Exhibit 99.2
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Introduction
On September 30, 2019, NGL Energy Partners LP (“the Partnership”) sold TransMontaigne Product Services, LLC (“TPSL”) and associated assets to Trajectory Acquisition Company LLC (“Trajectory”) for total consideration of $275.5 million less estimated expenses of approximately $5.0 million. TPSL comprised a portion of the Partnership’s Refined Products and Renewables segment.
The following sets forth the unaudited pro forma condensed consolidated balance sheet of the Partnership as of June 30, 2019 and the unaudited pro forma condensed consolidated statements of operations for the three months ended June 30, 2019 and the years ended March 31, 2019, 2018 and 2017. The unaudited pro forma condensed consolidated balance sheet gives pro forma effect only for the sale of TPSL as if it had occurred on June 30, 2019. The unaudited pro forma condensed consolidated statements of operations give pro forma effect for the sale of TPSL as if it had occurred on April 1, 2016.
These unaudited pro forma condensed consolidated financial statements have been derived from the Partnership’s historical consolidated financial statements, which are included in its Annual Report on Form 10-K for the year ended March 31, 2019 and Quarterly Report on Form 10-Q for the three months ended June 30, 2019. These unaudited condensed consolidated financial statements should be read in conjunction with the Partnership’s historical financial statements and related notes thereto.
The following unaudited pro forma condensed consolidated financial statements are based on certain assumptions and do not purport to be indicative of the results that actually would have been achieved if the transaction described above had occurred on the dates indicated. Moreover, the accompanying unaudited pro forma condensed consolidated financial statements do not project the Partnership’s results of operations for any future date or period.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of June 30, 2019
(U.S. Dollars in Thousands)
Historical NGL Energy Partners LP (As Reported) | Pro Forma Adjustments | Pro Forma NGL Energy Partners LP Continuing Operations | |||||||||
ASSETS | |||||||||||
CURRENT ASSETS: | |||||||||||
Cash and cash equivalents | $ | 27,501 | $ | 275,470 | (A) | $ | 27,501 | ||||
(5,000 | ) | (A) | |||||||||
(270,470 | ) | (B) | |||||||||
Accounts receivable-trade, net | 911,982 | (121,543 | ) | (C) | 790,439 | ||||||
Accounts receivable-affiliates | 11,507 | — | 11,507 | ||||||||
Inventories | 519,603 | (212,111 | ) | (C) | 307,492 | ||||||
Prepaid expenses and other current assets | 178,695 | (15,704 | ) | (C) | 162,991 | ||||||
Total current assets | 1,649,288 | (349,358 | ) | 1,299,930 | |||||||
PROPERTY, PLANT AND EQUIPMENT, net | 2,015,518 | (15,185 | ) | (C) | 2,000,333 | ||||||
GOODWILL | 1,153,029 | (32,712 | ) | (C) | 1,120,317 | ||||||
INTANGIBLE ASSETS, net | 931,709 | (136,074 | ) | (C) | 795,635 | ||||||
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 1,585 | — | 1,585 | ||||||||
OPERATING LEASE RIGHT-OF-USE ASSETS | 518,035 | (308,117 | ) | (C) | 209,918 | ||||||
OTHER NONCURRENT ASSETS | 125,741 | (46,871 | ) | (C) | 78,870 | ||||||
Total assets | $ | 6,394,905 | $ | (888,317 | ) | $ | 5,506,588 | ||||
LIABILITIES AND EQUITY | |||||||||||
CURRENT LIABILITIES: | |||||||||||
Accounts payable-trade | $ | 814,141 | $ | (77,352 | ) | (C) | $ | 736,789 | |||
Accounts payable-affiliates | 23,071 | — | 23,071 | ||||||||
Accrued expenses and other payables | 214,243 | (51,041 | ) | (C) | 163,202 | ||||||
Advance payments received from customers | 28,313 | (460 | ) | (C) | 27,853 | ||||||
Current maturities of long-term debt | 649 | — | 649 | ||||||||
Operating lease obligations | 77,021 | (7,526 | ) | (C) | 69,495 | ||||||
Total current liabilities | 1,157,438 | (136,379 | ) | 1,021,059 | |||||||
LONG-TERM DEBT, net of debt issuance costs and current maturities | 2,586,954 | (270,470 | ) | (B) | 2,316,484 | ||||||
— | |||||||||||
— | |||||||||||
OPERATING LEASE OBLIGATIONS | 439,083 | (300,591 | ) | (C) | 138,492 | ||||||
OTHER NONCURRENT LIABILITIES | 61,165 | — | 61,165 | ||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||
EQUITY: | |||||||||||
