FOR IMMEDIATE RELEASE
Contact: Bob Deere
Chief Financial Officer
(713) 860-2516
GENESIS ENERGY, L.P. REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
Houston, Texas – February 24, 2010 – Genesis Energy, L.P. (AMEX: GEL) today announced its fourth quarter and annual results. Results for the quarter and year ended December 31, 2009 included the following items:
| · | For the fourth quarter of 2009, we generated total Available Cash before Reserves of $23.7 million, essentially equal to the third quarter of 2009. For the full year of 2009, we generated Available Cash before Reserves of $91.0 million compared to $89.8 million for 2008. 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 $34.2 million and $36.8 million for the fourth and third quarters of 2009, respectively, and $90.1 million and $94.8 million for the full years of 2009 and 2008, respectively. |
| · | Net loss attributable to the Partnership for the fourth quarter of 2009 was $6.0 million as compared to net income attributable to the Partnership of $6.4 million for the fourth quarter of 2008. For the fourth quarter of 2009, the common unitholders’ share of our net income was $3.2 million, or $0.08 per unit. For the fourth quarter of 2008, the common unitholders share of our net income was $5.4 million, or 0.14 per unit. |
| · | For the full year 2009 we generated net income attributable to the Partnership of $8.1 million. For all of 2008, Genesis had net income attributable to the Partnership of $26.1 million. Net income allocable to our common unitholders was $20.2 million, or $0.51 per unit, for 2009 and $23.0 million, or $0.59 per unit for 2008. |
| · | On February 12, 2010, we paid a total quarterly distribution of $16.6 million attributable to our financial and operational results for the fourth quarter of 2009, including $14.3 million payable to our common unitholders based on our quarterly distribution rate of $0.36 per unit, and $2.3 million payable to our general partner, which includes its incentive distribution amount. Given the total Available Cash before Reserves generated for the fourth quarter of 2009, the coverage ratio for our total distribution was approximately 1.4 times. |
| · | The distribution for the fourth quarter of 2009 is our eighteenth consecutive quarter with an increase in the per unit distribution. The quarterly distribution of $0.36 per unit represents a 2.1% increase in the distribution paid relative to the previous quarter and an approximately 9.1% increase over the year earlier period. |
Grant Sims, CEO said “The partnership turned in another solid quarter, again demonstrating the financial capabilities of our diverse but increasingly integrated businesses. As we enter 2010, we are cautiously optimistic and encouraged by increases in activities and apparent opportunities across our business segments.
We are proud of our employees and how they responded to the macroeconomic challenges presented in 2009. Because of their efforts, we were able to deliver the eighteenth consecutive quarterly increase in the distribution paid to our unitholders, while maintaining a high coverage ratio and conservative financial structure.
As we announced on February 5, 2010, the ownership of our general partner has changed. We look forward to working with, and being supported by, the Quintana Group and their co-investors in our continuing efforts to create value for all of the partnership’s stakeholders.”
Financial Results – Fourth Quarter
To provide a view of current earnings trends, we will initially compare the fourth quarter of 2009 to the third quarter of 2009, and then follow that discussion with a comparison of the full years of 2009 and 2008.
Comparison Fourth Quarter 2009 to Third Quarter 2009
Available Cash before Reserves (a non-GAAP measure) remained steady at $23.7 million in the fourth quarter. The primary components impacting Available Cash before Reserves are Segment Margin, corporate general and administrative expenses (excluding non-cash charges) and maintenance capital expenditures. Variances from the previous quarter in these components are explained as follows:
Segment Margin
Segment margin is defined and reconciled later in this press release to income before income taxes. For the third and fourth quarters of 2009, segment results were as follows:
| Pipeline | Refinery | Supply & | Industrial | |||||||||||||||||
| Transportation | Services | Logistics | Gases | Total | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
Segment margin (1) | ||||||||||||||||||||
| Three months ended December 31, 2009 | $ | 11,321 | $ | 13,201 | $ | 7,073 | $ | 2,647 | $ | 34,242 | ||||||||||
| Three months ended September 30, 2009 | $ | 10,269 | $ | 12,694 | $ | 9,423 | $ | 2,893 | $ | 35,279 | ||||||||||
| (1) | Segment margin was calculated as revenues less cost of sales, operating expenses and segment general and administrative expenses, plus our share of the distributable cash generated by our joint ventures. Segment margin excludes the non-cash effects of our equity-based compensation plans and unrealized gains and losses from derivative transactions, and includes the non-income portion of payments received under direct financing leases. A reconciliation of segment margin to income before income taxes is presented for periods presented in the table at the end of this release. |
Pipeline segment margin increased $1.1 million between the third and fourth quarters of 2009. Overall throughput increased on our crude oil pipeline systems by 4% resulting in increased oil tariff revenues of $0.2 million. Volumes increased on our Free State CO2 pipeline by 45,300 Mcf per day resulting in increased revenues of $0.5 million. Pipeline loss allowance revenues increased $0.4 million due to an increase in pipeline allowance volumes sold of 3,300 barrels and higher market prices for crude oil. These increases were slightly offset by increased operating costs of $0.1 million.
