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Buckeye Partners L.P. L.P. Units Reports Operating Results (10-Q)

May 07, 2010 | About:
10qk

10qk

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Buckeye Partners L.P. L.P. Units (BPL) filed Quarterly Report for the period ended 2010-03-31.

Buckeye Partners L.p. L.p. Units has a market cap of $2.78 billion; its shares were traded at around $54 with a P/E ratio of 15.2 and P/S ratio of 1.6. The dividend yield of Buckeye Partners L.p. L.p. Units stocks is 6.9%. Buckeye Partners L.p. L.p. Units had an annual average earning growth of 4% over the past 10 years.BPL is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Adjusted EBITDA increased by $3.4 million, or 3.9%, to $90.1 million in the three months ended March 31, 2010 from $86.7 million in the corresponding period in 2009. The Terminalling & Storage segment and the Pipeline Operations segment were primarily responsible for this increase in Adjusted EBITDA. The Terminalling & Storage segments Adjusted EBITDA increased by $13.4 million in the three months ended March 31, 2010 as compared to the corresponding period in 2009, driven primarily by growth in fees, storage and rental revenues, the contribution from terminals acquired in November 2009 (see Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements), favorable settlement experience and lower operating expenses. The Pipeline Operations segments Adjusted EBITDA increased by $1.9 million in the three months ended March 31, 2010 as compared to the corresponding period in 2009, primarily due to increased tariffs, favorable settlement experience and lower overall operating expenses, which more than offset the impact of lower volumes transported during the three months ended March 31, 2010 compared to the corresponding period in 2009. The Energy Services segments Adjusted EBITDA decreased by $9.0 million in the three months ended March 31, 2010 as compared to the corresponding period in 2009 as a result of lower margins realized on products sold as a result of weakened market conditions during the three months ended March 31, 2010, partially offset by increased volumes of product sold. The Natural Gas Storage segments Adjusted EBITDA decreased by $2.5 million in the three months ended March 31, 2010 as compared to the corresponding period in 2009 as a result of general market conditions, which led to increased hub service expense transactions partially offset by increased hub service revenue transactions. The Development & Logistics segments Adjusted EBITDA decreased by $0.4 million in the three months ended March 31, 2010 as compared to the corresponding period in 2009 as a result of reduced operating services and construction revenues. Further contributing to the increase in Adjusted EBITDA was the continued effectiveness of cost control measures we implemented in 2009. Largely as a result of these efforts, costs decreased by approximately $4.6 million during the three months ended March 31, 2010 as compared to the corresponding period in 2009. Income from equity investments increased by $0.6 million in the three months ended March 31, 2010 as compared to the corresponding

Revenue was $731.1 million for the three months ended March 31, 2010, which is an increase of $314.3 million, or 75.4%, from the three months ended March 31, 2009. This overall increase was caused primarily by an increase of $299.7 million in revenues from the Energy Services segment, an increase of $11.8 million in revenues from the Terminalling & Storage segment and an increase of $10.3 million in revenues from the Natural Gas Storage segment. The increase in revenues in the Energy Services segment resulted from an overall increase in refined petroleum product prices and volumes of product sold in the first quarter of 2010 as compared to the corresponding period in 2009. The increase in revenues in the Terminalling & Storage segment resulted primarily from increased fees, storage and rental revenue, including $1.7 million in storage fees from previously underutilized tankage identified in connection with our best-practice initiatives, increased revenue from terminals acquired in November 2009 and favorable settlement experience. The increase in revenues from the Natural Gas Storage segment resulted from increased activity from the commencement of operations of the Kirby Hills Phase II expansion project in June 2009. These increases in revenue were partially offset by a decrease of $2.7 million in revenues from the Pipeline Operations segment and a decrease of $1.6 million in revenue from the Development & Logistics segment. Revenue decreased in the Pipeline Operations segment primarily due to lower transportation volumes and lower miscellaneous revenues, partially offset by increased tariffs, favorable settlement experience and increased revenues from the pipeline assets acquired in November 2009. Revenue decreased in the Development & Logistics segment primarily due to decreased construction activities.

