PAA Plains All American Pipeline

Plains All American Pipeline, L.P. (NYSE: PAA) and Plains GP Holdings (NYSE: PAGP) today reported first-quarter 2016 results.

     

Plains All American Pipeline, L.P.

 

Summary Financial Information (1) (unaudited)

(in millions, except per unit data) Three Months Ended March 31,   2016 2015 %

Change

Net income attributable to PAA

$ 202 $ 283 (29 )% Diluted net income per common unit $ 0.07 $ 0.35 (80 )% Diluted weighted average common units outstanding 399 385 4 % EBITDA $ 448 $ 509 (12 )%     Three Months Ended March 31,   2016 2015 %

Change

Adjusted net income attributable to PAA $ 355 $ 369 (4 )% Diluted adjusted net income per common unit $ 0.45 $ 0.57 (21 )% Adjusted EBITDA $ 621 $ 622 - % Distribution per common unit declared for the period $ 0.700 $ 0.685 2.2 %  

(1)

PAA’s reported results include the impact of items that affect comparability between reporting periods. The impact of certain of these items is excluded from adjusted results. See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding certain selected items that PAA believes impact comparability of financial results between reporting periods, as well as for information regarding non-GAAP financial measures (such as adjusted EBITDA) and their reconciliation to the most directly comparable measures as reported in accordance with GAAP.

 

“PAA reported first-quarter adjusted EBITDA of $621 million, which was approximately $51 million or 9% above the midpoint of our first-quarter guidance,” said Greg Armstrong, Chairman and CEO of Plains All American. “PAA’s results reflect a combination of performance above expectations, the inclusion of deficiency amounts for ship or pay obligations that have been billed or collected, and some timing related items expected to reverse later in the year.”

Armstrong added, “We are cautious over the near term as recent drilling and completion activity is meaningfully below levels of just a few months ago and what we anticipated in our initial 2016 guidance. These lower activity levels are starting to impact U.S. oil production and, accordingly, we are revising our full-year 2016 midpoint guidance for adjusted EBITDA downward by approximately 4% to $2.175 billion.

Importantly, PAA ended the first quarter of 2016 with $3.8 billion of committed liquidity and an improved balance sheet as a result of the $1.6 billion preferred equity offering completed in January. We believe PAA is well positioned to manage through near-term challenges and to prosper over the intermediate to long term as the industry recovers.”

The following table summarizes selected PAA financial information by segment for the first quarter of 2016:

                 

Summary of Selected Financial Data by Segment (1) (unaudited)

(in millions) Three Months Ended Three Months Ended March 31, 2016 March 31, 2015 Transportation Facilities Supply and

Logistics

Transportation Facilities Supply and

Logistics

Reported segment profit $ 247 $ 159 $ 37 $ 241 $ 142 $ 130 Selected items impacting comparability of segment profit (2)   22     8     147     5   2   101 Adjusted segment profit $ 269   $ 167   $ 184   $ 246 $ 144 $ 231 Percentage change in adjusted segment profit versus 2015 period   9 %   16 %   (20 )%    

(1)

PAA’s reported results include the impact of items that affect comparability between reporting periods. The impact of certain of these items is excluded from adjusted results. See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding certain selected items that PAA believes impact comparability of financial results between reporting periods.

(2)

Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

 

First-quarter 2016 Transportation adjusted segment profit increased 9% over comparable 2015 results. This increase was primarily driven by higher crude oil pipeline volumes associated with our Cactus pipeline, which was placed into service in April 2015, and the expansion of our pipeline system in the Delaware Basin. Such increases were partially offset by lower pipeline loss allowance revenues.

First-quarter 2016 Facilities adjusted segment profit increased by 16% over comparable 2015 results. This increase was primarily due to an increase in capacity and higher utilization of our crude oil storage facilities and lower operating expenses.

