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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): May 4, 2017

 

ARC LOGISTICS PARTNERS LP

(Exact name of registrant as specified in its charter)

 

 

Delaware

(State or other jurisdiction of incorporation)

 

001-36168 36-4767846
(Commission File Number) (IRS Employer Identification No.)

 

725 Fifth Avenue, 19th Floor

New York, New York

10022
(Address of principal executive offices) (Zip Code)

 

 

(212) 993-1290

(Registrant’s telephone number, including area code)

 

N/A

(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:

 

 

☐     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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

Item 2.02.Results of Operations and Financial Condition.

 

On May 4, 2017, Arc Logistics Partners LP, a Delaware limited partnership (the “Partnership”), issued a press release announcing its financial results for the first quarter ended March 31, 2017. A copy of the press release is furnished with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

 

The information provided in this Item 2.02 (including the press release furnished as Exhibit 99.1) 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”), nor shall it be incorporated by reference in any filing made by the Partnership pursuant to the Securities Act of 1933, as amended (the “Securities Act”), regardless of any general incorporation language in such filing except to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

 

Item 7.01.Regulation FD Disclosure.

 

The information set forth under Item 2.02 of this Current Report on Form 8-K is incorporated in this Item 7.01 by reference.

 

The information provided in this Item 7.01 (including the press release furnished as Exhibit 99.1) shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act, nor shall it be incorporated by reference in any filing made by the Partnership pursuant to the Securities Act, except to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

 

Item 9.01.Financial Statements and Exhibits.

 

(d)    Exhibits.

 

Exhibit No.   Description
     
99.1   Press release of Arc Logistics Partners LP issued May 4, 2017.  
       

 

 

 

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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.

 

 

  ARC LOGISTICS PARTNERS LP
     
  By:  ARC LOGISTICS GP LLC, its General Partner
     
Date:        May 4, 2017 By:   /s/ BRADLEY K. OSWALD
    Bradley K. Oswald
    Senior Vice President, Chief Financial Officer and Treasurer

 

 

 

 

 

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EXHIBIT INDEX

 

 

Exhibit No.   Description
     
99.1   Press release of Arc Logistics Partners LP issued May 4, 2017.  
       

 

 

 

 

 

 

 

 

 

 

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Exhibit 99.1

 

 

Arc Logistics Partners

http://arcxlp.com

 

 

Arc Logistics Partners LP Announces First Quarter 2017 Results

 

NEW YORK, May 4, 2017 (GLOBE NEWSWIRE) -- Arc Logistics Partners LP (NYSE: ARCX) ("Arc Logistics" or the "Partnership") today reported its financial and operating results for the first quarter ended March 31, 2017.

 

During the first quarter of 2017, the Partnership accomplished the following:

 

·Realized throughput of 159.5 thousand barrels per day (“mbpd”)
·Reported revenues, net income and Adjusted EBITDA of $25.9 million, $3.8 million and $13.3 million, respectively
·Invested $2.9 million of expansion capital expenditures to support existing, new and future customer initiatives
·Generated cash flows from operating activities of $11.5 million and Distributable Cash Flow of $9.2 million
·Declared a quarterly cash distribution of $0.44 per unit for the first quarter ended March 31, 2017

 

For additional information regarding the Partnership’s calculation of Adjusted EBITDA and Distributable Cash Flow, which are non-GAAP financial measures, and a reconciliation of net income to Adjusted EBITDA and cash flows from operating activities to Distributable Cash Flow, please see below in this release and the accompanying tables.

 

First Quarter 2017 Operational and Financial Results

 

The Partnership’s first quarter 2017 reported revenues, net income and Adjusted EBITDA of $25.9 million, $3.8 million and $13.3 million, respectively, represents a decrease over the Partnership’s first quarter 2016 reported revenues, net income and Adjusted EBITDA of $26.1 million, $5.0 million and $13.5 million, respectively. Operating income decreased by $0.9 million to $4.1 million for the first quarter 2017 when compared to the first quarter 2016 operating income of $5.0 million, which decrease was principally due to the following:

 

