Exhibit 99.1
CROSSTEX REPORTS FOURTH QUARTER AND FULL YEAR 2004 RESULTS
SEVEN STRAIGHT QUARTERS OF INCREASES IN DISTRIBUTABLE CASH FLOW SINCE IPO OF
PARTNERSHIP
DALLAS, March 8 /PRNewswire-FirstCall/ -- Crosstex Energy, L.P. (Nasdaq:
XTEX) (the Partnership) today reported fourth quarter and full year earnings.
Crosstex Energy, Inc. (Nasdaq: XTXI) (the Corporation) will report its results
later this week. Both companies continued their track record of solid growth in
the fourth quarter and full year 2004, which supported increases in
distributions and dividends from both companies.
"With the LIG acquisition and the continued growth of our treating
business, our employees continue to drive our results higher," said Barry E.
Davis, President and Chief Executive Officer of the Crosstex Energy companies.
"We have been able to continue this growth while maintaining our emphasis on
return on total invested capital. Our emphasis on return, as opposed to
accretion alone, will compel us to focus more resources on organic growth
projects as the driver of our next growth steps in preference to acquisitions,
given the current market environment."
The Partnership reported net income of $6.1 million, or $0.22 per
limited partner unit, in the quarter ended December 31, 2004, compared to net
income in the fourth quarter of 2003 of $5.5 million, or $0.26 per unit. Full
year 2004 results for the Partnership were net income of $23.7 million, or $0.95
per unit, compared to net income of $15.2 million or $0.88 per unit in 2003.
The Partnership's Distributable Cash Flow for the quarter was $11.9
million, or 2.58 times the amount required to cover its Minimum Quarterly
Distribution of $0.25 per unit, and 1.17 times the amount required to cover its
recently increased distribution of $0.45 per unit. This is an increase of $3.2
million, or 37 percent, over Distributable Cash Flow of $8.7 million in the 2003
fourth quarter. For the full year of 2004, Distributable Cash Flow was $42.2
million, or 2.29 times the amount required to cover the Minimum Quarterly
Distribution and 1.14 times the amount required to cover its actual
distributions of $37.0 million. Distributable Cash Flow for the year increased
more than 40 percent from the 2003 figure of $29.5 million. 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 increase in Distributable Cash Flow was due to growth in the
Partnership's gross margin, to $33.2 million compared to $18.5 million in the
corresponding 2003 period, an increase of 80 percent. Gross margin from the
Midstream business segment increased by $13.0 million, or 98 percent, to $26.3
million, due to growth in on-system gathering and transmission volumes of 104
percent, and to growth in processed volumes of 182 percent. The acquisition of
Louisiana Intrastate Gas (LIG) Pipeline Company and its subsidiaries on April 1,
2004 was the main driver of growth in Midstream gross margins. LIG contributed
$10.8 million to gross margin in the quarter.
Gross margin for the quarter from the Treating segment increased by $1.7
million, or 33 percent, to $7.0 million. Improvements in margins of the Seminole
plant provided $266 thousand of the increase. Growth in the number of treating
plants in service from 52 at the end of the fourth quarter of 2003 to 74 at the
end of the fourth quarter of 2004 created the remaining increase in Treating
margins.
For similar reasons, gross margin for the year increased from $59.7
million to $112.3 million, or 88 percent. Of the $52.6 million gross margin
increase for the year, $43.5 million was contributed from the midstream segment.
In addition to improvements from the LIG acquisition ($27.7 million for the nine
months it was owned in 2004), midstream margins increased $7.9 million due to
the DEFS assets acquired mid-year 2003. Treating margins improved $9.1 million
year over year, $4.5 million of which is due to ownership of the Seminole plant
for only six months in 2003, and $4.1 million due to the net growth in treating
plants in service. These improvements were offset by increases in operating
expenses of $5.9 million and $20.4 million for the quarter and year
respectively, primarily associated with the new assets in service.
