Crestwood Announces Fourth Quarter 2022 Financial and Operating Results, the Divestiture of Tres Palacios for $335 Million, and Provides 2023 Guidance and Outlook

$US millions

Adj. EBITDA Range

Operating Segment

Low

High

Gathering & Processing North

$570

-

$620

Gathering & Processing South

170

-

190

Storage & Logistics

100

-

110

Less: Corporate G&A

(60)

(60)

FY 2023 Totals

$780

-

$860

Consolidated Statements of Operations

(in millions, except per unit data)

(unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

2022

2021

2022

2021

Revenues

$

1,402.9

$

1,380.4

$

6,000.7

$

4,569.0

Costs of products/services sold

1,132.7

1,133.6

4,997.1

3,843.9

Operating expenses and other:

Operations and maintenance

52.1

30.8

196.1

121.0

General and administrative

26.6

30.2

130.4

97.6

Depreciation, amortization and accretion

86.6

61.6

328.9

244.2

Loss on long-lived assets, net

0.8

20.0

187.7

39.6

Gain on acquisition

—

—

(75.3

)

—

166.1

142.6

767.8

502.4

Operating income

104.1

104.2

235.8

222.7

Earnings (loss) from unconsolidated affiliates, net

3.5

5.5

15.7

(120.4

)

Interest and debt expense, net

(53.6

)

(30.1

)

(177.4

)

(132.1

)

Loss on modification/extinguishment of debt

—

(0.8

)

—

(7.5

)

Other income (expense), net

0.1

(0.1

)

0.3

0.1

Income (loss) before income taxes

54.1

78.7

74.4

(37.2

)

Provision for income taxes

(0.2

)

(0.1

)

(1.9

)

(0.2

)

Net income (loss)

53.9

78.6

72.5

(37.4

)

Net income attributable to non-controlling partner

10.4

10.4

41.2

41.1

Net income (loss) attributable to Crestwood Equity Partners LP

43.5

68.2

31.3

(78.5

)

Net income attributable to preferred units

15.1

15.1

60.1

60.1

Net income (loss) attributable to partners

$

28.4

$

53.1

$

(28.8

)

$

(138.6

)

Net income (loss) per limited partner unit:

Basic

$

0.27

$

0.84

$

(0.29

)

$

(2.11

)

Diluted

$

0.26

$

0.79

$

(0.29

)

$

(2.11

)

CRESTWOOD EQUITY PARTNERS LP

Selected Balance Sheet Data

(in millions)

(unaudited)

December 31,

2022

2021

Cash

$

7.5

$

13.3

Outstanding debt:

Revolving Credit Facilities

$

1,129.1

$

282.0

Senior Notes

2,250.0

1,800.0

Other

26.7

0.2

Subtotal

3,405.8

2,082.2

Less: deferred financing costs, net

27.5

29.9

Total debt

$

3,378.3

$

2,052.3

Partners' capital

Total partners' capital

$

1,907.2

$

1,099.6

Common units outstanding

104.6

63.0

CRESTWOOD EQUITY PARTNERS LP

Reconciliation of Non-GAAP Financial Measures

(in millions)

(unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

2022

2021

2022

2021

Net Income (Loss) to Adjusted EBITDA

Net income (loss)

$

53.9

$

78.6

$

72.5

$

(37.4

)

Interest and debt expense, net

53.6

30.1

177.4

132.1

Loss on modification/extinguishment of debt

—

0.8

—

7.5

Provision for income taxes

0.2

0.1

1.9

0.2

Depreciation, amortization and accretion

86.6

61.6

328.9

244.2

EBITDA (a)

$

194.3

$

171.2

$

580.7

$

346.6

Significant items impacting EBITDA:

Unit-based compensation charges

10.4

12.1

37.2

34.9

Loss on long-lived assets, net

0.8

20.0

187.7

39.6

Gain on acquisition

—

—

(75.3

)

—

(Earnings) loss from unconsolidated affiliates, net

(3.5

)

(5.5

)

(15.7

)

120.4

Adjusted EBITDA from unconsolidated affiliates, net

5.8

10.5

30.0

67.0

Change in fair value of commodity inventory-related derivative contracts

(9.8

)

(62.4

)

(14.4

)

(13.5

)

Significant transaction and environmental related costs and other items

2.3

3.2

31.9

5.1

Adjusted EBITDA (a)

$

200.3

$

149.1

$

762.1

$

600.1

Distributable Cash Flow (b)

Adjusted EBITDA (a)

$

200.3

$

149.1

$

762.1

$

600.1

Cash interest expense (c)

