SOURCE: SemGroup Corporation

SemGroup Corporation

November 30, 2010 17:30 ET

SemGroup Corporation Reports Third Quarter 2010 Results

TULSA, OK--(Marketwire - November 30, 2010) - SemGroup® Corporation (NYSE: SEMG) today announced its unaudited financial results for the three and nine months ended September 30, 2010.

For the third quarter of 2010, revenue was $385.3 million and the net loss attributable to SemGroup was $15.4 million, or ($0.37) per diluted share, compared to revenue of $235.1 million and a net loss of $34.9 million for the third quarter of 2009. For the first nine months of 2010, revenue was $1,177.2 million with a net loss of $127.4 million, or ($3.08) per diluted share, compared to revenue of $725.9 million and a net loss of $154.2 million for the first nine months of 2009. A number of factors affect the comparability of financial results between the two years, including the deconsolidation of the Canadian subsidiaries during most of 2009, the sale or shutdown of various subsidiaries and the implementation of fresh start reporting in late 2009.

"SemGroup continues to make positive progress towards rebuilding and moving forward as a growing publicly traded company," said Norman Szydlowski, President and Chief Executive Officer.

SemGroup successfully completed the listing process on the New York Stock Exchange and transitioned the trading of its shares from the over-the-counter market to the NYSE. In addition, the company continues to make progress on its expansion opportunities including the construction of new storage facilities in Cushing, Oklahoma, and the completion of a natural gas liquids terminal in Winslow, Arizona. SemGroup previously announced the sale of a partial interest in its White Cliffs Pipeline subsidiary during the third quarter of 2010.

SemGroup reported adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") of $37.4 million for the three months ended September 30, 2010, compared with a reported Adjusted EBITDA of $26.4 million for the three months ended September 30, 2009. For the first nine months of 2010, Adjusted EBITDA was $109.0 million, compared to $78.4 million for the first nine months of 2009. (See the section of the release entitled "Non-GAAP Financial Measures" for a discussion on Adjusted EBITDA and a reconciliation of this measure to net loss attributable to SemGroup.)

Earnings Conference Call

The call being held at 4:30 p.m. Eastern Time today can be accessed live over the telephone by dialing (800) 299-6183, or for international callers, (617) 801-9713. The passcode for the call is 33198361. A replay will be available shortly after the call and can be accessed by dialing (888) 286-8010, or for international callers, (617) 801-6888. The passcode for the replay is 79804132. The replay will be available until December 7, 2010.

Interested parties may also listen to a simultaneous webcast of the conference call by logging onto SemGroup's Investor Relations website at ir.semgroupcorp.com. A replay of the webcast will also be available for a year following the call at ir.semgroupcorp.com on the Calendar of Events-Past Events page.

An additional slide deck for third quarter earnings will be posted under Investor Relations/Presentations.

About SemGroup

Based in Tulsa, Okla., SemGroup® Corporation (NYSE: SEMG) is a publicly traded midstream service company providing the energy industry the means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end-users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminalling and storing energy.

SemGroup® is a registered trademark of SemGroup Corporation.

Non-GAAP Financial Measures

Adjusted EBITDA is presented in this release for the three and nine month periods ended September 30, 2010 and 2009. Adjusted EBITDA is not a generally accepted accounting principles ("GAAP") measure and is not intended to be used in lieu of a GAAP presentation of net income/loss. Adjusted EBITDA is presented in this release because SemGroup believes it provides additional information with respect to its financial performance and its ability to meet future debt service, capital expenditures and working capital requirements. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, adjusted for selected items that SemGroup believes impact the comparability of financial results between reporting periods. Although SemGroup presents selected items that it considers in evaluating its performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in SemGroup's operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions and numerous other factors. These types of variances are not separately identified in this release. Because all companies do not use identical calculations, SemGroup's presentation of Adjusted EBITDA may be different from similarly titled measures of other companies.

A reconciliation of net loss to EBITDA and Adjusted EBITDA for the periods presented is included in the tables attached to this release.

