FOR IMMEDIATE RELEASE
Contact: Ross A. Benavides
Chief Financial Officer
(713) 860-2528
GENESIS ENERGY, L.P. REPORTS 2003 RESULTS
February 25, 2004 - Genesis Energy, L.P. (AMEX:GEL) today announced
earnings for 2003 of $13.3 million, or $1.50 per unit, and fourth quarter
earnings of $11.8 million or $1.28 per unit. These earnings included a gain on
the disposal of portions of its Texas pipeline system of $13.1 million in the
fourth quarter.
Mark Gorman, President and CEO said "2003 was an important year for
Genesis. We accomplished our key objectives for the year:
o Entering into a new credit facility with a group of banks led by
Fleet National Bank during the first quarter;
o Completing the sale of our Texas Gulf Coast operations, along with
related sales and abandonment of assets, during the fourth
quarter;
o Completing the fourth quarter acquisition of an interest in 167.5
Bcf of CO2 under a volumetric production payment, plus certain
marketing rights, from Denbury Resources Inc. enabling Genesis to
commence a wholesale CO2 marketing operation;
o Generating Available Cash of $3.7 million before reserves compared
to distributions of $2.7 million for the year; and
o Increasing our regular quarterly distribution from $0.05 to $0.15
per unit, starting with the fourth quarter of 2003."
2003 Financial Results
Genesis generated earnings for 2003 of $13.3 million, or $1.50 per
unit, compared to 2002 earnings of $5.1 million, or $0.58 per unit. Genesis
generated a loss from continuing operations of $419,000, or $0.05 per unit, for
2003 and income from continuing operations of $1.0 million, or $0.12, per unit
for 2002. Income from discontinued operations for 2003 was $13.7 million, or
$1.55 per unit, and included $13.0 million of gain from disposal of assets.
Income from discontinued operations for the comparable period of 2002 was $4.1
million, or $0.46 per unit.
Gross margin (excluding depreciation) from continuing crude oil
gathering and marketing activities was $7.9 million for 2003, a decrease of $3.3
million from 2002 levels. The primary factor decreasing gross margin (excluding
depreciation) between the two periods was a 23% decrease in purchased volumes,
reducing gross margin (excluding depreciation) by $5.3 million. Partially
offsetting this decrease in volumes was a $1.7 million positive price variance.
Field costs were slightly lower in the 2003 period.
<page>1
Crude oil pipeline gross margin (excluding depreciation) from continuing
operations was $5.1 million for 2003 as compared to $5.4 million for the 2002
period. Pipeline operating costs were $2.0 million greater in 2003, principally
due to regulatory and spill prevention requirements and right of way
maintenance. Partially offsetting these higher costs was a $2.4 million benefit
from increases in tariff rates. Additionally, in the 2002 period, the accrual
for fines and penalties related to the 1999 Mississippi spill increased by $1.5
million.
Gross margin (excluding amortization) from CO2 wholesale distribution
activities was $724,000. This amount represents gross margin for the last two
months of 2003 after Genesis acquired the CO2 assets.
General and administrative expenses increased by $904,000 during 2003 as
compared to 2002, principally due to small increases in audit and consultant
fees, directors' fees and premiums for officers and directors liability
insurance. An accrual in 2003 for incentive compensation under the Partnership's
plans was offset by reductions in personnel and benefits costs.
Interest costs were $49,000 lower in 2003 than the 2002 period,
primarily due to lower commitment fees from a reduction in the size of the
Partnership's credit facility between the two periods. Two other items that
occurred in 2002, but not in 2003, were a loss from the change in the fair value
of derivatives of $1.3 million and a gain from the disposal of surplus assets of
$705,000.
Income from discontinued operations in 2003 included a gain of $13.1
million from the disposition of assets, plus income from the discontinued
operations during the year of $714,000. The reduction from the comparable income
from these assets in 2002 was due primarily to costs incurred in 2003 to
dismantle and dispose of assets.
Genesis incurred maintenance capital expenditures of $4.2 million for
both 2003 and 2002.
During the fourth quarter, Genesis issued 688,811 additional Common
Units to Denbury Resources Inc. for $4.9 million.
