Plains All American Pipeline, L.P. (NYSE:PAA) and Plains GP
Holdings (NYSE:PAGP) today reported second-quarter 2014 results,
with PAA’s results exceeding the midpoint of its quarterly guidance
range by 13%. PAA’s second-quarter 2014 results exceeded the
midpoint of quarterly guidance in all three of PAA’s segments.
Plains All American Pipeline, L.P.
Summary Financial
Information(1)
(in millions, except per unit data)
Three Months
Ended
June 30,
Six Months Ended
June 30,
2014 2013 %
Change
2014 2013 %
Change
Net income attributable to PAA $ 287 $ 292 -2% $ 671 $ 821
-18%
Diluted net income per limited partner unit $ 0.45 $
0.57 -21% $ 1.18 $ 1.84 -36%
EBITDA $ 492 $ 484
2% $ 1,099 $ 1,232 -11%
Three
Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 %
Change
2014 2013 %
Change
Adjusted net income attributable to PAA $ 307 $ 287 7% $ 660
$ 811 -19%
Diluted adjusted net income per limited partner
unit $ 0.50 $ 0.56 -11% $ 1.15 $ 1.82 -37%
Adjusted
EBITDA $ 512 $ 478 7% $ 1,079 $ 1,217
-11%
Distribution per unit declared for the period $
0.6450 $ 0.5875 9.8%
____________________
(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 GAAP measures.
“PAA delivered solid second-quarter results, exceeding the
high-end of our initial guidance range and slightly ahead of our
updated outlook provided in June,” stated Greg L. Armstrong,
Chairman and CEO of Plains All American. “These results were driven
by over performance in our Transportation and Supply and Logistics
segments.”
Armstrong added, “PAA remains on track to achieve its
distribution growth objective of 10% for 2014, while maintaining
attractive distribution coverage. PAA’s quarterly distribution of
$0.6450 per unit, to be paid next week, represents a 9.8% increase
over the quarterly distribution paid in August 2013. Given PAA’s
trajectory, PAGP also remains on track to achieve its distribution
growth objective of 25% for 2014. PAGP’s quarterly distribution of
$0.1834 per share represents a 7.5% increase over the quarterly
distribution paid in May of 2014 and a 23.1% increase over the
initial quarterly distribution included in PAGP’s October 2013
initial public offering (“IPO”) prospectus.
As a result of PAA’s first half performance and our outlook for
near baseline performance for the remainder of the year, we have
increased our full-year adjusted EBITDA guidance by $25 million to
a mid-point of $2.175 billion,” said Armstrong. “Our 2014 capital
expansion program is proceeding well as we continue to advance a
number of attractive projects included in our multi-billion dollar
project portfolio. Furthermore, we are well positioned financially,
ending the second quarter with a strong balance sheet, credit
metrics favorable to PAA’s targeted credit profile and
approximately $2.2 billion of committed liquidity.”
The following table summarizes selected PAA financial
information by segment for the second quarter and first half of
2014:
Summary of
Selected Financial Data by Segment(1)
(in millions)
Three Months
Ended Three Months Ended June 30, 2014 June
30, 2013 Transportation Facilities Supply
and
Logistics
Transportation Facilities Supply and
Logistics
Reported segment profit $ 221 $ 134 $ 133 $ 160 $ 149 $ 176
Selected items impacting the comparability of segment profit (2)
8 4 11 7 4
(22 )
Adjusted segment profit $ 229
$ 138 $ 144
$ 167 $ 153 $ 154
Percentage change in adjusted segment profit versus 2013
period 37 % -10 %
-6 % Six Months Ended Six
Months Ended June 30, 2014 June 30, 2013
Transportation Facilities Supply and
Logistics
Transportation Facilities Supply and
Logistics
Reported segment profit $ 427 $ 288 $ 382 $ 323 $ 300 $ 610
Selected items impacting the comparability of segment profit (2)
16 9 (44 ) 18 10
(49 )
Adjusted segment profit $ 443
$ 297 $ 338
$ 341 $ 310 $ 561
Percentage change in adjusted segment profit versus 2013
period 30 % -4 %
-40 %
__________________
(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.
Second-quarter 2014 Transportation adjusted segment profit
increased 37% versus comparable 2013 results. This increase was
primarily driven by higher crude oil pipeline volumes associated
with recently completed organic growth projects and increased
producer drilling activities, partially offset by the sale of our
refined products pipelines in 2013.
