Crosstex Reports Second Quarter 2003 Results.Business Editors/Energy Editors DALLAS--(BUSINESS WIRE)--Aug. 7, 2003 Crosstex Energy, L.P. (NasdaqNM:XTEX), a Texas-based midstream mid·stream n. 1. The middle part of a stream. 2. The part of a course that is neither at the beginning nor at the end: the midstream of life. Noun 1. natural gas company, reported second quarter net income of $4.975 million, or $0.65 per limited partner unit, compared to net income in the second quarter of 2002 of $224 thousand. (Limited partner units were not outstanding in the 2002 period, as the Partnership completed its initial public offering in December December: see month. 2002.) For the first six months of 2003, Crosstex reported net income of $5.8 million, or $0.77 per unit, compared to a net loss of $28 thousand in the first half of 2002. Distributable Cash Flow for the quarter was $6.8 million, or 1.8 times the amount required to cover the Minimum Quarterly Distribution. Distributable Cash Flow was $2.4 million in the 2002 period. In the first half of 2003, Distributable Cash Flow was $12.2 million, or 1.6 times the amount required to cover the Minimum Quarterly Distribution. (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 second quarter was $13.1 million, compared to $8.1 million in 2002, an increase of 63 percent. Midstream gross margin increased by $4.1 million, or 70 percent, to $10.0 million, while Treating gross margin increased by $1.0 million, or 44 percent, to $3.2 million. The acquisition of certain assets from Duke Energy Field Services, which closed on June June: see month. 30, 2003, did not impact the results of operations in the first half of 2003. Net income was negatively impacted in the second quarter and six-month period by charges of $0.6 million and $3.1 million, respectively, in stock-based compensation. The charges primarily resulted from a modification A change or alteration in existing materials. Modification generally has the same meaning in the law as it does in common parlance. The term has special significance in the law of contracts and the law of sales. in stock options held in Crosstex Energy Holdings by employees of the Partnership. Crosstex Energy Holdings 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 $0.4 million incurred in the quarter, for a total of $1.9 million for the second quarter. Had the cap not been in place, those expenses would have been $2.6 million, reducing reported earnings and Distributable Cash Flow by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.7 million. In the second quarter of 2003, pipeline throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. increased approximately 26 percent over the second quarter of 2002, from 402,774 MMBtu/d to 506,403 MMBtu/d. Natural gas processed increased approximately 10 percent, from 85,073 MMBtu/d to 93,456 MMBtu/d for the same period, and treating plants in operation increased from 32 at the end of the second quarter of 2002 to 43 at the end of the second quarter in 2003. Revenues for the quarter were $229.3 million compared to $126.5 million for the second quarter of 2002. The increase in revenues was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to higher volumes 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 $12.5 million and $13.6 million, and its estimate of Distributable Cash Flow for the year is a range of between $23.7 million and $25.8 million. Crosstex will hold its quarterly conference call to discuss first quarter results tomorrow, August 8, at 10:00 am Central Time (11:00 am Eastern Time). The dial-in number for the call is 800-884-5695, passcode Crosstex. A live Webcast of the call can be accessed on the investor relations Investor relations The process by which the corporation communicates with its investors. 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 39228573. 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 Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. , operates over 2,500 miles of pipeline, three processing plants, and over 40 natural gas amine amine (əmēn`, ăm`ēn): see under amino group. amine Any of a class of nitrogen-containing organic compounds derived, either in principle or in practice, from ammonia (NH3). 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 Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 NGL - A dialect of IGL. 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 Non`pay´ment n. 1. Neglect or failure to pay. Noun 1. nonpayment - act of failing to meet a financial obligation nonremittal, default failure - an act that fails; "his failure to pass the test" ; and (6) the Partnership may not adequately address construction and operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. . 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 Six Months Ended
