FOR IMMEDIATE RELEASE
November 3, 2010
Genesis Energy, L.P. Reports Third Quarter 2010 Results
HOUSTON – (BUSINESSWIRE) – Genesis Energy, L.P. (NYSE:GEL) today announced its third quarter results. Significant events in 2010 included the following items:
| · | For the third quarter of 2010, we generated total Available Cash before Reserves of $28.1 million. Available Cash before Reserves for the same period in 2009 was $23.7 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 $23.4 million and $36.8 million for the third quarter of 2010 and 2009, respectively. |
| · | Net income attributable to the Partnership for the third quarter of 2010 was $5.1 million, or $0.12 per common unit, as compared to net income attributable to the Partnership of $4.3 million, or $0.14 per unit, for the third quarter of 2009. See the Calculation of Net Income per Common Unit included in the tables at the end of this press release. Net income available for the common unitholders for the third quarter of 2010 was negatively impacted by approximately $6.4 million of non-cash charges, or approximately $0.16 per common unit. |
| · | On July 29, 2010, we acquired the remaining 51% interest in DG Marine held by a related party for $25.5 million in cash, such that DG Marine is a now wholly-owned subsidiary. Additionally, we paid off DG Marine’s stand-alone credit facility with proceeds from our credit agreement. |
| · | On November 12, 2010, we will pay a total quarterly distribution of $18.8 million attributable to our financial and operational results for the third quarter of 2010, including $15.3 million payable to our common unitholders based on our quarterly distribution rate of $0.3875 per unit, and $3.5 million payable to our general partner, which includes its incentive distribution. Our distribution coverage ratio -- Available Cash before Reserves divided by our total distribution attributable to the third quarter -- was approximately 1.5 times. |
| · | Our distribution attributable to the third quarter of 2010 will be our twenty-first consecutive quarter with an increase in the per unit distribution. The quarterly distribution of $0.3875 per unit represents a 3.3% increase in the distribution paid relative to the previous quarter and a 9.9% increase over the year earlier period. |
| · | On October 22, 2010, we entered into an agreement to acquire a 50% interest in Cameron Highway for approximately $330 million in cash. Cameron Highway, constructed in 2004, is a 380-mile 24-and 30-inch diameter pipeline, with capacity to deliver up to 500,000 barrels per day of crude oil from developments in the Gulf of Mexico to major refining markets along the Texas Gulf Coast located in Port Arthur and Texas City. |
Grant Sims, CEO, said, “Our existing businesses had another solid quarter, with net operating margin increasing approximately 4% sequentially and over 11% from the year earlier quarter. The increasing performance continues to be driven by steady volume growth. Our existing oil and CO2 pipelines continue to benefit from increasing throughput. Our refinery services division continues to benefit from improving global economic conditions. As the world economies, particularly outside the US and Europe, are recovering from the great recession of the last few years, the demand for base metals such as copper and molybdenum has increased dramatically over the prior year. That translated into an increase in demand for NaHS from our mining customers in North and South America. We have also seen an increase in the rate of industrialization and urbanization in the world’s more underdeveloped economies, which has contributed to increased demand for paper products and packaging materials. Our pulp and paper customers in North America have increased their requirements for NaHS, which they use in their processes.” |
“During the quarter, we also completed the acquisition of 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 Marine joint venture level. While the results of DG Marine have previously been included in our presentation of net operating margin, this acquisition and consolidation will be additive to available cash for distribution to our unitholders starting this quarter and in future periods,” added Sims.
Sims continued, “Last week we announced entering into a definitive agreement to purchase a 50% interest in the Cameron Highway Oil Pipeline Company for $330 million in cash. We believe that Cameron Highway is an attractive investment underpinned by the cash flows tied to large, dedicated anchor fields, the majority of which are not yet fully developed. Cameron Highway has the capacity and is geographically positioned to benefit from future development in the Gulf of Mexico. We are very excited about the opportunity to partner with Enterprise Products Partners, L.P., the operator of Cameron Highway and owner of the other 50% interest. This is a very strategic investment for us and it further complements the integrated midstream services we provide to Gulf Coast producers and refiners.&# 8221;
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 twenty-first consecutive increase in our quarterly distribution. Together, we will continue to work creatively and tirelessly to 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 third quarters of 2010 and 2009, Segment Margin was as follows:
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| Pipeline | Refinery | Supply & | Industrial | |||||||||||||||||
| Transportation | Services | Logistics | Gases | Total | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
Segment margin (1) | ||||||||||||||||||||
| Three months ended September 30, 2010 | $ | 11,920 | $ | 16,218 | $ | 7,740 | $ | 3,495 | $ | 39,373 | ||||||||||
| 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 equity investees. Segment Margin excludes the non-cash effects of our equity-based compensation plans and unrealized gains and losses from derivative transactions, as well as expenses related to the acquiring or constructing of assets that provide new sources of cash flows, 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 third quarter of 2010 increased $1.7 million as compared to the third quarter of 2009. Increased volumes on our crude oil and CO2 pipeline systems were the primary drivers of this increase. The effects of higher crude oil market prices on sales of pipeline loss allowance volumes also contributed to the increase.
