FOR IMMEDIATE RELEASE
Contact: Ross A. Benavides
Chief Financial Officer
(713) 860-2528
GENESIS ENERGY, L.P. REPORTS FIRST QUARTER RESULTS
May 4, 2005 - Genesis Energy, L.P. (AMEX:GEL) announced today that net
income for the first quarter of 2005 was $2,770,000, or $0.29 per unit. This
compares to a loss in the 2004 period of $1,005,000, or $0.11 per unit.
Mark Gorman, President and CEO said "Results for the first quarter of
2005 benefited from the increased segment margin resulting from operations
related to pipeline construction projects placed in service and acquisitions
completed in late 2004 and during the first quarter of 2005, as well as the sale
of idle assets. We generated Available Cash before Reserves, a non-GAAP measure,
of $3.2 million or $0.34 per unit, which exceeded our distribution of $1.4
million or $0.15 per unit for the first quarter of 2005."
"Our pipeline transportation and CO2 wholesale distribution segments
performed very well in the first quarter of 2005. We continue to take steps to
improve the results from our crude oil gathering and marketing segment, but
higher field costs and volatility in marketing margins continue to present
challenges. During the first quarter we sold idle assets, resulting in a gain of
$0.7 million. Additionally, our general and administrative expenses were reduced
in the first quarter primarily due to a non-cash credit related to our employee
stock appreciation rights program of $1.3 million."
"Since the end of the first quarter of 2005, we acquired a 50% interest
in a syngas manufacturing facility, which produces syngas (a combination of
carbon monoxide and hydrogen) and high pressure steam. We expect this
acquisition to be accretive to earnings and Available Cash before Reserves in
future periods."
Financial Results
Genesis generated income for the first quarter of 2005 of $2.8 million,
or $0.29 per unit, compared to a loss for the first quarter of 2004 of $1.0
million, or $0.11 per unit. The 2005 income included income from continuing
operations of $2.5 million, or $0.26 per unit, and income from discontinued
operations of $0.3 million, or $0.03 per unit. The 2004 loss included a loss
from continuing operations of $0.8 million, or $0.09 per unit and a loss from
discontinued operations of $0.2 million, or $0.02 per unit.
The following table presents certain selected financial information by
segment for the first quarter reporting periods for continuing operations:
Crude Oil
Gathering and Pipeline CO2
Marketing Transportation Marketing Total
(in thousands)
Three Months Ended
March 31, 2005
Revenues:
External customers $247,008 $6,633 $2,280 $255,921
Intersegment - 679 - 679
---------- ------- --------- ---------
Total revenues of
reportable segments $247,008 $7,312 $2,280 $256,600
========= ====== ======= ========
Segment margin excluding
depreciation and
amortization (a) $ 888 $2,443 $1,525 $ 4,856
Capital expenditures $ 22 $3,676 $ - $ 3,698
Maintenance capital
expenditures $ 22 $ 489 $ - $ 511
Three Months Ended
March 31, 2004
Revenues:
External customers $192,996 $3,263 $1,831 $198,090
Intersegment - 822 - 822
--------- ------- ------- --------
Total revenues of
reportable segments $192,996 $4,085 $1,831 $198,912
======== ====== ====== ========
Segment margin excluding
depreciation and
amortization (a) $ 1,006 $1,853 $1,240 $ 4,099
Capital expenditures $ 51 $ 349 $ - $ 400
Maintenance capital
expenditures $ 51 $ 104 $ - $ 155
<FN>
(a) Segment margin was calculated as revenues less cost of sales and operating
expenses. A reconciliation of segment margin to income from continuing
operations is presented for periods presented in the tables at the end of this
release.
</FN>
Segment margin from continuing crude oil gathering and marketing
activities was $0.9 million for the 2005 first quarter, a decrease of $0.1
million from 2004 levels. The primary factor decreasing segment margin between
the two periods was increased field operating costs. Increases in fuel costs as
well as personnel costs could not all be passed through to producers due to
competition
Pipeline transportation segment margin from continuing operations was
$2.4 million for first quarter of 2005 as compared to $1.9 million for the 2004
period. Higher crude oil prices resulted in greater revenues from the sale of
crude oil from volumetric gains. Additionally, the 2005 quarter included segment
margin from the CO2 pipeline segment constructed in 2004 and from natural gas
gathering pipelines acquired during the first quarter of 2005.
