Valero (NYSE:VLI)
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From Jul 2019 to Jul 2024
Valero L.P. (NYSE:VLI) today announced record net
income applicable to limited partners of $41.3 million, or $0.88 per
unit, which includes net income applicable to limited partners from
discontinued operations of $4.4 million, or $0.09 per unit. For the
comparable period in 2004, net income applicable to limited partners
was $17.9 million, or $0.78 per unit. Distributable cash flow
available to limited partners for the third quarter was a record $54.7
million, or $1.17 per unit, compared to $22.7 million, or $0.99 per
unit, for the third quarter of 2004. Reported results for Valero
L.P.'s third quarter and nine months ended September 30, 2005, include
three months contribution from Kaneb Services LLC and Kaneb Pipe Line
Partners, L.P., which merged into an affiliate of Valero L.P. on July
1, 2005.
With respect to the quarterly distribution to unitholders payable
for the third quarter of 2005, Valero L.P. also announced that it has
declared a distribution of $0.855 per unit payable November 14, 2005,
to holders of record as of November 7, 2005. Distributable cash flow
covers the distribution to the limited partners by 1.37 times.
As previously announced, the partnership completed the sale of
certain terminal and pipeline assets to Pacific Energy Partners, L.P.
on September 30, 2005. These assets consisted of two California
terminals handling refined products, blendstocks, and crude oil, three
East Coast refined products terminals, and a 550-mile refined products
pipeline with four truck terminals and storage in the U.S. Rocky
Mountains. Proceeds of approximately $455 million were received in
connection with the sale and were used to pay down outstanding debt
incurred to partially finance the Kaneb acquisition.
Results of the divested assets have been classified as
discontinued operations on the income statement and reflect three
months contribution. Effective October 1, 2005, the financial results
from these divested assets will no longer be included in the reported
results of Valero L.P.
"We are pleased to report record results in our initial quarter
after completing the Kaneb acquisition," said Curt Anastasio, Valero
L.P.'s Chief Executive Officer. "We had an outstanding quarter
financially as we benefited from the Kaneb acquisition, increases in
our pipeline tariffs, which went into effect on July 1, and higher
overall throughput volumes due to seasonally strong demand.
"Fortunately, we experienced no significant damage to our Gulf
Coast assets from either Hurricane Katrina or Hurricane Rita. Certain
of our Gulf Coast pipeline and terminal assets were shut down prior to
the storms making landfall, however, our skilled team of engineers and
operators had these assets back up and running within a few days. As a
result, the financial impact from these shutdowns was minimal.
"With respect to the recently announced pipeline project to
construct approximately 110 miles of new pipeline in the northeastern
Mexico and South Texas regions, we are ahead of schedule and now
expect to be completed by May 2006. The newly constructed pipeline
will connect to our recently expanded Valley products pipeline system,
which transports refined products to the Rio Grande Valley from
refineries in the Corpus Christi area. This connection allows us to
increase our shipments of products to the fast growing South Texas,
Rio Grande Valley and northern Mexico regions. With this new pipeline
and the recently expanded Valley pipeline, we expect to move
approximately 36,000 barrels per day of petroleum products.
"Looking ahead to the fourth quarter, operations are expected to
be impacted temporarily by lower throughput volumes from the typical
seasonal slowdown in demand for asphalt and the previously announced
scheduled plant-wide turnaround at Valero Energy's McKee refinery.
Higher power costs due to significantly higher natural gas prices and
higher maintenance expenses on certain legacy Kaneb assets are also
expected to impact the quarter. In addition, the sale of assets to
Pacific Energy Partners, L.P. is expected to lower earnings compared
to the third quarter. Given those factors, we expect to report
earnings in the range of 65 to 70 cents per unit for the fourth
quarter," said Anastasio.
A conference call with management is scheduled for 4:00 p.m. ET
(3:00 p.m. CT) today to discuss the financial and operational results
for the third quarter of 2005. Investors interested in listening to
the presentation may call 800/622-7620, passcode 1089876.
