Exhibit 99.1
FOR IMMEDIATE RELEASE
Inergy, L.P. Reports Record Earnings
Strong Growth in Gallons, Income and Distributable Cash Flow
Kansas City, MO (February 4, 2003) - Inergy, L.P. (NASDAQ: NRGY) today
reported its results of operations for the quarter ended December 31, 2002, the
first quarter of fiscal 2003.
For the three months ended December 31, 2002, Inergy, L.P. (Inergy)
reported income before interest, taxes, depreciation and amortization (EBITDA)
of $13.8 million, an increase of over 83% from the $7.5 million of EBITDA
reported in the first quarter of last year. Inergy recorded net income for the
three months ended December 31, 2002 of $7.7 million, or $0.97 per diluted
limited partner unit, as compared to $4.5 million, or $0.74 per diluted limited
partner unit for the same period in the prior year.
As previously announced, the Board of Directors of the Partnership's
general partner increased Inergy's quarterly distribution from $0.70 to $0.715
per unit ($2.86 annually). The distribution will be paid on February 14, 2003 to
unitholders of record as of February 7, 2003.
"We are pleased with the results of the first quarter of fiscal 2003 and
our ability to increase the cash distribution to our unitholders for the fifth
consecutive quarter," said John Sherman, President and CEO of Inergy. Sherman
continued, "Our people are doing an outstanding job managing the challenges of
higher demand and significantly increasing propane costs. We look forward to
continued execution of our growth strategy on behalf of Inergy's unitholders."
The improved EBITDA and net income results are primarily due to an increase
in retail gross profit as a result of acquisitions, partially offset by an
increase in operating expenses, depreciation and amortization, and interest
expense associated with those acquisitions.
Retail gallon sales increased 106% to 36.9 million in the first quarter of
fiscal 2003 from 17.9 million gallons sold in the same quarter of last year. The
net increase in retail gallon sales is primarily attributable to acquisitions,
and to a lesser extent, colder weather in the three months ended December 31,
2002 as compared to the same period in 2001.
Retail propane gross profit increased to $22.2 million in the quarter ended
December 31, 2002, from $11.4 million in the same period last year. As described
above, the increase in retail propane gross profit in these comparable periods
is primarily due to acquisitions. Other retail gross profits, including
transportation, were $3.9 million in the three months ended December 31, 2002 as
compared to $2.3 million in the prior year. This increase is primarily the
result of acquisitions. Gross profit from wholesale operations was $2.2 million
in the first quarter of fiscal 2003 compared to $2.1 million in the same period
of 2001.
Operating and administrative expenses were $14.5 million in the three
months ended December 31, 2002 compared to $8.3 million in the same period of
2001. The increase in operating expenses is primarily attributable to growth
related to acquisitions.
Inergy, L.P. - headquartered in Kansas City, Missouri - is among the
fastest growing Master Limited Partnerships in the country. The company's
operations include the retail marketing, sale and distribution of propane to
residential, commercial, industrial and agricultural customers. Today Inergy
serves approximately 210,000 retail customers from 109 customer service centers
throughout the eastern half of the United States. The company also operates a
growing supply logistics, transportation and wholesale marketing business that
serves independent dealers and multi-state marketers in 35 states.
Inergy will conduct a conference call on Wednesday, February 5, 2003, to
discuss the Company's first quarter performance. The call is scheduled for 10:00
a.m., CST. Call-in begins at 9:50 a.m., CST. The call-in number is
1-888-792-8459. A digital recording of the call will be available for the two
weeks following the call by dialing 1-877-519-4471 and entering the pass code
3731075. A recording will also will be available on Inergy's website,
www.InergyPropane.com, for two weeks following the call.
For more information, please contact Mary Adams in Inergy's Investor
Relations Department at 816-842-8181 or via email at madams@inergyservices.com.
This news release contains forward-looking statements, which are statements
that are not historical in nature such as being positioned to continue the
execution of our growth strategy. Forward-looking statements are subject to
certain risks, uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or any underlying assumption proves incorrect,
actual results may vary materially from those anticipated, estimated or
projected. Among the key factors that could cause actual results to differ
materially from those referred to in the forward-looking statements, are weather
conditions that vary significantly from historically normal conditions; our
success in hedging our positions; the general level of petroleum product demand,
and the availability of propane supplies; increases in the wholesale cost of
propane; the price of propane to the consumer compared to the price of
alternative and competing fuels; our ability to generate available cash for
distribution to unitholders; the costs and effects of legal and administrative
proceedings against us or which may be brought against us; and our ability to
sustain our historical levels of internal growth. These and other risks and
assumptions are described in Inergy's annual report on Form 10-K and other
reports that are available from the United States Securities and Exchange
Commission.
[TABLE FOLLOWS]
Inergy, L.P.
Consolidated Statements of Operations
For the Three Months Ended December 31, 2002 and 2001
(in thousands)
(Unaudited)
Three Months Ended
December 31,
2002 2001
---- ----
Revenues:
Propane (a) $104,042 $ 46,584
Other 5,648 3,046
---------------------
109,690 49,630
Cost of product sold (a) 81,323 33,795
---------------------
Gross profit 28,367 15,835
Operating and administrative expenses 14,539 8,292
Depreciation and amortization 3,361 1,774
---------------------
Operating income 10,467 5,769
Other income (expense):
Interest expense (2,640) (1,238)
Loss on sale of property, plant and equipment (106) (90)
Finance charges 16 36
Other 29 20
---------------------
Income before income taxes 7,766 4,497
Provision for income taxes 50 32
---------------------
Net income $ 7,716 $ 4,465
=====================
Net Income allocable to:
Non-Managing General Partner Interest $ 155 $ 89
Limited Partner Interest 7,561 4,376
---------------------
$ 7,716 $ 4,465
=====================
Net Income Per Limited Partner Unit:
Basic $ 0.98 $ 0.75
Diluted $ 0.97 $ 0.74
Supplemental Information:
- ------------------------
Retail gallons sold 36,851 17,875
Distributable Cash Flow:
EBITDA (b) $ 13,767 $ 7,509
Cash interest expense (c) (2,296) (1,035)
Maintenance capital expenditures (248) (104)
Provision for income taxes (50) (32)
---------------------
Distributable cash flow (d) $ 11,173 $ 6,338
=====================
Weighted Average Limited Partner Units Outstanding:
- --------------------------------------------------
Basic 7,713 5,827
Diluted 7,805 5,898
(a) New accounting standards affecting the reporting of gains or losses on
certain contracts related to our risk management activities became
effective in the past year requiring such contracts to be reported on a net
basis in the income statement. The adoption of the new standards required
that we reduce both revenue and cost of product sold by $12.4 million in
the three-month period ended December 31, 2001. This reclassification had
no impact on gross profit, net income or EBITDA.
(b) EBITDA is defined as income before taxes, plus interest expense and
depreciation and amortization expense, less interest income. EBITDA should
not be considered an alternative to net income, income before income taxes,
cash flows from operating activities, or any other measure of financial
performance calculated in accordance with generally accepted accounting
principles as those items are used to measure operating performance,
liquidity or ability to service debt obligations. We believe that EBITDA
provides additional information for evaluating our ability to make the
minimum quarterly distribution and is presented solely as a supplemental
measure. EBITDA, as we define it, may not be comparable to EBITDA or
similarly titled measures used by other corporations or partnerships.
(c) Cash interest expense is net of amortization charges associated with
deferred financing costs.
(d) Distributable cash flow should not be used as a measure of financial
performance calculated in accordance with generally accepted accounting
principles.