First-quarter 2016 Supply and Logistics adjusted segment profit decreased by 20% as compared to 2015 results. This decrease was primarily driven by lower volumes and margins associated with our U.S. crude oil lease gathering due to crude oil production declines in certain basins and the resulting increase in competitive pressures for lease gathered barrels as well as lower margins from our NGL sales activities. Such decreases were partially offset by the benefit of contango storage opportunities.

Plains GP Holdings

PAGP’s sole assets are its ownership interest in PAA’s general partner and incentive distribution rights. As the control entity of PAA, PAGP consolidates PAA’s results into its financial statements, which is reflected in the condensed consolidating balance sheet and income statement tables included at the end of this release. Information regarding PAGP’s distributions is reflected below:

                  Q1 2016 Q4 2015 Q1 2015 Distribution per Class A share declared for the period $ 0.231 $ 0.231   $ 0.222   Q1 2016 distribution percentage growth from prior periods   - %   4.1 %  

Conference Call

PAA and PAGP will hold a conference call on May 5, 2016 (see details below). Prior to this conference call, PAA will furnish a current report on Form 8-K, which will include material in this news release as well as PAA’s financial and operational guidance for the second quarter and full year of 2016. A copy of the Form 8-K will be available at www.plainsallamerican.com, where PAA and PAGP routinely post important information.

The PAA and PAGP conference call will be held at 11:00 a.m. ET on Thursday, May 5, 2016 to discuss the following items:

1. PAA's first-quarter 2016 performance;

2. The status of major expansion projects;

3. Capitalization and liquidity;

4. Financial and operating guidance for the second quarter and full year of 2016; and

5. PAA and PAGP’s outlook for the future.

Conference Call Access Instructions

To access the Internet webcast of the conference call, please go to www.plainsallamerican.com, under the “Investor Relations” section of the website (Navigate to: Investor Relations / either “PAA” or “PAGP” / News & Events / Quarterly Earnings). Following the live webcast, an audio replay in MP3 format will be available on the website within two hours after the end of the call and will be accessible for a period of 365 days.

Non-GAAP Financial Measures and Selected Items Impacting Comparability

To supplement our financial information presented in accordance with GAAP, management uses additional measures that are known as “non-GAAP financial measures” (such as adjusted EBITDA and implied distributable cash flow (“DCF”)) in its evaluation of past performance and prospects for the future. Management believes that 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 our core operating performance and ability to generate and distribute cash flow, (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 us and our results of operations. These measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) the mark-to-market of derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are related to investing activities (such as the purchase of linefill) and inventory valuation adjustments, as applicable, (iii) long–term inventory costing adjustments, (iv) items that are not indicative of our core operating results and business outlook and/or (v) other items that we believe should be excluded in understanding our core operating performance. These measures may further be adjusted to include amounts related to deficiencies associated with minimum volume commitments whereby we have billed the counterparties for their deficiency obligation and such amounts are recognized as deferred revenue in “Accounts payable and accrued liabilities” in our Condensed Consolidated Financial Statements. Such amounts are presented net of applicable amounts subsequently recognized into revenue. We have defined all such items as “Selected Items Impacting Comparability.” Due to the nature of the selected items, certain selected items impacting comparability may impact certain non-GAAP financial measures, referred to as adjusted results, but not impact other non-GAAP financial measures. We consider an understanding of these selected items impacting comparability to be material to the evaluation of our operating results and prospects.

Although we present selected items that we consider in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions and numerous other factors. These types of variations are not separately identified in this release, but will be discussed, as applicable, in management’s discussion and analysis of operating results in our Quarterly Report on Form 10-Q.

Adjusted EBITDA and other non-GAAP financial measures are reconciled to the most comparable measures as reported in accordance with GAAP for the periods presented in the tables attached to this release, and should be viewed in addition to, and not in lieu of, our Condensed Consolidated Financial Statements and notes thereto. In addition, PAA maintains on its website (www.plainsallamerican.com) a reconciliation of adjusted EBITDA and certain commonly used non-GAAP financial information to the most comparable GAAP measures. To access the information, investors should click on “PAA” under the "Investor Relations" tab on the home page, select the "Financial Information" tab and navigate to the “Non-GAAP Reconciliations” link.

