EXHIBIT 99.1
For further information contact:
Investor Relations:
Brian Bourque
(713) 475-7415
FOR IMMEDIATE RELEASE: April 29, 2003
Houston, Texas - Texas Petrochemicals LP (TPC) today announced a net
loss of $4.9 million on $197.8 million in sales revenue in the company's Fiscal
Year 2003 third quarter ending March 31, 2003, compared to net income of $3.5
million on $136.6 million in sales revenue for the corresponding quarter in the
prior year. Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the third quarter were $6.5 million compared to $17.3 million for
the corresponding quarter in the prior year.
The current quarter EBITDA performance represented a 62 percent
decrease from the prior year. A significant decline in demand for MTBE, in
addition to increases in raw material and energy costs during the current
quarter negatively impacted results. Higher sales volumes and product sales
prices from butadiene and specialty isobutylenes partially offset the impact of
the higher costs during the current quarter.
MTBE variable margin contribution in the current quarter decreased 94
percent from the corresponding prior year quarter. MTBE consumption in
California has fallen significantly as some refiners have switched to ethanol.
This decreased demand has placed pressure on MTBE sales prices during the
current quarter. Sales volume of MTBE produced during the current quarter was 23
percent lower than the prior year quarter. Higher raw material and energy costs
negatively impacted unit margins during the current quarter. As a result, MTBE
represented 3 percent of TPC's total variable margin in the current quarter
versus 35 percent in the corresponding prior year quarter. Unfavorable unit
margins for MTBE production resulted in the shutdown of a portion of TPC's
on-purpose MTBE production during the current quarter. One dehydro unit was down
for the months of January and February due to increases in raw material and
energy costs in addition to lower MTBE demand. The corresponding quarter in the
prior year included a one-month outage of one dehydro unit for a planned
maintenance turnaround. The variable margin contribution from MTBE during the
current quarter also reflects a $1.1 million charge for the write-down of
inventory under the lower of cost or market requirements under generally
accepted accounting principles (GAAP). The write-down was due to the decline in
the future net realizable sales value of MTBE inventory as compared to the
weighted average cost of MTBE inventory at the end of the current quarter.
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Butadiene variable margin contribution increased 25 percent in the
current quarter compared to the corresponding prior year quarter due to higher
sales volumes and increasing sales prices. Sales volumes increased as a result
of new contract supplies of crude butadiene becoming available during the
quarter. The contract price for butadiene increased three cents per pound during
the period due to limited availability of product supply. Butadiene sales
volumes remained feedstock limited due to the global shortage of available crude
butadiene. Crude butadiene is produced as a by-product to the ethylene
manufacturing process. Ethylene plants have been operating at rates lower than
historical levels and many have taken planned maintenance turnarounds in recent
months.
Specialty products variable margin contribution decreased 14 percent in
the current quarter compared to the corresponding prior year quarter. Higher raw
material and energy costs negatively impacted unit margins during the current
quarter. The increase in costs was partially offset by higher sales volumes
during the current quarter.
Non-variable costs increased 12 percent during the current quarter due
to higher plant maintenance costs, insurance premiums and the reclassification
of certain logistics costs from variable costs to non-variable costs as compared
to the corresponding prior year quarter. The reclassification of logistics costs
increased non-variable costs by $1.2 million or 7% during the current quarter
and lowered the variable costs in the butadiene and MTBE businesses. The
increase in non-variable costs was partially offset by a $0.6 million refund
from the settlement of a sales and use tax claim during the current quarter.
TPC has availability of up to $60 million from its revolving credit
facility based on eligible accounts receivable and inventory. As of March 31,
2003 TPC had full availability of the line with a $41.6 million balance
outstanding. The revolving credit facility is used to provide funds for ongoing
operations, debt service, working capital changes and planned capital
expenditures.
In a press release dated April 17, 2003, TPC announced changes in its
executive management team and board of directors. Bill W. Waycaster, TPC's
president and CEO, announced his retirement and was succeeded by Carl S. Stutts,
TPC's former executive vice president and CFO. Arthur W. Peabody, Jr., retired
former executive of Union Texas Petroleum, was elected chairman of the board.
Mr. Peabody succeeds William A. McMinn, who will remain a member of the board.
Additionally, effective April 28, 2003 the Company announces the hiring of E.
Joseph Grady as TPC's senior vice president and he will become CFO on May 16,
2003. Mr. Grady was previously Vice President and CFO of Forcenergy Inc., which
merged with Forest Oil Corp.
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TPC is a producer of quality C4 chemical products widely used as
chemical building blocks for synthetic rubber, nylon carpets, adhesives,
catalysts and additives used in high-performance polymers. TPC also manufactures
fuel products used in the formulation of cleaner burning gasoline. The company
has manufacturing facilities in the industrial corridor adjacent to the Houston
Ship Channel and operates product terminals in Baytown, Texas and Lake Charles,
Louisiana. TPC is a Responsible Care(R) company dedicated to supporting the
continuing effort to improve the industry's responsible management of chemicals.
For more information about TPC products and services visit the company online at
www.txpetrochem.com.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This news release includes forward-looking statements. Although TPC
believes that its expectations are based upon reasonable assumptions, it can
give no assurance that its expectations will materialize. Important factors that
could cause actual results to differ materially from those in the forward
looking statements included herein are enumerated in TPC's Forms 10-K and 10-Q
filed with the Securities and Exchange Commission. TPC disclaims any intention
or obligation to update publicly or revise such statements, whether as a result
of new information, future events or otherwise.
