FOR IMMEDIATE RELEASE
Contact: Ross A. Benavides
Chief Financial Officer
(713) 860-2528
GENESIS ENERGY, L.P. REPORTS SECOND QUARTER RESULTS
Houston – August 6, 2008 – Genesis Energy, L.P. (AMEX: GEL) reported today net income for the second quarter of 2008 of $7.3 million, or $0.17 per unit. This compares to a loss in the 2007 period of $1.4 million, or $0.09 per unit.
Net income for the first six months of 2008 was $9.0 million, or $0.21 per unit. Net income was $0.2 million, or $0.02 per unit, for the first six months of 2007.
Grant Sims, CEO said “We are very pleased with the solid performance reported by all of our business segments and the contributions of our dedicated employees. For the second quarter of 2008, we generated total Available Cash before reserves, a non-GAAP measure, of $26.2 million.” Available Cash before reserves is a non-GAAP measure that is defined and reconciled later in this press release to its most directly comparable GAAP financial measure, net cash provided by operating activities. Net cash provided by operating activities was $5.3 million for the second quarter of 2008.
“The second quarter results reflect our continuing integration of the assets and businesses we acquired in the third quarter of 2007 from the Davison family with Genesis’ historic operations. On May 30, 2008, we completed two transactions representing an aggregate $250 million investment in two CO2 pipelines with Denbury Resources Inc. (NYSE: DNR), the indirect owner of our general partner. We believe those investments will significantly contribute in future periods to our total fee based margins. In July, we completed the acquisition of the inland marine transportation business of Grifco Transportation, Ltd., through a 49% owned joint venture with certain members of the Davison family, and closed a $75 million credit facility at the joint venture level in an otherwise challenging market for new bank credits. While we clearly believe the inland marine joint venture is an outstanding stand-alone investment, we are confident those operations should significantly enhance the utilization and stability of our other assets and operations,” Mr. Sims added.
“For meaningful comparative purposes, we focused on the change in our performance from the first quarter of 2008 rather than the second quarter of 2007 since the Davison businesses were not reported therein. Segment margin for the second quarter of 2008 was $37.0 million; an increase of $9.7 million as compared to the first quarter of 2008. The increase in segment margin resulted from increased contribution from all segments of our business, with the drop down transactions with Denbury adding $2.1 million to our pipeline transportation segment margin, reflecting only one month of reported financial results.”
Mr. Sims concluded, “On August 14, 2008, we will pay a total distribution of $13.3 million, comprised of $12.4 million or $0.315 per unit with respect to our limited partner units and $0.9 million to our general partner including its incentive distribution, attributable to the
second quarter of 2008. This is the twelfth consecutive quarter with an increase in the per unit distribution. Given the $26.2 million of total Available Cash before reserves generated during the second quarter, our total distribution coverage ratio is approximately 1.97 times.”
Financial Results
Quarterly Comparison – 2008 Second Quarter to 2007 Second Quarter
Net income for the 2008 second quarter was $7.3 million or $0.17 per unit. For the 2007 second quarter, we sustained a loss of $1.4 million, or $0.09 per unit.
