Strong first quarter performance delivers
record Adjusted EBITDA and distributable cash flow, up 9% and 15%
respectively, over first quarter 2020 generating significant
positive free cash flow
Quarterly results highlighted by increased
commodity prices and operational reliability in the face of extreme
winter weather providing producer customers with strong flow
assurance and improved net-backs
Executed a series of transactions that enabled
First Reserve to exit its ten-year investment in Crestwood and
allows for the transition to a publicly elected Board of Directors,
further enhancing corporate governance
Crestwood Equity Partners LP (NYSE: CEQP) (“Crestwood”) reported
today its financial and operating results for the three months
ended March 31, 2021.
First Quarter 2021 Highlights1
- First quarter 2021 net loss of $38.3 million, compared to net
loss of $23.4 million in first quarter 2020
- First quarter 2021 Adjusted EBITDA of $165.4 million, an
increase of 9% compared to $151.4 million in the first quarter
2020
- First quarter 2021 distributable cash flow (“DCF”) to common
unitholders of $108.4 million, an increase of 15% compared to first
quarter 2020; The first quarter 2021 coverage ratio was 2.8x
- First quarter 2021 free cash flow after distributions of $63.6
million
- Ended March 31, 2021 with approximately $2.6 billion in total
debt and a 4.2x leverage ratio; Crestwood has substantial liquidity
available under its $1.25 billion revolver with $530 million drawn
as of March 31, 2021
- Announced first quarter 2021 cash distribution of $0.625 per
common unit, or $2.50 per common unit on an annualized basis,
payable on May 14, 2021, to unitholders of record as of May 7,
2021
Recent Highlights
- On March 30, 2021, Crestwood closed the first step of the
previously announced strategic transactions with First Reserve; in
the transactions First Reserve completed a private placement of six
million common units for proceeds of $132 million and Crestwood
purchased the general partner interest and 11.5 million common
units for $268 million, facilitating First Reserve’s complete exit
of its investment in Crestwood; In total, these transactions drive
substantial accretion to Crestwood’s distributable cash flow per
unit and allows for Crestwood’s transition to a publicly elected
Board of Directors
- The Board of Directors authorized a $175 million opportunistic
common and preferred unit repurchase program through December 31,
2022 that will provide additional flexibility for increased return
of capital to investors, once the company’s long-term leverage
target is met
- On April 21, 2021, closed on the redemption of the remaining
$288 million of 6.25% senior notes due 2023 at par utilizing
borrowings on the $1.25 billion revolving credit facility;
Crestwood’s nearest term senior note maturity is now 2025
- As a result of the strategic transactions, strong first quarter
results and an increasingly positive commodity price outlook for
2021, Crestwood provided revised guidance including full year
Adjusted EBITDA in a range of $575 million to $625 million,
distributable cash flow of $335 million to $385 million, and free
cash flow after distributions of $130 million to $180 million
Management Commentary
“I am pleased to announce record first quarter 2021 results with
Adjusted EBITDA of $165.4 million and distributable cash flow of
$108.4 million, increases of 9% and 15%, respectively, over the
first quarter of 2020, leading to free cash flow after
distributions of $63.6 million,” commented Robert G. Phillips,
Chairman, President and Chief Executive Officer of Crestwood’s
general partner. “These results were largely achievable because of
the tireless efforts of our dedicated operations teams that
maintained strong flow assurance through our gathering systems,
processing plants and storage facilities despite the unprecedented
challenges presented by Winter Storm Uri. Additionally, with the
significant increase in commodity prices during the quarter, both
Crestwood and our producers benefitted through increased margins
and net-backs, respectively. As a result, we took advantage of
these higher and more stabilized prices to hedge a portion of our
commodity exposure throughout 2021 and lock in higher margins on
several of our assets, giving us increased confidence in our
revised 2021 guidance.”
Mr. Phillips commented further, “In addition to a strong
operating quarter, we completed a historic transaction by arranging
for the acquisition of all of First Reserve’s general partner and
limited partner interests, allowing our sponsor to exit Crestwood
after a ten-year partnership with management. This series of
transactions not only improves Crestwood’s financial and strategic
flexibility in the future, but greatly simplifies our capital
structure and transitions Crestwood to an independent MLP with an
elected Board of Directors. Given our strong first quarter
performance and improving market fundamentals in 2021, Crestwood is
on-track to achieve its revised annual guidance, continue to
maintain our distribution, reduce debt to our target levels and
opportunistically execute our repurchase program which we believe
will further drive long-term value to our unitholders.”
