Solid second quarter performance results in
14% and 15% year-over-year Adjusted EBITDA and distributable cash
flow growth, respectively, and significant free cash flow after
distributions, delivering leading financial flexibility
Strong customer activity paired with higher
commodity prices drive increased outlook for drilling and
completion activity in the Bakken, Powder River, Delaware, and
Barnett basins in 2H 2021 and 2022
Crestwood achieves best-in-class financial
metrics by accelerating deleveraging strategy following the
divestiture of Stagecoach that results in pro forma leverage of
3.6x
Crestwood Equity Partners LP (NYSE: CEQP) (“Crestwood”) reported
today its financial and operating results for the three months
ended June 30, 2021.
Second Quarter 2021 Highlights1
- Second quarter 2021 net loss of $38.1 million, compared to net
loss of $24.3 million in second quarter 2020
- Second quarter 2021 Adjusted EBITDA of $145.7 million, a 14%
increase compared to $127.8 million in the second quarter 2020
- Second quarter 2021 distributable cash flow (“DCF”) to common
unitholders of $85.8 million, a 15% increase compared to $74.4
million in the second quarter 2020; The second quarter 2021
coverage ratio was 2.2x
- Second quarter 2021 free cash flow after distributions of $40.1
million
- Ended June 30, 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 $848.6 million
drawn as of June 30, 2021
- Announced second quarter 2021 cash distribution of $0.625 per
common unit, or $2.50 per common unit on an annualized basis,
payable on August 13, 2021, to unitholders of record as of August
6, 2021
Recent Highlights
- On July 9, 2021, Crestwood and Consolidated Edison (NYSE: ED)
(“Con Edison”) successfully executed the first closing of the
previously announced divestiture of Stagecoach Gas Services LLC
(“Stagecoach”) to a subsidiary of Kinder Morgan Inc; Gross proceeds
from the first closing totaled $1.195 billion (excluding working
capital adjustments)
- Crestwood used its net proceeds to immediately accelerate its
deleveraging strategy and repaid outstanding borrowings on its
revolving credit facility; pro forma for the closing, Crestwood had
$2.1 billion in total debt with $274 million outstanding on its
revolving credit facility resulting in available liquidity of more
than $940 million and a pro forma leverage ratio of 3.6x, which is
in-line with its long-term target range
Management Commentary
“During the second quarter 2021, I am pleased to announce
Crestwood continued its trend of strong execution generating
Adjusted EBITDA of $145.7 million, a 14% increase year-over-year,
distributable cash flow of $85.8 million, a 15% increase
year-over-year, free cash flow after distributions of $40.1
million, and best-in-class credit metrics with coverage of 2.2x and
leverage of 3.6x, pro forma for the completion of the Stagecoach
divestiture,” commented Robert G. Phillips, Chairman, President and
Chief Executive Officer of Crestwood’s general partner. “During the
quarter, Crestwood’s gathering and processing segment experienced
an increase in drilling and completion activity and better netback
pricing for our customers resulting from the continued improvements
in commodity prices, both of which will drive higher utilization
and enhanced margins across our gathering and processing assets
going forward. Following the Stagecoach divestiture and based on
Crestwood’s improved outlook for the second half of 2021, we are
revising our guidance estimates to an Adjusted EBITDA range of $570
million to $600 million, which will help generate free cash flow
after distributions of $150 million to $180 million, leverage of
3.4x to 3.7x and distribution coverage of 2.2x to 2.4x.”
Mr. Phillips continued, “During the first half of 2021,
Crestwood has proactively taken action to differentiate the
partnership from our peers by simplifying our ownership structure,
enhancing our corporate governance and achieving our deleveraging
targets, resulting in industry leading unitholder alignment and
financial flexibility. Successful execution of these strategic
initiatives has been viewed favorably by both the credit and ESG
rating agencies and has resulted in improved ratings and outlooks
across the board. With stronger commodity prices and an improved
volume outlook across our G&P segment through 2022, Crestwood
is squarely focused on utilizing its financial flexibility to
maintain a strong balance sheet and enhance total returns to its
unitholders through a secure distribution, prudent investment in
the highest returning expansions of our existing assets and
opportunistic common and preferred unit repurchases with excess
cash flow. We believe this strategy best positions the partnership
to maximize value creation for our investors as we manage through
persistent COVID uncertainty, evaluate potential asset and
corporate consolidation opportunities, and focus on generating
long-term value for our unitholders.”
