CANONSBURG, Pa., Nov. 2, 2016 /PRNewswire/ -- Rice
Midstream Partners LP (NYSE: RMP) ("RMP" or the "Partnership")
today reported third quarter 2016 financial and operating results.
Highlights to date include:
- Average throughput of 957 MDth/d, a 43% increase over the prior
year quarter and a 2% increase relative to second quarter 2016
- Net income of $25 million; net
cash provided by operating activities of $34.8 million
- Adjusted EBITDA(1) of $32.1
million, a 106% increase over the prior year quarter
- Distributable cash flow ("DCF")(1) of $28.9 million, resulting in DCF coverage ratio of
1.17x(2)
- Completed $600 million
acquisition of midstream assets and acreage dedication covering
80,000 core dry gas Marcellus acres in Greene County, Pennsylvania in October
- Completed private placement of 20,930,233 common units for
$450 million of gross proceeds in
October
- Increased revolving credit facility to $850 million from $450
million in October
- Increased core acreage dedication by 67% to approximately
201,000 acres(3)
- Raised third quarter distribution to $0.2370 per common unit, an increase of 22% over
the prior year quarter and 6% relative to second quarter 2016
- Exited the quarter with strong liquidity position of
$687 million(4) and low
leverage ratio of net debt to LTM Adjusted EBITDA of
1.2x(4)(5)
Commenting on the results, Daniel J.
Rice IV, Chief Executive Officer, said, "We are excited to
deliver another solid quarter, as gathering and compression
throughputs continue to increase primarily as a result of our
sponsor's continued strong execution. We believe the addition of
the Vantage Energy assets to our portfolio will position us to
generate best-in-class growth while exceeding our targeted 1.15x
distributable cash flow coverage and extending our long-term 20%
distribution growth target."
1.
|
Please see
"Supplemental Non-GAAP Financial Measures" for a description of
Adjusted EBITDA, distributable cash flow and related
reconciliations to comparable GAAP financial measures.
|
2.
|
Common units issued
in the October 2016 private placement will receive the third
quarter distribution based on the November 1, 2016 distribution
record date.
|
3.
|
Pro forma for the
Vantage Energy midstream assets acquisition, which closed on
October 19, 2016.
|
4.
|
Pro forma for the RMP
private placement of 20,930,233 common units, the borrowings under
the RMP credit facility used to fund the Vantage Energy midstream
assets acquisition, which closed on October 19, 2016, and the
October RMP revolving credit facility increase.
|
5.
|
Pro forma leverage
does not include acquired Vantage Energy midstream
EBITDA.
|
Third Quarter 2016 Financial Results
For the three months ended September 30,
2016, gathering volumes averaged 957 MDth/d, a 43% increase
over the prior year quarter and a 2% increase relative to second
quarter 2016, with 32% attributable to third-party volumes.
Compression volumes averaged 745 MDth/d, a 1,810% increase over the
prior year quarter and a 32% increase relative to second quarter
2016, with 42% attributable to third-party volumes. Fresh water
delivery volumes were 135 million gallons, or an average of 1.5
MMgal/d, a 60% decrease relative to second quarter 2016. The
anticipated sequential quarter decrease was due to timing of well
completion activity by Rice Energy in the quarter.
Operating revenues were $41.1 million, comprised
of $33.5 million in revenues from our gathering and
compression segment and $7.6 million in revenues from our
water services segment. Operation and maintenance expense totaled
$4.6 million, including $1.9 million for gathering and compression and
$2.6 million for water services. Net
income was $25 million, or
$0.30 per limited partner unit.
Adjusted EBITDA was $32.1 million
and, after giving effect to $2.8
million of estimated maintenance capital expenditures and
cash interest expense of $0.4
million, DCF was $28.9
million, resulting in a DCF coverage ratio of 1.17x.
We invested approximately $25
million of net expansion capital, excluding acquisitions,
including $29 million to develop gas
gathering and compression assets and ($4)
million to develop our water services assets, primarily due
to a reclass of water capital expenditures to gas gathering and
compression capital expenditures.
