Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: Ross A. Benavides
Chief Financial Officer
(713) 860-2528
GENESIS ENERGY, L.P. REPORTS THIRD QUARTER RESULTS
November 3, 2004 - Genesis Energy, L.P. (AMEX:GEL) announced today that
it lost $394,000, or $0.04 per unit in the third quarter of 2004.
Mark Gorman, President and CEO said "Although we had a loss for the
quarter, we are pleased that we generated Available Cash before reserves during
the quarter of $1,975,000 or $0.21 per unit, which exceeded our distribution of
$0.15 per unit for the quarter. Our crude oil pipeline segment and CO2 wholesale
distribution segment performed well during the quarter."
"During the third quarter we increased our CO2 marketing segment gross
margin with the acquisition of a second volumetric payment, along with related
industrial sales contracts from Denbury for $4.7 million."
"Results for the third quarter were impacted only slightly by the
effects of Hurricane Ivan that hit the panhandle of Florida in mid-September.
While our facilities experienced minimal damage from the storm, power outages in
the area shut down our crude oil pipeline transportation operations for much of
the last half of September. Average volumes transported on our Jay pipeline
system were 2,800 barrels per day less than in the second quarter; however
tariff revenues only declined $0.1 million due to tariff increases that became
effective during the third quarter."
Financial Results
Genesis had a loss for the third quarter of 2004 of $0.4 million, or
$0.04 per unit, compared to a third quarter 2003 loss of $1.2 million, or $0.14
per unit. Genesis's loss from continuing operations was also $0.4 million, or
$0.04 per unit, for the 2004 quarter and $1.6 million, or $0.18 per unit, for
the 2003 quarter. Income from discontinued operations for the 2003 period was
$0.4 million, or $0.04 per unit.
For the 2004 nine month period, Genesis generated a loss of $0.3
million, or $0.03 per unit, with $19,000 of income from continuing operations
and a loss of $0.3 million, or $0.03 per unit from discontinued operations. In
the comparable period in 2003, income was $1.6 million, with a loss of $0.4
million, or $0.05 per unit, from continuing operations and income of $2.0
million, or $0.23 per unit, from discontinued operations.
The following table presents selected financial information by segment
for the three month and nine month reporting periods for continuing operations:
Crude Oil
---------------------------
Gathering and CO2
Marketing Pipeline Marketing Total
(in thousands)
Three Months Ended September 30, 2004
Revenues:
External customers $244,377 $ 2,877 $ 2,295 $249,549
Intersegment - 1,187 - 1,187
-------- ------- ------- --------
Total revenues of reportable segments $244,377 $ 4,064 $ 2,295 $250,736
======== ======= ======= ========
Segment margin excluding depreciation
and amortization (a) $ 948 $ 2,601 $ 1,543 $ 5,092
Capital expenditures $ 56 $ 4,173 $ 4,723 $ 8,952
Maintenance capital expenditures $ 56 $ 161 $ - $ 217
Three Months Ended September 30, 2003
Revenues:
External customers $153,441 $ 2,992 $ - $156,433
Intersegment - 661 - 661
-------- ------- ------- --------
Total revenues of reportable segments $153,441 $ 3,653 $ - $157,094
======== ======= ======= ========
Segment margin excluding depreciation
and amortization (a) $ 1,203 $ 200 $ - $ 1,403
Capital expenditures $ 206 $ 259 $ - $ 465
Maintenance capital expenditures $ 206 $ 259 $ - $ 465
Nine Months Ended September 30, 2004
Revenues:
External customers $663,245 $ 9,346 $ 6,275 $678,866
Intersegment - 2,889 - 2,889
-------- ------- ------- --------
Total revenues of reportable segments $663,245 $12,235 $ 6,275 $681,755
======== ======= ======= ========
Segment margin excluding depreciation
and amortization (a) $ 3,898 $ 6,111 $ 4,244 $ 14,253
Capital expenditures $ 131 $ 5,577 $ 4,723 $ 10,431
Maintenance capital expenditures $ 131 $ 496 $ - $ 627
Nine Months Ended September 30, 2003
Revenues:
External customers $468,283 $ 8,675 $ - $476,958
Intersegment - 2,488 - 2,488
-------- ------- ------- --------
Total revenues of reportable segments $468,283 $11,163 $ - $479,446
======== ======= ======= ========
Segment margin excluding depreciation
and amortization (a) $ 7,060 $ 2,905 $ - $ 9,965
Capital expenditures $ 528 $ 1,636 $ - $ 2,164
Maintenance capital expenditures $ 528 $ 1,636 $ - $ 2,164
(a) Segment margin was calculated as revenues less cost of sales and operating
expenses. A reconciliation of segment margin (a non-GAAP measure) to income from
continuing operations is presented for periods presented in the tables at the
end of this release.