Refinery services Segment Margin increased from $12.7 million in the 2009 third quarter to $16.2 million in the 2010 period. NaHS sales volumes increased more than 26% over 2009 third quarter levels. Improvements in world-wide macroeconomic conditions positively impacted the demand for copper and molybdenum and paper products, thereby increasing NaHS demand used in mining applications and in the pulp and paper industries.
Supply and logistics Segment Margin was $7.7 million in the third quarter of 2010 compared to $9.4 million in the third quarter of 2009. Fluctuations in the effects of quality differentials on pricing of petroleum products limited the contribution to Segment Margin while the effects on pricing of quality differentials for different grades of crude oil slightly improved Segment Margin. We were able to partially offset the decline in our Segment Margin attributable to the effects of quality differentials by increasing our volume by 50%. Our volume increase was primarily attributable to increased opportunities to handle the heavy-end petroleum products due to increased access to transportation services (including DG Marine) and storage. The contribution of our barge operations to Segment Margin was comparable between the quarters, however beginning in August 2010, available cash generated by DG Marine was 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 $0.6 million between the quarters primarily due to an increase in volumes delivered to our customers. Sales volumes of CO2 increased 7% between the two quarterly periods as customers increased purchases in response to improving economic conditions. The average sales price of CO2 decreased $0.02, or 4% 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
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Available Cash before Reserves. The effect of interest costs on Available Cash before Reserves was $1.8 million greater in the 2010 period due to higher debt levels. The increase in debt is attributable primarily to the acquisition of the 51% of DG Marine we did not own and the replacement of borrowings under the DG Marine credit facility with borrowings under our credit facility. In the third quarter of 2010, corporate general and administrative expenses (excluding non-cash items) were $0.7 million greater than in the 2009 third quarter. This difference related primarily to an increase in personnel and other compensation related expenditures.
Net income available for the common unitholders for the current quarter as compared to the second quarter of 2010 was negatively impacted by $6.4 million resulting primarily from non-cash charges including (1) higher accruals of approximately of $2.0 million for equity-based compensation resulting from the increase in the market price of our common units and (2) an increase in unrealized losses on commodity derivatives used to hedge physical inventory volumes of approximately $4.4 million. The unrealized losses on commodity derivatives should reverse in future periods as the cash margins are realized when the hedged inventory is physically sold. These items had no impact on Available Cash before Reserves.
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 September 30, 2010 and 2009 is as follows:
| Three Months Ended | ||||||||
| September 30, 2010 | September 30, 2009 | |||||||
| (in thousands) | ||||||||
| Net income attributable to Genesis Energy, L.P. | $ | 5,068 | $ | 4,299 | ||||
| Depreciation and amortization | 13,477 | 15,806 | ||||||
| Cash received from direct financing leases not | ||||||||
| included in income | 1,063 | 951 | ||||||
| Unrealized loss on inventory accounting hedges and | ||||||||
| derivative transactions | 2,934 | 211 | ||||||
| Effects of available cash generated by equity method | ||||||||
| investees not included in income | 196 | 787 | ||||||
| Cash effects of stock appreciation rights plan | (165 | ) | (77 | ) | ||||
| Non-cash tax expense | 235 | (3 | ) | |||||
| Loss (earnings) of DG Marine in excess of distributable cash | 1,686 | (1,108 | ) | |||||
| Other non-cash items, net, including equity-based | ||||||||
| compensation | 4,348 | 4,185 | ||||||
| Maintenance capital expenditures | (716 | ) | (1,336 | ) | ||||
| Available Cash before Reserves | $ | 28,126 | $ | 23,715 | ||||
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 $13.5 million for the third quarter of 2010, as compared to $15.8 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 losses on derivative transactions that were excluded in the computation of Available Cash before Reserves totaled $2.9 million for the 2010 quarter compared to $0.2 million in the 2009 third quarter.