Second-quarter 2014 Facilities adjusted segment profit decreased
10% over comparable 2013 results. This decrease was primarily due
to the impact of recontracting capacity originally contracted at
higher rates within our natural gas storage operations, as well as
increased field operating costs. This impact was partially offset
by increased profitability from our NGL storage and fractionation
activities.
Second-quarter 2014 Supply and Logistics adjusted segment profit
decreased by approximately 6% relative to comparable 2013 results.
This decrease was primarily related to less favorable NGL market
conditions and higher costs, primarily related to increased
facility fees, in the second quarter of 2014 compared to the same
2013 period. These impacts were partially offset by more favorable
crude oil market conditions during the second quarter of 2014.
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 included at the end of this release. Information
regarding PAGP’s distributions is reflected below:
Summary Financial
Information
Q2 2014 Q1 2014
Distribution provided in
IPO prospectus
Distribution per share for the period $ 0.18340 $ 0.17055
$ 0.14904
Q2 2014 distribution percentage growth
over previous benchmarks 7.5 % 23.1 %
Conference Call
PAA and PAGP will hold a conference call on August 7, 2014 (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 third quarter and full year of 2014. 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. EDT
on Thursday, August 7, 2014 to discuss the following items:
1. PAA's second-quarter 2014 performance;
2. The status of major expansion projects;
3. Capitalization and liquidity;
4. Financial and operating guidance for the third quarter and
full year of 2014; and
5. PAA’s 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, choose “Investor Relations,” and then
choose “Events and Presentations.” Following the live webcast, the
call will be archived for a period of sixty (60) days on the
website.
Alternatively, access to the live conference call is available
by dialing toll free (800) 230-1085. International callers should
dial (612) 332-0107. No password is required. The slide
presentation accompanying the conference call will be available a
few minutes prior to the call under the “Events and Presentations”
tab of the PAA and PAGP Investor Relations sections of the above
referenced website.
Telephonic Replay Instructions
To listen to a telephonic replay of the conference call, please
dial (800) 475-6701, or (320) 365-3844 for international callers,
and enter replay access code 331340. The replay will be available
beginning Thursday, August 7, 2014, at approximately 1:00 p.m.
EDT and will continue until 11:59 p.m. EDT on September 7,
2014.
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) 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), (iii) items that are not
indicative of our core operating results and business outlook
and/or (iv) other items that we believe should be excluded in
understanding our core operating performance. We have defined all
such items as “selected items impacting comparability.” 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 GAAP measures for the periods
presented in the tables attached to this release, and should be
viewed in addition to, and not in lieu of, our 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 “Plains All American
Pipeline, L.P.” under the "Investor Relations" link on the home
page, select the "Guidance & Non-GAAP Reconciliations" link and
navigate to the “Non-GAAP Reconciliations” tab.
Forward Looking Statements
Except for the historical information contained herein, the
matters discussed in this release are forward-looking statements
that involve certain risks and uncertainties that could cause
actual results to differ materially from results anticipated in the
forward-looking statements. These risks and uncertainties include,
among other things, failure to implement or capitalize, or delays
in implementing or capitalizing, on planned internal growth
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; 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
facilities, 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 or other factors; 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; weather interference with business operations or project
