EXHIBIT 99.1
Crosstex Reports Record First Quarter Results
DALLAS--(BUSINESS WIRE)--May 4, 2004--The Crosstex Energy
companies, Crosstex Energy, L.P. (NasdaqNM:XTEX) (the Partnership) and
Crosstex Energy, Inc. (NasdaqNM:XTXI) (the Corporation), today
reported strong growth in the first quarter of 2004.
"We are very pleased with the record earnings we accomplished in
the first quarter. Our 78 percent increase in Distributable Cash Flow
from the first quarter of last year is attributable to continued
strong internal growth and acquisitions," stated Barry E. Davis,
President and Chief Executive Officer. "We are also pleased that this
allowed us to increase the Partnership distribution from the fourth
quarter of 2003 by 6.7 percent, as announced last week, while
maintaining strong coverage of 1.15 times the amount of the
distribution."
Crosstex Energy, L.P. Financial Results
The Partnership reported net income of $5.7 million for the first
quarter of 2004, or $0.24 per limited partner unit, compared to net
income in the first quarter of 2003 of $0.8 million, or $0.06 per
unit. The Partnership's Distributable Cash Flow for the quarter was
$9.6 million, or 2.09 times the amount required to cover its Minimum
Quarterly Distribution of $0.25 per unit, and 1.15 times the amount
required to cover its recently increased distribution of $0.40 per
unit. Distributable Cash Flow was $5.4 million in the 2003 first
quarter. Distributable Cash Flow is a non-GAAP financial measure and
is explained in greater detail under "Non-GAAP Financial Information."
Also, in the tables at the end of this release is a reconciliation of
this measure to net income.
The growth of Distributable Cash Flow was driven by growth in the
Partnership's gross margin, to $21.1 million compared to $10.7 million
in the corresponding 2003 period, an increase of 96 percent. Gross
margin from the Midstream business segment increased by $7.4 million,
or 94 percent, to $15.3 million, due to growth in on-system gathering
and transmission volumes of 41 percent, and to growth in processed
volumes of 68 percent. This growth was a balance of organic growth and
acquisitions. The organic growth was comprised of significant
increases in pipeline throughput at CCNG, Vanderbilt, and Arkoma, and
significant processing volume growth from the Gregory plant expansion.
Additional growth resulted from the acquisition of the Mississippi
system and the Conroe plant from Duke Energy Field Services (DEFS) on
June 30, 2003.
"A key to our growth strategy is the development of assets after
acquisition. Our first quarter results clearly demonstrate that we are
continuing to see strong improvements in the assets we've acquired in
the last three years," commented Davis.
Gross margin from the Treating segment increased by $2.9 million,
or 103 percent, to $5.8 million. The Treating segment's increase in
2004 over 2003 is attributable to the growth in the number of treating
plants in service from 40 at the end of the first quarter of 2003 to
56 at the end of the first quarter of 2004. In addition, the Seminole
plant acquired from DEFS is included in the Treating gross margin.
"Our Treating business has more than doubled in size over the last
18 months and we continue to see excellent growth opportunities in
this niche business," said Davis.
Crosstex Energy, Inc. Financial Results
The Corporation reported net income of $2.2 million for the first
quarter of 2004, compared to $31,000 for the respective period in
2003. The Corporation's annual income before income taxes and interest
of non-controlling partners in the Partnership's net income was $5.5
million in the first quarter of 2004 and $0.3 million in the first
quarter of 2003. The Corporation's share of distributions, including
distributions to its ten million limited partner units, its two
percent general partner interest, and the incentive distribution
rights, is $5.1 million for the first quarter (payable on May 14,
2004). Its share of the distribution in the first quarter of 2003 was
$2.6 million. The recently announced increase in the Partnership's
distribution increased the Corporation's share of the distribution by
$0.7 million, from $4.4 million to $5.1 million.
2004 Outlook
The Partnership has adjusted its guidance on net income and
Distributable Cash Flow in the attached table. The adjustments take
into account the closing of the LIG acquisition on April 1. The
Partnership now anticipates it will generate net income in 2004 of
between $24.0 million and $25.0 million, and its estimate of
Distributable Cash Flow for the year is in the range of $37.0 million
to $40.0 million. At this level, the Partnership will cover the
current $0.40 quarterly distribution by between 1.11 and 1.20 times.