Second Quarter 2021 Segment Results
Gathering and Processing (G&P) segment Adjusted EBITDA
totaled $123.5 million in the second quarter 2021, a 48% increase
compared to $83.6 million in the second quarter 2020. Second
quarter 2021 results were highlighted by increased drilling and
completion activity with 79 total wells connected across the
G&P assets, as well as significant year-over-year volume
improvement across Crestwood’s oil weighted basins. Notably, Bakken
gas gathering and processing volumes increased 58% and 59%,
year-over-year, respectively, as debottlenecking projects have been
completed increasing gas capture and further minimizing flaring
across the Arrow system. In the second half of 2021, Crestwood
expects to see an uptick in volumes from the Bakken, Powder River
Basin, Delaware, and Barnett as incremental wells are connected to
the gathering systems and producers continue to operate rigs and
completion crews across the diversified footprint.
Storage and Transportation (S&T) segment Adjusted EBITDA
totaled $14.9 million in the second quarter 2021, compared to $14.1
million in the second quarter 2020. Second quarter 2021 excludes a
$38.5 million loss from unconsolidated affiliates related to the
divestiture of Stagecoach. Second quarter 2021 natural gas storage
and transportation volumes averaged 2.4 Bcf/d, compared to 2.1
Bcf/d in the second quarter 2020. In the second quarter 2021,
continued favorable natural gas prices in the Northeast resulted in
strong E&P production providing a backdrop for increased demand
for transportation, as well as increased storage opportunities at
Stagecoach. At the COLT Hub, second quarter 2021 rail loading
volumes were 46 MBbls/d, a 13% increase over the second quarter of
2020, as producers brought all volumes back online after the height
of the pandemic uncertainty. Tres Palacios continues to see
increased third-party interest for incremental firm contracts as a
result of the facility’s operational performance during Winter
Storm Uri.
Marketing, Supply and Logistics (MS&L) segment Adjusted
EBITDA totaled $12.5 million in the second quarter 2021, compared
to $23.8 million in the second quarter 2020. Both periods exclude
the non-cash change in fair value of commodity inventory-related
derivative contracts. During the second quarter 2021, Crestwood’s
NGL marketing and logistics benefitted from strong propane prices
that drove strong utilization of its transportation assets, offset
in part by market backwardation and limited storage opportunities
for all products, and higher demand for international LNG and LPG
exports. Crestwood expects much of these trends to continue into
the third quarter with regional opportunities that include
crop-drying, butane blending and incremental opportunities to
service increased downstream demand.
Combined O&M and G&A expenses, net of non-cash
unit-based compensation, in the second quarter 2021 were $41.0
million compared to $47.5 million in the second quarter 2020.
During the second quarter 2021, expenses continued to benefit from
cost reduction efforts the company undertook in mid-2020 in
response to the decline in commodity prices.
Second Quarter 2021 Business Update and Outlook
Bakken
During the second quarter 2021, the Arrow system averaged crude
oil gathering volumes of 89 MBbls/d, natural gas gathering volumes
of 142 MMcf/d, and produced water gathering volumes of 83 MBbls/d.
During the quarter, while all product volumes increased
year-over-year primarily due to COVID related producer shut-ins
during the second quarter 2020, natural gas gathering and
processing volumes increased 58% and 59%, respectively, as
increased gas-to-oil ratios combined with higher gas capture and
minimized flaring drove higher gas volumes across the system. When
combined with Crestwood’s percent of proceeds contracts and higher
than forecasted natural gas pricing during the second quarter, the
Arrow system has outperformed its cash flow forecasts for the first
half of 2021. Drilling and completion activities during the latter
part of the quarter brought 10 three-product and 14 water-only well
connections to the Arrow system which will drive volumetric
increases into the second half of the year. For the remainder of
the year, Crestwood expects producers to run one to two rigs on the
Fort Berthold Indian Reservation which, when paired with completion
crews working through existing DUC inventories, will result in
total well connects within the previously guided range of 30 to 45
new wells.
