Valero (NYSE:VLI)
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Valero L.P. (NYSE:VLI) today announced net income
applicable to limited partners of $35.3 million, or $0.75 per unit,
for the first quarter of 2006, compared to $17.8 million, or $0.77 per
unit, for the first quarter of 2005. Distributable cash flow available
to limited partners for the first quarter was $50.2 million, or $1.07
per unit, compared to $23.1 million, or $1.00 per unit for the first
quarter of 2005. The increase in net income and distributable cash
flow was primarily due to the acquisition of Kaneb completed on July
1, 2005. Valero L.P.'s first quarter 2005 results do not include any
results from Kaneb.
With respect to the quarterly distribution to unitholders payable
for the first quarter of 2006, Valero L.P. also announced that it has
declared a distribution of $0.885 per unit, or $3.54 per unit on an
annual basis, which will be paid on May 12, 2006, to holders of record
as of May 5, 2006. This distribution represents an increase of $0.03
per unit, or 3.5 percent, over the distribution for the fourth quarter
of 2005. Distributable cash flow available to limited partners covers
the distribution to the limited partners by 1.21 times for the first
quarter.
As previously announced, the partnership completed the sale of its
Australia and New Zealand subsidiaries to ANZ Terminals Pty. Ltd. on
March 30, 2006, for $68.6 million. Results of the divested businesses
have been classified as discontinued operations on the income
statement for the first quarter of 2006.
"We are pleased to report another increase in the quarterly
distribution for the partnership," said Curt Anastasio, Valero L.P.'s
Chief Executive Officer. "With this increase, the partnership has
increased the distribution rate 47.5 percent since we went public in
2001.
"With respect to our financial results, our businesses performed
well during the quarter, despite the impact of the previously
announced scheduled turnaround at Valero Energy's Texas City refinery.
In particular, our bunkering businesses at St. Eustatius and Point
Tupper did better than anticipated, as did several of the other assets
acquired with Kaneb. We also benefited from lower than expected
natural gas costs.
"With regard to our Burgos pipeline construction project in South
Texas and northeastern Mexico, the partnership has completed
construction of the pipeline segments connecting our Edinburg and
Harlingen, Texas terminals to CITGO's terminal in Brownsville, Texas.
We are nearly finished with the Mexican portion of this project and we
expect the Burgos project to be complete by July 1, 2006.
Effective January 1, 2006, the partnership successfully completed
the acquisition of Valero Energy's 23.77 percent interest in a 57-mile
crude oil pipeline located in Illinois for approximately $13 million.
"Looking ahead to the second quarter of 2006, results will be
negatively impacted by scheduled turnarounds at several Valero Energy
refineries and higher maintenance expenses. We expect to report
earnings of about 60 cents per unit for the second quarter.
"After the second quarter of 2006, operations and results should
improve in the third and fourth quarters primarily due to increases in
our pipeline tariffs effective July 1, fewer turnarounds at the
refineries we serve, and the Burgos project coming online. And, keep
in mind, we have strategic growth projects, including projects on our
ammonia pipeline and at several terminals we acquired with Kaneb, that
will benefit us in the second half of 2006 and going forward," said
Anastasio.
A conference call with management is scheduled for 2:30 p.m. ET
(1:30 p.m. CT) today to discuss the financial and operational results
for the first quarter of 2006. Investors interested in listening to
the presentation may call 800-622-7620, passcode 7582154.
International callers may access the presentation by dialing
706-645-0327, passcode 7582154. The company intends to have a playback
available following the presentation, which may be accessed by calling
800-642-1687, passcode 7582154. A live broadcast of the conference
call will also be available on the company's website at
www.valerolp.com.