·Revenues decreased by $0.1 million, or 1%, to $25.9 million as compared to $26.1 million, which decrease was related to a $1.1 million decrease in minimum storage and throughput services fees primarily due to transitioning customers from short-term agreements to long-term agreements, customers reducing short-term storage capacity needs and/or total minimum take-or-pay contract terms at Altoona, Blakeley, Chickasaw, Dupont, Mechanicsburg, Mobile, Portland and Williamsport terminals, offset by (i) $0.7 million increase in excess throughput and handling fees primarily due to execution of new agreements and incremental existing customer throughput and handling fees at the Partnership’s Altoona, Baltimore, Chickasaw, Cleveland, Dupont, Mechanicsburg, Mobile, Norfolk, Pawnee, Selma, Toledo and Williamsport terminals and (ii) a $0.3 million increase in ancillary services fees primarily due to services provided to existing customers at the Partnership’s Baltimore, Brooklyn, Dupont, Mechanicsburg, Norfolk, Pawnee, Selma and Spartanburg terminals due to increased activity.
·Operating expenses increased by $0.2 million, or 2%, to $8.9 million as compared to $8.7 million, which increase was the result of a (i) $0.2 million increase attributable to increased throughput activity including additive, utility and supply expenses, (ii) $0.1 million increase in repair and maintenance expense, (iii) $0.2 million increase in contract labor in support of customer activities at the Joliet terminal and (iv) an increase in compliance expense of $0.1 million, offset by (i) reduced payroll expenses of $0.1 million due to a realignment and optimization of the Partnership’s workforce, (ii) $0.1 million related to a reduction in office expenses, (iii) $0.1 million related to prior period tank cleaning projects and (iv) $0.1 million related to a reduction in estimated property taxes related to prior year acquisitions.

 

 

 

 

·Selling, general and administrative expenses decreased by approximately $0.7 million, or 14%, to $4.5 million as compared to $5.2 million, which was a result of a (i) $0.3 million decrease in due diligence expenses, (ii) $0.2 million decrease in professional fees associated with a customer dispute, (iii) $0.2 million decrease related to a reduction in compensation expense under the Partnership’s long-term incentive plan and (iv) less than $0.1 million decrease related to a reduction in allocation of expenses from the Partnership’s general partner.
·Depreciation expense increased by $0.8 million, or 22%, to $4.5 million as compared to $3.7 million, which increase was primarily due to the impact of the expansion project at our Pennsylvania terminals which were acquired in 2016, customer expansion activities and incremental maintenance projects. Amortization expense decreased by less than $0.1 million, or 1%, to $3.7 million, which decrease was primarily due to an intangible asset related to the Mobile terminal acquisition becoming fully amortized in the first quarter of 2016.

 

As of March 31, 2017, the Partnership's storage capacity was approximately 7.8 million barrels, which represents an approximately 0.1 million barrel, or 1%, increase when compared to the Partnership’s capacity at March 31, 2016. The increase in storage capacity is related to three newly constructed biodiesel tanks at the Pennsylvania terminals and the completion of the third 100,000 barrel tank at the Pawnee terminal.

 

The Partnership's throughput activity increased by 14.5 mbpd, or 10%, to 159.5 mbpd during the first quarter of 2017 compared to the first quarter of 2016. The increase was due to (i) 2.9 mbpd increase in asphalt and industrial products throughput related to existing customer activity in the Gulf Coast, (ii) 0.5 mbpd decrease in crude oil throughput as customer activity at the Joliet terminal offset a reduction in customer activity at the Pawnee and Portland terminals, (iii) 5.0 mbpd increase in distillates throughput is the result of recently executed agreements and increased existing customer activity in Baltimore, Chickasaw, Cleveland and the Pennsylvania terminals, partially offset by reduced customer activity and customer non-renewals in the Partnership’s Blakeley, Madison, Mobile, Portland, Selma, Toledo terminals, (iv) 7.1 mbpd increase in gasoline throughput as a result of 8.3 mbpd of recently executed agreements and increased commercial activity across the entire network providing gasoline service offset by 1.2 mbpd of reduced customer activity in the Partnership’s Dupont and Selma terminals.

 

In April 2017, the Partnership declared a quarterly cash distribution of $0.44 per unit, or $1.76 per unit on an annualized basis, for the period from January 1, 2017 through March 31, 2017. The distribution will be paid on May 15, 2017 to unitholders of record on May 8, 2017.

