FOR IMMEDIATE RELEASE
Contact: Bob Deere
Chief Financial Officer
(713) 860-2516
GENESIS ENERGY, L.P. REPORTS SECOND QUARTER 2010 RESULTS
Houston, Texas – August 5, 2010 – Genesis Energy, L.P. (AMEX:GEL) today announced its second quarter results. Significant events for the quarter ended June 30, 2010 included the following items:
· | For the second quarter of 2010, we generated total Available Cash before Reserves of $26.1 million. Available Cash for the same period in 2009 was $22.2 million. All of our segments reported improved results from the prior year period. 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 utilized in operating activities was $2.6 million for the second quarter of 2010 and net cash provided by operating activities was $15.9 million for the second quarter of 2009. |
· | Net income attributable to the Partnership for the second quarter of 2010 was $14.2 million, or $0.29 per common unit, as compared to net income attributable to the Partnership of $4.5 million, or $0.13 per unit, for the second quarter of 2009. See the Calculation of Net Income per Common Unit included in the tables at the end of this press release. |
· | On June 29, 2010, we restructured our senior secured revolving credit agreement. Our credit agreement is now a $525 million facility, with an accordion feature whereby the total credit available can be increased up to $650 million. Among other changes, our new credit agreement includes a $75 million sublimit tranche for crude oil and petroleum products inventory and it now matures in June 2015. |
· | On August 13, 2010, we will pay a total quarterly distribution of $17.8 million attributable to our financial and operational results for the second quarter of 2010, including $14.8 million payable to our common unitholders based on our quarterly distribution rate of $0.375 per unit, and $3.0 million payable to our general partner, which includes its incentive distribution amount. Our distribution coverage ratio -- Available Cash before Reserves divided by our total distribution attributable to the second quarter -- was approximately 1.5 times. |
· | Our distribution attributable to the second quarter of 2010 will be our twentieth consecutive quarter with an increase in the per unit distribution. The quarterly distribution of $0.375 per unit represents a 2.0% increase in the distribution paid relative to the previous quarter and an approximately 8.7% increase over the year earlier period. |
Grant Sims, CEO said, “As you can see from the attached, each of our segments reported improved financial performance over the 2009 period driven primarily by real increases in the demand for our products and service capabilities. Absent a significant double-dip in economic activity, we would hope to be able to build upon these financial results as we continue to integrate our services across existing and new customers.”
Mr. Sims added, “Late in the quarter, we successfully accessed the capital markets and extended and amended our bank facility including extending the term to mid 2015, adding additional total commitments, and providing for the more efficient financing of the inventories used in our crude oil and refined products businesses. Given our conservative credit metrics and committed financial flexibility, we hope to be opportunistic as we identify internal and external opportunities that we believe would build long-term value for the Partnership.”
Sims continued, “As we announced last week, we acquired the 51% interest in DG Marine that we did not already own for $25.5 million in cash plus $44.4 million paid to the lender group at the DG joint venture level. We believe that such transaction, under current market conditions, can add some $2.5 million to a full quarter’s Available Cash before Reserves in future periods.”
Sims concluded, “Our employees and their commitment to always work safely, reliably and responsibly, are the real key to the Partnership’s continuing success. We’re all very proud to have delivered the twentieth consecutive increase in our quarterly distribution. Together, we will continue to work creatively and tirelessly to try and create value for all of our stakeholders.”
Financial Results
The primary components impacting Available Cash before Reserves (a non GAAP measure) are Segment Margin, corporate general and administrative expenses (excluding non-cash charges) and maintenance capital expenditures.
Segment Margin
Segment Margin is defined below and reconciled later in this press release to income before income taxes. For the second quarters of 2010 and 2009, Segment Margin was as follows:
Pipeline | Refinery | Supply & | Industrial | |||||||||||||||||
Transportation | Services | Logistics | Gases | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Segment margin (1) | ||||||||||||||||||||
Three months ended June 30, 2010 | $ | 11,437 | $ | 16,190 | $ | 7,221 | $ | 3,001 | $ | 37,849 | ||||||||||
Three months ended June 30, 2009 | $ | 10,347 | $ | 13,190 | $ | 6,600 | $ | 2,869 | $ | 33,006 |
(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 equity investees. 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 in the table at the end of this release. |
Pipeline transportation Segment Margin for the second quarter of 2010 increased $1.1 million as compared to the second quarter of 2009. Increased volumes on the Jay System combined with the effects of higher crude oil market prices on sales of pipeline loss allowance volumes and increased tariff rates effective in July 2009 were the primary factors resulting in the increase.