Our refinery services segment margin increased $0.5 million between the 2009 sequential quarterly periods. NaHS sales volumes increased by 3,760 dry short tons (DST) from 28,207 DST in the third quarter of 2009 to 31,967 DST in the fourth quarter of 2009. Sales of caustic soda decreased by 1,500 DST, from 26,898 DST to 25,398 DST, between those same periods. Demand for NaHS in both North and South America has improved as increased copper and molybdenum prices have increased mining activities and industrial activity levels have improved.
Supply and logistics segment margin decreased $2.3 million between the quarters. The flattening of the forward curve in crude oil prices (reduction in contango) and narrowing of the differential in prices between sour and sweet crude oil (blending economics) contributed to approximately $0.8 million of such decrease. Seasonal declines in asphalt sales and slightly lower petroleum product sales and increased operating expenses (principally due to river flooding early in the fourth quarter) accounted for approximately $0.8 of such decrease. DG Marine contributed approximately $0.4 million less compared to the third quarter.
Our industrial gases segment margin declined slightly due to the normal decrease in demand in the fourth quarter of each year resulting from the seasonal use of CO2 in food and beverage applications.
Other Components of Available Cash
While segment margin declined between the periods as discussed above, our interest costs and corporate general and administrative expenses (excluding non-cash charges) partially offset the decline. Additionally, our maintenance capital expenditures were lower in the fourth quarter as we typically incur a higher percentage of our annual maintenance capital expenditures in the warmer months of the year. Lastly, DG Marine is excluded from Available Cash, although it is included in segment margin. The effect of this exclusion was less in the fourth quarter as compared to the third quarter of 2009.
Several adjustments to net income attributable to the Partnership are required to calculate Available Cash before Reserves. The calculation of Available Cash before Reserves for the quarters ended December 31, 2009 and September 30, 2009 is as follows:
| Three Months Ended | ||||||||
| December 31, 2009 | September 30, 2009 | |||||||
| (in thousands) | ||||||||
| Net (loss) income attributable to Genesis Energy, L.P. | $ | (5,982 | ) | $ | 4,299 | |||
| Depreciation and amortization expense | 15,223 | 15,806 | ||||||
| Impairment charge | 5,005 | - | ||||||
| Cash received from direct financing leases not | ||||||||
| included in income | 971 | 951 | ||||||
| Cash effects of sales of certain assets | 260 | 156 | ||||||
| Effects of available cash generated by equity method | ||||||||
| investees not included in income | (163 | ) | 787 | |||||
| Cash effects of stock appreciation rights plan | (37 | ) | (77 | ) | ||||
| Non-cash tax expense (benefit) | 830 | (3 | ) | |||||
| Earnings of DG Marine in excess of distributable cash | (493 | ) | (1,108 | ) | ||||
| Other non-cash items, net, including equity-based | ||||||||
| compensation | 8,775 | 4,240 | ||||||
| Maintenance capital expenditures | (668 | ) | (1,336 | ) | ||||
| Available Cash before Reserves | $ | 23,721 | $ | 23,715 | ||||
Other Components of Net Income
In the fourth quarter of 2009, the Partnership recorded a net loss of $6.0 million. In addition to the factors impacting Available Cash before Reserves, the net loss included the effect of several non cash charges. Depreciation and amortization expense totaled $15.2 million for the fourth quarter. Additionally, in the fourth quarter of 2009, we recorded an impairment charge of $5.0 million related to our investment in the Faustina Project, a developmental pet coke to ammonia project. Based on a number of factors, including the progress of the project development and our decision not to continue to invest further in the project, we made the determination that the likelihood of a recovery of our investment was remote and the fair value of the investment was zero. Non-cash performance-based compensation expense and deferred income tax expense were approximately $8.1 million and $0.8 million, respectively, for the fourth quarter.