Segment margin is defined and reconciled later in this press release to income before income taxes and minority interest. The following table presents selected financial information by segment for the three month reporting periods:
| | | Pipeline | | | Refinery | | | Industrial | | | Supply & | | | | |
| | | Transportation | | | Services | | | Gases | | | Logistics | | | Total | |
| | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2008 | | | | | | | | | | | | | | | |
| Segment margin excluding | | | | | | | | | | | | | | | |
depreciation and amortization (a) | | $ | 6,828 | | | $ | 17,616 | | | $ | 3,043 | | | $ | 9,492 | | | $ | 36,979 | |
| | | | | | | | | | | | | | | | | | | | | |
| Capital expenditures | | $ | 77,246 | | | $ | 559 | | | $ | - | | | $ | - | | | $ | 77,805 | |
| Maintenance capital | | | | | | | | | | | | | | | | | | | | |
| expenditures | | $ | - | | | $ | 208 | | | $ | - | | | $ | - | | | $ | 208 | |
| | | | | | | | | | | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | | | | | | | | | | |
| External customers | | $ | 8,885 | | | $ | 55,727 | | | $ | 4,450 | | | $ | 569,477 | | | $ | 638,539 | |
| Intersegment | | | 2,001 | | | | - | | | | - | | | | - | | | | 2,001 | |
| Total revenues of reportable segments | | $ | 10,886 | | | $ | 55,727 | | | $ | 4,450 | | | $ | 569,477 | | | $ | 640,540 | |
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2007 | | | | | | | | | | | | | | | | | | | | |
| Segment margin excluding | | | | | | | | | | | | | | | | | | | | |
depreciation and amortization (a) | | $ | 2,227 | | | $ | - | | | $ | 2,958 | | | $ | 1,427 | | | $ | 6,612 | |
| | | | | | | | | | | | | | | | | | | | | |
| Capital expenditures | | $ | 337 | | | $ | - | | | $ | - | | | $ | 42 | | | $ | 379 | |
| Maintenance capital | | | | | | | | | | | | | | | | | | | | |
| expenditures | | $ | 337 | | | $ | - | | | $ | - | | | $ | 42 | | | $ | 379 | |
| | | | | | | | | | | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | | | | | | | | | | |
| External customers | | $ | 5,347 | | | $ | - | | | $ | 3,946 | | | $ | 190,735 | | | $ | 200,028 | |
| Intersegment | | | 988 | | | | - | | | | - | | | | - | | | | 988 | |
| Total revenues of reportable segments | | $ | 6,335 | | | $ | - | | | $ | 3,946 | | | $ | 190,735 | | | $ | 201,016 | |
| | | | | | | | | | | | | | | | | | | | | |
(a) Segment margin was calculated as revenues less cost of sales and operating expenses. It includes our share of the operating income of our investment in joint ventures. A reconciliation of segment margin to income before income taxes is presented for periods in the table at the end of this release.
Pipeline transportation segment margin increased by $4.6 million between the second- quarter periods. Throughput increases on all three of our crude oil pipeline systems, combined with higher tariff rates contributed $0.5 million of the increased segment margin, with $1.4
million of the remainder primarily due to the effects of higher crude oil market prices on volumetric gains. The CO2 pipelines acquired from Denbury contributed $2.1 million to segment margin for the one month since the acquisition. Decreased operating costs contributed to the improved segment margin, although this decline was related to a non-cash credit for our stock appreciation rights plan in 2008.
Our refinery services segment was acquired in the transaction with the Davison family, therefore it is not included in the second quarter of 2007.
Segment margin from industrial gases activities showed a slight increase primarily related to volumes sold to our CO2 industrial customers. Volumes sold increased 6.6%, and the average sales price of CO2 increased 5.8%, primarily due to variations in the volumes sold under contracts with different pricing terms.
Segment margin from supply and logistics activities reflects an increase between the second quarters of 2008 and 2007 of $8.1 million, with approximately $7.0 million of that amount due to the Davison acquisition. Our historical crude oil related supply and logistics operations showed an improvement of $1.1 million compared to the 2007 second quarter. Much of that improvement resulted from favorable fluctuations in crude oil price differentials for grades of crude oil.
General and administrative expenses increased $3.6 million when comparing the second quarter periods. Approximately $2.8 million of that increase related to the administrative personnel and costs at the Davison locations, with the remainder attributable to increased professional service fees, headcount increases at our headquarters office and bonus plan expense totaling a combined $3.2 million. Offsetting some of these higher costs was a decrease in the expense for our stock appreciation rights plan of $2.4 million between the quarters due to the decrease in our unit price.
The $14.7 million increase in our depreciation and amortization expenses between 2008 and 2007 second quarters is substantially all attributable to our acquisition of the assets in the Davison transaction.
Interest costs in the 2008 second quarter were $1.7 million higher than in the prior year. This increase is due partly to the rise in our average outstanding borrowings of $154.8 million, offset in part by a reduction of 4.4% in our average interest rate. The increase in our outstanding debt at June 30, 2008 is primarily a function of borrowing $225 million to fund the acquisition of CO2 pipelines from Denbury.
