FOR IMMEDIATE RELEASE
Contact: Ross A. Benavides
Chief Financial Officer
(713) 860-2528
GENESIS ENERGY, L.P. REPORTS FIRST QUARTER RESULTS
May 3, 2006 - Genesis Energy, L.P. (AMEX:GEL) announced today that net
income for the first quarter of 2006 was $2,591,000, or $0.18 per unit. This
compares to net income in the 2005 period of $2,770,000, or $0.29 per unit.
Mark Gorman, President and CEO said "Results for the first quarter of
2006 were very solid. All segments reported improved performance from the prior
year period. The slight decline in net income was due to fluctuations in general
and administrative expenses and to asset sales in 2005. We generated Available
Cash before Reserves, a non-GAAP measure, of $5.0 million or $0.36 per unit,
which exceeds our distribution of $2.5 million or $0.18 per unit for the first
quarter of 2006. This compares to Available Cash before Reserves in the 2005
period of $3.2 million or $0.34 per unit. Available Cash before Reserves is a
non-GAAP financial measure that is defined and reconciled later in this press
release to its most directly comparable GAAP financial measure, net cash
utilized by operating activities. Net cash utilized in operating activities was
$2.3 million for the first quarter of 2006.
"Since the end of the first quarter of 2006, we completed the
previously announced acquisition of a 50% interest in Sandhill Group, LLC
(Sandhill), which owns a carbon dioxide processing facility which produces food
grade CO2 from CO2 supplied under a long-term supply contract we have with
Sandhill."
Financial Results
Genesis generated income for the first quarter of 2006 of $2.6 million,
or $0.18 per unit, compared to income for the first quarter of 2005 of $2.8
million, or $0.29 per unit. The 2006 income included income from continuing
operations of $2.6 million, or $0.18 per unit, and income from a cumulative
effect adjustment related to the adoption of a new accounting pronouncement of
$30,000. In 2005, Genesis' 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 following table presents certain selected financial information by
segment for the first quarter reporting periods for continuing operations:
Crude Oil
Pipeline Industrial Gathering and
Transportation Gases Marketing Total
(in thousands)
Three Months Ended March 31, 2006
---------------------------------
Segment margin excluding depreciation
and amortization (a)................. $ 2,802 $ 2,627 $ 1,728 $ 7,157
Total capital expenditures.............. $ 166 $ - $ 121 $ 287
Maintenance capital
expenditures......................... $ 98 $ - $ 121 $ 219
Revenues:
External customers...................... $ 7,098 $ 3,387 $ 252,445 $ 262,930
Intersegment............................ 672 - - 672
---------- --------- ----------- ----------
Total revenues of reportable segments... $ 7,770 $ 3,387 $ 252,445 $ 263,602
========== ========= =========== ==========
Crude Oil
Pipeline Industrial Gathering and
Transportation Gases Marketing Total
(in thousands)
Three Months Ended March 31, 2005
---------------------------------
Segment margin excluding depreciation
and amortization (a)................. $ 2,443 $ 1,525 $ 888 $ 4,856
Total capital expenditures.............. $ 3,676 $ - $ 22 $ 3,698
Maintenance capital
expenditures......................... $ 489 $ - $ 22 $ 511
Revenues:
External customers...................... $ 6,633 $ 2,280 $ 247,088 $ 255,921
Intersegment............................ 679 - - 679
---------- -------- ----------- ----------
Total revenues of reportable segments... $ 7,312 $ 2,280 $ 247,008 $ 256,600
========== ======== =========== ==========
(a) Segment margin was calculated as revenues less cost of sales and operating
expenses, plus our share of the operating income of our investment in joint
ventures. A reconciliation of segment margin to income from continuing
operations is presented for periods presented in the tables at the end of this
release.
Pipeline transportation segment margin from continuing operations was
$2.8 million for first quarter of 2006 as compared to $2.4 million for the 2005
period. Higher crude oil prices resulted in greater revenues from the sale of
crude oil from volumetric gains. Volumes increased on pipeline segments with
relatively low tariffs, slightly increasing tariff revenues.
Segment margin from industrial gas activities in the 2006 period was
$2.6 million as compared to $1.5 million for 2005. The additional volumetric
production payment acquired in the fourth quarter of 2005 provided most of this
margin increase. Also contributing to the increase was our equity in the
earnings of our investment in a joint venture of $0.3 million. We made this
investment in the second quarter of 2005.
Segment margin from continuing crude oil gathering and marketing
activities was $1.7 million for the 2006 first quarter, an increase of $0.8
million from 2005 levels. The primary factors increasing segment margin between
the two periods were a decrease in field operating costs and improved margins
from marketing activities.