Comparison 2009 to 2008
Available Cash before Reserves for the full year 2009 increased by $1.2 million over the same period in the previous year, to a total of $91.0 million. Segment margin slightly declined by $0.4 million; however reductions in other cash costs and expenses included in the computation of Available Cash more than offset that decline.
Segment Margin
The following table presents selected financial information by segment for the twelve-month reporting periods:
| Pipeline | Refinery | Supply & | Industrial | |||||||||||||||||
| Transportation | Services | Logistics | Gases | Total | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
Segment margin (1) | ||||||||||||||||||||
| Year Ended December 31, 2009 | $ | 42,162 | $ | 51,844 | $ | 29,052 | $ | 11,432 | $ | 134,490 | ||||||||||
| Year Ended December 31, 2008 | $ | 33,149 | $ | 55,784 | $ | 32,448 | $ | 13,504 | $ | 134,885 | ||||||||||
| (1) | Segment margin was calculated as revenues less cost of sales, operating expenses and segment general and administrative expenses, plus our share of the distributable cash generated by our joint ventures. Segment margin excludes the non-cash effects of our equity-based compensation plans and unrealized gains and losses from derivative transactions, and includes the non-income portion of payments received under direct financing leases. A reconciliation of segment margin to income before income taxes is presented for periods presented in the table at the end of this release. |
Pipeline transportation segment margin increased $9.0 million in 2009 as compared to 2008. The primary reasons for this improvement was an increase in revenues from CO2 financing leases and tariffs of $10.5 million and a related increase in non-income payments from the same financing leases of $1.4 million. The increase was principally due to the acquisition of the Free State Pipeline and NEJD pipeline lease in May 2008. Tariff rate increases of approximately 7.6% on our Jay and Mississippi pipelines went into effect July 1, 2009 and increased our tariff revenue by $1.9 million. These increases were offset by a decrease in our pipeline loss allowance revenues of $4.1 million caused by an average $38 per barrel decline in the market price of crude oil in addition to a decline in our pipeline loss allowance volumes of 10,000 barrels. A decline in volumes transported on our crude oil pipelines also decreased segment margin by $1.0 million.
Refinery services segment margin decreased $3.9 million between 2008 and 2009. While we experienced a decrease in NaHS demand of approximately 34%, we have taken advantage of our logistics capabilities and economies of scale to increase caustic sales to third parties. As a result, our caustic soda sales volumes increased by 30% to 88,959 dry short tons (DST). Raw material and processing costs related to providing our refinery services and supplying caustic soda as a percentage of our segment revenues increased only 3% between the periods. The cost of delivering NaHS and caustic soda to our customers, as a percentage of segment revenues increased 4% between the two periods.
Supply and logistics segment margin was $29.1 million in 2009 compared to $32.4 million in 2008. The primary factors producing this decrease were a decline in crude oil and petroleum products marketing activities, substantially offset by the contribution of the DG Marine barge operations and the contango crude oil pricing. Contango pricing in the crude oil market provided opportunities for us to hold more barrels in storage tanks to take advantage of higher oil prices for future deliveries. We hedge the future delivery price with the use of derivative contracts (principally NYMEX futures) and minimize price risk. During 2009, we averaged approximately 174,000 barrels of crude oil in inventory and recorded $2.2 million of segment margin related to storing and hedging crude oil. We also benefited in the second half of 2009 from additional opportunities to handle the heavy end of the refined barrel due to our access to the additional leased heavy-products storage and to barge transportation capabilities through our DG Marine joint venture. The DG Marine barge operations we acquired in July 2008 added approximately $5.6 million to our segment margin in 2009 as compared to 2008. However, due to the joint venture financial covenants, we eliminate the segment margin associated with DG Marine in determining Available Cash. More than offsetting these improvements, our crude oil and petroleum products marketing activities contributed $11.1 million less to segment margin in the 2009 than in 2008. In 2009, we experienced some reduction in crude oil marketing volumes as crude oil producers, in response to lower prices, reduced operating expenses or postponed development activities that could have enhanced or maintained existing production levels. Additionally in 2009, gasoline demand declined significantly from 2008 levels and refiners reduced their production rates. The economics of our blending and marketing activities in the heavy-end refined products narrowed as volatility in prices declined in correlation to the reduced refinery production rates.
