Exhibit 99.1
Inergy, L.P. Reports Third Quarter Results
******
Continues Execution of Acquisition Plan
Kansas City, MO (August 13, 2003) - Inergy, L.P. (NASDAQ: NRGY) today
reported its results of operations for its fiscal third quarter ended June 30,
2003.
For the three months ended June 30, 2003, Inergy, L.P. (Inergy) reported a
seasonal net loss of $6.5 million, or $(0.75) per limited partner unit, as
compared to a loss of $5.9 million, or $(0.88) per limited partner unit for the
same period in the prior year. Due to the seasonal nature of the propane
industry, Inergy typically reports a quarterly net loss in its third and fourth
fiscal quarters. For the nine-month period ended June 30, 2003 net income was
$19.0 million, or $2.28 per diluted limited partner unit, compared with $12.6
million, or $1.93 per diluted limited partner unit, for the same period in the
prior year. Income (loss) before interest, taxes, depreciation and amortization
(EBITDA) was $(0.9) million for the quarter ended June 30, 2003, as compared to
$0.2 million of EBITDA reported in the third quarter of last year. For the
nine-month period, EBITDA increased 35% to $36.6 million from $27.1 million last
year.
As previously announced, the Board of Directors of the Partnership's
general partner declared the seventh consecutive increase in the Partnership's
quarterly cash distribution to $0.75 per unit ($3.00 annually) for the quarter
ended June 30, 2003. The distribution will be paid on August 14, 2003 to
unitholders of record as of August 7, 2003.
Since April 2003, the Partnership has closed on the acquisitions of the
assets of seven retail propane companies. These companies distributed
approximately 27 million gallons during the prior 12 months which represents an
approximate 24 percent increase in the Partnership's retail propane volume. All
seven acquisitions are expected to be accretive on distributable cash flow per
unit basis.
"We are on track for another solid year of performance," said John Sherman,
President and CEO of Inergy. "The successful integration of our recent
acquisitions, our continuing acquisition activity in the retail propane sector
and the closing of our recently announced credit facility position us to
continue the execution of our disciplined growth strategy."
Retail gallon sales increased to 13.4 million in the third quarter of
fiscal 2003 from 13.1 million gallons sold in the same quarter of last year,
primarily as a result of acquisitions. For the nine-month period, retail gallon
sales increased to 99.8 million gallons in 2003 as compared to 73.6 million
gallons sold in the same period of the prior year. The 36% increase in the
nine-month retail gallon sales in 2003 over those of 2002 is due primarily to
acquisition-related volume in addition to colder weather in the 2003 period as
compared to the 2002 period.
Retail propane gross profit was $8.3 million in the quarter ended June 30,
2003, as compared to $8.5 million in the same period last year. Retail propane
gross profit in the nine months ended June 30, 2003 increased 29% to $63.6
million from $49.4 million in the same period of 2002. The decrease in retail
propane gross profit for the three-month period is a result of decreased margin
per gallon as a result of higher product costs while the increase in retail
propane gross profit in the nine-month period is primarily attributable to
acquisition-related volume and colder weather in 2003 as compared to 2002. Gross
profit from wholesale operations was $0.4 million in the third quarter of fiscal
2003 as compared to $0.8 million in the same fiscal period of 2002. In the nine
months ended June 30, 2003, gross profit from wholesale operations
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increased to $6.6 million as compared to $4.2 million in the same period of
2002. Other retail gross profits, including transportation, were $2.4 million in
the three months ended June 30, 2003 compared to $2.8 million in the same period
of the prior year. For the nine months ended June 30, 2003, other retail gross
profits increased to $10.2 million as compared to $8.8 million in the same
period of fiscal 2002 primarily as a result of acquisitions.
Operating and administrative expenses were $12.1 million in the three
months ended June 30, 2003 compared to $11.9 million in the same period of 2002.
For the nine months ended June 30, 2003 operating and administrative expenses
were $44.2 million compared to $35.2 million in the nine months ended June 30,
2002. The increase in operating expenses is primarily attributable to increased
personnel and vehicle costs due to higher volume sales as a result of the colder
weather, internal growth, and retail acquisitions.
Inergy, L.P. - headquartered in Kansas City, Missouri - is among the
fastest growing Master Limited Partnerships in the country. The Partnership's
operations include the retail marketing, sale and distribution of propane to
residential, commercial, industrial and agricultural customers. Today Inergy
serves nearly 240,000 retail customers from 131 customer service centers
throughout the eastern half of the United States. The Partnership also operates
a growing supply logistics, transportation and wholesale marketing business that
serves independent dealers and multi-state marketers in 35 states and Canada.
Inergy will conduct a conference call on August 13, 2003, to discuss the
Partnership's third quarter performance. The call is scheduled for 3:30 p.m.,
CDT. Call-in begins at 3:20 p.m., CDT. The call-in number is 1-800-370-0898. A
digital recording of the call will be available for the two weeks following the
call by dialing 1-877-519-4471 and entering the pass code 4066347. A recording
will also will be available on Inergy's website, www.InergyPropane.com. For more
information, please contact Mary Adams in Inergy's Investor Relations Department
at 816-842-8181 or via email at madams@inergyservices.com.
