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SemGroup Corporation Reports Fourth Quarter and Full Year 2013 Results

(February 27, 2014)


Adjusted EBITDA Increased 40% Year-Over-Year;



2014 Adjusted EBITDA Guidance $245 to $265 Million;



2014 Capex Guidance $415 Million


TULSA, Okla., Feb. 27, 2014 (GLOBE NEWSWIRE) -- SemGroup® Corporation (NYSE:SEMG) today announced its financial results for the three months and year ended December 31, 2013.




SemGroup's adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $57.8 million for the fourth quarter 2013, compared to $52.1 million for the third quarter 2013 and $43.7 million for the fourth quarter 2012, an increase of 11% and 32%, respectively. Adjusted EBITDA, which is a non-GAAP measure, is reconciled to net income (loss) below.



"2013 was an excellent year for our company. We continued a multi-quarter trend of strong results," said Norm Szydlowski, president and chief executive officer of SemGroup. "These results reflect the strength of our strategic plan and asset base. Looking to 2014, we are well positioned for another exciting year. Our solid business model, strong balance sheet and attractive fee-based growth projects should provide significant benefit and attractive results for our shareholders."



Fourth Quarter 2013 Adjusted EBITDA Highlights



Compared to the Third Quarter 2013




  • Crude's results increased $5.9 million

    — $3.5 million increase in marketing due to higher volumes

    — 15% increase in White Cliffs Pipeline volumes


  • SemGas increased $1.9 million

    — Largely related to Northern Oklahoma processing volumes increase of 9.5% due to additional production


  • SemCAMS decreased $2.2 million

    — Primarily due to pipeline curtailments and lower volumes



SemGroup reported revenues for fourth quarter 2013 of $457.3 million with net income attributable to SemGroup of $3.3 million, or $0.08 per diluted share, compared to revenues of $357.7 million with a net loss attributable to SemGroup of $1.9 million, or $(0.05) per diluted share, for the third quarter 2013. For the fourth quarter 2012, revenues totaled $315.8 million with net income attributable to SemGroup of $21.1 million, or $0.50 per diluted share.



Full Year 2013 Highlights




  • SemGroup invested approximately $400 million in growth projects


  • SemGroup completed three acquisitions for nearly $360 million


  • Initiated and increased SemGroup dividends by 16%


  • Major projects remain on time and on budget


  • Many existing assets operating at or near capacity


  • Completed two drop downs to Rose Rock Midstream



Adjusted EBITDA for the year ended December 31, 2013, totaled $189.0 million, up 40% from $135.0 million for the year ended December 31, 2012. For the year ended December 31, 2013, SemGroup reported revenues of $1.4 billion with a net income attributable to SemGroup of $48.1 million, or $1.13 per diluted share, compared to revenues of $1.2 billion with a net income attributable to SemGroup of $22.1 million, or $0.52 per diluted share, for the year ended December 31, 2012.



Dividend



The SemGroup board of directors declared a quarterly cash dividend to common shareholders of $0.22 per share, resulting in an annualized distribution of $0.88 per share. This represents a 5% increase from the previous quarterly dividend of $0.21. The dividend will be paid on March 20, 2014 to all common shareholders of record on March 10, 2014.



2014 Adjusted EBITDA and Capex Guidance



SemGroup anticipates 2014 consolidated Adjusted EBITDA of $245 million to $265 million, an increase of approximately 35% over 2013 results of $189.0 million. The company also expects to deploy $415 million in capital investments in 2014, with more than 85% allocated to growth projects.



Recent Updates



SemGroup announces plans to extend its current Wattenberg Oil Trunkline (WOT) in the DJ Basin in Colorado. The extension will further support the transportation of Noble Energy's crude oil production from the wellhead.



The project will include a 38-mile, 12-inch pipeline extension, as well as 150,000 barrels of operational storage. The pipeline will expand northeast from the current WOT, connecting Noble Energy's East Pony processing facilities in the northeast part of the DJ Basin. Rose Rock Midstream will continue to operate the pipeline and deliver to its Platteville Station, the origin point of White Cliffs Pipeline.



Noble Energy has entered into a long-term agreement to use the asset. The project is expected to be operational in the fourth quarter of 2014.



Earnings Conference Call



SemGroup will host a joint conference call with Rose Rock Midstream®, L.P. (NYSE:RRMS) for investors tomorrow, February 28, 2014, at 11 a.m. ET. The call can be accessed live over the telephone by dialing 877.359.3652, or for international callers, 720.545.0014. The pass code for the call is 31052519. 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. The fourth quarter 2013 earnings slide deck will be posted under Presentations.