During the second quarter, Crestwood invested $5.3 million in
the Bakken which was primarily comprised of capital to complete the
phase one of the southern expansion of Arrow’s produced water
gathering infrastructure and begin work on phase two of the
project. Phase one of the southern expansion project provides
critical produced water gathering infrastructure to Enerplus
Corporation (“Enerplus”), while phase two supports Enerplus as well
as additional producer customers and places the Arrow system in
close proximity to approximately 150 new inventory locations on and
around the reservation. Crestwood also completed several
debottlenecking projects on the gas gathering system during the
first half of the year which have increased gas capture rates and
further reduced flaring on the reservation.
Powder River Basin
During the second quarter 2021, the Jackalope system averaged
natural gas gathering volumes of 100 MMcf/d and processing volumes
of 96 MMcf/d, both increasing 10% over the second quarter of 2020.
During the quarter, producers connected 11 wells to the Jackalope
system and Crestwood expects four additional wells to be brought
online during the third quarter. In the current commodity price
environment, Crestwood continues to have positive system planning
and design discussions with its two primary producers on
incremental rig activity and well completions for the latter half
of the year. Additionally, Crestwood is engaged in commercial
discussions with new third-party producers in the basin and has a
competitive advantage to attract new volumes with total gathering
and processing capacity of 345 MMcf/d.
Delaware Basin
During the second quarter 2021, the Delaware Basin systems
averaged gathering volumes of 222 MMcf/d and processing volumes of
67 MMcf/d. During the second quarter 2021, 36 wells were connected
to the Delaware Basin systems, largely driven by Royal Dutch
Shell’s development program on the Nautilus system and by
ConocoPhillips and Mewbourne Oil Company on the Willow Lake system.
There are currently five rigs running on Crestwood’s Delaware Basin
assets driving incremental volumes through both gathering systems
and the Orla processing plant. Based on producer forecasts and the
potential for new third-party commercial agreements, Crestwood
anticipates producers to connect 40 - 50 wells in the second half
of the year which is expected to increase Orla processing
utilization to approximately 75% in the second half of 2021. During
the second quarter, produced water gathering averaged 51 MBbl/d as
the anchor customer continues to run two rigs on the dedicated
acreage.
Barnett Shale
During the second quarter, Sage Natural Resources began flowing
volumes from a new eight-well pad connected to the Lake Arlington
system. The wells, which are the first new wells to be connected to
the system in over five years, are performing exceptionally well
and have exceeded internal type curves expectations by
approximately 20%. Given the favorable natural gas pricing
environment, Crestwood is currently in discussions with producer
customers in the Lake Arlington area for incremental activity.
Stagecoach Gas Services
Divestiture
As previously announced, during the third quarter Crestwood and
Con Edison successfully completed the first closing of the
Stagecoach divestiture to a subsidiary of Kinder Morgan for $1.195
billion. The cash proceeds from the divestiture were shared between
Crestwood and Con Edison in line with each member’s 50% ownership
interest in the joint venture. Crestwood utilized net proceeds to
accelerate deleveraging and satisfy the remaining $38 million of
contingent consideration related to the original divestiture in
June 2016. The second closing includes Twin Tier Pipeline LLC, $30
million in value, is subject to New York state regulatory approval
and is expected to close in the first quarter 2022.
Revised 2021 Financial Guidance
Based on the successful Stagecoach divestiture and Crestwood’s
improved outlook for its G&P segment for the second half of
2021, Crestwood has updated its full-year 2021 guidance as noted
below. Crestwood’s original 2021 Adjusted EBITDA guidance range of
$575 million to $625 million included approximately $30 million of
Stagecoach contribution in the second half of 2021. These
projections are subject to risks and uncertainties as described in
the “Forward-Looking Statements” section at the end of this
release.