Segment margin from continuing crude oil gathering and marketing
operations was $0.9 million for the 2004 third quarter, a decrease of $0.3
million from the 2003 period margin. An increase of $0.7 million in field costs
reduced segment margin in the third quarter of 2004. Increased volumes added
$0.4 million to segment margin, partially offsetting the effect of the higher
field costs.
For the nine month periods, segment margin from continuing crude oil
gathering and marketing operations decreased $3.2 million in the 2004 period as
compared to margin in the prior period. During the 2003 period, Genesis
decreased its inventory volumes as market prices were rising, producing
approximately $1.0 million of income that did not recur in the 2004 period.
Additionally, in 2003, Genesis benefited from price volatility in P-Plus as
P-Plus prices increased. In the latter half of 2003 as P-Plus prices declined,
many contract arrangements were changed to reduce exposure to price volatility.
Therefore the Partnership did not benefit as P-Plus prices rose in the first few
months of 2004. Also contributing to the reduced segment margin in the first
nine months of 2004 was an increase in field costs of $1.3 million. The
increases in field costs were attributable to higher fuel prices and increases
in payroll and fleet repair costs.
Crude oil pipeline segment margin from continuing operations was $2.6
million for the third quarter of 2004 as compared to $0.2 million for the 2003
period. Pipeline operating costs declined $2.0 million in the 2004 period.
Contributing to the decrease in costs was a $1.2 million difference related to
an accrual to remove an abandoned offshore pipeline. Higher tariffs combined
with sales of pipeline measurement gain volumes at higher crude oil prices were
additional reasons for the increase in pipeline segment margin.
Segment margin from our crude oil pipeline operations increased $3.2
million between the nine month periods. Revenues increased $1.1 million due to a
combination of higher tariffs and higher crude oil prices for sales of pipeline
measurement gain volumes. In the 2003 period, initial compliance with new
regulatory and spill prevention regulations increased costs. The recurring costs
under these programs in 2004 were significantly less. An $0.8 million difference
related to an accrual for the removal of an abandoned pipeline contributed to
the increase in 2004.
Segment margin from CO2 wholesale distribution activities in the 2004
three and nine month periods was $1.5 million and $4.2 million, respectively.
Genesis entered this business in November 2003.
General and administrative expenses increased by $0.7 million during the
2004 third quarter as compared to the 2003 period. The majority of this increase
was attributable to professional services for assistance in documenting and
assessing the Partnership's internal controls as required by the Sarbanes-Oxley
Act.
For the nine month periods, general and administrative expenses
increased $1.3 million in the 2004 period, which includes a charge related to
the Partnership's stock appreciation rights plan. During the 2004 nine-month
period, Genesis recorded a $0.6 million charge to account for its employee stock
appreciation rights program that was implemented in 2003. This charge resulted
from an increase in Genesis' unit price from $9.80 at the beginning of the year
to $11.25 at September 30. While Genesis incurred costs of $0.9 million for the
Sarbanes internal control project and higher audit fees, these charges were
offset somewhat by reductions in legal fees.
During the third quarter of 2004 Genesis recorded an impairment charge
of $1.0 million related to a segment of our Mississippi pipeline that is idle.
Depreciation and amortization also increased due to additions of capital assets.
Interest costs were $0.1 million less in the 2004 nine month period
because the comparable period in 2003 included a charge for unamortized deferred
costs related to a credit facility that was replaced in March 2003. Interest on
increased borrowings in the 2004 period combined with higher market interest
rates offset a portion of the decline.
The $0.3 million loss from discontinued operations in the 2004 nine
month period was due to costs to dismantle and dispose of abandoned assets. The
operations that were disposed of in the fourth quarter of 2003 generated income
of $2.0 million during the first nine months of 2003.
Genesis paid a distribution of $0.15 per unit for each of the first two
quarters of 2004, and will pay a distribution of $0.15 per unit for the third
quarter of 2004 in November of 2004. Genesis generated Available Cash before
reserves (a non-GAAP measure) of $2.0 million during the third quarter of 2004
and $5.4 million during the first nine months of 2004. (Please see the
accompanying schedules for a reconciliation of Available Cash, a non-GAAP
liquidity measure, to net cash flow provided by operations, the GAAP measure.)
Available Cash
Several adjustments to net income are required to calculate Available
Cash. The calculation of Available Cash before reserves for the quarter ended
September 30, 2004 is as follows:
Net loss $ (394,000)
Depreciation and amortization expense 2,599,000
Non-cash credit for incentive compensation
plan (28,000)
Other non-cash items 15,000
Maintenance capital expenditures (217,000)
-----------------
Available Cash before reserves $ 1,975,000
=================
Outlook
The Partnership's continuing gathering and marketing business remains
volatile. We continue to take steps to improve the performance of this segment.
