TransMontaigne Partners L.P. (NYSE TLP) Wells Fargo Energy Symposium December 9 th and 10 th, 2014
Forward Looking Statements All statements, other than statements of historical facts, contained herein and made by representatives of TransMontaigne Partners L.P. during this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future. These forwardlooking statements are based on certain assumptions made by the Partnership based on management s experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Any forward-looking statements contained herein or made by representatives of the Partnership during this presentation are subject to risks and uncertainties, many of which are beyond the Partnership s ability to control or predict. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, then the Partnership s actual results may differ materially from those implied or expressed by the forward-looking statements. Important factors that could cause actual results to differ materially from management s expectations are detailed in the Partnership s filings with the Securities and Exchange Commission. As a result of these risks and uncertainties, investors should not place undue reliance on forward-looking statements. The Partnership undertakes no obligation to update any forward-looking statements, whether as a result of new information or future events. 2
Overview of TLP s Business Primary operating regions: US Gulf Coast; Southeast; Midwest; Houston and Brownsville, Texas; and along the Mississippi and Ohio Rivers. Controlled by NGL Energy Partners LP and its wholly-owned subsidiary TransMontaigne Inc. ( TMG ). Publicly traded master limited partnership providing refined petroleum products terminaling and transportation services. Products Handled Key Partnership Metrics ($ in millions) NYSE: TLP Market Cap 1 : $570.0 TTM Revenue 9/30/2014: $153.3 TTM EBITDA 9/30/2014: $74.9 9/30/2014 Leverage: 3.37x (1) As of 12/02/2014. L.P. units only. Revenue by Region Light Refined Products Heavy Refined Products Gasoline Diesel Fuel Jet Fuel Heating Oil Crude Oil Chemicals Residual Fuel Oil Asphalt Fertilizers Other Liquid Products Nine Months Ended 9/30/14 Gulf Coast Midwest Brownsville River Southeast 35% 6% 13% 8% 38% 3
Area of Operations 4
Business Highlights Stable, fee-based cash flows from terminaling services agreements. Term contracts with customers. No material direct commodity price risk. Current size results in significant accretion potential from relatively small acquisitions and expansion projects. Experienced management team. 5
Key Customer Relationships U.S. Government 6
Terminal Capacity 32,000,000 30,000,000 Active Shell Capacity (Barrels) 30,622,000 30,622,000 28,000,000 26,000,000 24,000,000 23,668,000 22,000,000 21,760,000 22,354,000 7 20,000,000 2010 2011 2012 2013 Q3 2014
Re-contracting / Customer Diversification TLP has made significant progress in diversifying its customer base in the short time since the completion of Morgan Stanley s sale of the general partner on July 1, 2014. Morgan Stanley represented 62% of our revenue on June 30, 2014. Today, Morgan Stanley represents only 13% of our revenues, primarily at our Collins/Purvis bulk storage terminal. Much of the capacity that NGL assumed from Morgan Stanley has been recontracted to third-parties. With additional growth opportunities anticipated for 2015, our customer base should continue to diversify. Our Bostco and Frontera joint ventures further diversify TLP s sources of distributable cash flow. 8
Bostco Overview Bostco is a newly constructed black oil terminal in the Houston Ship Channel with approximately 7.1 million barrels of capacity (Phase I and Phase II) with a total capital investment of approximately $535 million. Phase I commercial operations commenced in October of 2013. As of September 2014, all Phase I and Phase II tanks have been placed into service and are fully operational. In February 2014 we received our first distribution from Bostco, and expect the quarterly Bostco distributions to continue to increase in 2015. TLP owns 42.5% of Bostco and Kinder Morgan owns 55%. TLP s investment in Phases I and II is approximately $235 million. Phases I and II are fully contracted for on a long-term basis. Multiple alternatives for Phase III being evaluated and could be equivalent in size to Phases I and II combined. 9
Houston Ship Channel Refinery Complex 10 Texas s 26 petroleum refineries have a capacity of over 4.7 million barrels of crude oil per day and account for approximately 27 percent of total U.S. refining capacity. This capacity results in the need to handle residual fuels, blend stocks and other products Bostco is specifically designed to handle.
