Boardwalk Announces Second Quarter 2017 Results And Quarterly Distribution Of $0.10 Per Unit

July 31, 2017

HOUSTON, July 31, 2017 /PRNewswire/ -- Boardwalk Pipeline Partners, LP, (NYSE: BWP) announced today that it has declared a quarterly cash distribution per common unit of $0.10 ($0.40 annualized) payable on August 17, 2017, to unitholders of record as of August 10, 2017.

The Partnership also announced its results for the second quarter ended June 30, 2017, which included the following items:

Operating revenues of $317.6 million for the quarter and $684.6 million for the six months ended June 30, 2017, a 4% increase and a 5% increase from $306.3 million and $651.3 million in the comparable 2016 periods. Operating revenues, less fuel and transportation expense, were $303.1 million for the quarter and $650.9 million for the six months ended June 30, 2017, a 3% increase and a 5% increase from $294.7 million and $619.4 million in the comparable 2016 periods;

Net income of $23.7 million for the quarter and $143.0 million for the six months ended June 30, 2017, a 64% decrease and a 14% decrease from $65.7 million and $166.7 million in the comparable 2016 periods. During the second quarter of 2017, the Partnership sold its Flag City Processing Partners, LLC subsidiary, which owns the Flag City processing plant, and related assets, to a third party for $64.7 million, including customary adjustments. The Partnership recorded $47.1 million of losses and impairment charges related to the sale. Excluding the impact of the Flag City sale, Net income would have been $70.8 million and $190.1 million for the quarter and six months ended June 30, 2017;

Earnings before interest, taxes, depreciation and amortization (EBITDA) of $148.0 million for the quarter and $394.2 million for the six months ended June 30, 2017, a 22% decrease and a 5% decrease from $190.3 million and $413.0 million in the comparable 2016 periods. Excluding the impact of the Flag City sale, EBITDA would have been $195.1 million and $441.3 million for the quarter and six months ended June 30, 2017; and

Distributable cash flow of $201.8 million for the quarter and $377.9 million for the six months ended June 30, 2017, a 57% increase and a 31% increase from $128.9 million and $289.0 million in the comparable 2016 periods. Excluding the impact of the Flag City sale, distributable cash flow would have been $137.1 million and $313.2 million for the quarter and six months ended June 30, 2017.

Compared with the second quarter of 2016, the Partnership's operating revenues in the second quarter of 2017 were favorably impacted by recently completed growth projects. The second quarter of 2016 was favorably impacted by $12.7 million of proceeds received from the settlement of a legal claim.

For the six-month period, the Partnership's operating revenues, net income and EBITDA were impacted by the items discussed above.

Capital Program

Growth capital expenditures were $258.4 million and maintenance capital expenditures were $44.4 million for the six months ended June 30, 2017.

Conference Call

The Partnership has scheduled a conference call for July 31, 2017, at 9:30 a.m. Eastern time to review the quarterly results, current market conditions and distribution amount. The earnings webcast may be accessed via the Boardwalk website at www.bwpmlp.com. Please access the website at least 10 minutes before the event begins to register and download and install any necessary audio software. Those interested in participating in the question and answer session of the conference call should dial (855) 793-3255 for callers in the U.S. or (631) 485-4925 for callers outside the U.S. The Conference ID to access the call is 49473667.

Replay

An online replay will be available on the Boardwalk website immediately following the call.

Non-GAAP Financial Measures - EBITDA and Distributable Cash Flow

The Partnership uses non-GAAP measures to evaluate its business and performance, including EBITDA and distributable cash flow. EBITDA is used as a supplemental financial measure by management and by external users of the Partnership's financial statements, such as investors, commercial banks, research analysts and rating agencies, to assess the Partnership's operating and financial performance, ability to generate cash and return on invested capital as compared to those of other companies in the midstream portion of the natural gas and natural gas liquids industry. Distributable cash flow is used as a supplemental financial measure by management and by external users of the Partnership's financial statements as an approximation of net operating revenues generated by the Partnership, that when realized in cash, will be available to be distributed to its unitholders and general partner.

EBITDA and distributable cash flow should not be considered alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with generally accepted accounting principles (GAAP). EBITDA and distributable cash flow are not necessarily comparable to similarly titled measures of another company.

Tax Notification

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat 100% of Boardwalk's distributions to foreign investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, Boardwalk's distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.

About Boardwalk

Boardwalk Pipeline Partners, LP (NYSE: BWP) is a midstream master limited partnership that primarily transports and stores natural gas and liquids for its customers. Additional information about the Partnership can be found on its website at www.bwpmlp.com.

