Exhibit 99.1
CROSSTEX REPORTS THIRD QUARTER RESULTS
DALLAS, Nov. 8 /PRNewswire-FirstCall/ -- The Crosstex Energy companies,
Crosstex Energy, L.P. (Nasdaq: XTEX) (the Partnership) and Crosstex Energy,
Inc. (Nasdaq: XTXI) (the Corporation) today reported results for the third
quarter of 2005.
Crosstex Energy, L.P. Financial Results
The Partnership reported net income of $1.1 million for the third quarter of
2005 compared to net income in the third quarter of 2004 of $5.9 million. As
previously disclosed, the Partnership's net income in the third quarter of 2005
was negatively impacted by an $11.5 million charge for the mark-to-market
valuation of the derivative financial instruments (puts) purchased to protect
against liquids prices fluctuations in conjunction with the South Louisiana
processing asset acquisition, and positively impacted by an $8.0 million gain on
sale of property.
Net income per limited partner unit for the third quarter of 2005 decreased
to a loss of $0.05 per unit from income of $0.24 per unit in the corresponding
quarter in 2004. The current quarter loss per limited partner unit results from
the preferential allocation of net income to the general partner equal to its
incentive distribution rights, less certain costs. For the third quarter 2005,
this allocation resulted in $2.0 million of net income allocated to the general
partners' share of net income. This allocation reduced the limited partners'
share of net income to a net loss of $0.9 million in the quarter.
The Partnership's Distributable Cash Flow for the quarter was $17.9 million,
3.50 times the amount required to cover its Minimum Quarterly Distribution of
$0.25 per unit, and 1.54 times the amount required to cover its distribution of
$0.49 per unit. As previously disclosed, the Partnership sold certain idle
equipment for $9.0 million in 2005, and during the third quarter, the
Partnership received the final $5.4 million of funds for the sale, which is
included in Distributable Cash Flow for the quarter. The $11.5 million charge
for the mark-to-market value of the puts did not affect Distributable Cash Flow.
Excluding proceeds from the sale, Distributable Cash Flow for the quarter
increased $2.1 million, or 20.2 percent, over Distributable Cash Flow of $10.4
million in the 2004 third quarter. 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.
In addition to the sale proceeds, the growth in Distributable Cash Flow was
driven by growth in the Partnership's gross margin to $39.4 million in the third
quarter of 2005, an increase of 33 percent compared to $29.7 million in the
corresponding 2004 period. Gross margin from the midstream segment increased by
$6.3 million, or 28 percent, to $28.8 million. The Partnership was able to
benefit from natural gas price volatility and abnormal basis differentials
during the current quarter, contributing $4.3 million to the margin increase.
Operational efficiencies offset volume declines due to hurricanes, contributing
the remaining $2.0 million increase.
Gross margin from the Treating segment increased $3.7 million, or 56
percent, to $10.3 million. Plants in service increased to 111 at September 30,
2005 from 67 at September 30, 2004, contributing $3.0 million to the increase in
gross margin. Plant expansions and increased volumes made up $0.5 million of the
increase and the acquisition and installation of dew point control plants
contributed the remaining $0.2 million.
"We are pleased that, despite the challenges presented by Hurricane Katrina
in the third quarter and later by Hurricane Rita, we have been able to continue
to show improved results and consistent increases in our distributions and
dividends," said Barry E. Davis, President and Chief Executive Officer. "As we
look forward to next year we expect to see that growth continue with our
acquisition of the South Louisiana processing assets from El Paso, the
completion of the North Texas pipeline and our pursuit of other growth
opportunities."
Crosstex Energy, Inc. Financial Results
The Corporation reported net income of $0.8 million for the third quarter of
2005, compared to net income of $1.7 million for the comparable period in 2004.
The Corporation's net income before income taxes and interest of non-
controlling partners in the net income of the Partnership was $0.9 million in
the third quarter of 2005 and $4.6 million in the third quarter of 2004.
The Corporation's share of distributions, including distributions on its ten
million limited partner units, its two percent general partner interest, and the
incentive distribution rights, was $7.7 million for the third quarter. Its share
of the distribution in the third quarter of 2004 was $6.0 million. The recently
announced increase in the Partnership's distribution of $0.02 per unit increased
the Corporation's share of distributions by $0.6 million, from $7.1 million in
the second quarter of 2005 to $7.7 million in the third quarter of 2005.