Quarterly Comparison – 2008 Second Quarter to 2008 First Quarter
Genesis has owned the Davison businesses for three full quarters as of June 30, 2008. As shown in the table below, segment margin increased in all segments between the first and second quarters of 2008.
| | | Second | | | First | | | Six Months | |
| | | Quarter | | | Quarter | | | Ended | |
| | | 2008 | | | 2008 | | | June 30, 2008 | |
| | | | | | | | | | |
| Segment Margin: | | | | | | | | | |
| Pipeline Transportation | | $ | 6,828 | | | $ | 4,643 | | | $ | 11,471 | |
| Refinery Services | | | 17,616 | | | | 13,588 | | | | 31,204 | |
| Industrial Gases | | | 3,043 | | | | 2,776 | | | | 5,819 | |
| Supply & Logistics | | | 9,492 | | | | 6,261 | | | | 15,753 | |
| Total Segment Margin | | $ | 36,979 | | | $ | 27,268 | | | $ | 64,247 | |
| | | | | | | | | | | | | |
Pipeline transportation segment margin includes $2.1 million related to the CO2 pipelines acquired from Denbury on May 30, 2008, accounting for the majority of the increase in that segment’s contribution. Refinery services segment margin improved as a result of a 12% increase in sodium hydrosulfide (NaHS) sales volumes and a 32% increase in the contribution margin per unit from those sales. The improvement in industrial gases segment between the first two quarters of 2008 resulted from normal seasonal fluctuations in our CO2 sales to industrial customers. Lastly, the supply and logistics segment experienced significant improvement in segment margin due to increased availability of products for blending and an improvement in the availability of barges and their ability, given river levels, to access our terminals to move product out of our facilities. Operational difficulties at some of the refineries from whom we purchase refined products resulted in reduced volumes being available to us during the first quarter.
Year-to-Date Comparison
Segment margin for the six months ended June 30, 2008 increased $50.6 million when compared to the same period in 2007. As illustrated in the table below, approximately $31.2 million of this increase is attributable to the refinery services segment acquired in the Davison transaction that was completed in July 2007. Approximately $10.6 million of the increase in segment margin in the supply and logistics segment is attributable to the operations acquired from the Davison family. Of the remaining $8.8 million increase in total segment margin, $6.4 million is attributable to pipeline transportation, $0.2 million to industrial gases and the remaining $2.2 million to the supply and logistics operations that existed before the Davison acquisition.
| | | Pipeline | | | Refinery | | | Industrial | | | Supply & | | | | |
| | | Transportation | | | Services | | | Gases (a) | | | Logistics | | | Total | |
| | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2008 | | | | | | | | | | | | | | | |
| Segment margin excluding | | | | | | | | | | | | | | | |
depreciation and amortization (a) | | $ | 11,471 | | | $ | 31,204 | | | $ | 5,819 | | | $ | 15,753 | | | $ | 64,247 | |
| | | | | | | | | | | | | | | | | | | | | |
| Capital expenditures | | $ | 78,524 | | | $ | 1,710 | | | $ | 2,210 | | | $ | 4,603 | | | $ | 87,047 | |
| Maintenance capital | | | | | | | | | | | | | | | | | | | | |
| expenditures | | $ | 165 | | | $ | 489 | | | $ | - | | | $ | 330 | | | $ | 984 | |
| Net fixed and other long-term | | | | | | | | | | | | | | | | | | | | |
| assets | | $ | 286,593 | | | $ | 449,637 | | | $ | 46,387 | | | $ | 143,980 | | | $ | 926,597 | |
| | | | | | | | | | | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | | | | | | | | | | |
| External customers | | $ | 15,673 | | | $ | 99,639 | | | $ | 8,320 | | | $ | 999,595 | | | $ | 1,123,227 | |
| Intersegment | | | 3,498 | | | | - | | | | - | | | | - | | | | 3,498 | |
| Total revenues of reportable segments | | $ | 19,171 | | | $ | 99,639 | | | $ | 8,320 | | | $ | 999,595 | | | $ | 1,126,725 | |
| | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2007 | | | | | | | | | | | | | | | | | | | | |
| Segment margin excluding | | | | | | | | | | | | | | | | | | | | |
depreciation and amortization (a) | | $ | 5,095 | | | $ | - | | | $ | 5,572 | | | $ | 3,026 | | | $ | 13,693 | |
| | | | | | | | | | | | | | | | | | | | | |
| Capital expenditures | | $ | 559 | | | $ | - | | | $ | - | | | $ | 135 | | | $ | 694 | |