- Net income/(loss) of $(25) million to $5 million
- Adjusted EBITDA of $570 million to $600 million
- Distributable cash flow available to common unitholders of $345
million to $375 million
- Free cash flow after distributions of $150 million to $180
million
- Full-year 2021 coverage ratio between 2.2x and 2.4x
- Full-year 2021 leverage ratio between 3.4x and 3.7x
- Full-year 2021 growth project capital spending and joint
venture contributions in the range of $35 million to $45 million
and maintenance capital spending in the range of $20 million to $25
million
Capitalization and Liquidity Update
As of June 30, 2021, Crestwood had approximately $2.6 billion of
debt outstanding, comprised of $1.8 billion of fixed-rate senior
notes and $848.6 million outstanding under its $1.25 billion
revolving credit facility, resulting in a leverage ratio of 4.2x.
Pro forma for the first closing of the Stagecoach divestiture,
Crestwood had $274 million outstanding on its revolving credit
facility and a leverage ratio of 3.6x. Crestwood currently has more
than $940 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 and focus on its capital allocation priorities with its
enhanced financial flexibility. Additionally, the rating agencies
have viewed Crestwood’s 2021 strategic Stagecoach and First Reserve
transactions favorably with Moody’s putting Crestwood’s rating on
watch for upgrade while S&P Global improved the company’s
outlook.
Robert T. Halpin, Executive Vice President and Chief Financial
Officer commented, “Following the completion of the Stagecoach
transaction, based on Crestwood’s positive long-term operational
outlook combined with the achievement of our conservative leverage
goal of 3.5x to 3.75x, Crestwood intends to begin allocating excess
free cash flow to opportunistically repurchase its common and
preferred units under our Board approved $175 million repurchase
program to optimize our capital structure and return capital to our
investors.”
Crestwood invested approximately $6.4 million in consolidated
growth capital projects and joint venture contributions during the
second quarter 2021 primarily on the southern expansion projects in
the Bakken. Crestwood remains on-track to invest between $35
million to $45 million on 2021 growth capital to expand and
optimize gathering and processing systems. Additionally, Crestwood
continues to expect 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.
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 taken a leadership role in advancing
ESG initiatives both within the company and across the midstream
industry. Crestwood’s third annual sustainability report published
in June 2021 entitled Shaping ESG in the Midstream Sector has
generated positive reviews from investors, customers, community
partners and key ESG rating and ranking agencies. The report
highlights the progression on its three-year sustainability
strategy including details on enhanced ESG key performance
indicators tied to employee compensation, enhanced emissions
reduction practices and the addition of disclosures related to the
Task Force on Climate-related Financial Disclosures (TCFD).
As a result of the progress Crestwood has made on its
sustainability journey and its commitment to enhanced transparency
and disclosure, the company received improved scores from both MSCI
and Sustainalytics. Crestwood’s MSCI score increased from a BB to a
BBB due to its strong commitment to business ethics and
environmental stewardship and Crestwood’s Sustainalytics score
improved 16% to 22.0, ranking Crestwood 8 out of 107 companies in
the Oil & Gas Transportation sector representing a 34% score
improvement since 2018. The recent Sustainalytics score upgrade was
largely driven by the company’s enhanced approach to corporate
governance including board diversity and independence.
Crestwood’s commitment to Biodiversity and Land Use was also
externally recognized by the Wildlife Habitat Council (WHC) who
recently awarded the company with the WHC 2021 Grassland Award for
the Crestwood’s grassland reclamation practices on the Fort
Berthold Indian Reservation in North Dakota.
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 Citi One-on-One
Midstream/Energy Infrastructure Conference on August 18 – 19, 2021.
Prior to the start of the conference, new presentation materials
will be posted to the Investors section of Crestwood’s website at
www.crestwoodlp.com.