First Quarter 2021 Segment Results
Gathering and Processing (G&P) segment EBITDA totaled $119.5
million in the first quarter 2021 compared to $119.4 million in the
first quarter 2020. First quarter 2020 excludes an $80.3 million
goodwill impairment related to Crestwood’s Powder River Basin
operations. Strong first quarter results were driven by higher
favorable commodity prices that had a positive impact on
Crestwood’s percent-of-proceeds (POP) contracts in the Bakken and
percent-of-index (POI) contracts on the Barnett system, as well as
year-over-year volume growth of 13% and 17% for Arrow natural gas
gathering and processing, respectively. As part of Crestwood’s
on-going conservative risk management practices, the company
opportunistically hedged approximately 50% of its POP and POI
exposure at favorable commodity price levels for the remainder of
the year which drives incremental upside from its original budget
price expectations. During the first quarter 2021, Crestwood had
continued producer rig activity in the Bakken, Powder River Basin,
Delaware Basin and Barnett shale which is expected to result in
strong volume growth beginning in the second quarter 2021.
Storage and Transportation (S&T) segment EBITDA totaled
$20.4 million in the first quarter 2021, compared to $13.7 million
in the first quarter 2020. First quarter 2021 EBITDA excludes a
$119.9 million impairment recorded by Crestwood’s equity investment
in Stagecoach Gas Services (“Stagecoach”), while first quarter 2020
EBITDA excludes a $4.5 million impairment recorded by Crestwood’s
equity investment in a rail terminal in the Powder River Basin.
First quarter 2021 natural gas storage and transportation volumes
averaged 2.3 Bcf/d, compared to 1.8 Bcf/d in the first quarter
2020. In the first quarter 2021, Stagecoach has continued to see
record setting transportation volumes as natural gas production in
Northeast Pennsylvania continues to increase due to favorable
economics. This increased demand has resulted in both the
transportation and storage assets reaching nearly 100% contracted
capacity. At the COLT Hub, first quarter 2021 rail loading volumes
were 52 MBbls/d as the facility benefited from increased activity
due to ongoing uncertainty around the Dakota Access Pipeline
(“DAPL”). The Tres Palacios facility in south Texas significantly
exceeded internal expectations during the first quarter 2021 driven
primarily by the effects of the extreme weather from Winter Storm
Uri that drove an increase in natural gas withdrawals across the
state of Texas in mid-February. As a result of prior winterization
efforts, the 35 Bcf natural gas storage facility located 60-miles
southwest of Houston was able to maintain operations during the
storm to meet all primary firm customer withdrawal requests for the
duration of the storm.
Marketing, Supply and Logistics (MS&L) segment EBITDA
totaled $30.5 million in the first quarter 2021, compared to $26.0
million in the first quarter 2020. All periods exclude the non-cash
change in fair value of commodity inventory-related derivative
contracts. During the first quarter 2021, Crestwood’s gas and crude
marketing teams benefitted from increased product demand and
volatility in commodity prices as a result of extreme winter
weather conditions. The NGL marketing and logistics business
continued to benefit from consistent residential demand and expects
to see increases in commercial demand and refinery utilization as
economic re-openings begin to occur across the country. Over the
last twelve months, the NGL business has fully integrated and
optimized its larger asset base and operations after the Plains
acquisition in April 2020, and as a result of a full year of
ownership and consistent customer relationships, has been able to
capture increased market share during the 2021 re-contracting
season.
Combined O&M and G&A expenses, net of non-cash
unit-based compensation, in the first quarter 2021 were $49.2
million compared to $56.9 million in the first quarter 2020. The
decrease in expenses in first quarter 2021 was due to Crestwood’s
permanent cost reduction efforts to streamline its operations
during the second quarter 2020.
First Quarter 2021 Business Update and Outlook
Bakken
During the first quarter 2021, the Arrow system averaged crude
oil gathering volumes of 100 MBbls/d, natural gas gathering volumes
of 134 MMcf/d, and produced water gathering volumes of 82 MBbls/d.
During the quarter, extreme winter weather negatively impacted
volumes on the Arrow system as producers experienced freeze-offs
and shut-in production due to record low temperatures, offset by
favorable commodity prices on Crestwood’s contracted POP exposure.
There are currently two rigs running and two completion crews
operating on acreage dedicated to Arrow which are expected to drive
10 to 15 new three product and 10 to 15 water-only well connections
in the second quarter. Crestwood continues to expect 45+ three
product wells to be connected in 2021 in the current commodity
price environment.
During the first quarter, Crestwood invested $4.3 million in the
Bakken which was primarily comprised of capital to complete the
southern expansion of Arrow’s produced water gathering
infrastructure. This strategic growth project provides critical
produced water gathering infrastructure to Enerplus Corporation
(“Enerplus”) as well as support for Enerplus’ sustainability
initiatives to re-use produced water in completion operations. For
the remainder of 2021, capital investments in the Bakken will
remain focused on the enhancement and expansion of the produced
water gathering system and incremental natural gas compression
projects to support producer development plans.