| Maintenance capital | | | | | | | | | | | | | | | | | | | | |
| expenditures | | $ | 559 | | | $ | - | | | $ | - | | | $ | 135 | | | $ | 694 | |
| Net fixed and other long-term | | | | | | | | | | | | | | | | | | | | |
| assets | | $ | 38,964 | | | $ | - | | | $ | 48,970 | | | $ | 8,309 | | | $ | 96,243 | |
| | | | | | | | | | | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | | | | | | | | | | |
| External customers | | $ | 11,007 | | | $ | - | | | $ | 7,443 | | | $ | 364,014 | | | $ | 382,464 | |
| Intersegment | | | 2,116 | | | | - | | | | - | | | | - | | | | 2,116 | |
| Total revenues of reportable segments | | $ | 13,123 | | | $ | - | | | $ | 7,443 | | | $ | 364,014 | | | $ | 384,580 | |
| | | | | | | | | | | | | | | | | | | | | |
Pipeline segment margin increased $6.4 million, with $2.1 million attributable to the CO2 pipelines acquired from Denbury, $3.3 million to increased volumes and tariffs on the crude oil pipelines and the effects of higher crude oil prices on pipeline loss allowance volumes, and $0.8 million to a reduction in pipeline operating costs. Volumes increased on all three crude oil pipeline systems. Annual tariff increases on the Mississippi and Jay pipeline systems also increased revenues.
The supply and logistics operations that existed before the Davison transaction experienced favorable variations in crude oil price differentials as well as volumetric gains. Costs of operating our truck fleet, primarily fuel costs, reduced the effects of these favorable variations.
General and administrative costs, depreciation and amortization and interest costs all increased between the six-month periods as a function of the growth in our operations.
Additionally, we borrowed $225 million under our existing credit facility to fund the CO2 pipeline acquisitions.
We have increased our distribution in the last twelve consecutive quarters, with the most recent increase of $0.015 per unit for the distribution to be paid for the second quarter of 2008.
| | | | | Per Unit |
| Distribution For | | Date Paid | | Amount |
| Second quarter 2008 | | August 2008 | | $ 0.315 |
| First quarter 2008 | | May 2008 | | $ 0.300 |
| Fourth quarter 2007 | | February 2008 | | $ 0.285 |
| Third quarter 2007 | | November 2007 | | $ 0.270 |
| Second quarter 2007 | | August 2007 | | $ 0.230 |
| First quarter 2007 | | May 2007 | | $ 0.220 |
| | | | | |
The second quarter 2008 distribution will be paid August 14, 2008 to unitholders of record on August 7, 2008. We generated Available Cash before reserves (a non-GAAP measure) of $26.2 million during the second quarter of 2008. Net cash flows provided by operating activities were $5.3 million for the second quarter period. (Please see the accompanying schedules for a reconciliation of Available Cash before reserves, a non-GAAP measure, to net cash flow provided by operations, the GAAP measure.)
Available Cash
Several adjustments to net income are required to calculate Available Cash before reserves. The calculation of Available Cash before reserves for the quarter ended June 30, 2008 is as follows (in thousands):
| | | Three Months Ended | |
| | | June 30, 2008 | |
| | | | |
| Net income | | $ | 7,328 | |
| Depreciation and amortization | | | 16,721 | |
| Cash received from direct financing leases not | | | | |
| included in income | | | 397 | |
| Cash effects of sales of certain assets | | | 181 | |
| Effects of available cash generated by investments | | | | |
| in joint ventures not included in income | | | 643 | |
| Cash effects of stock appreciation rights plan | | | (113 | ) |
| Loss on asset disposals | | | 76 | |
| Deferred tax expense | | | 700 | |
| Other non-cash items | | | 460 | |
| Maintenance capital expenditures | | | (208 | ) |
| Available Cash before reserves | | $ | 26,185 | |
| | | | | |
Earnings Conference Call
We will broadcast our Earnings Conference Call on Wednesday, August 6, 2008, at 10:00 a.m. Central time. This call can be accessed at www.genesisenergylp.com. Choose the Investor Relations button. Listeners should go to this website at least fifteen minutes before this event to download and install any necessary audio software. For those unable to attend the live broadcast, a replay will be available beginning approximately one hour after the event and remain available on our website for 30 days. There is no charge to access the event.