International callers may access the presentation by dialing
706/645-0327, passcode 1089876. The company intends to have a playback
available following the presentation, which may be accessed by calling
800/642-1687, passcode 1089876. 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 master limited partnership based in San Antonio,
with 9,150 miles of pipeline, 94 terminal facilities and four crude
oil storage facilities. One of the largest terminal and independent
petroleum liquids pipeline operators in the nation, the partnership
has terminal facilities in 25 U.S. states, Canada, Mexico, the
Netherlands Antilles, the Netherlands, Australia, New Zealand and the
United Kingdom. The partnership's combined system has approximately
77.6 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 2004 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
September 30, 2005 and 2004
(unaudited, thousands of dollars, except unit data and per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Statement of Income
Data (Note 1):
Revenues:
Services $153,371 $58,075 $268,312 $166,106
Products 110,175 -- 110,175 --
----------- ----------- ----------- ----------
Total Revenues 263,546 58,075 378,487 166,106
Costs and expenses:
Cost of sales 101,217 -- 101,217 --
Operating expenses 71,358 21,626 112,688 59,746
General and
administrative
expenses 10,391 3,588 17,455 8,233
Depreciation and
amortization 23,902 8,413 41,425 24,536
----------- ----------- ----------- -----------
Total costs and
expenses 206,868 33,627 272,785 92,515
----------- ----------- ----------- -----------
Operating income 56,678 24,448 105,702 73,591
Equity income from
joint ventures 1,541 372 2,340 1,102
Interest and other
expense, net (15,315) (5,433) (27,022) (15,630)
----------- ----------- ----------- -----------
Income from
continuing
operations
before income tax
expense 42,904 19,387 81,020 59,063
Income tax expense 2,147 -- 2,147 --
----------- ----------- ----------- -----------
Income from
continuing
operations 40,757 19,387 78,873 59,063
Income from
discontinued
operations 4,410 -- 4,410 --
----------- ----------- ----------- -----------
Net income
applicable to
general partner
and limited
partners' interest 45,167 19,387 83,283 59,063
Net income
applicable to
general partner
including incentive
distributions
(Note 2) (3,892) (1,478) (7,215) (4,451)
----------- ----------- ----------- -----------
Net income
applicable to
limited partners $41,275 $17,909 $76,068 $54,612
=========== =========== =========== ===========
Net income per unit
applicable to
limited
partners (Note 2):
Continuing
operations $0.79 $0.78 $2.31 $2.37
Discontinued
operations 0.09 -- 0.14 --
----------- ----------- ----------- -----------
Net income $0.88 $0.78 $2.45 $2.37
Weighted average
number of limited
partnership units
outstanding 46,809,749 23,041,394 31,051,243 23,041,394
Earnings before
interest, taxes
and depreciation
and amortization
(EBITDA, Note 3) $91,221 $33,233 $158,567 $99,229
Distributable cash
flow (Note 3) $63,574 $25,684 $114,634 $76,690
September 30, September 30, December 31,
2005 2004 2004
------------- --------------- ------------
Balance Sheet Data:
Long-term debt,
including current
portion (a) $1,175,473 $395,599 $385,161
Partners' equity (b) 1,918,933 438,903 438,311
Debt-to-
capitalization
ratio (a) /
((a)+(b)) 38.0% 47.4% 46.8%
Valero L.P.