Earnings Call
Crosstex will hold its quarterly conference call to discuss third quarter
results today at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The dial- in
number for the call is 800-561-2718, passcode Crosstex. A live Webcast of the
call can be accessed on the investor information page of Crosstex Energy's
Website at http://www.crosstexenergy.com. The call will be available for replay
for 30 days by dialing 888-286-8010, passcode 33312060. A replay of the
broadcast will also be available on the company's Website.
About Crosstex
Crosstex Energy, L.P., a mid-stream natural gas company headquartered in
Dallas, operates approximately 5,000 miles of pipeline, nine processing plants,
four fractionators and more than 100 natural gas amine treating plants.
Crosstex Energy Inc. owns the two percent general partner interest, a 44
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 a non-generally accepted accounting principle
financial measure which we refer to as Distributable Cash Flow. Distributable
Cash Flow includes earnings before non-cash charges, less maintenance capital
expenditures plus, in this period, proceeds from the sale of idle equipment. 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" and "estimate". These statements are
based on currently available information and assumptions and expectations that
the Partnership believes are reasonable. However, the assumptions and
expectations are subject to a wide range of business risks, so the Partnership
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 operations 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 has no
obligation to publicly update or revise any forward-looking statement, whether
as a result of new information, future events, or otherwise.
Contact:
Barry E. Davis, President and Chief Executive Officer
William W. Davis, Executive V.P. and Chief Financial Officer
Phone: (214) 953-9500
CROSSTEX ENERGY, L.P.
Selected Financial and Operating Data
(All amounts in thousands except per unit numbers)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------
Revenues
Midstream $ 769,334 $ 501,004 $ 1,928,330 $ 1,327,181
Treating 13,117 7,880 34,064 22,592
Profit from Energy
Trading Activities 306 579 1,157 1,605
782,757 509,463 1,963,551 1,351,378
Cost of Gas
Midstream 740,519 478,536 1,851,418 1,266,624
Treating 2,792 1,229 5,996 4,092
743,311 479,765 1,857,414 1,270,716
Gross Margin 39,446 29,698 106,137 80,662
Operating Expenses 13,874 10,087 37,598 26,740
General and Administrative 8,127 5,121 22,337 13,804
(Gain) Loss on Derivatives 13,273 (187) 13,679 (187)
Gain on Sale of
Property (7,632) (287) (7,797) (12)
Depreciation and
Amortization 7,828 6,160 22,134 16,499
Total 35,470 20,894 87,951 56,844
Operating Income 3,976 8,804 18,186 23,818
Interest Expense (2,762) (2,872) (9,323) (6,214)
Other Income 32 51 380 254
Total Other Income (2,730) (2,821) (8,943) (5,960)
Net Income Before Minority
Interest and Taxes 1,246 5,983 9,243 17,858
Minority Interest in
Subsidiary (106) (51) (331) (150)
Income Tax Provision (68) 13 (176) (116)
Net Income $ 1,072 $ 5,945 $ 8,736 $ 17,592
General Partner Share
of Net Income $ 1,990 $ 1,563 $ 5,216 $ 4,005
Limited Partners Share
of Net Income $ (918) $ 4,382 $ 3,520 $ 13,587
Net Income per Limited
Partners' Unit:
Basic $ (0.05) $ 0.24 $ 0.19 $ 0.75
Diluted $ (0.05) $ 0.23 $ 0.18 $ 0.73
Weighted Average Limited
Partners' Units Outstanding:
Basic 18,157 18,083 18,126 18,079
Diluted 20,479 18,662 19,371 18,607
CROSSTEX ENERGY, L.P.