Segment margin from CO2 wholesale distribution activities in the 2004
period was $1.5 million as compared to $1.2 million for 2004. The additional
volumetric production payment acquired in the third quarter of 2004 provided
most of this margin increase.
General and administrative expenses decreased by $2.4 million during the
2005 first quarter as compared to the 2004 period, principally due to an accrual
related to the Partnership's stock appreciation rights plan. In the 2004 period,
our unit market price increased requiring us to record a charge of $1.1 million.
In 2005, the decrease in our unit price resulted in a credit to general and
administrative expenses of $1.3 million.
In the 2005 first quarter, we disposed of idle assets for $1.3 million,
generating $0.7 million of gain. The assets sold included pipelines that had
been idle in 2002 and 2003. $0.3 million of this gain is reflected as
discontinued operations.
Interest costs were $0.2 million higher in the 2005 first quarter than
the 2004 period, due to higher debt balances and increased market interest
rates.
Genesis paid a distribution of $0.15 per unit for the fourth quarter of
2004 in February 2005, and announced payment of a distribution of $0.15 per unit
for the first quarter of 2005 in May 2005. Genesis generated Available Cash
before Reserves (a non-GAAP measure) during the first quarter of 2005 of $3.2
million and net cash flow provided by operations of $2.5 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.)
Available Cash before Reserves
Several adjustments to net income are required to calculate Available
Cash before Reserves. The calculation of Available Cash before Reserves for the
quarter ended March 31, 2005 is as follows:
Net income $ 2,770,000
Depreciation and amortization expense 1,526,000
Cash in excess of gain on asset sales 666,000
Non-cash credit for incentive compensation
plan and other non-cash items (1,250,000)
Maintenance capital expenditures (511,000)
-----------------
Available Cash before reserves $ 3,201,000
=================
Available Cash before Reserves (a non-GAAP liquidity measure) has been
reconciled to net cash flow provided by operating activities (the GAAP measure)
for the three months ended March 31, 2005 in the financial tables below.
Outlook
Genesis expects pipeline segment margin from continuing operations for
2005 to be approximately the same as in 2004. Segment margin from the CO2
marketing operation in 2005 is expected to be greater than the 2004 amount due
to the acquisition of an additional volumetric production payment in September
of 2004. Genesis expects general and administrative expenses to be lower in 2005
than in 2004 primarily due to incurring the initial costs of complying with the
Sarbanes Oxley Act during 2004. Genesis expects 2005 projected maintenance
capital expenditures to be more than twice as much as the amounts expended
during 2004 due primarily to pipeline integrity management program expenditures
on the Mississippi Pipeline System.
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 expects to be able to sustain its
regular quarterly distribution of $0.15 per unit during 2005. Our ability to
increase distributions during 2005 will depend in part on our success in
developing and executing capital projects and making accretive acquisitions, the
results of our integrity management program testing, and our ability to generate
sustained improvements in the gathering and marketing segment.
Earnings Conference Call
Genesis Energy, L.P. will broadcast its Earnings Conference Call on
Wednesday, May 4, 2005, at 10:00 a.m. Central time. This call can be accessed at
www.genesiscrudeoil.com by choosing 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, managing operating costs, completion of capital
projects on schedule and within budget, consummation of accretive acquisitions,
capital spending, 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. We undertake no obligation to publicly update or
revise any forward-looking statement.
(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
March 31, 2005 March 31, 2004
-------------- --------------
Revenues $ 256,600 $ 198,912
Cost of sales 251,744 194,813
General & administrative expenses 858 3,164
Depreciation and amortization expense 1,526 1,547
Gains from disposals of surplus assets (371) -
--------------- --------------
OPERATING INCOME (LOSS) 2,843 (612)
Interest and other, net (355) (170)
-------------- --------------
Income (loss) from Continuing Operations 2,488 (782)
Income (loss) from Discontinued Operations 282 (223)
-------------- --------------
NET INCOME (LOSS) $ 2,770 $ (1,005)
============== ==============
NET INCOME (LOSS) PER COMMON UNIT - BASIC AND DILUTED
Continuing Operations $ 0.26 $ (0.09)
Discontinued Operations 0.03 (0.02)
-------------- --------------
Net income (loss) Per Common Unit - Basic and Diluted
$ 0.29 $ (0.11)
Continuing Operations Volumes:
Crude oil wellhead barrels per day 41,969 48,409
Total gathering and marketing barrels per day 58,346 60,591
Crude oil pipeline barrels per day 60,821 68,583
CO2 marketing Mcf per day 47,808 39,173
Genesis Energy, L.P.