 

Conference Call

 

Arc Logistics will hold a conference call and webcast to discuss the first quarter 2017 financial and operating results on May 4, 2017, at 5:00 p.m. Eastern. Interested parties may listen to the conference call by dialing (855) 433-0931. International callers may access the conference call by dialing (484) 756-4279. The call may also be accessed live over the internet by visiting the “Investor Relations” page of the Partnership’s website at www.arcxlp.com and will be available for replay for approximately one month.

 

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About Arc Logistics Partners LP

 

Arc Logistics is a fee-based, growth-oriented limited partnership that owns, operates, develops and acquires a diversified portfolio of complementary energy logistics assets. Arc Logistics is principally engaged in the terminalling, storage, throughput and transloading of petroleum products and other liquids. For more information, please visit www.arcxlp.com.

 

Forward-Looking Statements

 

Certain statements and information in this press release constitute “forward-looking statements.” Certain expressions including “believe,” “expect,” “intends,” or other similar expressions are intended to identify the Partnership’s current expectations, opinions, views or beliefs concerning future developments and their potential effect on the Partnership. While management believes that these forward-looking statements are reasonable when made, there can be no assurance that future developments affecting the Partnership will be those that it anticipates. The forward-looking statements involve significant risks and uncertainties (some of which are beyond the Partnership’s control) and assumptions that could cause actual results to differ materially from the Partnership’s historical experience and its present expectations or projections. Important factors that could cause actual results to differ materially from forward-looking statements include but are not limited to: (i) adverse economic, capital markets and political conditions; (ii) changes in the market place for the Partnership’s services; (iii) changes in prices and supply and demand of crude oil and petroleum products; (iv) actions and performance of the Partnership’s customers, vendors or competitors; (v) nonrenewal, nonpayment or nonperformance by the Partnership’s customers and the Partnership’s ability to replace such contracts and/or customers; (vi) changes in the cost of or availability of capital; (vi) unanticipated capital expenditures in connection with the construction, repair or replacement of the Partnership’s assets; (viii) operating hazards, unforeseen weather events or matters beyond the Partnership’s control; (ix) inability to consummate acquisitions, pending or otherwise, on acceptable terms and successfully integrate acquired businesses into the Partnership’s operations; (x) effects of existing and future laws or governmental regulations; and (xi) litigation. Additional information concerning these and other factors that could cause the Partnership’s actual results to differ from projected results can be found in the Partnership’s public periodic filings with the Securities and Exchange Commission (“SEC”), including the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 14, 2017 and any updates thereto in the Partnership’s subsequent quarterly reports on Form 10-Q and current reports on Forms 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The Partnership undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

 

Non-GAAP Financial Measures

 

The Partnership defines Adjusted EBITDA as net income before interest expense, income taxes and depreciation and amortization expense, as further adjusted for other non-cash charges and other charges that are not reflective of its ongoing operations. Adjusted EBITDA is a non-GAAP financial measure that management and external users of the Partnership’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess (i) the performance of the Partnership’s assets without regard to the impact of financing methods, capital structure or historical cost basis of the Partnership’s assets; (ii) the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities; (iii) the Partnership’s ability to make distributions; (iv) the Partnership’s ability to incur and service debt and fund capital expenditures; and (v) the Partnership’s ability to incur additional expenses. The Partnership believes that the presentation of Adjusted EBITDA provides useful information to investors in assessing its financial condition and results of operations.

 

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The Partnership defines Distributable Cash Flow as Adjusted EBITDA less (i) cash interest expense paid; (ii) cash income taxes paid; (iii) maintenance capital expenditures paid; and (iv) equity earnings from the Partnership’s interests in Gulf LNG Holdings Group, LLC (the “LNG Interest”); plus (v) cash distributions from the LNG Interest. Distributable Cash Flow is a non-GAAP financial measure that management and external users of the Partnership’s consolidated financial statements may use to evaluate whether the Partnership is generating sufficient cash flow to support distributions to its unitholders as well as to measure the ability of the Partnership’s assets to generate cash sufficient to support its indebtedness and maintain its operations.