General and administrative expenses increased by $5.1 million and $13.2
million for the quarter and year, respectively. The Partnership's general and
administrative costs were capped in 2003. Without such a cap, annual general and
administrative expenses would have been $10.2 million in 2003 compared to $20.1
million in 2004, an increase of $9.9 million. This increase is related to the
staffing increases around the LIG acquisition and the significant infrastructure
improvements being made at the company to support future growth. Also included
in general and administrative costs are $2.7 million associated with the
implementation of new computer systems, outside consultants and audit work
related to compliance with Sarbanes Oxley and corporate development costs.
Interest expense increased $1.8 million and $5.8 million for the quarter
and year, respectively, as the Partnership has financed its growth in 2004 with
debt. The Partnership's capital structure is still very conservative.
Crosstex Energy, Inc.
The Corporation's share of Partnership distributions, including
distributions on its ten million limited partner units, its two percent general
partner interest, and the incentive distribution rights, was $6.5 million in the
fourth quarter, compared to $4.4 million in the fourth quarter of 2003, an
increase of over 47 percent. The recently announced increase in the
Partnership's distribution increased the Corporation's share of the distribution
by $0.5 million, from $6.0 million in the third quarter of 2004 to $6.5 million
for the fourth quarter.
"The accretive growth of the Partnership and the growth of the
Corporation's distributions received from the Partnership have allowed it to
increase its dividend payable to its stockholders by 30 percent in the first
year of its existence as a public company," said Mr. Davis. "From the first
quarter to the fourth quarter of 2004, we increased dividends from $0.30 per
share to $0.39 per share."
Earnings Call
Crosstex will hold its quarterly conference call to discuss fourth
quarter results today at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The
dial- in number for the call is 800-706-7741, passcode Crosstex. A live Webcast
of the call can be accessed on the investor information page of Crosstex
Energy's Web site at http://www.crosstexenergy.com . The call will be available
for replay for 30 days by dialing 888-286-8010, passcode 76714886. A replay of
the broadcast will also be available on the Partnership's Web site.
About the Crosstex Energy Companies
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
80 natural gas amine treating plants. Crosstex currently provides services for
over 1.9 BCF/day of natural gas.
Crosstex Energy, Inc. owns the general partner, a 54 percent limited
partner interest and the incentive distribution rights of Crosstex Energy, L.P.
Additional information about the Crosstex companies can be found at
http://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," "plan" 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 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 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.
(tables to follow)
CROSSTEX ENERGY, L.P.
Selected Financial and Operating Data
(All amounts in thousands except per unit numbers)
Quarter Ended Twelve Months Ended
December 31, December 31,
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues
Midstream $ 620,840 $ 244,130 $ 1,948,021 $ 989,697
Treating 8,163 6,513 30,755 23,966
629,003 250,643 1,978,776 1,013,663
Cost of Gas
Midstream 594,580 230,898 1,861,204 946,412
Treating 1,182 1,257 5,274 7,568
595,762 232,155 1,866,478 953,980
Gross Margin 33,241 18,488 112,298 59,683
Operating Expenses 11,599 5,685 38,141 17,692
General & Administrative 6,828 1,732 20,064 6,844
Profit on Energy Trading
Activities (715) (414) (2,507) (1,905)
Stock Based Compensation 235 696 1,001 5,345
(Gain) Loss on Sale
of Property -- -- (12) --
Depreciation and
Amortization 6,535 4,191 23,034 13,268
Total 24,482 11,890 79,721 41,244
Operating Income 8,759 6,598 32,577 18,439
Interest Expense (3,006) (1,196) (9,220) (3,392)
Other Income 544 129 798 179
Total Other
Income (Expense) (2,462) (1,067) (8,422) (3,213)
Income Before Income
Taxes and Interest of
Non-controlling
Partners in the
Partnership's Net
Income 6,297 5,531 24,155 15,226
Interest of Non-
controlling Partners
in the Partnership's
Net Income (139) -- (289) --
Income Tax Provision (46) -- (162) --
Net Income $ 6,112 $ 5,531 $ 23,704 $ 15,226
General Partner Share
of Net Income $ 1,908 $ 619 $ 5,913 $ 1,240
Limited Partners Share
of Net Income $ 4,204 $ 4,912 $ 17,791 $ 13,986
Net Income per Limited
Partners' Unit $ 0.22 $ 0.26 $ 0.95 $ 0.88
Weighted Average Limited
Partners' Units
Outstanding (Diluted) 18,713 18,564 18,633 15,960
CROSSTEX ENERGY. L.P.
