OREANDA-NEWS. American Midstream Partners, LP (NYSE: AMID) (the "Partnership") today reported financial results for the three and twelve months ended December 31, 2015.

Highlights:

  • Generated year-over-year Adjusted EBITDA1 and Distributable Cash Flow ("DCF")1 growth of greater than 40 percent in 2015 with forecasted growth of approximately 70 percent in 2016;
  • Acquired a minority interest in Delta House from an affiliate of the general partner of the Partnership, contributing significant fee-based cash flow to 2015 financial results;
  • Increased borrowing capacity under the revolving credit facility by 50 percent to $750 million; and
  • ArcLight Capital Partners, which controls the general partner of the Partnership, initiated a purchase program in December 2015 to acquire common units of the Partnership, purchasing more than five percent of common units outstanding to-date.

1Indicates a non-GAAP financial measure.

EXECUTIVE COMMENTARY

"2015 marks the third consecutive year of Adjusted EBITDA and DCF growth," said Lynn Bourdon, Chairman, President and Chief Executive Officer. "Our financial results reflect a strong year of execution for American Midstream, including the acquisition of a minority interest in Delta House and transition to 90 percent fee-based cash flow in multiple basins. Amidst a challenging environment, we delivered year-over-year Adjusted EBITDA and DCF growth of greater than 40 percent, and we are forecasting significant growth again in 2016.

"The Partnership's 2016 forecast reflects a full-year benefit of a minority interest in Delta House and organic growth projects completed in 2015, as well as fee-based organic growth projects coming online in 2016, including expansions at the Harvey terminal, startup of the Longview rail facility, and contributions from off-spec processing in the Permian. As a result, in 2016 we expect to generate top-quartile, year-over-year Adjusted EBITDA and DCF growth of 70 percent with distribution coverage in a range of 1.1 to 1.2 times.

"Our diversified portfolio of midstream assets in multiple key resource plays provides a strong footprint to continue delivering long-term growth. As we look ahead, we are actively evaluating organic growth and acquisition opportunities in partnership with ArcLight Capital, who is executing a $75 million common unit purchase program and currently holds more than 10 percent of our outstanding common units. We remain committed to operating prudently in the current environment while remaining focused on delivering long-term, sustainable growth to unitholders."

FINANCIAL RESULTS

Key Metrics   Three months ended December 31,     Years ended December 31,  
    (millions)   %     (millions)   %  
    2015   2014   Change     2015   2014   Change  
Gross Margin   $28.1   $36.2   (22.4)     $123.3   $102.8   19.9  
Adjusted EBITDA   $20.4   $19.2   6.3     $66.3   $45.6   45.4  
Distributable Cash Flow   $14.3   $15.5   (7.7)     $46.6   $32.7   42.5  
                             

Gross margin1 for the three months ended December 31, 2015 was $28.1 million, a decrease of $8.1 million, or 22.4 percent, from $36.2 million in the prior-year period. For the twelve months ended December 31, 2015, gross margin was $123.3 million compared to $102.8 million in 2014, an increase of $20.5 million, or 19.9 percent.

The decrease in gross margin for the three months ended December 31, 2015 was primarily due to lower natural gas liquids ("NGL") pricing, lower condensate production, and a decrease in total average throughput volumes in the Transmission segment. The increase in gross margin for the twelve months ended December 31, 2015 was primarily due to higher NGL and condensate production and higher throughput volumes in the Gathering and Processing segment as a result of the Costar Midstream acquisition in October 2014, partially offset by lower average throughput volumes in the Transmission segment.

Adjusted EBITDA for the three and twelve months ended December 31, 2015 was $20.4 million and $66.3 million, respectively, compared to $19.2 million and $45.6 million for the same periods in 2014, increases of 6.3 percent and 45.4 percent, respectively. The increases were primarily related to the October 2014 acquisition of Costar Midstream and incremental earnings from unconsolidated affiliates, including Delta House and the Main Pass Oil Gathering system.

DCF for the three and twelve months ended December 31, 2015 was $14.3 million and $46.6 million, respectively, representing distribution coverage ratios of 0.84 and 0.81, respectively. The fourth quarter 2015 distribution of $0.4725 per common unit remains unchanged from the third quarter 2015 distribution and was paid February 12, 2016.

Reconciliations of the non-GAAP financial measures gross margin, Adjusted EBITDA, and DCF to net income (loss) attributable to the Partnership, the most directly comparable GAAP financial measure, are provided at the end of this press release.

Net loss attributable to the Partnership for the three and twelve months ended December 31, 2015 was $121.6 million and $127.5 million, respectively, which included a loss on impairment of goodwill of $118.6 million recorded in the fourth quarter of 2015. This compares to a net loss of $94.3 million and $98.0 million for the same periods in 2014, which included a $99.9 million asset impairment charge incurred in the fourth quarter of 2014. During the fourth quarter of 2015, in which the carrying value of the Partnership exceeded its market capitalization, the Partnership completed annual impairment testing and recorded a $118.6 million loss on impairment of goodwill primarily attributable to changes in the assumptions supporting the fair value of goodwill related to certain gathering and processing reporting units, including reduced commodity price assumptions and delayed future growth.