Other Growth Opportunities Bostco Phase III expansion. Collins/Purvis expansion projects. Butane blending at multiple locations. Available capacity at Florida and River terminals. Future projects with Frontera JV. 11
Recent Developments Effective July 1 st, Morgan Stanley completed its sale of TransMontaigne Inc. to NGL Energy Partners LP (NGL), which resulted in a change in control of our general partner. NGL acquired Morgan Stanley s and TransMontaigne s outstanding common units, which represent 20% of the total outstanding common units. The transaction did not involve the sale of any of our common units held by the public, and our common units continue to trade on the NYSE. NGL assumed Morgan Stanley s rights pursuant to TLP s light products terminaling services agreements in Florida and the Southeast, excluding the Collins Purvis tankage. Our omnibus agreement with TransMontaigne Inc. did not change. 12
Recent Developments (Continued) Effective November 19 th, we contracted our bunker capacity at Cape Canaveral to a third party. Capacity had previously been unutilized since Morgan Stanley left the space on June 1 st. Effective September 4 th, we contracted 100% of our light oil capacity at Cape Canaveral, Port Everglades South and Port Manatee to RaceTrac. Replaced NGL as the customer. Includes butane blending options, following terminal improvements at Tampa (which had previously been contracted to RaceTrac in September 2013). Effective June 1 st, we contracted our bunker capacity at Fisher Island and Port Everglades North to Chemoil. Replaced Morgan Stanley as the customer. Continue to market unsubscribed bunker capacity at Port Manatee. Effective March 1 st, we contracted our Razorback System to Magellan. Replaced Morgan Stanley as the customer. 10-year agreement. TLP continues to operate the system. Similar revenue stream to the prior Morgan Stanley agreement. 13
Recent Developments (Continued) Bostco Phases I and Il are complete. In the third quarter we received $2.9 million in distributions for Bostco s 2 nd quarter operations and expect continued increases in distributions in 2015. 14
Consistent Performance Historical EBITDA Historical Leverage ($ in millions) $75 $72 $71 $69 $69 2010 2011 2012 2013 TTM Q3 '14 Distributable Cash Flow Capital Expenditures ($ in millions) ($ in millions) $53 $53 $58 $61 $67 104 122 $38 $40 $42 $47 $50 43 $35 55 $47 $96 $114 33 $30 2010 2011 2012 2013 TTM Q3 '14 2010 2011 2012 2013 TTM Q3 '14 Cushion Actual Distributions Maintenance Acquisitions/Expansion/Investments 15
Insulation from Commodity Price Volatility 16
Results of Operations Three Months Ended (in thousands) Sept. 30, 2013 Dec. 31, 2013 Mar. 31, 2014 June 30, 2014 Sept. 31, 2014 Revenue: Terminaling services fees, net $ 28,682 $ 29,854 $ 28,719 $ 28,396 $ 27,338 Pipeline transportation fees 2,077 1,345 693 776 786 Management fees and reimbursed costs 1,506 1,549 1,540 1,771 1,892 Other 6,109 7,467 7,101 8,416 5,687 Total revenue 38,374 40,215 38,053 39,359 35,703 Direct operating costs and expenses (17,843) (17,524) (15,392) (16,396) (16,514) Net operating margins 20,531 22,691 22,661 22,963 19,189 G&A, depreciation, gains and other, net (13,746) (12,811) (12,226) (10,653) (10,932) Operating income 6,785 9,880 10,435 12,310 8,257 Other expenses, net (781) (920) (1,197) (1,470) (1,737) Net earnings $ 6,004 $ 8,960 $ 9,238 $ 10,840 $ 6,520 17