Forward Looking Statements

Except for the historical information contained herein, the matters discussed in this release consist of forward-looking statements that involve certain risks and uncertainties that could cause actual results or outcomes to differ materially from results or outcomes anticipated in the forward-looking statements. These risks and uncertainties include, among other things, declines in the volume of crude oil, refined product and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of our assets, whether due to declines in production from existing oil and gas reserves, failure to develop or slowdown in the development of additional oil and gas reserves, whether from reduced cash flow to fund drilling or the inability to access capital, or other factors; the effects of competition; failure to implement or capitalize, or delays in implementing or capitalizing, on expansion projects; unanticipated changes in crude oil market structure, grade differentials and volatility (or lack thereof); environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; fluctuations in refinery capacity in areas supplied by our mainlines and other factors affecting demand for various grades of crude oil, refined products and natural gas and resulting changes in pricing conditions or transportation throughput requirements; the occurrence of a natural disaster, catastrophe, terrorist attack or other event, including attacks on our electronic and computer systems; maintenance of our credit rating and ability to receive open credit from our suppliers and trade counterparties; tightened capital markets or other factors that increase our cost of capital or limit our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; the currency exchange rate of the Canadian dollar; continued creditworthiness of, and performance by, our counterparties, including financial institutions and trading companies with which we do business; inability to recognize current revenue attributable to deficiency payments received from customers who fail to ship or move more than minimum contracted volumes until the related credits expire or are used; non-utilization of our assets and facilities; increased costs, or lack of availability, of insurance; weather interference with business operations or project construction, including the impact of extreme weather events or conditions; the availability of, and our ability to consummate, acquisition or combination opportunities; the successful integration and future performance of acquired assets or businesses and the risks associated with operating in lines of business that are distinct and separate from our historical operations; the effectiveness of our risk management activities; shortages or cost increases of supplies, materials or labor; the impact of current and future laws, rulings, governmental regulations, accounting standards and statements and related interpretations; fluctuations in the debt and equity markets, including the price of our units at the time of vesting under our long-term incentive plans; risks related to the development and operation of our assets, including our ability to satisfy our contractual obligations to our customers; factors affecting demand for natural gas and natural gas storage services and rates; general economic, market or business conditions and the amplification of other risks caused by volatile financial markets, capital constraints and pervasive liquidity concerns; and other factors and uncertainties inherent in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the storage of natural gas and the processing, transportation, fractionation, storage and marketing of natural gas liquids as discussed in the Partnerships' filings with the Securities and Exchange Commission.

Plains All American Pipeline, L.P. is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL"), natural gas and refined products. PAA owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, PAA handles over 4.6 million barrels per day of crude oil and NGL in its Transportation segment. PAA is headquartered in Houston, Texas.

Plains GP Holdings is a publicly traded entity that owns an interest in the general partner and incentive distribution rights of Plains All American Pipeline, L.P., one of the largest energy infrastructure and logistics companies in North America. PAGP is headquartered in Houston, Texas.

          PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)                

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)

(in millions, except per unit data) Three Months Ended March 31, 2016 2015   REVENUES $ 4,111 $ 5,942   COSTS AND EXPENSES Purchases and related costs 3,348 5,042 Field operating costs 300 346 General and administrative expenses 67 78 Depreciation and amortization   114     104   Total costs and expenses 3,829 5,570   OPERATING INCOME 282 372   OTHER INCOME/(EXPENSE) Equity earnings in unconsolidated entities 47 37 Interest expense, net (112 ) (105 ) Other income/(expense), net   5     (4 )   INCOME BEFORE TAX 222 300 Current income tax expense (31 ) (42 ) Deferred income tax benefit   12     26     NET INCOME 203 284 Net income attributable to noncontrolling interests   (1 )   (1 ) NET INCOME ATTRIBUTABLE TO PAA $ 202   $ 283     NET INCOME PER COMMON UNIT:

