American Midstream Reports First Quarter 2019 Results

Source Quarterly Report
Company ArcLight Capital Partners, LLCAmerican Midstream Partners, LP 
Tags Corporate Deals, Deals, LNG & Gas Storage/Processing
Date May 10, 2019

American Midstream Partners, LP (NYSE:  AMID) ("American Midstream" or the "Partnership") today reported financial and operational results for the three months ended March 31, 2019.  Net loss attributable to the Partnership was $13.2 million for the three months ended March 31, 2019 compared to $13.9 millionfor 2018.  Adjusted EBITDA (1) was $54.7 million for the three months ended March 31, 2019, compared to $52.4 millionfor 2018.  Total segment gross margin (1) was $71.2 million for the three months ended March 31, 2019, compared to $64.7 million for 2018.  The increases in adjusted EBITDA and total segment gross margin were driven largely by increased throughput on Delta House, reduction in operating expenses resulting from decreases in the use of third-party services and reductions in corporate expenses, due to a decrease in acquisition activity compared to the prior period and general corporate cost reduction as the Partnership prepares for the completion of the pending merger and operating as a privately held company. 

SEGMENT PERFORMANCE

  Segment Gross Margin 
  (In thousands) 
  Three months ended
March 31,
 
  2019     2018  
       
Offshore Pipelines and Services  $ 38,770    $ 25,317 
Gas Gathering and Processing Services  14,876    12,209 
Liquid Pipelines and Services  8,104    9,154 
Natural Gas Transportation Services  9,428    10,687 
Terminalling Services    7,289 
Total Segment Gross Margin  $ 71,178    $ 64,656 

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

PENDING MERGER

All customary conditions to the closing of the merger of the Partnership and an affiliate of ArcLight have been satisfied, with the exception of the expiration of the waiting period following filing of a definitive information statement with the United States Securities and Exchange Commission ("SEC"). The Partnership expects the merger to close by the outside date under the merger agreement of July 31, 2019.

As previously announced, 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 an affiliate of ArcLight and the 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 March 31, 2019, the Partnership had approximately $1.0 billion of total debt outstanding, comprising $534 millionoutstanding under its revolving credit facility, $425 million in outstanding 8.50% senior unsecured notes and $87 million in outstanding non-recourse senior secured notes. The Partnership had a consolidated total leverage ratio of approximately 5.8 times at March 31, 2019. 

For the three months ended March 31, 2019, capital expenditures totaled approximately $19 million, including approximately $7 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" and "Operating Margin". 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 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 December 31, 2018 and our Quarterly Report on From 10-Q for the quarter ended March 31, 2019.  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
ir@americanmidstream.com

American Midstream Partners, LP and Subsidiaries 
Condensed Consolidated Balance Sheets 
(Unaudited, in thousands) 
 
  March 31,
2019
 
  December 31,
2018
 
Assets       
       
Cash and cash equivalents  12,273      9,069   
Restricted cash  33,558      30,868   
Accounts receivable, net of allowance for doubtful accounts of $511 and $591 as of March 31, 2019 and December 31, 2018, respectively  87,355      76,632   
Inventory  8,924      1,186   
Other current assets  21,728      26,236   
Total current assets  163,838      143,991   
Property, plant and equipment, net  995,755      997,708   
Goodwill  51,723      51,723   
Restricted cash - long term  5,281      5,083   
Intangible assets, net  131,447      133,992   
Investment in unconsolidated affiliates  321,760      337,796   
Other assets, net  45,933      17,403   
Total assets  1,715,737      1,687,696   
Liabilities, Equity and Partners' Capital       
       
Total current liabilities (1)  664,817      649,892   
Asset retirement obligations  68,338      67,451   
Other long-term liabilities  41,876      18,491   
Long-term debt  501,836      500,739   
Deferred tax liability  1,421      1,421   
Total liabilities  1,278,288      1,237,994   
Convertible preferred units  331,964      324,624   
Total Equity and partners' capital  105,485      125,078   
Total liabilities, equity and partners' capital  1,715,737      1,687,696   

_________________________ 
(1)  Total current liabilities include $534.3 million and $514.8 million for March 31, 2019 and December 31, 2018, respectively, outstanding under the Partnership's revolving credit facility, which matures in September 2019. 

American Midstream Partners, LP and Subsidiaries 
Condensed Consolidated Statements of Operations 
(Unaudited, in thousands, except for per unit amounts) 
 
    Three months ended March 31, 
    2019    2018 
Revenues    172,830      205,829   
Operating expenses:         
Cost of sales    128,061      150,166   
Direct operating expenses    17,978      23,446   
Corporate expenses    19,401      22,692   
Depreciation, amortization and accretion    21,180      21,997   
Loss (gain) on sale of assets, net    55      (95)   
Impairment of long-lived assets    829      —   
Total operating expenses    187,504      218,206   
Operating loss    (14,674)      (12,377)   
Other income (expense), net:         
Interest expense, net of capitalized interest    (24,363)      (13,876)   
Other income, net        22   
Earnings in unconsolidated affiliates    26,110      12,673   
Loss before income taxes    (12,919)      (13,558)   
Income tax expense    (218)      (280)   
Net loss    (13,137)      (13,838)   
Net income attributable to noncontrolling interests    (77)      (45)   
Net loss attributable to the Partnership    (13,214)      (13,883)   
         
