PETROLOGISTICS LP 
By HOUSTON, April 23, 2014 /PRNewswire/ -- PetroLogistics LP (NYSE: PDH) (the "Partnership") announced today its financial and operating results and cash distribution for the first quarter of 2014. The distribution for the quarter ended March 31, 2014, is 37 cents per common unit. This brings the aggregate distributions for the twelve months ended March 31, 2014 to $1.42 per common unit.
Total sales in the first quarter were $220.0 million and net income was $46.7 million. The Partnership's reported results include certain items that impact comparability of financial results between reporting periods. Excluding the impact of these items, the Partnership's Adjusted EBITDA was $67.5 million and Adjusted net income was $48.0 million.
Cash available for distribution was $51.4 million for the first quarter of 2014. Adjusted net income, Adjusted EBITDA and cash available for distribution are non-GAAP financial measures. Please see "Non-GAAP Financial Measures" included later in this release for reconciliations of these Non-GAAP Financial Measures to the most directly comparable GAAP measures.
"The partnership turned in solid earnings for the quarter, generating a distribution of 37 cents per unit. This result was achieved despite a very cold winter and a resulting spike in propane prices in January and February," said Nathan Ticatch, President and Chief Executive Officer. "Our performance was positively impacted by the significant improvement in plant operations we have experienced since coming out of our planned turnaround in October 2013. During January and February of this year, we set an average daily production record of 3.94 million pounds of propylene per day. We also successfully completed a previously announced outage which commenced in late March to replace two heat exchangers and made other modifications to continue to improve plant reliability and increase production."
Operations
The Partnership produced 315.5 million pounds of propylene during the first quarter of 2014 compared to 298.9 million pounds produced during the same period of 2013. The Partnership recognized total sales of $220.0 million and $208.7 million, during the quarters ended March 31, 2014 and 2013, respectively, an increase of $11.3 million. This increase was primarily driven by higher propylene sales which totaled $214.4 million for the quarter ended March 31, 2014, compared to $204.3 million in 2013. The increase in propylene sales was due to increased sales volumes of 22 million pounds offset by a decrease in the average polymer grade propylene benchmark price which decreased to 73.3 cents per pound during the first quarter of 2014 compared to an average price for the same period of 2013 of 75 cents per pound.
Cost of sales was $161.6 million and $114.1 million for the first quarters of 2014 and 2013, respectively. The increase in cost of sales was primarily attributed to the increase in the average price of propane which climbed to $1.30 per gallon in 2014 compared to 86 cents per gallon for the same period in 2013. Propane feedstock costs are the primary component of cost of sales and represented approximately 76% and 70% of total production costs for the first quarters of 2014 and 2013.
For the first quarter of 2014, the Partnership had a gross profit of $58.4 million, and the average propane-to-propylene spread(1) was 36.2 cents per pound, compared to a gross profit of $94.6 million, and an average spread of 50.4 cents for the first quarter of 2013.
Distribution
The first quarter 2014 distribution of 37 cents per common unit will be paid on May 14, 2014, to unitholders of record on May 5, 2014. This brings the aggregate distributions for the twelve months ended March 31, 2014, to $1.42 per common unit.
Conference Call Details
The 2014 first quarter results conference call will be held on Thursday, April 24, 2014, at 11 a.m. EDT. Callers may listen to the live presentation, which will be followed by a question and answer segment, by dialing (866) 813-5647 or (847) 619-6249 entering pass code 37036258. An audio webcast of the call will be available at www.petrologistics.com within the Investor Relations portion of the site under the Presentations section. A replay will be available by audio webcast and teleconference from 12:00 p.m. EDT on April 24, 2014 through 12:00 a.m. EDT on May 13, 2014. The replay teleconference will be available by dialing (888) 843-7419 or (630) 652-3042 and the reservation number 37036258.
About PetroLogistics LP
PetroLogistics LP is a master limited partnership which owns and operates the only U.S. propane dehydrogenation facility producing propylene from propane. The Partnership's headquarters and operations are located in Houston, Texas.
