FOR IMMEDIATE RELEASE
Contact: Ross A. Benavides
Chief Financial Officer
(713) 860-2528
GENESIS ENERGY, L.P.
REPORTS FIRST QUARTER RESULTS
May 7, 2003 - Genesis Energy, L.P. (AMEX:GEL) announced today that its
net income for the quarter ended March 31, 2003, was $879,000 or $0.10 per unit.
This compares to a net income for the quarter ended March 31, 2002, of
$1,314,000, or $0.15 per unit. Minority interests had no effect on the reported
periods.
"We are pleased with our results for the first quarter," said Mark J.
Gorman, President and Chief Executive Officer of Genesis. "We continue to
perform well under our new business model. For the remainder of 2003, we will
remain focused on maintaining gathering and marketing gross margins excluding
depreciation, effectively managing our capital expenditures under the pipeline
integrity management program, strengthening our balance sheet, and developing
opportunities for accretive acquisitions."
Highlights of the First Quarter
We are making a regular quarterly distribution of $0.05 per common unit
for the first quarter of 2003 on May 15, 2003 to unitholders of record on April
30, 2003. We are comfortable that we will be able to sustain this level of
distribution and look forward to growing it as soon as it is reasonable to do
so.
In March 2003, we entered into a $65 million three-year credit facility
with a group of banks with Fleet National Bank as agent ("Fleet Agreement"). The
Fleet Agreement has a sublimit for working capital loans in the amount of $25
million, with the remainder of the facility available for letters of credit. The
completion of this financing places us in a much better position to explore
opportunities to grow the business by making acquisitions.
We generated Available Cash during the Quarter of $790,000. This was
more than enough to provide for our regular distribution of $0.05 per unit, or a
total of $440,000, and to allow us to reserve the balance of Available Cash to
build up liquidity to support future growth of the business and to assure our
ability to maintain and grow the regular quarterly distribution.
Outlook
We expect the gathering and marketing business to continue to perform
well during 2003, although perhaps not as well as in 2002. Both volumes and
margins are expected to be lower during 2003 as this business is likely to be
subject to market volatility.
Pipeline gross margin excluding depreciation should decline slightly
during 2003. We expect pipeline revenues to increase as we obtain the benefit of
the 2002 tariff increases for the full year 2003. Offsetting these revenue
increases will be increased costs for maintenance, insurance, and safety.
General and administrative costs are expected to remain stable. We
expect that a one-time adjustment for replacing the Citicorp Credit facility
with a new bank facility led by Fleet Bank and cost increases for insurance and
other costs to comply with SEC regulations mandated by the Sarbanes-Oxley Act
will offset the permanent cost reductions from changing the business model.
An important factor affecting our outlook will be capital expenditures.
We previously indicated that we might need to increase capital expenditures as a
result of complying with federal pipeline integrity management program (IMP)
regulations and other regulatory requirements. Based on our preliminary
experience with the IMP program during 2002, we have established a capital
budget of $6.7 million for 2003. For 2004, we expect to make capital
expenditures of $8.4 million. After 2004, capital expenditures are expected to
return to a normal pattern of approximately $2.0 million per year.
As stated above, we resumed our regular quarterly distributions with
the first quarter distribution of $0.05 per unit on May 15, 2003 to unitholders
of record as of April 30, 2003. We expect to be able to meet the covenant in our
Fleet Facility that restricts our ability to make distributions unless our
borrowing base exceeds usage under the Fleet Facility by at least $10 million on
the monthly measurement dates of each quarter. We are comfortable that we will
be able to sustain quarterly distributions for 2003 and 2004 of at least $0.05
per unit for each quarter. Based on current conditions, we do not expect to
restore the regular distribution to the targeted minimum distribution amount of
$0.20 per quarter for the next year or two. However, if we exceed our
expectations for improving the performance of the business, if our capital
projects cost less than we currently estimate, or if our access to capital
allows us to make accretive acquisitions, we may be able to restore the targeted
minimum quarterly distribution sooner.
Other Matters
Several adjustments to net income are required to calculate Available
Cash. The calculation is as follows:
Net income $ 879,000
Depreciation and amortization expense 1,515,000
Cash proceeds in excess of gain on
disposals of assets 40,000
Maintenance capital expenditures (1,644,000)
--------------
Available Cash $ 790,000
==============
We have reconciled Available Cash (a non-GAAP liquidity measure) to
cash flow from operating activities in the financial tables below.