General and administrative expenses increased by $1.8 million during the
2006 first quarter as compared to the 2005 period, principally due to an accrual
related to the Partnership's stock appreciation rights plan, a non-cash
adjustment. We changed our method of accounting for our stock appreciation
rights plan in 2006 due to a new accounting pronouncement, which resulted in an
expense of $0.2 million for the first quarter of 2006. In the 2005 period, under
the previous method of accounting, we recorded a non-cash credit of $1.3 million
due to a decrease in our unit price. We also recorded a cumulative effect
adjustment of $30,000 of income for the adoption of this new accounting
pronouncement.
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 was reflected as
discontinued operations.
Interest costs were $0.2 million lower in the 2006 first quarter than
the 2005 period, due to lower debt balances. During much of the first quarter of
2006, we had no outstanding borrowings due to proceeds from the sale of
partnership units in the fourth quarter of 2005.
Genesis paid a distribution of $0.17 per unit for the fourth quarter of
2005 in February 2006, and announced payment of a distribution of $0.18 per unit
for the first quarter of 2006 in May 2006. This distribution is an increase of
20 percent over the $0.15 per unit distribution for the first quarter of 2005.
Genesis generated Available Cash before Reserves (a non-GAAP measure) during the
first quarter of 2006 of $5.0 million and net cash flow utilized in operations
was $2.3 million. (Please see the accompanying schedules for a reconciliation of
Available Cash, a non-GAAP measure, to net cash flow utilized in 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, 2006 is as follows:
Net income $ 2,591,000
Depreciation and amortization expense 1,864,000
Cash in excess of gain on asset sales 17,000
Cash from direct financing leases in excess of income
recorded 129,000
Available cash generated by T&P Syngas in excess of
earnings 280,000
Non-cash charge for incentive compensation plan and
other non-cash items 353,000
Maintenance capital expenditures (219,000)
---------------
Available Cash before reserves $ 5,015,000
===============
Available Cash before Reserves (a non-GAAP liquidity measure) has been
reconciled to net cash flow utilized in operating activities (the GAAP measure)
for the three months ended March 31, 2006 in the financial tables below.
Earnings Conference Call
Genesis Energy, L.P. will broadcast its Earnings Conference Call on
Wednesday, May 3, 2006, at 2:00 p.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 30 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 an industrial gases 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 we believe that our expectations are
based upon reasonable assumptions, we can give no assurance that our 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, our ability to
meet our stated business goals and other risks noted from time to time in our
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 volume data)
Three Months Ended Three Months Ended
March 31, 2006 March 31, 2005
-------------- --------------
Revenues $ 263,602 $ 256,600
Cost of sales 256,758 251,744
General & administrative expenses 2,660 858
Depreciation and amortization expense 1,864 1,526
Gains from disposals of surplus assets (50) (371)
--------------- --------------
OPERATING INCOME 2,370 2,843
Equity in earnings of investment in T&P Syngas Supply Company 313 -
Interest, net (122) (355)
-------------- -------------
Income from Continuing Operations 2,561 2,488
Income from Discontinued Operations - 282
Income from cumulative effect adjustment from adoption of new
accounting principle 30 -
-------------- -------------
NET INCOME $ 2,591 $ 2,770
============== =============
NET INCOME PER COMMON UNIT - BASIC AND DILUTED
Continuing Operations $ 0.18 $ 0.26
Discontinued Operations - 0.03
Cumulative Effect Adjustment - -
-------------- -------------
Net income per Common Unit - Basic and Diluted $ 0.18 $ 0.29
Volume Data:
Crude oil pipeline barrels per day (total) 62,058 60,821
Mississippi System barrels per day 16,409 16,139
Jay System barrels per day 11,414 14,853
Texas System barrels per day 34,235 29,828
CO2 sales Mcf per day 66,565 47,808
Crude oil wellhead barrels per day 36,624 41,969
Total gathering and marketing barrels per day 45,288 58,346
Genesis Energy, L.P.
Summary Consolidated Balance Sheets - Unaudited
(in thousands)
March 31, 2006 December 31, 2005
-------------- -----------------
ASSETS
Cash $ 382 $ 3,099
Accounts receivable 86,968 82,634
Inventories 7,399 498
Other current assets 3,637 4,218
-------------- -------------
Total Current Assets 98,386 90,449
Net property 33,130 33,769
CO2 contracts 36,693 37,648
Investment in T&P Syngas Supply 13,120 13,042
Other assets 6,667 6,869
-------------- -------------
Total Assets $ 187,996 $ 181,777
============== =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 89,575 $ 85,286
Accrued liabilities 6,446 7,325
-------------- -------------
Total Current Liabilities 96,021 92,611
Long-term debt and other liabilities 3,564 955
Minority interest 522 522
Partners' capital 87,889 87,689
-------------- -------------
Total Liabilities and Partners' Capital $ 187,996 $ 181,777
============== =============
Units Data:
Common units held by Public 12,765,000 8,625,000
Common units held by general partner 1,019,441 688,811
Total common units outstanding 13,784,441 9,313,811
Genesis Energy, L.P.