About SemGroup



Based in Tulsa, OK, 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 uses its Investor Relations website and social media outlets as channels of distribution of material company information. Such information is routinely posted and accessible on our Investor Relations website at ir.semgroupcorp.com, our Twitter account and LinkedIn account.



Non-GAAP Financial Measures



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 Press Release because SemGroup believes it provides additional information with respect to its performance. 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 Press 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, thereby diminishing its utility. Reconciliations of net income (loss) to Adjusted EBITDA for the periods presented are included in the tables at the end of this Press Release.



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 including the prospects of our industry, our anticipated financial performance, our anticipated annual dividend growth rate, NGL Energy Partners LP (NYSE:NGL) 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, the factors discussed above; our ability to comply with the covenants contained in the instruments governing our indebtedness and to maintain certain financial ratios required by our credit facilities; NGL's operations, which we do not control; the ability of our subsidiary, Rose Rock Midstream L.P. (NYSE:RRMS), to make minimum quarterly distributions; 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; 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, as well as other risk factors discussed from time to time in each of our documents and reports filed 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.


























































































































Condensed Consolidated Balance Sheets

(in thousands, unaudited)

 

 

 

 

December 31, 

December 31, 

 

 2013

 2012

ASSETS

 

 

Current assets

 $ 534,014

 $ 520,003

Property, plant and equipment, net

1,105,728

814,724

Goodwill and other intangible assets

236,859

17,469

Equity method investments

565,124

387,802

Other noncurrent assets, net

28,889

8,181

Total assets

 $ 2,470,614

 $ 1,748,179

LIABILITIES AND OWNERS' EQUITY

 

 

Current liabilities:

 

 

Current portion of long-term debt

 $ 37

 $ 24

Other current liabilities

499,177

374,320

Total current liabilities

499,214

374,344

Long-term debt, excluding current portion

615,088

206,062

Other noncurrent liabilities

142,449

146,245

Total liabilities

1,256,751

726,651

Total owners' equity

1,213,863

1,021,528

Total liabilities and owners' equity

 $ 2,470,614

 $ 1,748,179

 

 

 

 

 

 






















































































































































































































































































Condensed Consolidated Statements of Operations

(in thousands, except per share amounts, unaudited)

 

 

 

 

 

 

 

Three Months Ended

Year Ended

 

December 31,

September 30,

December 31,

 

2013

2012

2013

2013

2012

Revenues

 $ 457,328

 $ 315,837

 $ 357,748

 $ 1,427,016

 $ 1,237,497

Expenses:

 

 

 

 

 

Costs of products sold, exclusive of depreciation and amortization shown below

339,468

223,602

255,554

1,020,100

874,885

Operating

60,772

51,950

52,360

223,585

224,700

General and administrative

23,710

18,845

20,952

78,597

71,918

Depreciation and amortization

24,846

12,523

16,113

66,409

48,210

Loss (gain) loss on disposal of long-lived assets, net

(109)

(35)

408

(239)

(3,531)

Total expenses

448,687

306,885

345,387

1,388,452

1,216,182

Earnings from equity method investments

12,788

13,133

7,483

52,477

36,036

Gain on issuance of common units by equity method investee

26,873



26,873


Operating income

48,302

22,085

19,844

117,914

57,351

Other expenses, net

17,646

5,567

13,294

69,415

30,471

Income from continuing operations before income taxes

30,656

16,518

6,550

48,499

26,880

Income tax expense (benefit)

24,051

(3,066)

3,413

(17,254)

(2,078)

Income from continuing operations

6,605

19,584

3,137

65,753

28,958

Income (loss) from discontinued operations, net of income taxes

(6)

3,392

(2)

59

2,939

Net income

6,599

22,976

3,135

65,812

31,897

Less: net income attributable to noncontrolling interests

3,319

1,882

5,054

17,710

9,797

Net income (loss) attributable to SemGroup Corporation

 $ 3,280

 $ 21,094

$ (1,919)

 $ 48,102

 $ 22,100

Net income (loss) attributable to SemGroup Corporation

 $ 3,280

 $ 21,094

$ (1,919)

 $ 48,102

 $ 22,100

Other comprehensive income (loss), net of income taxes

2,752

(2,354)

6,105

(1,555)

