Exhibit 99.1
Crosstex Reports Third Quarter 2003 Results
DALLAS--(BUSINESS WIRE)--Nov. 12, 2003--Crosstex Energy, L.P.
(NasdaqNM:XTEX), a Texas-based midstream natural gas company, reported
third quarter net income of $3.9 million, or $0.43 per limited partner
unit, compared to net income in the third quarter of 2002 of $1.5
million. (Limited partner units were not outstanding in the 2002
period, as the Partnership completed its initial public offering in
December 2002.) For the first nine months of 2003, Crosstex reported
net income of $9.7 million, or $1.20 per unit, compared to net income
of $1.5 million in the first nine months of 2002.
Distributable Cash Flow for the quarter was $8.6 million, covering
its Minimum Quarterly Distribution of $0.50 per unit 1.9 times and
covering its actual distributions of $0.70 per unit 1.3 times.
Distributable Cash Flow was $3.3 million in the 2002 third quarter. In
the first nine months of 2003, Distributable Cash Flow was $20.9
million, or 1.7 times the amount required to cover the Minimum
Quarterly Distribution and 1.4 times the amount required to cover its
actual distributions of $1.75 per unit. (See below for a discussion of
the Partnership's use of Distributable Cash Flow, which is a
non-generally accepted accounting principle financial measure. Also,
in the tables at the end of this release is a reconciliation of this
measure to net income.)
Gross margin in the third quarter was $17.3 million, compared to
$8.9 million in the corresponding 2002 period, an increase of 95
percent. Midstream gross margin increased by $7.4 million, or 113
percent, to $13.9 million, while Treating gross margin increased by
$1.0 million, or 45 percent, to $3.4 million.
Net income was negatively impacted in the three- and nine-month
periods in 2003 by charges of $1.6 million and $4.6 million,
respectively, in stock-based compensation. The charges primarily
resulted from a modification in stock options held in Crosstex Energy
Inc. (formerly Crosstex Energy Holdings Inc.) by employees of the
Partnership. Crosstex Energy Inc. is the owner of the Partnership's
general partner. The charges, as previously discussed, had no impact
on distributable cash or outstanding units of the Partnership.
General and administrative expenses charged to the Partnership are
capped at $1.5 million per quarter during 2003, plus costs associated
with acquisition activities of $212 thousand incurred in the quarter,
for a total of $1.7 million for the third quarter. Had the cap not
been in place, those expenses would have been $2.7 million, reducing
reported earnings and Distributable Cash Flow by approximately $1.0
million.
In the third quarter of 2003, pipeline throughput increased
approximately 66 percent over the third quarter of 2002, from 407,000
MMBtu/d to 675,000 MMBtu/d. Natural gas processed increased
approximately 61 percent, from 83,000 MMBtu/d to 134,000 MMBtu/d for
the same period, and treating plants in operation increased from 30 at
the end of the third quarter of 2002 to 45 at the end of the third
quarter in 2003. Revenues for the quarter were $283.2 million compared
to $114.6 million for the third quarter of 2002. The increase in
revenues was attributable to recent property acquisitions, primarily
the Duke assets, together with higher volumes on existing systems and
the increase in average natural gas prices.
The Partnership has adjusted its forecast for net income and
Distributable Cash Flow in the attached table. The Partnership now
anticipates it will generate net income in 2003 of between $14.0
million and $15.0 million, and its estimate of Distributable Cash Flow
for the year is in the range of $26.9 million to $28.9 million.
Crosstex will hold its quarterly conference call to discuss third
quarter results tomorrow, Nov. 13, at 10:00 a.m. Central time (11:00
a.m. Eastern time). The dial-in number for the call is 800-901-5241,
passcode Crosstex. A live webcast of the call can be accessed on the
investor information page of Crosstex Energy's Web site at
www.crosstexenergy.com. The call will be available for replay for 30
days by dialing 888-286-8010, passcode 34787732. A replay of the
broadcast will also be available on the company's Web site.
Crosstex Energy, L.P., a mid-stream natural gas company
headquartered in Dallas, operates over 2,500 miles of pipeline, three
processing plants and over 40 natural gas amine treating plants.
Crosstex currently provides services for more than 1 BCF/day of
natural gas. Additional information about Crosstex can be found at
www.crosstexenergy.com.
This press release contains non-generally accepted accounting
principle financial measures of earnings before non-cash charges and
less maintenance capital expenditures, which we refer to as
Distributable Cash Flow. The amounts included in the calculation of
these measures are computed in accordance with generally accepted
accounting principles (GAAP), with the exception of maintenance
capital expenditures, which are defined as capital expenditures (as
defined by GAAP) that do not increase the capacity of the asset. We
believe this measure is useful to investors because it enhances the
investors' overall understanding of our current financial performance,
our prospects for future performance and the cash that our Partnership
is generating. Management also uses Distributable Cash Flow to
evaluate our financial performance. Our reconciliation of this measure
to net income is included in the following tables.
This press release contains forward-looking statements identified
by the use of words such as "forecast," "anticipate" and "estimate."
These statements are based on currently available information and
assumptions and expectations that the Partnership believes are
reasonable. However, the Partnership's assumptions and expectations
are subject to a wide range of business risks, so it can give no
assurance that actual performance will fall within the forecast
ranges. Among the key risks that may bear directly on the
Partnership's results of operation and financial condition are: (1)
the amount of natural gas transported in the Partnership's gathering
and transmission lines may decline as a result of competition for
supplies, reserve declines and reduction in demand from key customers
and markets; (2) the level of the Partnership's processing and
treating operations may decline for similar reasons; (3) fluctuations
in natural gas and NGL prices may occur due to weather and other
natural and economic forces; (4) there may be a failure to
successfully integrate new acquisitions; (5) the Partnership's credit
risk management efforts may fail to adequately protect against
customer nonpayment; and (6) the Partnership may not adequately
address construction and operating risks. The Partnership has no
obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise.