Summary Consolidated Statements of Cash Flows - Unaudited
(in thousands)
Three Months Ended Three Months Ended
March 31, 2006 March 31, 2005
-------------- --------------
Net income $ 2,591 $ 2,770
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 1,864 1,526
Amortization of credit facility issuance costs 92 93
Amortization of unearned income (168) (177)
Cash received from direct financing leases 297 297
Earnings of T&P Syngas in excess of distributions (78) -
Gains on asset disposals (50) (653)
Other non-cash items 371 (1,320)
Changes to components of working capital (7,216) 3
-------------- -------------
Net cash (used in) provided by operating activities (2,297) 2,539
-------------- -------------
Additions to property and equipment (163) (3,597)
Distributions from T&P Syngas Supply Company in excess of
earnings
Proceeds from sales of assets 67 1,319
Other, net (32) (546)
--------------- --------------
Net cash used in investing activities (128) (2,824)
-------------- -------------
Net borrowings of debt 2,600 2,200
Distributions to partners (2,391) (1,426)
Other, net (501) 564
-------------- -------------
Net cash (used in) provided by financing activities (292) 1,338
-------------- -------------
Net (decrease) increase in cash and cash equivalents (2,717) 1,053
Cash and cash equivalents at beginning of period 3,099 2,078
-------------- -------------
Cash and cash equivalents at end of period $ 382 $ 3,131
============== =============
Genesis Energy, L.P.
Reconciliations
SEGMENT MARGIN EXCLUDING DEPRECIATION AND AMORTIZATION RECONCILIATION
TO INCOME FROM CONTINUING OPERATIONS
Three Months Ended Three Months Ended
March 31, 2006 March 31, 2005
-------------- --------------
(in thousands)
Segment margin excluding depreciation and amortization $ 7,157 $ 4,856
General & administrative expenses (2,660) (858)
Depreciation and amortization expense (1,864) (1,526)
Gains from disposals of surplus assets 50 371
Interest, net (122) (355)
-------------- -------------
Income from continuing operations $ 2,561 $ 2,488
============== =============
GAAP to Non-GAAP Financial Measure Reconciliation
AVAILABLE CASH BEFORE RESERVES RECONCILIATION TO NET CASH USED
IN OPERATING ACTIVITIES
Three Months Ended
March 31, 2006
(in thousands)
Net cash flow used in operating activities (GAAP measure) $ (2,297)
Adjustments to reconcile net cash flow provided by operating activities to
Available Cash before reserves:
Maintenance capital expenditures (219)
Proceeds from asset sales 67
Amortization of credit facility issuance costs (92)
Cash effects of stock appreciation rights plan (18)
Available Cash from T&P Syngas Supply not included in operating cash flows
358 Net effect of changes in operating accounts not included in calculation
of
Available Cash before reserves 7,216
-------------
Available Cash before reserves (non-GAAP measure) $ 5,015
=============
This press release and the accompanying schedules include a
non-generally accepted accounting principle ("non-GAAP") financial measures of
available cash. The accompanying schedules provide a reconciliation of this
non-GAAP financial measure to its most directly comparable financial measure
calculated in accordance with generally accepted accounting principles in the
United States of America ("GAAP"). Our non-GAAP financial measure should not be
considered as an alternative to GAAP measures of liquidity or financial
performance. We believe that investors benefit from having access to the same
financial measures being utilized by management, lenders, analysts and other
market participants.
Available cash. Available Cash before Reserves is a liquidity measure
used by management to compare cash flows generated by us to the cash
distribution paid to our limited partners and general partner. This is an
important financial measure to the public unitholders since it is an indicator
of our ability to provide a cash return on their investment. Specifically, this
financial measure aids investors in determining whether or not we are generating
cash flows at a level that can support a quarterly cash distribution to the
partners. Lastly, Available Cash before Reserves (also referred to as
distributable cash flow) is the quantitative standard used throughout the
investment community with respect to publicly-traded partnerships.
We define available cash as net income or loss plus: (1) depreciation
and amortization expense; (2) cash proceeds from the sale of certain assets; (3)
the addition of losses or subtraction of gains relating to the sale of assets;
(4) payments under direct financing leases in excess of the amount recognized as
income; (5) the addition of losses or subtraction of gains on derivative
financial instruments; (6) available cash generated by equity method
investments; (7) the subtraction of maintenance capital expenditures incurred to
replace or enhance partially or fully depreciated assets so as to sustain the
existing operating capacity or efficiency of our assets and extend their useful
lives; and (8) the addition of losses or subtraction of gains relating to other
non-cash amounts affecting net income for the period.
# # #