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NuStar Energy L.P. Reports Solid Fourth Quarter and Full-Year 2023 Earnings Results

Excluding the gain related to the sale of a portion of NuStar's corporate headquarters in 2023, non-cash charges and insurance proceeds in 2022, as well as the EPU impact from the repurchases of the Series D preferred units in 2023 and 2022, our full-year 2023 adjusted net income was $233 million, or $0.92 per unit, compared to 2022 adjusted net income of $250 million, or $0.92 per unit.

It is important to note that earnings before interest, taxes, depreciation and amortization (EBITDA) were not impacted by the premium associated with the accelerated repurchase of the Series D preferred units, and we reported EBITDA of $199 million for the fourth quarter of 2023, compared to fourth quarter of 2022 adjusted EBITDA of $197 million. Our adjusted EBITDA for full-year 2023 was $735 million - up compared to 2022 adjusted EBITDA of $722 million.

Distributable Cash Flow (DCF) was $87 million for the fourth quarter of 2023, compared to fourth quarter of 2022 adjusted DCF of $89 million. The distribution coverage ratio was 1.73 times for the fourth quarter of 2023.

Adjusted DCF was $354 million for full-year 2023, compared to adjusted DCF of $357 million in 2022. The adjusted distribution coverage ratio was 1.86 times for full-year 2023.

"I am pleased to report that we have delivered another quarter of solid earnings results and made significant progress on many of our strategic initiatives in 2023," said NuStar Chairman and CEO Brad Barron.

Operations Continue to Perform Well

NuStar's Pipeline Segment generated operating income of $130 million and EBITDA of $174 million in the fourth quarter of 2023, compared to operating income of $132 million and EBITDA of $176 million in the fourth quarter of 2022, as increased revenues and throughputs across refined products systems were offset by decreases from the Permian Crude System and Corpus Christi Crude System.

The Permian Crude System's fourth quarter of 2023 volumes averaged 528,000 BPD, down compared to the fourth quarter of 2022 but up slightly from the third quarter of 2023.

"As we have said on prior calls, our Permian volumes reflected some producer-specific operational issues and delays in 2023, which were largely resolved over the course of the year," said Barron.

For full-year 2023, NuStar's Pipeline Segment generated operating income of $483 million, compared to operating income of $439 million in 2022, and EBITDA of $659 million in 2023, compared to EBITDA of $617 million in 2022, an improvement of 7%.

"Our refined products systems, along with our Ammonia System, generated solid, dependable revenue in 2023 as total throughputs were up compared to 2022, reflecting the strength of these assets and our strong position in the markets we serve in the mid-Continent and throughout Texas," said Barron.

"Our McKee System also performed very well this year, with higher revenues and throughputs versus last year, and almost all our pipeline systems benefitted from annual rate escalations linked to either the FERC index or PPI."

NuStar's Storage Segment generated operating income of $26 million and EBITDA of $45 million in the fourth quarter of 2023, compared to operating income of $22 million and EBITDA of $41 million in the fourth quarter of 2022, largely driven by the solid performance of the West Coast region and the continuing growth from our West Coast Renewables Strategy.

For full-year 2023, NuStar's Storage Segment generated operating income of $88 million and EBITDA of $163 million, compared to operating income of $61 million and adjusted EBITDA of $180 million in 2022. While West Coast region revenues continued to increase, an amendment and an extension of a customer contract at the Corpus Christi North Beach terminal combined with customer transitions and required tank maintenance at the St. James terminal contributed to the decrease in adjusted EBITDA.

Barron also highlighted the strong performance of NuStar's Fuels Marketing Segment.

"After a near record-breaking 2022, our Fuels Marketing Segment has turned in another strong quarter, generating operating income and EBITDA of $12 million in the fourth quarter of 2023, which is comparable to the segment's strong fourth quarter of 2022 results," said Barron. For full-year 2023, NuStar's Fuels Marketing Segment generated operating income and EBITDA of $33 million, comparable to 2022 operating income and EBITDA of $34 million.

Even with the acceleration of our Series D redemptions in 2023, we ended the fourth quarter of 2023 with a healthy debt-to-EBITDA ratio of 3.85 times and $652 million available on our $1.0 billion unsecured revolving credit facility.