Year to Date 2016 Financial Results
For the nine months ended September 30,
2016, gathering volumes averaged 909 MDth/d, a 45% increase
over the prior year period with 29% attributable to third-party
volumes. Compression volumes averaged 488 MDth/d, an 821% increase
over the prior year period, with 47% attributable to third-party
volumes. Fresh water delivery volumes were 932 million gallons, or
an average of 3.4 MMgal/d.
Operating revenues were $142.2 million, comprised
of $90.3 million in revenues from our gathering and
compression segment and $51.8 million in revenues from
our water services segment. Operation and maintenance expense
totaled $17.3 million, including
$5.1 million for gathering and
compression and $12.2 million for
water services. Net income was $87.4
million, or $1.15 per limited
partner unit. Adjusted EBITDA was $112.1
million and, after giving effect to $8.4 million of estimated maintenance capital
expenditures and cash interest expense of $2.4 million, DCF was $101.4 million resulting in a DCF coverage ratio
of 1.75x.
We invested approximately $82
million of expansion capital, excluding acquisitions, to
develop our gas gathering and compression assets including water
services capital expenditures that were reclassed to gas gathering
and compression capital expenditures.
|
Average Daily
Throughput (MDth/d)
|
Gathering
Assets
|
Three Months
Ended
September 30, 2016
|
|
Nine Months
Ended
September 30, 2016
|
Affiliate
|
647
|
|
648
|
Third-party
|
310
|
|
261
|
Total
|
957
|
|
909
|
%
Third-party
|
32%
|
|
29%
|
|
Average Daily
Compression Volumes (MDth/d)
|
Compression
Assets
|
Three Months
Ended
September 30, 2016
|
|
Nine Months
Ended
September 30, 2016
|
Affiliate
|
435
|
|
258
|
Third-party
|
310
|
|
230
|
Total
|
745
|
|
488
|
%
Third-party
|
42%
|
|
47%
|
|
Average Daily
Water Volumes (MMgal/d)
|
Water Services
Assets
|
Three Months
Ended
September 30, 2016
|
|
Nine Months
Ended
September 30, 2016
|
Pennsylvania
Water
|
1.5
|
|
2.9
|
Ohio Water
|
—
|
|
0.5
|
Total
|
1.5
|
|
3.4
|
%
Third-party
|
—%
|
|
14%
|
Vantage Energy Midstream Assets Acquisition
On October 19, 2016, concurrent
with Rice Energy's acquisition of Vantage Energy, we purchased
entities owning the Vantage Energy midstream assets from Rice
Energy for $600 million. The assets
are located in Greene County,
Pennsylvania and include 30 miles of dry gas gathering and
compression assets. In connection with the acquisition, Rice
Energy dedicated the acquired 80,000 net acres to RMP to
provide gas gathering, compression and freshwater distribution
services.
The $600 million midstream
acquisition was funded by net proceeds from the October private
placement of RMP common units and borrowings under RMP's revolving
credit facility.
2016 Capital Budget and Guidance Update
We are unable to provide a projection of full-year 2016 net
income and net cash provided by operating activities, the most
comparable financial measures to Adjusted EBITDA and distributable
cash flow, respectively, calculated in accordance with GAAP. We do
not anticipate the changes in operating assets and liabilities to
be material, but changes in depreciation expense, accounts
receivable, accounts payable and accrued liabilities could be
significant, such that the amount of net cash provided by operating
activities would vary substantially from the amount of projected
Adjusted EBITDA and distributable cash flow. In addition, we are
unable to project net income because this metric includes the
impact of certain non-cash items that we are unable to project with
any reasonable degree of accuracy without unreasonable effort.
Please see the "Supplemental Non-GAAP Financial Measures" section
of this news release.
As a result of increased organic gathering and compression
throughput, as well as giving effect to the Vantage Energy
acquisition, we are increasing our expected 2016 Adjusted EBITDA
and distributable cash flow. In addition, we are decreasing our
water services capital budget due to a reclassification of certain
temporary water capital expenditures primarily to gas gathering and
compression capital expenditures.
