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American Midstream Reports Fourth Quarter and Full Year 2018 Results


HOUSTON, April 1, 2019 /PRNewswire/ — American Midstream Partners, LP (NYSE: AMID) (“American Midstream” or the “Partnership”) today reported financial and operational results for the three and twelve months ended December 31, 2018.  Net loss attributable to the Partnership was $7.8 million for the year ended December 31, 2018 compared to $223.0 million for 2017.  Adjusted EBITDA (1) was $184.6 million for the year ended December 31, 2018, compared to $176.4 million for 2017.  The Partnership’s distributable cash flow was $69.8 million for the year ended December 31, 2018, compared to $91.1 million for 2017.

SEGMENT PERFORMANCE

Three months ended

December 31,

Twelve months ended

December 31,

2018

2017

2018

2017

Offshore Pipelines and Services

$45,636

$22,871

$134,106

$103,970

Gas Gathering and Processing Services

11,847

10,946

51,888

48,053

Liquid Pipelines and Services

10,771

9,698

40,542

39,870

Natural Gas Transportation Services

8,746

6,306

36,130

23,005

Terminalling Services

3,172

6,869

22,814

29,956

Total Segment Gross Margin (1)

$80,172

$56,690

$285,480

$244,854

(1) Adjusted EBITDA and Total Segment Gross Margin are Non-GAAP supplemental financial measures.  Please read “Non-GAAP Financial Measures” in this press release.

Offshore Pipelines and Services

Segment gross margin was $45.6 million for the three months ended December 31, 2018, an increase of 100% compared to the same period in 2017.  The increase was primarily a result of a 32% increase in throughput volumes on the Partnership’s offshore consolidated assets, as well as rate and imbalance adjustments on the Destin and Okeanos pipelines.  Quarterly cash distributions from unconsolidated affiliates, Delta House, Destin and Okeanos, were $29.8 million for the three months ended December 31, 2018, compared to $29.6 million for the same period in 2017.

Gas Gathering and Processing Services

Segment gross margin was $11.8 million for the three months ended December 31, 2018, an increase of 8% compared to the same period in 2017.  The increase reflected producer development activity across the Partnership’s Gas Gathering and Processing Services segment, which contributed to a 20% increase in throughput volumes on the Partnership’s Permian Basin assets compared to the same period in 2017.

Liquid Pipelines and Services

Segment gross margin was $10.8 million for the three months ended December 31, 2018, an increase of 11% as compared to the same period in 2017.  The Partnership benefited from increased producer activity across the segment, which contributed to an 11% increase in throughput volumes on the Partnership’s consolidated assets compared to the same period in 2017.  Quarterly cash distributions from unconsolidated affiliates were $3.7 million, a 60% increase compared to the same period in 2017.  The increase in distributions was driven by a 43% increase in throughput volumes, primarily attributable to the Partnership’s interest in the Cayenne pipeline, which commenced operation in January of 2018.

Natural Gas Transportation Services

Segment gross margin was $8.7 million for the three months ended December 31, 2018, a 39% increase compared to the same period in 2017.  The increase was primarily attributable to the acquisition of Trans-Union pipeline in November 2017.  Throughput volumes grew 43% compared to the same period in 2017.

Terminalling Services

Segment gross margin was $3.2 million for the three months ended December 31, 2018, a decrease of 54% compared to the same period in 2017.  The decrease in gross margin was primarily a result of the sale of the Partnership’s Marine Products Terminals, on August 1, 2018, for approximately $210 million and the Partnership’s Refined Products Terminals, on December 20, 2018, for approximately $125 million.

Pending Merger

On March 18, 2019, the Partnership announced it had entered into a definitive agreement and plan of merger with an affiliate (the “Purchaser”) of ArcLight Energy Partners Fund V, L.P. (“ArcLight”). The Purchaser will acquire, for cash, in a merger transaction, all outstanding common units of the Partnership not already held by affiliates of ArcLight, at a price of $5.25 per common unit.

The merger is expected to close in the second quarter of 2019.  The merger is subject to customary closing conditions, including an amendment to the Partnership’s credit agreement.  The Partnership will not make any cash distributions on its common units or preferred units prior to the closing of the merger.

Upon closing of the merger, the Partnership will be a wholly owned subsidiary of the Purchaser and its common units will cease to be publicly traded.

As a result of the pending merger, the Partnership will not hold a conference call in connection with the issuance of this earnings release.