Genesis Energy, L.P. is a diversified midstream energy master limited partnership headquartered in Houston, Texas. Genesis engages in four business segments. The Pipeline Transportation Division is engaged in the pipeline transportation of crude oil, carbon dioxide and, to a lesser extent, natural gas. The Refinery Services Division primarily processes sour gas streams to remove sulfur at refining operations, principally located in Texas, Louisiana, and Arkansas. The Supply and Logistics Division is engaged in the transportation, storage and supply of energy products, including crude oil and refined products. The Industrial Gases Division produces and supplies industrial gases, such as carbon dioxide and syngas. Genesis’ operations are primarily located in Texas, Louisiana, Arkansas, Mississippi, Alabama, and Florida.
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although we believe that our expectations are based upon reasonable assumptions, we can give no assurance that our goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include the timing and extent of changes in commodity prices for oil, ability to obtain adequate credit facilities, managing operating costs, completion of capital projects on schedule and within budget, consummation of accretive acquisitions, capital spending, environmental risks, government regulation, our ability to meet our stated business goals and other risks noted from time to time in our Securities and Exchange Commission filings. Actual results may vary materially. We undertake no obligation to publicly update or revise any forward-looking statement.
(tables to follow)
| Genesis Energy, L.P. | |
| Summary Consolidated Statements of Operations - Unaudited | |
| (in thousands except per unit amounts and volumes) | |
| | | | | | | |
| | | Three Months Ended | | | Three Months Ended | |
| | | June 30, 2008 | | | June 30, 2007 | |
| | | | | | | |
| Revenues | | $ | 640,540 | | | $ | 201,016 | |
| Cost of sales | | | 603,545 | | | | 194,697 | |
| General and administrative expenses | | | 9,166 | | | | 5,600 | |
| Depreciation and amortization expense | | | 16,721 | | | | 2,046 | |
| Net loss (gain) on disposal of surplus assets | | | 76 | | | | (8 | ) |
| OPERATING INCOME (LOSS) | | | 11,032 | | | | (1,319 | ) |
| Equity in (losses) earnings of joint ventures | | | (16 | ) | | | 293 | |
| Interest expense, net | | | (2,039 | ) | | | (321 | ) |
| INCOME (LOSS) BEFORE INCOME TAXES | | | 8,977 | | | | (1,347 | ) |
| Income tax expense | | | (1,648 | ) | | | (25 | ) |
| Minority Interest | | | (1 | ) | | | - | |
| NET INCOME (LOSS) | | $ | 7,328 | | | $ | (1,372 | ) |
| | | | | | | | | |
| NET INCOME (LOSS) PER COMMON UNIT - | | | | | | | | |
| BASIC AND DILUTED | | $ | 0.17 | | | $ | (0.09 | ) |
| | | | | | | | | |
| Volume data: | | | | | | | | |
| Crude oil pipeline barrels per day (total) | | | 67,434 | | | | 57,127 | |
| Mississippi Pipeline System barrels per day | | | 24,873 | | | | 20,496 | |
| Jay Pipeline System barrels per day | | | 11,828 | | | | 11,602 | |
| Texas Pipeline System barrels per day | | | 30,733 | | | | 25,029 | |
CO2 sales Mcf per day | | | 79,968 | | | | 75,039 | |
| | | | | | | | | |
| Units Data: | | | | | | | | |
| Common units held by general partner and its affiliates | | | 4,028,096 | | | | 1,019,441 | |
| Common units held by Davison family | | | 12,619,069 | | | | - | |
| Common units held by others | | | 22,805,140 | | | | 12,765,000 | |
| Total common units outstanding | | | 39,452,305 | | | | 13,784,441 | |
| | | | | | | | | |
| Genesis Energy, L.P. | |
| Summary Consolidated Statements of Operations - Unaudited | |
