SOURCE: Buckeye Partners, L.P.

Buckeye Partners, L.P.

February 05, 2010 07:45 ET

Buckeye Partners, L.P. Reports 2009 Fourth Quarter and Full Year Results and Increases Quarterly Cash Distribution

HOUSTON, TX--(Marketwire - February 5, 2010) - Buckeye Partners, L.P. ("Buckeye") (NYSE: BPL) today reported net income attributable to Buckeye's unitholders for the fourth quarter of 2009 of $77.7 million, or $1.17 per limited partner ("LP") unit, compared to $54.1 million, or $0.89 per LP unit, for the fourth quarter of 2008. Net income attributable to Buckeye's unitholders for the fourth quarter of 2009 included the reversal of $12.8 million of a previously recognized non-cash impairment expense as a result of the sale in January 2010 of a natural gas liquids ("NGL") pipeline system, and the recognition of $2.9 million of additional restructuring charges. Combined, these special items increased net income by $9.9 million, or $0.14 per LP unit, for the fourth quarter of 2009.

Buckeye's Adjusted EBITDA (as defined below) for the fourth quarter of 2009 increased 18 percent to $105.7 million compared to $89.3 million for the fourth quarter of 2008. Operating income for the fourth quarter of 2009 was $96.9 million compared to operating income of $72.4 million for the fourth quarter of 2008. Operating income before special items for the fourth quarter of 2009 was $87.0 million, an increase of 20 percent over the prior year.

Net income attributable to Buckeye's unitholders for the year ended December 31, 2009, was $141.0 million, or $1.84 per LP unit, compared to $184.4 million, or $3.00 per LP unit, for the full year of 2008. During 2009, Buckeye recorded special items totaling $91.8 million, comprised of $59.7 million of non-cash impairment expense to reduce the carrying value of the NGL pipeline system, which was sold in January 2010, and $32.1 million of expense related to organizational restructuring. Net income attributable to Buckeye's unitholders before special items for the full year of 2009 was $232.5 million, or $3.63 per LP unit.

Buckeye's Adjusted EBITDA for the year ended December 31, 2009, increased 17 percent to $370.9 million compared to $318.2 million for the full year of 2008. Operating income for the year ended December 31, 2009, was $208.4 million compared to $253.6 million for 2008. Operating income before special items totaled $300.2 million for the year ended December 31, 2009, an increase of 18 percent from 2008.

Buckeye also announced today that its general partner, Buckeye GP LLC, declared a cash distribution of $0.9375 per LP unit for the quarter ended December 31, 2009. The distribution will be payable on February 26, 2010, to unitholders of record on February 16, 2010. This cash distribution is the 23rd consecutive increase in the quarterly cash distribution and represents a cumulative 5.6 percent increase over the distribution declared for the fourth quarter of 2008. Buckeye has paid cash distributions in each quarter since its formation in 1986.

"Buckeye continued to generate solid financial and operational performance in the fourth quarter of 2009," said Forrest E. Wylie, Chairman and CEO of Buckeye's general partner. "Despite lower volumes in our Pipeline Operations and Terminalling and Storage segments, we generated an 18 percent increase in Adjusted EBITDA during the fourth quarter of 2009 compared to the same quarter in 2008. We continue to identify opportunities to grow and strengthen our business. In mid-November 2009, we completed the previously announced acquisition of 310 miles of refined petroleum products pipelines and three refined petroleum products terminals from ConocoPhillips and integrated these strategic assets into our business."

"Buckeye's fourth quarter performance demonstrates that our transition to a more commercially focused and entrepreneurial business culture is producing tangible results," Wylie said.

"The fourth quarter capped a year of transformation for Buckeye," continued Wylie. "Our employees worked hard to change the culture to make Buckeye a much more nimble commercial organization that is better able to respond to the constantly evolving demands of the market and needs of our customers, while continuing to focus on being an environmentally responsible and reliable operator. In light of difficult economic conditions impacting product demand, we are pleased with our strong results in 2009 and the growth in cash distributions to our unitholders."