Positive Outlook for 2024

Although the pending merger with Sunoco LP is expected to close as early as the second quarter of 2024, we want to provide our 2024 financial expectations for NuStar on a stand-alone basis. We expect to generate full-year 2024 net income in the range of $220 to $260 million and full-year 2024 EBITDA in the range of $720 to $780 million.

NuStar once again expects to self-fund all of its operational expenses, growth capital and distributions, and continues to target a healthy year-end debt-to-EBITDA ratio below four times.

Conference Call Details

In light of the merger announced on January 22, 2024, NuStar no longer plans to host its previously scheduled earnings call.

About NuStar Energy L.P.

NuStar Energy L.P., through its subsidiaries (collectively, "NuStar" or the "Partnership"), is an independent liquids terminal and pipeline operator. NuStar has approximately 9,500 miles of pipeline and 63 terminal and storage facilities that store and distribute crude oil, refined products, renewable fuels, ammonia and specialty liquids. The Partnership's combined system has approximately 49 million barrels of storage capacity, and NuStar has operations in the United States and Mexico. For more information, visit NuStar Energy L.P.'s website at www.nustarenergy.com and its Sustainability page at https://sustainability.nustarenergy.com/.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding future events and expectations, such as NuStar's future performance, plans and expenditures. All forward-looking statements are based on NuStar's beliefs as well as assumptions made by and information currently available to NuStar. These statements reflect NuStar's current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P.'s 2022 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements. Except as required by law, NuStar does not intend, or undertake any obligation, to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

NuStar Energy L.P. and Subsidiaries
Reconciliation of Non-GAAP Financial Information
(Unaudited, Thousands of Dollars, Except Ratio Data)

Note 1: NuStar Energy L.P. (the Partnership) utilizes financial measures, such as earnings before interest, taxes, depreciation and amortization (EBITDA), distributable cash flow (DCF) and distribution coverage ratio, which are not defined in U.S. generally accepted accounting principles (GAAP). Management believes these financial measures provide useful information to investors and other external users of our financial information because (i) they provide additional information about the operating performance of the Partnership's assets and the cash the business is generating, (ii) investors and other external users of our financial statements benefit from having access to the same financial measures being utilized by management and our board of directors when making financial, operational, compensation and planning decisions and (iii) they highlight the impact of significant transactions. We present segment EBITDA to facilitate period-over-period comparisons of the operational performance of our business segments and to understand our business segments' relative contributions to our consolidated performance. We may also adjust these measures to enhance the comparability of our performance across periods.

Our board of directors and management use EBITDA and/or DCF when assessing the following: (i) the performance of our assets, (ii) the viability of potential projects, (iii) our ability to fund distributions, (iv) our ability to fund capital expenditures and (v) our ability to service debt. In addition, our board of directors uses EBITDA, DCF and a distribution coverage ratio, which is calculated based on DCF, as some of the factors in its compensation determinations. DCF is a financial indicator used by the master limited partnership (MLP) investment community to compare partnership performance. DCF is used by the MLP investment community, in part, because the value of a partnership unit is partially based on its yield, and its yield is based on the cash distributions a partnership can pay its unitholders.

None of these financial measures are presented as an alternative to net income. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with GAAP.

The following is a reconciliation of net income to EBITDA, DCF and distribution coverage ratio.

NuStar Energy L.P. and Subsidiaries
Reconciliation of Non-GAAP Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio and Per Unit Data)

The following is the reconciliation for the calculation of our Consolidated Debt Coverage Ratio, as defined in our revolving credit agreement (the Revolving Credit Agreement).

The following are reconciliations of net income / net income per common unit to adjusted net income / adjusted net income per common unit.

NuStar Energy L.P. and Subsidiaries
Reconciliation of Non-GAAP Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio Data)

The following is a reconciliation of EBITDA to adjusted EBITDA.

The following is a reconciliation of DCF to adjusted DCF and adjusted distribution coverage ratio.

NuStar Energy L.P.
Reconciliation of Non-GAAP Financial Information - Continued
(Unaudited, Thousands of Dollars)

The following are reconciliations for our reported segments of operating income to segment EBITDA and adjusted segment EBITDA.

The following is a reconciliation of projected net income to EBITDA.

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