Selected Financial and Operating Data
(All amounts in thousands except per unit numbers)
Quarter Ended Nine Months Ended
Sept. 30, Sept. 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues
Midstream $277,925 $110,858 $747,270 $311,453
Treating 5,273 3,753 15,750 10,631
--------- --------- --------- ---------
283,198 114,611 763,020 322,084
Cost of Gas
Midstream 264,035 104,350 715,514 294,025
Treating 1,860 1,397 6,311 3,996
--------- --------- --------- ---------
265,895 105,747 721,825 298,021
Gross Margin 17,303 8,864 41,195 24,063
Operating Expenses 5,462 2,682 12,007 7,732
General & Administrative 1,721 2,041 5,112 6,247
Impairments -- -- -- 3,150
(Profit) Loss on Energy
Trading Activities (646) (162) (1,491) (2,916)
Stock Based Compensation 1,577 33 4,649 33
Depreciation and Amortization 4,031 2,150 9,077 6,034
--------- --------- --------- ---------
Total 12,145 6,744 29,354 20,280
Operating Income 5,158 2,120 11,841 3,783
Interest Expense (1,321) (703) (2,196) (2,399)
Other Income 51 68 50 73
--------- --------- --------- ---------
Total Other Income
(Expense) (1,270) (635) (2,146) (2,326)
--------- --------- --------- ---------
Net Income $3,888 $1,485 $9,695 $1,457
========= ========= ========= =========
General Partner Share of Net
Income $450 $621
========= =========
Limited Partners Share of Net
Income $3,438 $9,074
========= =========
Net Income per Limited
Partners' Unit $0.43 $1.20
========= =========
Weighted Average Limited
Partners' Units Outstanding
(diluted) 7,930 7,548
========= =========
Reconciliation of Net Income to Distributable Cash Flow
(All amounts in thousands except ratios)
Quarter Ended Nine Months Ended
Sept. 30, Sept. 30,
--------------- -----------------
2003 2002 2003 2002
------- ------- -------- --------
Net Income $3,888 $1,485 $9,695 $1,457
Depreciation and Amortization 4,031 2,150 9,077 6,034
Impairments -- -- -- 3,150
(Profit) Loss on Energy Trading
Activities -- 318 (1) -- (1,673) (1)
Stock Based Compensation 1,577 33 4,649 33
------- ------- -------- --------
Cash Flow 9,496 3,986 23,421 9,001
Maintenance Capital
Expenditures (852) (675) (2,571) (1,267)
------- ------- -------- --------
Distributable Cash Flow $8,644 $3,311 $20,850 $7,734
======= ======= ======== ========
Minimum Quarterly Distribution
(MQD) $4,605 $12,054
Distributable Cash Flow/MQD 1.88 1.73
Actual Distribution $6,834 $14,712
Distribution Coverage 1.26 1.42
(1) (Profit) loss on energy trading activities for the three and nine
months ended Sept. 30, 2002 includes one-time (gains) and losses,
primarily related to the Partnership's Enron position, of $318 and
($1,673), respectively, which have been excluded from the
computation of Distributable Cash Flow.
Operating Data
(All volumes in MMBtu/d)
Quarter Ended Nine Months Ended
Sept. 30, Sept. 30,
----------------- -----------------
Pipeline Throughput 2003 2002 2003 2002
-------- -------- -------- --------
Gulf Coast Transmission 74,000 107,000 81,000 106,000
Vanderbilt 55,000 -- 45,000 --
CCNG Transmission 170,000 159,000 166,000 157,000
CCNG Transmission - Hallmark 62,000 -- 52,000 --
Gregory Gathering 163,000 117,000 150,000 105,000
Mississippi 84,000 -- 84,000 --
Arkoma 15,000 11,000 12,000 11,000
Other Midstream 52,000 13,000 53,000 14,000
-------- -------- -------- --------
Total On-System Volume 675,000 407,000 643,000 393,000
Natural Gas Processed
Gregory Processing 106,000 83,000 98,000 84,000
Conroe Processing 28,000 -- 28,000 --
-------- -------- -------- --------
Total Processed Volume 134,000 83,000 126,000 84,000
Total On-System Volumes 809,000 490,000 769,000 477,000
Producer Services Volumes 274,000 225,000 263,000 229,000
Treating Volumes (1) 94,000 104,000 91,000 99,000
Treating Plants in Service (2) 45 30
(1) Volumes represent volumes on volume sensitive plants only.
(2) Plants in service represent plants in service on the last day of
the quarter.
Forecast for 2003 Net Income
Reconciliation to Distributable Cash Flow
(In millions)
Range
Low High
--------- ---------
Net Income (1) $14.0 $15.0
Depreciation and Amortization 13.3 13.3
Stock Based Compensation (1) 4.6 4.6
--------- ---------
Cash Flow 31.9 32.9
Maintenance Capital (5.0) (4.0)
--------- ---------
Distributable Cash Flow $26.9 $28.9
========= =========
(1) The results for net income assume that no further charges are
incurred due to the modification of certain stock options of
Crosstex Energy Inc. Such charges are likely if the trading price
of the partnership's units continue to exceed their average value
in the third quarter of 2003, which was $36.95 per unit. These
charges do not negatively impact the calculation of Distributable
Cash Flow.
See the Partnership's filing on Form 10-Q.
CONTACT: Crosstex Energy, Dallas
Barry E. Davis or William W. Davis, 214-953-9500