 

The GAAP measure most directly comparable to Adjusted EBITDA is net income and to Distributable Cash Flow is cash flows from operating activities. Neither Adjusted EBITDA nor Distributable Cash Flow should be considered an alternative to net income or cash flows from operating activities, respectively. Adjusted EBITDA and Distributable Cash Flow have important limitations as analytical tools because they exclude some but not all items that affect net income. You should not consider Adjusted EBITDA or Distributable Cash Flow in isolation or as a substitute for analysis of the Partnership’s results as reported under GAAP. Additionally, because Adjusted EBITDA and Distributable Cash Flow may be defined differently by other companies in the Partnership’s industry, the Partnership’s definitions of Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. Please see the reconciliation of net income to Adjusted EBITDA and cash flows from operating activities to Distributable Cash Flow in the accompanying tables.

 

Investor Contact: 
IR@arcxlp.com
www.arcxlp.com

212-993-1290

 

 

 

 

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ARC LOGISTICS PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except per unit amounts)

(Unaudited)

 

   Three Months Ended
   March 31,
   2017  2016
Revenues:      
Third-party customers  $24,448   $22,584 
Related parties   1,477    3,483 
    25,925    26,067 
Expenses:          
Operating expenses   8,873    8,687 
Selling, general and administrative   3,239    3,924 
Selling, general and administrative - affiliate   1,262    1,322 
Depreciation   4,456    3,652 
Amortization   3,672    3,697 
(Gain) loss on revaluation of contingent consideration, net   318    (189)
Total expenses   21,820    21,093 
Operating (loss) income   4,105    4,974 
Other income (expense):          
Equity earnings from unconsolidated affiliate   2,371    2,461 
Interest expense   (2,654)   (2,367)
Total other income (expenses), net   (283)   94 
(Loss) income before income taxes   3,822    5,068 
Income taxes   31    28 
Net (loss) income   3,791    5,040 
Net income attributable to non-controlling interests   (1,328)   (1,811)
Net (loss) income attributable to partners' capital   2,463    3,229 
Other comprehensive (loss) income   448    (896)
Comprehensive (loss) income attributable to partners’ capital  $2,911   $2,333 
           
Earnings (loss) per limited partner unit:          
Common units (basic and diluted)  $0.12   $0.15 
Subordinated units (basic and diluted)  $-   $0.15 

 

 

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ARC LOGISTICS PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(In thousands, except unit amounts)

(Unaudited)

 

   March 31,  December 31,
   2017  2016
Assets:          
Current assets:          
Cash and cash equivalents  $1,762   $4,584 
Trade accounts receivable   9,216    8,257 
Due from related parties   549    1,321 
Inventories   369    397 
Other current assets   2,341    2,060 
Total current assets   14,237    16,619 
Property, plant and equipment, net   395,006    395,511 
Investment in unconsolidated affiliate   76,807    75,716 
Intangible assets, net   114,121    117,716 
Goodwill   39,871    39,871 
Other assets   2,599    2,980 
Total assets  $642,641   $648,413 
Liabilities and partners' capital:          
Current liabilities:          
Accounts payable  $4,609   $2,455 
Accrued expenses   4,741    5,684 
Due to general partner   1,557    2,082 
Other liabilities   2,855    2,961 
Total current liabilities   13,762    13,182 
Credit facility   249,500    249,000 
Other non-current liabilities   19,391    19,805 
Total liabilities   282,653    281,987 
Commitments and contingencies          
Partners' capital:          
General partner interest   -    - 
Limited partners' interest          
Common units – (19,515,678 and 19,477,021 units issued and outstanding at March 31, 2017 and December 31, 2016, respectively)   276,614    282,228 
Non-controlling interests   80,269    81,541 
Accumulated other comprehensive income   3,105    2,657 
Total partners' capital   359,988    366,426 
Total liabilities and partners' capital  $642,641   $648,413 

 

 

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ARC LOGISTICS PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