General partner, representing a 0.1% interest | (50,773 | ) | (181 | ) | (D) | (50,954 | ) | ||||
Limited partners, representing a 99.9% interest | 1,897,407 | (180,696 | ) | (D) | 1,716,711 | ||||||
Class B preferred limited partners | 202,731 | — | 202,731 | ||||||||
Class C preferred limited partners | 42,638 | 42,638 | |||||||||
Accumulated other comprehensive loss | (218 | ) | — | (218 | ) | ||||||
Noncontrolling interests | 58,480 | — | 58,480 | ||||||||
Total equity | 2,150,265 | (180,877 | ) | 1,969,388 | |||||||
Total liabilities and equity | $ | 6,394,905 | $ | (888,317 | ) | $ | 5,506,588 |
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the three months ended June 30, 2019
(U.S. dollars in thousands, except unit and per unit amounts)
Historical NGL Energy Partners LP (As Reported) | Pro Forma Adjustments | Pro Forma NGL Energy Partners LP Continuing Operations | |||||||||
REVENUES | $ | 6,637,891 | $ | (1,471,466 | ) | (E) | $ | 5,166,425 | |||
COST OF SALES | 6,453,467 | (1,458,501 | ) | (E) | 4,994,966 | ||||||
OPERATING COSTS AND EXPENSES: | |||||||||||
Operating | 64,267 | (2,171 | ) | (E) | 62,096 | ||||||
General and administrative | 20,363 | (21 | ) | (E) | 20,342 | ||||||
Depreciation and amortization | 54,208 | (454 | ) | (E) | 53,754 | ||||||
Gain on disposal or impairment of assets, net | (967 | ) | — | (967 | ) | ||||||
Operating Income | 46,553 | (10,319 | ) | 36,234 | |||||||
OTHER INCOME (EXPENSE): | |||||||||||
Equity in earnings of unconsolidated entities | 8 | — | 8 | ||||||||
Interest expense | (39,908 | ) | 14 | (E) | (37,007 | ) | |||||
2,887 | (F) | ||||||||||
Other income, net | 1,075 | (66 | ) | (E) | 1,009 | ||||||
Income From Continuing Operations Before Income Taxes | 7,728 | (7,484 | ) | 244 | |||||||
INCOME TAX BENEFIT | 311 | 10 | (E) | 321 | |||||||
Income From Continuing Operations | 8,039 | (7,474 | ) | 565 | |||||||
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 268 | — | 268 | ||||||||
NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP | 8,307 | (7,474 | ) | 833 | |||||||
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS | (129,460 | ) | — | (129,460 | ) | ||||||
LESS: CONTINUING OPERATIONS NET LOSS ALLOCATED TO GENERAL PARTNER | 85 | 8 | (G) | 93 | |||||||
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS | $ | (121,068 | ) | $ | (7,466 | ) | $ | (128,534 | ) | ||
BASIC AND DILUTED LOSS PER COMMON UNIT | $ | (0.96 | ) | $ | (1.02 | ) | |||||
BASIC AND DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 125,886,738 | 125,886,738 |
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended March 31, 2019
(U.S. dollars in thousands, except unit and per unit amounts)
Historical NGL Energy Partners LP (As Reported) | Pro Forma Adjustments | Pro Forma NGL Energy Partners LP Continuing Operations | |||||||||
REVENUES | $ | 24,016,907 | $ | (6,196,287 | ) | (E) | $ | 17,820,620 | |||
COST OF SALES | 23,284,917 | (6,122,642 | ) | (E) | 17,162,275 | ||||||
OPERATING COSTS AND EXPENSES: | |||||||||||
Operating | 240,684 | (7,371 | ) | (E) | 233,313 | ||||||
General and administrative | 107,534 | (127 | ) | (E) | 107,407 | ||||||
Depreciation and amortization | 212,860 | (887 | ) | (E) | 211,973 | ||||||
Loss on disposal or impairment of assets, net | 34,296 | — | 34,296 | ||||||||
Revaluation of liabilities | (5,373 | ) | — | (5,373 | ) | ||||||
Operating Income | 141,989 | (65,260 | ) | 76,729 | |||||||
OTHER INCOME (EXPENSE): | |||||||||||
Equity in earnings of unconsolidated entities | 2,533 | — | 2,533 | ||||||||
Interest expense | (164,726 | ) | 1 | (E) | (153,176 | ) | |||||
11,549 | (F) | ||||||||||
Loss on early extinguishment of liabilities, net | (12,340 | ) | — | (12,340 | ) | ||||||
Other expense, net | (29,946 | ) | (468 | ) | (E) | (30,414 | ) | ||||
Loss From Continuing Operations Before Income Taxes | (62,490 | ) | (54,178 | ) | (116,668 | ) | |||||
INCOME TAX EXPENSE | (1,234 | ) | 1 | (E) | (1,233 | ) | |||||
Net Loss From Continuing Operations | (63,724 | ) | (54,177 | ) | (117,901 | ) | |||||
LESS: CONTINUING OPERATIONS NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 20,206 | — | 20,206 | ||||||||
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP | (43,518 | ) | (54,177 | ) | (97,695 | ) | |||||