construction, including the impact of extreme weather events or
conditions; tightened capital markets or other factors that
increase our cost of capital or limit our access to capital;
maintenance of our credit rating and ability to receive open credit
from our suppliers and trade counterparties; continued
creditworthiness of, and performance by, our counterparties,
including financial institutions and trading companies with which
we do business; the currency exchange rate of the Canadian dollar;
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; shortages or cost
increases of supplies, materials or labor; the effectiveness of our
risk management activities; 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 impact of current and future
laws, rulings, governmental regulations, accounting standards and
statements, and related interpretations; non-utilization of our
assets and facilities; the effects of competition; increased costs
or lack of availability of insurance; 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 facilities, including our ability
to satisfy our contractual obligations to our customers at our
facilities; 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 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 3.5 million
barrels per day of crude oil and NGL on its pipelines. 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
(in millions, except per unit data)
Three Months
Ended Six Months Ended June 30, June 30,
2014 2013 2014 2013
REVENUES $ 11,195 $ 10,295 $ 22,878 $ 20,915
COSTS
AND EXPENSES Purchases and related costs 10,280 9,387 20,950
18,825 Field operating costs 360 343 696 684 General and
administrative expenses 90 91 179 196 Depreciation and amortization
100 91 196 173
Total costs and expenses 10,830 9,912
22,021 19,878
OPERATING INCOME 365 383 857 1,037
OTHER
INCOME/(EXPENSE) Equity earnings in unconsolidated entities 23
11 44 23 Interest expense, net (82 ) (75 ) (161 ) (152 ) Other
income/(expense), net 4 (1 ) 2
(1 )
INCOME BEFORE TAX 310 318 742 907 Current
income tax expense (16 ) (8 ) (52 ) (53 ) Deferred income tax
expense (6 ) (10 ) (18 ) (17 )
NET INCOME 288 300 672 837 Net income attributable to
noncontrolling interests (1 ) (8 ) (1 )
(16 )
NET INCOME ATTRIBUTABLE TO PAA $ 287 $ 292
$ 671 $ 821
NET INCOME ATTRIBUTABLE
TO PAA: LIMITED PARTNERS $ 166 $ 197 $ 435
$ 631
GENERAL PARTNER $ 121 $ 95
$ 236 $ 190
BASIC NET INCOME PER LIMITED
PARTNER UNIT $ 0.45 $ 0.58 $ 1.19 $ 1.85
DILUTED NET INCOME PER LIMITED PARTNER UNIT $
0.45 $ 0.57 $ 1.18 $ 1.84
BASIC WEIGHTED AVERAGE UNITS OUTSTANDING 365
340 363 338
DILUTED WEIGHTED AVERAGE UNITS OUTSTANDING 367
342 365 341
ADJUSTED
RESULTS
(in millions, except per unit data)
Three Months Ended
Six Months Ended June 30, June 30,
2014 2013 2014
2013 ADJUSTED NET INCOME
ATTRIBUTABLE TO PAA $ 307 $ 287 $ 660 $
811
DILUTED ADJUSTED NET INCOME PER LIMITED
PARTNER UNIT $ 0.50 $ 0.56 $ 1.15 $ 1.82
ADJUSTED EBITDA $ 512 $ 478 $
1,079 $ 1,217
PLAINS ALL AMERICAN PIPELINE,
L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATED BALANCE SHEET DATA
(in millions)
June 30, December 31, 2014
2013 ASSETS Current assets $ 5,168 $ 4,964 Property
and equipment, net 11,613 10,819 Goodwill 2,502 2,503 Linefill and
base gas 895 798 Long-term inventory 287 251 Investments in
unconsolidated entities 545 485 Other, net 485
540 Total assets $ 21,495 $ 20,360
LIABILITIES AND PARTNERS' CAPITAL Current liabilities $
5,423 $ 5,411 Senior notes, net of unamortized discount 7,409 6,710
Long-term debt under credit facilities and other 5 5 Other
long-term liabilities and deferred credits 546
531 Total liabilities 13,383 12,657 Partners' capital
excluding noncontrolling interests 8,053 7,644 Noncontrolling
interests 59 59 Total partners' capital
8,112 7,703 Total liabilities and
partners' capital $ 21,495 $ 20,360
DEBT
CAPITALIZATION RATIOS
(in millions)
June 30, December 31,
2014 2013 Short-term debt $ 763
$ 1,113 Long-term debt 7,414 6,715
Total debt $ 8,177 $ 7,828 Long-term debt $
7,414 $ 6,715 Partners' capital 8,112 7,703
Total book capitalization $ 15,526 $ 14,418
Total book capitalization, including short-term debt $ 16,289
$ 15,531 Long-term debt-to-total book
capitalization 48 % 47 % Total debt-to-total book capitalization,
including short-term debt 50 % 50 %