Net income attributable to common unitholders -- Basic

$ 28 $ 136 Basic weighted average common units outstanding 398 383 Basic net income per common unit $ 0.07   $ 0.36    

Net income attributable to common unitholders -- Diluted

$ 28 $ 136 Diluted weighted average common units outstanding 399 385 Diluted net income per common unit $ 0.07   $ 0.35    

(1) The 2015 periods have been retroactively adjusted to reflect the reclassification of the amortization of debt issuance costs from "Depreciation and amortization" to "Interest expense, net" as a result of our adoption of revised debt issuance costs guidance issued by the FASB.

               

ADJUSTED RESULTS

(in millions, except per unit data) Three Months Ended March 31, 2016 2015   ADJUSTED NET INCOME ATTRIBUTABLE TO PAA $ 355   $ 369     DILUTED ADJUSTED NET INCOME PER COMMON UNIT $ 0.45   $ 0.57     ADJUSTED EBITDA $ 621   $ 622             PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)                

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(in millions) March 31, December 31, 2016 2015 ASSETS Current assets $ 2,780 $ 2,969 Property and equipment, net 13,670 13,474 Goodwill 2,405 2,405 Investments in unconsolidated entities 2,097 2,027 Linefill and base gas 899 898 Long-term inventory 112 129 Other long-term assets, net   334     386   Total assets $ 22,297   $ 22,288     LIABILITIES AND PARTNERS' CAPITAL Current liabilities $ 3,063 $ 3,407 Senior notes, net of unamortized discounts and debt issuance costs 9,126 9,698 Other long-term debt 27 677 Other long-term liabilities and deferred credits   710     567   Total liabilities 12,926 14,349   Partners' capital excluding noncontrolling interests 9,313 7,881 Noncontrolling interests   58     58   Total partners' capital   9,371     7,939   Total liabilities and partners' capital $ 22,297   $ 22,288    

DEBT CAPITALIZATION RATIOS

(in millions) March 31, December 31, 2016 2015 Short-term debt $ 715 $ 999 Long-term debt   9,153     10,375   Total debt $ 9,868   $ 11,374     Long-term debt $ 9,153 $ 10,375 Partners' capital   9,371     7,939   Total book capitalization $ 18,524   $ 18,314   Total book capitalization, including short-term debt $ 19,239   $ 19,313     Long-term debt-to-total book capitalization 49 % 57 % Total debt-to-total book capitalization, including short-term debt 51 % 59 %                         PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)  

SELECTED FINANCIAL DATA BY SEGMENT

(in millions) Three Months Ended Three Months Ended March 31, 2016 March 31, 2015 Supply and Supply and Transportation Facilities Logistics Transportation Facilities Logistics Revenues (1) $ 383 $ 265 $ 3,821 $ 400 $ 257 $ 5,634 Purchases and related costs (1) (21 ) (5 ) (3,677 ) (30 ) (4 ) (5,353 ) Field operating costs (1) (2) (137 ) (85 ) (81 ) (136 ) (91 ) (118 )

Equity-indexed compensation expense - operations

- - - (3 ) (1 ) (1 ) Segment general and administrative expenses (2) (3) (23 ) (15 ) (25 ) (22 ) (15 ) (27 ) Equity-indexed compensation expense - general and administrative (2 ) (1 ) (1 ) (5 ) (4 ) (5 ) Equity earnings in unconsolidated entities   47     -     -     37     -     -   Reported segment profit $ 247 $ 159 $ 37 241 142 130 Selected items impacting comparability of segment profit (4)   22     8     147     5     2     101   Adjusted segment profit $ 269   $ 167   $ 184   $ 246   $ 144   $ 231     Maintenance capital $ 35   $ 9   $ 3   $ 33   $ 15   $ 2    

(1)

Includes intersegment amounts.

(2)

Field operating costs and Segment general and administrative expenses exclude equity-indexed compensation expense, which is presented separately in the table above.

