Exhibit 99.1
Contacts: | | Phillip D. Kramer | | A. Patrick Diamond | |
| | Executive VP and CFO | | Manager, Special Projects | |
| | 713/646-4560 – 800/564-3036 | | 713/646-4487 – 800/564-3036 | |
FOR IMMEDIATE RELEASE
Plains All American Pipeline, L.P. Reports
Record Financial Results for First Quarter 2005—
Net Income Up 18%; EBITDA Up 32%
(Houston—April 28, 2005) Plains All American Pipeline, L.P. (NYSE: PAA) today reported net income of $32.8 million, or $0.43 per basic and diluted limited partner unit, for the first quarter of 2005, as compared to net income of $27.9 million, or $0.44 per basic and diluted limited partner unit, for the first quarter of 2004. As reported, earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the first quarter of 2005 were $66.5 million, an increase of 32% as compared with EBITDA of $50.5 million for the first quarter of 2004. (See the section of this release entitled “Non-GAAP Financial Measures” and the attached tables for discussion of EBITDA and other non-GAAP financial measures, and reconciliations of such measures to the comparable GAAP measures.)
Adjusting for selected items impacting comparability, the Partnership’s first quarter 2005 adjusted net income, adjusted net income per limited partner unit and adjusted EBITDA were $49.3 million, $0.67 per basic and diluted unit, and $82.9 million, respectively. Similarly, the Partnership’s first quarter 2004 adjusted net income, adjusted net income per limited partner unit and adjusted EBITDA were $28.1 million, $0.44 per basic and diluted unit, and $50.8 million, respectively. On a comparable basis, first quarter 2005 adjusted net income, adjusted net income per diluted limited partner unit and adjusted EBITDA increased 75%, 51% and 63%, respectively, over first quarter 2004.
“Plains All American delivered record financial and operating performance for the first quarter as both of our business segments experienced solid baseline growth,” said Greg L. Armstrong, Chairman and CEO of the Partnership. “These strong results were driven by a combination of factors, including the contribution of acquisitions completed since March 1, 2004, increased transportation volumes in our pipeline segment and increased receipts of foreign crude oil at our Gulf Coast facilities. In addition, as a result of our extensive asset base and business model, we were able to capture increased margins and incremental profit opportunities in our gathering, marketing, terminalling and storage segment from contango market opportunities and continued crude oil market volatility. Given our strong first quarter results and our outlook for the second quarter that we furnished this morning via Form 8-K, the Partnership is well on its way to achieving the goals that we have set for 2005.”
Armstrong noted that the results exceeded both the Partnership’s original and upwardly revised quarterly guidance ranges for EBITDA that had been previously provided to the investment community.
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The following table summarizes selected items that the Partnership believes impact the comparability of financial results between reporting periods:
| | For the Three
Months Ended
March 31, | |
| | 2005 | | 2004 | |
| | (Dollars in millions,
except per unit data) | |
Long-Term Incentive Plan (“LTIP”) charge | | $ (2.2 | ) | $ (4.2 | ) |
Cumulative effect of change in accounting principle | | — | | (3.1 | ) |
Loss on foreign currency revaluation | | (0.8 | ) | (0.4 | ) |
SFAS 133 noncash mark-to-market adjustment | | (13.4 | ) | 7.5 | |
Total | | $ (16.5 | ) | $ (0.3 | ) |
Per Basic Limited Partner Unit | | $ (0.24 | ) | $ (0.00 | ) |
Per Diluted Limited Partner Unit | | $ (0.24 | ) | $ (0.00 | ) |
The following table presents certain selected financial information by segment for the first quarter reporting periods:
| | Pipeline
Operations | | Gathering,
Marketing,
Terminalling &