Reconciliation of Net Income to Distributable Cash Flow
(All amounts in thousands except ratios)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------
Net Income $ 1,072 $ 5,945 $ 8,736 $ 17,592
Depreciation and
Amortization (1) 7,760 6,112 21,932 16,374
Stock-Based Compensation 1,143 288 2,659 766
Gain on Sale of Property (7,632) (287) (7,797) (12)
Proceeds from Sale of
Property 5,400 385 9,313 611
Puts Mark-to-Market 11,547 - 11,547 -
Deferred Tax Benefit (95) (168) (286) (168)
Cash Flow 19,195 12,275 46,104 35,163
Maintenance Capital
Expenditures (1,251) (1,842) (3,727) (4,814)
Distributable Cash Flow $ 17,944 $ 10,433 $ 42,377 $ 30,349
Minimum Quarterly
Distribution (MQD) $ 5,120 $ 4,612 $ 13,955 $ 13,840
Distributable Cash Flow/MQD 3.50 2.26 3.04 2.19
Actual Distribution $ 11,663 $ 9,439 $ 33,137 $ 26,868
Distribution Coverage 1.54 1.11 1.28 1.13
(1) Excludes minority interest share of depreciation and amortization of
$68,000 and $202,000 for the three and nine months ended September 30,
2005, respectively, and $48,000 and $125,000 for the three and nine months
ended September 30, 2004, respectively.
CROSSTEX ENERGY, L.P.
Operating Data
(All volumes in MMBtu/d)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------
Pipeline Throughput
Gulf Coast Transmission
& Vanderbilt 156,000 124,000 148,000 140,000
CCNG Transmission 267,000 301,000 253,000 282,000
Gregory Gathering 114,000 127,000 114,000 137,000
LIG Pipeline & Marketing 583,000 628,000 616,000 594,000
Other Midstream 193,000 129,000 160,000 132,000
Total Gathering and
Transmission Volume 1,313,000 1,309,000 1,291,000 1,285,000
Natural Gas Processed
Gregory Processing 108,000 100,000 100,000 110,000
Conroe Processing 17,000 25,000 23,000 26,000
LIG Processing 327,000 303,000 327,000 283,000
Total Processed Volume 452,000 428,000 450,000 419,000
Total On-System Volumes 1,765,000 1,737,000 1,741,000 1,704,000
Commercial Services Volume 188,000 224,000 186,000 209,000
Treating Plants in
Service (1) 111 67 111 67
(1) Plants in service represents plants in service on the last day of the
quarter.
CROSSTEX ENERGY, INC.
Selected Financial and Operating Data
(All amounts in thousands except per unit numbers)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------
Revenues
Midstream $ 769,334 $ 501,004 $ 1,928,330 $ 1,327,181
Treating 13,117 7,880 34,064 22,592
Profit from Energy
Trading Activities 306 579 1,157 1,605
782,757 509,463 1,963,551 1,351,378
Cost of Gas
Midstream 740,519 478,536 1,851,418 1,266,624
Treating 2,792 1,229 5,996 4,092
743,311 479,765 1,857,414 1,270,716
Gross Margin 39,446 29,698 106,137 80,662
Operating Expenses 13,882 10,092 37,613 26,768
General and
Administrative 8,471 5,478 23,295 14,688
(Gain) Loss on
Derivatives 13,273 (187) 13,679 (187)
Gain on Sale
of Property (7,633) (287) (7,797) (12)
Impairment - 981 - 981
Depreciation and
Amortization 7,839 6,160 22,169 16,499
Total 35,832 22,237 88,959 58,737
Operating Income 3,614 7,461 17,178 21,925
Interest Expense (2,701) (2,869) (9,046) (6,166)
Other Income 32 50 378 254
Total Other Income (2,669) (2,819) (8,668) (5,912)
Income Before Income
Taxes and Interest of
Non-controlling Partners
in the Partnership's
Net Income 945 4,642 8,510 16,013
Income Tax Expense (494) (957) (2,528) (3,504)
Interest of Non-controlling
Partners in the
Partnership's Net
(Income) Loss 304 (2,005) (1,909) (6,216)
Net Income $ 755 $ 1,680 $ 4,073 $ 6,293
Net Income per Common Share:
Basic Earnings per
Common Share $ 0.06 $ 0.14 $ 0.32 $ 0.54
Diluted Earnings
per Common Share $ 0.06 $ 0.13 $ 0.32 $ 0.49
Weighted Average
Shares Outstanding:
Basic 12,760 12,134 12,615 11,727
Diluted 12,962 12,918 12,944 12,892
SOURCE Crosstex Energy
-0- 11/08/2005
/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 /