Segment margin from our industrial gases segment declined between the two periods as sales of CO2 to our industrial gases customers were affected by macroeconomic conditions. Our customers process the CO2 for further sale to beverage and food processing customers and to parties who use the gases in tertiary oil recovery and other industrial processes. In addition, a scheduled turnaround in the second half of 2009 at the facility of our syngas joint venture reduced the contribution of that venture in 2009.
Other Components of Available Cash
Declines in our interest costs (excluding interest on the debt of DG Marine) of $2.6 million and corporate general and administrative expenses (excluding non-cash charges) of $5.7 million more than offset the slight decrease in segment margin and the exclusion of the DG Marine from our calculation of available cash.
Although our average debt balance was greater in 2009 than in 2008, lower market interest rates substantially offset the effect. Our average interest rate under our credit facility during 2009 was approximately 2.2% less than in 2008. Our average outstanding debt balance under the facility was approximately $114 million more in 2009. The increase in average debt resulted primarily from the CO2 pipeline dropdown transactions in May 2008 and the DG Marine acquisition in July 2008. Declines in professional services expenses and bonus expense reduced corporate general and administrative expenses between the annual periods.
Because the cash flows generated by DG Marine must be utilized to reduce DG Marine’s debt under its credit facility, we exclude the effects of DG Marine from our calculation of Available Cash before Reserves.
The calculation of Available Cash before Reserves for the years ended December 31, 2009 and 2008 is as follows:
| Year Ended December 31, | ||||||||
| 2009 | 2008 | |||||||
| (in thousands) | ||||||||
| Net income attributable to Genesis Energy, L.P. | $ | 8,063 | $ | 26,089 | ||||
| Depreciation and amortization expense | 62,581 | 71,370 | ||||||
| Impairment charge | 5,005 | - | ||||||
| Cash received from direct financing leases not | ||||||||
| included in income | 3,758 | 2,349 | ||||||
| Cash effects of sales of certain assets | 873 | 760 | ||||||
| Effects of available cash generated by equity method | ||||||||
| investees not included in income | (495 | ) | 1,830 | |||||
| Cash effects of stock appreciation rights plan | (121 | ) | (385 | ) | ||||
| Non-cash tax expense (benefit) | 1,914 | (2,782 | ) | |||||
| Earnings of DG Marine in excess of distributable cash | (4,475 | ) | (2,821 | ) | ||||
| Other non-cash items, net, including equity-based | ||||||||
| compensation | 18,309 | (2,172 | ) | |||||
| Maintenance capital expenditures | (4,426 | ) | (4,454 | ) | ||||
| Available Cash before Reserves | $ | 90,986 | $ | 89,784 | ||||
Other Components of Net Income
Net income attributable to the Partnership was $8.1 million for 2009, a decrease of $18 million from 2008. In addition to the factors impacting Available Cash before Reserves, net income included the effects of non cash items and the recorded share of the results of DG Marine. Differences between the periods in the non cash items of depreciation, amortization and impairment and non-cash compensation were the principal factors resulting in the decline in net income for the period.
The amount we recorded as depreciation and amortization expense declined in 2009 as compared to 2008 by $8.8 million. We are amortizing our intangible assets over the period during which the intangible asset is expected to contribute to future cash flows. As a result, amortization is generally greater in the initial years after an acquisition. The decline in intangible asset amortization was partially offset by depreciation from the DG Marine acquisition in July 2008 and the vessels added to DG Marine’s barge fleet since the end of 2008.
As discussed above, we recorded a $5.0 million impairment charge related to our investment in the Faustina Project in 2009.
The non-cash charges in 2009 related to the compensation arrangement between our senior executives and our general partner resulted in $14.1 million of additional expense in 2009. Our general partner will bear the cash cost of this arrangement. Non-cash expense related to other equity-based compensation also increased in 2009 by approximately $6.0 million.
Although we exclude the available cash generated by DG Marine from the calculation of available cash, our share of its results is included in net income attributable the Partnership.