Storage
Operations (4) | |
| | (Dollars in millions) | |
Three Months Ended March 31, 2005 | | | | | | | | | |
Revenues(1) | | | $ 247.2 | | | | $ 6,426.2 | | |
Purchases(1) | | | (151.7 | ) | | | (6,369.4 | ) | |
Field operating costs (excluding LTIP charge) | | | (34.0 | ) | | | (29.5 | ) | |
LTIP charge—operations | | | (0.1 | ) | | | (0.2 | ) | |
Segment G&A expenses (excluding LTIP charge)(2) | | | (10.1 | ) | | | (10.1 | ) | |
LTIP charge—general and administrative | | | (1.2 | ) | | | (0.7 | ) | |
Segment profit | | | $ 50.1 | | | | $ 16.3 | | |
Noncash SFAS 133 impact(3) | | | $ — | | | | $ (13.4 | ) | |
Maintenance capital | | | $ 2.8 | | | | $ 1.2 | | |
Three Months Ended March 31, 2004 | | | | | | | | | |
Revenues(1) | | | $ 189.3 | | | | $ 3,631.3 | | |
Purchases(1) | | | (136.7 | ) | | | (3,572.9 | ) | |
Field operating costs (excluding LTIP charge) | | | (19.3 | ) | | | (18.5 | ) | |
LTIP charge—operations | | | (0.1 | ) | | | (0.4 | ) | |
Segment G&A expenses (excluding LTIP charge)(2) | | | (6.0 | ) | | | (9.4 | ) | |
LTIP charge—general and administrative | | | (1.7 | ) | | | (2.0 | ) | |
Segment profit | | | $ 25.5 | | | | $ 28.1 | | |
Noncash SFAS 133 impact(3) | | | $ — | | | | $ 7.5 | | |
Maintenance capital | | | $ 1.4 | | | | $ 0.3 | | |
(1) Include intersegment amounts.
(2) Segment general and administrative (G&A) expenses reflect direct costs attributable to each segment and an allocation of other expenses to the segments based on the business activities that existed at that
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time. The proportional allocations by segment require judgment by management and will continue to be based on the business activities that exist during each period.
(3) Amounts related to SFAS 133 are included in revenues and impact segment profit. The SFAS 133 mark-to-market adjustment is primarily based upon crude oil prices at the end of the period and is related to the non-effective portion of our cash flow hedges, as well as certain derivative contracts that do not qualify under SFAS 133 as cash flow hedges. The net gain or loss related to these derivative instruments is principally offset by physical positions in future periods.
(4) Gains/losses on foreign currency revaluation are included in the Gathering, Marketing, Terminalling & Storage segment.
Segment profit from pipeline operations was up approximately 96% (88% excluding selected items impacting comparability in both periods) in the first quarter of 2005 when compared to the first quarter of 2004. Also excluding selected items impacting comparability in both periods, segment profit from gathering, marketing, terminalling and storage operations was up approximately 34%.
The Partnership’s basic weighted average units outstanding for the first quarter of 2005 totaled 67.5 million (68.2 million diluted) as compared to 58.4 million (59.0 million diluted) in last year’s first quarter. At March 31, 2005, the Partnership had approximately 67.9 million units outstanding, long-term debt of $930.2 million and a long-term debt-to-total capitalization ratio of approximately 48%.
On April 22, 2005, the Partnership declared a cash distribution of $0.6375 per unit ($2.55 per unit on an annualized basis) on its outstanding limited partner units. The distribution will be paid on May 13, 2005, to holders of record of such units at the close of business on May 3, 2005. The distribution represents an increase of approximately 13.3% over the May 2004 distribution and approximately 4.1% over the February 2005 distribution. This represents the 11th distribution increase for the Partnership in the last 18 quarters.
The Partnership today furnished a current report on Form 8-K, which included material in this press release and financial and operational guidance for the second quarter and full year 2005. A copy of the Form 8-K is available on the Partnership’s website at www.paalp.com.