(3)

Segment general and administrative expenses reflect direct costs attributable to each segment and an allocation of other expenses to the segments. The proportional allocations by segment require judgment by management and are based on the business activities that exist during each period.

(4)

Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

          PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)  

OPERATING DATA (1)

Three Months Ended March 31, 2016 2015   Transportation segment (average daily volumes in thousands of barrels per day): Volumes from tariff activities Crude oil pipelines (by region): Permian Basin (2) 2,045 1,658 South Texas / Eagle Ford (2) 313 263 Western 175 268 Rocky Mountain (2) 437 453 Gulf Coast 581 441 Central 379 435 Canada 394 414 Crude oil pipelines 4,324 3,932 NGL pipelines 178 191 Total volumes from tariff activities 4,502 4,123 Trucking 106 121 Transportation segment total volumes 4,608 4,244   Facilities segment (average monthly volumes): Crude oil, refined products and NGL terminalling and storage (average monthly capacity in millions of barrels) 105 99 Rail load / unload volumes (average volumes in thousands of barrels per day) 91 206 Natural gas storage (average monthly working capacity in billions of cubic feet) 97 97 NGL fractionation (average volumes in thousands of barrels per day) 115 102 Facilities segment total volumes (average monthly volumes in millions of barrels) ((3)) 127 124   Supply and Logistics segment (average daily volumes in thousands of barrels per day): Crude oil lease gathering purchases 913 981 NGL sales 308 286 Waterborne cargos 7 - Supply and Logistics segment total volumes 1,228 1,267  

(1)

Average volumes are calculated as total volumes for the period (attributable to our interest) divided by the number of days or months in the period.

(2)

Region includes volumes (attributable to our interest) from pipelines owned by unconsolidated entities.

(3)

Facilities segment total is calculated as the sum of: (i) crude oil, refined products and NGL terminalling and storage capacity; (ii) rail load and unload volumes multiplied by the number of days in the period and divided by the number of months in the period; (iii) natural gas storage working capacity divided by 6 to account for the 6:1 mcf of natural gas to crude Btu equivalent ratio and further divided by 1,000 to convert to monthly volumes in millions; and (iv) NGL fractionation volumes multiplied by the number of days in the period and divided by the number of months in the period.

            PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)                  

COMPUTATION OF BASIC AND DILUTED NET INCOME PER COMMON UNIT

(in millions, except per unit data) Three Months Ended March 31, 2016 2015 Basic Net Income per Common Unit Net income attributable to PAA $ 202 $ 283 Less: Distributions to Series A preferred units (1) (23 ) - Less: Distributions to general partner (1) (155 ) (148 ) Less: Distributions to participating securities (1) (1 ) (2 ) Less: Undistributed loss allocated to general partner (1)   5     3   Net income attributable to common unitholders in accordance with application of the two-class method for MLPs $ 28   $ 136     Basic weighted average common units outstanding 398 383   Basic net income per common unit $ 0.07   $ 0.36     Diluted Net Income per Common Unit Net income attributable to PAA $ 202 $ 283 Less: Distributions to Series A preferred units (1) (23 ) - Less: Distributions to general partner (1) (155 ) (148 ) Less: Distributions to participating securities (1) (1 ) (2 ) Less: Undistributed loss allocated to general partner (1)   5     3   Net income attributable to common unitholders in accordance with application of the two-class method for MLPs $ 28   $ 136     Basic weighted average common units outstanding 398 383 Effect of dilutive securities: Weighted average LTIP units (2)   1     2   Diluted weighted average common units outstanding   399     385     Diluted net income per common unit (3) $ 0.07   $ 0.35    

(1)

We calculate net income attributable to common unitholders based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period's distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, common unitholders and participating securities in accordance with the contractual terms of the partnership agreement and as further prescribed under the two-class method.

(2)

Our Long-term Incentive Plan ("LTIP") awards that contemplate the issuance of common units are considered dilutive unless (i) vesting occurs only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. LTIP awards that are deemed to be dilutive are reduced by a hypothetical unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB.