| (in thousands except per unit amounts and volumes) | |
| | | | | | | |
| | | Six Months Ended | | | Six Months Ended | |
| | | June 30, 2008 | | | June 30, 2007 | |
| | | | | | | |
| Revenues | | $ | 1,126,725 | | | $ | 384,580 | |
| Cost of sales | | | 1,062,640 | | | | 371,441 | |
| General and administrative expenses | | | 17,690 | | | | 8,928 | |
| Depreciation and amortization expense | | | 33,510 | | | | 3,974 | |
| Net loss (gain) on disposal of surplus assets | | | 94 | | | | (24 | ) |
| OPERATING INCOME | | | 12,791 | | | | 261 | |
| Equity in earnings of joint ventures | | | 162 | | | | 554 | |
| Interest expense, net | | | (3,708 | ) | | | (547 | ) |
| INCOME BEFORE INCOME TAXES | | | 9,245 | | | | 268 | |
| Income tax expense | | | (271 | ) | | | (55 | ) |
| Minority Interest | | | (1 | ) | | | - | |
| NET INCOME | | $ | 8,973 | | | $ | 213 | |
| | | | | | | | | |
| NET INCOME PER COMMON UNIT - | | | | | | | | |
| BASIC AND DILUTED | | $ | 0.21 | | | $ | 0.02 | |
| | | | | | | | | |
| Volume data: | | | | | | | | |
| Crude oil pipeline barrels per day (total) | | | 66,733 | | | | 57,627 | |
| Mississippi Pipeline System barrels per day | | | 23,864 | | | | 19,983 | |
| Jay Pipeline System barrels per day | | | 13,222 | | | | 12,230 | |
| Texas Pipeline System barrels per day | | | 29,647 | | | | 25,414 | |
CO2 sales Mcf per day | | | 76,515 | | | | 71,120 | |
| | | | | | | | | |
| Units Data: | | | | | | | | |
| Common units held by general partner and its affiliates | | | 4,028,096 | | | | 1,019,441 | |
| Common units held by Davison family | | | 12,619,069 | | | | - | |
| Common units held by others | | | 22,805,140 | | | | 12,765,000 | |
| Total common units outstanding | | | 39,452,305 | | | | 13,784,441 | |
| | | | | | | | | |
| Genesis Energy, L.P. | | | | | | |
| Consolidated Balance Sheets - Unaudited | | | | | | |
| (in thousands) | | | | | | |
| | | | | | | |
| | | | | | | |
| | | June 30, 2008 | | | December 31, 2007 | |
| | | | | | | |
| ASSETS | | | | | | |
| Cash | | $ | 9,187 | | | $ | 11,851 | |
| Accounts receivable | | | 235,229 | | | | 180,099 | |
| Inventories | | | 18,783 | | | | 15,988 | |
| Net Investment in direct financing leases, net of | | | | | | | | |
| unearned income | | | 3,639 | | | | 609 | |
| Other current assets | | | 5,807 | | | | 5,693 | |
| Total current assets | | | 272,645 | | | | 214,240 | |
| Net property | | | 174,442 | | | | 102,000 | |
| Net Investment in direct financing leases, net of | | | | | | | | |
| unearned income | | | 180,567 | | | | 4,764 | |
CO2 contracts | | | 26,700 | | | | 28,916 | |
| Joint ventures and other investments | | | 19,687 | | | | 18,448 | |
| Net intangible assets | | | 187,828 | | | | 211,050 | |
| Goodwill | | | 325,045 | | | | 320,708 | |
| Other assets | | | 12,328 | | | | 8,397 | |
| Total Assets | | $ | 1,199,242 | | | $ | 908,523 | |
| | | | | | | | | |
| LIABILITIES AND PARTNERS' CAPITAL | | | | | | | | |
| Accounts payable | | $ | 197,451 | | | $ | 157,261 | |
| Accrued liabilities | | | 23,332 | | | | 17,537 | |
| Total current liabilities | | | 220,783 | | | | 174,798 | |
| Long-term debt | | | 319,000 | | | | 80,000 | |
| Deferred tax liabilities | | | 14,817 | | | | 20,087 | |
| Other liabilities | | | 1,290 | | | | 1,264 | |
| Minority interest | | | 574 | | | | 570 | |
| Partners' capital | | | 642,778 | | | | 631,804 | |
| Total Liabilities and Partners' Capital | | $ | 1,199,242 | | | $ | 908,523 | |
| | | | | | | | | |
| Genesis Energy, L.P. | |
| Summary Consolidated Statements of Cash Flows - Unaudited | |
| (in thousands) | |
| | | | | | | |
| | | Six Months Ended | | | Six Months Ended | |