Buckeye will host a conference call with members of executive management on Friday, February 5, 2010, at 11:00 a.m. Eastern Time. To access the live Webcast of the call, go to http://www.visualwebcaster.com/event.asp?id=63429 10 minutes prior to its start. A replay will be archived and available at this link for 14 days. Interested parties may participate in the call by dialing 866-226-1792 at least 10 minutes prior to the start and referencing conference ID 404519.

Buckeye Partners, L.P. (www.buckeye.com) is a publicly traded partnership that owns and operates one of the largest independent refined petroleum products pipeline systems in the United States in terms of volumes delivered, with approximately 5,400 miles of pipeline. Buckeye Partners, L.P. also owns 67 refined petroleum products terminals, operates and maintains approximately 2,400 miles of pipeline under agreements with major oil and chemical companies, owns a major natural gas storage facility in northern California, and markets refined petroleum products in certain of the geographic areas served by its pipeline and terminal operations. The general partner of Buckeye Partners, L.P. is owned by Buckeye GP Holdings L.P. (NYSE: BGH).

EBITDA, a measure not defined under U.S. generally accepted accounting principles ("GAAP"), is defined by Buckeye as net income attributable to Buckeye's unitholders from continuing operations before interest expense, income taxes, and depreciation and amortization. The EBITDA measure eliminates the significant level of non-cash depreciation and amortization expense that results from the capital-intensive nature of Buckeye's businesses and from intangible assets recognized in business combinations. In addition, EBITDA is unaffected by Buckeye's capital structure due to the elimination of interest expense and income taxes. Adjusted EBITDA, which also is a non-GAAP measure, is defined by Buckeye as EBITDA plus non-cash deferred lease expense, which is the difference between the estimated annual land lease expense for Buckeye's natural gas storage facility in the Natural Gas Storage segment to be recorded under GAAP and the actual cash to be paid for such annual land lease. In addition, Buckeye's management has excluded the impairment expense related to the approximately 350-mile natural gas liquids pipeline from Wattenberg, Colorado, to Bushton, Kansas, that Buckeye sold in January 2010 (the "Buckeye NGL Pipeline"), and reorganization expense from Adjusted EBITDA in order to evaluate the results of Buckeye's operations on a comparative basis over multiple periods. This press release also includes discussion of net income attributable to Buckeye's unitholders before special items, which is a non-GAAP measure derived by excluding from net income attributable to Buckeye's unitholders items to recognize the Buckeye NGL Pipeline impairment expense and expenses related to an organizational restructuring, and operating income before special items, which is a non-GAAP measure derived by excluding from operating income items to recognize the Buckeye NGL Pipeline impairment expense and expenses related to an organizational restructuring. EBITDA, Adjusted EBITDA, net income attributable to Buckeye's unitholders before special items, and operating income before special items should not be considered alternatives to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP.

The EBITDA and Adjusted EBITDA data presented may not be directly comparable to similarly titled measures at other companies because EBITDA and Adjusted EBITDA exclude some items that affect net income attributable to Buckeye's unitholders, and these items may vary among other companies. Management of Buckeye uses Adjusted EBITDA to evaluate the consolidated operating performance and the operating performance of the business segments and to allocate resources and capital to the business. In addition, Buckeye's management uses Adjusted EBITDA as a performance measure to evaluate the viability of proposed projects and to determine overall rates of return on alternative investment opportunities. Net income attributable to Buckeye's unitholders before special items and operating income before special items are useful measures for investors because they allow comparison of Buckeye's core operations from period to period.