Refinery services Segment Margin increased from $13.2 million in the 2009 second quarter to $16.2 million in the 2010 period. NaHS sales volumes increased more than 80% over 2009 second quarter levels. Improvements in world-wide macroeconomic conditions positively impacted the demand for copper and molybdenum, thereby increasing NaHS demand used in mining applications. Industrial activities including the pulp and paper and tanning industries have improved, also contributing to increased NaHS demand. Caustic soda (NaOH) sales volumes also increased over the prior year quarter reflecting improved industrial activities
Supply and logistics Segment Margin was $7.2 million in the second quarter of 2010 compared to $6.6 million in the second quarter of 2009. Volumes of crude oil and petroleum products increased 5.1% as compared to the second quarter of 2009, although the contribution of these additional volumes was slightly mitigated by the narrowing of quality differentials and contango pricing conditions during the 2010 period. The contribution of our barge operations to Segment Margin increased as compared to the second quarter of 2009 by approximately $0.3 million as average charter rates improved in 2010 over the low rates in the same period of 2009. While DG Marine’s barge operations are included in Segment Margin, they are excluded from Available Cash before Reserves. Beginning in August 2010, available cas h generated by DG Marine will be included in Available Cash before Reserves as a result of the acquisition of the remaining 51% interest in the joint venture.
Segment Margin from the industrial gases segment increased slightly between the quarters primarily due to an increase in volumes delivered to our customers. Volumes increased 5.8% between the two quarterly periods as customers increased purchases in response to improving economic conditions. The average sales price of CO2 was consistent between the quarters.
Other Components of Available Cash
Available Cash before Reserves is also affected by income taxes to be paid in cash (which did not vary significantly from the 2009 period), interest costs, and corporate general and administrative expenses (excluding non-cash charges or credits). Additionally, our maintenance capital expenditures, net of proceeds from sales of surplus assets, are subtracted in calculating Available Cash before Reserves. The effect of interest costs on Available Cash before Reserves was $0.5 million greater in the 2010 period due to higher debt levels. In the second quarter of 2010, corporate general and administrative expenses (excluding non-cash items) were $0.9 million greater than in the 2009 second quarter. This difference related primarily to an increase in personnel and other compensation related . In the 2010 period, proceeds from idle asset disposals totaled $0.7 million more than the 2009 quarterly period.
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 June 30, 2010 and 2009 is as follows:
Three Months Ended | ||||||||
June 30, 2010 | June 30, 2009 | |||||||
(in thousands) | ||||||||
Net income attributable to Genesis Energy, L.P. | $ | 14,238 | $ | 4,456 | ||||
Depreciation and amortization | 13,606 | 16,133 | ||||||
Cash received from direct financing leases not | ||||||||
included in income | 1,038 | 929 | ||||||
Cash effects of sales of certain assets | 795 | 52 | ||||||
Effects of available cash generated by equity method | ||||||||
investees not included in income | 188 | 170 | ||||||
Cash effects of stock appreciation rights plan | (117 | ) | (3 | ) | ||||
Non-cash tax expense | 228 | 627 | ||||||
Earnings of DG Marine in excess of distributable cash | (1,481 | ) | (904 | ) | ||||
Other non-cash items, net, including equity-based | ||||||||
compensation | (1,502 | ) | 2,222 | |||||
Maintenance capital expenditures | (918 | ) | (1,474 | ) | ||||
Available Cash before Reserves | $ | 26,075 | $ | 22,208 | ||||
Other Components of Net Income
In addition to the factors impacting Available Cash before Reserves, net income included the effect of several non-cash charges and credits. Depreciation and amortization expense totaled $13.6 million for the second quarter of 2010, as compared to $16.1 in the 2009 period. The decrease in depreciation and amortization expense between the quarterly periods results from lower amortization expense on intangible assets. We amortize our intangible assets over the period during which we expect them to contribute to cash flows. As a result, amortization of those assets declines over their lives as we expect a greater contribution in the initial years following their acquisition.
Unrealized gains on derivative transactions that were excluded in the computation of Available Cash before Reserves totaled $1.6 million for the 2010 quarter compared to $0.3 million in the 2009 second quarter. For the 2009 second quarter, charges for non-cash compensation for employees totaled $3.2 million as compared to $0.2 million in the 2010 period. Most of this variation related to a compensation arrangement with our senior management team and the former owner of our general partner that was settled in the first quarter of 2010.
