Blueknight Announces First Quarter 2021 Results

Rhea-AI Summary

Blueknight Energy Partners, L.P. (BKEP, BKEPP) reported a net income of $81.7 million for Q1 2021, a significant rise from $0.0 million in Q1 2020, largely due to a $75.1 million gain from crude oil business sales. Adjusted EBITDA stood at $11.4 million, with revenue increasing to $27.1 million. The partnership's asphalt terminalling services showed a solid operating margin of $14.2 million, and the distribution coverage ratio improved to 1.13 times.

Management emphasized growth and stability, with a focus on disciplined expansion and capital optimization.

Positive

• Net income surged to $81.7 million in Q1 2021 from $0.0 million in Q1 2020.
• Achieved an adjusted EBITDA of $11.4 million, slightly up from $11.0 million year-over-year.
• Asphalt terminalling services recorded a 5% increase in operating margin to $14.2 million.
• Total revenue increased to $27.1 million, with 99% classified as stable fixed-fee revenue.
• Improved distribution coverage ratio to 1.13 times from 1.01 times in the previous year.

Negative

• Rising operating expenses, totaling $12.8 million, which is higher compared to $12.1 million last year.
• General and administrative expenses increased to $4.0 million from $3.4 million, including transaction costs.
• Leverage ratio at 2.12 times, though improved from 4.27 times, indicates ongoing debt levels.

Blueknight Energy Partners, L.P. (“Blueknight” or the “Partnership”) (Nasdaq: BKEP and BKEPP) today reported its financial results for the first quarter ended March 31, 2021. Net income was $81.7 million in the first quarter 2021, compared to net income of $0.0 million for the same period in 2020. The first quarter 2021 included a $75.1 million gain from the sales of the crude oil businesses.

Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $11.4 million in first quarter 2021 compared to $11.0 million for the same period in 2020. Adjusted EBITDA in first quarter 2021 excluded $0.8 million in transaction fees, severance, and other costs related to the sales of the crude oil businesses.

“I am very pleased with our performance during the first quarter 2021 and the foundation we have following the sales of our crude oil businesses. Out of the gate, our asphalt terminalling business is tracking ahead of last year and we reported solid financial metrics for the first quarter with common unit distribution coverage of 1.59 times and leverage of 2.12 times,” commented Andrew Woodward, Chief Executive Officer.

“We remain excited about our strategic and financial position as a pure-play infrastructure terminalling company and have ramped up our efforts and organization in the pursuit of disciplined growth. As we spend time identifying and evaluating opportunities, we are also pursuing cost of capital improvement activities such as our recent opportunistic repurchase of preferred units with excess liquidity. These activities combined with our growth aspirations are governed by an overarching goal of maximizing risk adjusted returns while enhancing the stability of our long-term cash flows and optimizing our capital structure,” added Woodward.

QUARTERLY PERFORMANCE

Asphalt terminalling services total operating margin, excluding depreciation and amortization, in first quarter 2021 was $14.2 million, up 5% compared to the same period in 2020. Total revenue increased to $27.1 million, with approximately 99% categorized as fixed-fee, take-or-pay revenue after excluding variable cost recovery revenue. Total operating expenses, excluding depreciation and amortization, increased to $12.8 million. The primary factor contributing to higher revenue and operating expenses compared to the same period in 2020 was due to contract renewals that changed certain sites from a lease arrangement to an operating arrangement effective in third quarter 2020.

General and administrative expense in first quarter 2021 was $4.0 million, compared to $3.4 million for the same period in 2020, and included $0.8 million in transaction fees, severance, and other costs related to the sales of the crude oil businesses.

DISCONTINUED OPERATIONS

On December 21, 2020, Blueknight announced it had entered into multiple definitive agreements to sell its (i) crude oil terminalling, (ii) crude oil pipeline, and (iii) crude oil trucking segments. The sales of these segments closed in the first quarter of 2021. As such, these segments are presented as discontinued operations in the Partnership’s financial statements.

BALANCE SHEET AND CASH FLOW

First quarter 2021 distributable cash flow was $9.0 million compared to $8.2 million for the same period in 2021. The 11% increase was attributable to improved business performance and lower cash interest expense. The calculated coverage ratio on all distributions was 1.13 times for first quarter 2021 versus 1.01 times for the same period in 2020.