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 7.6%. Distributions paid over the last four quarters, and the distribution to be paid for the third quarter of 2010, are as follows:
| Per Unit | |||||
| Distribution For | Date Paid | Amount | |||
| Third quarter 2010 | November 2010 | $ | 0.3875 | ||
| 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 | ||
The third quarter 2010 distribution will be paid November 12, 2010 to unitholders of record on November 2, 2010.
Earnings Conference Call
We will broadcast our Earnings Conference Call on Wednesday, November 3, 2010, at 9:00 a.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)
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| Genesis Energy, L.P. | ||||||||
| Condensed Consolidated Statements of Operations - Unaudited | ||||||||
| (in thousands except per unit amounts and volumes) | ||||||||
| Three Months Ended | Three Months Ended | |||||||
| September 30, 2010 | September 30, 2009 | |||||||
| Revenues | $ | 576,012 | $ | 403,389 | ||||
| Costs of sales | 541,762 | 369,082 | ||||||
| General and administrative expenses | 10,583 | 10,128 | ||||||
| Depreciation and amortization expense | 13,477 | 15,806 | ||||||
| Loss from disposal of surplus assets | 7 | 17 | ||||||
| OPERATING INCOME | 10,183 | 8,356 | ||||||
| Equity in earnings (losses) of joint ventures | 377 | (788 | ) | |||||
| Interest expense | (6,542 | ) | (3,418 | ) | ||||
| Income before income taxes | 4,018 | 4,150 | ||||||
| Income tax expense | (155 | ) | (253 | ) | ||||
| NET INCOME | 3,863 | 3,897 | ||||||
| Net loss attributable to noncontrolling interests | 1,205 | 402 | ||||||
| NET INCOME ATTRIBUTABLE TO | ||||||||
| GENESIS ENERGY, L.P. | $ | 5,068 | $ | 4,299 | ||||
| NET INCOME PER COMMON UNIT - | ||||||||
| BASIC AND DILUTED | $ | 0.12 | $ | 0.14 | ||||
| Volume data: | ||||||||
| Crude oil pipeline barrels per day (total) | 71,776 | 57,786 | ||||||
| Mississippi Pipeline System barrels per day | 23,672 | 22,643 | ||||||
| Jay Pipeline System barrels per day | 16,555 | 10,550 | ||||||
| Texas Pipeline System barrels per day | 31,549 | 24,593 | ||||||
Free State CO2 System Mcf per day | 158,546 | 133,038 | ||||||
| NaHS dry short tons sold | 35,415 | 28,207 | ||||||
| NaOH (caustic soda) dry short tons sold | 21,442 | 26,898 | ||||||
| Crude oil and petroleum products barrels per day | 76,964 | 51,260 | ||||||
CO2 sales Mcf per day | 86,534 | 80,520 | ||||||
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| Genesis Energy, L.P. | ||||||||
| Condensed Consolidated Statements of Operations - Unaudited | ||||||||
| (in thousands except per unit amounts and volumes) | ||||||||
| Nine Months Ended | Nine Months Ended | |||||||
| September 30, 2010 | September 30, 2009 | |||||||
| Revenues | $ | 1,499,081 | $ | 999,086 | ||||
| Costs of sales | 1,396,369 | 901,556 | ||||||
| General and administrative expenses | 23,678 | 27,188 | ||||||
| Depreciation and amortization expense | 40,489 | 47,358 | ||||||
| Loss (gain) from disposal of surplus assets | 25 | (141 | ) | |||||
| OPERATING INCOME | 38,520 | 23,125 | ||||||
| Equity in earnings of joint ventures | 922 | 1,382 | ||||||
| Interest expense | (13,506 | ) | (9,826 | ) | ||||
| Income before income taxes | 25,936 | 14,681 | ||||||
| Income tax expense | (1,827 | ) | (1,661 | ) | ||||
| NET INCOME | 24,109 | 13,020 | ||||||
| Net loss attributable to noncontrolling interests | 2,082 | 1,025 | ||||||
| NET INCOME ATTRIBUTABLE TO | ||||||||
| GENESIS ENERGY, L.P. | $ | 26,191 | $ | 14,045 | ||||
| NET INCOME PER COMMON UNIT - | ||||||||
| BASIC AND DILUTED | $ | 0.48 | $ | 0.43 | ||||
| Volume data: | ||||||||
| Crude oil pipeline barrels per day (total) | 65,218 | 60,290 | ||||||
| Mississippi Pipeline System barrels per day | 23,750 | 24,046 | ||||||
| Jay Pipeline System barrels per day | 15,188 | 9,767 | ||||||