Distributable cash flow, which is a financial measure included in the schedules to this press release, is another measure not defined under GAAP that is defined by Buckeye as net income attributable to Buckeye's unitholders from continuing operations, excluding depreciation and amortization, the Buckeye NGL Pipeline impairment expense, and Buckeye's reorganization expense. In addition, distributable cash flow excludes the deferred land lease expense for Buckeye's Natural Gas Storage segment and the senior administrative charge, which has been waived indefinitely, both of which are non-cash items, and is reduced by maintenance capital expenditures. Distributable cash flow is useful to investors because it removes non-cash items from net income and provides a clearer picture of Buckeye's cash available for distribution to its unitholders.

Buckeye believes that investors benefit from having access to the same financial measures used by Buckeye's management. Further, Buckeye believes that these measures are useful to investors because they are one of the bases for comparing Buckeye's operating performance with that of other companies with similar operations, although Buckeye's measures may not be directly comparable to similar measures used by other companies. Please see the attached reconciliations of each of EBITDA, Adjusted EBITDA, net income attributable to Buckeye's unitholders before special items, and distributable cash flow to net income attributable to Buckeye's unitholders, as well as a reconciliation of operating income before special items to operating income.

This press release includes forward-looking statements that we believe to be reasonable as of today's date. Such statements are identified by use of the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "should," and similar expressions. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and that may be beyond Buckeye's control. Among them are (1) changes in laws or regulations to which we are subject, including those that permit the treatment of us as a partnership for federal income tax purposes, (2) terrorism, adverse weather conditions, environmental releases, and natural disasters, (3) changes in the marketplace for our products or services, such as increased competition, better energy efficiency, or general reductions in demand, (4) adverse regional or national economic conditions or adverse capital market conditions, (5) shutdowns or interruptions at the source points for the products we transport, store, or sell, (6) unanticipated capital expenditures in connection with the construction, repair, or replacement of our assets, (7) volatility in the price of refined petroleum products and the value of natural gas storage services, (8) nonpayment or nonperformance by our customers, (9) our ability to realize efficiencies expected to result from our previously announced reorganization, and (10) our ability to integrate acquired assets with our existing assets and to realize anticipated cost savings and other efficiencies. You should read our Annual Report on Form 10-K and our most recent Quarterly Reports on Form 10-Q for a more extensive list of factors that could affect results. We undertake no obligation to revise our forward-looking statements to reflect events or circumstances occurring after today's date.


                          BUCKEYE PARTNERS, L.P.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per unit amounts)
                               (Unaudited)


                           Three Months Ended           Year Ended
                              December 31,              December 31,
                        ------------------------  ------------------------
                            2009         2008         2009         2008
                        -----------  -----------  -----------  -----------
Revenue:
  Product sales         $   396,909  $   370,886  $ 1,125,653  $ 1,304,097
  Transportation and
   other services           181,959      156,773      644,719      592,555
                        -----------  -----------  -----------  -----------
    Total revenue           578,868      527,659    1,770,372    1,896,652
                        -----------  -----------  -----------  -----------
Costs and expenses:
  Cost of product sales
   and natural gas
   storage services         400,392      360,974    1,103,015    1,274,135
  Operating expenses         66,346       72,330      273,985      279,454
  Depreciation and
   amortization              15,756       13,884       59,164       55,299
  Asset impairment
   expense, net             (12,816)           -       59,724            -
  General and
   administrative             9,359        8,101       33,984       34,143
  Reorganization expense      2,948            -       32,057            -
                        -----------  -----------  -----------  -----------
    Total costs and
     expenses               481,985      455,289    1,561,929    1,643,031
                        -----------  -----------  -----------  -----------
  Operating income           96,883       72,370      208,443      253,621
                        -----------  -----------  -----------  -----------
Other income (expense):
  Earnings from equity
   investments                3,500        2,186       12,531        7,988
  Interest and debt
   expense                  (21,071)     (19,378)     (74,851)     (74,387)
  Other income                  146          344          777        1,429
                        -----------  -----------  -----------  -----------
    Total other expense     (17,425)     (16,848)     (61,543)     (64,970)
                        -----------  -----------  -----------  -----------
  Income from continuing
   operations                79,458       55,522      146,900      188,651
  Income from
   discontinued
   operations                     -            -            -        1,230
                        -----------  -----------  -----------  -----------
  Net income                 79,458       55,522      146,900      189,881
    Less: Net income
     attributable to
     noncontrolling
     interest                (1,754)      (1,404)      (5,918)      (5,492)
                        -----------  -----------  -----------  -----------
  Net income
   attributable to
   Buckeye Partners,
   L.P.                 $    77,704  $    54,118  $   140,982  $   184,389
                        ===========  ===========  ===========  ===========