During first quarter 2021, net capital expenditures from continuing operations were $1.9 million, which included $1.4 million of net maintenance capital. Additionally, the Partnership repurchased 688,417 outstanding preferred units at $7.50 per unit, or total cash consideration of $5.2 million. The units were retired on March 24, 2021, which will result in approximately $0.5 million lower annual cash distributions paid for preferred units commencing in first quarter 2021.

As of March 31, 2021, total debt was $106.6 million, and the leverage ratio, which included $0.7 million in outstanding letters of credit, was 2.12 times, versus 4.27 times for the same period in 2020. At the end of the first quarter 2021, total availability under the credit facility was approximately $242.7 million, and availability subject to covenant restrictions was $132.9 million.

As of April 28, 2021, total debt was $106.6 million and total cash was $1.2 million.

UPCOMING INVESTOR CONFERENCES

Chief Executive Officer, Andrew Woodward, and Chief Financial Officer, Matthew Lewis, are scheduled to participate in the following upcoming investor conferences:

• 2021 EIC Investor Conference, May 18-20, 2021
• Sidoti & Company Virtual Microcap Conference, May 19-20, 2021

Any updates to materials used during the conference will be accessible in the Investors section of Blueknight’s website at www.bkep.com.

CONFERENCE CALL DETAILS

The Partnership will discuss first quarter 2021 results during a conference call tomorrow, Wednesday, May 5, 2021, at 10:00 a.m. CDT (11:00 a.m. EDT). The conference call will be accessible by telephone at 1-855-327-6837. International participants will be able to access the conference call at 1-631-891-4304. Participants are requested to dial in five to ten minutes before the scheduled start time. An audio replay will be available through the “Investors” section of the Partnership’s website.

Additional information regarding the Partnership’s results of operations will be provided in the Partnership’s Quarterly Report on Form 10-Q for the three months ended March 31, 2021, to be filed with the SEC on May 5, 2021.

RESULTS OF OPERATIONS

The following table summarizes the Partnership’s financial results for the three months ended March 31, 2020 and 2021 (in thousands, except per unit data):

		Three Months Ended March 31,
		2020				2021
Fixed fee revenue		$	22,356			$	24,371
Variable cost recovery revenue			3,303				2,584
Variable throughput and other revenue			1				120
Total revenue			25,660				27,075
Operating expenses, excluding depreciation and amortization			(12,075	)			(12,847	)
Total operating margin, excluding depreciation and amortization			13,585				14,228
Depreciation and amortization			3,585				3,033
General and administrative expense			3,366				3,982
Loss on disposal of assets			74				-
Operating income			6,560				7,213
Other income(expenses):
Other income			650				233
Interest expense			(1,686	)			(1,333	)
Provision for income taxes			(5	)			(10	)
Income from continuing operations			5,519				6,103
Income(loss) from discontinued operations			(5,519	)			75,550
Net income		$	-			$	81,653
Allocation of net income(loss) for calculation of earnings per unit:
General partner interest in net income		$	-

FAQ

What were Blueknight Energy's financial results for Q1 2021?

Blueknight reported a net income of $81.7 million for Q1 2021, compared to $0.0 million in the same period in 2020.

How did Blueknight's revenue perform in Q1 2021?

Total revenue for Q1 2021 was $27.1 million, an increase from $25.7 million in Q1 2020.

What is Blueknight's Adjusted EBITDA for Q1 2021?

Adjusted EBITDA for Q1 2021 was $11.4 million, up from $11.0 million in Q1 2020.

What is the distribution coverage ratio for Blueknight in Q1 2021?

The distribution coverage ratio improved to 1.13 times in Q1 2021.

What impact did the sale of crude oil businesses have on Blueknight's financials?

The sale led to a gain of $75.1 million, significantly boosting net income for Q1 2021.

What upcoming events is Blueknight Energy participating in?

Blueknight's CEO and CFO are scheduled to attend the 2021 EIC Investor Conference and Sidoti & Company Virtual Microcap Conference in May 2021.