unit, for the second quarter of 2012. In addition, the company announced that its board of directors has declared a second quarter distribution of $0.545 per unit. The second quarter 2013 distribution will be paid on August 14, 2013, to holders of record as of August 5, 2013.

The company reported second quarter net income of $12.6 million, or $0.29 per unit, compared to a net loss of $33.2 million, or $0.78 per unit, in the second quarter of 2012. Negative earnings in NuStar Energy’s asphalt and fuels marketing segment caused the second quarter 2012 net loss. Asset impairment charges associated with the company’s asphalt operations, in anticipation of the September 2012 sale of 50% of these operations to an affiliate of Lindsay Goldberg LLC were the primary cause of the second quarter 2012 loss.

“NuStar Energy L.P.’s large internal growth program for 2013, primarily in the Eagle Ford Shale region, should have a positive impact on the future growth of NuStar GP Holdings, LLC’s distributable cash flow and distributions,” said Curt Anastasio, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC.

A conference call with management is scheduled for 10:00 a.m. ET (9:00 a.m. CT) today, July 26, 2013, to discuss the financial results for the second quarter of 2013. Investors interested in listening to the presentation may call 800/622-7620, passcode 14958501. International callers may access the presentation by dialing 706/645-0327, passcode 14958501. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 14958501. International callers may access the playback by calling 404/537-3406, passcode 14958501. A live broadcast of the conference call will also be available on the company’s Web site at www.nustargpholdings.com.

NuStar GP Holdings, LLC is a publicly traded limited liability company that owns the two percent general partner interest, a 13.0 percent limited partner interest and the incentive distribution rights in NuStar Energy L.P., one of the largest independent liquids terminal and pipeline operators in the nation. NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey. For more information, visit NuStar GP Holdings, LLC’s Web site at www.nustargpholdings.com.

This release serves as qualified notice to nominees under Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note that 100% of NuStar’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals and corporations, as applicable. Nominees, and not NuStar, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding future events. All forward-looking statements are based on the company's beliefs as well as assumptions made by and information currently available to the company. These statements reflect the company'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. and NuStar GP Holdings, LLC’s 2012 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.

NuStar GP Holdings, LLC
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)
             
 
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Statement of Income Data:
Equity in earnings (loss) of NuStar Energy L.P. $ 13,417 $ (32,428 ) $ 25,561 $ (20,656 )
 
General and administrative expenses (618 ) (795 ) (1,418 ) (1,652 )
Other income (expense), net 18 (30 ) 99 106
Interest expense, net   (170 )   (151 )   (343 )   (284 )
 
Income (loss) before income tax benefit (expense) 12,647 (33,404 ) 23,899 (22,486 )
Income tax (expense) benefit   (88 )   196     (265 )   324  
Net income (loss) $ 12,559   $ (33,208 ) $ 23,634   $ (22,162 )
 
Basic and diluted net income (loss) per unit $ 0.29   $ (0.78 ) $ 0.55   $ (0.52 )
 
Equity in Earnings (Loss) of NuStar Energy L.P.:
General partner interest $ 446 $ (5,131 ) $ 722 $ (4,800 )
General partner incentive distribution   10,805     9,816     21,610     19,632  
General partner's interest in earnings (loss) and incentive
distributions of NuStar Energy L.P. 11,251 4,685 22,332 14,832
Limited partner interest in earnings (loss) of NuStar Energy L.P. 2,887 (36,392 ) 4,671 (34,046 )
Amortization of step-up in basis related to NuStar
Energy L.P.'s assets and liabilities   (721 )   (721 )   (1,442 )   (1,442 )
Equity in earnings (loss) of NuStar Energy L.P. $ 13,417   $ (32,428 ) $ 25,561   $ (20,656 )
 
 
Distributable Cash Flow (Note 1):
Cash distributions from NuStar Energy L.P. associated with:
General partner interest $ 1,961 $ 1,782 $ 3,922 $ 3,564
General partner incentive distribution 10,805 9,816 21,610 19,632
Limited partner interest - common units   11,272     11,223     22,552     22,434  
Total cash distributions expected from NuStar Energy L.P. 24,038 22,821 48,084 45,630
Deduct expenses of NuStar GP Holdings, LLC:
General and administrative expenses (618 ) (795 ) (1,418 ) (1,652 )
Income tax (expense) benefit (88 ) 196 (265 ) 324
Interest expense, net   (170 )   (151 )   (343 )   (284 )
Distributable cash flow $ 23,162   $ 22,071   $ 46,058   $ 44,018  
 
Weighted average number of common units outstanding 42,618,376 42,575,563 42,612,057 42,574,991
 
Distributable cash flow per unit $ 0.54   $ 0.52   $ 1.08   $ 1.03  
 
Cash distributions to be paid to the unitholders of
NuStar GP Holdings, LLC:
Distribution per unit $ 0.545   $ 0.510   $ 1.090   $ 1.020  
 
Total distribution $ 23,236   $ 21,713   $ 46,458   $ 43,433  
 
 

NuStar GP Holdings, LLC

Consolidated Financial Information - Continued

(Unaudited, Thousands of Dollars)

 

Notes:

 
1.  

NuStar GP Holdings, LLC utilizes distributable cash flow as a financial measure, which is not defined in United States generally accepted accounting principles. Management uses this financial measure because it is a widely accepted financial indicator used by investors to compare general partner performance. In addition, management believes that this measure provides investors an enhanced perspective of the ability to make a minimum quarterly distribution. Distributable cash flow is not intended to represent cash flows for the period, nor is it presented as an alternative to net income. It should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with United States generally accepted accounting principles.

 
The following is a reconciliation of net income (loss) to distributable cash flow and net cash provided by (used in) operating activities:
           
Three Months Ended Six Months Ended
June 30, June 30,
2013     2012 2013     2012
Net income (loss) $ 12,559 $ (33,208 ) $ 23,634 $ (22,162 )
Less equity in (earnings) loss of NuStar Energy L.P. (13,417 ) 32,428 (25,561 ) 20,656
Plus cash distributions expected from NuStar Energy L.P. 24,038 22,821 48,084 45,630
Other (income) expense, net   (18 )   30     (99 )   (106 )
Distributable cash flow 23,162 22,071 46,058 44,018
Less cash distributions expected from NuStar Energy L.P. (24,038 ) (22,821 ) (48,084 ) (45,630 )

Distributions of equity in earnings of NuStar Energy L.P./

      (Cumulative earnings less than distributions)

13,417 (11,772 ) 25,561 -
Net effect of changes in operating accounts   (611 )   122     60     (2,592 )
Net cash provided by (used in) operating activities $ 11,930   $ (12,400 ) $ 23,595   $ (4,204 )

Source: NuStar GP Holdings, LLC

NuStar Energy, L.P., San Antonio
Investors, Chris Russell, Treasurer and Vice President Investor Relations
Investor Relations: 210-918-3507
or
Media, Mary Rose Brown, Executive Vice President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com

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