(3)

The Series A preferred units were excluded from the calculation of diluted net income per common unit as the effect was antidilutive.

    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)          

SELECTED ITEMS IMPACTING COMPARABILITY

(in millions, except per unit data) Three Months Ended March 31, 2016 2015

Selected Items Impacting Comparability(1):

Gains/(losses) from derivative activities net of inventory valuation adjustments (2) $ (122 ) $ (91 ) Deficiencies under minimum volume commitments, net (3) (27 ) - Long-term inventory costing adjustments (4) (23 ) (38 ) Equity-indexed compensation expense (5) (4 ) (11 ) Net gain on foreign currency revaluation 3 27 Tax effect on selected items impacting comparability   20     27   Selected items impacting comparability of net income attributable to PAA $ (153 ) $ (86 )   Impact to basic net income per common unit $ (0.38 ) $ (0.22 ) Impact to diluted net income per common unit $ (0.38 ) $ (0.22 )  

(1)

 

Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

(2)

Includes mark-to-market and other gains and losses resulting from derivative instruments that are related to underlying activities in another period (or the reversal of mark-to-market gains

and losses from a prior period), gains and losses on derivatives that are related to investing activities (such as the purchase of linefill) and inventory valuation adjustments, as applicable.

(3)

Includes the impact of amounts billed to counterparties for their deficiency obligation under agreements with minimum volume commitments, net of applicable amounts subsequently

recognized into revenue.

(4)

Includes the impact of changes in the average cost of long-term inventory that result from fluctuations in market prices and writedowns of such inventory that result from price declines.

Long-term inventory consists of minimum working inventory requirements in third-party assets and other working inventory needed for our commercial operations. We consider this

inventory necessary to conduct our operations and we intend to carry this inventory for the foreseeable future. Therefore, we classify this inventory as long-term on our balance sheet and

do not hedge the inventory with derivative instruments (similar to linefill in our own assets).

(5)

Includes equity-indexed compensation expense associated with LTIP awards that will or may be settled in units, as the dilutive impact of these outstanding awards is included in our diluted

net income per unit calculation and the majority of these awards are expected to be settled in units.

    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)          

COMPUTATION OF ADJUSTED BASIC AND DILUTED NET INCOME PER COMMON UNIT

(in millions, except per unit data) Three Months Ended March 31, 2016 2015 Basic Adjusted Net Income per Common Unit Net income attributable to PAA $ 202 $ 283 Selected items impacting comparability of net income attributable to PAA (1)   153     86   Adjusted net income attributable to PAA 355 369 Less: Distributions to Series A preferred units (2) (23 ) - Less: Distributions to general partner (2) (155 ) (148 ) Less: Distributions to participating securities (2) (1 ) (2 ) Less: Undistributed loss allocated to general partner (2)   3     1   Adjusted net income attributable to common unitholders in accordance with application of the two-class method for MLPs $ 179   $ 220     Basic weighted average common units outstanding 398 383   Basic adjusted net income per common unit $ 0.45   $ 0.58     Diluted Adjusted Net Income per Common Unit Net income attributable to PAA $ 202 $ 283 Selected items impacting comparability of net income attributable to PAA (1)   153     86   Adjusted net income attributable to PAA 355 369 Less: Distributions to Series A preferred units (2) (23 ) - Less: Distributions to general partner (2) (155 ) (148 ) Less: Distributions to participating securities (2) (1 ) (2 ) Less: Undistributed loss allocated to general partner (2)   3     1   Adjusted net income attributable to common unitholders in accordance with application of the two-class method for MLPs $ 179   $ 220     Diluted weighted average common units outstanding 399 385   Diluted adjusted net income per common unit (3) $ 0.45   $ 0.57    

(1)

 

Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

(2)

We calculate adjusted net income attributable to common unitholders based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period's distributions, the

remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, common unitholders and participating securities in accordance with the contractual terms of

the partnership agreement and as further prescribed under the two-class method.