CAPITAL MANAGEMENT

As of December 31, 2018, the Partnership had approximately $1.0 billion of total debt outstanding, comprising of $515 million outstanding under its revolving credit facility, $425 million in outstanding 8.50% senior unsecured notes and $88 million in outstanding non-recourse senior secured notes. The Partnership had a consolidated total leverage ratio of approximately 5.8 times at December 31, 2018.

For the three months ended December 31, 2018, capital expenditures totaled approximately $24 million, including approximately $6 million of maintenance capital expenditures.  For the twelve months ended December 31, 2018, capital expenditures totaled approximately $97 million, including approximately $16 million of maintenance capital expenditures.

Non-GAAP Financial Measures

This press release and the accompanying tables include supplemental non-GAAP financial measures, including “Adjusted EBITDA,” “Total Segment Gross Margin,” “Operating Margin,” and “Distributable Cash Flow.” For definitions and required reconciliations of supplemental non-GAAP financial measures to the nearest comparable GAAP financial measures, please read “Note About Non-GAAP Financial Measures” set forth in a later section of this press release.

About American Midstream Partners, LP

American Midstream Partners, LP is a limited partnership formed to provide critical midstream infrastructure that links producers of natural gas, crude oil, NGLs and condensate to end-use markets. American Midstream’s assets are strategically located in some of the most prolific offshore and onshore basins in the Permian, Eagle Ford, East Texas, Bakken and Gulf Coast. American Midstream owns or has an ownership interest in approximately 5,100 miles of interstate and intrastate pipelines, as well as ownership in gas processing plants, fractionation facilities, an offshore semisubmersible floating production system with nameplate processing capacity of 90 MBbl/d of crude oil and 220 MMcf/d of natural gas; and terminal sites with approximately 3.0 MMBbls of storage capacity.

For more information about American Midstream Partners, LP, visit: www.americanmidstream.com. The content of our website is not part of this release.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. We have used the words “could,” “expect,” “intend,” “may,” “will,” “would,” and similar terms and phrases to identify forward-looking statements in this press release. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Many of the factors that will determine these results are beyond our ability to control or predict. These factors include actions by ArcLight, lenders, regulatory agencies, and other third parties, changes in market conditions, and information described in our public disclosure and filings with the SEC, including the risk factors and other information that will be included in our Annual Report on Form 10-K for the year ended 2018. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. The forward-looking statements herein speak as of the date of this press release. We undertake no obligation to update such statements for any reason, except as required by law.

Investor Contact
American Midstream Partners, LP
Mark Schuck
Director of Investor Relations
(346) 241-3497
[email protected]

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)

December 31,
2018

December 31,
2017

Assets

Cash and cash equivalents

$

9,069

$

8,782

Restricted cash

30,868

20,352

Accounts receivable, net of allowance for doubtful accounts of $591 and $225 as of
      December 31, 2018 and December 31, 2017, respectively

76,632

98,132

Inventory and other current assets

27,422

26,386

      Total current assets

143,991

153,652

Property, plant and equipment, net

997,708

1,095,585

Goodwill

51,723

128,866

Restricted cash – long term

5,083

5,045

Intangible and other assets, net

133,992

174,010

Investment in unconsolidated affiliates

337,796

348,434

Other assets, net

17,403

17,874

Total assets

$

1,687,696

$

1,923,466

Liabilities, Equity and Partners’ Capital

Total current liabilities (1)

$

649,892

$

137,493

Asset retirement obligations

67,451

66,194

Other long-term liabilities

18,491

2,080

Long-term debt

500,739

1,201,456

Deferred tax liability

1,421

8,123

      Total liabilities

1,237,994

1,415,346

Convertible preferred units

324,624

317,180

Total Equity and partners’ capital

125,078

190,940

Total liabilities, equity and partners’ capital

$

1,687,696

$

1,923,466

__________________________

(1)  Total current liabilities include $514.8 million outstanding under the Partnership’s revolving credit facility, which matures September

2019.

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except for per unit amounts)

Three months ended

December 31,

Twelve months ended

December 31,

2018

2017

2018

2017

Revenues

$

176,962

$

163,037

$

805,354

$

651,435

Operating expenses:

     Cost of sales

130,092

114,485

592,040

457,371

     Direct operating expenses

22,082

25,437

87,677

82,256

     Corporate expenses

19,786

27,489

89,706

112,058

     Termination fee

17,000

     Depreciation, amortization and accretion

20,897

24,614

87,171

103,448

     Gain on sale of assets, net

4,373

(95,118)

(4,063)

     Impairment of long-lived assets and intangible assets

1,610

116,609

1,610

116,609

     Impairment of goodwill

77,961

77,961

           Total operating expenses

198,840

386,595

780,086

945,640

Operating income (loss)