Distributions
Over the last four quarters, we have increased the distribution rate on our common units by a total of $0.03 per unit, or 9.1%. Distributions paid over the last four quarters, and the distribution paid on February 12, 2010 for the fourth quarter of 2009, are as follows:
| Per Unit | |||||
| Distribution For | Date Paid | Amount | |||
| Fourth quarter 2009 | February 2010 | $ | 0.3600 | ||
| Third quarter 2009 | November 2009 | $ | 0.3525 | ||
| Second quarter 2009 | August 2009 | $ | 0.3450 | ||
| First quarter 2009 | May 2009 | $ | 0.3375 | ||
| Fourth quarter 2008 | February 2009 | $ | 0.3300 | ||
Liquidity
We generate substantial cash flows from our operations. In addition, we have a $500 million revolving credit facility, which we can access for general partnership purposes, including funding working capital requirements and/or growth opportunities. Should we want to grow through acquisitions, we have the ability to increase our borrowing base for one year because we can include an agreed upon amount of pro-forma EBITDA associated with a material acquisition and calculate the borrowing base at a higher borrowing base multiple of 4.75 (as compared to our normal multiple of 4.25). Upon the completion of four full quarters of operations including the acquired operations, our EBITDA multiple reverts back to 4.25, from 4.75 times. For example, our operations now include four full quarters of operations from the pipelines dropped down from Denbury in 2008, so our borrowing base multiple reverted to 4.25 times our last four quarters, or approximately $407 million. Our cash flows from operations and our revolving credit facility, which matures in November 2011, provide us with sufficient liquidity to run our current business.
Earnings Conference Call
We will broadcast our Earnings Conference Call on Wednesday, February 24, 2010, 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 and carbon dioxide. 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 and marketing 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 | |||||||
| December 31, 2009 | December 31, 2008 | |||||||
| Revenues | $ | 436,274 | $ | 378,040 | ||||
| Costs of sales and other expenses | 417,499 | 346,568 | ||||||
| Depreciation, amortization and impairment expense | 15,223 | 19,760 | ||||||
| Gain (loss) from disposal of surplus assets | 301 | (7 | ) | |||||
| Impairment expense | 5,005 | - | ||||||
| OPERATING (LOSS) INCOME | (1,754 | ) | 11,719 | |||||
| Equity in earnings of joint ventures | 165 | 131 | ||||||
| Interest expense, net | (3,834 | ) | (4,746 | ) | ||||
| (Loss) income before income taxes | (5,423 | ) | 7,104 | |||||
| Income tax (expense) benefit | (1,419 | ) | (871 | ) | ||||
| NET (LOSS) INCOME | (6,842 | ) | 6,233 | |||||
| Net loss attributable to noncontrolling interests | 860 | 120 | ||||||
| NET (LOSS) INCOME ATTRIBUTABLE | ||||||||
| TO GENESIS ENERGY, L.P. | $ | (5,982 | ) | $ | 6,353 | |||
| NET INCOME ATTRIBUTABLE TO | ||||||||
| GENESIS ENERGY, L.P. PER COMMON UNIT - | ||||||||
| BASIC AND DILUTED | $ | 0.08 | $ | 0.14 | ||||
| Volume data: | ||||||||
| Crude oil pipeline barrels per day (total) | 60,181 | 58,363 | ||||||
| Mississippi Pipeline System barrels per day | 24,231 | 28,163 | ||||||
| Jay Pipeline System barrels per day | 12,766 | 13,448 | ||||||
| Texas Pipeline System barrels per day | 23,184 | 16,752 | ||||||
Free State CO2 System Mcf per day | 178,338 | 167,926 | ||||||
| NaHS dry short tons sold | 31,967 | 35,494 | ||||||
| NaOH (caustic soda) dry short tons sold | 25,397 | 17,580 | ||||||
| Crude oil and petroleum products barrels per day | 50,691 | 47,713 | ||||||
CO2 sales Mcf per day | 72,233 | 75,164 | ||||||
| Genesis Energy, L.P. | ||||||||
| Summary Consolidated Statements of Operations - Unaudited | ||||||||