Genesis paid distributions of $0.05 per unit for the first three
quarters of 2003 and paid a distribution of $0.15 per unit for the fourth
quarter of 2003 in February 2004. Genesis generated Available Cash before
reserves (a non-GAAP measure) during 2003 of $3.7 million and made distributions
with respect to 2003 of $2.7 million. (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.)
Outlook
The Partnership's continuing gathering and marketing business is
expected to perform better during 2004 than it did during 2003, principally due
to the expectation of less volatility in P-Plus market prices. Genesis expects
pipeline gross margin (excluding depreciation) from continuing operations for
2004 to be generally consistent with 2003 levels. Genesis owned its newly
purchased wholesale CO2 marketing operations for two months in 2003. Gross
margin before amortization from these activities in 2004 is expected to be more
than the annualized 2003 amount. Genesis expects general and administrative
expenses to be higher in 2004 than in 2003,
<page>2
and expects 2004 projected maintenance capital expenditures to be less than half
of the amounts expended during 2003.
Based on the foregoing, Genesis continues to expect to be able to
sustain its regular quarterly distribution of $0.15 per unit for 2004 and to be
able to restore its regular distributions to the targeted minimum distribution
amount of $0.20 per unit per quarter in 2005. However, Genesis could increase
its regular quarterly distribution sooner or decrease its distribution depending
on actual results.
Available Cash
Several adjustments to net income are required to calculate Available
Cash. The calculation of Available Cash before reserves for the quarter ended
December 31, 2003 is as follows:
Net income $ 11,766,000
Depreciation and amortization expense 2,260,000
Excluded gains from asset sales (13,088,000)
Cash proceeds in excess of gains on certain
asset sales 833,000
Non-cash charges 229,000
Maintenance capital expenditures (697,000)
-----------------
Available Cash before reserves $ 1,303,000
=================
The calculation of Available Cash before reserves for the year ended December
31, 2003 is as follows:
Net income $ 13,322,000
Depreciation and amortization expense 6,504,000
Excluded gains from asset sales (13,088,000)
Cash proceeds in excess of gains on certain
asset sales 879,000
Non-cash charges 229,000
Maintenance capital expenditures (4,176,000)
-----------------
Available Cash before reserves $ 3,670,000
=================
Available Cash (a non-GAAP liquidity measure) has been reconciled to
cash flow from operating activities (the GAAP measure) for the three months and
year ended December 31, 2003 in the financial tables below.
Earnings Conference Call
Genesis Energy, L.P. will broadcast its Earnings Conference Call on
Tuesday, February 25, 2004, 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 and remain available on our website for 60 days. 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,
<page>3
Louisiana, Alabama, Florida, and Mississippi. Genesis Energy, L.P. also
operates a wholesale CO2 marketing business.
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)
Year Ended Year Ended
December 31, 2003 December 31, 2002
----------------- -----------------
Revenues $ 657,897 $ 652,628
Cost of Sales 644,157 636,042
-------------- -------------
GROSS MARGIN 13,740 16,586
General & Administrative Expenses 8,768 7,864
Depreciation and Amortization Expense 4,641 4,603
Unrealized Loss on Change in Fair Value of Derivatives - 1,279
Gains from Disposals of Surplus Assets (236) (705)
Other operating charges - 1,500
-------------- -------------
OPERATING INCOME 567 2,045
Interest Expense, Net (986) (1,035)
-------------- -------------
Income (Loss) from Continuing Operations (419) 1,010
Discontinued Operations 13,741 4,082
-------------- -------------
NET INCOME $ 13,322 $ 5,092
============== =============
NET INCOME PER COMMON UNIT - BASIC AND DILUTED $ 1.50 $ 0.58
============== =============
Continuing operations volumes:
Wellhead barrels per day 45,015 47,819
Total gathering and marketing barrels per day 56,805 73,429
Pipeline barrels per day 66,959 71,870
Three Months Ended Three Months Ended
December 31, 2003 December 31, 2002
----------------- -----------------
Revenues $ 178,451 $ 151,833
Cost of Sales 174,676 146,048
-------------- -------------
GROSS MARGIN 3,775 5,785
General & Administrative Expenses 2,194 1,833
Depreciation and Amortization Expense 1,556 1,183
Gains from Disposals of Surplus Assets (120) (7)
Other operating charges - 1,500
-------------- -------------
OPERATING INCOME 145 1,276
Interest and Other, Net (130) (188)
-------------- -------------
Income from Continuing Operations 15 1,088
Discontinued Operations 11,751 481
-------------- -------------
NET INCOME $ 11,766 $ 1,569
============== =============
NET INCOME PER COMMON UNIT - BASIC AND DILUTED $ 1.28 $ 0.18
============== =============
Continuing operations volumes:
Wellhead barrels per day 48,409 46,889
Total gathering and marketing barrels per day 61,350 58,181
Pipeline barrels per day 67,855 72,014
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Genesis Energy, L.P.