Summary Consolidated Balance Sheets - Unaudited
(in thousands)
March 31, 2005 December 31, 2004
-------------- -----------------
ASSETS
Cash $ 3,131 $ 2,078
Accounts receivable 90,492 69,321
Inventories 1,797 1,866
Other current assets 3,842 4,131
-------------- -------------
Total Current Assets 99,262 77,396
Net property 33,525 33,786
CO2 contracts 25,708 26,344
Other assets 8,162 5,628
-------------- -------------
Total Assets $ 166,657 $ 143,154
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 95,250 $ 75,415
Accrued liabilities 6,651 6,523
-------------- -------------
Total Current Liabilities 101,901 81,938
Long-term debt and other liabilities 17,656 15,460
Minority interest 517 517
Partners' capital 46,583 45,239
-------------- -------------
Total Liabilities and Partners' Capital $ 166,657 $ 143,154
============== =============
Genesis Energy, L.P.
Summary Consolidated Statements of Cash Flows - Unaudited
(in thousands)
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004
-------------- --------------
Net income (loss) $ 2,770 $ (1,005)
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Depreciation and amortization 1,526 1,547
Amortization of credit facility issuance costs 93 93
Amortization of unearned income (177) -
Cash received from direct financing leases 297 -
Change in fair value of derivatives 9 -
Gains on asset disposals (653) -
Other non-cash items (1,329) 1,104
Changes to components of working capital 3 (5,342)
-------------- --------------
Net cash provided by (used in) operating activities 2,539 (3,603)
-------------- --------------
Additions to property and equipment (3,597) (400)
Proceeds from sales of assets 1,319 -
Other, net (546) -
--------------- -------------
Net cash used in investing activities (2,824) (400)
-------------- -------------
Net borrowings of debt 2,200 2,900
Distributions to partners (1,426) (1,426)
Other, net 564 -
-------------- -------------
Net cash provided by financing activities 1,338 1,474
-------------- -------------
Net increase (decrease) in cash and cash equivalents 1,053 (2,529)
Cash and cash equivalents at beginning of period 2,078 2,869
-------------- -------------
Cash and cash equivalents at end of period $ 3,131 $ 340
============== =============
Genesis Energy, L.P.
Reconciliations
SEGMENT MARGIN EXCLUDING DEPRECIATION AND AMORTIZATION RECONCILIATION
TO OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS
Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004
-------------- --------------
(in thousands)
Segment margin excluding depreciation and amortization $ 4,856 $ 4,099
General & administrative expenses (858) (3,164)
Depreciation and amortization expense (1,526) (1,547)
Gains from disposals of surplus assets 371 -
-------------- -------------
Operating income (loss) from continuing operations $ 2,843 $ (612)
============== ==============
GAAP to Non-GAAP Financial Measure Reconciliation
AVAILABLE CASH BEFORE RESERVES RECONCILIATION TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Three Months Ended
March 31, 2005
(in thousands)
Net cash flow provided by operating activities (GAAP measure) $ 2,539
Adjustments to reconcile net cash flow provided by operating activities to
Available Cash before reserves:
Maintenance capital expenditures (511)
Proceeds from asset sales 1,319
Amortization of credit facility issuance costs (93)
Cash effects of stock appreciation rights plan (50)
Net effect of changes in operating accounts not included in calculation of
Available Cash before reserves (3)
--------------
Available Cash before reserves (non-GAAP measure) $ 3,201
==============
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. This measure is exclusive of depreciation and amortization, general
and administrative expenses, any gains or losses on asset disposals. It also
excludes the effects of any adjustments for the effects of derivative
accounting, minority interests and the cumulative effect of any accounting
changes.
Available Cash before Reserves 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.