Investor Relations
Phone: 855-840-7140
E-mail: investor@petrologistics.com
Address: Investor Relations
600 Travis STE 3250
Houston, TX 77002
Forward-Looking Statements
Certain statements and information in this release may constitute "forward-looking statements." The words "believe," "expect," "anticipate," "plan," "intend," "foresee," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the volatile nature of our business and the variable nature of our distributions; the ability of our general partner to modify or revoke our distribution policy at any time; our ability to forecast our future financial condition or results; the cyclical nature of our business; competition from other propylene producers; our reliance on propane that we purchase from Enterprise Products Operating LLC; our reliance on other third-party suppliers; the supply and price levels of propane and propylene; the risk of a material decline in production at our propane dehydrogenation facility; potential operating hazards from accidents, fire, severe weather, floods or other natural disasters; the risk associated with governmental policies affecting the petrochemical industry; capital expenditures and potential liabilities arising from environmental laws and regulations; existing and proposed environmental laws and regulations, including those relating to climate change, alternative energy or fuel sources, and on the end-use and application of propylene; new regulations concerning the transportation of hazardous chemicals, risks of terrorism and the security of propane processing facilities; our lack of asset diversification; our dependence on a limited number of significant customers; our ability to comply with employee safety laws and regulations; potential disruptions in the global or U.S. capital and credit markets; our potential inability to complete our required turnarounds and other significant capital expenditure projects on time, within budget or both; additional risks, compliance costs and liabilities from expansions or acquisitions; our potential inability to successfully implement our business strategies; our reliance on certain members of our senior management team and other key personnel of our general partner; the potential development of integrated propylene facilities by competitors or our current customers, displacing us as suppliers; the potential shortage of skilled labor or loss of key personnel; our ability to secure appropriate and adequate debt facilities at a reasonable cost of capital; restrictions in our debt agreements; the dependence on our subsidiary for cash to meet our debt obligations; our limited operating history; risks relating to our relationship with our sponsors; and changes in our treatment as a partnership for U.S. income or state tax purposes. For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with Securities and Exchange Commission, including our annual report on Form 10-K as filed with the SEC on March 7, 2014, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of the Partnership's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
(1) Propane-to-propylene spread is calculated as (PGP Contract Benchmark Price (cents per pound) - 1.2*(Propane Price (cents per gallon)/4.2)). This calculation assumes that it takes approximately 1.2 pounds of propane to make 1.0 pound of propylene and one gallon of propane weighs approximately 4.2 pounds.
PetroLogistics LP
Financial and Operational Data
(all information in this release
is unaudited except as otherwise
noted):
The following tables
summarize the
financial data and key
operating statistics
for the Partnership
for the three months
ended March 31, 2014
and 2013. Selected
balance sheet data is
as of March 31, 2014
and December 31, 2013.
Three Months
Ended
March 31,
---------
2014 2013
---- ----
($ in
millions)
(unaudited)
Operational Data
Propylene produced (thousand pounds) 315,537 298,947
Propylene sold (thousand pounds) 310,742 288,691
Average PGP benchmark price (cents per
pound) 73.3 75.0
Average propane price (cents per gallon) 130.4 86.3
Propane-to-propylene spread (cents per
pound) 36.2 50.4
Consolidated Statement of Comprehensive
Income:
Sales $220.0 $208.7
Cost of sales* (161.6) (114.1)
------ ------
Gross profit $58.4 $94.6
General and administrative expense (4.0) (4.2)
Equity-based compensation expense
(general and administrative) (0.7) (0.6)
Development expense (1) - (0.6)
Unrealized gain on derivatives - 18.4
Realized loss on derivatives (2) - (22.1)
--- -----
Operating income 53.7 85.5
Loss on early extinguishment of debt(3) - (20.5)
Interest expense, net (6.4) (7.1)
---- ----
Income before income tax expense 47.3 57.9
Income tax expense (0.6) (0.8)
---- ----
Net income $46.7 $57.1
Adjusted net income $48.0 $83.0
_______________
* Amounts shown are
inclusive of depreciation
and amortization of $12.5
million and $9.7 million
and equity-based
compensation expense of
$0.6 million and $0.5
million for the first
quarters of 2014 and 2013,
respectively.
