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NuStar GP Holdings, LLC Reports Earnings for the Third Quarter of 2016

Quarterly Distribution Previously Announced at $0.545 per Unit

SAN ANTONIO--(BUSINESS WIRE)--Nov. 2, 2016-- NuStar GP Holdings, LLC (NYSE: NSH) today announced third quarter 2016 net income of $17.3 million, or $0.40 per unit. For the nine months ended September 30, 2016, net income was $49.1 million, or $1.14 per unit.

Distributable cash flow (DCF) available to unitholders for the third quarter of 2016 and for the nine months ended September 30, 2016 was $23.2 million and $69.2 million, respectively.

As previously announced on October 28, 2016, the third quarter 2016 distribution of $0.545 per unit will be paid on November 16, 2016 to holders of record as of November 8, 2016.

“NuStar GP Holdings, LLC’s third quarter results were positively impacted by NuStar Energy L.P.’s strong third quarter performance from its pipeline and storage operations,” said Brad Barron, 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. CT today, November 2, 2016, to discuss the financial and operational results for the third quarter of 2016. Investors interested in listening to the discussion may dial toll-free 844/889-7787, passcode 94604384. International callers may access the discussion by dialing 661/378-9931, passcode 94604384. The company intends to have a playback available following the discussion, which may be accessed by dialing toll-free 855/859-2056, passcode 94604384. International callers may access the playback by dialing 404/537-3406, passcode 94604384. The playback will be available until 1:00 p.m. CT on December 2, 2016.

Investors interested in listening to the live discussion or a replay via the internet may access the discussion directly at http://edge.media-server.com/m/p/m6imjyxv/lan/en or by logging on to NuStar GP Holdings, LLC’s website at www.nustargpholdings.com.

The discussion will disclose certain non-GAAP financial measures. Reconciliations of certain of these non-GAAP financial measures to U.S. GAAP may be found in this press release, with additional reconciliations located on the Financials page of the Investors section of NuStar GP Holdings, LLC’s website at www.nustargpholdings.com.

NuStar GP Holdings, LLC is a publicly traded limited liability company that owns the two percent general partner interest, an approximate 13 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, and the United Kingdom. For more information, visit NuStar GP Holdings, LLC’s website 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 GP Holdings, LLC’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar GP Holdings, LLC’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 GP Holdings, LLC, 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 and/or the related conference call will include forward-looking statements regarding future events, such as the future performance of NuStar Energy L.P. and NuStar GP Holdings, LLC. 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.’s and NuStar GP Holdings, LLC’s 2015 annual reports 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.

       
 
NuStar GP Holdings, LLC and Subsidiaries
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)
 

Three Months Ended
September 30,

Nine Months Ended
September 30,

2016     2015 2016     2015
Statement of Income Data:
Equity in earnings of NuStar Energy L.P. $ 16,130 $ 18,194 $ 49,425 $ 62,284
 
General and administrative expenses (704 ) (825 ) (2,377 ) (2,697 )
Other income (expense), net 2,142 (3 ) 2,755 536
Interest expense, net   (276 )   (234 )   (789 )   (661 )
 
Income before income tax benefit (expense) 17,292 17,132 49,014 59,462
Income tax benefit (expense)   28     (215 )   55     (213 )
Net income $ 17,320   $ 16,917   $ 49,069   $ 59,249  
 
Basic and diluted net income per unit $ 0.40   $ 0.39   $ 1.14   $ 1.38  
 
Equity in Earnings of NuStar Energy L.P.:
General partner interest $ 805 $ 1,084 $ 2,571 $ 4,297
General partner incentive distribution   10,890     10,805     32,500     32,415  
General partner’s interest in earnings and incentive distributions of NuStar Energy L.P. 11,695 11,889 35,071 36,712
Limited partner interest in earnings of NuStar Energy L.P. 5,156 7,026 16,517 27,735
Amortization of step-up in basis related to NuStar Energy L.P.’s assets and liabilities   (721 )   (721 )   (2,163 )   (2,163 )
Equity in earnings of NuStar Energy L.P. $ 16,130   $ 18,194   $ 49,425   $ 62,284  
 