(54.2

)

(28.6

)

(178.2

)

(125.9

)

Maintenance capital expenditures (d)

(13.5

)

(6.2

)

(28.7

)

(19.3

)

Adjusted EBITDA from unconsolidated affiliates, net

(5.8

)

(10.5

)

(30.0

)

(67.0

)

Distributable cash flow from unconsolidated affiliates

5.6

9.3

28.0

62.6

PRB cash received in excess of recognized revenues (e)

4.1

3.5

16.8

22.1

Provision for income taxes

(0.2

)

(0.1

)

(1.9

)

(0.2

)

Distributable cash flow attributable to CEQP

136.3

116.5

568.1

472.4

Distributions to preferred

(15.1

)

(15.1

)

(60.1

)

(60.1

)

Distributions to Niobrara preferred

(10.4

)

(10.3

)

(41.4

)

(41.2

)

Distributable cash flow attributable to CEQP common

$

110.8

$

91.1

$

466.6

$

371.1

(a)

EBITDA is defined as income before income taxes, plus debt-related costs (interest and debt expense, net, and gain (loss) on modification/extinguishment of debt) and depreciation, amortization and accretion expense. Adjusted EBITDA considers the adjusted earnings impact of our unconsolidated affiliates by adjusting our equity earnings or losses from our unconsolidated affiliates to reflect our proportionate share (based on the distribution percentage) of their EBITDA, excluding gains and losses on long-lived assets and other impairments. Adjusted EBITDA also considers the impact of certain significant items, such as unit-based compensation charges, gains or losses and impairments on long-lived assets, impairments of goodwill, third party costs incurred related to potential and completed acquisitions, certain environmental remediation costs, the change in fair value of commodity inventory-related derivative contracts, costs associated with the realignment and restructuring of our operations and corporate structure, and other transactions identified in a specific reporting period. The change in fair value of commodity inventory-related derivative contracts is considered in determining Adjusted EBITDA given that the timing of recognizing gains and losses on these derivative contracts differs from the recognition of revenue for the related underlying sale of inventory to which these derivatives relate. Changes in the fair value of other derivative contracts are not considered in determining Adjusted EBITDA given the relatively short-term nature of those derivative contracts. EBITDA and Adjusted EBITDA are not measures calculated in accordance with U.S. GAAP, as they do not include deductions for items such as depreciation, amortization and accretion, interest and income taxes, which are necessary to maintain our business. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, operating cash flow or any other measure of financial performance presented in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA calculations may vary among entities, so our computation may not be comparable to measures used by other companies.

(b)

Distributable cash flow is defined as Adjusted EBITDA, adjusted for cash interest expense, maintenance capital expenditures, income taxes, the cash received from our Powder River Basin operations in excess of revenue recognized, and our proportionate share (based on the distribution percentage) of our unconsolidated affiliates' distributable cash flow. Distributable cash flow should not be considered an alternative to cash flows from operating activities or any other measure of financial performance calculated in accordance with U.S. GAAP as those items are used to measure operating performance, liquidity, or the ability to service debt obligations. We believe that distributable cash flow provides additional information for evaluating our ability to declare and pay distributions to unitholders. Distributable cash flow, as we define it, may not be comparable to distributable cash flow or similarly titled measures used by other companies.

(c)

Cash interest expense less amortization of deferred financing costs.

(d)

Maintenance capital expenditures are defined as those capital expenditures which do not increase operating capacity or revenues from existing levels.

(e)

Cash received from customers of our Powder River Basin operations pursuant to certain contractual minimum revenue commitments in excess of related revenue recognized under FASB ASC 606.

CRESTWOOD EQUITY PARTNERS LP

Reconciliation of Non-GAAP Financial Measures

(in millions)

(unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

2022

2021

2022

2021

Operating Cash Flows to Adjusted EBITDA

Net cash provided by operating activities

$

161.9

$

53.8

$

439.2

$

426.7

Net changes in operating assets and liabilities

(9.6

)

121.5

114.3

6.7

Amortization of debt-related deferred costs

(0.5

)

(1.6

)

(2.2

)

(6.7

)

Interest and debt expense, net

53.6

30.1

177.4

132.1

Unit-based compensation charges

(10.4

)

(12.1

)

(37.2

)

(34.9

)

Loss on long-lived assets, net

(0.8

)

(20.0

)

(187.7

)

(39.6

)

Gain on acquisition

—

—

75.3

—

(Earnings) loss from unconsolidated affiliates, net, adjusted for cash distributions received

(0.2

)

(0.5

)

0.7

(138.0

)