2016 Capital
Budget ($ in millions)
|
|
Prior
|
|
Updated
|
Gas Gathering and
Compression
|
$
|
125
|
|
|
$
|
125
|
|
Water
Services
|
$
|
15
|
|
|
$
|
10
|
|
Total
RMP
|
$
|
140
|
|
|
$
|
135
|
|
|
|
|
|
|
|
Estimated Maintenance
Capital
|
$
|
11
|
|
|
$
|
11
|
|
Prior
|
|
Updated
|
Cash G&A ($ in
millions)
|
$
|
18
|
|
|
$
|
21
|
|
|
$
|
18
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Gas Gathering and
Compression
|
$
|
95
|
|
-
|
$
|
100
|
|
|
$
|
100
|
|
-
|
$
|
105
|
|
Water
Services
|
$
|
40
|
|
-
|
$
|
45
|
|
|
$
|
40
|
|
-
|
$
|
45
|
|
Total Adjusted
EBITDA
|
$
|
135
|
|
-
|
$
|
145
|
|
|
$
|
140
|
|
-
|
$
|
150
|
|
|
% Third
Party
|
20%
|
|
-
|
25%
|
|
|
20%
|
|
-
|
25%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributable Cash
Flow ($ in millions)
|
$
|
115
|
|
-
|
$
|
125
|
|
|
$
|
125
|
|
-
|
$
|
135
|
|
Average DCF Coverage
Ratio
|
|
1.5x
|
-
|
|
1.6x
|
|
|
1.5x
|
-
|
|
1.6x
|
% Distribution
Growth
|
20%
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preliminary 2017 Outlook
In connection with the Vantage Energy midstream assets
acquisition, we have provided a preliminary 2017 outlook for our
capital budget, throughput and water volumes guidance. We expect
our expansion budget to be within a range of $300 - $360 million. Furthermore, we expect 2017
throughput to be within a range of 1,270 - 1,340 MDth/d, an
approximate 40% increase above our 2016 estimated throughput based
on the midpoint of guidance. In addition, we expect 2017 water
volumes to be within a range of 1,075 - 1,225 million gallons.
Financial Position and Liquidity
On September 30, 2016, we priced a
private placement of 20,930,233 common units representing limited
partner interest for gross proceeds of approximately $450 million. The closing of the private
placement occurred on October 7,
2016. We used the net proceeds from the private placement to
fund the acquisition from Rice Energy of Vantage Energy midstream
assets.
On October 19, 2016, RMP's credit
facility was increased to $850
million, representing an 89% increase from $450 million.
As of September 30, 2016, we had
$685 million(1) of
availability on our revolving credit facility and $2 million of cash on hand, resulting in
$687 million of total liquidity.
1.
|
Pro forma for the RMP
private placement of 20,930,233 common units, the borrowings under
the RMP credit facility used to fund the Vantage Energy midstream
assets acquisition, which closed on October 19, 2016, and the
October RMP revolving credit facility increase.
|
Quarterly Cash Distribution
On October 20, 2016, we declared a quarterly distribution
of $0.2370 per unit for the third
quarter 2016, an increase of $0.0135
per unit, or 6%, relative to second quarter 2016. The distribution
will be payable on November 10, 2016 to unitholders of record
as of November 1, 2016.
Conference Call
RMP will host a conference call on November 2, 2016 at 11:00
a.m. Eastern time (10:00 a.m. Central
time) to discuss third quarter 2016 financial and operating
results. To listen to a live audio webcast of the conference call,
please visit RMP's website at www.ricemidstream.com. A replay
of the conference call will be available following the call for two
weeks and can be accessed from www.ricemidstream.com.
Rice Energy will host a conference call on November 2, 2016 at 10:00
a.m. Eastern time (9:00 a.m. Central
time) to discuss third quarter 2016 financial and operating
results and we encourage RMP investors to listen-in. To listen to a
live audio webcast of the conference call, please visit Rice
Energy's website at www.riceenergy.com. A replay of the conference
call will be available for two weeks and can also be accessed from
www.riceenergy.com.
Please visit www.ricemidstream.com to view a presentation
containing supplemental third quarter 2016 information.
About Rice Midstream Partners
Rice Midstream Partners LP is a fee-based, growth-oriented
limited partnership formed by Rice Energy Inc. (NYSE: RICE) to own,
operate, develop and acquire midstream assets in the Appalachian
basin. RMP provides midstream services to Rice Energy and
third-party companies through its natural gas gathering,
compression and water assets in the rapidly developing dry gas
cores of the Marcellus and Utica Shales.
For more information, please visit www.ricemidstream.com.