(21,878)

(223,558)

25,268

(294,205)

Other income (expense), net:

     Interest expense, net of capitalized interest

(26,576)

(15,428)

(82,410)

(66,465)

Other income (expense), net

498

4,006

560

36,254

Earnings in unconsolidated affiliates

34,187

13,269

81,929

63,050

Income (loss) from continuing operations before income taxes

(13,769)

(221,711)

25,347

(261,366)

Income tax expense

(950)

1,376

(32,995)

(1,235)

Income (loss) from continuing operations

(14,719)

(220,335)

(7,648)

(262,601)

Income from discontinued operations, including gain on sale

1,910

44,095

Net income (loss)

(14,719)

(218,425)

(7,648)

(218,506)

Net income attributable to noncontrolling interests

(33)

(1,087)

(116)

(4,473)

Net income (loss) attributable to the Partnership

$

(14,752)

$

(219,512)

$

(7,764)

$

(222,979)

Limited Partners’ net income (loss) per common unit:

Basic and diluted:

Income (loss) from continuing operations

$

(0.41)

$

(4.32)

$

(0.75)

$

(5.70)

Income from discontinued operations

0.03

0.85

Net income (loss) per common unit

$

(0.41)

$

(4.29)

$

(0.75)

$

(4.85)

Weighted average number of common units outstanding

Basic and diluted

53,239

52,697

53,136

52,043

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

Twelve months ended

December 31,

2018

2017

Net cash provided by operating activities

$

5,175

$

9,620

Net cash provided by (used in) investing activities

248,800

(40,491)

Net cash used in financing activities

(243,134)

(264,180)

Net decrease in Cash, Cash equivalents, and Restricted cash

10,841

(295,051)

Cash, cash equivalents and restricted cash

Beginning of period

34,179

329,230

End of period

$

45,020

$

34,179

American Midstream Partners, LP and Subsidiaries

Reconciliation of Net income (loss) attributable to the Partnership to

Adjusted EBITDA and Distributable Cash Flow

(Unaudited, in thousands)

Three months ended

December 31,

Twelve months ended

December 31,

2018

2017

2018

2017

Reconciliation of Net loss attributable to the Partnership to Adjusted

EBITDA and DCF:

Net loss attributable to the Partnership

$

(14,752)

$

(219,512)

$

(7,764)

$

(222,979)

Depreciation, amortization and accretion

20,897

24,593

87,171

102,766

Interest expense, net of capitalized interest

26,576

15,428

82,410

66,465

Amortization of deferred financing costs

(2,343)

(1,507)

(7,485)

(5,117)

Gain on extinguishment of debt

(1,870)

Debt issuance costs paid

2,276

3,470

6,977

5,705

Unrealized loss (gain) on commodity derivatives, net

(350)

(498)

2

Non-cash equity compensation expense

1,112

1,965

4,641

8,032

Transaction expenses

5,869

11,705

28,791

42,860

Termination fee

17,000

Income tax expense

950

(1,376)

32,995

1,235

Impairment of long-lived assets and intangible assets

1,610

116,609

1,610

116,609

Impairment of goodwill

77,961

77,961

Discontinued operations

(965)

(37,212)

Distributions from unconsolidated affiliates

33,453

31,870

97,713

90,846

General Partner contribution

17,732

34,614

Earnings in unconsolidated affiliates

(34,187)

(13,269)

(81,929)

(63,050)

Other income

257

(153)

(132)

(409)

(Gain) loss on sale of assets, net

4,373

(95,118)

(4,063)

Gain on revaluation of equity interest

(3,616)

(35,999)

                     Adjusted EBITDA

$

45,741

$

42,705

$

184,614

$

176,394

Interest expense, net of capitalized interest

(26,576)

(15,428)

(82,410)

(66,465)

Amortization of deferred financing costs

2,343

1,507

7,485

5,117

Unrealized (loss) gain on interest rate swaps

7,277

(2,897)

1,154

(1,109)

Gain on extinguishment of debt

1,870

Letter of credit fees

307

21

517

Maintenance capital

(6,339)

(2,322)

(15,970)

(8,892)

Preferred unit distributions

(25,061)

(16,311)

                  Distributable cash flow

$

22,446

$

23,872

$

69,833

$

91,121

American Midstream Partners, LP and Subsidiaries

Reconciliation of Total Gross Margin to Net loss attributable to the Partnership

(Unaudited, in thousands)

Three months ended

December 31,

Twelve months ended

December 31,

2018

2017

2018

2017

Total Segment Gross Margin

$

80,172

$

56,690

$

285,480

$

244,854

Direct operating expenses

(21,297)

