PETROLOGISTICS LP 
By HOUSTON, July 24, 2013 /PRNewswire/ -- PetroLogistics LP (NYSE: PDH) (the "Partnership") announces its financial results and cash distribution for the second quarter of 2013. The distribution for the quarter ended June 30, 2013, is 30 cents per common unit.
Total sales in the second quarter were $159.4 million and net income was $41.4 million. The Partnership's reported results include certain items that impact comparability of financial results between reporting periods. Excluding the impact of these items, the Partnership's Adjusted EBITDA was $54.8 million and Adjusted net income was $37.8 million.
Cash available for distribution totaled $41.7 million for the second quarter of 2013. Adjusted net income, Adjusted EBITDA and cash available for distribution are non-GAAP financial measures. Please see "Non-GAAP Financial Measures" included later in this release for reconciliations of these Non-GAAP Financial Measures to the most directly comparable GAAP measures.
"Although propane-to-propylene spreads were at generally healthy levels over the course of the quarter, an unplanned outage during the month of June negatively impacted results," said Nathan Ticatch, President and Chief Executive Officer. "Since resuming normal operations the plant has run well, and with continued healthy margins the third quarter has started off on a solid footing."
Operations
The Partnership produced 255 million pounds of propylene and sold 265 million pounds of propylene during the second quarter of 2013. The Partnership recognized total sales of $159.4 million during the quarter, which included propylene sales of $156.0 million. The average polymer grade propylene benchmark price for the second quarter was 63.3 cents per pound.
Cost of sales was $111.1 million for the second quarter of 2013. The primary component of cost of sales is propane feedstock, which represented approximately 70% of total production costs for the second quarter of 2013. The average propane price for the quarter was 91.2 cents per gallon.
For the second quarter of 2013, the Partnership had a gross profit of $48.3 million, and the average propane-to-propylene spread[1] was 37.3 cents per pound.
Distribution
The second quarter 2013 distribution of 30 cents per common unit will be paid on August 14, 2013, to unitholders of record on August 5, 2013.
Conference Call Details
The 2013 second quarter results conference call will be held on Thursday, July 25, 2013 at 11 a.m. EDT. Callers may listen to the live presentation, which will be followed by a question and answer segment, by dialing (866) 813-5647 or (847) 619-6249 entering pass code 35263324. An audio webcast of the call will be available at www.petrologistics.com within the Investor Relations portion of the site under the Presentations section. A replay will be available by audio webcast and teleconference from 12:00 p.m. EDT on July 25, 2013, through 12:00 a.m. EDT on August 3, 2013. The replay teleconference will be available by dialing (888) 843-7419 or (630) 652-3042 and the reservation number 35263324.
About PetroLogistics LP
PetroLogistics LP is a master limited partnership which owns and operates the only U.S. propane dehydrogenation facility producing propylene from propane. The Partnership's headquarters and operations are located in Houston, Texas.
Investor Relations
Phone: 855-840-7140
E-mail: investor@petrologistics.com
Address: Investor Relations
600 Travis STE 3250
Houston, TX 77002
Forward-Looking Statements
Certain statements and information in this release may constitute "forward-looking statements." The words "believe," "expect," "anticipate," "plan," "intend," "foresee," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the volatile nature of our business and the variable nature of our distributions; the ability of our general partner to modify or revoke our distribution policy at any time; our ability to forecast our future financial condition or results; the cyclical nature of our business; competition from other propylene producers; our reliance on propane that we purchase from Enterprise Products Operating LLC; our reliance on other third-party suppliers; the supply and price levels of propane and propylene; the risk of a material decline in production at our propane dehydrogenation facility; potential operating hazards from accidents, fire, severe weather, floods or other natural disasters; the risk associated with governmental policies affecting the petrochemical industry; capital expenditures and potential liabilities arising from environmental laws and regulations; existing and proposed environmental laws and regulations, including those relating to climate change, alternative energy or fuel sources, and on the end-use and application of propylene; new regulations concerning the transportation of hazardous chemicals, risks of terrorism and the security of propane processing facilities; our lack of asset diversification; our dependence on a limited number of significant customers; our ability to comply with employee safety laws and regulations; potential disruptions in the global or U.S. capital and credit markets; our potential inability to complete our required turnarounds and other significant capital expenditure projects on time, within budget or both; additional risks, compliance costs and liabilities from expansions or acquisitions; our potential inability to successfully implement our business strategies; our reliance on certain members of our senior management team and other key personnel of our general partner; the potential development of integrated propylene facilities by competitors or our current customers, displacing us as suppliers; the potential shortage of skilled labor or loss of key personnel; our ability to secure appropriate and adequate debt facilities at a reasonable cost of capital; restrictions in our debt agreements; the dependence on our subsidiary for cash to meet our debt obligations; our limited operating history; risks relating to our relationship with our sponsors; and changes in our treatment as a partnership for U.S. income or state tax purposes.