DAPL
Crestwood continues to actively monitor the legal proceedings on
DAPL and remains well-positioned to manage its Bakken operations
under any potential outcome for the pipeline. At current basin
production rates of approximately 1.2 million barrels of crude oil
per day, there is more than adequate alternative crude oil pipeline
and crude-by-rail takeaway capacity to provide operators flow
assurance to premium markets out of the basin. During the first
quarter 2021, Crestwood’s customers further mitigated their
exposure to a DAPL shutdown by utilizing other takeaway options at
the Arrow CDP. These mitigation efforts have resulted in less than
50% of Arrow producer volumes being delivered to DAPL. Currently,
in addition to DAPL, Arrow offers its customers connectivity to
Kinder Morgan’s Hiland pipeline, Tesoro’s High Plains pipeline, and
the True Companies’ Bridger Four Bears pipeline system, in addition
to the COLT Hub and trucking takeaway. In total, Arrow has over 220
MBbls/d of takeaway capacity for customers, allowing it to
competitively clear all of its producers’ product from the basin in
the event operations on DAPL are temporarily suspended.
Powder River Basin
During the first quarter 2021, the Jackalope system averaged
natural gas gathering and processing volumes of 98 MMcf/d,
increases of 19% and 16%, respectively, over the fourth quarter of
2020 as all producing wells across the system have resumed full
operations. During the quarter, Jackalope customers experienced
production disruptions as a result of the extreme winter weather
which had a short-term negative impact to gathering and processing
volumes. Crestwood continues to expect 15 to 20 wells to be
connected to the Jackalope system during 2021, the majority of
which are expected to come online in the second quarter 2021.
Delaware Basin
During the first quarter 2021, the Delaware Basin systems
averaged gathering volumes of 182 MMcf/d and processing volumes of
54 MMcf/d. Gathering volumes increased 5% compared to the fourth
quarter 2020 as a result of 23 new wells connected to the systems
driven primarily by Royal Dutch Shell’s (“Shell”) development
program on the Nautilus gathering system. Volumes across both the
Nautilus and Willow Lake systems were negatively impacted by Winter
Storm Uri in mid-February as producers experienced freeze-offs at
the well-head during the storm. Produced water gathering volumes
averaged 48 MBbls/d during the first quarter 2021, an increase of
10% compared to fourth quarter 2020, as the anchor producer re-used
fewer barrels for completion activities.
During the first quarter, Crestwood invested $3.3 million in the
Delaware Basin related to system expansions and well-connect
capital. Crestwood expects a material increase in activity on the
Willow Lake system in the beginning in the second quarter driven by
new wells connections from ConocoPhillips, formerly Concho
Resources, and Mewbourne Oil Company, resulting in incremental
gathering volumes as well as a significant increase in volumes
processed at the Orla processing plant. Activity on the Nautilus
system continues to be driven by Shell’s development program on
dedicated acreage. Based on current producer forecasts, Crestwood
estimates 30 to 40 wells to be connected to the Delaware Basin
gathering systems during the second quarter.
Barnett Shale
In the Barnett shale, completion operations have begun on a new
eight-well pad on Crestwood’s Lake Arlington system. Crestwood’s
gathering infrastructure is connected to the pad and initial
production is expected in the coming weeks. The new pad will be the
first new wells completed on the Lake Arlington system in over five
years and utilized modern well bore and frack design techniques to
optimize initial flow performance. Crestwood anticipates the
incremental volumes from this activity to more than offset natural
field decline for the year.
Stagecoach Gas Services
The Stagecoach assets have continued to benefit as producers in
the Northeast Marcellus region have increased capital allocation to
the area due to favorable natural gas prices that has resulted in
increased production in the region. Stagecoach is connected to more
than 5.0 Bcf/d natural gas supply and its advantaged infrastructure
position provides customers with access to high-demand metropolitan
areas including New York City and the East Coast. As demand has
increased, Stagecoach has seen a favorable uptick in transportation
demand that has led to both transportation and storage nearly 100%
contracted for 2021. Crestwood estimates that the Stagecoach asset
will generate approximately $55 million to $60 million in Adjusted
EBITDA, net to Crestwood, in 2021.
During the first quarter of 2021, Crestwood recorded a $119.9
million reduction to the equity earnings from its investment in
Stagecoach as a result of a goodwill impairment at the asset level.
This goodwill impairment is a non-cash adjustment and was based on
market-based information received through the on-going strategic
evaluation Consolidated Edison (“ConEd”) is conducting on its
investment in Stagecoach, as well as other precedent market
transactions. The carrying value of Crestwood’s Stagecoach equity
method investment was approximately $666 million as of March 31,
2021.