If the Partnership's $0.40 quarterly distribution rate per unit is
maintained for the entire year, the Corporation will receive cash
distributions from the Partnership of $20.5 million in 2004. It
anticipates direct cash expenses associated with its operations
outside of the Partnership of approximately $1 million. The
Corporation expects that it will incur no current year income tax
expense due to tax loss carryforwards and other tax benefits it
expects to use in 2004. Assuming the $1.20 per share annual dividend
rate is maintained for the entire year, and no additional issuances of
shares, the total dividends for the year will be $14.5 million.
Earnings Call
Crosstex will hold its quarterly conference call to discuss first
quarter results tomorrow, May 5, at 10:00 am Central Time (11:00 am
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 36734310. A replay of the
broadcast will also be available on the company's Web site.
About Crosstex
Crosstex Energy, L.P., a mid-stream natural gas company
headquartered in Dallas, operates over 4,500 miles of pipeline, five
processing plants, and over 50 natural gas amine treating plants.
Crosstex currently provides services for over 1.5 BCF/day of natural
gas.
Crosstex Energy, Inc. owns ten million limited partner units in
the Partnership, the two percent general partner interest in the
Partnership, and the Partnership's incentive distribution rights.
Additional information about Crosstex can be found at
www.crosstexenergy.com.
Non-GAAP Financial Information
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. Maintenance capital expenditures are capital
expenditures made to replace partially or fully depreciated assets in
order to maintain the existing operating capacity of our assets and to
extend their useful lives. We believe this measure is useful to
investors because it may provide users of this financial information
with meaningful comparisons between current results and prior reported
results and a meaningful measure of the Partnership's cash flow after
it has satisfied the capital and related requirements of its
operations. Distributable Cash Flow is not a measure of financial
performance or liquidity under GAAP. It should not be considered in
isolation or as an indicator of the Partnership's performance.
Furthermore, it should not be seen as a measure of liquidity or a
substitute for metrics prepared in accordance with GAAP. 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 and the Corporation
believe are reasonable. However, the Partnership's and the
Corporation's assumptions and expectations are subject to a wide range
of business risks, so they 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 and the Corporation'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 and the
Corporation have no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events, or otherwise.
CROSSTEX ENERGY. L.P.
Selected Financial and Operating Data
(All amounts in thousands except per unit numbers)
Three Months Ended
March 31,
-------------------
2004 2003
--------- ---------
Revenues
Midstream $318,214 $245,315
Treating 7,144 5,255
--------- ---------
325,358 250,570
Cost of Gas
Midstream 302,876 237,408
Treating 1,376 2,416
--------- ---------
304,252 239,824
Gross Margin 21,106 10,746
Operating Expenses 6,213 3,210
General and Administrative 3,592 1,500
Stock Based Compensation 209 2,504
(Profit) Loss on Energy Trading Activities (421) (107)
Loss on Sale of Property 296 --
Depreciation and Amortization 4,418 2,435
--------- ---------
Total 14,307 9,542
Operating Income 6,799 1,204
Interest Expense (1,156) (410)
Other Income 92 38
--------- ---------
Total Other Income (Expense) (1,064) (372)
--------- ---------
Income Before Minority Interest 5,735 832
Minority Interest in Subsidiary (29) --
--------- ---------
Net Income $5,706 $832
========= =========
General Partner Share of Net Income $1,048 $17
========= =========
Limited Partners Share of Net Income $4,658 $815
========= =========
Net Income per Limited Partners' Unit:
Basic $0.26 $0.06
========= =========
Diluted $0.24 $0.06
========= =========
Weighted Average Limited Partners' Units
Outstanding
Basic 18,072 14,600
========= =========
Diluted 19,090 14,680
========= =========
CROSSTEX ENERGY. L.P.