Total costs and expenses were $660.2 million for the three months ended March 31, 2010, which is an increase of $313.5 million, or 90.4%, from the corresponding period in 2009. Total costs and expenses reflect an increase in refined petroleum product prices, which, coupled with an increase in volume sold, resulted in a $309.9 million increase in the Energy Services segments cost of product sales in the 2010 period as compared to the 2009 period. Total costs and expenses also reflect an increase of $13.1 million in the Natural Gas Storage segments costs and expenses resulting from higher costs associated with hub services transactions caused by general market conditions. Total costs and expenses also include an increase of $1.1 million in depreciation and amortization and an increase of $1.2 million in non-cash unit-based compensation expense, which are not components of Adjusted EBITDA as presented in the reconciliation above. These increases in total costs and expenses were largely offset by decreases of $3.7 million, $1.1 million and $0.8 million in the costs and expenses of the Pipeline Operations segment, the Development & Logistics segment and the Terminalling & Storage segment, respectively. The decrease in the costs and expenses of the Pipeline Operations segment was driven by lower payroll and benefits costs, which was primarily attributable to the organizational restructuring that occurred in 2009, which resulted in reduced headcount, as well as from lower contract service activities and lower environmental remediation expenses. The decrease in the costs and expenses of the Development & Logistics segment was primarily due to reduced construction contract activity and reduced operating services activities. The decrease in the costs and expenses of the Terminalling & Storage segment primarily resulted from lower environmental remediation expenses. Total costs and expenses for the three months ended March 31, 2010 reflect the effectiveness of cost management efforts we implemented in 2009.

Adjusted EBITDA was driven primarily by the benefit of higher tariffs of $2.5 million, favorable settlement experience of $2.0 million and increased revenues of $0.6 million from pipeline assets acquired in November 2009. The Pipeline Operations segments improved Adjusted EBITDA was also due to a $0.6 million increase in income from equity investments and a $2.6 million decrease in operating expenses. These increases in Adjusted EBITDA were partially offset by a decrease of $4.8 million in transportation revenues resulting from lower volumes transported in the three months ended March 31, 2010 compared with the corresponding period in 2009 and lower volumes resulting from the sale of Buckeye NGL Pipeline on January 1, 2010 (see Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements) and a $3.1 million decrease in miscellaneous other revenue. The revenue and expense factors affecting the variance in Adjusted EBITDA are more fully discussed below.

Total costs and expenses from the Pipeline Operations segment were $50.6 million for the three months ended March 31, 2010, which is a decrease of $3.7 million, or 6.8%, from the corresponding period in 2009. Total costs and expenses include decreases in (i) payroll and benefits costs of $2.2 million, pursuant to our best-practice initiative in 2009; (ii) contract service activities of $1.1 million at customer facilities connected to our refined petroleum products pipelines; (iii) environmental remediation expenses of $1.5 million and (iv) product costs of $0.4 million as a result of reduced volumes of product sold to a wholesale distributor. These decreases were partially offset by an increase of $0.4 million in professional fees, as well as increases in other expenses, primarily consisting of an increase of $0.6 million in bad debt expense. Total costs and expenses also include an increase of $0.7 million in non-cash unit-based compensation expense, which is not a component of Adjusted EBITDA as presented in the reconciliation above.

Total costs and expenses from the Terminalling & Storage segment were $18.9 million for the three months ended March 31, 2010, which is a decrease of $0.8 million, or 3.8%, from the corresponding period in 2009. Total costs and expenses reflect a $2.4 million decrease in environmental remediation expenses and a decrease in payroll and benefits costs of approximately $0.6 million, partially offset by a $1.0 million increase in operating expenses for terminals acquired in November 2009 and a $0.6 million increase in bad debt expense. Total costs and expenses also include an increase of $0.6 million in depreciation and amortization and an increase of $0.2 million in non-cash unit-based compensation expense, which are not components of Adjusted EBITDA as presented in the reconciliation above.

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