For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with Securities and Exchange Commission, including our annual report on Form 10-K as filed with the SEC on March 8, 2013, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of the Partnership's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
[1] Propane-to-propylene spread is calculated as (PGP Contract Benchmark Price (cents per pound) - 1.2*(Propane Price (cents per gallon)/4.2)). This calculation assumes that it takes approximately 1.2 pounds of propane to make 1.0 pound of propylene and one gallon of propane weighs approximately 4.2 pounds.
PetroLogistics LP
Financial and Operational Data (all information in this
release is unaudited except as otherwise noted):
The following tables summarize the financial data and key
operating statistics for the Partnership for the three months
ended June 30, 2013 and 2012. Select balance sheet data is as
of June 30, 2013 and December 31, 2012.
Three Months
Ended
June 30,
--------
2013 2012
---- ----
($ in
millions)
(unaudited)
Operational Data
Propylene produced
(thousand pounds) 254,794 324,168
Propylene sold (thousand
pounds) 264,633 310,085
Propane-to-propylene
spread (cents per pound) 37.3 37.9
Consolidated Statement of
Comprehensive Income
(Loss):
Sales $159.4 193.8
Cost of sales* (111.1) (121.3)
------ ------
Gross profit $48.3 $72.5
General and administrative
expense (4.0) (2.1)
Equity-based compensation
expense (general and
administrative) (0.6) (43.5)
Management fee (1) - (0.2)
Development expense(2) (0.7) -
Unrealized gain (loss) on
derivatives 44.6 (32.2)
Realized loss on
derivatives (3) (39.2) (25.6)
----- -----
Operating income (loss) 48.4 (31.1)
Interest expense, net (6.4) (7.3)
Net income (loss) before
income tax expense 42.0 (38.4)
Income tax benefit
(expense) (0.6) 0.6
---- ---
Net income (loss) $41.4 $(37.8)
Adjusted net income
(excluding certain items) $37.8 $64.4
_______________
* Amounts shown are inclusive of depreciation and amortization
of $10.7 million and $8.3 million and equity-based
compensation expense of $0.5 million and $0.7 million for the
second quarters of 2013 and 2012, respectively.
Non-GAAP Financial Measures
To supplement the financial information presented in accordance with GAAP, additional measures are used that are known as "non-GAAP financial measures" in the evaluation of past performance and prospects for the future. These measures include Adjusted EBITDA and Adjusted net income. The presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about operating performance and ability to generate cash available for distribution, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing results of operations. These measures may exclude, for example, (i) the mark-to-market of derivative instruments that are related to underlying activities in another period or settled positions that are subject to the Omnibus Agreement, (ii) items that are not indicative of operating results and/or (iii) other items that we believe should be excluded in understanding operating performance. We have defined all such items as "Certain Items that Impact Comparability." These additional financial measures are reconciled to the most directly comparable measures as reported in accordance with GAAP, and should be viewed in addition to, and not in lieu of, our consolidated financial statements and footnotes.
Three Months
Ended
June 30,
--------
2013 2012
---- ----
($ in millions)
(unaudited)
Reconciliation of Net income (loss) to
adjusted net income (excluding certain items)
and to Adjusted EBITDA:
Net income (loss) $41.4 $(37.8)
Equity-based
compensation
expense (4) 1.1 44.2
Management fee (1) - 0.2
Unrealized (gain)
loss on
derivatives (44.6) 32.2
Realized loss on
derivatives (3) 39.2 25.6
Development Expense
(2) 0.7 -
--- ---
Adjusted net income
(excluding certain
items) $37.8 $64.4
Net income (loss) $41.4 $(37.8)
Adjustments:
Interest expense 6.4 7.3
Income tax expense
(benefit) 0.6 (0.6)
Depreciation,
amortization and
accretion 10.7 8.3
Equity-based
compensation
expense (4) 1.1 44.2
Unrealized (gain)
loss on
derivatives (44.6) 32.2
Realized loss on
derivatives (3) 39.2 16.0
---- ----
Adjusted EBITDA $54.8 $69.6
Three Months
Ended
June 30, 2013
-------------
($ in millions)
(unaudited)
Calculation of Cash Available for Distribution
Adjusted EBITDA $54.8
Adjustments
Less: Debt service (5.9)
Less: Capital
expenditures
exclusive of
prefunded items
(5) (2.0)
Less: Income tax -
Less: Reserve for
catalyst
turnaround (5.9)
Less: Distribution
payments on
awarded non-
vested LTIPs (0.6)
Less: Insurance
reimbursement (6) (2.1)
Plus: Adjustment
for inventory
purchased for
turnaround (7) 3.4
---
Cash available for
distribution $41.7
Common units
outstanding for
purposes of
calculating
distribution* 139,140,672
Per unit cash
distribution $0.30
*Represents outstanding units on date of record, August 5,
2013. Does not include participating non-vested awards
granted under our Long Term Incentive Plan (677,266 units at
August 5, 2013).