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS | (111,936 | ) | — | (111,936 | ) | ||||||
LESS: CONTINUING OPERATIONS NET LOSS ALLOCATED TO GENERAL PARTNER | 17 | 54 | (G) | 71 | |||||||
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS | $ | (155,437 | ) | $ | (54,123 | ) | $ | (209,560 | ) | ||
BASIC AND DILUTED LOSS FROM CONTINUING OPERATIONS PER COMMON UNIT | $ | (1.26 | ) | $ | (1.70 | ) | |||||
BASIC AND DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 123,017,064 | 123,017,064 |
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended March 31, 2018
(U.S. dollars in thousands, except unit and per unit amounts)
Historical NGL Energy Partners LP (As Reported) | Pro Forma Adjustments | Pro Forma NGL Energy Partners LP Continuing Operations | |||||||||
REVENUES | $ | 16,907,296 | $ | (6,536,524 | ) | (E) | $ | 10,370,772 | |||
COST OF SALES | 16,412,641 | (6,709,772 | ) | (E) | 9,702,869 | ||||||
OPERATING COSTS AND EXPENSES: | |||||||||||
Operating | 201,068 | (6,972 | ) | (E) | 194,096 | ||||||
General and administrative | 98,129 | (150 | ) | (E) | 97,979 | ||||||
Depreciation and amortization | 209,020 | (622 | ) | (E) | 208,398 | ||||||
(Gain) loss on disposal or impairment of assets, net | (17,104 | ) | (14 | ) | (E) | (17,118 | ) | ||||
Revaluation of liabilities | 20,716 | — | 20,716 | ||||||||
Operating (Loss) Income | (17,174 | ) | 181,006 | 163,832 | |||||||
OTHER INCOME (EXPENSE): | |||||||||||
Equity in earnings of unconsolidated entities | 7,539 | — | 7,539 | ||||||||
Interest expense | (199,148 | ) | (2 | ) | (E) | (199,150 | ) | ||||
Loss on early extinguishment of liabilities, net | (23,201 | ) | — | (23,201 | ) | ||||||
Other income, net | 6,953 | (601 | ) | (E) | 6,352 | ||||||
Loss From Continuing Operations Before Income Taxes | (225,031 | ) | 180,403 | (44,628 | ) | ||||||
INCOME TAX EXPENSE | (1,354 | ) | 1 | (E) | (1,353 | ) | |||||
Net Loss From Continuing Operations | (226,385 | ) | 180,404 | (45,981 | ) | ||||||
LESS: CONTINUING OPERATIONS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (240 | ) | — | (240 | ) | ||||||
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP | (226,625 | ) | 180,404 | (46,221 | ) | ||||||
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS | (59,697 | ) | — | (59,697 | ) | ||||||
LESS: CONTINUING OPERATIONS NET LOSS (INCOME) ALLOCATED TO GENERAL PARTNER | 150 | (180 | ) | (G) | (30 | ) | |||||
LESS: REPURCHASE OF WARRANTS | (349 | ) | — | (349 | ) | ||||||
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS | $ | (286,521 | ) | $ | 180,224 | $ | (106,297 | ) | |||
BASIC AND DILUTED LOSS FROM CONTINUING OPERATIONS PER COMMON UNIT | $ | (2.37 | ) | $ | (0.88 | ) | |||||
BASIC AND DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 120,991,340 | 120,991,340 |
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended March 31, 2017
(U.S. dollars in thousands, except unit and per unit amounts)
Historical NGL Energy Partners LP (As Reported) | Pro Forma Adjustments | Pro Forma NGL Energy Partners LP Continuing Operations | |||||||||
REVENUES | $ | 12,707,203 | $ | (5,229,681 | ) | (E) | $ | 7,477,522 | |||
COST OF SALES | 12,228,404 | (5,231,227 | ) | (E) | 6,997,177 | ||||||
OPERATING COSTS AND EXPENSES: | |||||||||||
Operating | 189,003 | (15,380 | ) | (E) | 173,623 | ||||||
General and administrative | 105,805 | (4,966 | ) | (E) | 100,839 | ||||||
Depreciation and amortization | 180,239 | (626 | ) | (E) | 179,613 | ||||||
(Gain) loss on disposal or impairment of assets, net | (208,890 | ) | (92 | ) | (E) | (208,982 | ) | ||||
Revaluation of liabilities | 6,717 | — | 6,717 | ||||||||
Operating Income | 205,925 | 22,610 | 228,535 | ||||||||
OTHER INCOME (EXPENSE): | |||||||||||
Equity in earnings of unconsolidated entities | 3,830 | — | 3,830 | ||||||||
Revaluation of investments | (14,365 | ) | — | (14,365 | ) | ||||||
Interest expense | (149,994 | ) | 393 | (E) | (149,601 | ) | |||||
Gain on early extinguishment of liabilities, net | 24,727 | — | 24,727 | ||||||||
Other income, net | 26,612 | (192 | ) | (E) | 26,420 | ||||||
Income From Continuing Operations Before Income Taxes | 96,735 | 22,811 | 119,546 | ||||||||
INCOME TAX EXPENSE | (1,933 | ) | — | (1,933 | ) | ||||||
Net Income From Continuing Operations | 94,802 | 22,811 | 117,613 | ||||||||