| | | June 30, 2008 | | | June 30, 2007 | |
| | | | | | | |
| Net income | | $ | 8,973 | | | $ | 213 | |
| Adjustments to reconcile net income to cash | | | | | | | | |
| provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 33,510 | | | | 3,974 | |
| Amortization of credit facility issuance costs | | | 535 | | | | 273 | |
| Amortization of unearned income and initial direct costs on direct financing leases | | | (1,772 | ) | | | (315 | ) |
| Deferred and other tax liabilities | | | (926 | ) | | | - | |
| Payments received under direct financing leases | | | 594 | | | | 594 | |
| Equity in earnings of joint ventures | | | (162 | ) | | | (554 | ) |
| Distributions from joint ventures - return on investment | | | 815 | | | | 833 | |
| Loss (gain) on asset disposals | | | 94 | | | | (24 | ) |
| Non-cash effects of unit-based compensation plans | | | (619 | ) | | | 3,340 | |
| Other non-cash items | | | (112 | ) | | | (992 | ) |
| Changes to components of working capital | | | (18,234 | ) | | | (4,287 | ) |
| Net cash provided by operating activities | | | 22,696 | | | | 3,055 | |
| | | | | | | | | |
| Payments to acquire fixed assets | | | (9,543 | ) | | | (718 | ) |
CO2 pipeline transactions and related costs | | | (228,833 | ) | | | - | |
| Distributions from joint ventures - return of investment | | | 438 | | | | 361 | |
| Investments in joint ventures and other investments | | | (2,210 | ) | | | - | |
| Proceeds from disposal of assets | | | 426 | | | | 195 | |
| Prepayment on purchase of Port Hudson assets | | | - | | | | (8,100 | ) |
| Other, net | | | (1,272 | ) | | | (1,711 | ) |
| Net cash used in investing activities | | | (240,994 | ) | | | (9,973 | ) |
| | | | | | | | | |
| Bank borrowings | | | 344,100 | | | | 77,900 | |
| Bank repayments | | | (105,100 | ) | | | (63,100 | ) |
| Other, net | | | (367 | ) | | | (319 | ) |
| General partner contributions | | | 510 | | | | - | |
| Distributions to common unitholders | | | (22,378 | ) | | | (5,927 | ) |
| Distribution to general partner and minority interest owner | | | (1,131 | ) | | | (122 | ) |
| Net cash provided by financing activities | | | 215,634 | | | | 8,432 | |
| | | | | | | | | |
| Net (decrease) increase in cash and cash equivalents | | | (2,664 | ) | | | 1,514 | |
| Cash and cash equivalents at beginning of period | | | 11,851 | | | | 2,318 | |
| Cash and cash equivalents at end of period | | $ | 9,187 | | | $ | 3,832 | |
| | | | | | | | | |
| Genesis Energy, L.P. | |
| Reconciliations | |
| | | | | | | |
| SEGMENT MARGIN EXCLUDING DEPRECIATION AND AMORTIZATION | | | | |
| RECONCILIATION TO INCOME BEFORE INCOME TAXES AND MINORITY INTEREST | | | | |
| | | | | | | |
| | | | | | | |
| | | Three Months Ended | | | Three Months Ended | |
| | | June 30, 2008 | | | June 30, 2007 | |
| | | (in thousands) | |
| | | | | | | |
| Segment margin excluding depreciation and | | | | | | |
| amortization | | $ | 36,979 | | | $ | 6,612 | |
| General and administrative expenses | | | (9,166 | ) | | | (5,600 | ) |
| Depreciation and amortization | | | (16,721 | ) | | | (2,046 | ) |
| Net (loss) gain on disposal of surplus assets | | | (76 | ) | | | 8 | |
| Interest expense, net | | | (2,039 | ) | | | (321 | ) |
| Income before income taxes and minority interest | | $ | 8,977 | | | $ | (1,347 | ) |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Six Months Ended | | | Six Months Ended | |
| | | June 30, 2008 | | | June 30, 2007 | |
| | | (in thousands) |
| | | | | | | | | |
| Segment margin excluding depreciation and | | | | | | | | |
| amortization | | $ | 64,247 | | | $ | 13,693 | |
| General and administrative expenses | | | (17,690 | ) | | | (8,928 | ) |