Non-GAAP Financial Measures
To supplement the financial
information presented in
accordance with GAAP,
additional measures are used
that are known as "non-GAAP
financial measures" in the
evaluation of past performance
and prospects for the future.
These measures include Adjusted
EBITDA, Adjusted net income and
Cash available for
distribution. The presentation
of such additional financial
measures provides useful
information to investors
regarding our performance and
results of operations because
these measures, when used in
conjunction with related GAAP
financial measures, (i) provide
additional information about
operating performance and our
ability to generate cash
available for distribution,
(ii) provide investors with the
financial analytical framework
upon which management bases
financial, operational,
compensation and planning
decisions and (iii) present
measurements that investors,
rating agencies and debt
holders have indicated are
useful in assessing our results
of operations. These measures
may exclude, for example, (i)
the mark-to-market of
derivative instruments that are
related to underlying
activities in another period or
settled positions that are
subject to the Omnibus
Agreement, (ii) items that are
not indicative of operating
results and/or (iii) other
items that we believe should be
excluded in understanding
operating performance. We have
defined all such items as
"Certain Items that Impact
Comparability." Cash available
for distribution should not be
considered in isolation or as
an alternative to net income or
operating income. Cash
available for distribution as
reported by the Partnership may
not be comparable to similarly
titled measures of other
entities. These additional
financial measures are
reconciled to the most directly
comparable measures as reported
in accordance with GAAP, and
should be viewed in addition
to, and not in lieu of, our
consolidated financial
statements and footnotes.
Three Months Ended Twelve Months Ended
March 31, March 31, 2014
--------- --------------
2014 2013
---- ----
($ in millions)
(unaudited)
Reconciliation
of Net Adjusted
Income EBITDA:
to
Adjusted
net
income
(Excluding
Certain
Items)
and to
Net
income $46.7 $57.1 $164.7
Equity-
based
compensation
expense
(4) 1.3 1.1 4.6
Unrealized
gain on
derivatives - (18.4) (44.6)
Realized
loss on
derivatives(2) - 22.1 39.2
Loss on
early
extinguishment
of
debt(3) - 20.5 -
Development
expense
(1) - 0.6 1.3
--- ---
Adjusted
net
income
(excluding
certain
items) $48.0 $83.0 $165.2
Net
income $46.7 $57.1 $164.7
Adjustments:
Interest
expense 6.4 7.1 $25.6
Income
tax
expense 0.6 0.8 2.4
Depreciation,
amortization
and
accretion 12.5 9.7 44.4
Loss on
early
extinguishment
of debt - 20.5 -
Equity-
based
compensation
expense
(4) 1.3 1.1 4.6
Unrealized
gain on
derivatives - (18.4) (44.6)
Plus:
Realized
loss on
derivatives(2) - 22.1 39.2
----
Adjusted
EBITDA $67.5 $100.0 $236.3
Three Months Ended Twelve Months Ended
March 31, 2014 March 31, 2014
-------------- --------------
($ in millions) ($ in millions)
(unaudited) (unaudited)
Calculation
of Cash
Available
for
Distribution
Adjusted
EBITDA $67.5 $236.3
Adjustments
Less:
Debt
service (5.9) (23.6)
Less:
Total
maintenance
capital
expenditures
(5) (2.5) (10.3)
Less:
Income
tax (0.5) (1.2)
Less:
Reserve
for
catalyst
turnaround (5.9) (23.7)
Less:
Insurance
reimbursement
(6) (1.1) (4.1)
Less:
Distribution
payments
on
awarded
non-
vested
LTIPs (0.2) (1.3)
Plus:
Adjustment expenses
for (7)
inventory
purchased
for
turnaround
and
October
2013
overhead - 19.0
Plus:
Extraordinary
maintenance
expenses
incurred
during
the
turnaround
(8) - 6.3
--- ---
Cash
available
for
distribution $51.4 $197.4
Cash
distribution
per unit $0.37 $1.42
Common
units
outstanding
for
purposes
of
calculating
distribution* 139,212,737 139,212,737
*Does not include
non-vested units
granted under our
2012 Long Term
Incentive Plan.