Consolidated Financial Information - Continued
September 30, 2005 and 2004
(unaudited, thousands of dollars, except barrel information)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Operating Data:
Crude oil
pipelines:
Throughput
(barrels/day) 382,615 380,395 362,574 384,643
Gross margin $14,041 $13,231 $39,601 $39,462
Operating
expenses 4,455 4,225 12,464 11,825
Depreciation and
amortization 1,155 1,136 3,457 3,368
----------- ----------- ----------- -----------
Segment
operating
income $8,431 $7,870 $23,680 $24,269
=========== =========== =========== ===========
Refined product
pipelines:
Throughput
(barrels/day) 688,126 433,695 524,290 440,853
Gross margin $53,749 $22,324 $98,609 $63,764
Operating
expenses 22,507 10,493 41,362 28,360
Depreciation and
amortization 7,772 3,690 15,533 10,978
----------- ----------- ----------- -----------
Segment
operating
income $23,470 $8,141 $41,714 $24,426
=========== =========== =========== ===========
Refined product
terminals:
Throughput
(barrels/day) 253,415 260,440 252,933 256,291
Throughput gross
margin $12,387 $11,150 $33,808 $30,259
Storage lease
gross margin 61,572 -- 61,572 --
Bunkering gross
margin 8,958 -- 8,958 --
Operating
expenses 42,379 4,677 52,601 13,930
Depreciation and
amortization 13,106 1,720 16,825 4,593
----------- ----------- ----------- -----------
Segment
operating
income $27,432 $4,753 $34,912 $11,736
=========== =========== =========== ===========
Crude oil storage
tanks:
Throughput
(barrels/day) 504,060 517,135 512,349 490,190
Gross margin $11,622 $11,370 $34,722 $32,621
Operating
expenses 2,017 2,231 6,261 5,631
Depreciation and
amortization 1,869 1,867 5,610 5,597
----------- ----------- ----------- -----------
Segment
operating
income $7,736 $7,272 $22,851 $21,393
=========== =========== =========== ===========
Consolidated
Information:
Gross margin $162,329 $58,075 $277,270 $166,106
Operating
expenses 71,358 21,626 112,688 59,746
Depreciation and
amortization 23,902 8,413 41,425 24,536
----------- ----------- ----------- -----------
Segment
operating
income 67,069 28,036 123,157 81,824
General and
administrative
expenses 10,391 3,588 17,455 8,233
----------- ----------- ----------- -----------
Consolidated
operating
income $56,678 $24,448 $105,702 $73,591
=========== =========== =========== ===========
Valero L.P.
Consolidated Financial Information - Continued
September 30, 2005 and 2004
(unaudited)
Notes:
1. The statement of income data for the three and nine months
ended September 30, 2005 includes $29.4 million of operating
income related to the Kaneb Acquisition. Of the $29.4 million,
$10.8 million is attributed to the refined product pipeline
segment and $18.6 million is attributed to the refined product
terminal 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 September 30, 2005, Valero L.P. has 46,809,749 common
and subordinated units outstanding. Net income applicable to
the general partner includes incentive distributions
aggregating $3.1 million and $1.1 million for the three months
ended September 30, 2005 and 2004, respectively, and $5.7
million and $3.3 million for the nine months ended September
30, 2005 and 2004, 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 net income to EBITDA and
distributable cash flow (thousands of dollars, except unit data
and per unit data):
Three Months Nine Months
Ended Ended
September 30, September 30,
------------------- ----------------------
2005 2004 2005 2004
--------- --------- ----------- ----------
Net income $45,167 $19,387 $83,283 $59,063
Plus interest expense,
net (a) 20,005 5,433 31,712 15,630
Plus income tax
expense 2,147 -- 2,147 --
Plus depreciation and
amortization 23,902 8,413 41,425 24,536
--------- ---------- ---------- ----------
EBITDA 91,221 33,233 158,567 99,229
Less equity income
from joint ventures (1,541) (372) (2,340) (1,102)
Less interest expense,
net (a) (20,005) (5,433) (31,712) (15,630)
Less reliability
capital expenditures (8,476) (1,992) (12,369) (7,030)
Plus distributions
from joint ventures 2,375 248 2,488 1,223
--------- ---------- ---------- ----------
Distributable cash flow $63,574 $25,684 $114,634 $76,690
General partner's interest
in distributable cash
flow (8,834) (2,946) (14,648) (8,748)
--------- ---------- ---------- ----------
Limited partners'
interest in
distributable cash
flow $54,740 $22,738 $99,986 $67,942
========= ========== ========== ==========
Weighted average
number of limited
partnership units
outstanding 46,809,749 23,041,394 31,051,243 23,041,394
Distributable cash
flow per limited
partner unit $1.17 $0.99 $3.22 $2.95
(a) Interest expense of $4.9 million is included in income from
discontinued operations in the statement of income data for the
three and nine months ended September 30, 2005.
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