(3)

The Series A preferred units were excluded from the calculation of diluted net income per common unit as the effect was antidilutive.

  PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)    

FINANCIAL DATA RECONCILIATIONS

(in millions) Three Months Ended March 31, 2016 2015 Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Excluding Selected Items Impacting Comparability ("Adjusted EBITDA") Reconciliations Net Income $ 203 $ 284 Add: Interest expense, net 112 105 Add: Income tax expense 19 16 Add: Depreciation and amortization   114     104   EBITDA 448 509 Selected items impacting comparability of EBITDA (1)   173     113   Adjusted EBITDA $ 621   $ 622     (1) Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.   Three Months Ended March 31, 2016 2015 Adjusted EBITDA to Implied Distributable Cash Flow ("DCF") Reconciliation Adjusted EBITDA $ 621 $ 622 Interest expense, net (1) (108 ) (101 ) Maintenance capital (47 ) (50 ) Current income tax expense (31 ) (42 ) Equity earnings in unconsolidated entities, net of distributions 5 17 Distributions to noncontrolling interests (2)   (1 )   (1 ) Implied DCF $ 439   $ 445     (1) Excludes certain non-cash items impacting interest expense such as amortization of debt issuance costs and terminated interest rate swaps. (2) Includes distributions that pertain to the current period's net income, which are paid in the subsequent period.   Three Months Ended March 31, 2016 2015 Net Cash Provided by Operating Activities Reconciliation EBITDA $ 448 $ 509 Current income tax expense (31 ) (42 ) Interest expense, net (1) (108 ) (101 ) Net change in assets and liabilities, net of acquisitions 322 347 Other items to reconcile to net cash provided by operating activities: Equity-indexed compensation expense   4     19   Net cash provided by operating activities $ 635   $ 732     (1) Excludes certain non-cash items impacting interest expense such as amortization of debt issuance costs and terminated interest rate swaps.     PLAINS GP HOLDINGS AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)               CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (1) (in millions, except per share data)   Three Months Ended Three Months Ended March 31, 2016 March 31, 2015 PAA Consolidating

Adjustments (2)

PAGP PAA Consolidating

Adjustments (2)

PAGP   REVENUES $ 4,111 $ - $ 4,111 $ 5,942 $ - $ 5,942   COSTS AND EXPENSES Purchases and related costs 3,348 - 3,348 5,042 - 5,042 Field operating costs 300 - 300 346 - 346 General and administrative expenses 67 1 68 78 1 79 Depreciation and amortization   114     -     114     104     1     105   Total costs and expenses 3,829 1 3,830 5,570 2 5,572   OPERATING INCOME 282 (1 ) 281 372 (2 ) 370   OTHER INCOME/(EXPENSE) Equity earnings in unconsolidated entities 47 - 47 37 - 37 Interest expense, net (112 ) (4 ) (116 ) (105 ) (2 ) (107 ) Other income/(expense), net   5     -     5     (4 )   -     (4 )   INCOME BEFORE TAX 222 (5 ) 217 300 (4 ) 296 Current income tax expense (31 ) - (31 ) (42 ) - (42 ) Deferred income tax (expense)/benefit   12     (21 )   (9 )   26     (18 )   8     NET INCOME 203 (26 ) 177 284 (22 ) 262 Net income attributable to noncontrolling interests   (1 )   (140 )   (141 )   (1 )   (230 )   (231 ) NET INCOME ATTRIBUTABLE TO PAGP $ 202   $ (166 ) $ 36   $ 283   $ (252 ) $ 31       BASIC AND DILUTED NET INCOME PER CLASS A SHARE $ 0.14   $ 0.14     BASIC AND DILUTED WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING   253     212    

(1)

 

The 2015 periods have been retroactively adjusted to reflect the reclassification of the amortization of debt issuance costs from "Depreciation and amortization" to "Interest expense, net" as a result of our adoption of revised debt issuance costs guidance issued by the FASB.

(2)

Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for PAGP.