Forward Looking Statements
This release includes forward-looking statements that are
subject to a number of risks and uncertainties, many of which are
beyond our control. All statements, other than historical facts
included in this release, that address activities, events or
developments that we expect or anticipate will or may occur in the
future, including such things as, forecasted gathering volumes,
revenues, Adjusted EBITDA, distribution growth, and distributable
cash flow, the timing of completion of midstream projects, future
capital expenditures (including the amount and nature thereof),
business strategy and measures to implement strategy, competitive
strengths, goals, expansion and growth of our business and
operations, plans, market conditions, references to future success,
references to intentions as to future matters and other such
matters are forward-looking statements. All forward-looking
statements speak only as of the date of this release. Although we
believe that the plans, intentions and expectations reflected in or
suggested by the forward-looking statements are reasonable, there
is no assurance that these plans, intentions or expectations will
be achieved. Therefore, actual outcomes and results could
materially differ from what is expressed, implied or forecast in
such statements.
We caution you that these forward-looking statements are subject
to risks and uncertainties, most of which are difficult to predict
and many of which are beyond our control, incident to our gathering
and compression and water services businesses. These risks include,
but are not limited to: commodity price volatility; inflation;
environmental risks; regulatory changes; the uncertainty inherent
in projecting future throughput volumes, cash flow and access to
capital; the timing of development expenditures of Rice Energy or
our other customers, the ultimate timing, outcome and results of
integrating the operations of Vantage Energy; the effects of the
business combination of Rice Energy and Vantage Energy, including
the combined company's future financial condition, results of
operations, strategy and plans; potential adverse reactions or
changes to business relationships resulting from fully combining
the businesses; and the ability of Rice Energy and RMP to recognize
the expected benefits and synergies of the transactions.
Information concerning these and other factors can be found in our
filings with the Securities and Exchange Commission, including our
Forms 10-K, 10-Q and 8-K. Consequently, all of the forward-looking
statements made in this news release are qualified by these
cautionary statements and there can be no assurances that the
actual results or developments anticipated by us will be realized,
or even if realized, that they will have the expected consequences
to or effects on us, our business or operations. We have no
intention, and disclaim any obligation, to update or revise any
forward-looking statements, whether as a result of new information,
future results or otherwise.
Rice Midstream
Partners LP
|
Statements of
Operations
|
(Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(in thousands,
except unit data)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Operating
revenues:
|
|
|
|
|
|
|
|
|
Affiliate
|
|
$
|
28,260
|
|
|
$
|
23,947
|
|
|
$
|
105,267
|
|
|
$
|
72,289
|
|
Third-party
|
|
12,807
|
|
|
6,128
|
|
|
36,890
|
|
|
12,857
|
|
Total operating
revenues
|
|
41,067
|
|
|
30,075
|
|
|
142,157
|
|
|
85,146
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Operation and