Limited Partners' net loss per common unit:         
Basic and diluted:         
Net loss per common unit    (0.38)      (0.42)   
         
Weighted average number of common units outstanding         
Basic and diluted    54,082      52,769   

American Midstream Partners, LP and Subsidiaries 
Condensed Consolidated Statements of Cash Flows 
(Unaudited, in thousands) 
 
  Three months ended March 31, 
  2019    2018 
Net cash (used in) provided by operating activities  (4,240)      14,847   
       
Net cash used in investing activities  (6,481)      (15,744)   
       
Net cash provided by (used in) financing activities  16,813      (1,774)   
       
Net decrease in Cash, Cash equivalents, and Restricted cash  6,092      (2,671)   
       
Cash, cash equivalents and restricted cash       
Beginning of period  45,020      34,179   
End of period  51,112      31,508   

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 March 31, 
  2019    2018 
Reconciliation of Net loss Attributable to the Partnership to Adjusted EBITDA:       
Net loss attributable to the Partnership  $  (13,214)      $  (13,883)   
Depreciation, amortization and accretion  21,180      21,997   
Interest expense, net of capitalized interest  24,363      13,876   
Amortization of deferred financing costs  (2,549)      (1,316)   
Debt issuance costs paid  61      1,085   
Unrealized loss (gain) on commodity derivatives, net  254      59   
Non-cash equity compensation expense  1,026      1,014   
Transaction expenses  6,370      8,877   
Impairment of long-lived assets  829      —   
Income tax expense  218      280   
Distributions from unconsolidated affiliates  42,146      23,853   
General Partner contribution  —      9,417   
Earnings in unconsolidated affiliates  (26,110)      (12,673)   
Other  46      (90)   
Other post-employment benefits plan net periodic benefit  (19)      15   
(Gain) loss on sale of assets, net  55      (95)   
                     Adjusted EBITDA  $  54,656      $  52,416   

American Midstream Partners, LP and Subsidiaries 
Reconciliation of Total Gross Margin to Net loss attributable to the Partnership 
(Unaudited, in thousands) 
 
  Three months ended March 31, 
Reconciliation of Total Segment Gross Margin and Operating Margin to Net Loss Attributable to the Partnership:  2019    2018 
Total Segment Gross Margin  71,178      64,656   
Direct operating expenses  (17,978)      (19,799)   
Operating margin  53,200      44,857   
       
Gain (loss) on commodity derivatives, net  (1,521)      60   
Corporate expenses  (19,401)      (22,692)   
Depreciation, amortization and accretion expense  (21,180)      (21,997)   
Gain (loss) on sale of assets, net  (55)      95   
Impairment of long-lived assets  (829)      —   
Interest expense, net of capitalized interest  (24,363)      (13,876)   
Other income, net  1,230      (5)   
Income tax expense  (218)      (280)   
Net income attributable to noncontrolling interest  (77)      (45)   
Net loss attributable to the Partnership  (13,214)      (13,883)   

American Midstream Partners, LP and Subsidiaries 
Segment Financial and Operating Data 
(Unaudited, in thousands, except for operating and pricing data) 
 
    Three months ended
March 31,
 
    2019    2018 
Segment Financial and Operating Data:         
         
Offshore Pipelines and Services Segment          
Financial data:         
Segment gross margin    38,770      25,317   
Direct operating expenses    5,939      7,795   
Segment operating margin    32,831      17,522   
         
Distributions:         
Destin/Okeanos    15,373      15,113   
Delta House    21,817      6,524   
Total    37,190      21,637   
         
Operating data:         
Average throughput (MMcfe/d)    617.5      498.6   
Average Destin/Okeanos throughput (MMcf/d)    828.6      982.8   
Average Delta House throughput (MBoe/d)    102.9      57.8   
         
Gas Gathering and Processing Services Segment          
Financial data:         
Segment gross margin    14,876      12,209   
Direct operating expenses    6,349      7,170   
  Segment operating margin    8,527      5,039   
Operating data:         
Average throughput (MMcf/d)    200.9      160.5   
         
Liquid Pipelines & Services          
Financial data:         
Segment gross margin    8,104      9,154   
Direct operating expenses    2,978      3,161   
Segment operating margin    5,126      5,993   
         
Distributions:         
Distributions from unconsolidated affiliates    4,956      2,217   
         
Operating data:         
Average unconsolidated affiliate throughput (MBbls/d)    127.4      104.4   
Average other liquid pipelines throughput (MBbls/d)    71.0      73.9   
         
Natural Gas Transportation Services Segment          
Financial data:         
Segment gross margin    9,428      10,687   
Direct operating expenses    2,712      1,673   
Segment operating margin    6,716      9,014   
Operating data:         
Average throughput (MMcf/d)    640.3      810.1   
         
Terminalling Services Segment          
Financial data:         
Segment revenue    —      15,959   
Cost of sales    —      5,023   
Direct operating expenses    —      3,647   
Segment operating margin    —      7,289 

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd