Blueknight Energy Partners reports lower earnings as it prepares for merger

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Blueknight Energy Partners, L.P. reported its financial results for the second quarter ended June 30, 2022 were down from the previous year.

Income from continuing operations for the Tulsa-based company was $6.3 million in the second quarter of 2022, compared to $7.1 million for the same period in 2021. The year-over-year decrease was primarily due to non-recurring legal and professional fees related to the proposed merger with Ergon, Inc. and higher depreciation and amortization expense.

Adjusted earnings before interest, taxes, depreciation and amortization from continuing operations was $12.1 million in the second quarter of 2022 and in-line with the same period in 2021.

Asphalt terminalling services total operating margin, excluding depreciation and amortization, in the second quarter of 2022 was $14.7 million, in-line with the same period in 2021. Total revenue increased 6% to $29.5 million, with 98% categorized as fixed-fee, take-or-pay revenue after excluding variable cost recovery revenue.

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Total operating expenses, excluding depreciation and amortization, increased 13% to $14.8 million in the second quarter of 2022. The year-over-year increase was attributable to higher utility costs, which are recoverable from our customers, and the timing of certain maintenance and repair projects.

General and administrative expense in the second quarter of 2022 was $3.6 million and in-line with the same period in 2021, after excluding non-cash equity-based compensation and non-recurring professional and legal fees.

Distributable Cash Flow from continuing operations was $9.6 million in the second quarter of 2022, which was $0.1 million below the same period in 2021 as lower cash interest expense was offset by higher maintenance capital. The coverage ratio on all distributions was 1.18 times for the second quarter of 2022 versus 1.21 times for the same period in 2021. The coverage ratio on common unit distributions was 1.79 times for the second quarter of 2022 versus 1.97 times for the same period in 2021.

Capital expenditures in the second quarter of 2022 included $1.7 million of expansion capital related to previously announced growth projects and $1.4 million of net maintenance capital.

As of June 30, 2022, total debt was $114.0 million, and the total leverage ratio was 2.16 times, compared to 2.17 times as of June 30, 2021. Total availability under the credit facility was $185.7 million at quarter end, subject to covenant restrictions.

As of July 29, 2022, total debt was $109.0 million and total cash was $0.6 million.

The merger is subject to customary closing conditions, including the approval of unitholders.  The Partnership has established a special meeting date of August 16, 2022, for its unitholders to consider approval of the merger.

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