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World Point Terminals announces financial results for FY15

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Hydrocarbon Engineering,


World Point Terminals, LP (the partnership), a Delaware limited partnership has announced its financial results for the year ended 31 December 2015.

“I am pleased with the operating performance and full year financial results”, said Ken Fenton, President and Chief Operating Officer of WPT GP, LLC, the general partner of the partnership. “2015 was a challenging year, but our conservative business strategy left us well poised to overcome those challenges. We have grown the business steadily over the last year, both in terms of returning tank capacity to service at our mobile terminals and building relationships with new and existing customers. As a result, 91% of our terminal capacity is currently in service and under contract.”

Financial summary

A summary of the financial results for the year ended 31 December 2015 compared to the year ended 31 December 2014, includes:

  • Revenues for the year ended 31 December 2015 increased by US$6 million, or 7%, compared to the year ended 31 December 2014.
  • Base storage services fees increased by US$5.7 million, or 8%, from the year ended 31 December 2014, primarily as a result of the addition of the Blakeley Island and Chickasaw terminals in the 2Q14, and the addition of the Greensboro terminal in the 1Q15, partially offset by reduced base storage fees at the Galveston terminal.
    Excess storage fees decreased by US$300 000 or 30%, from the year before.

  • Ancillary and additive services fees increased by US$600 000, or 4%, from the year ended 31 December 2014, primarily as a result of the addition of the Blakeley Island and Chickasaw terminals in the 2Q14, the addition of the Greensboro terminal in the 1Q15 and additional polymer processing activity at the Granite City terminal, partially offset by reduced customer activity at the Galveston terminal.
  • Operating expenses for the year ended 31 December 2015 increased by US$1.6 million, or 6%, compared to the year ended 31 December, 2014. This increase was primarily attributable to a (i) US$1.4 million increase in labour costs due to the acquisition of the Chickasaw, Blakeley Island, Greensboro and Salisbury terminals and normal wage increases, (ii) US$500 000 increase in property taxes, (iii) US$300 000 increase in insurance premiums and (iv) US$300 000 million increase in repairs and maintenance due to periodic tank cleanings and repairs, offset by a US$400 000 decrease in utility costs due to lower natural gas cost used for heating and a US$500 000 decrease in other expenses including a (i) US$400 000 decrease in wharfage fees at the Galveston terminal, (ii) US$200 000 decrease in fuel additive costs, offset by a US$100 000 increase in tax and license expense.
  • Selling, general and administrative expenses for the year ended 31 December, 2015 decreased by US$900 000, or 13%, compared to the year ended 31 December, 2014. Selling, general and administrative expenses decreased primarily as a result of a US$900 000 decrease in IPO expenses incurred in connection with final documentation of the collateral package for the credit facility, a US$300 000 decrease in professional fees for acquisition diligence, a US$300 000 decrease in legal fees and a US$200 000 decrease in partnership filing fees, offset by a US$600 000 increase in unit based compensation and a US$200 000 increase in administrative expense.
  • Depreciation and amortisation expense for the year ended 31 December, 2015 increased by $5.3 million, or 26%, compared to the year ended 31 December, 2014. This increase is primarily due to (i) normal capital expenditures, (ii) the acquisition of two terminals in Mobile, Alabama in the second quarter of 2014, and (iii) the acquisition of the Greensboro terminal in the 1Q15.
  • Income from joint venture for the year ended 31 December, 2015 increased US$400 000, or 72% compared to the year ended 31 December, 2014 resulting from the partnership’s investment in the Cenex joint venture. The increase is attributable to the addition of three tanks totalling approximately 236 000 bbls of storage capacity at Cenex during 2015.
  • Interest expense for the year ended 31 December, 2015 decreased slightly compared to the year ended 31 December, 2014.
  • Interest and dividend income for the year ended 31 December, 2015 increased US$100 000 compared to the year ended 31 December, 2014. This increase was attributable to increased amounts of short term investments during the first half of 2015.
  • Gain (loss) on investments for the year ended 31 December, 2015 increased US$100 000 compared to the year ended 31 December, 2014. The increase was primarily attributable to a US$200 000 decrease in the loss on sale of investments, offset by a US$200 000 decrease in mark to market gain on investment.
  • Income tax expense for the year ended 31 December, 2015 increased slightly compared to the year ended 31 December, 2014.
  • Net income for the year ended 31 December, 2015 increased by US$600 000 compared to the year ended 31 December, 2014.
  • Adjusted EBITDA, as defined by the partnership, increased $5.8 million for the year ended 31 December, 2015 compared with the year ended 31 December, 2014.

Non-GAAP financial measure

In addition to the GAAP results provided in the annual report on Form 10-K, World Point Terminals provided a non-GAAP financial measure, Adjusted EBITDA. Adjusted EBITDA defined as: net income (loss) before net interest expense, income tax expense and depreciation and amortisation expense, as further adjusted to remove gain or loss on investments and on the disposition of assets and non-recurring items, such as the IPO expenses.

Adjusted EBITDA is a non-GAAP supplemental financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess: 

  • Operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or financing methods.
  • The ability of assets to generate sufficient cash flow to make distributions to unit holders.
  • The ability to incur and service debt and fund capital expenditures.
  • The viability of acquisitions and other capital expenditure projects and the returns on investment in various opportunities.

The presentation of adjusted EBITDA will provide useful information to investors in assessing the financial condition and results of operations at World Point Terminals. The GAAP measure most directly comparable to adjusted EBITDA is net income. The non-GAAP financial measure of adjusted EBITDA should not be considered as an alternative to GAAP net income. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income. Adjusted EBITDA should be considered in isolation, or as a substitute for analysis, of the results as reported under GAAP. As adjusted EBITDA may be defined differently by other companies in the oil and gas and storage industry, the definitions of adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

Operational update

During 2014, some customers did not renew their contracts. As a result, approximately 580 000 bbls of tankage was placed under ‘spot’ (month to month) contracts at the Galveston terminal. As of 31 December 2015, 518 000 bbls of tankage remain under spot contracts at the Galveston terminal. There is no certainty that those tanks will be under contract throughout 2016. In addition, there is no certainty that contracts expiring in 2016 will be extended or that any extension or recontracting will result in the same level of revenue to the partnership.

World Point Terminals, LP is a master limited partnership that owns, operates, develops and acquires terminals and other assets relating to the storage of light refined products, heavy refined products and crude oil. The partnership’s storage terminals are strategically located in the East Coast, Gulf Coast and Midwest regions of the US. The partnership is headquartered in St. Louis, Missouri.


Adapted from press release by Francesca Brindle

Read the article online at: https://www.hydrocarbonengineering.com/tanks-terminals/30032016/world-point-terminals-announce-fy15-financial-results-2891/


 

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