Summary Consolidated Balance Sheets - Unaudited
(in thousands)
December 31, 2003 December 31, 2002
----------------- -----------------
ASSETS
Cash $ 2,869 $ 1,071
Accounts Receivable 66,732 80,664
Inventories 1,546 4,952
Other Current Assets 17,064(1) 5,410
-------------- -------------
Total Current Assets 88,211 92,097
Net Property 33,971 44,460
CO2 Contracts 24,073 -
Other Assets 860 980
-------------- -------------
Total Assets $ 147,115 $ 137,537
============== =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts Payable $ 67,175 $ 87,386
Accrued Liabilities 20,069(1) 8,834
-------------- -------------
Total Current Liabilities 87,244 96,220
Long-Term Debt 7,000 5,500
Minority Interest 517 515
Partners' Capital 52,354 35,302
-------------- -------------
Total Liabilities and Partners' Capital $ 147,115 $ 137,537
============== =============
<FN>
(1) Includes $12.8 million accrual for settlement of litigation and the related
receivable for reimbursement from insurers.
</FN>
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Genesis Energy, L.P.
Summary Consolidated Statements of Cash Flows - Unaudited
(in thousands)
Year Ended Year Ended
December 31, 2003 December 31, 2002
----------------- -----------------
Net income $ 13,322 $ 5,092
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation, amortization and impairment 6,504 5,813
Amortization/write-off of credit facility issuance
costs 1,031 736
Gains on asset disposals (13,264) (708)
Other non-cash charges 268 3,555
Changes to components of working capital (3,168) (7,071)
-------------- -------------
Net cash provided by operating activities 4,693 7,417
-------------- -------------
Additions to property and equipment (4,910) (4,211)
Purchase of CO2 contracts and other (24,425) -
Proceeds from sales of assets and other 22,341 2,248
-------------- -------------
Net cash (used in) provided by investing activities (6,994) (1,963)
-------------- -------------
Net borrowings (repayments) of debt 1,500 (8,400)
Issuance of units and minority interest contributions 5,013 -
Distributions to partners (1,321) (1,760)
Credit facility issuance fees (1,093) -
-------------- -------------
Net cash used in financing activities 4,099 (10,160)
-------------- -------------
Net increase (decrease) in cash and cash equivalents 1,798 (4,706)
Cash and cash equivalents at beginning of period 1,071 5,777
-------------- -------------
Cash and cash equivalents at end of period $ 2,869 $ 1,071
============== =============
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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 Months and Year Ended December 31, 2003
(in thousands)
Three Months Ended Year Ended
December 31, 2003 December 31, 2003
----------------- -----------------
Net Cash Flow Provided by Operating Activities $ (3,642) $ 4,693
Adjustments to reconcile Net Cash Flow Provided
by Operating Activities to Available Cash
before reserves:
Maintenance capital expenditures (697) (4,176)
Proceeds from sales of certain assets 819 1,055
Change in fair value of derivatives - (39)
Amortization of credit facility issuance costs (128) (1,031)
Net effect of changes in operating accounts not
included in calculation of Available Cash before
reserves 4,951 3,168
-------------- -------------
Available Cash before reserves $ 1,303 $ 3,670
============== =============
Genesis believes that investors benefit from having access to the same
financial measures being utilized by management. Available Cash is a liquidity
measure used by management to compare cash flows generated by the Partnership to
the cash distribution paid to the limited partners and the general partner. This
is an important financial measure to the public unitholders since it is an
indicator of the Partnership's ability to provide a cash return on their
investment. Specifically, this financial measure tells investors whether or not
the Partnership is generating cash flows at a level that can support a quarterly
cash distribution to the partners. Lastly, Available Cash (also referred to as
distributable cash flow) is the quantitative standard used throughout the
investment community with respect to publicly-traded partnerships.
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