Exhibit 99.1
[LOGO OF CROSSTEX]
FINAL Contact: Jill McMillan
MAY 9, 2006 Phone: 214-721-9271
jill.mcmillan@crosstexenergy.com
CROSSTEX ENERGY REPORTS FIRST QUARTER RESULTS
DALLAS, May 9, 2006 --- The Crosstex Energy companies, Crosstex Energy, L.P.
(NasdaqNM: XTEX) (the Partnership) and Crosstex Energy, Inc. (NasdaqNM: XTXI)
(the Corporation) today reported earnings for the first quarter of 2006.
"We were pleased with the financial results in the first quarter as they
supported our ability to increase distributions from the Partnership and
dividends from the Corporation", said Barry E. Davis, President and Chief
Executive Officer. "We continue to emphasize profitable growth in all phases of
the business."
CROSSTEX ENERGY, L.P. FINANCIAL RESULTS
The Partnership reported net income of $2.9 million for the first quarter of
2006 compared to net income of $3.2 million in the first quarter of 2005. The
Partnership adopted new standards for share-based compensation effective January
1, 2006 as required by FASB Statement No. 123(R). The cumulative effect of
adopting the new standard was an increase in net income of $0.7 million in the
first quarter 2006 representing a reduction of share-based compensation
recognized in prior periods.
Net income per limited partner unit for the first quarter of 2006 decreased to a
loss of $0.05 per unit from income of $0.06 per unit in the corresponding
quarter in 2005. 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 first quarter 2006,
this allocation resulted in $4.1 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 $1.2 million in the quarter.
The Partnership's Distributable Cash Flow for the quarter was $19.5 million, or
2.9 times the amount required to cover its Minimum Quarterly Distribution of
$0.25 per unit, and 1.02 times the amount required to cover its distribution of
$0.53 per unit. Distributable Cash Flow was $11.1 million in the 2005 first
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.
The Partnership's gross margin increased to $59.1 million in the first quarter
of 2006, compared to $32.1 million in the corresponding 2005 period, an increase
of 84 percent. Gross margin from the Midstream business segment increased by
$23.3 million, or 99 percent, to $46.9 million, mainly due to growth in
processed volumes of 337 percent. This growth was primarily the result of the
acquisition of South Louisiana processing assets from El Paso Corporation. Gross
margin from the Treating segment increased by $3.7 million, or 44 percent, to
$12.1 million. The Treating segment's increase in 2006 over 2005 is attributable
to the growth in the number of treating plants in service from 87 at the end of
the first quarter of 2005 to 151 at the end of the first quarter of 2006.
CROSSTEX ENERGY, INC. FINANCIAL RESULTS
The Corporation reported net income of $12.8 million for the first quarter of
2006, compared to net income of $1.6 million for the comparable period in 2005.
Net income for the first quarter of 2006 included a non-cash gain on issuance of
units of the Partnership of $19.0 million related to conversion of 1.5 million
of the Partnership's Series B Subordinated Units into common units during the
quarter. This gain was offset in part by deferred income tax expense of $8.2
million for a net non-cash impact on first quarter earnings of $10.8 million.
The Corporation's net income before income taxes and interest of non-controlling
partners in the net income of the Partnership was $2.0 million in the first
quarter of 2006 and $3.2 million in the first quarter of 2005.
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 $10.4 million for the first quarter. Its
share of the distribution in the first quarter of 2005 was $6.8 million. The
recently announced increase in the Partnership's distribution of $0.02 per unit
and the issuance of new units discussed above increased the Corporation's share
of distributions by $1.0 million, from $9.4 million in the fourth quarter of
2005 to $10.4 million in the first quarter of 2006.
EARNINGS CALL
The Partnership and the Corporation will hold their quarterly conference call to
discuss first quarter results today, May 9, at 10:00 a.m. Central Time (11:00
a.m. Eastern Time). The dial-in number for the call is 866-356-3095, passcode
Crosstex. A live Webcast of the call can be accessed on the investor relations
page of Crosstex Energy's Web site at www.crosstexenergy.com. The call will also
be available for replay for 30 days by dialing 888-286-8010, passcode 49933675,
or by going to the investor relations events page of Crosstex Energy's Web site.