Deferred income taxes

—

—

(1.1

)

0.4

Provision for income taxes

0.2

0.1

1.9

0.2

Other non-cash income (expense)

0.1

(0.1

)

0.1

(0.3

)

EBITDA (a)

$

194.3

$

171.2

$

580.7

$

346.6

Unit-based compensation charges

10.4

12.1

37.2

34.9

Loss on long-lived assets, net

0.8

20.0

187.7

39.6

Gain on acquisition

—

—

(75.3

)

—

(Earnings) loss from unconsolidated affiliates, net

(3.5

)

(5.5

)

(15.7

)

120.4

Adjusted EBITDA from unconsolidated affiliates, net

5.8

10.5

30.0

67.0

Change in fair value of commodity inventory-related derivative contracts

(9.8

)

(62.4

)

(14.4

)

(13.5

)

Significant transaction and environmental related costs and other items

2.3

3.2

31.9

5.1

Adjusted EBITDA (a)

$

200.3

$

149.1

$

762.1

$

600.1

Distributable Cash Flow (b)

Adjusted EBITDA (a)

$

200.3

$

149.1

$

762.1

$

600.1

Cash interest expense (c)

(54.2

)

(28.6

)

(178.2

)

(125.9

)

Maintenance capital expenditures (d)

(13.5

)

(6.2

)

(28.7

)

(19.3

)

Adjusted EBITDA from unconsolidated affiliates, net

(5.8

)

(10.5

)

(30.0

)

(67.0

)

Distributable cash flow from unconsolidated affiliates

5.6

9.3

28.0

62.6

PRB cash received in excess of recognized revenues (e)

4.1

3.5

16.8

22.1

Provision for income taxes

(0.2

)

(0.1

)

(1.9

)

(0.2

)

Distributable cash flow attributable to CEQP

136.3

116.5

568.1

472.4

Distributions to preferred

(15.1

)

(15.1

)

(60.1

)

(60.1

)

Distributions to Niobrara preferred

(10.4

)

(10.3

)

(41.4

)

(41.2

)

Distributable cash flow attributable to CEQP common

$

110.8

$

91.1

$

466.6

$

371.1

Free Cash Flow After Distributions (f)

Distributable cash flow attributable to CEQP common

$

110.8

$

91.1

$

466.6

$

371.1

Less: Growth capital expenditures

65.7

18.6

191.6

59.5

Less: Distributions to common unitholders (g)

68.9

39.7

265.8

157.6

Free cash flow after distributions

$

(23.8

)

$

32.8

$

9.2

$

154.0

(a)

EBITDA is defined as income before income taxes, plus debt-related costs (interest and debt expense, net, and gain (loss) on modification/extinguishment of debt) and depreciation, amortization and accretion expense. Adjusted EBITDA considers the adjusted earnings impact of our unconsolidated affiliates by adjusting our equity earnings or losses from our unconsolidated affiliates to reflect our proportionate share (based on the distribution percentage) of their EBITDA, excluding gains and losses on long-lived assets and other impairments. Adjusted EBITDA also considers the impact of certain significant items, such as unit-based compensation charges, gains or losses and impairments on long-lived assets, impairments of goodwill, third party costs incurred related to potential and completed acquisitions, certain environmental remediation costs, the change in fair value of commodity inventory-related derivative contracts, costs associated with the realignment and restructuring of our operations and corporate structure, and other transactions identified in a specific reporting period. The change in fair value of commodity inventory-related derivative contracts is considered in determining Adjusted EBITDA given that the timing of recognizing gains and losses on these derivative contracts differs from the recognition of revenue for the related underlying sale of inventory to which these derivatives relate. Changes in the fair value of other derivative contracts are not considered in determining Adjusted EBITDA given the relatively short-term nature of those derivative contracts. EBITDA and Adjusted EBITDA are not measures calculated in accordance with U.S. GAAP, as they do not include deductions for items such as depreciation, amortization and accretion, interest and income taxes, which are necessary to maintain our business. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, operating cash flow or any other measure of financial performance presented in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA calculations may vary among entities, so our computation may not be comparable to measures used by other companies.

(b)

Distributable cash flow is defined as Adjusted EBITDA, adjusted for cash interest expense, maintenance capital expenditures, income taxes, the cash received from our Powder River Basin operations in excess of revenue recognized, and our proportionate share (based on the distribution percentage) of our unconsolidated affiliates' distributable cash flow. Distributable cash flow should not be considered an alternative to cash flows from operating activities or any other measure of financial performance calculated in accordance with U.S. GAAP as those items are used to measure operating performance, liquidity, or the ability to service debt obligations. We believe that distributable cash flow provides additional information for evaluating our ability to declare and pay distributions to unitholders. Distributable cash flow, as we define it, may not be comparable to distributable cash flow or similarly titled measures used by other companies.