As of March 31 As of December 31,
2014 2013
---- ----
($ in millions)
(unaudited)
Balance Sheet Data:
Cash and cash
equivalents $23.4 $25.4
Working capital (9) 64.2 54.7
Total assets 756.5 769.9
Total debt 365.0 365.0
Partners' capital 339.0 333.1
(1) Development expense includes
preliminary engineering and
design work and other expenses
for projects which do not
qualify for capitalization
under GAAP.
(2) Effective May 9, 2012,
pursuant to the Omnibus
Agreement, PL Manufacturing and
the PL Manufacturing Members
were responsible for making
quarterly capital contributions
to us in an amount equal to the
net amount due to the propane
swap counterparty for realized
losses under the Propane Swaps
for the applicable fiscal
quarter. On April 19, 2013,
we, PL Manufacturing and the
counterparty to the propane
swaps agreed to terminate the
propane swaps remaining as of
May 1, 2013, and therefore no
hedge impact was incurred
during the first quarter of
2014. During the first quarter
of 2013, we were reimbursed
$31.9 million for losses
incurred in the quarter ended
December 31, 2012.
(3) The loss on early
extinguishment of debt consists
of the write-off of deferred
financing costs, original issue
discount, and retirement
premium to refinance our term
loan B in March 2013 and amend
and extend our revolving credit
facility.
(4) Equity-based compensation
expense consists of non-cash
unit-based compensation
granted to employees and
independent directors.
(5) Total maintenance capital
expenditures for the three
months ended March 31, 2014,
represents one quarter of the
total estimated maintenance
capital spending for 2014,
which excludes spending on
profit enhancement capital.
Total maintenance capital
expenditures for the twelve
months ended March 31, 2014,
represents one quarter of the
2014 estimated maintenance
capital spending, plus total
maintenance capital spending
withheld from distributions
from April through December
2013, excluding spending on
items prefunded by the pre-IPO
investors, turnaround and
profit enhancement capital.
(6) The insurance reimbursement
for the quarter and the twelve
months ended March 31, 2014,
represents proceeds received
from insurance related to
claims for which the expenses
were incurred and added to Cash
Available for Distribution in
prior periods. Since the
proceeds were included in net
income, and consequently
Adjusted EBITDA, the deduction
has no impact on Cash Available
for Distribution.
(7) The adjustment for inventory
purchased for the turnaround
and October 2013 overhead
expenses represents the
difference between the actual
cost of sales and the cost of
sales calculated excluding the
impact of the purchased
inventory, plus overhead
expenses incurred during the
turnaround in October 2013.
These costs were reserved for
as a part of the "Reserve for
catalyst turnaround" in prior
quarters. Since these costs
were included in the
determination of net income,
and, consequently Adjusted
EBITDA, this adjustment has no
impact on Cash Available for
Distribution for the twelve
months ended March 31, 2014.
(8) Extraordinary maintenance
expenses of $6.3 million
incurred during the turnaround
in October 2013, are added back
to the Cash available for
distribution for the twelve
months ended March 31, 2014, as
these costs were reserved for
as a part of the "Reserve for
catalyst turnaround" in prior
quarters. Since these costs
were included in the
determination of net income,
and, consequently Adjusted
EBITDA, this adjustment has no
impact on Cash Available for
Distribution.
(9) Working capital is defined
as current assets, including
cash, less current liabilities.
SOURCE PetroLogistics LP