June 30, June 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues
Midstream $224,030 $122,787 $469,345 $200,595
Treating 5,222 3,693 10,477 6,878
--------- --------- --------- ---------
229,252 126,480 479,822 207,473
Cost of Gas
Midstream 214,071 116,916 451,479 189,675
Treating 2,035 1,486 4,451 2,599
--------- --------- --------- ---------
216,106 118,402 455,930 192,274
Gross Margin 13,146 8,078 23,892 15,199
Operating Expenses 3,335 2,610 6,545 5,050
General & Administrative 1,891 2,272 3,391 4,206
Impairments -- -- -- 3,150
(Profit) Loss on Energy Trading
Contracts (738) 21 (845) (2,754)
Stock Based Compensation 568 -- 3,072 --
Depreciation and Amortization 2,611 1,975 5,046 3,884
--------- --------- --------- ---------
Total 7,667 6,878 17,209 13,536
Operating Income 5,479 1,200 6,683 1,663
Interest Expense (465) (1,016) (875) (1,696)
Other (39) 40 (1) 5
--------- --------- --------- ---------
Total Other (504) (976) (876) (1,691)
--------- --------- --------- ---------
Net Income (Loss) $4,975 $224 $5,807 $(28)
========= ========= ========= =========
General Partner Share of Net
Income $155 $172
========= =========
Limited Partners Share of Net
Income $4,820 $5,635
========= =========
Net Income per Limited
Partners' Unit $0.65 $0.77
========= =========
Weighted Average Limited
Partners' Units Outstanding
(diluted) 7,421 7,366
========= =========
Reconciliation of Net Income to Distributable Cash Flow
(All amounts in thousands except ratios)
Quarter Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
------- ------- -------- --------
Net Income (Loss) $4,975 $224 $5,807 $(28)
Depreciation and Amortization 2,611 1,975 5,046 3,884
Impairments -- -- -- 3,150
(Profit) Loss on Energy Trading
Contracts -- 472(1) -- (1,991)(1)
Stock Based Compensation 568 -- 3,072 --
------- ------- -------- --------
Cash Flow 8,154 2,671 13,925 5,015
Maintenance Capital
Expenditures 1,375 269 1,719 592
------- ------- -------- --------
Distributable Cash Flow $6,779 $2,402 $12,206 $4,423
======= ======= ======== ========
Minimum Quarterly
Distribution (MQD) $3,725 $7,449
Distributable Cash Flow/MQD 1.82 1.64
Actual Distribution $4,154 $7,878
Distribution Coverage 1.63 1.55
(1) Profit on energy trading contracts for the three and six months
ended June 30, 2002 includes one-time (gains) and losses,
primarily related to the company's Enron position, of $472 and
($1,991), respectively, which have been excluded from the
computation of Distributable Cash Flow.
Operating Data
(All volumes in mmbtu/d)
Quarter Ended Six Months Ended
June 30, June 30,
Pipeline Throughput 2003 2002 2003 2002
-------- -------- -------- --------
Gulf Coast Transmission 74,569 106,798 85,052 105,858
Vanderbilt 44,080 -- 39,604 --
CCNG Transmission 166,006 168,968 164,624 155,721
CCNG Transmission - Hallmark 44,052 -- 46,020 --
Gregory Gathering 153,914 101,206 144,045 98,636
Arkoma 10,859 10,871 10,670 11,028
Other Midstream 12,923 14,931 13,186 14,867
-------- -------- -------- --------
Total On-System Volume 506,403 402,774 503,201 386,110
Natural Gas Processed
Gregory Processing 93,456 85,073 93,654 85,332
Total On-System Volumes 599,859 487,847 596,855 471,442
Producer Services Volumes 262,098 246,859 258,064 230,735
Treating Volumes (1) 88,944 100,162 88,994 95,895
Treating Plants in Service (2) 43 32
(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) $12.5 $13.6
Depreciation and Amortization 12.9 12.9
Stock Based Compensation (1) 3.3 3.3
---------- ----------
Cash Flow 28.7 29.8
Maintenance Capital (5.0) (4.0)
---------- ----------
Distributable Cash Flow $23.7 $25.8
========== ==========
(1) The results for net income assume that no further charges are
incurred due to the modification of certain stock options of
Crosstex Energy Holdings. Such charges are likely if the trading
price of the partnership's units continue to exceed their average
value in the second quarter of 2003, which was $29.54 per unit.
These charges do not negatively impact the calculation of
Distributable Cash Flow. See the Partnership's filing on Form
10-Q.
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