| Depreciation and amortization | | | (33,510 | ) | | | (3,974 | ) |
| Net (loss) gain on disposal of surplus assets | | | (94 | ) | | | 24 | |
| Interest expense, net | | | (3,708 | ) | | | (547 | ) |
| Income before income taxes and minority interest | | $ | 9,245 | | | $ | 268 | |
| | | | | | | | | |
| GAAP to Non-GAAP Financial Measure Reconciliation | | | |
| | | | |
| AVAILABLE CASH BEFORE RESERVES RECONCILIATION TO | | | |
| NET CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| | | | |
| | | Three Months Ended | |
| | | June 30, 2008 | |
| | | (in thousands) | |
| | | | |
| Net cash flows from operating activities (GAAP measure) | | $ | 5,313 | |
| Adjustments to reconcile net cash flow provided by operating | | | | |
| activities to Available Cash before reserves: | | | | |
| Maintenance capital expenditures | | | (208 | ) |
| Proceeds from asset sales | | | 181 | |
| Amortization of credit facility issuance costs | | | (267 | ) |
| Effects of available cash generated by investments in joint | | | | |
| ventures not included in cash flows from operating activities | | | 329 | |
| Available cash from NEJD pipeline not yet received | | | | |
| and included in cash flows from operating activities | | | 1,722 | |
| Net effect of changes in operating accounts not included | | | | |
| in calculation of Available Cash | | | 19,115 | |
| Available Cash before reserves (Non-GAAP measure) | | $ | 26,185 | |
| | | | | |
This press release and the accompanying schedules include a non-generally accepted accounting principle (“non-GAAP”) financial measures of available cash. The accompanying schedule provides a reconciliation of this non-GAAP financial measure to its most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Our non-GAAP financial measure should not be considered as an alternative to GAAP measures of liquidity or financial performance. We believe that investors benefit from having access to the same financial measures being utilized by management, lenders, analysts and other market participants.
Available Cash. Available Cash before reserves is a liquidity measure used by management to compare cash flows generated by us to the cash distribution paid to our limited partners and general partner. This is an important financial measure to the public unitholders since it is an indicator of our ability to provide a cash return on their investment. Specifically, this financial measure aids investors in determining whether or not we are generating cash flows at a level that can support a quarterly cash distribution to the partners. Lastly, Available Cash before reserves (also referred to as distributable cash flow) is a quantitative standard used throughout the investment community with respect to publicly-traded partnerships.
We define available cash as net income or loss plus: (1) depreciation and amortization expense; (2) cash proceeds from the sale of certain assets; (3) the addition of losses or subtraction of gains relating to the sale of assets; (4) payments under direct financing leases in excess of the amount recognized as income; (5) the addition of losses or subtraction of gains on derivative financial instruments; (6) available cash generated by equity method investments; (7) the subtraction of maintenance capital expenditures incurred to replace or enhance partially or fully depreciated assets so as to sustain the existing operating capacity or efficiency of our assets and extend their useful lives; and (8) the addition of losses or subtraction of gains relating to other non-cash amounts affecting net income for the period.
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