   Three Months Ended
   March 31,
   2017  2016
Cash flow from operating activities:          
Net income  $3,791   $5,040 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Depreciation   4,456    3,652 
Amortization   3,672    3,697 
Equity earnings from unconsolidated affiliate, net of distributions   (719)   (282)
Amortization of deferred financing costs   406    359 
Unit-based compensation   839    1,095 
Net loss (gain) on revaluation of contingent consideration   318    (189)
Changes in operating assets and liabilities:          
Trade accounts receivable   (960)   (219)
Due from related parties   772    195 
Inventories   27    (101)
Other current assets   (281)   56 
Accounts payable   415    (792)
Accrued expenses   (448)   (1,447)
Due to general partner   (525)   383 
Other liabilities   (220)   1,073 
Net cash provided by operating activities   11,543    12,520 
Cash flows from investing activities:          
Capital expenditures   (2,557)   (5,715)
Investment in unconsolidated affiliate   -    (8,000)
Net cash used in investing activities   (2,557)   (13,715)
Cash flows from financing activities:          
Distributions   (8,570)   (8,473)
Deferred financing costs   (25)   (192)
Repayments to credit facility   (5,000)   - 
Proceeds from credit facility   5,500    14,250 
Payments of earn-out liability   (951)   (341)
Distributions paid to non-controlling interests   (2,600)   (2,800)
Distribution equivalent rights paid on unissued units   (162)   (231)
Net cash (used in) provided by financing activities   (11,808)   2,213 
Net increase in cash and cash equivalents   (2,822)   1,018 
Cash and cash equivalents, beginning of period   4,584    5,870 
Cash and cash equivalents, end of period  $1,762   $6,888 

 

 

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ARC LOGISTICS PARTNERS LP

RECONCILIATIONS OF ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW

(In thousands)

(Unaudited)

 

   Three Months Ended
   March 31,
   2017  2016
       
Net Income Attributable to Partners' Capital  $2,463   $3,229 
Income taxes   31    28 
Interest expense   2,654    2,367 
Depreciation (a)   3,978    3,202 
Amortization (a)   3,055    3,081 
One-time non-recurring expenses (b)   -    559 
Non-cash unit-based compensation   840    1,088 
Non-cash loss (gain) on revaluation of contingent consideration, net (a),(c)   191    (113)
Non-cash deferred rent expense (d)   65    65 
Adjusted EBITDA  $13,277   $13,506 
Cash interest expense   (2,273)   (2,138)
Cash income taxes   (31)   (27)
Maintenance capital expenditures   (1,096)   (2,080)
Equity earnings from the LNG Interest   (2,371)   (2,461)
Cash distributions received from the LNG Interest   1,652    2,179 
Distributable Cash Flow  $9,158   $8,979 
Maintenance capital expenditures   1,096    2,080 
Distributable cash flow attributable to non-controlling interests   2,423    2,803 
Changes in operating assets and liabilities   (1,220)   (852)
One-time non-recurring expenses (b)   -    (559)
Other non-cash adjustments   86    69 
Net Cash Provided by Operating Activities  $11,543   $12,520 

___________

   
(a)The (gain) loss on revaluation of contingent consideration, depreciation and amortization have been adjusted to remove the non-controlling interest portion related to the GE EFS affiliate’s ownership interest in Arc Terminals Joliet Holdings LLC.
   
(b)The one-time non-recurring expenses relate to amounts incurred as due diligence expenses from acquisitions and other infrequent or unusual expenses incurred.
   
(c)The non-cash (gain) loss on revaluation of contingent consideration is related to the earn-out obligations incurred as a part of the Joliet terminal acquisition.
   
(d)The non-cash deferred rent expense relates to the accounting treatment for the Portland terminal lease transaction termination fees.

 

 

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ARC LOGISTICS PARTNERS LP

SUPPLEMENTAL INFORMATION

(In thousands, except operating data)

(Unaudited)

 

   Three Months Ended
   March 31,
   2017  2016
Selected Operating Data:          
Storage capacity (bbls)   7,842,600    7,741,100 
Throughput (bpd)   159,476    144,980 
           
Throughput Data (bpd):          
Asphalts and industrial products   17,324    14,452 
Crude oil   69,714    70,195 
Distillates   24,206    19,183 
Gasoline   48,232    41,150 
Total Throughput   159,476    144,980 
           
Revenue Summary:          
Minimum storage & throughput services fees  $20,919   $22,018 
Excess throughput & handling fees   3,316    2,656 
Total storage & throughput fees   24,235    24,674 
Ancillary services fees   1,690    1,393 
Total revenue  $25,925   $26,067 
           
Capital Expenditures:          
Maintenance capital expenditures  $1,096   $2,080 
Growth capital expenditures   2,854    4,177 
Total capital expenditures  $3,950   $6,257 

 

 

 

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