Genesis Energy, L.P. Reports Third Quarter Results and Declares Special Distribution.Business/Energy Editors HOUSTON--(BUSINESS WIRE)--Nov. 8, 2002 Genesis Energy, L.P. (AMEX AMEX See: American Stock Exchange :GEL) today issued the following:
Earnings Highlights
(in thousands except per unit amounts)
Nine Months Ended Three Months Ended
September 30, September 30,
2002 2001 2002 2001
------ ------ ------ ------
Net Income Adjusted
for Special Items $7,117 $2,139 $2,640 $1,322
Per Unit - Basic and
Diluted $0.81 $0.24 $0.30 $0.15
Special Items:
Derivative-related
Items $(2,094) $3,965 $(1,037) $(1,589)
Increase in Environmental
Accrual (1,500) -- (1,500) --
------- ------- ------- -------
Total Special Items $(3,594) $3,965 $(2,537) $(1,589)
======= ======= ======= =======
Net Income $3,523 $6,104 $103 $(267)
Per Unit - Basic and Diluted $0.40 $0.69 $0.01 $(0.03)
Genesis Energy, L.P. announced today that its net income adjusted for special items for the quarter ended September September: see month. 30, 2002, was $2,640,000, or $0.30 per unit. This compares to net income adjusted for special items for the quarter ended September 30, 2001, of $1,322,000, or $0.15 per unit. Minority interests had no effect on the reported income for either period. Net income adjusted for special items for the nine months ended September 30, 2002, was $7,117,000, or $0.81 per unit. Net income adjusted for special items for the nine months ended September 30, 2001, was $2,139,000, or $0.24 per unit. Minority interests had no effect on either reported amount. Special items include the change in the fair value of derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. and an addition to the accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for environmental costs associated with a 1999 crude oil spill oil spill: see water pollution. . Based upon a review of contracts existing at September 30, 2002, the Partnership determined that it had no contracts meeting the requirement for treatment as derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. contracts under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 133, "Accounting for Derivative Instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. and Hedging Activities" (as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and interpreted). As a result, the fair value of the Partnership's net asset for derivatives decreased by $2,094,000 to zero for the nine months ended September 30, 2002. In addition, during the third quarter of 2002, the Partnership increased its environmental accrual by $1,500,000, primarily as a result of discussions with regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. regarding potential fines that may be imposed under the Clean Water Act in connection with the crude oil spill that occurred on its Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by System in December 1999. "I am pleased to report that we continued to generate strong cash flow during the third quarter," said Mark Gorman, President and Chief Executive Officer of Genesis. "Available Cash before adjusting for reserves for the future needs of the Partnership was $2,510,000, or $0.285 per unit. This performance results from executing our 2002 business plan. Early in 2002, we elected to eliminate the merchant trading activity from our marketing operations, focus our marketing efforts on smaller volume/higher margin activity, and improve the profitability of our pipeline operations by reducing operating costs operating costs npl → gastos mpl operacionales and increasing tariffs This is a list of tariffs and trade legislation:
"Although the Partnership met the $20,000,000 restrictive covenant restrictive covenant In property law, an agreement acknowledged in a deed or lease that restricts the free use or occupancy of property, such as by forbidding commercial use or certain types of structures. regarding cash distributions under the Credit Agreement in the third quarter, the Partnership did not make a distribution because of a reserve established for future needs of the Partnership. These reserves exceeded the Available Cash for the third quarter of 2002. Such future needs of the Partnership include, but are not limited to, potential fines that may be imposed under the Clean Water Act in connection with the crude oil spill that occurred on its Mississippi System in December 1999 and future expenditures that will be required for pipeline integrity management programs required by federal regulations. "We believe that the Partnership will be able to meet the $20,000,000 Credit Agreement covenant on an ongoing basis. We are evaluating the ability of the Partnership to generate Available Cash in amounts sufficient to restore the distribution during 2003. We are not yet able to provide guidance as to when the distribution will be restored or at what level it will be restored. We are hopeful that we will be able to provide such guidance during the first quarter of 2003. Any decision to restore the distribution will take into account the ability of the Partnership to sustain the distribution on an ongoing basis with cash