| Texas Pipeline System barrels per day | 26,280 | 26,477 | ||||||
Free State CO2 System Mcf per day | 155,541 | 146,160 | ||||||
| NaHS dry short tons sold | 106,829 | 75,344 | ||||||
| NaOH (caustic soda) dry short tons sold | 66,778 | 63,561 | ||||||
| Crude oil and petroleum products barrels per day | 61,605 | 47,280 | ||||||
CO2 sales Mcf per day | 74,341 | 73,697 | ||||||
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| Genesis Energy, L.P. | ||||||||
| Condensed Consolidated Balance Sheets - Unaudited | ||||||||
| (in thousands, except number of units) | ||||||||
| September 30, 2010 | December 31, 2009 | |||||||
| ASSETS | ||||||||
| Cash | $ | 3,058 | $ | 4,148 | ||||
| Accounts receivable, net | 169,685 | 129,865 | ||||||
| Inventories | 64,581 | 40,204 | ||||||
| Other current assets | 13,413 | 15,027 | ||||||
| Total current assets | 250,737 | 189,244 | ||||||
| Property, net | 269,802 | 284,887 | ||||||
CO2 contracts, net | 16,869 | 20,105 | ||||||
| Joint ventures and other investments | 14,255 | 15,128 | ||||||
| Investment in direct financing leases | 169,626 | 173,027 | ||||||
| Intangible assets, net | 123,315 | 136,330 | ||||||
| Goodwill | 325,046 | 325,046 | ||||||
| Other assets | 9,847 | 4,360 | ||||||
| Total Assets | $ | 1,179,497 | $ | 1,148,127 | ||||
| LIABILITIES AND PARTNERS' CAPITAL | ||||||||
| Accounts payable | $ | 139,603 | $ | 117,625 | ||||
| Accrued liabilities | 25,733 | 23,803 | ||||||
| Total current liabilities | 165,336 | 141,428 | ||||||
| Long-term debt | 426,000 | 366,900 | ||||||
| Deferred tax liabilities | 14,391 | 15,167 | ||||||
| Other liabilities | 5,523 | 5,699 | ||||||
| Partners' Capital: | ||||||||
| Genesis Energy, L.P. partners' capital | 567,687 | 595,877 | ||||||
| Noncontrolling interests | 560 | 23,056 | ||||||
| Total partners' capital | 568,247 | 618,933 | ||||||
| Total Liabilities and Partners' Capital | $ | 1,179,497 | $ | 1,148,127 | ||||
| Units Data: | ||||||||
| Total common units outstanding | 39,585,692 | 39,487,997 | ||||||
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| SEGMENT MARGIN RECONCILIATION TO INCOME BEFORE INCOME TAXES - UNAUDITED | ||||||||
| Three Months Ended | ||||||||
| September 30, 2010 | September 30, 2009 | |||||||
| (in thousands) | ||||||||
| Segment margin | $ | 39,373 | $ | 35,279 | ||||
| Corporate general and administrative expenses | (9,769 | ) | (9,141 | ) | ||||
| Non-cash items included in corporate general and | ||||||||
| administrative costs | 3,702 | 3,657 | ||||||
| Cash expenditures not included in EBITDA or | ||||||||
| net income | 263 | (121 | ) | |||||
| DG Marine contribution to segment margin | (941 | ) | (2,701 | ) | ||||
| Adjusted EBITDA | 32,628 | 26,973 | ||||||
| DG Marine contribution to segment margin | 941 | 2,701 | ||||||
| Depreciation and amortization | (13,477 | ) | (15,806 | ) | ||||
| Interest expense, net | (6,542 | ) | (3,418 | ) | ||||
| Cash expenditures not included in EBITDA or | ||||||||
| net income | (263 | ) | 121 | |||||
| Other non-cash items | (9,269 | ) | (6,421 | ) | ||||
| Income before income taxes | $ | 4,018 | $ | 4,150 | ||||
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| CALCULATION OF NET INCOME PER COMMON UNIT - UNAUDITED | ||||||||
| (in thousands, except per unit amounts) | ||||||||
| Three Months Ended | ||||||||
| September 30, 2010 | September 30, 2009 | |||||||
| Numerators for basic and diluted net income | ||||||||
| per common unit: | ||||||||
| Net income attributable to Genesis Energy, L.P. | $ | 5,068 | $ | 4,299 | ||||
| Less: General partner's incentive distribution | ||||||||
| to be paid for the period | (3,147 | ) | (1,729 | ) | ||||
| Add: Expense for Class B/Series B Membership Awards | 2,965 | 3,088 | ||||||
| Subtotal | 4,886 | 5,658 | ||||||
| Less: General partner 2% ownership | (98 | ) | (113 | ) | ||||