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TEXAS PETROCHEMICALS LP
CONSOLIDATED INCOME STATEMENT
(DOLLARS IN MILLIONS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------- -------------------------
2003 2002 2003 2002
------- ------- ------- -------
Revenues $ 197.8 $ 136.6 $ 531.3 $ 430.8
Cost of goods sold 189.1 117.1 500.9 396.5
Non-cash ESOP compensation 0.0 0.1 0.1 0.2
Depreciation and amortization 5.6 5.1 16.6 15.3
------- ------- ------- -------
Gross Profit 3.1 14.3 13.7 18.8
SG&A expense 2.9 2.3 7.8 7.6
------- ------- ------- -------
Income from operations 0.2 12.0 5.9 11.2
Interest expense 8.6 7.6 23.8 22.6
Other income (expenses)
Non-cash change in FMV of derivatives -- 1.0 0.1 0.9
Gain on early extinguishment of debt -- -- 3.5 --
Other, net 0.7 0.1 1.0 0.3
------- ------- ------- -------
0.7 1.1 4.6 1.2
Income (loss) before income taxes (7.7) 5.5 (13.3) (10.2)
Provision (benefit) for income taxes (2.8) 2.0 (4.9) (3.5)
------- ------- ------- -------
Net income (loss) $ (4.9) $ 3.5 $ (8.4) $ (6.7)
======= ======= ======= =======
EBITDA $ 6.5 $ 17.3 $ 23.6 $ 27.0
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RECONCILIATTION OF NON-GAAP FINANCIAL MEASURES
(DOLLARS IN MILLIONS)
(UNAUDITED)
This earnings release contains non-GAAP financial measures. For purposes of
Regulation G, a non-GAAP financial measure is a numerical measure of a
registrant's historical or future financial performance, financial position or
cash flows that excludes amounts, or is subject to adjustments that have the
effect of excluding amounts, that are included in the most directly comparable
measure calculated and presented in accordance with GAAP in the statement of
income, balance sheet, or statement of cash flows (or equivalent statements) of
the registrant; or includes amounts, or is subject to adjustments that have the
effect of including amounts, that are excluded from the most directly comparable
measure so calculated and presented. In this regard GAAP refers to generally
accepted accounting principles in the United States. Pursuant to the
requirements of Regulation G, TPC has provided a reconciliation of the non-GAAP
financial measure (EBITDA) to the most directly comparable GAAP financial
measure (net income/loss).
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------- -------------------------
2003 2002 2003 2002
------- ------- ------- -------
Net income (loss) $ (4.9) $ 3.5 $ (8.4) $ (6.7)
Plus:
Provisions (benefit) for income taxes (2.8) 2.0 (4.9) (3.5)
Interest expense 8.6 7.6 23.8 22.6
Depreciation and amortization 5.6 5.1 16.6 15.3
Non-cash ESOP compensation -- 0.1 0.1 0.2
Minus:
Non-cash change in FMV of derivatives -- 1.0 0.1 0.9
Gain on early extinguishment of debt -- -- 3.5 --
------- ------- ------- -------
EBITDA $ 6.5 $ 17.3 $ 23.6 $ 27.0
======= ======= ======= =======
EBITDA is presented in the earnings release because it has particular importance
in certain of TPC's debt covenants and related compliance ratios and because
management believes it is of interest to its investors and lenders.
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TEXAS PETROCHEMICALS LP
SELECTED DATA
(DOLLARS IN MILLIONS)
(UNAUDITED)
REVENUES
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------------------------- ---------------------------------------
2003 2002 2003 2002
---------------- ---------------- ---------------- ----------------
Butadiene $ 55.1 28% $ 26.9 20% $ 139.2 26% $ 82.7 19%
Fuel Products(1) 87.9 44 73.4 53 250.9 47 240.2 56
Specialty Products(2) 48.9 25 34.1 25 127.0 24 101.1 23
Other(3) 5.9 3 2.2 2 14.2 3 6.8 2
------- --- ------- --- ------- --- ------- ---
Total $ 197.8 100% $ 136.6 100% $ 531.3 100% $ 430.8 100%
======= === ======= === ======= === ======= ===
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(1) Includes revenues from sales of MTBE, butene-2 and alkylate.
(2) Includes revenues from sales of butene-1, isobutylene concentrate,
high-purity isobutylene, diisobutylene and polyisobutylene.
(3) Includes utility revenues and revenues realized from the Company's
terminalling facilities.
SALES VOLUMES
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------------- ---------------------------
2003 2002 2003 2002
------ ------ ------ ------
(IN MILLIONS OF POUNDS, EXCEPT WHERE NOTED)
Butadiene 226.0 213.0 649.9 610.1
Fuel Products(1) 81.9 90.4 254.4 315.1
Specialty Products 170.9 163.0 484.1 461.8
- ------------
(1) Volumes in million of gallons. Includes 53.3 million, 67.8 million, 185.8
million and 241.1 million gallon of MTBE sales, of which 7.5 million, 8.5
million, 27.7 million and 43.0 million gallons were MTBE purchased for
resale for the three months ended March 31, 2003 and 2002, and the nine
months ended March 31, 2003 and 2002, respectively.
BALANCE SHEET DATA
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------------- ---------------------------
2003 2002 2003 2002
------ ------ ------ ------
Capital Expenditures $2.5 $2.7 $7.4 $7.1
Balance at: December 31, 2002 March 31, 2003
- ----------- ----------------- --------------
Cash and cash equivalents $ 0.9 $ 0.4
Accounts Receivable 71.6 86.2
Inventory 25.8 34.4
Accounts Payable & Bank Overdraft 59.3 76.9
Revolving Credit Loan 19.4 41.6
Long Term Debt:
Term Loan 55.0 55.5
Subordinated Notes 209.6 209.6