(21,047)

(78,012)

(70,385)

Operating margin

58,875

35,643

207,468

174,469

Gains (losses) on commodity derivatives, net

2,566

(86)

2,036

(119)

Corporate expenses

(19,784)

(27,488)

(89,706)

(112,058)

Termination fee

(17,000)

Depreciation, amortization and accretion

(20,897)

(24,615)

(87,171)

(103,448)

Gain (loss) on sale of assets, net

(4,373)

95,118

4,063

Impairment of long-lived assets and intangible assets

(1,610)

(116,609)

(1,610)

(116,609)

Impairment of goodwill

(77,961)

(77,961)

Interest expense, net of capitalized interest

(26,576)

(15,428)

(82,410)

(66,465)

Other income, net

498

4,005

560

36,254

Other, net

(2,468)

829

(1,938)

508

Income tax expense

(950)

1,375

(32,995)

(1,235)

Income (loss) from discontinued operations, including gain on sale

1,910

44,095

Net income attributable to noncontrolling interest

(33)

(1,087)

(116)

(4,473)

Net income (loss) attributable to the Partnership

$

(14,752)

$

(219,512)

$

(7,764)

$

(222,979)

American Midstream Partners, LP and Subsidiaries

Segment Financial and Operating Data

(Unaudited, in thousands, except for operating and pricing data)

Three months ended

December 31,

Twelve months ended

December 31,

2018

2017

2018

2017

Segment Financial and Operating Data:

Offshore Pipelines and Services Segment

Financial data:

          Segment gross margin

$

45,636

$

22,871

$

134,106

$

103,970

Direct operating expenses

7,373

6,988

30,578

17,040

     Segment operating margin

$

38,263

$

15,883

$

103,528

$

86,930

Distributions:

         Destin/Okeanos

$

12,726

$

12,000

$

46,205

$

38,667

         Delta House

17,053

17,572

40,385

43,746

              Total

$

29,779

$

29,572

$

86,590

$

82,413

     Operating data:

          Average throughput (MMcfe/d)

557.2

422.8

498.1

497.1

          Average Destin/Okeanos throughput (MMcf/d)

1,038.5

1,035.1

1,029.9

1,094.0

          Average Delta House throughput (MBoe/d)

89.4

63.3

68.7

101.2

Gas Gathering and Processing Services Segment

Financial data:

Segment gross margin

$

11,847

$

10,946

$

51,888

$

48,053

Direct operating expenses

8,246

8,028

28,000

34,040

                Segment operating margin

$

3,601

$

2,918

$

23,888

$

14,013

Operating data:

Average throughput (MMcf/d)

176.8

192.7

170.8

202.0

Liquid Pipelines & Services

Financial data:

          Segment gross margin

$

10,771

$

9,698

$

40,542

$

39,870

Direct operating expenses

2,883

5,152

11,162

13,061

     Segment operating margin

$

7,888

$

4,546

$

29,380

$

26,809

Distributions:

         Distributions from unconsolidated affiliates

$

3,675

$

2,298

$

11,123

$

7,334

         Operating data:

             Average unconsolidated affiliate throughput (MBbls/d)

128.9

90.2

117.1

87.7

             Average other liquid pipelines throughput (MBbls/d)

79.5

71.6

76.8

67.4

Natural Gas Transportation Services Segment

Financial data:

Segment gross margin

$

8,746

$

6,306

$

36,130

$

23,005

Direct operating expenses

2,795

883

8,272

6,244

     Segment operating margin

$

5,951

$

5,423

$

27,858

$

16,761

Operating data:

Average throughput (MMcf/d)

612.4

429.4

678.9

394.7

Terminalling Services Segment

Financial data:

Segment revenue

$

7,414

$

16,497

$

45,363

$

54,541

Cost of sales

3,457

5,242

12,885

12,715

Direct operating expenses

785

4,386

9,664

11,870

     Segment operating margin

$

3,172

$

6,869

$

22,814

$

29,956

Note About Non-GAAP Financial Measures

Total segment gross margin, operating margin, Adjusted EBITDA and distributable cash flow are performance measures that are non-GAAP financial measures. Each has important limitations as an analytical tool because they exclude some, but not all, items that affect the most directly comparable GAAP financial measures. Management compensates for the limitations of these non-GAAP measures as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these data points into management’s decision-making process.