generated by its existing asset base, capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. needed to maintain and optimize optimize - optimisation the performance of its asset base, and its ability to finance its existing capital requirements and accretive acquisitions Accretive Acquisition An acquisition that will increase the acquiring company's EPS. Notes: As they are expected to increase the acquiring company's future earnings, these acquisitions tend to be favorable for the company's market price. . If distributions are resumed, such distributions may be for less than the minimum quarterly distribution target of $0.20 per unit. "Although no distributions have been made by the Partnership in 2002, some of the Partnership's Unitholders will be allocated taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. for 2002. The amount of taxable income allocated to each unitholder will vary, depending on the timing of purchases by unitholders and the amount of each unitholder's tax basis in their units. In order to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the burden of incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. a tax liability without receiving a cash distribution, the Partnership will make a special distribution in the amount of $1,760,000, or $0.20 per unit, on December 16, 2002, to Unitholders of record as of December 2, 2002." Genesis Energy, L.P. will broadcast its Third Quarter Earnings Announcement Conference Call on Wednesday, November 13, 2002, at 10:00 a.m. Central. This call can be accessed at www.genesiscrudeoil.com. Choose the Investor Relations Investor relations The process by which the corporation communicates with its investors. button. Listeners should go to this website at least fifteen minutes before this event to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. 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. Genesis Energy, L.P., operates crude oil common carrier pipelines and is an independent gatherer and marketer of crude oil in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , with operations concentrated in Texas, Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. , Alabama Alabama, indigenous people of North AmericaAlabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). , Florida and Mississippi. This press release includes 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. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Genesis believes that its expectations are based upon reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the ability to restore distributions, the timing and extent of changes in commodity prices for oil, ability to obtain adequate credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities , environmental risks, government regulation, the ability of the Company to meet its stated business goals and other risks noted from time to time in the Company's Securities and Exchange Commission filings. (tables to follow)
Genesis Energy, L.P.
Summary Consolidated Statements of Operations
(in thousands except per unit amounts and volumes)
Nine Months Nine Months
Ended Ended
Sept. 30, 2002 Sept. 30, 2001
-------------- --------------
Revenues $696,358 $2,672,819
Cost of Sales 679,930 2,656,142
----------- -----------
Gross Margin 16,428 16,677
General & Administrative Expenses 6,352 8,695
Depreciation and Amortization Expense 4,310 5,630
----------- -----------
Operating Income 5,766 2,352
Interest, Net (847) (373)
Unrealized Gain (Loss) on Change in
Fair Value of Derivatives (2,094) 3,499
Gains from Asset Sales 698 160
----------- -----------
Income Before Cumulative
Effect of Adoption of Accounting
Principle and Minority Interests 3,523 5,638
Minority Interests -- 1
----------- -----------
Income Before Cumulative
Effect of Adoption of Accounting
Principle 3,523 5,637
Cumulative Effect of Adoption
of Accounting Principle, Net
of Minority Interests -- 467
----------- -----------
Net Income $3,523 $6,104
=========== ===========
Net Income per Common Unit -
Basic and Diluted:
Before Cumulative Effect of
Adoption of Accounting Principle $0.40 $0.64
Cumulative Effect of Accounting
Change -- 0.05
----------- -----------
Net Income $0.40 $0.69
=========== ===========
Wellhead barrels per day 64,308 86,390
Pipeline barrels per day 75,385 86,106
Three Months Ended Three Months Ended
Sept. 30, 2002 Sept. 30, 2001
------------------ ------------------
Revenues $216,350 $821,647
Cost of Sales 211,582 815,386
--------- ---------
Gross Margin 4,768 6,261
General & Administrative
Expenses 2,060 2,969
Depreciation and Amortization
Expense 1,412 1,863
--------- ---------
Operating Income 1,296 1,429
Interest and Other, Net (179) (119)
Unrealized Gain (Loss) on
Change in Fair Value of
Derivatives (1,037) (1,589)
Gains from Asset Sales 23 12
--------- ---------
Income Before Minority Interests 103 (267)
Minority Interests -- --
--------- ---------
Net Income $103 $(267)
========= =========
Net Income per Common Unit
Basic and Diluted $0.01 $(0.03)
Wellhead barrels per day 60,044 82,280
Pipeline barrels per day 75,172 81,829
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