maintenance expense
|
|
4,559
|
|
|
4,421
|
|
|
17,292
|
|
|
10,028
|
|
Equity compensation
expense (1)
|
|
609
|
|
|
1,105
|
|
|
2,728
|
|
|
3,316
|
|
General and
administrative expense
|
|
4,373
|
|
|
4,137
|
|
|
12,736
|
|
|
10,322
|
|
Incentive unit
(income) expense (1)
|
|
—
|
|
|
(75)
|
|
|
—
|
|
|
1,048
|
|
Depreciation
expense
|
|
5,489
|
|
|
4,417
|
|
|
17,714
|
|
|
10,454
|
|
Acquisition
costs
|
|
—
|
|
|
—
|
|
|
73
|
|
|
—
|
|
Amortization of
intangible assets
|
|
411
|
|
|
407
|
|
|
1,222
|
|
|
1,223
|
|
Other expense
(income)
|
|
90
|
|
|
(347)
|
|
|
239
|
|
|
492
|
|
Total operating
expenses
|
|
15,531
|
|
|
14,065
|
|
|
52,004
|
|
|
36,883
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
25,536
|
|
|
16,010
|
|
|
90,153
|
|
|
48,263
|
|
Other
income
|
|
—
|
|
|
2
|
|
|
—
|
|
|
11
|
|
Interest expense
(1)
|
|
(402)
|
|
|
(814)
|
|
|
(2,369)
|
|
|
(2,070)
|
|
Amortization of
deferred finance costs
|
|
(145)
|
|
|
(144)
|
|
|
(433)
|
|
|
(432)
|
|
Income before income
taxes
|
|
24,989
|
|
|
15,054
|
|
|
87,351
|
|
|
45,772
|
|
Income tax
expense
|
|
—
|
|
|
(1,794)
|
|
|
—
|
|
|
(5,796)
|
|
Net income
|
|
$
|
24,989
|
|
|
$
|
13,260
|
|
|
$
|
87,351
|
|
|
$
|
39,976
|
|
|
|
|
|
|
|
|
|
|
Calculation of
limited partner interest in net income:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
24,989
|
|
|
$
|
13,260
|
|
|
$
|
87,351
|
|
|
$
|
39,976
|
|
Less: Pre-acquisition
net income allocated to general partner
|
|
—
|
|
|
990
|
|
|
—
|
|
|
6,306
|
|
Less: General partner
interest in net income attributable to incentive distribution
rights
|
|
427
|
|
|
—
|
|
|
540
|
|
|
—
|
|
Net income
attributable to limited partners
|
|
$
|
24,562
|
|
|
$
|
12,270
|
|
|
$
|
86,811
|
|
|
$
|
33,670
|
|
|
|
|
|
|
|
|
|
|
Weighted average
limited partner units (in millions)
|
|
|
|
|
|
|
|
|
Common units
(basic)
|
|
52.4
|
|
|
28.8
|
|
|
46.4
|
|
|
28.8
|
|
Common units
(diluted)
|
|
52.6
|
|
|
28.9
|
|
|
46.6
|
|
|
28.8
|
|
Subordinated units
(basic and diluted)
|
|
28.8
|
|
|
28.8
|
|
|
28.8
|
|
|
28.8
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to RMP per limited partner unit
(2)
|
|
|
|
|
|
|
|
|
Common units
(basic)
|
|
$
|
0.30
|
|
|
$
|
0.21
|
|
|
$
|
1.15
|
|
|
$
|
0.59
|
|
Common units
(diluted)
|
|
$
|
0.30
|
|
|
$
|
0.21
|
|
|
$
|
1.14
|
|
|
$
|
0.58
|
|
Subordinated units
(basic and diluted)
|
|
$
|
0.30
|
|
|
$
|
0.21
|
|
|
$
|
1.17
|
|
|
$
|
0.59
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(3)
|
|
$
|
32,135
|
|
|
$
|
15,589
|
|
|
$
|
112,129
|
|
|
$
|
44,716
|
|
Distributable cash
flow (4)
|
|
$
|
28,933
|
|
|
$
|
13,912
|
|
|
$
|
101,360
|
|
|
$
|
39,948
|
|
|
|
|
|
|
|
|
|
|
Quarterly
distribution per unit
|
|
$
|
0.2370
|
|
|
$
|
0.1935
|
|
|
$
|
0.6705
|
|
|
$
|
0.5715
|
|
|
|
|
|
|
|
|
|
|
Distributions
declared:
|
|
|
|
|
|
|
|
|
Limited Partner Units
- Public
|
|
$
|
17,386
|
|
|
$
|
5,563
|
|
|
$
|
37,954
|
|
|
$
|
16,431
|
|
Limited Partner Units
- GP Holdings
|
|
6,815
|
|
|
5,565
|
|
|
19,282
|
|
|
16,435
|
|
General
Partner
|
|
427
|
|
|
—
|
|
|
540
|
|
|
—
|
|
Total distributions
declared
|
|
$
|
24,628
|
|
|
$
|
11,128
|
|
|
$
|
57,776
|
|
|
$
|
32,866
|
|
|
|
|
|
|
|
|
|
|
DCF coverage ratio
(5)
|
|
1.17
|
|
|
1.25
|
|
|
1.75
|
|
|
1.22
|
|
|
|
1.
|
Prior to their
acquisition by us, our water assets were allocated incentive
unit expense, equity compensation expense and interest expense
initially recognized by Rice Energy. These non-cash charges are
described in more detail in Note 9 to the consolidated financial
statements in our 10-Q.
|
2.