Capitalization and Liquidity Update
On March 30, 2021, Crestwood completed the first closing of the
previously announced strategic transactions which allowed First
Reserve to exit its investment in Crestwood which included 17.5
million common units, approximately 24% of total common units
outstanding, and control of the general partner. In a private
placement, First Reserve sold six million common units representing
limited partner interests in Crestwood to third parties, resulting
in total proceeds of $132 million. In addition, Crestwood
repurchased the general partner interest and the remaining 11.5
million units held by First Reserve with $268 million drawn from
its existing $1.25 billion revolving credit facility. The 11.5
million common units were then retired. Closing of the purchase of
the general partner interest is expected in the coming months
following an amendment to the Crestwood partnership agreement. This
second closing is not subject to any closing conditions. Using the
proceeds it received on March 30, 2021, First Reserve repaid the
term loan B at Crestwood Holdings in full.
Following the completion of these transactions, Crestwood has
approximately 62.8 million common units outstanding, representing
an approximate 15% reduction in total common units outstanding.
Crestwood’s purchase and retirement of the 11.5 million common
units from First Reserve results in annual cash distribution
savings of approximately $29 million based on the current annual
distribution rate of $2.50 per common unit.
As of March 31, 2021, Crestwood had approximately $2.6 billion
of debt outstanding, comprised of $2.1 billion of fixed-rate senior
notes and $530 million outstanding under its $1.25 billion
revolving credit facility, resulting in a leverage ratio of 4.2x.
On April 21, 2021, Crestwood closed on the redemption of the
remaining $288 million of 6.25% senior notes due 2023 at par
utilizing borrowings on the revolving credit facility. As a result,
Crestwood’s outstanding debt balance pro forma for calling the 2023
senior notes remains unchanged at $2.6 billion but is now comprised
of $1.8 billion of fixed-rate senior notes and $818 million
outstanding under the revolving credit facility. Crestwood
currently has more than $400 million of availability on its
revolving credit facility which, when combined with its substantial
free cash flow, provides Crestwood more than ample liquidity to
execute its business strategy.
Crestwood invested approximately $8.8 million in consolidated
growth capital projects and joint venture contributions during the
first quarter 2021. Crestwood expects growth capital for 2021 to be
in a range of $35 million to $45 million, primarily focused on
optimizations to the Arrow gathering system in the Bakken and well
connects in the Delaware Permian and Powder River Basin. Crestwood
expects to invest between $20 million to $25 million on maintenance
capital projects for the year. Based on the current outlook,
Crestwood expects to fund its total 2021 capital program entirely
with retained cash flow and to generate meaningful free cash flow
after distributions.
Crestwood currently has 71.3 million preferred units outstanding
(par value of $9.13 per unit) which pay a fixed-rate annual cash
distribution of 9.25%, payable quarterly. The preferred units are
listed on the New York Stock Exchange and trade under the ticker
symbol CEQP-P.
Sustainability Program Update
Since 2018, Crestwood has been a leader in the midstream ESG
space by advancing ESG initiatives both within the company and
across the energy industry. ESG/Sustainability at Crestwood
continues to be a top priority and it remains steadfast in
advancing ESG within the midstream sector. Upon closing the recent
strategic transactions, Crestwood will be only one of three
existing master limited partnerships to enhance its corporate
governance with a transition to a publicly elected board. Going
forward, Crestwood will continue to enhance its commitment to board
diversity and other governance elements in accordance with its ESG
strategy.
Crestwood’s 2020 sustainability will be issued in June 2021 and
will include additional disclosures including those associated with
the Task Force for Climate-related Financial Disclosures (“TCFD”),
progress made on its three-year sustainability strategy and the
continuation of executive compensation linked to sustainability key
performance indicators.
For up-to-date information on Crestwood’s on-going commitment to
sustainability please visit https://esg.crestwoodlp.com.
Upcoming Conference Participation
Crestwood’s management will participate in the following
upcoming virtual investor conferences. Prior to the start of each
conference, new presentation materials may be posted to the
Investors section of Crestwood’s website at
www.crestwoodlp.com.
- EIC 2021 Investor Conference, May 18 – 21, 2021
- Stifel Cross Sector Insight Conference, June 8 – 10, 2021
- J.P. Morgan Energy, Power & Renewables Conference, June 22
- 23, 2021
Earnings Conference Call Schedule
Management will host a conference call for investors and
analysts of Crestwood today at 9:00 a.m. Eastern Time (8:00 a.m.
Central Time) which will be broadcast live over the Internet.
Investors will be able to connect to the webcast via the
“Investors” page of Crestwood’s website at www.crestwoodlp.com.
Please log in at least 10 minutes in advance to register and
download any necessary software. A replay will be available shortly
after the call for 90 days.