SEGMENT PERFORMANCE

Gross Margin  

Three months ended
December 31,

    

Years ended
December 31,

     Percent Change (%)  
    (millions)     (millions)     quarter   year-to-date  
    2015   2014     2015   2014            
Gathering and Processing   $17.2   $19.7     $76.9   $50.8     (12.7)   51.4  
Transmission   $8.3   $13.8     $35.3   $42.8     (39.9)   (17.5)  
Terminals   $2.6   $2.7     $11.1   $9.2     (3.7)   20.7  
                               

Gross margin for the Gathering and Processing segment was $17.2 million and $76.9 million for the three and twelve months ended December 31, 2015, respectively, compared to $19.7 million and $50.8 million for the same periods in 2014. The decrease in gross margin for the fourth quarter was primarily due to lower condensate production and associated margins. The increase in gross margin for the full year was primarily attributable to incremental gross margin from the Costar-acquired assets and higher gross margin from the Lavaca system, partially offset by lower NGL and condensate production in the second-half of 2015 due to lower off-spec volumes at Longview.

Natural gas throughput volumes increased in the Gathering and Processing segment for the reported periods primarily due to the addition of the Costar assets and incremental throughput volumes on Lavaca system, partially offset by declines from legacy assets. Processed NGLs increased during the same periods as a result of a full-year benefit of Longview operations as part of the Costar acquisition.

Gross margin for the Transmission segment was $8.3 million and $35.3 million for the three and twelve months ended December 31, 2015, respectively, compared to $13.8 million and $42.8 million for the same periods in 2014. The decrease in gross margin for the reported periods was primarily attributable to higher pipeline gains in 2014 and lower interruptible transportation margins in 2015. Lower throughput volumes in the segment were primarily due to lower average throughputs on the High Point system and legacy Midla system.

Gross margin for the Terminals segment was $2.6 million and $11.1 million for the three and twelve months ended December 31, 2015, respectively, compared to $2.7 million and $9.2 million for the same periods in 2014. The change in gross margin was primarily attributable to increases in contracted storage capacity and contractual storage rate escalations, as well as increased ancillary services.

2016 FORECAST

The Partnership forecasts 2016 Adjusted EBITDA and DCF in a range of $105 million to $120 million and $70 million to $85 million, respectively, with distribution coverage in a range of 1.1 to 1.2 times, leverage in a range of 4.0 to 4.5 times, and fee-based cash flow greater than 90 percent. The 2016 forecast is based on current commodity pricing and volume expectations. Growth capital expenditures in 2016, which excludes maintenance capital, are forecasted to be in a range of $45 million to $55 million, a reduction of approximately 60 percent over prior year, and primarily include the construction of organic growth projects. The 2016 forecast does not include potential acquisitions, drop downs, or asset development projects.

Key Metric   2016 Guidance   2015 Actual     Percent change  
    (millions)     (at the midpoint)  
Adjusted EBITDA   $105 - $120   $66.3     69.7%  
Distributable Cash Flow   $70 - $85   $46.6     66.3%  
Growth Capital Expenditures   $45 - $55   $130.5     (61.7)%  
                 

The Partnership's 2016 guidance assumes WTI oil price of approximately $34 per barrel, composite NGL pricing of $0.44 per gallon, and natural gas prices of $2.35 per MMBtu. For every 10 percent change in oil and composite NGL pricing, the Partnership estimates an impact to Adjusted EBTIDA of $0.5 million and $1 million, respectively. The table in Appendix A provides an overview of forecast Adjusted EBITDA's sensitivity to changes in commodity prices as of March 4, 2016.

BALANCE SHEET

As of December 31, 2015, the Partnership had $526.9 million outstanding under its senior secured revolving credit facility and its consolidated total leverage ratio under the credit facility was 4.6 times. For the three and twelve months ended December 31, 2015, capital expenditures totaled $18.7 million and $130.5 million, respectively, which included $1.1 million and $4.5 million for maintenance capital, respectively. 2015 capital expenditures were primarily attributable to construction of the Lavaca system, Bakken system, Longview rail facility, Permian off-spec treatment facility as well as the ongoing build-out of the Harvey terminal and initial construction activities for the Midla-Natchez pipeline.

DERIVATIVES

The Partnership enters into derivative agreements to hedge exposure to commodity prices associated with natural gas, NGLs, and crude oil from time to time. As of December 31, 2015, the Partnership had not entered into commodity hedge contracts for 2016 and beyond.

About American Midstream Partners, LP

Denver-based American Midstream Partners, LP is a growth-oriented limited partnership formed to own, operate, develop and acquire a diversified portfolio of midstream energy assets. The Partnership provides midstream services in Texas, North Dakota, and the Gulf Coast and Southeast regions of the United States.