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 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
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Revenues:
Gathering and processing
$
173.1
$
114.5
$
327.5
$
329.4
Storage and transportation
2.0
3.1
4.0
6.6
Marketing, supply and logistics
741.3
227.6
1,612.7
729.6
Related party
13.2
7.5
18.1
15.0
Total revenues
929.6
352.7
1,962.3
1,080.6
Cost of products/services sold
797.2
225.7
1,611.0
760.1
Operating expenses and other:
Operations and maintenance
25.8
31.6
58.6
69.2
General and administrative
22.8
29.5
41.5
44.4
Depreciation, amortization and
accretion
58.8
61.0
118.0
117.1
(Gain) loss on long-lived assets, net
(0.3
)
3.8
1.1
4.8
Goodwill impairment
—
—
—
80.3
107.1
125.9
219.2
315.8
Operating income
25.3
1.1
132.1
4.7
Earnings (loss) from unconsolidated
affiliates, net
(27.1
)
8.4
(130.8
)
13.9
Interest and debt expense, net
(35.1
)
(34.0
)
(71.1
)
(66.6
)
Loss on modification/extinguishment of
debt
(1.2
)
—
(6.7
)
—
Other income, net
0.1
0.1
0.1
0.2
Loss before income taxes
(38.0
)
(24.4
)
(76.4
)
(47.8
)
(Provision) benefit for income taxes
(0.1
)
0.1
—
0.1
Net loss
(38.1
)
(24.3
)
(76.4
)
(47.7
)
Net income attributable to non-controlling
partner
10.3
10.2
20.4
20.1
Net loss attributable to Crestwood Equity
Partners LP
(48.4
)
(34.5
)
(96.8
)
(67.8
)
Net income attributable to preferred
units
15.0
15.0
30.0
30.0
Net loss attributable to partners
$
(63.4
)
$
(49.5
)
$
(126.8
)
$
(97.8
)
Net loss per limited partner unit:
Basic and Diluted
$
(1.00
)
$
(0.68
)
$
(1.85
)
$
(1.34
)
CRESTWOOD EQUITY PARTNERS
LP
Selected Balance Sheet
Data
(in millions)
June 30,
December 31,
2021
2020
(unaudited)
Cash
$
16.6
$
14.0
Outstanding
debt:
Revolving Credit Facility
$
848.6
$
719.0
Senior Notes
1,800.0
1,787.2
Other
0.4
0.4
Subtotal
2,649.0
2,506.6
Less: deferred financing costs, net
27.2
22.6
Total debt
$
2,621.8
$
2,484.0
Partners'
capital
Total partners' capital
$
1,172.1
$
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
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Net Loss to
Adjusted EBITDA
Net loss
$
(38.1
)
$
(24.3
)
$
(76.4
)
$
(47.7
)
Interest and debt expense, net
35.1
34.0
71.1
66.6
Loss on modification/extinguishment of
debt
1.2
—
6.7
—
Provision (benefit) for income taxes
0.1
(0.1
)
—
(0.1
)
Depreciation, amortization and
accretion
58.8
61.0
118.0
117.1
EBITDA (a)
$
57.1
$
70.6
$
119.4
$
135.9
Significant items impacting EBITDA:
Unit-based compensation charges
7.6
13.6
9.9
9.2
(Gain) loss on long-lived assets, net
(0.3
)
3.8
1.1
4.8
Goodwill impairment
—
—
—
80.3
(Earnings) loss from unconsolidated
affiliates, net
27.1
(8.4
)
130.8
(13.9
)
Adjusted EBITDA from unconsolidated
affiliates, net
21.0
17.9
46.7
37.2
Change in fair value of commodity
inventory-related derivative contracts
32.6
21.5
2.1
15.7
Significant transaction and environmental
related costs and other items
0.6
8.8
1.1
10.0
Adjusted EBITDA (a)
$
145.7
$
127.8
$
311.1
$
279.2
Distributable
Cash Flow (b)
Adjusted EBITDA (a)
$
145.7
$
127.8
$
311.1
$
279.2
Cash interest expense (c)
(33.4
)
(32.8
)
(67.9
)
(66.0
)
Maintenance capital expenditures (d)
(5.3
)
(3.4
)
(8.3
)
(6.4
)
Adjusted EBITDA from unconsolidated
affiliates, net
(21.0
)
(17.9
