Northern Tier Energy Reports Second Quarter 2013 Results and Declares Quarterly Cash Distribution

RIDGEFIELD, Conn., Aug. 12, 2013 /PRNewswire/ -- Northern Tier Energy LP and its subsidiaries (NYSE: NTI) ("Northern Tier Energy") today reported results for the second quarter ending June 30, 2013.

Net income was $63.9 million compared to $245.6 million for the second quarter of 2012 and Adjusted EBITDA for the second quarter of 2013 was $85.9 million, a decrease of $160.4 million compared to $246.3 million for the second quarter of 2012.  These decreases were driven by a 32% decline in refinery throughput due to planned turnaround activities that resulted in a full plant shutdown for part of the quarter.  Tightened crude oil price differentials also contributed to the decrease in Adjusted EBITDA.  See the table below for a full reconciliation of non-GAAP performance measures.

"This quarter we successfully completed a planned major plant turnaround with zero loss time injuries despite unseasonable weather conditions," said Hank Kuchta, Chief Executive Officer and President of Northern Tier Energy. "We also took advantage of our planned downtime to complete a capital project that both enhances our product yield and results in a 10% capacity enhancement of our facility.  While our quarterly operating results were impacted by lower throughput due to the planned shutdown and tighter crude spreads, we remain well positioned to protect our competitive advantages of access to price advantaged crudes and favorable product gross margins.  We anticipate that unitholders will realize these competitive advantages through our variable quarterly distributions."

"With this quarter's announced distribution, we will have paid cumulative cash distributions to our unitholders of $4.66 per unit, which amounts to $429 million in the aggregate, since our IPO in July 2012," concluded Kuchta. 

Quarterly Distribution     

The Board of Directors of Northern Tier Energy GP LLC, the general partner of Northern Tier Energy LP, has approved a second quarter distribution of $0.68 per unit that will be paid in cash on August 29, 2013 to common unit holders of record as of the close of business on August 22, 2013.  Cash available for distribution totaled approximately $63 million for the second quarter of 2013. 

Northern Tier Energy LP is a variable distribution master limited partnership.  As a result, its quarterly distributions, if any, will vary from quarter to quarter as a result of variations in, among other factors, (i) its operating performance, (ii) cash flows caused by fluctuations in the prices it pays for crude oil and other feedstocks and the prices it receives for finished products, (iii) capital expenditures, and (iv) other cash reserves deemed necessary or appropriate by the board of directors of its general partner.

Second Quarter Operating Segment Highlights

Refining Segment
The Refining segment's operating income was $48.1 million for the second quarter of 2013 compared to $235.1 million for the second quarter of 2012.  Refining gross product margins were $23.92 per barrel of throughput for the second quarter of 2013 compared to $38.60 per barrel for the second quarter of 2012.  This decrease is primarily due to tightened crude oil price differentials versus the benchmark WTI crude oil prices as well as lower benchmark crack spreads in the second quarter of 2013 compared to the second quarter of 2012.

In addition to lower product margins per barrel, throughput and sales volumes decreased compared to the prior year quarter.  Total throughput was 55,486 barrels per day for the second quarter of 2013 compared to 81,906 barrels per day for the prior year quarter.  Sales volumes decreased to 68,395 barrels per day for the second quarter of 2013 from 88,773 barrels per day for the second quarter of 2012.  These decreases were due to our planned spring turnaround activities which resulted in downtime at the St. Paul Park refinery for a portion of the 2013 second quarter.

Retail Segment
Retail operating income was $8.0 million in the second quarter of 2013 compared to $4.8 million in the second quarter of 2012.  Fuel margins were $0.23 per gallon for the second quarter of 2013 compared to $0.22 per gallon for the same period last year.  Fuel gallons sold at company-operated retail stores were fairly consistent compared to the prior year period. 

Liquidity and Capital Spending

Northern Tier Energy's primary sources of liquidity are cash generated from operating activities and its asset-backed revolving credit facility (the "ABL Facility").  As of June 30, 2013, Northern Tier Energy's cash on hand and availability under the ABL Facility amounted to $291 million as compared to $284 million as of June 30, 2012. Northern Tier Energy continues to maintain a strong balance sheet with a net debt to LTM EBITDA ratio of 0.4x. 

Cash provided by operating activities for the second quarter of 2013 was $82.6 million compared to $154.7 million for the second quarter of 2012.  Capital expenditures for the second quarter of 2013 were $42.4 million of which $27.0 million was used to fund discretionary projects, primarily the refinery's capacity expansion.   

Q3 2013 Operating and Rest of Year Capital Expenditure Guidance

Northern Tier Energy has provided key operating metrics for the third quarter of 2013 and an update on rest of year capital expenditures.  Northern Tier Energy projects it will realize total throughput and sales of between 90,000 and 95,000 barrels per day at the Saint Paul Park Refinery.  Direct operating expense per barrel of throughput at the Saint Paul Park Refinery is expected to be between $4.50 and $4.75, not including turnaround expenditures.  Total capital expenditures are expected to be $20 million and $17 million for the third and fourth quarter of 2013, respectively.  See the table below for additional key metric guidance.

Conference Call Information

The Northern Tier Energy conference call to discuss financial results for the second quarter ending June 30, 2013 is scheduled for Tuesday, August 13, 2013 at 11:00 a.m. Eastern Time.  Callers may listen to the live presentation, which will be followed by a question and answer segment, by dialing 877-280-4957 or 857-244-7314 and the passcode 61031520.  An audio webcast of the call along with a slide presentation will be available at www.ntenergy.com within the Investor section of the site. This audio webcast will be available on the website for fourteen days after the conference call.  A replay will also be available by teleconference for seven days from the conference call.  The replay teleconference will be available by dialing 888-286-8010 or 617-801-6888 and the passcode 61070303.

About Northern Tier Energy

Northern Tier Energy LP (NYSE: NTI) is an independent downstream energy company with refining, retail and pipeline operations that serves the PADD II region of the United States.  Northern Tier Energy operates a 92,500 barrels per stream day refinery located in St. Paul Park, Minnesota.  Northern Tier Energy also operates 163 convenience stores and supports 73 franchised convenience stores, primarily in Minnesota and Wisconsin, under the SuperAmerica trademark, and owns a bakery and commissary under the SuperMom's brand.  Northern Tier Energy is headquartered in Ridgefield, Connecticut. 

Non-GAAP Measures

This earnings release includes non-GAAP measures including Adjusted EBITDA and Cash Available for Distribution.  Northern Tier Energy believes that these non-GAAP financial measures provide useful information about its operating performance.  However, these measures have important limitations as analytical tools and should not be viewed in isolation or considered as alternatives to comparable GAAP financial measures.  Northern Tier Energy's non-GAAP financial measures may also differ from similarly named measures used by other companies.  See the accompanying tables and footnotes in this release for additional information on the non-GAAP measures used in this release and reconciliations to the most directly comparable GAAP measures.

Forward-Looking Statements

This press release contains certain "forward-looking statements" which reflect Northern Tier Energy's views and assumptions on the date of this press release regarding future events. They involve known and unknown risks, uncertainties and other factors, many of which may be beyond its control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. All forward-looking statements speak only as of the date hereof.  Northern Tier Energy undertakes no obligation to update or revise publicly any such forward-looking statements. Northern Tier Energy cautions you not to place undue reliance on these forward-looking statements. Please refer to Northern Tier Energy's filings with the SEC for more detailed information regarding these risks, uncertainties and assumptions.

This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of Northern Tier Energy LP's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, Northern Tier Energy LP's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.

SOURCE Northern Tier Energy LP