Genesis expects pipeline segment margin from continuing operations for 2004 to
be better than 2003 levels. Genesis owned its newly purchased wholesale CO2
marketing operations for two months in 2003. Segment margin from these
activities in 2004 is expected to be more than the annualized 2003 amount due to
seasonality. Genesis expects general and administrative expenses to be higher in
2004 than in 2003 primarily due to compliance with the Sarbanes Oxley Act, and
expects 2004 projected maintenance capital expenditures to be less than half of
the amounts expended during 2003.
Genesis' earnings are likely to be impacted in future periods from
volatility in its unit price and the effect of that volatility on the accounting
for the stock appreciation rights plan. This non-cash expense is not expected to
have an adverse impact on the Partnership's ability to make or increase
distributions to its Unitholders.
Based on the foregoing, Genesis continues to expect to be able to
sustain its regular quarterly distribution of $0.15 per unit for 2004. We expect
to be able to increase our distribution during 2005. However, our ability to
restore the distribution to the targeted minimum distribution amount of $0.20
per unit may depend in part on our success in developing and executing capital
projects and making accretive acquisitions.
Earnings Conference Call
Genesis Energy, L.P. will broadcast its Earnings Conference Call on
Wednesday, November 3, 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, 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. Actual results may vary materially.
(tables to follow)
Genesis Energy, L.P.
Summary Consolidated Statements of Operations - Unaudited
(in thousands except per unit amounts and volumes)
Three Months Ended Three Months Ended
September 30, 2004 September 30, 2003
------------------ ------------------
Revenues $ 250,736 $ 157,094
Cost of sales 245,642 155,691
General & administrative expenses 2,639 1,938
Depreciation and amortization expense 2,599 943
Change in fair value of derivatives 2 -
Losses (gains) from disposals of surplus assets 10 (69)
-------------- -------------
OPERATING LOSS (156) (1,409)
Interest and other, net (203) (156)
-------------- -------------
Loss from continuing operations (359) (1,565)
(Loss) income from discontinued operations (35) 352
--------------- -------------
NET LOSS $ (394) $ (1,213)
=============== ==============
NET LOSS PER COMMON UNIT - BASIC AND DILUTED
Continuing operations $ (0.04) $ (0.18)
Discontinued operations 0.00 0.04
-------------- -------------
Net Loss Per Common Unit - Basic and Diluted $ (0.04) $ (0.14)
Continuing Operations Volumes:
Crude oil wellhead barrels per day 46,676 43,074
Total gathering and marketing barrels per day 61,919 55,817
Crude oil pipeline barrels per day 57,544 64,571
CO2 marketing Mcf per day 48,634 -
Genesis Energy, L.P.
Summary Consolidated Statements of Operations - Unaudited
(in thousands except per unit amounts and volumes)
Nine Months Ended Nine Months Ended
September 30, 2004 September 30, 2003
------------------ ------------------
Revenues $ 681,755 $ 479,446
Cost of sales 667,518 469,481
General & administrative expenses 7,825 6,574
Depreciation and amortization expense 5,773 3,085
Change in fair value of derivatives (16) -
Gains from disposals of surplus assets (65) (116)
--------------- -------------
OPERATING INCOME 720 422
Interest and other, net (701) (856)
-------------- -------------
Income (loss) from continuing operations 19 (434)
(Loss) income from discontinued operations (319) 1,990
-------------- -------------
NET (LOSS) INCOME $ (300) $ 1,556
=============== =============
NET INCOME (LOSS) PER COMMON UNIT - BASIC AND DILUTED
Continuing operations $ 0.00 $ (0.05)
Discontinued operations (0.03) 0.23
-------------- ------------
Net (Loss) Income Per Common Unit - Basic and Diluted $ (0.03) $ 0.18
============== =============
Continuing Operations Volumes:
Crude oil wellhead barrels per day 48,078 43,871
Total gathering and marketing barrels per day 62,556 55,274
Crude oil pipeline barrels per day 64,402 66,657
CO2 marketing Mcf per day 44,337 -
Genesis Energy, L.P.
