Business Context and Reporting Period
This Form 8-K, filed on February 19, 2020, by NGL Energy Partners LP ("NGL"), serves to update the presentation of historical financial statements. The filing reflects the formalized plan and approval to divest two specific business units: the refined products marketing business in the mid-continent region ("Mid-Con") and the gas blending business in the southeastern and eastern United States ("Gas Blending"). These businesses are now classified as discontinued operations.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it details a reclassification of financial data:
- Discontinued Operations: Results for Mid-Con and Gas Blending are reclassified as discontinued operations in the consolidated statements of operations for the three years ended March 31, 2019.
- Balance Sheet Classification: Assets and liabilities related to these businesses, including inventory, derivatives, and leases, are classified as held for sale on the consolidated balance sheets as of March 31, 2019, and 2018.
- Cash Flow: Net cash flows for these businesses are reclassified within operating, investing, and financing activities for the three years ended March 31, 2019.
- Impact on Totals: The reclassification had no impact on total consolidated assets, liabilities, equity, net income (loss), or total cash flows for any period presented.
Material Changes Versus Prior Period
The primary material change is the accounting treatment of the Mid-Con and Gas Blending businesses in the 2019 Annual Report (Form 10-K) and a prior Form 8-K filed on November 22, 2019.
- Mid-Con Sale: On January 3, 2020, NGL completed the sale of the Mid-Con business to a third party. The buyer assumed inventory, open derivative positions, and certain system storage obligations. NGL retained accounts receivable and payable related to pre-closing transactions.
- Revised Disclosures: Selected Financial Data, Management's Discussion and Analysis (MD&A), Quantitative and Qualitative Disclosures about Market Risk, and Financial Statements in the 2019 Annual Report are being revised to reflect these businesses as discontinued operations.
Guidance, Outlook, and Risks
This filing does not contain new guidance, outlook, or management commentary regarding future performance beyond the description of the divestiture. The document explicitly states that it does not update the MD&A for any information, uncertainties, transactions, risks, or trends occurring after the events described, other than the reclassification itself. Investors are directed to more recent Quarterly Reports (Form 10-Q) for updated information.
Important Facts for Investor Verification
- Verify the specific financial impact of the Mid-Con and Gas Blending businesses by reviewing the revised financial statements in Exhibit 99.1 of this filing.
- Confirm that the sale of the Mid-Con business was completed on January 3, 2020, and review the terms regarding retained receivables and payables.
- Review the most recent Form 10-Q filings (quarters ended June 30, September 30, and December 31, 2019) for current operational data, as this 8-K only updates historical presentation.
- Note that the reclassification affects the presentation of prior periods (2017-2019) but does not alter the total consolidated financial results.