BOARDWALK PIPELINE PARTNERS, LP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Millions, except per unit amounts) (Unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017		2016
Operating Revenues:
Transportation	$	278.7	$	269.8	$	597.3	$	575.7
Parking and lending		7.9		4.4		13.3		8.5
Storage		19.9		23.6		43.3		44.6
Other		11.1		8.5		30.7		22.5
Total operating revenues		317.6		306.3		684.6		651.3
Operating Costs and Expenses:
Fuel and transportation		14.5		11.6		33.7		31.9
Operation and maintenance		51.6		48.3		92.0		91.7
Administrative and general		34.2		35.5		68.8		70.2
Depreciation and amortization		80.2		79.1		160.8		158.1
Loss on sale of assets and impairments		47.1		—		47.1		—
Taxes other than income taxes		22.8		22.5		50.2		48.5
Total operating costs and expenses		250.4		197.0		452.6		400.4
Operating income		67.2		109.3		232.0		250.9
Other Deductions (Income):
Interest expense		43.9		45.4		90.1		88.0
Interest income		(0.2)		(0.1)		(0.3)		(0.2)
Miscellaneous other income, net		(0.6)		(1.9)		(1.4)		(4.0)
Total other deductions		43.1		43.4		88.4		83.8
Income before income taxes		24.1		65.9		143.6		167.1
Income taxes		0.4		0.2		0.6		0.4
Net income	$	23.7	$	65.7	$	143.0	$	166.7
Net Income per Unit:
Net income per common unit	$	0.09	$	0.26	$	0.56	$	0.65
Weighted-average number of common units outstanding		250.3		250.3		250.3		250.3
Cash distribution declared and paid to common units per common unit	$	0.10	$	0.10	$	0.20	$	0.20

The following table presents a reconciliation of the Partnership's EBITDA and distributable cash flow to its net income, the most directly comparable GAAP financial measure, for each of the periods presented (in millions):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017		2016
Net income ⁽³⁾	$	23.7	$	65.7	$	143.0	$	166.7
Income taxes	0.4		0.2		0.6		0.4
Depreciation and amortization	80.2		79.1		160.8		158.1
Interest expense	43.9		45.4		90.1		88.0
Interest income	(0.2)		(0.1)		(0.3)		(0.2)
EBITDA⁽³⁾	148.0		190.3		394.2		413.0
Less:
Cash paid for interest, net of capitalized interest ⁽¹⁾	37.7		32.7		82.4		78.7
Maintenance capital expenditures	19.8		26.8		44.4		41.4
Add:
Proceeds from sale of operating assets	64.8		—		64.8		0.1
Loss on sale of assets and impairments	47.1		—		47.1		—
Other⁽²⁾	(0.6)		(1.9)		(1.4)		(4.0)
Distributable Cash Flow⁽³⁾	$	201.8	$	128.9	$	377.9	$	289.0

(1)	The six months ended June 30, 2017, includes $1.5 million of payments related to the settlement of interest rate derivatives.
(2)	Includes other non-cash items, such as the equity component of allowance for funds used during construction.
(3)	Net income, EBITDA and Distributable Cash Flow were impacted by the sale of the Flag City processing plant and related assets as follows:

	For the Three Months Ended June 30, 2017						For the Six Months Ended June 30, 2017
	Net Income		EBITDA		Distributable Cash Flow		Net Income		EBITDA		Distributable Cash Flow
Per above:	$	23.7	$	148.0	$	201.8	$	143.0	$	394.2	$	377.9
Items impacting comparability related to the sale of the Flag City processing plant and related assets:
Loss on sale of assets and impairments	47.1		47.1		—		47.1		47.1		—
Proceeds from the sale of the Flag City processing plant and related assets	—		—		(64.7)		—		—		(64.7)
Adjusted:	$	70.8	$	195.1	$	137.1	$	190.1	$	441.3	$	313.2

BOARDWALK PIPELINE PARTNERS, LP

NET INCOME PER UNIT RECONCILIATION
(Unaudited)

The following table provides a reconciliation of net income and the assumed allocation of net income to the common units for purposes of computing net income per unit for the three months ended June 30, 2017, (in millions, except per unit data):

	Total		Common Units		General Partner and IDRs
Net income	$	23.7
Declared distribution		25.6	$	25.1	$	0.5
Assumed allocation of undistributed net loss		(1.9)		(1.9)		—
Assumed allocation of net income attributable to limited partner unitholders and general partner	$	23.7	$	23.2	$	0.5
Weighted-average units outstanding				250.3
Net income per unit			$	0.09

The following table provides a reconciliation of net income and the assumed allocation of net income to the common units for purposes of computing net income per unit for the three months ended June 30, 2016, (in millions, except per unit data):

	Total		Common Units		General Partner and IDRs
Net income	$	65.7
Declared distribution		25.6	$	25.1	$	0.5
Assumed allocation of undistributed net income		40.1		39.3		0.8
Assumed allocation of net income attributable to limited partner unitholders and general partner	$	65.7	$	64.4	$	1.3
Weighted-average units outstanding				250.3
Net income per unit			$	0.26

The following table provides a reconciliation of net income and the assumed allocation of net income to the common units for purposes of computing net income per unit for the six months ended June 30, 2017, (in millions, except per unit data):

	Total		Common Units		General Partner and IDRs
Net income	$	143.0
Declared distribution		51.1	$	50.1	$	1.0
Assumed allocation of undistributed net income		91.9		90.1		1.8
Assumed allocation of net income attributable to limited partner unitholders and general partner	$	143.0	$	140.2	$	2.8
Weighted-average units outstanding				250.3
Net income per unit			$	0.56

The following table provides a reconciliation of net income and the assumed allocation of net income to the common units for purposes of computing net income per unit for the six months ended June 30, 2016, (in millions, except per unit data):

	Total		Common Units		General Partner and IDRs
Net income	$	166.7
Declared distribution		51.1	$	50.1	$	1.0
Assumed allocation of undistributed net income		115.6		113.3		2.3
Assumed allocation of net income attributable to limited partner unitholders and general partner	$	166.7	$	163.4	$	3.3
Weighted-average units outstanding				250.3
Net income per unit			$	0.65