PLAINS ALL AMERICAN
PIPELINE, L.P. AND SUBSIDIARIES FINANCIAL SUMMARY
(unaudited)
SELECTED
FINANCIAL DATA BY SEGMENT
(in millions)
Three Months Ended Three Months Ended
June 30, 2014 June 30, 2013 Supply and
Supply and Transportation Facilities
Logistics Transportation Facilities
Logistics Revenues (1) $ 412 $ 277 $ 10,860 $ 365 $ 348 $
9,934 Purchases and related costs (1) (41 ) (12 ) (10,578 ) (39 )
(83 ) (9,614 ) Field operating costs (excluding equity-indexed
compensation expense) (1) (137 ) (106 ) (112 ) (138 ) (94 ) (109 )
Equity-indexed compensation expense - operations (5 ) (2 ) (1 ) (4
) - (1 ) Segment G&A expenses (excluding equity-indexed
compensation expense) (2) (21 ) (16 ) (27 ) (26 ) (16 ) (27 )
Equity-indexed compensation expense - general and administrative
(10 ) (7 ) (9 ) (9 ) (6 ) (7 ) Equity earnings in unconsolidated
entities 23 - - 11
- - Reported segment profit $
221 $ 134 $ 133 $ 160 $ 149 $ 176 Selected items impacting
comparability of segment profit (3) 8 4
11 7 4 (22 )
Adjusted segment profit $ 229 $ 138 $ 144 $
167 $ 153 $ 154 Maintenance capital $
42 $ 5 $ 1 $ 23 $ 11 $ 5
Six Months Ended Six Months Ended June 30,
2014 June 30, 2013 Supply and Supply and
Transportation Facilities Logistics
Transportation Facilities Logistics Revenues
(1) $ 798 $ 576 $ 22,228 $ 732 $ 703 $ 20,158 Purchases and related
costs (1) (78 ) (38 ) (21,553 ) (74 ) (174 ) (19,249 ) Field
operating costs (excluding equity-indexed compensation expense) (1)
(265 ) (204 ) (218 ) (270 ) (180 ) (224 ) Equity-indexed
compensation expense - operations (10 ) (2 ) (2 ) (13 ) (1 ) (2 )
Segment G&A expenses (excluding equity-indexed compensation
expense) (2) (43 ) (29 ) (53 ) (49 ) (32 ) (53 ) Equity-indexed
compensation expense - general and administrative (19 ) (15 ) (20 )
(26 ) (16 ) (20 ) Equity earnings in unconsolidated entities
44 - - 23 -
- Reported segment profit $ 427 $ 288 $ 382 $
323 $ 300 $ 610 Selected items impacting comparability of segment
profit (3) 16 9 (44 ) 18
10 (49 ) Adjusted segment profit $ 443
$ 297 $ 338 $ 341 $ 310 $ 561
Maintenance capital $ 76 $ 15 $ 4
$ 55 $ 18 $ 9
___________________________________
(1) Includes intersegment amounts.
(2) Segment general and administrative
expenses (G&A) 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.
(3) Certain 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)
Three Months
Ended Six Months Ended June 30, June 30,
OPERATING
DATA (1)
2014 2013 2014 2013
Transportation activities (average daily volumes in thousands of
barrels per day): Tariff activities Crude Oil Pipelines All
American 38 38 36 39 Bakken Area Systems 145 130 138 127 Basin /
Mesa 714 680 729 702 Capline 121 158 123 157 Eagle Ford Area
Systems 209 74 199 61 Line 63 / Line 2000 106 108 116 113 Manito 44
46 44 46 Mid-Continent Area Systems 360 282 338 287 Permian Basin
Area Systems 759 548 759 513 Rainbow 108 125 114 124 Rangeland 65
56 67 62 Salt Lake City Area Systems 130 131 131 133 South
Saskatchewan 58 33 61 46 White Cliffs 24 21 24 21 Other 745 739 703
737 NGL Pipelines Co-Ed 55 51 56 54 Other 123 165 119 186 Refined
Products Pipelines - 110 - 105 Tariff activities total 3,804 3,495
3,757 3,513 Trucking 127 108 129 109 Transportation activities
total 3,931 3,603 3,886 3,622
Facilities activities
(average monthly volumes): Crude oil, refined products and NGL
terminalling and storage
(average monthly capacity in millions of
barrels)
94 95 95 94 Rail load / unload volumes
(average volumes in thousands of barrels
per day)
224 231 227 223 Natural gas storage
(average monthly capacity in billions of
cubic feet)
97 97 97 95 NGL fractionation
(average volumes in thousands of barrels
per day)
86 90 89 95 Facilities activities total
(average monthly volumes in millions of
barrels) (2)
120 121 121 120
Supply and Logistics activities (average
daily volumes in thousands of barrels per day): Crude oil lease
gathering purchases 931 853 912 855 NGL sales 139 160 205 221
Waterborne cargos - 7 - 6
Supply and Logistics activities total
1,070 1,020 1,117 1,082
(1) Volumes associated with assets
employed through acquisitions and internal growth projects
represent total volumes (attributable to our interest) for the
number of days or months we employed the assets divided by the
number of days or months in the period.