Amounts attributable to
 Buckeye Partners, L.P.
  Income from
   continuing
   operations           $    77,704  $    54,118  $   140,982  $   183,159
  Income from
   discontinued
   operations                     -            -            -        1,230
                        -----------  -----------  -----------  -----------
    Total amounts
     attributable to
     Buckeye Partners,
     L.P.               $    77,704  $    54,118  $   140,982  $   184,389
                        ===========  ===========  ===========  ===========

Allocation of net
 income attributable to
 Buckeye Partners, L.P.
  Net income allocated
   to general partner:
    Income from
     continuing
     operations         $    19,790  $    10,862  $    55,153  $    33,684
                        ===========  ===========  ===========  ===========
    Income from
     discontinued
     operations         $         -  $         -  $         -  $       370
                        ===========  ===========  ===========  ===========
  Net income allocated
   to limited partners:
    Income from
     continuing
     operations         $    57,914  $    43,256  $    85,829  $   149,475
                        ===========  ===========  ===========  ===========
    Income from
     discontinued
     operations         $         -  $         -  $         -  $       860
                        ===========  ===========  ===========  ===========
Calculation of Earnings
 per Limited Partner
 Unit-diluted:
  Earnings per limited
   partner unit-diluted:
  Income from
   continuing
   operations           $      1.17  $      0.89  $      1.84  $      2.97
  Income from
   discontinued
   operations                     -            -            -         0.03
                        -----------  -----------  -----------  -----------
  Earnings per limited
   partner unit-diluted $      1.17  $      0.89  $      1.84  $      3.00
                        ===========  ===========  ===========  ===========
Weighted average number
 of limited partner
 units outstanding:
  Basic                      51,418       48,372       50,620       47,747
                        ===========  ===========  ===========  ===========
  Diluted                    51,516       48,374       50,663       47,763
                        ===========  ===========  ===========  ===========




                          BUCKEYE PARTNERS, L.P.
                  SELECTED FINANCIAL AND OPERATING DATA
                              (In thousands)
                                (Unaudited)


                        Three Months Ended             Year Ended
                           December 31,                December 31,
                    --------------------------  --------------------------
                        2009           2008         2009           2008
                    -----------    -----------  -----------    -----------
Revenue:
  Pipeline
   Operations       $    98,583    $   100,552  $   392,667    $   387,267
  Terminalling and
   Storage               42,468         31,406      136,576        119,155
  Natural Gas
   Storage               38,838         18,379       99,163         61,791
  Energy Services       396,450        369,116    1,125,013      1,295,925
  Other Operations        8,690          9,861       34,136         43,498
  Intersegment
   eliminations          (6,161)        (1,655)     (17,183)       (10,984)
                    -----------    -----------  -----------    -----------
    Total revenue   $   578,868    $   527,659  $ 1,770,372    $ 1,896,652
                    ===========    ===========  ===========    ===========

Operating income:
  Pipeline
   Operations       $    59,334    $    44,455  $    96,683    $   153,250
  Terminalling and
   Storage               22,377         13,410       61,950         53,704
  Natural Gas
   Storage               11,057         11,218       30,748         32,692
  Energy Services         2,886            800       13,521          6,039
  Other Operations        1,229          2,487        5,541          7,936
                    -----------    -----------  -----------    -----------
    Total operating
     income         $    96,883    $    72,370  $   208,443    $   253,621
                    ===========    ===========  ===========    ===========