Non-GAAP Financial Measures
Adjusted EBITDA, distributable cash flow and free cash flow are
non-GAAP financial measures. The accompanying schedules of this
news release provide reconciliations of these non-GAAP financial
measures to their most directly comparable financial measures
calculated and presented in accordance with GAAP. Our non-GAAP
financial measures should not be considered as alternatives to GAAP
measures such as net income or operating income or any other GAAP
measure of liquidity or financial performance.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995 and Section 21E of the Securities and Exchange Act of 1934.
The words “expects,” “believes,” “anticipates,” “plans,” “will,”
“shall,” “estimates,” and similar expressions identify
forward-looking statements, which are generally not historical in
nature. Forward-looking statements are subject to risks and
uncertainties and are based on the beliefs and assumptions of
management, based on information currently available to them.
Although Crestwood believes that these forward-looking statements
are based on reasonable assumptions, it can give no assurance that
any such forward-looking statements will materialize. Important
factors that could cause actual results to differ materially from
those expressed in or implied from these forward-looking statements
include the risks and uncertainties described in Crestwood’s
reports filed with the Securities and Exchange Commission,
including its Annual Report on Form 10-K and its subsequent
reports, which are available through the SEC’s EDGAR system at
www.sec.gov and on our website. Readers are cautioned not to place
undue reliance on forward-looking statements, which reflect
management’s view only as of the date made, and Crestwood assumes
no obligation to update these forward-looking statements.
About Crestwood Equity Partners LP
Houston, Texas, based Crestwood Equity Partners LP (NYSE: CEQP)
is a master limited partnership that owns and operates midstream
businesses in multiple shale resource plays across the United
States. Crestwood Equity is engaged in the gathering, processing,
treating, compression, storage and transportation of natural gas;
storage, transportation, terminalling and marketing of NGLs;
gathering, storage, terminalling and marketing of crude oil; and
gathering and disposal of produced water. Visit Crestwood Equity
Partners LP at www.crestwoodlp.com; and to learn more about
Crestwood’s sustainability efforts, please visit
https://esg.crestwoodlp.com.
1 Please see non-GAAP reconciliation tables included at the end
of the press release
CRESTWOOD EQUITY PARTNERS
LP
Consolidated Statements of
Operations (in millions, except per unit data) (unaudited)
Three Months Ended
March 31,
2021
2020
Revenues:
Gathering and processing
$
154.4
$
214.9
Storage and transportation
2.0
3.5
Marketing, supply and logistics
871.4
502.0
Related party
4.9
7.5
Total revenues
1,032.7
727.9
Cost of products/services sold
813.8
534.4
Operating expenses and other:
Operations and maintenance
32.8
37.6
General and administrative
18.7
14.9
Depreciation, amortization and
accretion
59.2
56.1
Loss on long-lived assets, net
1.4
1.0
Goodwill impairment
—
80.3
112.1
189.9
Operating income
106.8
3.6
Earnings (loss) from unconsolidated
affiliates, net
(103.7
)
5.5
Interest and debt expense, net
(36.0
)
(32.6
)
Loss on modification/extinguishment of
debt
(5.5
)
—
Other income, net
—
0.1
Loss before income taxes
(38.4
)
(23.4
)
Benefit for income taxes
0.1
—
Net loss
(38.3
)
(23.4
)
Net income attributable to non-controlling
partner
10.1
9.9
Net loss attributable to Crestwood Equity
Partners LP
(48.4
)
(33.3
)
Net income attributable to preferred
units
15.0
15.0
Net loss attributable to partners
$
(63.4
)
$
(48.3
)
Net loss per limited partner unit:
Basic and Diluted
$
(0.86
)
$
(0.66
)
CRESTWOOD EQUITY PARTNERS
LP
Selected Balance Sheet
Data
(in millions)
March 31, 2021
December 31,
2020
(unaudited)
Cash
$
16.3
$
14.0
Outstanding
debt:
Revolving Credit Facility
$
530.0
$
719.0
Senior Notes
2,088.0
1,787.2
Other
0.4
0.4
Subtotal
2,618.4
2,506.6
Less: deferred financing costs, net
30.0
22.6
Total debt
$
2,588.4
$
2,484.0
Partners'
capital
Total partners' capital
$
1,267.6
$
1,655.4
Common units outstanding
62.8
74.0
CRESTWOOD EQUITY PARTNERS
LP
Reconciliation of Non-GAAP
Financial Measures
(in millions)
(unaudited)
Three Months Ended
March 31,
2021
2020
Net Loss to Adjusted EBITDA
Net loss
$
(38.3
)
$
(23.4
)
Interest and debt expense, net
36.0
32.6
Loss on modification/extinguishment of
debt
5.5
—
Benefit for income taxes