| (in thousands except per unit amounts and volumes) | ||||||||
| Year Ended | Year Ended | |||||||
| December 31, 2009 | December 31, 2008 | |||||||
| Revenues | $ | 1,435,360 | $ | 2,141,684 | ||||
| Costs of sales and other expenses | 1,346,243 | 2,032,394 | ||||||
| Depreciation, amortization and impairment expense | 62,581 | 71,370 | ||||||
| Loss from disposal of surplus assets | 160 | 29 | ||||||
| Impairment expense | 5,005 | - | ||||||
| OPERATING INCOME | 21,371 | 37,891 | ||||||
| Equity in earnings of joint ventures | 1,547 | 509 | ||||||
| Interest expense, net | (13,660 | ) | (12,937 | ) | ||||
| Income before income taxes | 9,258 | 25,463 | ||||||
| Income tax (expense) benefit | (3,080 | ) | 362 | |||||
| NET INCOME | 6,178 | 25,825 | ||||||
| Net loss attributable to noncontrolling interests | 1,885 | 264 | ||||||
| NET INCOME ATTRIBUTABLE | ||||||||
| TO GENESIS ENERGY, L.P. | $ | 8,063 | $ | 26,089 | ||||
| NET INCOME ATTRIBUTABLE TO | ||||||||
| GENESIS ENERGY, L.P. PER COMMON UNIT - | ||||||||
| BASIC AND DILUTED | $ | 0.51 | $ | 0.59 | ||||
| Volume data: | ||||||||
| Crude oil pipeline barrels per day (total) | 60,262 | 64,111 | ||||||
| Mississippi Pipeline System barrels per day | 24,092 | 25,288 | ||||||
| Jay Pipeline System barrels per day | 10,523 | 13,428 | ||||||
| Texas Pipeline System barrels per day | 25,647 | 25,395 | ||||||
Free State CO2 System Mcf per day (1) | 154,271 | 160,220 | ||||||
| NaHS dry short tons sold | 107,311 | 162,210 | ||||||
| NaOH (caustic soda) dry short tons sold | 88,959 | 68,647 | ||||||
| Crude oil and petroleum products barrels per day | 48,117 | 47,569 | ||||||
CO2 sales Mcf per day | 73,328 | 78,058 | ||||||
(1) 2008 volume is for seven months
| Genesis Energy, L.P. | ||||||||
| Consolidated Balance Sheets - Unaudited | ||||||||
| (in thousands) | ||||||||
| December 31, 2009 | December 31, 2008 | |||||||
| ASSETS | ||||||||
| Cash | $ | 4,148 | $ | 18,985 | ||||
| Accounts receivable | 129,865 | 115,104 | ||||||
| Inventories | 40,204 | 21,544 | ||||||
| Other current assets | 15,027 | 12,494 | ||||||
| Total current assets | 189,244 | 168,127 | ||||||
| Property, net | 284,887 | 282,105 | ||||||
CO2 contracts, net | 20,105 | 24,379 | ||||||
| Joint ventures and other investments | 15,128 | 19,468 | ||||||
| Investment in direct financing leases | 173,027 | 177,203 | ||||||
| Intangible assets, net | 136,330 | 166,933 | ||||||
| Goodwill | 325,046 | 325,046 | ||||||
| Other assets | 4,360 | 15,413 | ||||||
| Total Assets | $ | 1,148,127 | $ | 1,178,674 | ||||
| LIABILITIES AND PARTNERS' CAPITAL | ||||||||
| Accounts payable | $ | 117,625 | $ | 99,559 | ||||
| Accrued liabilities | 23,803 | 26,713 | ||||||
| Total current liabilities | 141,428 | 126,272 | ||||||
| Long-term debt | 366,900 | 375,300 | ||||||
| Deferred tax liabilities | 15,167 | 16,806 | ||||||
| Other liabilities | 5,699 | 2,834 | ||||||
| Partners' capital: | ||||||||
| Genesis Energy, L.P. partners' capital | 595,877 | 632,658 | ||||||
| Noncontrolling interests | 23,056 | 24,804 | ||||||
| Total partners' capital | 618,933 | 657,462 | ||||||
| Total Liabilities and Partners' Capital | $ | 1,148,127 | $ | 1,178,674 | ||||
| Units Data: | ||||||||
| Common units held by general partner and affiliates | 4,028,096 | 4,028,096 | ||||||
| Common units held by Davison family | 11,785,979 | 11,781,379 | ||||||
| Common units held by others | 23,673,922 | 23,647,299 | ||||||
| Total common units outstanding | 39,487,997 | 39,456,774 | ||||||
| SEGMENT MARGIN RECONCILIATION | ||||||||
| TO (LOSS) INCOME BEFORE INCOME TAXES - UNAUDITED | ||||||||
| Three Months Ended | Three Months Ended | |||||||
| December 31, 2009 | December 31, 2008 | |||||||
| (in thousands) | ||||||||
| Segment margin | $ | 34,242 | $ | 38,908 | ||||