(c)

Cash interest expense less amortization of deferred financing costs.

(d)

Maintenance capital expenditures are defined as those capital expenditures which do not increase operating capacity or revenues from existing levels.

(e)

Cash received from customers of our Powder River Basin operations pursuant to certain contractual minimum revenue commitments in excess of related revenue recognized under FASB ASC 606.

(f)

Free cash flow after distributions is defined as distributable cash flow attributable to common unitholders less growth capital expenditures and distributions to common unitholders. Free cash flow after distributions should not be considered an alternative to cash flows from operating activities or any other measure of liquidity calculated in accordance with U.S. GAAP as those items are used to measure liquidity or the ability to service debt obligations. We believe that free cash flow after distributions provides additional information for evaluating our ability to generate cash flow after paying our distributions to common unitholders and paying for our growth capital expenditures.

(g)

The year ended December 31, 2022, excludes $7.4 million of distributions made on August 12, 2022 related to 11.3 million CEQP common units issued in conjunction with the acquisition of the remaining 50% equity interest in Crestwood Permian Basin Holdings LLC on July 11, 2022. The three months and year ended December 31, 2021, excludes $21.1 million of distributions made on February 14, 2022 to legacy Oasis Midstream unitholders.

CRESTWOOD EQUITY PARTNERS LP

Segment Data

(in millions)

(unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

2022

2021

2022

2021

Gathering and Processing North

Revenues

$

329.5

$

296.0

$

1,537.9

$

1,034.0

Costs of product/services sold

162.0

166.8

848.6

553.2

Operations and maintenance expense

26.7

12.9

105.3

51.1

Gain on long-lived assets, net

—

0.2

—

0.4

EBITDA

$

140.8

$

116.5

$

584.0

$

430.1

Gathering and Processing South

Revenues

$

207.7

$

29.9

$

588.9

$

105.9

Costs of product/services sold

149.9

0.1

399.5

0.9

Operations and maintenance expense

14.4

5.5

43.0

22.9

Loss on long-lived assets, net

(1.1

)

(20.7

)

(183.9

)

(40.6

)

Gain on acquisition

—

—

75.3

—

Earnings from unconsolidated affiliates, net

1.7

5.2

11.1

9.6

EBITDA

$

44.0

$

8.8

$

48.9

$

51.1

Storage and Logistics

Revenues

$

865.7

$

1,054.5

$

3,873.9

$

3,429.1

Costs of product/services sold

820.8

966.7

3,749.0

3,289.8

Operations and maintenance expense

11.0

12.4

47.8

47.0

Gain (loss) on long-lived assets, net

—

0.6

(4.1

)

0.7

Earnings (loss) from unconsolidated affiliates, net

1.8

0.3

4.6

(130.0

)

EBITDA

$

35.7

$

76.3

$

77.6

$

(37.0

)

Total Segment EBITDA

$

220.5

$

201.6

$

710.5

$

444.2

Corporate

(26.2

)

(30.4

)

(129.8

)

(97.6

)

EBITDA

$

194.3

$

171.2

$

580.7

$

346.6

CRESTWOOD EQUITY PARTNERS LP

Operating Statistics

(unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

2022

2021

2022

2021

Gathering and Processing North

Gas gathering volumes (MMcf/d)

Williston Basin

243.1

141.1

246.9

139.1

Powder River Basin

105.9

102.6

106.3

100.7

Total gas gathering volumes

349.0

243.7

353.2

239.8

Processing volumes (MMcf/d)

Williston Basin

275.4

132.2

279.1

132.4

Powder River Basin

103.5

99.2

103.2

97.7

Total processing volumes

378.9

231.4

382.3

230.1

Williston Basin

Crude oil gathering volumes (MBbls/d)

75.9

80.0

78.0

87.7

Water gathering volumes (MBbls/d)

151.6

90.7

164.9

86.4

Gathering and Processing South

Gas gathering volumes (MMcf/d)

Delaware Basin (a)

504.2

250.5

472.2

228.9

Marcellus (b)

203.3

221.4

209.8

227.3

Barnett (b)

—

228.2

212.9

218.2

Total gas gathering volumes

707.5

700.1

894.9

674.4

Processing volumes (MMcf/d)

Delaware Basin (a)

408.4

111.8

391.8

84.7

Barnett (b)