This news release contains forward-looking statements, which are statements
that are not historical in nature such as the expected accretion for the seven
recent acquisitions. Forward-looking statements are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or any underlying assumption proves incorrect, actual
results may vary materially from those anticipated, estimated or projected.
Among the key factors that could cause actual results to differ materially from
those referred to in the forward-looking statements, are weather conditions that
vary significantly from historically normal conditions; our success in hedging
our positions; the general level of petroleum product demand, and the
availability of propane supplies; increases in the wholesale cost of propane;
the price of propane to the consumer compared to the price of alternative and
competing fuels; our ability to generate available cash for distribution to
unitholders; the costs and effects of legal and administrative proceedings
against us or which may be brought against us; and our ability to sustain our
historical levels of internal growth. These and other risks and assumptions are
described in Inergy's annual report on Form 10-K and other reports that are
available from the United States Securities and Exchange Commission.
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Inergy, L.P. and Subsidiary
Consolidated Statements of Operations
For the Three Months and Nine Months Ended June 30, 2003 and 2002
(in thousands, except per unit data)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Propane (a) $35,331 $32,937 $292,823 $158,082
Other 4,150 3,761 14,998 11,433
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39,481 36,698 307,821 169,515
Cost of product sold (a) 28,344 24,536 227,360 107,079
---------------------- -----------------------
Gross profit 11,137 12,162 80,461 62,436
Operating and administrative expenses 12,127 11,898 44,159 35,225
Depreciation and amortization 3,362 3,174 10,097 8,319
---------------------- -----------------------
Operating income (loss) (4,352) (2,910) 26,205 18,892
Other income (expense):
Interest expense (2,263) (2,318) (7,399) (5,555)
Loss on sale of property, plant and equipment (96) (109) (86) (228)
Interest expense related to write-off of
deferred financing costs - (585) - (585)
Finance charges 147 29 236 114
Other 48 13 99 50
---------------------- -----------------------
Income (loss) before income taxes (6,516) (5,880) 19,055 12,688
Provision for income taxes 32 30 102 82
---------------------- -----------------------
Net income (loss) $(6,548) $(5,910) $ 18,953 $ 12,606
====================== =======================
Net Income (loss) allocable to:
Non-Managing General Partner Interest $ (131) $ (118) $ 379 $ 252
Limited Partner Interest (6,417) (5,792) 18,574 12,354
---------------------- -----------------------
$(6,548) $(5,910) $ 18,953 $ 12,606
====================== =======================
Net Income (loss) Per Limited Partner Unit:
Basic $ (0.75) $ (0.88) $ 2.32 $ 1.96
Diluted $ (0.75) $ (0.88) $ 2.28 $ 1.93
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Supplemental Information:
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Retail gallons sold 13,361 13,103 99,795 73,650
EBITDA:
Net Income (loss) $(6,548) $(5,910) $18,953 $12,606
Interest expense 2,263 2,318 7,399 5,555
Interest expense related to write-off of
deferred financing costs - 585 - 585
Provision for income taxes 32 30 102 82
Depreciation and amortization 3,362 3,174 10,097 8,319
---------------------- -----------------------
EBITDA (b) $ (891) $ 197 $36,551 $27,147
====================== =======================
Distributable Cash Flow:
EBITDA (b) $(891) $ 197 $36,551 $27,147
Cash interest expense (c) (1,907) (1,957) (6,354) (4,647)
Maintenance capital expenditures (238) (555) (808) (1,192)
Provision for income taxes (32) (30) (102) (82)
---------------------- -----------------------
Distributable cash flow (d) $(3,068) $(2,345) $29,287 $21,226
====================== =======================
Weighted Average Limited Partner Units Outstanding:
- ---------------------------------------------------
Basic 8,516 6,585 8,022 6,303
Diluted 8,516 6,585 8,138 6,402
(a) New accounting standards affecting the reporting of gains or losses on
certain contracts related to our risk management activities became
effective in the past year requiring such contracts to be reported on a net
basis in the income statement. The adoption of the new standards required
that we reduce both revenue and cost of product sold by $21.3 million and
$52.5 million in the three-month and nine-month periods ended June 30,
2002, respectively. This reclassification had no impact on gross profit,
net income or EBITDA.
(b) EBITDA is defined as income before taxes, plus interest expense and
depreciation and amortization expense, less interest income. EBITDA should
not be considered an alternative to net income, income before income taxes,
cash flows from operating activities, or any other measure of financial
performance calculated in accordance with accounting principles generally
accepted in the United States as those items are used to measure operating
performance, liquidity or ability to service debt obligations. We believe
that EBITDA provides additional information for evaluating our ability to
make the minimum quarterly distribution and is presented solely as a
supplemental measure. EBITDA, as we define it, may not be comparable to
EBITDA or similarly titled measures used by other corporations or
partnerships.
(c) Cash interest expense is net of amortization charges associated with
deferred financing costs.
(d) Distributable cash flow should not be used as a measure of financial
performance calculated in accordance with generally accepted accounting
principles.
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