(2) Facilities 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 capacity divided by
6 to account for the 6:1 mcf of 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 EARNINGS PER LIMITED PARTNER UNIT
(in millions, except per unit data)
Three Months Ended
Six Months Ended June 30, June 30, 2014
2013 2014 2013 Basic Net Income per Limited
Partner Unit Net income attributable to PAA $ 287 $ 292 $ 671 $
821 Less: General partner's incentive distribution (1) (117 ) (91 )
(227 ) (177 ) Less: General partner 2% ownership (1) (4 )
(4 ) (9 ) (13 ) Net income available to
limited partners 166 197 435 631 Less: Undistributed earnings
allocated and distributions to participating securities (1)
(1 ) (1 ) (3 ) (5 ) Net income available to
limited partners in accordance with application of the two-class
method for MLPs $ 165 $ 196 $ 432 $ 626
Basic weighted average number of limited partner units
outstanding 365 340 363 338 Basic net income per limited
partner unit $ 0.45 $ 0.58 $ 1.19 $ 1.85
Diluted Net Income per Limited Partner Unit
Net income attributable to PAA $ 287 $ 292 $ 671 $ 821 Less:
General partner's incentive distribution (1) (117 ) (91 ) (227 )
(177 ) Less: General partner 2% ownership (1) (4 ) (4
) (9 ) (13 ) Net income available to limited partners
166 197 435 631 Less: Undistributed earnings allocated and
distributions to participating securities (1) (1 ) (1
) (3 ) (3 ) Net income available to limited partners
in accordance with application of the two-class method for MLPs $
165 $ 196 $ 432 $ 628 Basic
weighted average number of limited partner units outstanding 365
340 363 338 Effect of dilutive securities: Weighted average LTIP
units (2) 2 2 2 3
Diluted weighted average number of limited partner units
outstanding 367 342 365
341 Diluted net income per limited partner
unit $ 0.45 $ 0.57 $ 1.18 $ 1.84
______________________
(1) We calculate net income available to
limited partners 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, limited partners 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.
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
SELECTED ITEMS
IMPACTING COMPARABILITY
(in millions, except per unit data)
Three Months Ended
Six Months Ended June 30, June 30, 2014
2013 2014 2013 Selected Items Impacting
Comparability - Income/(Loss) (1): Gains/(losses)
from derivative activities net of inventory valuation adjustments
(2) $ (14 ) $ 26 $ 50 $ 50 Equity-indexed compensation expense (3)
(17 ) (16 ) (36 ) (39 ) Net gain/(loss) on foreign currency
revaluation 11 (4 ) 6 4 Tax effect on selected items impacting
comparability - (1 ) (9 ) (6 ) Other (4) - -
- 1 Selected items impacting
comparability of net income attributable to PAA $ (20 ) $ 5
$ 11 $ 10 Impact to basic net income per
limited partner unit $ (0.06 ) $ 0.02 $ 0.03 $ 0.02
Impact to diluted net income per limited partner unit $
(0.05 ) $ 0.01 $ 0.03 $ 0.02
_________________
(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 gains and
losses resulting from derivative instruments that are related to
underlying activities in future periods or the reversal of
mark-to-market gains and losses from the prior period, net of
inventory valuation adjustments, as applicable.
(3) Equity-indexed compensation expense
above excludes the portion of equity-indexed compensation expense
represented by grants under LTIP that, pursuant to the terms of the
grant, will be settled in cash only and have no impact on diluted
units.
(4) Includes other immaterial selected
items impacting comparability, as well as the noncontrolling
interests' portion of selected items.