| Income available for common unitholders | $ | 4,788 | $ | 5,545 | ||||
| Denominator for basic per common unit: | ||||||||
| Common Units | 39,586 | 39,480 | ||||||
| Denominator for diluted per common unit: | ||||||||
| Common Units | 39,586 | 39,480 | ||||||
| Phantom Units | - | 134 | ||||||
| 39,586 | 39,614 | |||||||
| Basic net income per common unit | $ | 0.12 | $ | 0.14 | ||||
| Diluted net income per common unit | $ | 0.12 | $ | 0.14 | ||||
| Nine Months Ended | ||||||||
| September 30, 2010 | September 30, 2009 | |||||||
| Numerators for basic and diluted net income | ||||||||
| per common unit: | ||||||||
| Net income attributable to Genesis Energy, L.P. | $ | 26,191 | $ | 14,045 | ||||
| Less: General partner's incentive distribution | ||||||||
| to be paid for the period | (8,128 | ) | (4,281 | ) | ||||
| Add: Expense for Class B/Series B Membership Awards | 1,289 | 7,587 | ||||||
| Subtotal | 19,352 | 17,351 | ||||||
| Less: General partner 2% ownership | (387 | ) | (347 | ) | ||||
| Income available for common unitholders | $ | 18,965 | $ | 17,004 | ||||
| Denominator for basic per common unit: | ||||||||
| Common Units | 39,573 | 39,467 | ||||||
| Denominator for diluted per common unit: | ||||||||
| Common Units | 39,573 | 39,467 | ||||||
| Phantom Units | 16 | 133 | ||||||
| 39,589 | 39,600 | |||||||
| Basic net income per common unit | $ | 0.48 | $ | 0.43 | ||||
| Diluted net income per common unit | $ | 0.48 | $ | 0.43 | ||||
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| GAAP to Non-GAAP Financial Measure Reconciliation - Unaudited | ||||||||
| AVAILABLE CASH BEFORE RESERVES RECONCILIATION TO | ||||||||
| NET CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Three Months Ended | ||||||||
| September 30, 2010 | September 30, 2009 | |||||||
| (in thousands) | ||||||||
| Net cash flows provided by operating | ||||||||
| activities (GAAP measure) | $ | 23,361 | $ | 36,765 | ||||
| Adjustments to reconcile net cash flow provided by | ||||||||
| operating activities to Available Cash before | ||||||||
| reserves: | ||||||||
| Maintenance capital expenditures | (716 | ) | (1,336 | ) | ||||
| Amortization and write-off of credit facility issuance | ||||||||
| costs | (1,229 | ) | (487 | ) | ||||
| Effects of available cash from equity investees not | ||||||||
| included in operating cash flows | 201 | - | ||||||
| DG Marine loss (earnings) in excess of | ||||||||
| distributable cash | 1,686 | (1,108 | ) | |||||
| Other items affecting Available Cash | 264 | (622 | ) | |||||
| Net effect of changes in operating accounts not | ||||||||
| included in calculation of Available Cash | 4,559 | (9,497 | ) | |||||
| Available Cash before Reserves (Non-GAAP measure) | $ | 28,126 | $ | 23,715 | ||||
| CHANGES IN OPERATING ACCOUNTS NOT INCLUDED IN CALCULATION | ||||||||
| OF AVAILABLE CASH BEFORE RESERVES - UNAUDITED | ||||||||
| Three Months Ended | ||||||||
| September 30, 2010 | September 30, 2009 | |||||||
| (in thousands) | ||||||||
| Increase (Decrease) in: | ||||||||
| Accounts receivable | $ | (44,641 | ) | $ | 93 | |||
| Inventories | 19,437 | (1,663 | ) | |||||
| Other current assets | 1,873 | 5,341 | ||||||
| Increase in: | ||||||||
| Accounts payable | 17,201 | 761 | ||||||
| Accrued liabilities | 1,571 | 4,965 | ||||||
| Net changes in components of operating assets | ||||||||
| and liabilities | $ | (4,559 | ) | $ | 9,497 | |||
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
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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), the elimination of expenses related to acquiring or constructing assets that provide new sources of cash flows, 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.
# # #
Contact:
Genesis Energy, L.P.
Bob Deere
Chief Financial Officer
(713) 860-2516
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