| Corporate general and administrative expenses | (12,257 | ) | (6,384 | ) | ||||
| Depreciation, amortization and impairment | (20,228 | ) | (19,760 | ) | ||||
| Net (loss) gain on disposal of surplus assets | (301 | ) | 7 | |||||
| Interest expense, net | (3,834 | ) | (4,746 | ) | ||||
| Non-cash expenses not included in segment margin | (2,239 | ) | 428 | |||||
| Other non-cash items affecting segment margin | (806 | ) | (1,349 | ) | ||||
| Income (loss) before income taxes | $ | (5,423 | ) | $ | 7,104 | |||
| Year Ended | Year Ended | |||||||
| December 31, 2009 | December 31, 2008 | |||||||
| (in thousands) | ||||||||
| Segment margin | $ | 134,490 | $ | 134,885 | ||||
| Corporate general and administrative expenses | (36,475 | ) | (22,113 | ) | ||||
| Depreciation, amortization and impairment | (67,586 | ) | (71,370 | ) | ||||
| Net loss on disposal of surplus assets | (160 | ) | (29 | ) | ||||
| Interest expense, net | (13,660 | ) | (12,937 | ) | ||||
| Non-cash expenses not included in segment margin | (4,089 | ) | 1,355 | |||||
| Other non-cash items affecting segment margin | (3,262 | ) | (4,328 | ) | ||||
| Income before income taxes | $ | 9,258 | $ | 25,463 | ||||
| CALCULATION OF NET INCOME PER COMMON UNIT - UNAUDITED | |||||||
| (in thousands, except per unit amounts) | |||||||
| Three Months Ended | |||||||
| December 31, 2009 | December 31, 2008 | ||||||
| Numerators for basic and diluted net income | |||||||
| per common unit: | |||||||
| Net (loss) income attributable to Genesis Energy, L.P. | $ | (5,982 | ) | $ | 6,353 | ||
| Less: General partner's incentive distribution | |||||||
| to be paid for the period | (2,037 | ) | (823 | ) | |||
| Add: Items allocable to our general partner | 11,266 | - | |||||
| Subtotal | 3,247 | 5,530 | |||||
| Less: General partner 2% ownership | (65 | ) | (111 | ) | |||
| Income available for common unitholders | $ | 3,182 | $ | 5,419 | |||
| Denominator for basic per common unit: | |||||||
| Common Units | 39,484 | 39,453 | |||||
| Denominator for diluted per common unit: | |||||||
| Common Units | 39,484 | 39,453 | |||||
| Phantom Units | 129 | 84 | |||||
| 39,613 | 39,537 | ||||||
| Basic net income per common unit | $ | 0.08 | $ | 0.14 | (1) | ||
| Diluted net income per common unit | $ | 0.08 | $ | 0.14 | (1) | ||
| Year Ended | |||||||
| December 31, 2009 | December 31, 2008 | ||||||
| Numerators for basic and diluted net income | |||||||
| per common unit: | |||||||
| Net income attributable to Genesis Energy, L.P. | $ | 8,063 | $ | 26,089 | |||
| Less: General partner's incentive distribution | |||||||
| to be paid for the period | (6,318 | ) | (2,613 | ) | |||
| Add: Items allocable to our general partner | 18,853 | - | |||||
| Subtotal | 20,598 | 23,476 | |||||
| Less: General partner 2% ownership | (412 | ) | (470 | ) | |||
| Income available for common unitholders | $ | 20,186 | $ | 23,006 | |||
| Denominator for basic per common unit: | |||||||
| Common Units | 39,471 | 38,961 | |||||
| Denominator for diluted per common unit: | |||||||
| Common Units | 39,471 | 38,961 | |||||
| Phantom Units | 132 | 64 | |||||
| 39,603 | 39,025 | ||||||
| Basic net income per common unit | $ | 0.51 | $ | 0.59 | (1) | ||
| Diluted net income per common unit | $ | 0.51 | $ | 0.59 | (1) | ||
(1) Amounts have been adjusted to reflect the adoption of new accounting guidance, which is now a part of ASC 260, “Earnings per Share”, which requires the subtraction in this calculation of the incentive distributions to be paid with respect to the quarter rather than incentive distributions paid in the quarter. Previously reported basic and diluted net income per common unit remained the same for the three months period. Basic and diluted net income per common unit was $0.61 and $0.60 for the annual period, respectively.
