Regency Energy Partners LP Reports Full-Year 2005 Financial Results.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. -- Regency Regency, in British history, the period of the last nine years (1811–20) of the reign of George III, when the king's insanity had rendered him unfit to rule and the government was vested in the prince of Wales (later George IV) as regent. Energy Partners LP, "Regency" or "the Partnership" (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : RGNC RGNC Rio Grande Nature Center State Park (Albuquerque, New Mexico) ), today announced its financial results for the year ended December December: see month. 31, 2005. For the year ended December 31, 2005, the Partnership reported a net loss of $11.2 million compared to net income of $21.5 million for the combined year ended December 31, 2004. Revenue for the year ended December 31, 2005 increased to $692.6 million compared to $480.2 million for the combined year ended December 31, 2004. For the year ended December 31, 2005, adjusted total segment margin increased to $83.3 million compared to $76.1 million for the combined year ended December 31, 2004. For the year ended December 31, 2005, the Partnership reported adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $48.2 million compared to $42.4 million for the combined year ended December 31, 2004. Adjusted total segment margin, adjusted EBITDA, segment margin and adjusted segment margin are key measures of the partnership's financial performance. Definitions for adjusted total segment margin, adjusted EBITDA and adjusted segment margin are included in the body of this press release. Schedules presenting Regency's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of operations, segment margin and operating information by segment, as well as schedules reconciling adjusted total segment margin, adjusted EBITDA and adjusted segment margin to the most directly comparable financial measures calculated and presented 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 are available on Regency's web site at www.regencyenergy.com and as an attachment See attach a file. to this document. "Regency finished 2005 as a privately held company privately held company A firm whose shares are held within a relatively small circle of owners and are not traded publicly. and reported solid results for the year despite the significant ramp-up costs we incurred in preparation for our January January: see month. 2006 initial public offering" said James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. W. Hunt, President and Chief Executive Officer of Regency. "In December, we completed the final phase of our Regency Intrastate in·tra·state adj. Relating to or existing within the boundaries of a state. Adj. 1. intrastate - relating to or existing within the boundaries of a state; "intrastate as well as interstate commerce" Enhancement Project, and although there was only minimal contribution from the final phase of the project, the completion of the early phases of the project helped us to increase the amount of gas gathered and transported in 2005 to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 566 thousand MMBtu per day compared to 494 thousand MMBtu per day in 2004." REVIEW OF SEGMENT PERFORMANCE Gas Gathering & Processing - The Gas Gathering & Processing segment includes the Partnership's natural gas processing Natural gas processing plants, or fractionators, are used to purify the raw natural gas extracted from underground gas fields and brought up to the surface by gas wells. The processed natural gas, used as fuel by residential, commercial and industial consumers, is almost pure and treating plants, low pressure gathering pipelines, NGL NGL - A dialect of IGL. pipeline and related NGL marketing activities. Segment margin for this segment was $56.2 million for the year ended December 31, 2005 compared to $67.6 million for the combined year ended December 31, 2004. Adjusted segment margin for this segment was $67.7 million for the year ended December 31, 2005 compared to $67.3 million for the combined year ended December 31, 2004. Total inlet inlet /in·let/ (-let) a means or route of entrance. pelvic inlet the upper limit of the pelvic cavity. thoracic inlet the elliptical opening at the summit of the thorax. volumes for the Gas Gathering & Processing segment averaged 308 thousand MMBtu per day of natural gas, and processed NGLs averaged 14,312 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. for the year ended December 31, 2005 compared to 304 thousand MMBtu per day of natural gas, and 14,588 barrels per day of processed NGLs for the combined year ended December 31, 2004. Gas Transportation - The Gas Transportation segment includes the Partnership's mid-to-high pressure natural gas pipelines. Segment margin for this segment was $15.7 million for the year ended December 31, 2005 compared to $8.8 million for the combined year ended December 31, 2004. Total transport volumes for the Gas Transportation segment averaged 258 thousand MMBtu per day of natural gas for the year ended December 31, 2005 compared to 190 thousand MMBtu per day of natural gas for the combined year ended December 31, 2004. EARNINGS CALL Regency will hold its quarterly conference call to discuss fourth quarter results today at 3:00 p.m. Eastern Time (2:00 p.m. Central Time). The dial-in number for the call is 800-638-4817 in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or 617-614-3943 outside the United States, pass code 11026894. A live webcast of the call can be accessed on the investor information page of Regency Energy Partners' web site at http://www.regencyenergy.com. The call will be available for replay for 7 days by dialing 888-286-8010 pass code 10839255. A replay and transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record of the broadcast will also be available on the Partnership's web site. NON-GAAP FINANCIAL INFORMATION This press release and the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. financial schedules include the non-generally accepted accounting principles ("non-GAAP") financial measures of adjusted total segment margin, adjusted EBITDA and adjusted segment margin. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). Our non-GAAP financial measures should not be considered an alternative to, or more meaningful than, net income, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as a measure of operating performance, liquidity or ability to service debt obligations. We define adjusted EBITDA as net income (loss) plus interest expense, net, depreciation and amortization expense, unrealized loss Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. (gain) from risk management activities, non-cash put option expirations and loss on debt refinancing Refinancing An extension and/or increase in amount of existing debt. . Adjusted EBITDA is used as a supplemental performance measure by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others, to assess: --financial performance of our assets without regard to financing methods, capital structure or historical cost basis; --our operating performance and return on capital as compared to those of other companies in the 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. energy industry, without regard to financing methods or capital structure; and --the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities. Our adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate adjusted EBITDA in the same manner. We define adjusted total segment margin as total operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. less the cost of purchases of natural gas and natural gas liquids plus unrealized losses (gains) from risk management activities and non-cash put option expirations. We define adjusted segment margin as segment operating revenues less segment cost of purchases of natural gas and natural gas liquids plus unrealized losses (gains) from risk management activities and non-cash put option expirations. Our adjusted total segment margin equals the sum of our Gas Gathering and Processing adjusted segment margin and Gas Transportation segment margin. Adjusted segment margin is included as a supplemental disclosure because it is a primary performance measure used by management as it represents the results of product purchases and sales, a key component of our operations. Our segment margin measures may not be comparable to similarly titled measures of other companies because other entities may not calculate segment margin amounts in the same manner. Regency Energy Partners LP (NASDAQ: RGNC) is a midstream master limited partnership that gathers, treats, compresses, processes, transports and markets natural gas and transports and markets natural gas liquids. For more information, visit the Regency Energy Partners LP Web site at www.regencyenergy.com. This press release may contain 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. as defined under the federal securities laws regarding Regency Energy Partners, including projections, estimates, forecasts, plans and objectives. These statements are based on management's current projections, estimates, forecasts, plans and objectives and are not guarantees of future performance. In addition, these statements are subject to certain risks, uncertainties and other assumptions that are difficult to predict and may be beyond our control. These risks and uncertainties include, but are not limited to, changes in laws and regulations impacting the gathering and processing industry, the level of creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. of the Partnership's counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. , the Partnership's ability to access the debt and equity markets, the Partnership's use of derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. financial instruments to hedge commodity and interest rate risks, the amount of collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although required to be posted from time to time in the Partnership's transactions, changes in commodity prices, interest rates, demand for the Partnership's services, weather and other natural phenomena, industry changes including the impact of consolidations and changes in competition, the Partnership's ability to obtain required approvals for construction or modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, of the Partnership's facilities and the timing of production from such facilities, and the effect of accounting pronouncements issued periodically by accounting standard setting boards. Therefore, actual results and outcomes may differ materially from those expressed in such forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than the Partnership has described. The Partnership undertakes no obligation to update publicly or to revise any forward-looking statements, whether as a result of new information, future events or otherwise. Information contained in this press release is unaudited and is subject to change.
Consolidated Statements of Operations
Regency Gas Services Regency LLC Combined
LLC Predecessor (a)
----------------------- ------------ --------
Period from
Acquisition
Date Period from
(December January 1, Year
Year Ended 1, 2004) to 2004 to Ended
December December November December
31, 31, 30, 31,
($ in thousands) 2005 2004 2004 2004
-------- ---------- --------- --------
REVENUE
Gas sales $495,987 $ 32,616 $ 279,582 $312,198
NGL sales 179,305 11,890 123,827 135,717
Gathering, transportation
and other fees 25,921 1,943 19,016 20,959
Unrealized/realized
gain/(loss) from risk
management activities (22,243) 322 - 322
Other 13,633 1,070 9,896 10,966
-------- ---------- --------- --------
Total revenue 692,603 47,841 432,321 480,162
EXPENSE
Cost of gas and liquids 611,137 39,979 352,508 392,487
Other cost of sales 9,614 1,007 10,254 11,261
Operating expenses 21,812 1,819 17,786 19,605
General and
administrative 14,412 638 6,571 7,209
Transaction expenses - - 7,003 7,003
Depreciation and
amortization 22,010 1,613 10,129 11,742
-------- ---------- --------- --------
Total operating expense 678,985 45,056 404,251 449,307
OPERATING INCOME 13,618 2,785 28,070 30,855
OTHER INCOME AND
DEDUCTIONS
Interest expense, net (17,432) (1,335) (5,097) (6,432)
Loss on debt refinancing (8,480) - (3,022) (3,022)
Other income and
deductions, net 338 14 186 200
-------- ---------- --------- --------
Total other income and
deductions (25,574) (1,321) (7,933) (9,254)
NET (LOSS) INCOME FROM
CONTINUING OPERATIONS (11,956) 1,464 20,137 21,601
DISCONTINUED OPERATIONS
Income (loss) from
operations of Regency
Gas Treating LP
(including gain on
disposal of $626 in
2005) 732 - (121) (121)
-------- ---------- --------- --------
NET (LOSS) INCOME $(11,224) $ 1,464 $ 20,016 $ 21,480
======== ========== ========= ========
a) We combined the results of operations for the period from January
1, 2004 through November 30, 2004 of the Regency LLC Predecessor with
those of the Predecessor for the period from the acquisition date
(December 1, 2004) through December 31, 2004 to provide a full year
of results for a more meaningful comparison with the year ended
December 31, 2005.