|
Net income per
limited partner unit does not include results attributable to the
water assets prior to their acquisition as these results are not
attributable to our limited partners.
|
3.
|
We define Adjusted
EBITDA as net income (loss) before interest expense, depreciation
expense, amortization expense, non-cash equity compensation
expense, amortization of deferred financing costs and other
non-recurring items. Please read Supplemental "Non-GAAP Financial
Measures."
|
4.
|
We define
distributable cash flow as Adjusted EBITDA less interest expense,
and estimated maintenance capital expenditures. Please read
Supplemental "Non-GAAP Financial Measures."
|
5.
|
We define DCF
coverage ratio as distributable cash flow divided by total
distributions declared. Please read Supplemental "Non-GAAP
Financial Measures."
|
Rice Midstream
Partners LP
|
Segment Results of
Operations
|
(Unaudited)
|
Gathering and
Compression Segment
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(in
thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Gathering volumes:
(MDth/d)
|
|
|
|
|
|
|
|
Affiliate
|
647
|
|
|
559
|
|
|
648
|
|
|
537
|
|
Third-party
|
310
|
|
|
112
|
|
|
261
|
|
|
92
|
|
Total gathering
volumes
|
957
|
|
|
671
|
|
|
909
|
|
|
629
|
|
|
|
|
|
|
|
|
|
Compression
volumes: (MDth/d)
|
|
|
|
|
|
|
|
Affiliate
|
435
|
|
|
34
|
|
|
258
|
|
|
41
|
|
Third-party
|
310
|
|
|
5
|
|
|
230
|
|
|
12
|
|
Total compression
volumes
|
745
|
|
|
39
|
|
|
488
|
|
|
53
|
|
|
|
|
|
|
|
|
|
Operating
results:
|
|
|
|
|
|
|
|
Operating
revenues:
|
|
|
|
|
|
|
|
Affiliate
|
$
|
20,696
|
|
|
$
|
15,578
|
|
|
$
|
57,060
|
|
|
$
|
44,745
|
|
Third-party
|
12,807
|
|
|
4,564
|
|
|
33,279
|
|
|
11,294
|
|
Total operating
revenues
|
33,503
|
|
|
20,142
|
|
|
90,339
|
|
|
56,039
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Operation and
maintenance expense
|
1,938
|
|
|
1,727
|
|
|
5,090
|
|
|
3,985
|
|
Equity compensation
expense
|
486
|
|
|
961
|
|
|
2,142
|
|
|
2,960
|
|
General and
administrative expense
|
3,592
|
|
|
2,828
|
|
|
10,313
|
|
|
7,344
|
|
Depreciation
expense
|
2,406
|
|
|
1,597
|
|
|
7,026
|
|
|
4,531
|
|
Acquisition
costs
|
—
|
|
|
—
|
|
|
73
|
|
|
—
|
|
Amortization of
intangible assets
|
411
|
|
|
407
|
|
|
1,222
|
|
|
1,223
|
|
Other expense
(income)
|
—
|
|
|
(347)
|
|
|
149
|
|
|
492
|
|
Total operating
expenses
|
8,833
|
|
|
7,173
|
|
|
26,015
|
|
|
20,535
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
24,670
|
|
|
$
|
12,969
|
|
|
$
|
64,324
|
|
|
$
|
35,504
|
|
Water Services
Segment
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(in
thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Water services
volumes: (MMgal)
|
|
|
|
|
|
|
|
Affiliate
|
135
|
|
|
167
|
|
|
800
|
|
|
516
|
|
Third-party
|
—
|
|
|
60
|
|
|
132
|
|
|
59
|
|
Total water services
volumes
|
135
|
|
|
227
|
|
|
932
|
|
|
575
|
|
|
|
|
|
|
|
|
|
Operating
results:
|
|
|
|
|
|
|
|
Operating
revenues:
|
|
|
|
|
|
|
|
Affiliate
|
$
|
7,564
|
|
|
$
|
8,369
|
|
|
$
|
48,207
|
|
|
$
|
27,544
|
|
Third-party
|
—
|
|
|
1,564
|
|
|
3,611
|
|
|
1,563
|
|
Total operating
revenues
|
7,564
|
|
|
9,933
|
|
|
51,818
|
|
|
29,107
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Operation and
maintenance expense
|
2,621
|
|
|
2,694
|
|
|
12,202
|
|
|
6,043
|
|
Equity compensation
expense
|
123
|
|
|
144
|
|
|
586
|
|
|
356
|
|
General and
administrative expense
|
781
|
|
|
1,309
|
|
|
2,423
|
|
|
2,978
|
|
Incentive unit
expense
|
—
|
|
|
(75)
|
|
|
—
|
|
|
1,048
|
|
Depreciation
expense
|
3,083
|
|
|
2,820
|
|
|
10,688
|
|
|
5,923
|
|
Other operating
expense
|
90
|
|
|
—
|
|
|
90
|
|
|
—
|
|
Total operating
expenses
|
6,698
|
|
|
6,892
|
|
|
25,989
|
|
|
16,348
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
866
|
|
|
$
|
3,041
|
|
|
$
|
25,829
|
|
|
$
|
12,759
|
|
Rice Midstream Partners
LP
Supplemental Non-GAAP Financial
Measures
(Unaudited)
Adjusted EBITDA is a supplemental non-GAAP financial measure