Genesis Energy, L.P. will broadcast its First Quarter Earnings
Announcement Conference Call on Tuesday, May 8, 2003, at 10:00 a.m. Central.
This call can be accessed at www.genesiscrudeoil.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. There is no charge to access the event.
Genesis Energy, L.P. operates crude oil common carrier pipelines and is
an independent gatherer and marketer of crude oil in North America, with
operations concentrated in Texas, Louisiana, Alabama, Florida, and Mississippi.
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 Genesis believes that its expectations
are based upon reasonable assumptions, it can give no assurance that its 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, environmental risks, government regulation, the
ability of the Company to meet its stated business goals and other risks noted
from time to time in the Company's Securities and Exchange Commission filings.
(tables to follow)
Genesis Energy, L.P.
Summary Consolidated Statements of Operations
(in thousands except per unit amounts and volumes)
Three Months Ended Three Months Ended
March 31, 2003 March 31, 2002
-------------- --------------
Revenues $ 261,882 $ 239,239
Cost of Sales and Operations (Excluding Depreciation) 256,627 233,801
-------------- -------------
Gross Margin Excluding Depreciation 5,255 5,438
General & Administrative Expenses 2,363 2,088
Depreciation and Amortization Expense 1,515 1,423
Other (44) -
-------------- -------------
Operating Income 1,421 1,927
Interest, Net (542) (400)
Unrealized (Loss) Gain on Change in Fair Value of
Derivatives - (702)
Gains from Disposals of Surplus Assets - 489
-------------- -------------
Income Before Minority Interests 879 1,314
Minority Interests - -
-------------- -------------
Net Income $ 879 $ 1,314
============== =============
Net Income per Common Unit - Basic and Diluted $ 0.10 $ 0.15
Wellhead barrels per day 61,449 67,466
Pipeline barrels per day 71,392 75,409
Genesis Energy, L.P.
Summary Consolidated Balance Sheets
(in thousands)
March 31, 2003 December 31, 2002
-------------- -----------------
ASSETS
Cash $ 1,923 $ 1,071
Accounts Receivable 88,661 80,664
Inventories 1,402 4,952
Other Current Assets 5,184 5,410
-------------- -------------
Total Current Assets 97,170 92,097
Net Property 45,306 44,460
Other Assets 1,117 980
-------------- -------------
Total Assets $ 143,593 $ 137,537
============== =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts Payable $ 94,718 $ 87,386
Accrued Liabilities 8,640 8,834
-------------- -------------
Total Current Liabilities 103,358 96,220
Long-Term Debt 3,500 5,500
Minority Interest 515 515
Partners' Capital 36,220 35,302
-------------- -------------
Total Liabilities and Partners' Capital $ 143,593 $ 137,537
============== =============
Genesis Energy, L.P.
Summary Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended Three Months Ended
March 31, 2003 March 31, 2002
-------------- --------------
Net income $ 879 $ 1,314
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 1,515 1,423
Amortization/write-off of credit facility issuance
costs 750 159
Gains on asset disposals (44) (489)
Other non-cash charges 39 1,512
Changes to components of working capital 2,917 (2,720)
-------------- -------------
Net cash provided by operating activities 6,056 1,199
-------------- -------------
Additions to property and equipment (2,195) (749)
Proceeds from sales of assets and other 84 1,704
-------------- -------------
Net cash (used in) provided by investing activities (2,111) 955
--------------- -------------
Net repayments of debt (2,000) (7,400)
Credit facility issuance fees (1,093) -
--------------- -------------
Net cash used in investing activities (3,093) (7,400)
--------------- -------------
Net increase (decrease) in cash and cash equivalents 852 (5,246)
Cash and cash equivalents at beginning of period 1,071 5,777
-------------- -------------
Cash and cash equivalents at end of period $ 1,923 $ 531
============== =============
Genesis Energy, L.P.
Reconciliation of GAAP "Operating Activities Cash Flows" to Non-GAAP
"Available Cash" for the Three Months Ended March 31, 2003
(in thousands)
Operating Activities Cash Flows $ 6,056
Adjustments to reconcile Operating Activities Cash
Flows to Available Cash:
Maintenance capital expenditures (1,644)
Proceeds from sales of assets 84
Change in fair value of derivatives (39)
Amortization of credit facility issuance fees (750)
Net effect of changes in operating accounts
not included in calculation of Available Cash (2,917)
--------------
Available Cash $ 790
==============
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