Total costs and
 expenses: (1)
  Pipeline
   Operations       $    39,249    $    56,098  $   295,984    $   234,017
  Terminalling and
   Storage               20,091         17,996       74,626         65,451
  Natural Gas
   Storage               27,781          7,160       68,415         29,099
  Energy Services       393,564        368,316    1,111,492      1,289,886
  Other Operations        7,461          7,374       28,595         35,562
  Intersegment
   eliminations          (6,161)        (1,655)     (17,183)       (10,984)
                    -----------    -----------  -----------    -----------
    Total costs and
     expenses       $   481,985    $   455,289  $ 1,561,929    $ 1,643,031
                    ===========    ===========  ===========    ===========
Depreciation and
 amortization:
  Pipeline
   Operations       $     9,738    $     9,575  $    38,433    $    38,279
  Terminalling and
   Storage                1,999          1,979        7,851          6,583
  Natural Gas
   Storage                2,186          1,271        6,458          5,003
  Energy Services         1,355            613        4,547          3,683
  Other Operations          477            446        1,874          1,751
                    -----------    -----------  -----------    -----------
    Total
     depreciation
     and
     amortization   $    15,756    $    13,884  $    59,164    $    55,299
                    ===========    ===========  ===========    ===========
Adjusted EBITDA:
  Pipeline
   Operations       $    61,133    $    55,489  $   230,172    $   196,852
  Terminalling and
   Storage               24,560         15,411       72,518         60,410
  Natural Gas
   Storage               14,480         14,037       42,214         42,374
  Energy Services         4,384          1,363       19,419          9,818
  Other Operations        1,146          2,974        6,607          8,785
                    -----------    -----------  -----------    -----------
    Adjusted EBITDA $   105,703    $    89,274  $   370,930    $   318,239
                    ===========    ===========  ===========    ===========
Capital additions:
  Pipeline
   Operations       $    12,257    $    13,478  $    34,209    $    38,182
  Terminalling and
   Storage                7,279         12,919       20,927         30,245
  Natural Gas
   Storage                3,949         21,986       20,860         49,514
  Energy Services         4,185          1,540        7,317          4,191
  Other Operations          146            297          700            297
                    -----------    -----------  -----------    -----------
    Total capital
     additions      $    27,816    $    50,220  $    84,013    $   122,429
                    ===========    ===========  ===========    ===========
Summary of capital
 additions:
Maintenance and
 capital
 expenditures       $    11,627    $    14,439  $    23,496    $    28,936
Expansion and cost
 reduction               16,189         35,781       60,517         93,493
                    -----------    -----------  -----------    -----------
    Total capital
     additions      $    27,816    $    50,220  $    84,013    $   122,429
                    ===========    ===========  ===========    ===========
Operating data:
  Pipeline
   Throughput (b/d -
   000s)                1,264.9        1,378.6      1,309.9        1,382.2
  Pipeline Average
   Tariff
   (Cents/bbl.)            72.5           69.0         72.1           67.6
  Terminal
   Throughput (b/d -
   000s) (2)              442.8          474.3        444.9          457.4
  Product sales
   (in millions
   of gallons)            199.6          144.0        655.1          435.2


(1) Includes depreciation and amortization, asset impairment expense and
    reorganization expense.
(2) Reported quantities exclude transfer volumes, which are non-revenue
    generating transfers among our various terminals.
   Previously reported amounts included transfer volumes.