(0.1
)
—
Depreciation, amortization and
accretion
59.2
56.1
EBITDA (a)
$
62.3
$
65.3
Significant items impacting EBITDA:
Unit-based compensation charges
2.3
(4.4
)
Loss on long-lived assets, net
1.4
1.0
Goodwill impairment
—
80.3
(Earnings) loss from unconsolidated
affiliates, net
103.7
(5.5
)
Adjusted EBITDA from unconsolidated
affiliates, net
25.7
19.3
Change in fair value of commodity
inventory-related derivative contracts
(30.5
)
(5.8
)
Significant transaction and environmental
related costs and other items
0.5
1.2
Adjusted EBITDA (a)
$
165.4
$
151.4
Distributable
Cash Flow (b)
Adjusted EBITDA (a)
$
165.4
$
151.4
Cash interest expense (c)
(34.5
)
(33.2
)
Maintenance capital expenditures (d)
(3.0
)
(3.0
)
Adjusted EBITDA from unconsolidated
affiliates, net
(25.7
)
(19.3
)
Distributable cash flow from
unconsolidated affiliates
24.8
18.0
PRB cash received in excess of recognized
revenues (e)
6.6
4.3
Benefit for income taxes
0.1
—
Distributable cash flow attributable to
CEQP
133.7
118.2
Distributions to preferred
(15.0
)
(15.0
)
Distributions to Niobrara preferred
(10.3
)
(9.2
)
Distributable cash flow attributable to
CEQP common
$
108.4
$
94.0
(a)
EBITDA is defined as income
before income taxes, plus debt-related costs (interest and debt
expense, net and loss on modification/extinguishment of debt) and
depreciation, amortization and accretion expense. Adjusted EBITDA
considers the adjusted earnings impact of our unconsolidated
affiliates by adjusting our equity earnings or losses from our
unconsolidated affiliates to reflect our proportionate share (based
on the distribution percentage) of their EBITDA, excluding
impairments. Adjusted EBITDA also considers the impact of certain
significant items, such as unit-based compensation charges, gains
or losses on long-lived assets, impairments of goodwill, third
party costs incurred related to potential and completed
acquisitions, certain environmental remediation costs, the change
in fair value of commodity inventory-related derivative contracts,
costs associated with the realignment and restructuring of our
operations and corporate structure, and other transactions
identified in a specific reporting period. The change in fair value
of commodity inventory-related derivative contracts is considered
in determining Adjusted EBITDA given that the timing of recognizing
gains and losses on these derivative contracts differs from the
recognition of revenue for the related underlying sale of inventory
to which these derivatives relate. Changes in the fair value of
other derivative contracts is not considered in determining
Adjusted EBITDA given the relatively short-term nature of those
derivative contracts. EBITDA and Adjusted EBITDA are not measures
calculated in accordance with GAAP, as they do not include
deductions for items such as depreciation, amortization and
accretion, interest and income taxes, which are necessary to
maintain our business. EBITDA and Adjusted EBITDA should not be
considered as alternatives to net income, operating cash flow or
any other measure of financial performance presented in accordance
with GAAP. EBITDA and Adjusted EBITDA calculations may vary among
entities, so our computation may not be comparable to measures used
by other companies.
(b)
Distributable cash flow is
defined as Adjusted EBITDA, adjusted for cash interest expense,
maintenance capital expenditures, income taxes, the cash received
from our Powder River Basin operations in excess of revenue
recognized, and our proportionate share of our unconsolidated
affiliates' distributable cash flow. Distributable cash flow should
not be considered an alternative to cash flows from operating
activities or any other measure of financial performance calculated
in accordance with GAAP as those items are used to measure
operating performance, liquidity, or the ability to service debt
obligations. We believe that distributable cash flow provides
additional information for evaluating our ability to declare and
pay distributions to unitholders. Distributable cash flow, as we
define it, may not be comparable to distributable cash flow or
similarly titled measures used by other companies.
(c)
Cash interest expense less
amortization of deferred financing costs.
(d)
Maintenance capital expenditures
are defined as those capital expenditures which do not increase
operating capacity or revenues from existing levels.
(e)
Cash received from customers of
our Powder River Basin operations pursuant to certain contractual
minimum revenue commitments in excess of related revenue recognized
under FASB ASC 606.
