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FOR IMMEDIATE RELEASE
Contact: Ross A. Benavides
Chief Financial Officer
(713) 860-2528
GENESIS ENERGY, L.P.
REPORTS SECOND QUARTER RESULTS
August 11, 2003 - Genesis Energy, L.P. (AMEX:GEL) announced today that
its net income for the second quarter of 2003 was $1,890,000, or $0.21 per unit,
compared to net income of $2,106,000, or $0.24 per unit, for the second quarter
of 2002.
Income for the six months ended June 30, 2003, was $2,769,000, or $0.31
per unit. For the six months ended June 30, 2002, net income was $3,420,000, or
$0.39 per unit. Minority interests had no effect on the results for the
quarterly or six months periods.
Highlights of the Second Quarter
Genesis made a regular quarterly distribution of $0.05 per common unit
for the first quarter of 2003 on May 15, 2003 and will make a distribution for
the second quarter of $0.05 per common unit on August 14, 2003, to unitholders
of record on July 31, 2003. Genesis currently expects that it will be able to
sustain this level of distribution and looks forward to growing distributions as
soon as it is reasonable to do so.
Net cash flow provided by operating activities was $193,000 for the
second quarter of 2003. Genesis generated Available Cash before reserves (a
non-GAAP measure) during the second quarter of $1,963,000. This was more than
enough to provide for the aggregate regular quarterly distribution of $440,000,
and to allow Genesis to increase its liquidity to support future growth of the
business and future regular quarterly distributions. (Please see the
accompanying schedules for a reconciliation of Available Cash, a non-GAAP
measure, to net cash flow provided by operations, the GAAP measure.)
Gross margin (excluding depreciation) from gathering and marketing
operations was $4.2 million for the second quarter of 2003, as compared to $3.6
million in the prior year. This increase in gross margin (excluding
depreciation) between the two periods resulted from a $2.3 million price
variance, largely offset by a negative variance of $1.7 million due to a 22 %
decrease in wellhead, bulk and exchange purchase volumes in the 2003 period.
Credit costs and field costs were flat between the two quarterly periods.
Pipeline gross margin (excluding depreciation) was $1.7 million for the
second quarter of 2003, as compared to $2.6 million for the second quarter of
2002. The factors decreasing pipeline gross margin (excluding depreciation) were
$1.5 million higher pipeline operating costs related to regulatory and spill
prevention requirements, higher insurance costs and increased operating and
maintenance costs, and a $0.2 million decrease in revenue due to a decline in
throughput of 5 percent between the two periods. Offsetting these factors were a
$0.4 million increase in revenues from sales of pipeline loss allowance barrels
primarily as a result of higher crude prices, and a $0.4 million increase in
revenues due to an increase of 10 percent in the average tariff on shipments.
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General and administrative expenses increased $0.2 million during the
three months ended June 30, 2003 as compared to the same period in 2002,
principally due to small increases in audit and consultant fees, directors' fees
and increased premiums for officers and directors liability insurance. An
accrual for bonuses under the Partnership's bonus program in 2003 was offset by
reductions in personnel and benefits costs.
Interest costs were $0.1 million less in the 2003 quarter primarily due
to lower commitment fees as a result of a reduction in the size of the
Partnership's credit facility between the two periods.
Outlook
The Partnership's gathering and marketing business is expected to
perform well during the remainder of 2003, although perhaps not as well as
during the first six months of 2003. The first half of 2003 was positively
impacted by higher than usual market prices and by the reduction by the
Partnership of its inventory volumes during the period of these higher market
prices. Both volumes and margins are expected to be somewhat lower during the
remainder of 2003 as this business is likely to be subject to market volatility.
Genesis expects pipeline gross margin excluding depreciation for the second half
of 2003 to be generally consistent with that in the first half of the year.
Genesis currently expects that it will be able to sustain regular
quarterly distributions for 2003 and 2004 of at least $0.05 per unit for each
quarter. Based on current conditions, the Partnership does 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 actual results exceed the
Partnership's expectations for improving the performance of the business, or if
it is able to complete a CO2 asset acquisition from Denbury, or if its capital
projects cost less than currently estimated, or if its access to capital allows
Genesis to make accretive acquisitions, the Partnership may be able to increase
its regular quarterly distributions or restore the targeted minimum quarterly
distribution sooner.
Other Matters
Several adjustments to net income are required to calculate Available
Cash. The calculation of Available Cash before reserves for the quarter ended
June 30, 2003 is as follows:
Net income $ 1,890,000
Depreciation and amortization expense 1,369,000
Maintenance capital expenditures (1,296,000)
--------------
Available Cash before reserves $ 1,963,000
==============
Available Cash (a non-GAAP liquidity measure) has been reconciled to
cash flow from operating activities for the three and six months ended June 30,
2003 in the financial tables below.
Genesis Energy, L.P. will broadcast its Second Quarter Earnings
Announcement Conference Call on Tuesday, August 12, 2003, at 10:00 a.m. Central
time. 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.
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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 Partnership to meet its stated business goals and other risks
noted from time to time in the Partnership's Securities and Exchange Commission
filings.