                        Consolidated Balance Sheets


(dollars in thousands, unaudited, condensed)    September 30, December 31,
                                                    2010          2009
                                                ------------- -------------
ASSETS
Current assets                                  $     528,126 $     790,727
Property, plant and equipment                         785,106     1,041,379
Goodwill                                              117,516       186,844
Other intangible assets                                33,708       130,612
Other noncurrent assets, net                          190,401        60,451
                                                ------------- -------------
Total assets                                    $   1,654,857 $   2,210,013
                                                ============= =============

LIABILITIES AND OWNERS' EQUITY
Current liabilities:
   Current portion of long-term debt            $       6,338 $      20,719
   Other current liabilities                          297,615       557,044
                                                ------------- -------------
Total current liabilities                             303,953       577,763

Long-term debt, excluding current portion             347,286       499,213
Other noncurrent liabilities                          144,688       154,780
                                                ------------- -------------
Total liabilities                                     795,927     1,231,756

Total SemGroup Corporation equity                     858,930       976,686
Noncontrolling interests in consolidated
 subsidiaries                                               -         1,571
                                                ------------- -------------
Total owners' equity                                  858,930       978,257

                                                ------------- -------------
Total liabilities and owners' equity            $   1,654,857 $   2,210,013
                                                ============= =============




                  Consolidated Statements of Operations

(dollars in thousands, except per share amounts, unaudited, condensed)

                         Successor   Predecessor   Successor   Predecessor
                        -----------  -----------  -----------  -----------
                       Three Months  Three Months Nine Months  Nine Months
                           ended        ended        ended        ended
                         September    September    September    September
                          30, 2010     30, 2009     30, 2010     30, 2009
                        -----------  -----------  -----------  -----------
Revenues                $   385,299  $   235,104  $ 1,177,204  $   725,934

Expenses:
  Costs of products
   sold, exclusive of
   depreciation and
   amortization
   (shown below)            293,684      188,688      903,248      599,678
  Operating                  41,195       11,949      113,310       33,868
  General and
   administrative            21,617       11,580       70,402       38,529
  Depreciation and
   amortization              18,632       12,117       58,150       30,836
  Loss (gain) on
   disposal or
   impairment of
   long-lived assets          5,192            5       96,581          (93)
                        -----------  -----------  -----------  -----------
  Total expenses            380,320      224,339    1,241,691      702,818

                        -----------  -----------  -----------  -----------
Operating income (loss)       4,979       10,765      (64,487)      23,116
                        -----------  -----------  -----------  -----------

Other expenses, net          18,409        1,819       64,654        3,239
                        -----------  -----------  -----------  -----------
Income (loss) from
 continuing operations
 before reorganization
 items and income taxes     (13,430)       8,946     (129,141)      19,877
Reorganization items
 loss                             -      (51,302)           -     (127,566)
                        -----------  -----------  -----------  ----------- 
Loss from continuing
 operations before
 income taxes               (13,430)     (42,356)    (129,141)    (107,689)
Income tax expense
 (benefit)                    2,242        1,201         (272)       5,393
                        -----------  -----------  -----------  -----------
Loss from continuing
 operations                 (15,672)     (43,557)    (128,869)    (113,082)
Income (loss) from
 discontinued
 operations, net of
 income taxes                   348        8,679        1,724      (41,076)
                        -----------  -----------  -----------  -----------
Net loss                    (15,324)     (34,878)    (127,145)    (154,158)
  Less: net income
   (loss) attributable
   to noncontrolling
   interests                    108           11          225           26
                        -----------  -----------  -----------  -----------
Net loss attributable
 to SemGroup            $   (15,432) $   (34,889) $  (127,370) $  (154,184)
                        ===========  ===========  ===========  ===========

Net loss attributable
 to SemGroup            $   (15,432) $   (34,889) $  (127,370) $  (154,184)
Other comprehensive
 income (loss)               12,389       (3,824)       4,932       19,057
                        -----------  -----------  -----------  -----------
Comprehensive loss
 attributable to
 SemGroup               $    (3,043) $   (38,713) $  (122,438) $  (135,127)
                        ===========  ===========  ===========  ===========