CRESTWOOD EQUITY PARTNERS
LP
Reconciliation of Non-GAAP
Financial Measures
(in millions)
(unaudited)
Three Months Ended March
31,
2021
2020
Operating Cash Flows to Adjusted
EBITDA
Net cash provided by operating
activities
$
258.5
$
119.2
Net changes in operating assets and
liabilities
(122.8
)
(3.7
)
Amortization of debt-related deferred
costs
(1.7
)
(1.6
)
Interest and debt expense, net
36.0
32.6
Unit-based compensation charges
(2.3
)
4.4
Loss on long-lived assets, net
(1.4
)
(1.0
)
Goodwill impairment
—
(80.3
)
Earnings from unconsolidated affiliates,
net, adjusted for cash distributions received
(103.8
)
(4.5
)
Deferred income taxes
—
0.2
Benefit for income taxes
(0.1
)
—
Other non-cash income
(0.1
)
—
EBITDA (a)
$
62.3
$
65.3
Unit-based compensation charges
2.3
(4.4
)
Loss on long-lived assets, net
1.4
1.0
Goodwill impairment
—
80.3
(Earnings) loss from unconsolidated
affiliates, net
103.7
(5.5
)
Adjusted EBITDA from unconsolidated
affiliates, net
25.7
19.3
Change in fair value of commodity
inventory-related derivative contracts
(30.5
)
(5.8
)
Significant transaction and environmental
related costs and other items
0.5
1.2
Adjusted EBITDA (a)
$
165.4
$
151.4
Distributable
Cash Flow (b)
Adjusted EBITDA (a)
$
165.4
$
151.4
Cash interest expense (c)
(34.5
)
(33.2
)
Maintenance capital expenditures (d)
(3.0
)
(3.0
)
Adjusted EBITDA from unconsolidated
affiliates, net
(25.7
)
(19.3
)
Distributable cash flow from
unconsolidated affiliates
24.8
18.0
PRB cash received in excess of recognized
revenues (e)
6.6
4.3
Benefit for income taxes
0.1
—
Distributable cash flow attributable to
CEQP
133.7
118.2
Distributions to preferred
(15.0
)
(15.0
)
Distributions to Niobrara preferred
(10.3
)
(9.2
)
Distributable cash flow attributable to
CEQP common
$
108.4
$
94.0
Free Cash Flow
After Distributions (f)
Distributable cash flow attributable to
CEQP common
$
108.4
$
94.0
Less: Growth capital expenditures
5.5
77.0
Less: Distributions to common
unitholders
39.3
45.7
Free cash flow after distributions
$
63.6
$
(28.7
)
(a)
EBITDA is defined as income
before income taxes, plus debt-related costs (interest and debt
expense, net and loss on modification/extinguishment of debt) and
depreciation, amortization and accretion expense. Adjusted EBITDA
considers the adjusted earnings impact of our unconsolidated
affiliates by adjusting our equity earnings or losses from our
unconsolidated affiliates to reflect our proportionate share (based
on the distribution percentage) of their EBITDA, excluding
impairments. Adjusted EBITDA also considers the impact of certain
significant items, such as unit-based compensation charges, gains
or losses on long-lived assets, impairments of goodwill, third
party costs incurred related to potential and completed
acquisitions, certain environmental remediation costs, the change
in fair value of commodity inventory-related derivative contracts,
costs associated with the realignment and restructuring of our
operations and corporate structure, and other transactions
identified in a specific reporting period. The change in fair value
of commodity inventory-related derivative contracts is considered
in determining Adjusted EBITDA given that the timing of recognizing
gains and losses on these derivative contracts differs from the
recognition of revenue for the related underlying sale of inventory
to which these derivatives relate. Changes in the fair value of
other derivative contracts is not considered in determining
Adjusted EBITDA given the relatively short-term nature of those
derivative contracts. EBITDA and Adjusted EBITDA are not measures
calculated in accordance with GAAP, as they do not include
deductions for items such as depreciation, amortization and
accretion, interest and income taxes, which are necessary to
maintain our business. EBITDA and Adjusted EBITDA should not be
considered as alternatives to net income, operating cash flow or
any other measure of financial performance presented in accordance
with GAAP. EBITDA and Adjusted EBITDA calculations may vary among
entities, so our computation may not be comparable to measures used
by other companies.
(b)
Distributable cash flow is
defined as Adjusted EBITDA, adjusted for cash interest expense,
maintenance capital expenditures, income taxes, the cash received
from our Powder River Basin operations in excess of revenue
recognized, and our proportionate share of our unconsolidated
affiliates' distributable cash flow. Distributable cash flow should
not be considered an alternative to cash flows from operating
activities or any other measure of financial performance calculated
in accordance with GAAP as those items are used to measure
operating performance, liquidity, or the ability to service debt
obligations. We believe that distributable cash flow provides
additional information for evaluating our ability to declare and
pay distributions to unitholders. Distributable cash flow, as we
define it, may not be comparable to distributable cash flow or
similarly titled measures used by other companies.
(c)
Cash interest expense less
amortization of deferred financing costs.
(d)
Maintenance capital expenditures
are defined as those capital expenditures which do not increase
operating capacity or revenues from existing levels.
