EX-99 2 p050306.txt PRESS RELEASE DATED MAY 3, 2006 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. # # #