LESS: CONTINUING OPERATIONS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (6,832 | ) | — | (6,832 | ) | ||||||
NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP | 87,970 | 22,811 | 110,781 | ||||||||
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS | (30,142 | ) | — | (30,142 | ) | ||||||
LESS: CONTINUING OPERATIONS NET INCOME ALLOCATED TO GENERAL PARTNER | (183 | ) | (22 | ) | (G) | (205 | ) | ||||
NET INCOME FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS | $ | 57,645 | $ | 22,789 | $ | 80,434 | |||||
BASIC INCOME FROM CONTINUING OPERATIONS PER COMMON UNIT | $ | 0.53 | $ | 0.74 | |||||||
DILUTED INCOME FROM CONTINUING OPERATIONS PER COMMON UNIT | $ | 0.52 | $ | 0.72 | |||||||
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 108,091,486 | 108,091,486 | |||||||||
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 111,850,621 | 111,850,621 |
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1 - Basis of Presentation
See “Introduction” for more information regarding the basis of presentation for these unaudited pro forma condensed consolidated financial statements.
Note 2 - Pro Forma Adjustments
The unaudited pro forma condensed consolidated financial statements reflect the impact of the following pro forma adjustments:
A. | Represents the net cash proceeds received from Trajectory at closing from the sale of TPSL for total consideration of $275.5 million, less estimated expenses of approximately $5 million. |
B. | The Partnership’s use of net proceeds from the consideration received from Trajectory to repay a portion of the outstanding debt under the revolving credit facility as of June 30, 2019, which bears interest primarily based on a LIBOR rate plus the applicable margin. |
C. | Represents the removal of assets and liabilities of the discontinued operations from the balance sheet. |
D. | Represents the non-recurring pro forma loss on sale that would have been recorded if the Partnership had completed the sale of TPSL on June 30, 2019. |
E. | Amounts reflect the pro forma effect of eliminating the results of operations of TPSL for the three months ended June 30, 2019 and the years ended March 31, 2019, 2018 and 2017 from the presentation of continuing operations in the unaudited pro forma condensed consolidated statements of operations. |
F. | The reduction of interest expense from the net repayment of outstanding borrowings under the revolving credit facility as a result of the sale of TPSL. As the pro forma statements of operations assume that the transaction closed on April 1, 2016, the Partnership calculated the reduction by using $270.5 million and an assumed interest rate of 4.27%, the interest rate on the Partnership's revolving credit facility as of June 30, 2019. A change of 0.125% in the assumed interest rate would result in an adjustment of interest expense, on an annual basis, of approximately $0.3 million. |
G. | Represents our general partner’s interest in the pro forma adjustment. |
Note 3 - Earnings per Unit
Basic earnings per unit is computed by dividing the net income (loss) by the weighted average number of units outstanding during a period. To determine net income (loss) allocated to each class of ownership, the Partnership first allocates net income (loss) in accordance with the amount of distributions made for the quarter by each class of units, if any. The remaining net income is allocated to each class of units in proportion to the weighted average number of units of such class outstanding for a period, as compared to the weighted average number of units outstanding for all classes for the period, with the exception of net losses. Net losses are allocated only to the common units.
Note 4 - Intercompany Transactions
Intercompany transactions have been eliminated within the consolidation in accordance with generally accepted accounting principles. The following are the intercompany transactions that were eliminated from TPSL for the periods presented:
Three Months Ended June 30, | Years Ended March 31, | ||||||||||||||
2019 | 2019 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Intercompany Revenue | $ | 62,419 | $ | 277,356 | $ | 243,796 | $ | 146,143 | |||||||
Intercompay Cost of Sales | $ | 72,663 | $ | 318,549 | $ | 32,336 | $ | 38,838 |