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
COMPUTATION OF
ADJUSTED BASIC AND DILUTED EARNINGS PER LIMITED PARTNER
UNIT
(in millions, except per unit data)
Three Months Ended
Six Months Ended June 30, June 30, 2014
2013 2014 2013 Basic Adjusted Net Income
per Limited Partner Unit Net income attributable to PAA $ 287 $
292 $ 671 $ 821 Selected items impacting comparability of net
income attributable to PAA (1) 20 (5 )
(11 ) (10 ) Adjusted net income attributable to PAA 307 287
660 811 Less: General partner's incentive distribution (2) (117 )
(91 ) (227 ) (177 ) Less: General partner 2% ownership (2)
(4 ) (4 ) (9 ) (13 ) Adjusted net income
available to limited partners 186 192 424 621 Less: Undistributed
earnings allocated and distributions to participating securities
(2) (1 ) (1 ) (3 ) (4 ) Adjusted
limited partners' net income $ 185 $ 191 $ 421
$ 617 Basic weighted average number of limited
partner units outstanding 365 340 363 338 Basic adjusted net
income per limited partner unit $ 0.51 $ 0.56 $ 1.16
$ 1.83
Diluted Adjusted Net Income per
Limited Partner Unit Net income attributable to PAA $ 287 $ 292
$ 671 $ 821 Selected items impacting comparability of net income
attributable to PAA (1) 20 (5 ) (11 )
(10 ) Adjusted net income attributable to PAA 307 287 660
811 Less: General partner's incentive distribution (2) (117 ) (91 )
(227 ) (177 ) Less: General partner 2% ownership (2) (4 )
(4 ) (9 ) (13 ) Adjusted net income available
to limited partners 186 192 424 621 Less: Undistributed earnings
allocated and distributions to participating securities (2)
(1 ) (1 ) (3 ) (3 ) Adjusted limited partners'
net income $ 185 $ 191 $ 421 $ 618
Diluted weighted average number of limited partner units
outstanding 367 342 365 341 Diluted adjusted net income per
limited partner unit $ 0.50 $ 0.56 $ 1.15 $
1.82
___________________
(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
available to limited partners 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, limited partners and
participating securities in accordance with the contractual terms
of the partnership agreement and as further prescribed under the
two-class method.
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
FINANCIAL DATA
RECONCILIATIONS
(in millions)
Three Months Ended Six Months
Ended June 30, June 30, 2014
2013 2014 2013 Net Income to
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") and
Excluding Selected Items Impacting
Comparability ("Adjusted EBITDA") Reconciliations
Net Income $ 288 $ 300 $ 672 $ 837 Add: Interest expense, net 82 75
161 152 Add: Income tax expense 22 18 70 70 Add: Depreciation and
amortization 100 91 196
173 EBITDA $ 492 $ 484 $ 1,099 $ 1,232 Selected items
impacting comparability of EBITDA (1) 20 (6 )
(20 ) (15 ) Adjusted EBITDA $ 512 $ 478
$ 1,079 $ 1,217 (1) Certain of our non-GAAP
financial measures may not be impacted by each of the selected
items impacting comparability.
Three Months Ended
Six Months Ended June 30, June 30, 2014
2013 2014 2013 Adjusted EBITDA to Implied
Distributable Cash Flow ("DCF") Adjusted EBITDA $ 512 $ 478 $
1,079 $ 1,217 Interest expense, net (82 ) (75 ) (161 ) (152 )
Maintenance capital (48 ) (39 ) (95 ) (82 ) Current income tax
expense (16 ) (8 ) (52 ) (53 ) Equity earnings in unconsolidated
entities, net of distributions 2 (1 ) 7 (1 ) Distributions to
noncontrolling interests (1) (1 ) (13 ) (2 )
(25 ) Implied DCF $ 367 $ 342 $ 776 $
904 (1) Includes distributions that pertain to the
current period's net income, which are paid in the subsequent
period.