)
(46.7
)
(37.2
)
Distributable cash flow from
unconsolidated affiliates
19.5
17.0
44.3
35.0
PRB cash received in excess of recognized
revenues (e)
5.7
7.9
12.3
12.2
(Provision) benefit for income taxes
(0.1
)
0.1
—
0.1
Distributable cash flow attributable to
CEQP
111.1
98.7
244.8
216.9
Distributions to preferred
(15.0
)
(15.0
)
(30.0
)
(30.0
)
Distributions to Niobrara preferred
(10.3
)
(9.3
)
(20.6
)
(18.5
)
Distributable cash flow attributable to
CEQP common
$
85.8
$
74.4
$
194.2
$
168.4
(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 gains and
losses on long-lived assets and other 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
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Operating Cash
Flows to Adjusted EBITDA
Net cash provided by operating
activities
$
35.0
$
64.2
$
293.5
$
183.4
Net changes in operating assets and
liabilities
33.1
(7.7
)
(89.7
)
(11.4
)
Amortization of debt-related deferred
costs
(1.7
)
(1.6
)
(3.4
)
(3.2
)
Interest and debt expense, net
35.1
34.0
71.1
66.6
Unit-based compensation charges
(7.6
)
(13.6
)
(9.9
)
(9.2
)
Gain (loss) on long-lived assets, net
0.3
(3.8
)
(1.1
)
(4.8
)
Goodwill impairment
—
—
—
(80.3
)
Earnings (loss) from unconsolidated
affiliates, net, adjusted for cash distributions received
(37.3
)
(0.9
)
(141.1
)
(5.4
)
Deferred income taxes
0.1
0.1
0.1
0.3
Provision (benefit) for income taxes
0.1
(0.1
)
—
(0.1
)
Other non-cash income
—
—
(0.1
)
—
EBITDA (a)
$
57.1
$
70.6
$
119.4
$
135.9
Unit-based compensation charges
7.6
13.6
9.9
9.2
(Gain) loss on long-lived assets, net
(0.3
)
3.8
1.1
4.8
Goodwill impairment
—
—
—
80.3
(Earnings) loss from unconsolidated
affiliates, net
27.1
(8.4
)
130.8
(13.9
)
Adjusted EBITDA from unconsolidated
affiliates, net
21.0
17.9
46.7
37.2
Change in fair value of commodity
inventory-related derivative contracts
32.6
21.5
2.1
15.7
Significant transaction and environmental
related costs and other items
0.6
8.8
1.1
10.0
Adjusted EBITDA (a)
$
145.7
$
127.8
$
311.1
$
279.2
Distributable
Cash Flow (b)
Adjusted EBITDA (a)
$
145.7
$
127.8
$
311.1
$
279.2
Cash interest expense (c)
(33.4
)
(32.8
)
(67.9
)
(66.0
)
Maintenance capital expenditures (d)
(5.3
)
(3.4
)
(8.3
)
(6.4
)
Adjusted EBITDA from unconsolidated
affiliates, net
(21.0
)
(17.9
)
(46.7
)
(37.2
)
Distributable cash flow from
unconsolidated affiliates
19.5
17.0
44.3
35.0
PRB cash received in excess of recognized
revenues (e)
5.7
7.9
12.3
12.2
(Provision) benefit for income taxes
(0.1
)
0.1
—
0.1
Distributable cash flow attributable to
CEQP
111.1
98.7
244.8
216.9
Distributions to preferred
(15.0
)
(15.0
)
(30.0
)
(30.0
)
Distributions to Niobrara preferred
(10.3
)
(9.3
)
(20.6
)
(18.5
)
Distributable cash flow attributable to
CEQP common
$
85.8
$
74.4
$
194.2
$
168.4
Free Cash Flow
After Distributions (f)
Distributable cash flow attributable to
CEQP common
$
85.8
$
74.4
$
194.2
$
168.4
Less: Growth capital expenditures
6.4
50.2
11.9
127.2
Less: Distributions to common
unitholders
39.3
45.7
78.6
91.4
Free cash flow after distributions
$
40.1
$
(21.5
)
$
103.7
$
(50.2
)
(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 gains and
losses on long-lived assets and other 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
capital expenditures.