—

76.8

70.4

76.4

Total processing volumes

408.4

188.6

462.2

161.1

Delaware Basin - Crude oil gathering volumes (MBbls/d) (a)

20.5

—

21.4

—

Delaware Basin - Water gathering volumes (MBbls/d) (a)

152.7

17.5

131.3

39.5

Storage and Logistics

Tres Palacios Storage - firm contracted capacity (Bcf) (a)

29.1

28.8

29.0

29.2

% of operational capacity contracted

76

%

75

%

76

%

76

%

Firm storage services (MMcf/d) (a)

212.2

147.9

294.1

271.8

Interruptible services (MMcf/d) (a)

227.5

128.9

190.1

91.1

COLT Hub

Rail loading (MBbls/d)

12.8

35.8

14.0

43.5

Outbound pipeline (MBbls/d) (c)

24.7

18.0

25.0

16.7

(a)

Includes our 50% owned joint venture, operational data reported at 100%.

(b)

The Barnett assets and Marcellus assets were sold in July 2022 and October 2022, respectively.

(c)

Represents only throughput leaving the terminal.

CRESTWOOD EQUITY PARTNERS LP

Full Year 2023 Adjusted EBITDA, Distributable Cash Flow and Free Cash Flow Guidance

Reconciliation of Non-GAAP Financial Measures

(in millions)

(unaudited)

Expected 2023 Range

Low - High

Net Income Reconciliation

Net income (loss)

$310 - $390

Interest and debt expense, net (a)

225 - 230

Depreciation, amortization and accretion

325 - 335

Unit-based compensation charges

30 - 35

Earnings from unconsolidated affiliates

(130) - (135)

Adjusted EBITDA from unconsolidated affiliates

10 - 15

Adjusted EBITDA

$780 - $860

Cash interest expense (b)

(220) - (225)

Maintenance capital expenditures (c)

(25) - (30)

Adjusted EBITDA from unconsolidated affiliates

(10) - (15)

Distributable cash flow from unconsolidated affiliates

9 - 14

Cash distributions to preferred unitholders (d)

(101)

Distributable cash flow attributable to CEQP (e)

$430 - $510

Cash Flows from Operating Activities Reconciliation

Net cash provided by operating activities, net

$685 - $765

Interest and debt expense, net (a)

225 - 230

Adjusted EBITDA from unconsolidated affiliates

10 - 15

Earnings from unconsolidated affiliates

(130) - (135)

Amortization of debt-related deferred costs

(5) - (10)

Changes in operating assets and liabilities, net

(5) - (15)

Adjusted EBITDA

$780 - $860

Cash interest expense (b)

(220) - (225)

Maintenance capital expenditures (c)

(25) - (30)

Adjusted EBITDA from unconsolidated affiliates

(10) - (15)

Distributable cash flow from unconsolidated affiliates

9 - 14

Cash distributions to preferred unitholders (d)

(101)

Distributable cash flow attributable to CEQP (e)

$430 - $510

Less: Growth capital expenditures

135 - 155

Less: Distributions to common unitholders

276

Free cash flow after distributions (f)

$10 - $90

(a)

Includes gain (loss) on modification/extinguishment of debt, net

(b)

Cash interest expense less amortization of deferred financing costs.

(c)

Maintenance capital expenditures are defined as those capital expenditures which do not increase operating capacity or revenues from existing levels.

(d)

Includes cash distributions to preferred unitholders and Crestwood Niobrara preferred unitholders.

(e)

Distributable cash flow is defined as Adjusted EBITDA, adjusted for cash interest expense, maintenance capital expenditures, income taxes, and our proportionate share of our unconsolidated affiliates' distributable cash flow. Distributable cash flow should not be considered an alternative to cash flows from operating activities or any other measure of financial performance calculated in accordance with generally accepted accounting principles as those items are used to measure operating performance, liquidity, or the ability to service debt obligations. We believe that distributable cash flow provides additional information for evaluating our ability to declare and pay distributions to unitholders. Distributable cash flow, as we define it, may not be comparable to distributable cash flow or similarly titled measures used by other companies.

(f)

Free cash flow after distributions is defined as distributable cash flow attributable to common unitholders less growth capital expenditures and distributions to common unitholders. Free cash flow after distributions should not be considered an alternative to cash flows from operating activities or any other measure of liquidity calculated in accordance with generally accepted accounting principles as those items are used to measure liquidity or the ability to service debt obligations. We believe that free cash flow after distributions provides additional information for evaluating our ability to generate cash flow after paying our distributions to common unitholders and paying for our growth capital expenditures.