Three Months Ended Six Months Ended
June 30, June 30, 2014 2013 2014
2013 Cash Flow from Operating Activities
Reconciliation EBITDA $ 492 $ 484 $ 1,099 $ 1,232 Current
income tax expense (16 ) (8 ) (52 ) (53 ) Interest expense, net (82
) (75 ) (161 ) (152 ) Net change in assets and liabilities, net of
acquisitions (287 ) (70 ) 9 232 Other items to reconcile to cash
flows from operating activities: Equity-indexed compensation
expense 34 27 68
78 Net cash provided by operating activities $ 141 $
358 $ 963 $ 1,337
PLAINS GP HOLDINGS
AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions, except per share data)
Three Months
Ended Six Months Ended June 30, 2014 June 30,
2014 PAA Consolidating
Adjustments (1)
PAGP PAA Consolidating
Adjustments (1)
PAGP REVENUES $ 11,195 $ - $ 11,195 $ 22,878 $
- $ 22,878
COSTS AND EXPENSES Purchases and related
costs 10,280 - 10,280 20,950 - 20,950 Field operating costs 360 -
360 696 - 696 General and administrative expenses 90 1 91 179 2 181
Depreciation and amortization 100 - 100
196 1 197 Total costs and
expenses 10,830 1 10,831
22,021 3 22,024
OPERATING
INCOME 365 (1 ) 364 857 (3 ) 854
OTHER
INCOME/(EXPENSE) Equity earnings in unconsolidated entities 23
- 23 44 - 44 Interest expense, net (82 ) (3 ) (85 ) (161 ) (5 )
(166 ) Other income/(expense), net 4 -
4 2 - 2
INCOME
BEFORE TAX 310 (4 ) 306 742 (8 ) 734 Current income tax expense
(16 ) - (16 ) (52 ) - (52 ) Deferred income tax expense (6 )
(9 ) (15 ) (18 ) (17 ) (35 )
NET INCOME 288 (13 ) 275 672 (25 ) 647 Net income
attributable to noncontrolling interests (1 ) (259 )
(260 ) (1 ) (617 ) (618 )
NET INCOME
ATTRIBUTABLE TO PAGP $ 287 $ (272 ) $ 15 $ 671
$ (642 ) $ 29
BASIC AND DILUTED NET
INCOME PER CLASS A SHARE $ 0.11 $ 0.21
BASIC AND DILUTED WEIGHTED AVERAGE CLASS A SHARES
OUTSTANDING 136 135
________________
(1) 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)
June 30, 2014 PAA Consolidating
Adjustments (1)
PAGP ASSETS Current assets $ 5,168 $ 2 $ 5,170
Property and equipment, net 11,613 21 11,634 Goodwill 2,502 - 2,502
Linefill and base gas 895 - 895 Long-term inventory 287 - 287
Investments in unconsolidated entities 545 - 545 Other, net
485 1,076 1,561 Total assets $ 21,495 $ 1,099 $
22,594
LIABILITIES AND PARTNERS' CAPITAL Current
liabilities $ 5,423 $ 1 $ 5,424 Senior notes, net of unamortized
discount 7,409 - 7,409 Long-term debt under credit facilities and
other 5 526 531 Other long-term liabilities and deferred credits
546 - 546 Total liabilities 13,383 527 13,910
Partners' capital excluding noncontrolling interests 8,053
(7,007 ) 1,046 Noncontrolling interests 59 7,579
7,638 Total partners' capital 8,112 572
8,684 Total liabilities and partners' capital $ 21,495 $ 1,099 $
22,594
________________
(1) Represents the aggregate consolidating adjustments necessary to
produce consolidated financial statements for PAGP.
PLAINS GP HOLDINGS AND SUBSIDIARIES DISTRIBUTION
SUMMARY (unaudited)
Q2 2014 PAGP
DISTRIBUTION SUMMARY
(in millions, except per unit and per share data)
Q2 2014(1)
PAA Distribution/LP Unit $ 0.6450 GP Distribution/LP Unit $ 0.3312
Total Distribution/LP Unit $ 0.9762 PAA LP
Units Outstanding at 8/1/14 369 Gross GP Distribution $ 128
Less: IDR Reduction (6 ) Net Distribution from PAA to AAP $
122 Less: Debt Service (2 ) Less: G&A Expense (1 ) Less: Other
- Cash Available for Distribution by AAP $ 119
Distributions to AAP Partners Direct AAP Owners &
AAP Management (79.1% economic interest) $ 94 PAGP (20.9% economic
interest) 25 Total distributions to AAP Partners $
119 Distribution to PAGP Investors $ 25 PAGP
Class A Shares Outstanding at 8/1/14 136 PAGP
Distribution/Class A Share $ 0.18340
_____________________
(1) Amounts may not recalculate due to rounding.
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
Six Months Ended June 30, 2014 June 30, 2014
Basic and Diluted Net Income per Class A Share Net income
attributable to PAGP $ 15 $ 29 Basic and diluted weighted average
number of Class A shares outstanding 136 135 Basic and
diluted net income per Class A share $ 0.11 $ 0.21
Plains All American Pipeline, L.P. and Plains GP
HoldingsDirector, Investor RelationsRyan Smith,
866-809-1291orExecutive Vice President, CFOAl Swanson,
800-564-3036
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