Valero L.P. is a publicly traded, limited partnership based in San
Antonio, with 9,186 miles of pipeline, 89 terminal facilities and four
crude oil storage facilities. One of the largest independent terminal
and petroleum liquids pipeline operators in the nation, the
partnership has operations in the United States, the Netherlands
Antilles, Canada, Mexico, the Netherlands and the United Kingdom. The
partnership's combined system has approximately 77.7 million barrels
of storage capacity, and includes crude oil and refined product
pipelines, refined product terminals, petroleum and a specialty
liquids storage and terminaling business, as well as crude oil storage
tank facilities. For more information, visit Valero L.P.'s web site at
www.valerolp.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements within the
meaning of the Securities Litigation Reform Act of 1995 regarding
future events and the future financial performance of Valero L.P. All
forward-looking statements are based on the partnership's beliefs as
well as assumptions made by and information currently available to the
partnership. These statements reflect the partnership'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 Valero L.P.'s 2005 annual report on Form
10-K and subsequent filings with the Securities and Exchange
Commission.
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Valero L.P.
Consolidated Financial Information
March 31, 2006 and 2005
(unaudited, thousands of dollars, except unit data and per unit data)
Three Months
Ended
March 31,
-----------------------
2006 2005
----------- -----------
Statement of Income Data (Note 1):
Revenues:
Services $147,929 $56,635
Product 126,075 --
----------- -----------
Total revenues 274,004 56,635
Costs and expenses:
Cost of sales 114,218 --
Operating expenses 71,070 19,685
General and administrative expenses 8,560 3,503
Depreciation and amortization 24,189 8,732
----------- -----------
Total costs and expenses 218,037 31,920
----------- -----------
Operating income 55,967 24,715
Equity income from joint ventures 1,206 378
Interest and other expense, net (15,465) (5,829)
----------- -----------
Income from continuing operations
before income tax expense 41,708 19,264
Income tax expense 2,119 --
----------- -----------
Income from continuing operations 39,589 19,264
Loss from discontinued operations (138) --
----------- -----------
Net income applicable to general
partner and limited partners'
interest 39,451 19,264
Net income applicable to general
partner including incentive
distributions (Note 2) (4,199) (1,476)
----------- -----------
Net income applicable to limited
partners $35,252 $17,788
=========== ===========
Net income per unit applicable to
limited partners (Note 2):
Continuing operations $0.75 $0.77
Discontinued operations -- --
----------- -----------
Net income $0.75 $0.77
Weighted average number of limited
partnership units outstanding 46,809,749 23,041,394
EBITDA from continuing operations
(Note 3) $81,593 $33,825
Distributable cash flow from
continuing operations (Note 3) $57,805 $26,193
March 31, December 31,
2006 2005
----------- ------------
Balance Sheet Data:
Long-term debt, including current
portion (a) $1,188,228 $1,170,705
Partners' equity (b) 1,898,480 1,900,779
Debt-to-capitalization ratio
(a) / ((a)+(b)) 38.5% 38.1%
Valero L.P.
Consolidated Financial Information - Continued
March 31, 2006 and 2005
(unaudited, thousands of dollars, except barrel information)
Three Months
Ended
March 31,
-----------------------
2006 2005
----------- -----------
Operating Data:
Refined product terminals:
Throughput (barrels/day) (a) 252,275 253,531
Throughput revenues $10,540 $9,937
Storage lease revenues 59,533 --
Bunkering revenues 126,075 --
----------- -----------
Total revenues 196,148 9,937
Cost of sales 114,218 --
Operating expenses 43,979 4,497
Depreciation and amortization 10,906 1,859
----------- -----------
Segment operating income $27,045 $3,581
=========== ===========
Refined product pipelines:
Throughput (barrels/day) 700,969 443,993
Revenues $52,046 $22,182
Operating expenses 19,802 9,303
Depreciation and amortization 10,139 3,857
----------- -----------
Segment operating income $22,105 $9,022
=========== ===========
Crude oil pipelines:
Throughput (barrels/day) 427,675 381,086
Revenues $14,049 $13,185
Operating expenses 3,697 3,823
Depreciation and amortization 1,249 1,146
----------- -----------
Segment operating income $9,103 $8,216
=========== ===========
Crude oil storage tanks:
Throughput (barrels/day) 513,073 505,643
Revenues $11,761 $11,331
Operating expenses 3,592 2,062
Depreciation and amortization 1,895 1,870
----------- -----------
Segment operating income $6,274 $7,399
=========== ===========
Consolidated Information:
Revenues $274,004 $56,635
Cost of sales 114,218 --
Operating expenses 71,070 19,685
Depreciation and amortization 24,189 8,732
----------- -----------
Segment operating income 64,527 28,218
General and administrative
expenses 8,560 3,503
----------- -----------
Consolidated operating
income $55,967 $24,715
=========== ===========
(a) Excludes throughputs related to the storage lease and bunkering
operations acquired in the Kaneb Acquisition.