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 8.7%. Distributions paid over the last four quarters, and the distribution to be paid for the second quarter of 2010, are as follows:
Per Unit | |||||
Distribution For | Date Paid | Amount | |||
Second quarter 2010 | August 2010 | $ | 0.3750 | ||
First quarter 2010 | May 2010 | $ | 0.3675 | ||
Fourth quarter 2009 | February 2010 | $ | 0.3600 | ||
Third quarter 2009 | November 2009 | $ | 0.3525 | ||
Second quarter 2009 | August 2009 | $ | 0.3450 | ||
The second quarter 2010 distribution will be paid August 13, 2010 to unitholders of record on August 3, 2010.
Earnings Conference Call
We will broadcast our Earnings Conference Call on Thursday, August 5, 2010, at 1:00 p.m. Central time. This call can be accessed at www.genesisenergy.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 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, A labama, 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. | ||||||||
Condensed Consolidated Statements of Operations - Unaudited | ||||||||
(in thousands except per unit amounts and volumes) | ||||||||
Three Months Ended | Three Months Ended | |||||||
June 30, 2010 | June 30, 2009 | |||||||
Revenues | $ | 456,538 | $ | 342,204 | ||||
Costs of sales | 417,894 | 309,957 | ||||||
General and administrative expenses | 6,801 | 8,306 | ||||||
Depreciation and amortization expense | 13,606 | 16,133 | ||||||
(Gain) loss from disposal of surplus assets | (62 | ) | 60 | |||||
OPERATING INCOME | 18,299 | 7,748 | ||||||
Equity in earnings of joint ventures | 363 | 264 | ||||||
Interest expense | (3,760 | ) | (3,373 | ) | ||||
Income before income taxes | 14,902 | 4,639 | ||||||
Income tax expense | (981 | ) | (817 | ) | ||||
NET INCOME | 13,921 | 3,822 | ||||||
Net loss attributable to noncontrolling interests | 317 | 634 | ||||||
NET INCOME ATTRIBUTABLE TO | ||||||||
GENESIS ENERGY, L.P. | $ | 14,238 | $ | 4,456 | ||||
NET INCOME PER COMMON UNIT - | ||||||||
BASIC AND DILUTED | $ | 0.29 | $ | 0.13 | ||||
Volume data: | ||||||||
Crude oil pipeline barrels per day (total) | 65,795 | 58,535 | ||||||
Mississippi Pipeline System barrels per day | 23,493 | 24,159 | ||||||
Jay Pipeline System barrels per day | 14,400 | 9,307 | ||||||
Texas Pipeline System barrels per day | 27,902 | 25,069 | ||||||
Free State CO2 System Mcf per day | 133,009 | 134,570 | ||||||
NaHS dry short tons sold | 38,307 | 20,908 | ||||||
NaOH (caustic soda) dry short tons sold | 23,969 | 19,763 | ||||||
Crude oil and petroleum products barrels per day | 50,383 | 47,941 | ||||||
CO2 sales Mcf per day | 74,724 | 70,621 |
Genesis Energy, L.P. | ||||||||
Condensed Consolidated Statements of Operations - Unaudited | ||||||||
(in thousands except per unit amounts and volumes) | ||||||||
Six Months Ended | Six Months Ended | |||||||
June 30, 2010 | June 30, 2009 | |||||||
Revenues | $ | 923,069 | $ | 595,697 | ||||
Costs of sales | 854,607 | 532,474 | ||||||
General and administrative expenses | 13,095 | 17,060 | ||||||
Depreciation and amortization expense | 27,012 | 31,552 | ||||||
Loss (gain) from disposal of surplus assets | 18 | (158 | ) | |||||
OPERATING INCOME | 28,337 | 14,769 | ||||||
Equity in earnings of joint ventures | 545 | 2,170 | ||||||
Interest expense | (6,964 | ) | (6,408 | ) | ||||
Income before income taxes | 21,918 | 10,531 | ||||||
Income tax expense | (1,672 | ) | (1,408 | ) | ||||
NET INCOME | 20,246 | 9,123 | ||||||
Net loss attributable to noncontrolling interests | 877 | 623 | ||||||
NET INCOME ATTRIBUTABLE TO | ||||||||
GENESIS ENERGY, L.P. | $ | 21,123 | $ | 9,746 | ||||
NET INCOME PER COMMON UNIT - | ||||||||
BASIC AND DILUTED | $ | 0.36 | $ | 0.29 | ||||
Volume data: | ||||||||
Crude oil pipeline barrels per day (total) | 61,884 | 61,562 | ||||||