CRESTWOOD EQUITY PARTNERS
LP
Segment Data
(in millions)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Gathering and
Processing
Revenues
$
257.5
$
128.8
$
517.2
$
383.7
Costs of product/services sold
120.6
21.3
237.1
129.6
Operations and maintenance expenses
14.7
19.3
36.1
46.3
Gain (loss) on long-lived assets, net
0.3
(3.6
)
(1.2
)
(4.6
)
Goodwill impairment
—
—
—
(80.3
)
Earnings (loss) from unconsolidated
affiliates, net
1.0
(1.0
)
0.2
(0.2
)
EBITDA
$
123.5
$
83.6
$
243.0
$
122.7
Storage and
Transportation
Revenues
$
5.1
$
5.5
$
9.5
$
11.6
Costs of product/services sold
(0.4
)
0.1
—
0.3
Operations and maintenance expenses
1.0
0.7
1.6
2.1
Earnings (loss) from unconsolidated
affiliates, net
(28.1
)
9.4
(131.0
)
14.1
EBITDA
$
(23.6
)
$
14.1
$
(123.1
)
$
23.3
Marketing, Supply
and Logistics
Revenues
$
667.0
$
218.4
$
1,435.6
$
685.3
Costs of product/services sold
677.0
204.3
1,373.9
630.2
Operations and maintenance expenses
10.1
11.6
20.9
20.8
Gain (loss) on long-lived assets, net
—
(0.2
)
0.1
(0.2
)
EBITDA
$
(20.1
)
$
2.3
$
40.9
$
34.1
Total Segment EBITDA
$
79.8
$
100.0
$
160.8
$
180.1
Corporate
(22.7
)
(29.4
)
(41.4
)
(44.2
)
EBITDA
$
57.1
$
70.6
$
119.4
$
135.9
CRESTWOOD EQUITY PARTNERS
LP
Operating Statistics
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Gathering and
Processing
Gas gathering volumes (MMcf/d)
Bakken - Arrow
141.8
89.9
138.0
104.4
Powder River Basin - Jackalope
99.6
90.8
99.0
122.4
Marcellus
227.8
259.2
231.1
264.8
Barnett
211.0
226.6
198.1
230.3
Delaware (a)
222.0
190.0
201.9
210.5
Other
—
31.8
—
26.8
Total gas gathering volumes
902.2
888.3
868.1
959.2
Processing volumes (MMcf/d)
Bakken - Arrow
137.1
86.4
133.4
98.4
Powder River Basin - Jackalope
96.1
87.4
96.8
114.3
Other
144.4
130.2
137.2
143.6
Total processing volumes
377.6
304.0
367.4
356.3
Compression volumes (MMcf/d)
249.1
336.6
263.6
356.9
Arrow
Bakken - Crude oil gathering volumes
(MBbls/d)
89.3
87.1
94.8
108.1
Bakken - Water gathering volumes
(MBbls/d)
82.9
73.1
82.5
81.2
Delaware - Water gathering volumes
(MBbls/d) (a)
50.5
11.7
49.3
11.7
Storage and
Transportation
Northeast Storage - firm contracted
capacity (Bcf) (a)
32.7
34.4
33.5
34.6
% of operational capacity contracted
94
%
99
%
96
%
99
%
Firm storage services (MMcf/d) (a)
227.4
199.5
227.8
166.7
Interruptible storage services (MMcf/d)
(a)
—
—
—
1.0
Northeast Transportation - firm contracted
capacity (MMcf/d) (a)
1,826.3
1,584.1
1,815.1
1,614.1
% of operational capacity contracted
100
%
87
%
99
%
88
%
Firm services (MMcf/d) (a)
1,776.9
1,463.1
1,680.7
1,377.8
Interruptible services (MMcf/d) (a)
69.2
27.3
55.0
24.4
Gulf Coast Storage - firm contracted
capacity (Bcf) (a)
28.8
30.5
29.6
29.9
% of operational capacity contracted
75
%
79
%
77
%
78
%
Firm storage services (MMcf/d) (a)
273.6
313.9
358.2
303.3
Interruptible services (MMcf/d) (a)
82.7
64.5
66.4
70.4
COLT Hub
Rail loading (MBbls/d)
46.1
40.7
48.8
50.8
Outbound pipeline (MBbls/d) (b)
18.3
9.8
14.2
11.6
Marketing, Supply
and Logistics
NGL volumes sold or processed
(MBbls/d)
114.0
59.7
132.6
82.7
NGL volumes trucked (MBbls/d)
16.9
15.3
19.5
19.7
(a)
Represents 50% owned joint venture,
operational data reported is at 100%.