| GAAP to Non-GAAP Financial Measure Reconciliation - Unaudited | ||||||||||||||||
| AVAILABLE CASH BEFORE RESERVES RECONCILIATION TO | ||||||||||||||||
| NET CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||
| 2009 | 2009 | 2009 | 2008 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net cash flows from operating activities (GAAP | ||||||||||||||||
| measure) | $ | 34,248 | $ | 36,765 | $ | 90,079 | 94,808 | |||||||||
| Adjustments to reconcile net cash flow provided | ||||||||||||||||
| by operating activities to Available Cash | ||||||||||||||||
| before reserves: | ||||||||||||||||
| Maintenance capital expenditures | (668 | ) | (1,336 | ) | (4,426 | ) | (4,454 | ) | ||||||||
| Proceeds from asset sales | 260 | 156 | 873 | 760 | ||||||||||||
| Amortization and write-off of credit facility | ||||||||||||||||
| issuance costs | (1,055 | ) | (487 | ) | (2,503 | ) | (1,437 | ) | ||||||||
| Effects of available cash from joint ventures | ||||||||||||||||
| not ncluded in operating cash flows | (150 | ) | - | 101 | 1,067 | |||||||||||
| DG Marine earnings in excess of distributable cash | (493 | ) | (1,108 | ) | (4,475 | ) | (2,821 | ) | ||||||||
| Other items affecting Available Cash | 1,353 | (778 | ) | 1,768 | 599 | |||||||||||
| Net effect of changes in operating accounts not | ||||||||||||||||
| included in calculation of Available Cash | (9,774 | ) | (9,497 | ) | 9,569 | 1,262 | ||||||||||
| Available Cash before Reserves (Non-GAAP | ||||||||||||||||
| measure) | $ | 23,721 | $ | 23,715 | $ | 90,986 | $ | 89,784 | ||||||||
| CHANGES IN OPERATING ACCOUNTS NOT INCLUDED IN CALCULATION | ||||||||||||||||
| OF AVAILABLE CASH BEFORE RESERVES | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||
| 2009 | 2009 | 2009 | 2008 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Decrease (increase) in: | ||||||||||||||||
| Accounts receivable | $ | (466 | ) | $ | 93 | $ | (7,979 | ) | $ | 61,126 | ||||||
| Inventories | (1,511 | ) | (1,663 | ) | (16,559 | ) | (5,557 | ) | ||||||||
| Other current assets | (2,189 | ) | 5,341 | (2,712 | ) | (2,419 | ) | |||||||||
| Increase (decrease) in: | ||||||||||||||||
| Accounts payable | 15,132 | 761 | 19,203 | (58,224 | ) | |||||||||||
| Accrued liabilities | (1,192 | ) | 4,965 | (1,522 | ) | 3,812 | ||||||||||
| Net changes in components of operating assets | ||||||||||||||||
| and liabilities | $ | 9,774 | $ | 9,497 | $ | (9,569 | ) | $ | (1,262 | ) | ||||||
This press release and the accompanying schedules include a non-generally accepted accounting principle (“non-GAAP”) financial measure 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 external users of financial statements, such as investors, commercial banks, research analysts and rating agencies, to assess: (1) the financial performance of our assets without regard to financing methods, capital structures, or historical cost basis; (2) the ability of our assets to generate cash sufficient to pay interest cost and support our indebtedness; (3) our operating performance and return on capital as compared to those of other companies in the midstream energy industry, without regard to financing and capital structure; and (4) the viability of projects and the overall rates of return on alternative investment opportunities. Lastly, Available Cash before Reserves (also referred to as distributable cash flow) is the quantitative standard used throughout the investment community with respect to publicly-traded partnerships. Available Cash before Reserves data presented in this press release may not be comparable to similarly titled measures of other companies as Available Cash before Reserves excludes some, but not all items that affect net income or loss and because these measures may vary among other companies.
We define available cash as net income or loss as adjusted for specific items, the most significant of which are the addition of non-cash expenses (such as depreciation), the substitution of cash generated by our joint ventures in lieu of our equity income attributable to such joint ventures, the elimination of gains and losses on asset sales (except those from the sale of surplus assets) and unrealized gains and losses on derivative transactions, and the subtraction of maintenance capital expenditures, which are expenditures that are necessary to sustain existing (but not to provide new sources of) cash flows.
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