       

PLAINS GP HOLDINGS AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

                 

CONDENSED CONSOLIDATING BALANCE SHEET DATA

(in millions)       March 31, 2016 December 31, 2015 PAA Consolidating

Adjustments (1)

PAGP PAA Consolidating

Adjustments (2)

PAGP ASSETS Current assets $ 2,780 $ 4 $ 2,784 $ 2,969 $ 3 $ 2,972 Property and equipment, net 13,670 19 13,689 13,474 19 13,493 Goodwill 2,405 - 2,405 2,405 - 2,405 Investments in unconsolidated entities 2,097 - 2,097 2,027 - 2,027 Deferred tax asset - 1,907 1,907 - 1,835 1,835 Linefill and base gas 899 - 899 898 - 898 Long-term inventory 112 - 112 129 - 129 Other long-term assets, net   334   (2 )   332   386   (3 )   383 Total assets $ 22,297 $ 1,928   $ 24,225 $ 22,288 $ 1,854   $ 24,142   LIABILITIES AND PARTNERS' CAPITAL Current liabilities $ 3,063 $ 3 $ 3,066 $ 3,407 $ 2 $ 3,409 Senior notes, net of unamortized discounts and debt issuance costs 9,126 - 9,126 9,698 - 9,698 Other long-term debt, net of unamortized debt issuance costs 27 591 618 677 557 1,234 Other long-term liabilities and deferred credits   710   -     710   567   -     567 Total liabilities 12,926 594 13,520 14,349 559 14,908   Partners' capital excluding noncontrolling interests 9,313 (7,492 ) 1,821 7,881 (6,119 ) 1,762 Noncontrolling interests   58   8,826     8,884   58   7,414     7,472 Total partners' capital   9,371   1,334     10,705   7,939   1,295     9,234

Total liabilities and partners' capital

$ 22,297 $ 1,928   $ 24,225 $ 22,288 $ 1,854   $ 24,142  

(1)

 

Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for PAGP.

  PLAINS GP HOLDINGS AND SUBSIDIARIES DISTRIBUTION SUMMARY (unaudited)      

Q1 2016 PAGP DISTRIBUTION SUMMARY

(in millions, except per unit and per share data)   Q1 2016 (1) PAA Distribution/Common Unit $ 0.7000 GP Distribution/Common Unit $ 0.3885   Total Distribution/Common Unit $ 1.0885     PAA Common Units Outstanding at 4/29/16 398   Gross GP Distribution $ 160 Less: IDR Reduction   (5 ) Net Distribution from PAA to AAP (2) $ 155 Less: Debt Service (3 ) Less: G&A Expense   (1 ) Cash Available for Distribution by AAP $ 150     Distributions to AAP Partners Direct AAP Owners & AAP Management (59% economic interest) $ 89 PAGP (41% economic interest)   61   Total distributions to AAP Partners $ 150     Distribution to PAGP Investors $ 62   PAGP Class A Shares Outstanding at 4/29/16   267   PAGP Distribution/Class A Share $ 0.231    

(1)

 

Amounts may not recalculate due to rounding.

(2)

Plains AAP, L.P. ("AAP") is the general partner of PAA.

    PLAINS GP HOLDINGS AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)           COMPUTATION OF BASIC AND DILUTED NET INCOME PER CLASS A SHARE (in millions, except per share data) Three Months Ended March 31, 2016 2015 Basic and Diluted Net Income per Class A Share (1) Net income attributable to PAGP $ 36 $ 31 Basic and diluted weighted average Class A shares outstanding 253 212   Basic and diluted net income per Class A share $ 0.14 $ 0.14  

(1)

 

Assumed exchanges of AAP units and AAP Management Units were excluded from the calculation of diluted net income per Class A share as the effect was not dilutive.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160504006747/en/

Plains All American Pipeline, L.P. and Plains GP HoldingsRyan Smith, (866) 809-1291Director, Investor RelationsorAl Swanson, (800) 564-3036Executive Vice President, CFO