Basic and diluted net
 loss attributable
 to SemGroup per
 common share:          $     (0.37)              $     (3.08)




                        Adjusted EBITDA Calculation


(dollars in thousands, unaudited)

                            Successor  Predecessor  Successor  Predecessor
                            ---------- -----------  ---------- -----------
                              Three Months Ended      Nine Months Ended
                                September 30,           September 30,
                            ----------------------  ----------------------
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------
 Net loss attributable to
  SemGroup                  $  (15,432) $  (34,889) $ (127,370) $ (154,184)
    Add: Interest expense       21,112       3,084      66,509       9,641
    Add: Income tax expense
     (benefit)                   2,242       1,201        (272)      5,393
    Add: Depreciation and
     amortization               18,632      12,117      58,150      30,836
                            ----------  ----------  ----------  ----------
 EBITDA                         26,554     (18,487)     (2,983)   (108,314)
    Selected items
     impacting
     comparability              10,859      44,929     111,974     186,703
                            ----------  ----------  ----------  ----------
 Adjusted EBITDA            $   37,413  $   26,442  $  108,991  $   78,389
                            ==========  ==========  ==========  ==========




                  Selected Items Impacting Comparability

(dollars in thousands, unaudited)

                                Successor Predecessor Successor Predecessor
                                --------- ----------  --------- ----------
                                 Three Months Ended     Nine Months Ended
                                    September 30,         September 30,
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------
 Loss (gain) on disposal or
  impairment of long-lived
  assets                        $   5,192  $       5  $  96,581  $     (93)
 Reorganization items loss              -     51,302          -    127,566
 Loss (income) from
  discontinued operations            (348)    (8,679)    (1,724)    41,076
 Foreign currency transaction
  (gain)/loss                         (39)       441      1,556     (2,753)
 Impact of change in basis of
  NGL inventory in fresh-start
  reporting                             -          -     27,821          -
 Unrealized (gain)/loss on
  derivative activities             5,290      1,860    (17,662)    20,907
 Change in fair value of
  warrants                           (937)         -     (2,920)         -
 Allowance on receivable from
  AGE Refining                          -          -      3,640          -
 Restricted stock expense           1,701          -      4,682          -
                                ---------  ---------  ---------  ---------
 Selected items impacting
  comparability                 $  10,859  $  44,929  $ 111,974  $ 186,703
                                =========  =========  =========  =========

Note:  SemGroup recorded lower of cost or market adjustments to inventory
of continuing operations of $0.1 million and $1.9 million during the three
months ended September 30, 2010 and 2009, respectively, and $10.9 million
and $8.3 million during the nine months ended September 30, 2010 and 2009,
respectively.

Forward-Looking Statements

Certain matters contained in this Press Release include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical fact, included in this Press Release regarding the prospects of our industry, our anticipated financial performance, management's plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters, may constitute forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, our ability to comply with the covenants contained in and maintain certain financial ratios required by our credit facilities; the possibility that our hedging activities may result in losses or may have a negative impact on our financial results; any sustained reduction in demand for the petroleum products we gather, transport, process and store; our ability to obtain new sources of supply of petroleum products; our failure to comply with new or existing environmental laws or regulations or cross border laws or regulations; the possibility that the construction or acquisition of new assets may not result in the corresponding anticipated revenue increases; any future impairment to goodwill resulting from the loss of customers or business; changes in currency exchange rates; and the risks and uncertainties of doing business outside of the U.S., including political and economic instability and changes in local governmental laws, regulations and policies. Other factors are those discussed in Item 1A of our Registration Statement on Form 10, as amended, entitled "Risk Factors," and risk factors discussed in other reports that we file with the SEC.

Readers are cautioned not to place undue reliance on any forward-looking statements contained in this Press Release, which reflect management's opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements.

SemGroup® is a registered trademark of SemGroup Corporation.

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