Reconciliation of Net Income to Distributable Cash Flow
(All amounts in thousands except ratios)
Three Months Ended
March 31,
--------------------
2004 2003
---------- ---------
Net Income $5,706 $832
Depreciation and Amortization (1) 4,380 2,435
Impairments -- --
Stock Based Compensation 209 2,504
Loss on Sale of Property 296 --
---------- ---------
Cash Flow 10,591 5,771
Maintenance Capital Expenditures (944) (344)
---------- ---------
Distributable Cash Flow $9,647 $5,427
========== =========
Minimum Quarterly Distribution (MQD) $4,613 $3,725
Distributable Cash Flow/MQD 2.09 1.46
Actual Distribution $8,353 $3,725
Distribution Coverage 1.15 1.46
(1) Excludes minority interest share of depreciation and amortization
of $38,000 for the three months ended March 31, 2004.
CROSSTEX ENERGY, L.P.
Operating Data
(All volumes, except Seminole Plant, in MMBtu/d)
Three Months Ended
March 31,
--------------------
Pipeline Throughput 2004 2003
---------- ---------
Gulf Coast Transmission 91,000 95,000
Vanderbilt 66,000 35,000
CCNG Transmission 259,000 211,000
Gregory Gathering 156,000 134,000
Mississippi 77,000 --
Arkoma 18,000 10,000
Other Midstream 35,000 14,000
---------- ---------
Total Gathering and Transmission Volume 702,000 499,000
Natural Gas Processed
Gregory Processing 132,000 94,000
Conroe Processing 26,000 --
---------- ---------
Total Processed Volume 158,000 94,000
Total On-System Volumes 860,000 593,000
Producer Services Volumes 197,000 254,000
Treating Volumes (1) 84,000 88,000
Treating Plants in Service (2) 56 40
Seminole Plant (Mcf/d of CO2) 20,000 --
(1) Represent volumes for treating plants operated by us whereby we
receive a fee based on the volumes treated.
(2) Plants in service represent plants in service on the last day of
the quarter.
CROSSTEX ENERGY, L.P.
Forecast for 2004 Net Income
Reconciliation to Distributable Cash Flow
(In millions)
Range
Low High
--------- ----------
Net Income $24.0 $25.0
Depreciation and Amortization 22.0 23.0
Stock Based Compensation 1.0 1.0
--------- ----------
Cash Flow 47.0 49.0
Maintenance Capital (10.0) (9.0)
--------- ----------
Distributable Cash Flow $37.0 $40.0
========= ==========
CROSSTEX ENERGY, INC.
Selected Financial and Operating Data
(All amounts in thousands except per unit numbers)
Three Months Ended
March 31,
-------------------
2004 2003
--------- ---------
Revenues
Midstream $318,214 $245,315
Treating 7,144 5,255
--------- ---------
325,358 250,570
Cost of Gas
Midstream 302,876 237,408
Treating 1,376 2,416
--------- ---------
304,252 239,824
Gross Margin 21,106 10,746
Operating Expenses 6,225 3,234
General and Administrative 3,865 2,000
Stock Based Compensation 209 2,504
(Profit) Loss on Energy Trading Activities (421) (107)
Loss on Sale of Property 296 --
Depreciation and Amortization 4,418 2,510
--------- ---------
Total 14,592 10,141
Operating Income 6,514 605
Interest Expense (1,117) (338)
Other Income 92 38
--------- ---------
Total Other Income (Expense) (1,025) (300)
--------- ---------
Income Before Income Taxes and Interest of
Non-controlling Partners in the Partnership's
Net Income 5,489 305
Income Tax Provision (1,182) (17)
Interest of Non-controlling Partners in the
Partnership's Net Income (2,110) (257)
--------- ---------
Net Income $2,197 $31
========= =========
Preferred Stock Dividends $132 $917
========= =========
Net Income (Loss) Available to Common $2,065 $(886)
========= =========
Basic Earnings (Loss) per Common Share $0.19 $(0.25)
========= =========
Diluted Earnings (Loss) per Common Share $0.19 $(0.25)
========= =========
Weighted Average Shares Outstanding:
Basic 10,946 3,486
Diluted 11,672 3,486
CONTACT: Crosstex Energy, Dallas
Barry E. Davis, 214-953-9500
or
William W. Davis, 214-953-9500