Reconciliation of Net Income to Distributable Cash Flow
(All amounts in thousands except ratios)
Quarter Ended Twelve Months Ended
December 31, December 31,
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Net Income $ 6,112 $ 5,531 $ 23,704 $ 15,226
Depreciation and
Amortization (A) 6,478 4,191 22,852 13,268
Stock Based Compensation 235 696 1,001 5,345
Loss (Gain) on Sale of
Property -- -- (12) --
Proceeds from Sale of
Property -- -- 611 --
Deferred Tax Benefit (22) -- (190) --
Cash Flow 12,803 10,418 47,966 33,839
Maintenance Capital
Expenditures (915) (1,738) (5,729) (4,310)
Distributable Cash Flow $ 11,888 $ 8,680 $ 42,237 $ 29,529
Minimum Quarterly
Distribution (MQD) $ 4,615 $ 4,605 $ 18,458 $ 16,658
Distributable Cash
Flow/MQD 2.58 1.89 2.29 1.77
Actual Distribution $ 10,164 $ 7,436 $ 37,032 $ 22,149
Distribution Coverage 1.17 1.17 1.14 1.33
(A) Excludes minority interest share of depreciation and amortization of
$57,000 and $182,000 for the three and twelve months ended December 31,
2004, respectively.
CROSSTEX ENERGY, L.P.
Operating Data
(All volumes in MMBtu/d)
Quarter Ended Twelve Months Ended
December 31, December 31,
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Pipeline Throughput
Gulf Coast
Transmission 56,000 97,000 72,000 85,000
Vanderbilt 89,000 61,000 68,000 49,000
CCNG Transmission 175,000 127,000 179,000 157,000
CCNG Transmission
- Hallmark 108,000 73,000 103,000 57,000
Gregory Gathering 120,000 151,000 133,000 151,000
Mississippi 78,000 74,000 78,000 79,000
Arkoma 17,000 15,000 19,000 13,000
LIG Pipeline &
Marketing 619,000 N/A 603,000(A) N/A
Other Midstream 30,000 35,000 34,000 35,000
Total Gathering and
Transmission Volume 1,292,000 633,000 1,289,000 626,000
Natural Gas Processed
Gregory Processing 93,000 128,000 106,000 106,000
Conroe Processing 22,000 25,000 25,000 26,000
LIG Processing 317,000 N/A 294,000(A) N/A
Total Processed Volume 432,000 153,000 425,000 132,000
Total On-System
Volumes 1,724,000 786,000 1,714,000 758,000
Producer Services
Volumes 212,000 246,000 210,000 259,000
Treating Plants in
Service (B) 74 52
(A) Represents activity since April 1, 2004 acquisition.
(B) Plants in service represent plants in service on the last day of the
quarter.
Contact: Barry E. Davis, President and Chief Executive Officer
William W. Davis, Executive V.P. and Chief Financial Officer
Phone: (214) 953-9500
SOURCE Crosstex Energy, L.P.
-0- 03/08/2005
/CONTACT: Barry E. Davis, President and Chief Executive Officer, or
William W. Davis, Executive V.P. and Chief Financial Officer, both of Crosstex
Energy, +1-214-953-9500/
/Web site: http://www.crosstexenergy.com /