Non-GAAP Financial Measures
In this release, the Partnership’s EBITDA disclosure is not presented in accordance with generally accepted accounting principles and is not intended to be used in lieu of GAAP presentations of results of operations or cash provided by operating activities. EBITDA is presented because PAA management believes it provides additional information with respect to both the performance of our fundamental business activities as well as our ability to meet our future debt service, capital expenditures and working capital requirements. Management also believes that debt holders commonly use EBITDA to analyze Partnership performance. In addition, we present selected items that impact the comparability of our operating results as additional information that may be helpful to your understanding of our financial results. Management considers an understanding of these selected items impacting comparability to be material to its evaluation of our operating results and prospects. Although we present selected items that management considers in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions and numerous other factors. These types of variations are not separately identified in this release, but will be discussed in management’s discussion and analysis of operating results in our Quarterly Report on Form 10-Q.
A reconciliation of EBITDA to net income and cash flow from operating activities for the periods presented is included in the tables attached to this release. In addition, the Partnership maintains on its website (www.paalp.com) a reconciliation of all non-GAAP financial information, such as EBITDA, that it
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reconciles to the most comparable GAAP measures. To access the information, investors should click on the “Investor Relations” link on the Partnership’s home page and then the “Non-GAAP Reconciliations” link on the Investor Relations page.
Conference Call:
The Partnership will host a conference call to discuss the results and other forward-looking items on Thursday, April 28, 2005. Specific items to be addressed in this call include:
1. A brief review of the Partnership’s first quarter performance;
2. A status report on expansion and organic growth projects and recent acquisition activity;
3. A discussion of capitalization and liquidity;
4. A review of financial and operating guidance for the second quarter and full year of 2005; and
5. Comments regarding the Partnership’s outlook for the future.
The call will begin at 10:00 AM (Central). To participate in the call, please call 800-473-6123, or, for international callers, 973-582-2706 at approximately 9:55 AM (Central). No password or reservation number is required.
Webcast Instructions:
To access the Internet webcast, please go to the Partnership’s website at www.paalp.com, choose “Investor Relations”, and then choose “Conference Calls”. Following the live webcast, the call will be archived for a period of sixty (60) days on the Partnership’s website.
Telephonic Replay Instructions:
Call 877-519-4471 or international call 973-341-3080 and enter PIN # 5963485
The replay will be available beginning Thursday, April 28, 2005, at approximately 1:00 PM (Central) and continue until 11:59pm (Central) Monday, May 2, 2005.
Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve certain risks and uncertainties. These risks and uncertainties include, among other things: abrupt or severe production declines or production interruptions in outer continental shelf production located offshore California and transported on our pipeline systems; the success of our risk management activities; the availability of, and ability to consummate, acquisition or combination opportunities; our access to capital to fund additional acquisitions and our ability to obtain debt or equity financing on satisfactory terms; successful integration and future performance of acquired assets or businesses; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of our credit rating and ability to receive open credit from our suppliers; declines in volumes shipped on the Basin Pipeline, Capline Pipeline and our other pipelines by the Partnership or third party shippers; the availability of adequate third party production volumes for transportation and marketing in the areas in which we operate; successful third party drilling efforts in areas in which we operate pipelines or gather crude oil; demand for various grades of crude oil and resulting changes in pricing conditions or transmission throughput requirements; fluctuations in refinery capacity in areas supplied by our transmission lines; the effects of competition; continued credit worthiness of, and performance by, our counterparties; the impact of crude oil price fluctuations; the impact of current and future laws, rulings and government regulations; shortages or cost increases in power supplies, materials and labor; weather interference with business operations or project construction; the currency exchange rate of the Canadian dollar; fluctuation in the debt and equity capital markets (including the
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price of our units at the time of vesting under our LTIP); and other factors and uncertainties inherent in the marketing, transportation, terminalling, gathering and storage of crude oil and liquefied petroleum gas (“LPG”) discussed in the Partnership’s filings with the Securities and Exchange Commission.
Plains All American Pipeline, L.P. is engaged in interstate and intrastate crude oil transportation, and crude oil gathering, marketing, terminalling and storage, as well as the marketing and storage of liquefied petroleum gas and other petroleum products, in the United States and Canada. The Partnership’s common units are traded on the New York Stock Exchange under the symbol “PAA.” The Partnership is headquartered in Houston, Texas.
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