(e)
Cash received from customers of
our Powder River Basin operations pursuant to certain contractual
minimum revenue commitments in excess of related revenue recognized
under FASB ASC 606.
(f)
Free cash flow after
distributions is defined as distributable cash flow attributable to
common unitholders less growth capital expenditures and
distributions to common unitholders. Free cash flow after
distributions should not be considered an alternative to cash flows
from operating activities or any other measure of liquidity
calculated in accordance with GAAP as those items are used to
measure liquidity or the ability to service debt obligations. We
believe that free cash flow after distributions provides additional
information for evaluating our ability to generate cash flow after
paying our distributions to common unitholders and paying for our
growth and capital expenditures.
CRESTWOOD EQUITY PARTNERS LP
Segment Data
(in millions)
(unaudited)
Three Months Ended March
31,
2021
2020
Gathering and Processing
Revenues
$
259.7
$
254.9
Costs of product/services sold
116.5
108.3
Operations and maintenance expenses
21.4
27.0
Loss on long-lived assets, net
(1.5
)
(1.0
)
Goodwill impairment
—
(80.3
)
Earnings (loss) from unconsolidated
affiliates, net
(0.8
)
0.8
EBITDA
$
119.5
$
39.1
Storage and
Transportation
Revenues
$
4.4
$
6.1
Costs of product/services sold
0.4
0.2
Operations and maintenance expenses
0.6
1.4
Earnings (loss) from unconsolidated
affiliates, net
(102.9
)
4.7
EBITDA
$
(99.5
)
$
9.2
Marketing, Supply
and Logistics
Revenues
$
768.6
$
466.9
Costs of product/services sold
696.9
425.9
Operations and maintenance expenses
10.8
9.2
Gain on long-lived assets, net
0.1
—
EBITDA
$
61.0
$
31.8
Total Segment EBITDA
$
81.0
$
80.1
Corporate
(18.7
)
(14.8
)
EBITDA
$
62.3
$
65.3
CRESTWOOD EQUITY PARTNERS LP
Operating Statistics
(unaudited)
Three Months Ended March
31,
2021
2020
Gathering and Processing
Gas gathering volumes (MMcf/d)
Bakken - Arrow
134.2
118.8
Powder River Basin - Jackalope
98.3
153.9
Marcellus
234.5
270.4
Barnett
184.9
234.0
Delaware (a)
181.5
230.8
Other
—
21.7
Total gas gathering volumes
833.4
1,029.6
Processing volumes (MMcf/d)
Bakken - Arrow
129.6
110.3
Powder River Basin - Jackalope
97.5
141.1
Other
129.9
156.9
Total processing volumes
357.0
408.3
Compression volumes (MMcf/d)
278.3
377.1
Arrow
Bakken - Crude oil gathering volumes
(MBbls/d)
100.3
129.1
Bakken - Water gathering volumes
(MBbls/d)
82.0
89.2
Delaware (a) - Water gathering volumes
(MBbls/d)
48.1
—
Storage and
Transportation
Northeast Storage - firm contracted
capacity (Bcf) (a)
34.4
34.8
% of operational capacity contracted
99
%
100
%
Firm storage services (MMcf/d) (a)
228.3
133.9
Interruptible storage services (MMcf/d)
(a)
—
2.0
Northeast Transportation - firm contracted
capacity (MMcf/d) (a)
1,803.8
1,644.1
% of operational capacity contracted
99
%
90
%
Firm services (MMcf/d) (a)
1,583.5
1,292.5
Interruptible services (MMcf/d) (a)
40.7
21.4
Gulf Coast Storage - firm contracted
capacity (Bcf) (a)
30.5
29.2
% of operational capacity contracted
79
%
76
%
Firm storage services (MMcf/d) (a)
443.8
292.7
Interruptible services (MMcf/d) (a)
49.9
76.3
COLT Hub
Rail loading (MBbls/d)
51.5
61.0
Outbound pipeline (MBbls/d) (b)
10.1
13.4
Marketing, Supply
and Logistics
NGL volumes sold or processed
(MBbls/d)
151.5
105.8
NGL volumes trucked (MBbls/d)
22.2
24.0
(a)
Represents 50% owned joint
venture, operational data reported is at 100%.
(b)
Represents only throughput
leaving the terminal.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210427005394/en/
Crestwood Equity Partners LP Investor Contacts
Josh Wannarka, 713-380-3081 josh.wannarka@crestwoodlp.com Senior
Vice President, Investor Relations, ESG & Corporate
Communications Rhianna Disch, 713-380-3006
rhianna.disch@crestwoodlp.com Director, Investor Relations
Sustainability and Media Contact Joanne Howard, 832-519-2211
joanne.howard@crestwoodlp.com Vice President, Sustainability and
Corporate Communications
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