You should not consider total segment gross margin, operating margin, Adjusted EBITDA or distributable cash flow in isolation or as a substitute for, or more meaningful than analysis of, our results as reported under GAAP. Total segment gross margin, operating margin, Adjusted EBITDA or distributable cash flow may be defined differently by other companies in our industry. Our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Adjusted EBITDA is a supplemental non-GAAP financial measure used by our management and external users of our financial statements, such as investors, commercial banks, research analysts and others, to assess: the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; the ability of our assets to generate cash flow to make cash distributions to our unitholders and our General Partner; our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure; and the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.

We define Adjusted EBITDA as net income (loss) attributable to the Partnership, plus depreciation, amortization and accretion expense (“DAA”) excluding non-controlling interest share of  DAA, interest expense, net of capitalized interest excluding , debt issuance costs paid during the period,  unrealized gains (losses)  on commodity derivatives, non-cash charges such as non-cash equity compensation expense, charges that are unusual such as transaction expenses primarily associated with our acquisitions, income tax expense, distributions from unconsolidated affiliates and General Partner’s contribution, less earnings in unconsolidated affiliates, discontinued operations, gains (losses) that are unusual, such as gain on revaluation of equity interest and gain (loss) on sale of assets, net, and other non-recurring items that impact our business, such as construction and operating management agreement income (“COMA”) and other post-employment benefits plan net periodic benefit.  The GAAP measure most directly comparable to our performance measure Adjusted EBITDA is Net income (loss) attributable to the Partnership.

DCF is a significant performance metric used by us and by external users of the Partnership’s financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay the Partnership’s unitholders. Using this metric, management and external users of the Partnership’s financial statements can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. DCF is also an important financial measure for the Partnership’s unitholders since it serves as an indicator of the Partnership’s success in providing a cash return on investment. Specifically, this financial measure may indicate to investors whether we are generating cash flow at a level that can sustain or support an increase in the Partnership’s quarterly distribution rates. DCF is also a quantitative standard used throughout the investment community with respect to publicly traded partnerships and limited liability companies because the value of a unit of such an entity is generally determined by the unit’s yield (which in turn is based on the amount of cash distributions the entity pays to a unitholder). DCF will not reflect changes in working capital balances.

We define DCF as Adjusted EBITDA, less interest expense, net of capitalized interest excluding realized gain/(loss) on interest rate swaps and letter of credit fees, maintenance capital expenditures, and distributions related to the Series A and Series C convertible preferred units. The GAAP financial measure most comparable to DCF is Net income (loss) attributable to the Partnership.

Segment gross margin and total segment gross margin are metrics that we use to evaluate our performance.  These metrics are useful for understanding our operating performance because it measures the operating results of our segments before DD&A and certain expenses that are generally not controllable by our business segment development managers, such as certain operating costs, general and administrative expenses, interest expense and income taxes.  Operating margin is useful for similar reasons except that it also includes all direct operating expenses in order to assess the performance of our operating managers.

We define segment gross margin in our Gas Gathering and Processing Services segment as total revenue plus unconsolidated affiliate earnings less unrealized gains or plus unrealized losses on commodity derivatives, construction and operating management agreement income and the cost of natural gas, and NGLs and condensate purchased.

We define segment gross margin in our Liquid Pipelines and Services segment as total revenue plus unconsolidated affiliate earnings less unrealized gains or plus unrealized losses on commodity derivatives and the cost of crude oil purchased in connection with fixed-margin arrangements. Substantially all of our gross margin in this segment is fee-based or fixed-margin, with little to no direct commodity price risk.

We define segment gross margin in our Natural Gas Transportation Services segment as total revenue plus unconsolidated affiliate earnings less the cost of natural gas purchased in connection with fixed-margin arrangements. Substantially all of our gross margin in this segment is fee-based or fixed-margin, with little to no direct commodity price risk.

We define segment gross margin in our Offshore Pipelines and Services segment as total revenue plus unconsolidated affiliate earnings less the cost of natural gas purchased in connection with fixed-margin arrangements.  Substantially all of our gross margin in this segment is fee-based or fixed-margin, with little to no direct commodity price risk.

We define segment gross margin in our Terminalling Services segment as total revenue less cost of sales and direct operating expense which includes direct labor, general materials and supplies and direct overhead.

Total segment gross margin is a supplemental non-GAAP financial measure that we use to evaluate our performance. We define total segment gross margin as the sum of the segment gross margins for our Gas Gathering and Processing Services, Liquid Pipelines and Services, Natural Gas Transportation Services, Offshore Pipelines and Services and Terminalling Services segments. The GAAP measure most directly comparable to total segment gross margin is Net Income (Loss) attributable to the Partnership.

SOURCE American Midstream Partners, LP



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