                           December 31,
                    --------------------------
Key Balance Sheet      2009           2008
 information:       -----------    -----------
 Cash and cash
  equivalents        $    34,599  $    58,843
 Long-term debt        1,498,970    1,445,722





                          BUCKEYE PARTNERS, L.P.
                  SELECTED FINANCIAL AND OPERATING DATA
                         Non-GAAP Reconciliations
        (In thousands, except per unit amounts and coverage ratio)
                                (Unaudited)


                              Three Months Ended         Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                              2009         2008       2009         2008
                            ---------    ---------  ---------    ---------
Operating income before
 special charges:
  Operating income          $  96,883    $  72,370  $ 208,443    $ 253,621
  Asset impairment expense,
   net                        (12,816)           -     59,724            -
  Reorganization expense        2,948            -     32,057            -
                            ---------    ---------  ---------    ---------
    Operating income before
     special charges        $  87,015    $  72,370  $ 300,224    $ 253,621
                            =========    =========  =========    =========

Net income allocated to
 limited partners (before
 special charges):
  Net income as reported    $  79,458               $ 146,900
      Add: Asset impairment
       expense, net           (12,816)                 59,724
      Add: Reorganization
       expense                  2,948                  32,057
                            ---------               ---------
  Net income (as adjusted)     69,590                 238,681
  Less: Net income
   attributable to
   noncontrolling interest
   (as adjusted)               (1,800)                 (6,177)
                            ---------               ---------
  Net income attributable
   to Buckeye Partners,
   L.P. (as adjusted)       $  67,790               $ 232,504
                            =========               =========
  Earnings per limited
   partner unit-diluted
   (as adjusted):
    Earnings per limited
     partner unit-diluted
     (as adjusted)          $    1.03               $    3.63
                            =========               =========

Adjusted EBITDA:
  Net income attributable
   to Buckeye Partners,
   L.P.                     $  77,704    $  54,118  $ 140,982    $ 184,389
  Less: Income from
   discontinued operations          -            -          -        1,230
                            ---------    ---------  ---------    ---------
  Net income from
   continuing operations
   attributable to
   Buckeye Partners, L.P.      77,704       54,118    140,982      183,159
  Interest and debt expense    21,071       19,378     74,851       74,387
  Income tax expense
   (benefit)                      (85)         361       (348)         796
  Depreciation and
   amortization                15,756       13,884     59,164       55,299
                            ---------    ---------  ---------    ---------
       EBITDA                 114,446       87,741    274,649      313,641
  Non-cash deferred lease
   expense                      1,125        1,533      4,500        4,598
  Asset impairment expense,
   net                        (12,816)           -     59,724            -
  Reorganization expense        2,948            -     32,057            -
                            ---------    ---------  ---------    ---------
       Adjusted EBITDA      $ 105,703    $  89,274  $ 370,930    $ 318,239
                            =========    =========  =========    =========

Distributable Cash Flow:
  Net income attributable
   to Buckeye Partners,
   L.P.                     $  77,704    $  54,118  $ 140,982    $ 184,389
  Less: Income from
   discontinued operations          -            -          -        1,230
                            ---------    ---------  ---------    ---------
  Net income from
   continuing operations
   attributable to
   Buckeye Partners, L.P.      77,704       54,118    140,982      183,159
  Depreciation and
   amortization                15,756       13,884     59,164       55,299
  Non-cash deferred lease
   expense                      1,125        1,533      4,500        4,598
  Asset impairment expense,
   net                        (12,816)           -     59,724            -
  Reorganization expense        2,948            -     32,057            -
  Non-cash senior
   administrative charge            -          475        475        1,900
  Maintenance and capital
   expenditures               (11,627)     (14,439)   (23,496)     (28,936)
                            ---------    ---------  ---------    ---------
  Distributable cash flow   $  73,090    $  55,571  $ 273,406    $ 216,020
                            =========    =========  =========    =========

  Distributions for
   Coverage Ratio (1)       $  60,760    $  53,652  $ 237,318    $ 209,412
                            =========    =========  =========    =========

  Coverage Ratio                 1.20         1.04       1.15         1.03
                            =========    =========  =========    =========

(1)  Represents cash distributions declared for respective periods.