Valero Energy Partners LP (NYSE:VLP) today reported third quarter 2016 net income attributable to partners of $52 million, or $0.77 per common limited partner unit. Earnings before interest, income taxes, depreciation, and amortization (“EBITDA”) attributable to the Partnership was $66 million, and distributable cash flow was $62 million. VLP’s distribution coverage ratio for the third quarter was 1.9x.
“We continued to operate safely and reliably in the third quarter, generating strong earnings and distribution growth,” said Joe Gorder, Chairman and Chief Executive Officer of VLP’s general partner. “We successfully integrated the operations of the Meraux and Three Rivers terminals into our system and remain on track to grow distributions at a target annual rate of 25 percent through 2017.”
Earlier this week, the board of directors of VLP’s general partner declared a third quarter 2016 cash distribution of $0.385 per unit, representing a 5.5 percent increase from the second quarter of 2016.
Financial Results
Revenues were $92 million for the third quarter of 2016. Operating expenses were $24 million, general and administrative expenses were $4 million, and depreciation expense was $11 million. Revenues for the Partnership were higher in the third quarter of 2016 compared to the third quarter of 2015 primarily due to contributions from the Corpus Christi terminals, which were acquired on
October 1, 2015; the McKee terminal, which was acquired on April 1, 2016; and the Meraux and Three Rivers terminals, which were acquired on September 1, 2016.
The Partnership completed the Meraux and Three Rivers Terminal Services Business acquisition from a subsidiary of Valero Energy Corporation for total consideration of $325 million. The acquired business is expected to contribute approximately $39 million of EBITDA in its first 12 months of operations. The Partnership entered into 10-year terminaling agreements with a subsidiary of Valero that include minimum volume commitments covering approximately 85 percent of planned throughput.
“We completed our drop-down transaction target for the year,” said Gorder. “Growing the Partnership through opportunistic drop downs and the development of logistics projects that support Valero’s operations or provide third-party revenue remain priorities for us.”
Liquidity and Financial Position
As of September 30, 2016, the Partnership had $261 million of total liquidity consisting of $35 million of cash and cash equivalents and $226 million available on its revolving credit facility. Capital expenditures attributable to the Partnership in the third quarter of 2016 totaled $3 million, which includes $1 million for expansion and $2 million for maintenance.
The Partnership expects 2016 capital expenditures to be approximately $22 million, slightly higher than previous guidance. Of the total, $11 million is allocated for expansion, and the balance is for maintenance.
Conference Call
The Partnership’s senior management will host a conference call at 10 a.m. ET today to discuss this earnings release. A live broadcast of the conference call will be available on the Partnership’s website at www.valeroenergypartners.com.
About Valero Energy Partners LP
Valero Energy Partners LP is a fee-based master limited partnership formed by Valero Energy Corporation to own, operate, develop and acquire crude oil and refined products pipelines, terminals and other transportation and logistics assets. With headquarters in San Antonio, the Partnership’s assets include crude oil and refined petroleum products pipeline and terminal systems in the Gulf Coast and Mid-Continent regions of the United States (“U.S.”) that are integral to the operations of 10 of Valero’s refineries. Please visit www.valeroenergypartners.com for more information.