Segment Financial and Operating Data
Year Ended December 31,
-----------------------------
($ in thousands) 2005 2004(a)
----------------------------------------------------------------------
Gathering and Processing Segment
Financial Data:
Segment Margin (b) $ 56,179 $ 67,594
Operating Data:
Throughput (thousand MMBtu/d) 308 304
NGL gross production (BBls/d) 14,312 14,588
Transportation Segment
Financial Data:
Segment Margin $ 15,672 $ 8,820
Operating Data:
Throughput (thousand MMBtu/d) 258 190
----------------------------------------------------------------------
a) We combined the results of operations for the period from January
1, 2004 through November 30, 2004 of the Regency LLC Predecessor with
those of the Predecessor for the period from the acquisition date
(December 1, 2004) through December 31, 2004 to provide a full year
of results for a more meaningful comparison with the year ended
December 31, 2005.
b) 2005 revenues include net realized and unrealized loss from risk
management activities of $12.7 million and $9.5 million,
respectively. 2004 revenues include unrealized gain from risk
management activities of $0.3 million.
Reconciliation of Non-GAAP measures to GAAP measures
Non-GAAP Adjusted EBITDA to Net Income (loss)
Year Ended December 31,
--------------------------
($ in thousands) 2005 2004(a)
----------------------------------------------------------------------
Net income (loss) ($ 11,224) $ 21,480
Interest expense, net 17,432 6,432
Depreciation and amortization 22,010 11,742
-------------------------
EBITDA (b) $ 28,218 $ 39,654
Unrealized loss (gain) from risk management
activities 9,530 (322)
Non-cash put option expiration 1,956 -
Loss on debt refinancing 8,480 3,022
-------------------------
Adjusted EBITDA $ 48,184 $ 42,354
----------------------------------------------------------------------
Non-GAAP Adjusted Total Segment Margin to Net Income (loss)
Year Ended December 31,
--------------------------
($ in thousands) 2005 2004(a)
----------------------------------------------------------------------
Net income (loss) ($ 11,224) $ 21,480
Add:
Operating expenses 21,812 19,605
General and administrative 14,412 7,209
Transaction expenses - 7,003
Depreciation and amortization 22,010 11,742
Interest expense, net 17,432 6,432
Loss on debt refinancing 8,480 3,022
Other income and deductions, net (338) (200)
Discontinued operations (732) 121
-------------------------
Total Segment Margin $ 71,852 $ 76,414
Unrealized loss (gain) from risk
management activities 9,530 (322)
Non-cash put option expiration 1,956 -
-------------------------
Adjusted Total Segment Margin $ 83,338 $ 76,092
----------------------------------------------------------------------
a) We combined the results of operations for the period from January
1, 2004 through November 30, 2004 of the Regency LLC Predecessor with
those of the Predecessor for the period from the acquisition date
(December 1, 2004) through December 31, 2004 to provide a full year
of results for a more meaningful comparison with the year ended
December 31, 2005.
b) Earnings before interest, taxes, depreciation and amortization.
Gas Gathering and Processing Segment:
Non-GAAP Adjusted Segment Margin to Segment Margin
Year Ended December 31,
-----------------------
($ in thousands) 2005 2004(a)
----------------------------------------------------------------------
Segment margin $ 56,179 $ 67,594
Unrealized loss (gain) from risk management
activities 9,530 (322)
Non-cash put option expiration 1,956 -
----------------------
Adjusted Segment Margin $ 67,665 $ 67,272
----------------------------------------------------------------------
a) We combined the results of operations for the period from January
1, 2004 through November 30, 2004 of the Regency LLC Predecessor with
those of the Predecessor for the period from the acquisition date
(December 1, 2004) through December 31, 2004 to provide a full year
of results for a more meaningful comparison with the year ended
December 31, 2005.
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