Summary Consolidated Balance Sheets - Unaudited
(in thousands)
September 30, 2004 December 31, 2003
------------------ -----------------
ASSETS
Cash $ 905 $ 2,869
Accounts receivable 75,637 66,732
Inventories 2,375 1,546
Other current assets 3,308 17,064(1)
-------------- -------------
Total Current Assets 82,225 88,211
Net property 36,397 33,971
CO2 contracts 26,999 24,073
Other assets 1,604 860
-------------- -------------
Total Assets $ 147,225 $ 147,115
============== =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 78,749 $ 67,175
Accrued liabilities 5,183 20,069(1)
-------------- -------------
Total Current Liabilities 83,932 87,244
Long-term debt 15,000 7,000
Minority interest 517 517
Partners' capital 47,776 52,354
-------------- -------------
Total Liabilities and Partners' Capital $ 147,225 $ 147,115
============== =============
(1) Includes $12.8 million accrual for settlement of litigation and the
related receivable for reimbursement from insurers.
Genesis Energy, L.P.
Summary Consolidated Statements of Cash Flows - Unaudited
(in thousands)
Nine Months Ended Nine Months Ended
September 30, 2004 September 30, 2003
------------------ ------------------
Net (loss) income $ (300) $ 1,556
Adjustments to reconcile net (loss) income to cash
provided by operating activities:
Depreciation and amortization 5,773 4,244
Amortization/write-off of credit facility issuance
costs 289 903
Change in fair value of derivatives (16) 39
Gains on asset disposals (65) (190)
Other non-cash compensation plan charges 564 -
Changes to components of working capital (1,966) 1,783
--------------- -------------
Net cash provided by operating activities 4,279 8,335
-------------- -------------
Additions to property and equipment and other assets (9,208) (4,136)
Proceeds from sales of assets and other 82 136
-------------- -------------
Net cash used in investing activities (9,126) (4,000)
-------------- -------------
Net (repayments) borrowings of debt 8,000 500
Distributions to partners (4,278) (880)
Credit facility issuance fees (839) (1,093)
--------------- -------------
Net cash provided by (used in) financing activities 2,883 (1,473)
-------------- -------------
Net (decrease) increase in cash and cash equivalents (1,964) 2,862
Cash and cash equivalents at beginning of period 2,869 1,071
-------------- -------------
Cash and cash equivalents at end of period $ 905 $ 3,933
============== =============
Genesis Energy, L.P.
GAAP to Non-GAAP Financial Measure Reconciliations
SEGMENT MARGIN EXCLUDING DEPRECIATION AND
AMORTIZATION RECONCILIATION TO OPERATING (LOSS) INCOME
Three Months Ended Three Months Ended
September 30, 2004 September 30, 2003
------------------ ------------------
(in thousands)
Segment margin excluding depreciation and amortization
(non-GAAP measure) $ 5,092 $ 1,403
General & administrative expenses (2,639) (1,938)
Depreciation and amortization expense (2,599) (943)
(Loss) gains from disposals of surplus assets (10) 69
--------------- -------------
Operating loss (GAAP measure) $ (156) $ (1,409)
=============== ==============
Nine Months Ended Nine Months Ended
September 30, 2004 September 30, 2003
------------------ ------------------
(in thousands)
Segment margin excluding depreciation and amortization
(non-GAAP measure) $ 14,253 $ 9,965
General & administrative expenses (7,825) (6,574)
Depreciation and amortization expense (5,773) (3,085)
Gains from disposals of surplus assets 65 116
-------------- -------------
Operating income (GAAP measure) $ 720 $ 422
============== =============
AVAILABLE CASH BEFORE RESERVES RECONCILIATION TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Three Months Ended Nine Months Ended
September 30, 2004 September 30, 2004
------------------ ------------------
(in thousands)
Net cash flow provided by operating
activities (GAAP measure) $ (1,185) $ 4,279
Adjustments to reconcile net cash flow provided by
operating activities to Available Cash before reserves:
Maintenance capital expenditures (217) (627)
Proceeds from asset sales 3 82
Amortization of credit facility issuance costs (95) (289)
Net effect of changes in operating accounts not
included in calculation of Available Cash before
reserves 3,469 1,966
----------- ----------
Available Cash before reserves (non-GAAP measure) $ 1,975 $ 5,411
============ ===========
Genesis believes that investors benefit from having access to the same
financial measures being utilized by management.
Segment margin forms the basis of our internal financial reporting and
is used by senior management in deciding how to allocate capital resources among
business segments. We believe that investors benefit from having access to the
same financial measures that our management uses in evaluating segment results.
The GAAP measure most directly comparable to total segment margin is operating
income.
We define segment margin as revenues less costs of sales and operating
expenses, plus the adjustments for the effects of derivative instruments. This
measure is exclusive of depreciation and amortization, general and
administrative expenses, and any gains or losses on asset disposals. It also
excludes the effects of minority interests and the cumulative effect of any
accounting changes.
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.
# # #