SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 27, 2014
SEMGROUP CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-34736 | 20-3533152 | |
(Commission File Number) | (IRS Employer Identification No.) | |
Two Warren Place
6120 S. Yale Avenue, Suite 700
Tulsa, OK 74136-4216
(Address of Principal Executive Offices) (Zip Code)
(918) 524-8100
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
1
Item 2.02. Results of Operations and Financial Condition.
On February 27, 2014, SemGroup Corporation issued a press release announcing fourth quarter and year ended December 31, 2013 results. A copy of the press release dated February 27, 2014, is attached as Exhibit 99.1 to this Form 8-K.
This information is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following exhibit is furnished herewith.
Exhibit No. | Description |
99.1 | Press Release dated February 27, 2014, issued by SemGroup Corporation. |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SEMGROUP CORPORATION
Date: February 28, 2014
By: /s/ Robert N. Fitzgerald
Robert N. Fitzgerald
Senior Vice President and Chief Financial Officer
3
EXHIBIT INDEX
The following exhibit is furnished herewith.
Exhibit No. | Description |
99.1 | Press Release dated February 27, 2014, issued by SemGroup Corporation. |
4
Exhibit 99.1
SemGroup Corporation Reports Fourth Quarter and Full Year 2013 Results
Adjusted EBITDA Increased 40% Year-Over-Year;
2014 Adjusted EBITDA Guidance $245 to $265 Million;
2014 Capex Guidance $415 Million
Tulsa, OK - February 27, 2014 - 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 |
Exhibit 99.1
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.
Exhibit 99.1
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
Exhibit 99.1
undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements.
Contacts:
Investor Relations:
Alisa Perkins
918-524-8081
investor.relations@semgroupcorp.com
Media:
Kiley Roberson
918-524-8594
kroberson@semgroupcorp.com
Exhibit 99.1
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
December 31, 2013 | December 31, 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 | |||
Exhibit 99.1
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 | ||||||||||
Exhibit 99.1
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 | ||||
Exhibit 99.1
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