Valero L.P.
Consolidated Financial Information - Continued
March 31, 2006 and 2005
(unaudited)
Notes:
1. The statement of income data for the three months ended March
31, 2006 includes $28.7 million of operating income related to
the Kaneb Acquisition on July 1, 2005. Of the $28.7 million,
$21.2 million is attributed to the refined product terminal
segment and $7.5 million is attributed to the refined product
pipeline segment.
2. Net income is allocated between limited partners and the general
partner's interests based on provisions in the partnership
agreement. The net income applicable to limited partners is
divided by the weighted average number of limited partnership
units outstanding in computing the net income per unit applicable
to limited partners. On July 1, 2005, Valero L.P. issued
23,768,751 of common units in exchange for all of the outstanding
common units of Kaneb Pipe Line Partners, L.P. As of March 31,
2006 Valero L.P. has 46,809,749 common and subordinated units
outstanding. Net income applicable to the general partner
includes incentive distributions aggregating $3.5 million and
$1.1 million for the three months ended March 31, 2006 and 2005,
respectively.
3. Valero L.P. utilizes two financial measures, EBITDA and
distributable cash flow, which are not defined in United States
generally accepted accounting principles. Management uses these
financial measures because they are widely accepted financial
indicators used by investors to compare partnership performance.
In addition, management believes that these measures provide
investors an enhanced perspective of the operating performance of
the partnership's assets and the cash that the business is
generating. Neither EBITDA nor distributable cash flow are
intended to represent cash flows for the period, nor are they
presented as an alternative to net income. They should not be
considered in isolation or as substitutes for a measure of
performance prepared in accordance with United States generally
accepted accounting principles.
The following is a reconciliation of income from continuing
operations to EBITDA and distributable cash flow (in thousands):
Three Months Ended
March 31,
----------------------
2006 2005
----------------------
Income from continuing operations $39,589 $19,264
Plus interest expense, net 15,696 5,829
Plus income tax expense 2,119 --
Plus depreciation and
amortization 24,189 8,732
---------- -----------
EBITDA from continuing operations 81,593 33,825
EBITDA from discontinued
operations 931 --
---------- -----------
Total EBITDA $82,524 $33,825
========== ===========
EBITDA from continuing operations $81,593 $33,825
Less equity income from joint
ventures (1,206) (378)
Less interest expense, net (15,696) (5,829)
Less reliability capital
expenditures (6,164) (1,425)
Less income tax expense (2,119) --
Plus distributions from joint
ventures 1,397 --
---------- -----------
Distributable cash flow from
continuing operations 57,805 26,193
General partner's interest in
distributable cash flow
from continuing operations (7,392) (3,073)
---------- -----------
Limited partners' interest in
distributable cash flow
from continuing operations $50,413 $23,120
========== ===========
Weighted average number of
limited partnership units
outstanding 46,809,749 23,041,394
Distributable cash flow from
continuing operations per
limited partner unit $1.08 $1.00
Distributable cash flow from
continuing operations $57,805 $26,193
Distributable cash flow from
discontinued operations (300) --
------------ -----------
Total distributable cash flow $57,505 $26,193
General partner's interest in
distributable cash flow (7,317) (3,073)
------------ -----------
Limited partners' interest in
distributable cash flow $50,188 $23,120
============ ===========
Distributable cash flow per
limited partner unit $1.07 $1.00
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