01—Abstract
Summary
Summary of the 10-K filed February 25, 2015. Cited figures are marked; the original filing is the authoritative source.
Plains All American Pipeline, L.P.
(PAA) reported 2014 net income attributable to PAA of $1.384 billiona, compared with $1.361 billion in 2013, on total revenues of $43.464 billion. The growth in the fee-based Transportation segment, which reported segment profit of $925 million versus $729 million in 2013, was partially offset by lower Facilities segment profit ($584 million versus $616 million) and Supply and Logistics segment profit ($782 million versus $822 million). Adjusted EBITDA was $2.200 billion, down from $2.292 billion in 2013, and implied distributable cash flow was $1.559 billion versus $1.665 billion.
Distributions paid to unitholders and the general partner totaled about $1.4 billionb, and declared distributions per unit rose to $2.55 from $2.33. The partnership made significant growth investments in 2014, with expansion capital of $2.026 billion and acquisition capital of $1.099 billion, mainly the November 2014 purchase of a 50% interest in BridgeTex Pipeline Company for $1.088 billion. The company expects to spend approximately $1.85 billion on expansion capital in 2015.
Total debt rose to $10.049 billionc at year end from $7.828 billion, and the company reported approximately $2.6 billion of liquidity. Management noted that crude oil and NGL prices fell meaningfully in late 2014 and early 2015, which it expects to slow North American production growth and may compress margins, particularly in the Supply and Logistics segment. The filing describes a partnership that is effectively controlled by Plains GP Holdings, L.P. through its ownership of the general partner, and highlights risks including the volume dependence of its pipelines, commodity price and market structure volatility, credit exposure to counterparties, leverage, and regulatory and environmental exposure in the U.S. and Canada.
02—Key points
Key Highlights
- Net income attributable to PAA of $1.384 billion in 2014, up from $1.361 billion in 2013; total revenues of $43.464 billion.
- Transportation segment profit rose to $925 million from $729 million, while Facilities ($584 million) and Supply and Logistics ($782 million) profit declined year over year.
- Adjusted EBITDA of $2.200 billion versus $2.292 billion in 2013; implied DCF of $1.559 billion versus $1.665 billion.
- Expansion capital of $2.026 billion and acquisition capital of $1.099 billion in 2014, including the $1.088 billion BridgeTex 50% interest acquired in November 2014; 2015 expansion capital plan of about $1.85 billion.
- Total debt of $10.049 billion at December 31, 2014 (up from $7.828 billion), with approximately $2.6 billion of liquidity.
- Declared distribution per unit of $2.55 in 2014 versus $2.33 in 2013; the February 2015 quarterly distribution was $0.6750 per unit.
- Management expects late-2014 declines in crude oil and NGL prices to slow North American production growth and may compress unit margins in parts of the business.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Plains All American Pipeline kept $0.03.
- Revenue$43.46B100.0%
- Cost of revenue−$41.17B94.7%
- Gross profit$2.29B5.3%
- Operating costs−$492.0M1.1%
- Operating income$1.80B4.1%
- Interest, other & tax−$415.0M1.0%
- Net income$1.38B3.2%
Where FY2014 revenue went
$43.46B- Cost of revenue: $39.50B, 91% of revenue
- Net income: $1.38B, 3.2% of revenue
- Operating costs: $2.17B, 5.0% of revenue
- Interest, other & tax: $415.0M, 1.0% of revenue
Kept 3.2% as net incomeNet income $1.38B · 3.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 25, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $43.46B$42.25B | +2.9% |
| Cost of Revenue | $39.50B$38.47B | +2.7% |
| Gross Profit | $2.29B$2.17B | +5.7% |
| Operating Expenses | $41.66B$40.51B | +2.8% |
| Operating Income | $1.80B$1.74B | +3.5% |
| Interest Expense | $348.00M$313.00M | +11.2% |
| Net Income | $1.38B$1.36B | +1.7% |
| EPS (Basic) | $2.39$2.82 | −15.2% |
| EPS (Diluted) | $2.38$2.80 | −15.0% |
05—Questions
Frequently Asked Questions
How did PAA's profitability change in 2014?
Net income attributable to PAA rose slightly to $1.384 billion from $1.361 billion. Growth in the fee-based Transportation segment, where segment profit increased to $925 million from $729 million, was offset by lower profit in the Facilities and Supply and Logistics segments. Adjusted EBITDA declined to $2.200 billion from $2.292 billion.
What major investments did PAA make in 2014 and what is planned for 2015?
In 2014 PAA spent $2.026 billion on expansion capital and $1.099 billion on acquisitions, including the 50% BridgeTex interest for $1.088 billion. The company plans about $1.85 billion of expansion capital in 2015, largely for Permian Basin, Cactus, Diamond, Fort Saskatchewan and rail terminal projects.
How leveraged is PAA and how much liquidity does it have?
Total debt was $10.049 billion at year end 2014, up from $7.828 billion, including about $8.8 billion of long-term debt. The company reported approximately $2.6 billion of liquidity, including cash and availability under its committed credit facilities, subject to covenant compliance. It also entered into a new $1.0 billion 364-day credit agreement in January 2015.
What are the key risks highlighted for investors?
Key risks include declines in throughput volumes if North American production slows after the late-2014 oil price decline, volatility and changes in crude oil market structure affecting Supply and Logistics results, counterparty credit risk, the cost and availability of capital, potential rate regulation by FERC and Canadian regulators, and environmental, pipeline safety and rail transportation regulation.
How are distributions to unitholders determined and what is the general partner's role?
PAA distributes 100% of available cash within 45 days after each quarter. In 2014 distributions declared were $2.55 per limited partner unit. The general partner holds a 2% interest and incentive distribution rights, receiving $473 million of distributions in 2014, including $454 million of incentive distributions net of $23 million of agreed reductions. Plains GP Holdings effectively controls the partnership through its ownership of the general partner.
06—Continue