Cash available for distribution is not a recognized term under
GAAP. The measure most directly comparable to cash available
for distribution is cash provided by operating activities for
which we have reconciled to Adjusted EBITDA, and in addition
reconciled Adjusted EBITDA to net income (loss). Cash
available for distribution should not be considered in
isolation or as an alternative to net income (loss) or
operating income. Cash available for distribution as
reported by the Partnership may not be comparable to
similarly titled measures of other entities.
As of June 30, As of December 31,
-------------- ------------------
2013 2012
---- ----
($ in millions)
(unaudited)
Balance Sheet
Data:
Cash and cash
equivalents $46.6 $31.4
Working capital
(8) 91.2 108.4
Total assets 766.5 798.1
Total debt 365.0 341.3
Partners' capital 359.1 329.9
Three Months Ended
June 30,
--------
2013 2012
---- ----
($ in millions)
(unaudited)
Other Financial
Data:
Cash flows
provided by
operating
activities $50.5 $8.8
Cash flows used
in investing
activities (9.1) (3.7)
Cash flows
provided by
(used) in
financing
activities (37.2) 20.6
----- ----
Net cash inflow $4.2 $25.7
Capital
expenditures $9.1 $3.7
Reconciliation of
Cash Flows From
Operating
Activities to
Adjusted EBITDA:
Cash provided by
operating
activities $50.5 8.8
Changes in
current assets
and current
liabilities (40.8) 38.0
Income tax
expense
(benefit) 0.6 (0.6)
Change in
deferred taxes (0.6) 1.0
Amortization of
deferred
financing costs (0.5) (0.9)
Interest expense 6.4 7.3
Realized loss on
derivatives (3) 39.2 16.0
---- ----
Adjusted EBITDA $54.8 $69.6
(1) Management fee consists of
the expense incurred through
our advisory services agreement
with Lindsay Goldberg LLC. This
agreement terminated upon the
closing of the Initial Public
Offering (IPO) in May 2012, and
the amount outstanding at the
time was waived by Lindsay
Goldberg LLC.
(2) Development expense includes
preliminary engineering and
design work and other expenses
for capital projects which do
not qualify for capitalization
under GAAP.
(3) Effective May 9, 2012,
pursuant to the Omnibus
Agreement, PL Manufacturing and
the PL Manufacturing Members
are responsible for making
quarterly capital contributions
to us in an amount equal to the
net amount due to the propane
swap counterparty for realized
losses under the Propane Swaps
for the applicable fiscal
quarter. On April 19, 2013,
we, PL Manufacturing and the
counterparty to the propane
swaps agreed to terminate the
propane swaps remaining as of
May 1, 2013. We paid the
counterparty a $34.4 million
cancellation payment, for which
we were promptly reimbursed by
PL Manufacturing. PL
Manufacturing and the PL
Manufacturing Members will
contribute a final payment of
approximately $4.8 million to
the Partnership in August 2013
for realized losses for the
settled April 2013 propane swap
position. During the third
quarter of 2012, we were
reimbursed $16.0 million for
losses incurred for the period
from the date of the completion
of our IPO (May 9, 2012) to
June 30, 2012. Excluded from
adjusted EBITDA is $9.6 million
for realized hedge losses
incurred during the second
quarter of 2012, prior to the
effectiveness of the Omnibus
Agreement. The total realized
loss on derivatives for the
three months ended June 30,
2012, was added back for
purposes of calculating
adjusted net income.
(4) The 2013 expense consists of
non-cash unit-based
compensation granted to
employees and independent
directors. The 2012 expense
consists of $43.7 million of
non-cash compensation expense
for outstanding pre-IPO equity
awards that were granted to
employees and management of our
Predecessor and affiliated
companies and borne by the pre-
IPO investors. These awards
were granted starting in 2008
and became fully vested in
conjunction with the closing of
the IPO. There is no remaining
expense to be recognized for
these awards. In addition, the
2012 expense also consists of
$0.5 million of non-cash
unit-based compensation
granted to employees and
independent directors.
(5) Represents one-fourth of
our estimated 2013 maintenance
capital spending, excluding
turnaround and profit
enhancement capital.
(6) The insurance reimbursement
of $2.1 million represents
proceeds received for insurance
claims incurred in prior
periods. This adjustment
results in a net zero impact on
Cash Available for
Distribution.
(7) The adjustment for inventory
purchased for the turnaround
represents the difference
between the actual cost of
sales and the cost of sales
calculated excluding the impact
of the purchased inventory.
(8) Working capital is defined
as current assets, including
cash, less current liabilities,
excluding the current portion
of long-term debt and the fair
value of derivative assets and
liabilities.
SOURCE PetroLogistics LP