(b)
Represents only throughput leaving the
terminal.
CRESTWOOD EQUITY PARTNERS
LP
Revised Full Year 2021
Adjusted EBITDA, Distributable Cash Flow and Free Cash Flow
Guidance
Reconciliation of Non-GAAP
Financial Measures
(in millions)
(unaudited)
Expected 2021 Range
Low - High
Net Income (Loss)
Reconciliation
Net income (loss)
$(25) - $5
Interest and debt expense, net (a)
140 - 145
Depreciation, amortization and
accretion
235
Unit-based compensation charges
20 - 25
Loss from unconsolidated affiliates,
net
125 - 130
Adjusted EBITDA from unconsolidated
affiliates
55 - 60
Other (b)
5
Adjusted EBITDA
$570 - $600
Cash interest expense (c)
(125) - (130)
Maintenance capital expenditures (d)
(20) - (25)
PRB cash received in excess of recognized
revenues (e)
25 - 30
Adjusted EBITDA from unconsolidated
affiliates
(55) - (60)
Distributable cash flow from
unconsolidated affiliates
50 - 55
Cash distributions to preferred
unitholders (f)
(101)
Distributable cash flow attributable to
CEQP (g)
$345 - $375
Cash Flows from Operating Activities
Reconciliation
Net cash provided by operating activities,
net
$480 - $510
Interest and debt expense, net
133 - 138
Adjusted EBITDA from unconsolidated
affiliates
55 - 60
Loss from unconsolidated affiliates,
net
125 - 130
Loss from unconsolidated affiliates, net,
adjusted for cash distributions received
(141)
Amortization of debt-related deferred
costs
(7)
Changes in operating assets and
liabilities, net
(90)
Other (b)
5
Adjusted EBITDA
$570 - $600
Cash interest expense (c)
(125) - (130)
Maintenance capital expenditures (d)
(20) - (25)
PRB cash received in excess of recognized
revenues (e)
25 - 30
Adjusted EBITDA from unconsolidated
affiliates
(55) - (60)
Distributable cash flow from
unconsolidated affiliates
50 - 55
Cash distributions to preferred
unitholders (f)
(101)
Distributable cash flow attributable to
CEQP (g)
$345 - $375
Less: Growth capital expenditures
35 - 45
Less: Distributions to common
unitholders
157
Free cash flow after distributions
(h)
$150 - $180
(a)
Includes gain (loss) on
modification/extinguishment of debt, net.
(b)
Includes change in fair value of commodity
inventory-related derivative contracts, gain (loss) on long-lived
assets and significant transaction and environmental related costs
and other items.
(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)
Includes cash distributions to preferred
unitholders and Crestwood Niobrara preferred unitholders.
(g)
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.
(h)
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
capital expenditures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210727005279/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
Crestwood Equity Partners (NYSE:CEQP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Crestwood Equity Partners (NYSE:CEQP)
Historical Stock Chart
From Apr 2023 to Apr 2024