(tables to follow)
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Genesis Energy, L.P.
Summary Consolidated Statements of Operations - Unaudited
(in thousands except per unit amounts and volumes)
Six Months Ended Six Months Ended
June 30, 2003 June 30, 2002
------------- -------------
Revenues $ 481,831 $ 480,008
Cost of Sales 470,717 468,348
-------------- -------------
GROSS MARGIN 11,114 11,660
General & Administrative Expenses 4,808 4,292
Depreciation and Amortization Expense 2,884 2,898
Other (47) -
-------------- -------------
OPERATING INCOME 3,469 4,470
Interest Expense, Net (700) (668)
Unrealized Loss on Change in Fair Value of Derivatives - (1,057)
Gains from Disposals of Surplus Assets - 675
-------------- -------------
Income Before Minority Interests 2,769 3,420
Minority Interests - -
-------------- -------------
NET INCOME $ 2,769 $ 3,420
NET INCOME PER COMMON UNIT - BASIC AND DILUTED ============== =============
$ 0.31 $ 0.39
============== =============
Wellhead barrels per day 60,125 66,476
Pipeline barrels per day 71,432 75,493
Three Months Ended Three Months Ended
June 30, 2003 June 30, 2002
------------- -------------
Revenues $ 219,949 $ 240,769
Cost of Sales 214,090 234,547
-------------- -------------
GROSS MARGIN 5,859 6,222
General & Administrative Expenses 2,445 2,204
Depreciation and Amortization Expense 1,369 1,475
Other (3) -
-------------- -------------
OPERATING INCOME 2,048 2,543
Interest and Other, Net (158) (268)
Unrealized Loss on Change in Fair Value of Derivatives - (355)
Gains from Disposals of Surplus Assets - 186
-------------- -------------
Income Before Minority Interests 1,890 2,106
Minority Interests - -
-------------- -------------
NET INCOME $ 1,890 $ 2,106
============== =============
NET INCOME PER COMMON UNIT - BASIC AND DILUTED $ 0.21 $ 0.24
============== =============
Wellhead barrels per day 58,815 65,497
Pipeline barrels per day 71,472 75,576
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Genesis Energy, L.P.
Summary Consolidated Balance Sheets - Unaudited
(in thousands)
June 30, 2003 December 31, 2002
------------- -----------------
ASSETS
Cash $ 2,863 $ 1,071
Accounts Receivable 76,795 80,664
Inventories 1,490 4,952
Other Current Assets 4,269 5,410
-------------- -------------
Total Current Assets 85,417 92,097
Net Property 45,686 44,460
Other Assets 1,028 980
-------------- -------------
Total Assets $ 132,131 $ 137,537
============== =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts Payable $ 80,028 $ 87,386
Accrued Liabilities 7,918 8,834
-------------- -------------
Total Current Liabilities 87,946 96,220
Long-Term Debt 6,000 5,500
Minority Interest 515 515
Partners' Capital 37,670 35,302
-------------- -------------
Total Liabilities and Partners' Capital $ 132,131 $ 137,537
============== =============
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Genesis Energy, L.P.
Summary Consolidated Statements of Cash Flows - Unaudited
(in thousands)
Six Months Ended Six Months Ended
June 30, 2003 June 30, 2002
------------- -------------
Net income $ 2,769 $ 3,420
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 2,884 2,898
Amortization/write-off of credit facility issuance
costs 841 320
Gains on asset disposals (47) (675)
Other non-cash charges 39 1,867
Changes to components of working capital (237) 3,756
-------------- -------------
Net cash provided by operating activities 6,249 11,586
-------------- -------------
Additions to property and equipment (3,509) (1,212)
Proceeds from sales of assets and other 85 2,183
-------------- -------------
Net cash (used in) provided by investing activities (3,424) 971
-------------- -------------
Net borrowings (repayments) of debt 500 (12,400)
Distributions to partners (440) -
Credit facility issuance fees (1,093) -
-------------- -------------
Net cash used in investing activities (1,033) (12,400)
-------------- -------------
Net increase in cash and cash equivalents 1,792 157
Cash and cash equivalents at beginning of period 1,071 5,777
-------------- -------------
Cash and cash equivalents at end of period $ 2,863 $ 5,934
============== =============
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Genesis Energy, L.P.
Reconciliation of Unaudited GAAP
"Net Cash Flow Provided by Operating Activities"
to Non-GAAP "Available Cash before Reserves"
for the Three and Six Months Ended June 30, 2003
(in thousands)
Three Months Ended Six Months Ended
June 30, 2003 June 30, 2003
------------- -------------
Net Cash Flow Provided by Operating Activities $ 193 $ 6,249
Adjustments to reconcile Net Cash Flow Provided
by Operating Activities to Available Cash
before reserves:
Maintenance capital expenditures (1,296) (2,940)
Proceeds in excess of gains from sales of assets 3 87
Change in fair value of derivatives - (39)
Amortization of credit facility issuance costs (91) (841)
Net effect of changes in operating accounts not
included in calculation of Available Cash before
reserves 3,154 237
-------------- -------------
Available Cash before reserves $ 1,963 $ 2,753
============== =============
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