12,576

Comprehensive income attributable to SemGroup Corporation

 $ 6,032

 $ 18,740

 $ 4,186

 $ 46,547

 $ 34,676

Net income (loss) per common share:

 

 

 

 

 

Basic

 $ 0.08

 $ 0.50

$ (0.05)

 $ 1.14

 $ 0.53

Diluted

 $ 0.08

 $ 0.50

$ (0.05)

 $ 1.13

 $ 0.52

Weighted average shares (thousands):

 

 

 

 

 

Basic

42,530

41,960

42,528

42,339

41,939

Diluted

42,888

42,303

42,528

42,646

42,254

 

 

 

 

 

 

 

 

 

 

 

 














































































































Reconciliation of net income to Adjusted EBITDA:

(in thousands, unaudited)

 

 

 

 

 

 

 

Three Months Ended

Year Ended

 

December 31,

September 30,

December 31,

 

2013

2012

2013

2013

2012

Net income

 $ 6,599

 $ 22,976

 $ 3,135

 $ 65,812

 $ 31,897

Add: Interest expense

9,171

1,139

9,080

25,142

8,902

Add: Income tax expense (benefit)

24,051

(3,066)

3,413

(17,254)

(2,078)

Add: Depreciation and amortization expense

24,846

12,523

16,113

66,409

48,210

EBITDA

64,667

33,572

31,741

140,109

86,931

Selected Non-Cash Items and Other Items Impacting Comparability

(6,869)

10,080

20,341

48,909

48,034

Adjusted EBITDA

 $ 57,798

 $ 43,652

 $ 52,082

 $ 189,018

 $ 134,965

 

 

 

 

 

 

 

 

 

 

 

 

















































































































































































Selected Non-Cash Items and

Other Items Impacting Comparability

(in thousands, unaudited)

 

 

 

 

 

 

 

Three Months Ended

Year Ended

 

December 31,

September 30,

December 31,

 

2013

2012

2013

2013

2012

Loss (gain) on disposal of long-lived assets, net

$ (109)

$ (35)

 $ 408

$ (239)

$ (3,531)

Loss (income) from discontinued operations, net of income taxes

6

(3,392)

2

(59)

(2,939)

Foreign currency transaction loss (gain)

(660)

(60)

(457)

(1,633)

298

Remove NGL equity earnings including gain on issuance of common units

(26,168)

(1,747)

3,288

(33,996)

403

NGL cash distribution

4,952

4,155

4,671

18,321

9,218

Mid-America Midstream Gas Services acquisition cost



3,600

3,600


Employee severance expense

29



38

354

Unrealized loss (gain) on derivative activities

785

1,628

(464)

(974)

1,196

Change in fair value of warrants

9,406

4,227

4,834

46,434

21,310

Depreciation and amortization included within equity earnings of White Cliffs

2,304

2,550

2,407

9,520

10,181

Bankruptcy related expenses

567



567


Defense costs





5,899

Recovery of receivables written off at emergence


1,082



(858)

Non-cash equity compensation

2,019

1,672

2,052

7,330

6,503

Selected Non-Cash Items and Other Items Impacting Comparability

$ (6,869)

 $ 10,080

 $ 20,341

 $ 48,909

 $ 48,034

 

 

 

 

 

 

 

 

 

 

 

 












































































































2014 Adjusted EBITDA Guidance Reconciliation

 

 

 

 

(in millions, unaudited)

2014 Guidance(1)

 

Low

 

High

Net income

 $ 79

 

 $ 93

Add: Interest expense

46

 

48

Add: Income tax expense

6

 

8

Add: Depreciation and amortization

86

 

88

EBITDA

 $ 217

 

 $ 237

Selected Non-Cash and Other Items Impacting Comparability

28

 

28

Adjusted EBITDA

 $ 245

 

 $ 265

 

 

 

 

 

 

 

 

Selected Non-Cash and Other Items Impacting Comparability

 

 

 

Depreciation and amortization included within equity earnings

 

18

 

Non-cash equity compensation

 

10

 

Selected Non-Cash and Other Items Impacting Comparability

 

 $ 28

 

 

 

 

 








(1) Guidance is on a cash basis for equity investments in NGL, includes fully consolidated Rose Rock Midstream

CONTACT: Investor Relations:
Alisa Perkins
918-524-8081
investor.relations@semgroupcorp.com

Media:
Kiley Roberson
918-524-8594
kroberson@semgroupcorp.com



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