Mississippi Pipeline System barrels per day | 23,789 | 24,758 | ||||||
Jay Pipeline System barrels per day | 14,493 | 9,369 | ||||||
Texas Pipeline System barrels per day | 23,602 | 27,435 | ||||||
Free State CO2 System Mcf per day | 154,013 | 152,830 | ||||||
NaHS dry short tons sold | 71,414 | 47,137 | ||||||
NaOH (caustic soda) dry short tons sold | 45,336 | 36,663 | ||||||
Crude oil and petroleum products barrels per day | 53,799 | 45,257 | ||||||
CO2 sales Mcf per day | 67,847 | 70,229 |
Genesis Energy, L.P. | ||||||||
Condensed Consolidated Balance Sheets - Unaudited | ||||||||
(in thousands, except number of units) | ||||||||
June 30, 2010 | December 31, 2009 | |||||||
ASSETS | ||||||||
Cash | $ | 6,033 | $ | 4,148 | ||||
Accounts receivable, net | 124,801 | 129,865 | ||||||
Inventories | 83,156 | 40,204 | ||||||
Other current assets | 19,433 | 15,027 | ||||||
Total current assets | 233,423 | 189,244 | ||||||
Property, net | 274,501 | 284,887 | ||||||
CO2 contracts, net | 18,129 | 20,105 | ||||||
Joint ventures and other investments | 14,378 | 15,128 | ||||||
Investment in direct financing leases | 170,785 | 173,027 | ||||||
Intangible assets, net | 127,179 | 136,330 | ||||||
Goodwill | 325,046 | 325,046 | ||||||
Other assets | 11,010 | 4,360 | ||||||
Total Assets | $ | 1,174,451 | $ | 1,148,127 | ||||
LIABILITIES AND PARTNERS' CAPITAL | ||||||||
Accounts payable | $ | 123,035 | $ | 117,625 | ||||
Accrued liabilities | 22,205 | 23,803 | ||||||
Total current liabilities | 145,240 | 141,428 | ||||||
Long-term debt | 404,900 | 366,900 | ||||||
Deferred tax liabilities | 14,639 | 15,167 | ||||||
Other liabilities | 5,519 | 5,699 | ||||||
Partners' Capital: | ||||||||
Genesis Energy, L.P. partners' capital | 581,794 | 595,877 | ||||||
Noncontrolling interests | 22,359 | 23,056 | ||||||
Total partners' capital | 604,153 | 618,933 | ||||||
Total Liabilities and Partners' Capital | $ | 1,174,451 | $ | 1,148,127 | ||||
Units Data: | ||||||||
Total common units outstanding | 39,585,692 | 39,487,997 | ||||||
SEGMENT MARGIN RECONCILIATION TO INCOME BEFORE INCOME TAXES - UNAUDITED | ||||||||
Three Months Ended | ||||||||
June 30, 2010 | June 30, 2009 | |||||||
(in thousands) | ||||||||
Segment margin | $ | 37,849 | $ | 33,006 | ||||
Corporate general and administrative expenses | (5,975 | ) | (7,576 | ) | ||||
Non-cash items included in corporate general and | ||||||||
administrative costs | 315 | 2,785 | ||||||
Cash expenditures not included in EBITDA or | ||||||||
net income | (71 | ) | (155 | ) | ||||
DG Marine contribution to segment margin | (2,826 | ) | (2,491 | ) | ||||
Adjusted EBITDA | 29,292 | 25,569 | ||||||
DG Marine contribution to segment margin | 2,826 | 2,491 | ||||||
Depreciation and amortization | (13,606 | ) | (16,133 | ) | ||||
Net gain (loss) from disposal of surplus assets | 62 | (60 | ) | |||||
Interest expense, net | (3,760 | ) | (3,373 | ) | ||||
Cash expenditures not included in EBITDA or | ||||||||
net income | 71 | 155 | ||||||
Other non-cash items | 17 | (4,010 | ) | |||||
Income before income taxes | $ | 14,902 | $ | 4,639 | ||||
CALCULATION OF NET INCOME PER COMMON UNIT - UNAUDITED | ||||||||
(in thousands, except per unit amounts) | ||||||||
Three Months Ended | ||||||||
June 30, 2010 | June 30, 2009 | |||||||
Numerators for basic and diluted net income | ||||||||
per common unit: | ||||||||
Net income attributable to Genesis Energy, L.P. | $ | 14,238 | $ | 4,456 | ||||
Less: General partner's incentive distribution | ||||||||
to be paid for the period | (2,642 | ) | (1,427 | ) | ||||
Add: Expense for Class B Membership Awards | 301 | 2,353 | ||||||
Subtotal | 11,897 | 5,382 | ||||||
Less: General partner 2% ownership | (238 | ) | (108 | ) | ||||