that is used by management and external users of our consolidated
financial statements, such as securities analysts, investors and
lenders. We define Adjusted EBITDA as net income (loss) before
interest expense, depreciation expense, amortization expense,
non-cash stock compensation expense, amortization of deferred
financing costs and other non-recurring items. Adjusted
EBITDA is not a measure of net income as determined by GAAP.
Distributable cash flow and DCF coverage ratio are supplemental
non-GAAP financial measures that are used by management and
external users of our consolidated financial statements, such as
securities analysts, investors and lenders. We define distributable
cash flow as Adjusted EBITDA less cash interest expense, and
estimated maintenance capital expenditures. We define DCF coverage
ratio as distributable cash flow divided by total distributions
declared. Distributable cash flow does not reflect changes in
working capital balances and is not a presentation made in
accordance with GAAP.
Adjusted EBITDA, distributable cash flow and DCF coverage ratio
are non-GAAP supplemental financial measures that management and
external users of our consolidated financial statements, such as
industry analysts, investors, lenders and rating agencies, may use
to assess the financial performance of our assets, without regard
to financing methods, capital structure or historical cost basis;
our operating performance and return on capital as compared to
other companies in the midstream energy sector, without regard to
historical cost basis or, in the case of Adjusted EBITDA, financing
or capital structure; our ability to incur and service debt and
fund capital expenditures; the ability of our assets to generate
sufficient cash flow to make distributions to our unitholders; and
the viability of acquisitions and other capital expenditure
projects and the returns on investment of various investment
opportunities.
We believe that the presentation of Adjusted EBITDA,
distributable cash flow and DCF coverage ratio will provide useful
information to investors in assessing our financial condition and
results of operations. The GAAP measures most directly comparable
to Adjusted EBITDA and distributable cash flow are net income and
net cash provided by (used in) operating activities. Our non-GAAP
financial measures of Adjusted EBITDA and distributable cash flow
should not be considered as an alternative to GAAP net income or
net cash provided by operating activities. Each of Adjusted EBITDA
and distributable cash flow has important limitations as an
analytical tool because it excludes some but not all items that
affect net income and net cash provided by operating activities.
You should not consider Adjusted EBITDA, distributable cash flow or
DCF coverage ratio in isolation or as a substitute for analysis of
our results as reported under GAAP. Because Adjusted EBITDA and
distributable cash flow and DCF coverage ratio may be defined
differently by other companies in our industry, our definitions of
Adjusted EBITDA, distributable cash flow and DCF coverage ratio may
not be comparable to similarly titled measures of other companies,
thereby diminishing its utility.
We have not provided projected net income or net cash provided
by operating activities or reconciliations of its projected
Adjusted EBITDA and projected distributable cash flow to projected
net income and projected net cash provided by operating activities,
respectively, the most comparable financial measures calculated in
accordance with GAAP. We are unable to project net cash provided by
operating activities because this metric includes the impact of
changes in operating assets and liabilities related to the timing
of cash receipts and disbursements that may not relate to the
period in which the operating activities occurred. We are unable to
project these timing differences with any reasonable degree of
accuracy to a specific day, three or more months in advance.