Structure of Terminaling Services Agreements Sept. 30, 2013 Firm commitments: Terminaling services fees, net: External customers 7,142 Three Months Ended (in thousands) Dec. 31, 2013 Mar. 31, 2014 June 30, 2014 Sept 30, 2014 $ $ 8,117 $ 8,043 $ 9,179 $ 15,211 Affiliates 20,709 20,012 19,688 18,207 10,930 Total firm commitments 27,851 28,129 27,731 27,386 26,141 Variable: Terminaling services fees, net: External customers 803 1,665 866 785 990 Affiliates 28 60 122 225 207 Total variable 831 1,725 988 1,010 1,197 Pipeline transportation fees 2,077 1,345 693 776 786 Management fees and reimbursed costs 1,506 1,549 1,540 1,771 1,892 Other 6,109 7,467 7,101 8,416 5,687 Total revenue $ 38,374 $ 40,215 $ 38,053 $ 39,359 $ 35,703 Firm terminaling services commitments 72.6% 69.9% 72.9% 69.6% 73.2% 18
Duration of Firm Commitments The remaining terms on the terminaling services agreements that generated firm commitments for the quarter ended September 30, 2014 were: Duration of Committed Contracts as of September 30, 2014 19
Quarterly Distribution History (1) 20
Distribution Coverage Sept. 30, 2013 Three Months Ended (in thousands) Mar. 31, 2014 Dec. 31, 2013 June 30, 2014 Sept. 30, 2014 Distributable cash flow $ 13,500 $ 15,770 $ 16,583 $ 18,540 $ 15,725 Total distributions 12,140 12,140 12,463 12,624 12,624 Distribution cushion $ 1,360 $ 3,630 $ 4,120 $ 5,916 $ 3,101 Coverage ratio 1.11 x 1.30 x 1.33 x 1.47 x 1.25 x 21
Ownership Structure Public Unitholders NGL Energy Partners LP 100% Interest TransMontaigne Inc. and Affiliates 79% Interest (Limited Partner) 16% Interest (Limited Partner) 2% Interest (General Partner) 100% Interest TransMontaigne GP L.L.C. (the General Partner) TransMontaigne Partners L.P. (the Partnership) 3% Interest (Limited Partner) Bostco LLC 42.5% Interest 100% Interest Operating Subsidiaries 50% Interest Frontera Brownsville LLC 22
Business Activities NGL Energy Partners LP NGL is a Delaware limited partnership that owns and operates a vertically integrated energy business with five primary businesses: water solutions, crude oil logistics, NGL logistics, refined products/renewables and retail propane. TransMontaigne Inc. and Affiliates TransMontaigne Inc. ( TMG ) is a leading distributor of unbranded refined petroleum products to independent wholesalers and industrial and commercial end users, delivering approximately 0.1 million barrels per day throughout the United States, but primarily in the Southeast region. TransMontaigne GP L.L.C. TransMontaigne GP L.L.C. is our general partner and has sole responsibility for conducting our business and managing our operations. TransMontaigne Partners L.P. TransMontaigne Partners L.P. ( TLP ) provides integrated terminaling, storage, transportation and related services for customers engaged in the distribution and marketing of light refined petroleum products, heavy refined petroleum products, crude oil, chemicals, fertilizers and other liquid products. 23
Key Considerations High Quality, Diversified Assets Leading presence in six core geographic regions. Term contracts with high-quality industry participants. Focus on fee-based contracts with commitments. Limited direct commodity price exposure. Strong Financial Profile Strong financial profile. Average historical Leverage Ratio of 2.5x over the past five years (Debt to EBITDA). At September 30, 2014 unused borrowing capacity of $98 million on the $350 million revolving credit facility. Distribution coverage for 2014 (nine months), 2013, 2012, 2011 and 2010 of 35%, 29%, 38%, 33% and 39%, respectively. Unique Operating Platform Experienced and proven management team and board. Three of the seven board members are independent directors. Integrated platform capitalizing on strengths of TLP, TMG and NGL. 24