Weighted average number of common units outstanding 42,931,242 42,913,969 42,930,951 42,913,675
 
Cash Flow Data:
Net cash provided by operating activities $ 16,239 $ 22,052 $ 43,589 $ 62,390
Net cash provided by investing activities $ 7,247 $ 1,269 $ 23,013 $ 5,200
Net cash used in financing activities $ (23,441 ) $ (23,388 ) $ (66,276 ) $ (70,164 )
 
Distributable Cash Flow (Note 1):
Cash distributions from NuStar Energy L.P. associated with:
General partner interest $ 1,976 $ 1,961 $ 5,898 $ 5,883
General partner incentive distribution 10,890 10,805 32,500 32,415
Limited partner interest – common units   11,185     11,318     33,514     33,846  
Total cash distributions expected from NuStar Energy L.P. 24,051 24,084 71,912 72,144
Adjustments:
General and administrative expenses (704 ) (825 ) (2,377 ) (2,697 )
Income tax benefit (expense) 28 (215 ) 55 (213 )
Interest expense, net (276 ) (234 ) (789 ) (661 )
Unit-based compensation   131         376      
DCF $ 23,230   $ 22,810   $ 69,177   $ 68,573  
 
Total distributions to unitholders $ 23,398 $ 23,388 $ 70,193 $ 70,164
 
 

NuStar GP Holdings, LLC and Subsidiaries

Consolidated Financial Information - Continued

(Unaudited, Thousands of Dollars)

 

Notes:

 
(1) NuStar GP Holdings, LLC utilizes distributable cash flow (DCF) as a financial measure, although it is not defined in U.S. generally accepted accounting principles. Management believes DCF provides useful information to investors and other external users of our financial information because (i) DCF provides additional information about the cash the business is generating and (ii) investors and other external users of our financial statements benefit from having access to the same financial measure being utilized by management and our board of directors when making financial and planning decisions. Our board of directors and management use DCF when assessing our ability to fund distributions and our ability to service debt. DCF is a widely accepted financial indicator used by our industry’s investment community to compare company performance. DCF is used by our industry’s investment community, in part, because the value of our company’s units is partially based on its yield, and its yield is based on the cash distributions a company can pay its unitholders.
 
DCF is not intended to represent cash flows from operations, and is not presented as an alternative to net income. DCF should not be considered in isolation or as a substitute for a measure of performance in accordance with U.S. generally accepted accounting principles. The following is a reconciliation of net income to DCF and net cash provided by operating activities:
   

Three Months Ended
September 30,

   

Nine Months Ended
September 30,

2016     2015 2016     2015
Net income $ 17,320 $ 16,917 $ 49,069 $ 59,249
Less equity in earnings of NuStar Energy L.P. (16,130 ) (18,194 ) (49,425 ) (62,284 )
Plus cash distributions expected from NuStar Energy L.P. 24,051 24,084 71,912 72,144

Gain related to NuStar Energy L.P.’s issuance of limited partner units

(2,142 ) (2,142 )
Unit-based compensation items (a)   131     3     (237 )   (536 )
DCF 23,230 22,810 69,177 68,573
Less cash distributions expected from NuStar Energy L.P. (24,051 ) (24,084 ) (71,912 ) (72,144 )
Distributions of equity in earnings of NuStar Energy L.P. 16,130 18,194 49,425 62,284
Changes in current assets and liabilities 881 4,767 (3,532 ) 3,130

Changes in noncurrent assets and liabilities and other items (b)

  49     365     431     547  
Net cash provided by operating activities $ 16,239   $ 22,052   $ 43,589   $ 62,390  
 
(a) We intend to satisfy the vestings of equity-based awards with the issuance of our units. As such, the expenses related to these awards are considered non-cash and added back to DCF. These awards include distribution equivalent rights (DERs). Payments made in connection with DERs are deducted from DCF. Also included in this item are gains and losses resulting from the satisfaction of certain long-term incentive awards prior to the employee transfer on March 1, 2016.
 
(b) Other items consist of adjustments for (i) the amortization of deferred debt costs, (ii) the provision/benefit for deferred income taxes and (iii) payments made in connection with DERs.

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
website: http://www.nustarenergy.com

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