Income available for common unitholders | $ | 11,659 | $ | 5,274 | ||||
Denominator for basic per common unit: | ||||||||
Common Units | 39,586 | 39,464 | ||||||
Denominator for diluted per common unit: | ||||||||
Common Units | 39,586 | 39,464 | ||||||
Phantom Units | - | 154 | ||||||
39,586 | 39,618 | |||||||
Basic net income per common unit | $ | 0.29 | $ | 0.13 | ||||
Diluted net income per common unit | $ | 0.29 | $ | 0.13 | ||||
Six Months Ended | ||||||||
June 30, 2010 | June 30, 2009 | |||||||
Numerators for basic and diluted net income | ||||||||
per common unit: | ||||||||
Net income attributable to Genesis Energy, L.P. | $ | 21,123 | $ | 9,746 | ||||
Less: General partner's incentive distribution | ||||||||
to be paid for the period | (4,981 | ) | (2,552 | ) | ||||
Add: (Credit) Expense for Class B Membership Awards | (1,676 | ) | 4,499 | |||||
Subtotal | 14,466 | 11,693 | ||||||
Less: General partner 2% ownership | (289 | ) | (234 | ) | ||||
Income available for common unitholders | $ | 14,177 | $ | 11,459 | ||||
Denominator for basic per common unit: | ||||||||
Common Units | 39,567 | 39,460 | ||||||
Denominator for diluted per common unit: | ||||||||
Common Units | 39,567 | 39,460 | ||||||
Phantom Units | 24 | 132 | ||||||
39,591 | 39,592 | |||||||
Basic net income per common unit | $ | 0.36 | $ | 0.29 | ||||
Diluted net income per common unit | $ | 0.36 | $ | 0.29 | ||||
GAAP to Non-GAAP Financial Measure Reconciliation - Unaudited | ||||||||
AVAILABLE CASH BEFORE RESERVES RECONCILIATION TO | ||||||||
NET CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Three Months Ended | ||||||||
June 30, 2010 | June 30, 2009 | |||||||
(in thousands) | ||||||||
Net cash flows (used in) provided by operating | ||||||||
activities (GAAP measure) | $ | (2,577 | ) | $ | 15,909 | |||
Adjustments to reconcile net cash flow provided by | ||||||||
operating activities to Available Cash before | ||||||||
reserves: | ||||||||
Maintenance capital expenditures | (918 | ) | (1,474 | ) | ||||
Proceeds from asset sales | 857 | 52 | ||||||
Amortization of credit facility issuance | ||||||||
costs | (814 | ) | (481 | ) | ||||
Effects of available cash from equity investees not | ||||||||
included in operating cash flows | 132 | 34 | ||||||
DG Marine earnings in excess of distributable cash | (1,481 | ) | (904 | ) | ||||
Other items affecting Available Cash | 584 | 443 | ||||||
Net effect of changes in operating accounts not | ||||||||
included in calculation of Available Cash | 30,292 | 8,629 | ||||||
Available Cash before Reserves (Non-GAAP measure) | $ | 26,075 | $ | 22,208 | ||||
CHANGES IN OPERATING ACCOUNTS NOT INCLUDED IN CALCULATION | ||||||||
OF AVAILABLE CASH BEFORE RESERVES - UNAUDITED | ||||||||
Three Months Ended | ||||||||
June 30, 2010 | June 30, 2009 | |||||||
(in thousands) | ||||||||
Increase (Decrease) in: | ||||||||
Accounts receivable | $ | 651 | $ | 11,577 | ||||
Inventories | 35,506 | 10,534 | ||||||
Other current assets | (1,761 | ) | 3,491 | |||||
Increase in: | ||||||||
Accounts payable | (3,646 | ) | (13,409 | ) | ||||
Accrued liabilities | (458 | ) | (3,564 | ) | ||||
Net changes in components of operating assets | �� | |||||||
and liabilities | $ | 30,292 | $ | 8,629 | ||||
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 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 retu rn on alternative investment opportunities. Lastly, Available Cash before Reserves (also referred to as distributable cash flow) is a quantitative metric used by many in 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 equity investees in lieu of our equity income attributable to such equity investees, 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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