Therefore, we are unable to provide projected net cash provided by
operating activities, or the related reconciliation of projected
distributable cash flow to projected net cash provided by operating
activities. In addition, we are unable to project net income
because this metric includes the impact of certain non-cash items
such as depreciation expense that we are unable to project with any
reasonable degree of accuracy without unreasonable effort.
Therefore, we are unable to provide projected net income, or the
related reconciliation of projected Adjusted EBITDA to projected
net income.
Further, we do not provide guidance with respect to the
intra-year timing of our capital spending, which impact debt and
equity and equity earnings, among other items, that are reconciling
items between Adjusted EBITDA and net income. The timing of capital
expenditures is volatile as it depends on weather, regulatory
approvals, contractor availability, system performance and various
other items. We provide a range for the forecasts of Adjusted
EBITDA and distributable cash flow to allow for the variability in
the timing of spending and the impact on the related reconciling
items, many of which interplay with each other. Therefore, the
reconciliation of Adjusted EBITDA to projected net income is not
available without unreasonable effort.
(in
thousands)
|
Three Months
Ended
September 30, 2016
|
|
Nine Months
Ended
September 30, 2016
|
|
Twelve Months
Ended
September 30, 2016
|
Reconciliation of
Net Income to Adjusted EBITDA and DCF:
|
|
|
|
|
|
Net income
|
$
|
24,989
|
|
|
$
|
87,351
|
|
|
$
|
106,176
|
|
Interest
expense
|
402
|
|
|
2,369
|
|
|
4,125
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
5,812
|
|
Acquisition
costs
|
—
|
|
|
73
|
|
|
73
|
|
Depreciation
expense
|
5,489
|
|
|
17,714
|
|
|
29,582
|
|
Amortization of
intangible assets
|
411
|
|
|
1,222
|
|
|
1,631
|
|
Non-cash equity
compensation expense
|
609
|
|
|
2,728
|
|
|
4,269
|
|
Incentive unit
expense
|
—
|
|
|
—
|
|
|
1,044
|
|
Amortization of
deferred finance costs
|
145
|
|
|
433
|
|
|
577
|
|
Other
expense
|
90
|
|
|
239
|
|
|
290
|
|
Adjusted EBITDA
attributable to Water Assets prior to
acquisition(1)
|
—
|
|
|
—
|
|
|
(22,386)
|
|
Adjusted
EBITDA
|
$
|
32,135
|
|
|
$
|
112,129
|
|
|
$
|
131,193
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
32,135
|
|
|
$
|
112,129
|
|
|
|
Cash interest
expense
|
(402)
|
|
|
(2,369)
|
|
|
|
Estimated maintenance
capital expenditures
|
(2,800)
|
|
|
(8,400)
|
|
|
|
Distributable cash
flow
|
$
|
28,933
|
|
|
$
|
101,360
|
|
|
|
|
|
|
|
|
|
Total distributions
declared
|
$
|
24,628
|
|
|
$
|
57,776
|
|
|
|
DCF coverage
ratio
|
1.17
|
|
|
1.75
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA to Cash:
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
32,135
|
|
|
$
|
112,129
|
|
|
|
Interest expense
|
(402)
|
|
|
(2,369)
|
|
|
|
Other income
|
(90)
|
|
|
—
|
|
|
|
Acquisition costs
|
—
|
|
|
(73)
|
|
|
|
Changes in operating assets and liabilities
|
3,197
|
|
|
(183)
|
|
|
|
Net cash provided by
operating activities
|
34,840
|
|
|
109,504
|
|
|
|
Net cash used in
investing activities
|
(22,660)
|
|
|
(97,679)
|
|
|
|
Net cash provided by
financing activities
|
(19,869)
|
|
|
(11,788)
|
|
|
|
Net (decrease)
increase in cash
|
(7,689)
|
|
|
37
|
|
|
|
Cash at the beginning
of the period
|
15,323
|
|
|
7,597
|
|
|
|
Cash at the end of
the period
|
$
|
7,634
|
|
|
$
|
7,634
|
|
|
|
|
|
1.
|
Adjusted EBITDA
attributable to the Water Assets prior to their acquisition is
excluded from our adjusted EBITDA calculation as these amounts are
not attributable to our limited partners.
|
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SOURCE Rice Midstream Partners LP