ABOUT THE CROSSTEX ENERGY COMPANIES
- -----------------------------------
Crosstex Energy, L.P., a midstream natural gas company headquartered in Dallas,
operates over 5,000 miles of pipeline, ten processing plants, four
fractionators, and approximately 150 natural gas amine treating plants and 22
dew point control plants. Crosstex currently provides services for over 3.0
Bcf/day of natural gas, or approximately 6.0 percent of marketed U.S. daily
production based on August 2005 Department of Energy data.
Crosstex Energy, Inc. owns the two percent general partner interest, a 38
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 and amortization of costs of certain derivatives (puts) plus, in
the prior period, a cash deposit securing the contracted 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 and amortization of the cost of
the puts. 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. The puts were
acquired to hedge the future price of natural gas liquids. The net cost of the
puts is being amortized over their life. 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 and the Corporation believe are reasonable. However, the
Partnership's and the Corporation's assumptions and expectations are subject to
a wide range of business risks, so they 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 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 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 follow)
CROSSTEX ENERGY, L.P.
SELECTED FINANCIAL & OPERATING DATA
(All amounts in thousands except per unit numbers)
THREE MONTHS ENDED
MARCH 31,
----------------------------
2006 2005
------------ ------------
Revenues
Midstream $ 802,130 $ 539,564
Treating 14,566 9,907
Profit from Energy Trading Activities 423 518
------------ ------------
817,119 549,989
Cost of Gas
Midstream 755,568 516,416
Treating 2,433 1,493
------------ ------------
758,001 517,909
Gross Margin 59,118 32,080
Operating Expenses 21,962 11,544
General and Administrative 11,355 6,460
(Gain) Loss on Derivatives (2,159) 474
(Gain) Loss on Sale of Property 52 (44)
Depreciation and Amortization 17,050 6,936
------------ ------------
Total 48,260 25,370
Operating Income 10,858 6,710
Interest Expense (8,512) (3,365)
Other Income 2 26
------------ ------------
Total Other Income (8,510) (3,339)
------------ ------------
Net Income Before Minority Interest and Taxes 2,348 3,371
Minority Interest in Subsidiary (80) (137)
Income Tax Provision (34) (54)
------------ ------------
Net Income before Cumulative Effect of
Accounting Change $ 2,234 $ 3,180
------------ ------------
Cumulative Effect of Accounting Change 689 -
------------ ------------
Net Income $ 2,923 $ 3,180
============ ============
General Partner Share of Net Income $ 4,165 $ 2,021
============ ============
Limited Partners Share of Net Income (loss) $ (1,242) $ 1,159
============ ============
Net Income (loss) per Limited Partners' Unit:
Basic $ (0.05) $ 0.06
============ ============
Diluted $ (0.05) $ 0.06
============ ============
Weighted Average Limited Partners'
Units Outstanding:
Basic 25,550 18,098
============ ============
Diluted 25,550 18,756
============ ============
Distributions per Limited Partner Unit $ 0.53 $ 0.46
============ ============
CROSSTEX ENERGY, L.P.
RECONCILIATION OF NET INCOME TO DISTRIBUTABLE CASH FLOW
(All amounts in thousands except ratios)
THREE MONTHS ENDED
MARCH 31,
----------------------------
2006 2005
------------ ------------
Net Income $ 2,923 $ 3,180
Depreciation and Amortization (1) 16,979 6,873
Stock-Based Compensation 1,645 276
(Gain) Loss on Sale of Property 52 (44)
Proceeds from Sale of Property (2) - 1,993
Corporate Mark-to-Market 224 -
Cumulative Effect of Acctg. Change (689) -
Deferred Tax (Benefit) Expense 55 (95)
------------ ------------
Cash Flow 21,189 12,183
Amortization of Put Premiums (622) -
Maintenance Capital Expenditures (1,019) (1,114)
------------ ------------
Distributable Cash Flow $ 19,548 $ 11,069
============ ============
Minimum Quarterly Distribution (MQD) $ 6,773 $ 4,619
Distributable Cash Flow/MQD 2.9 2.4
Actual Distribution $ 19,169 $ 10,537
Distribution Coverage 1.02 1.05
(1) Excludes minority interest share of depreciation and amortization of $71,000
for the three months ended March 31, 2006, and $63,000 for the three months
ended March 31, 2005.
(2) 2005 includes a deposit from the contracted sale of equipment.
CROSSTEX ENERGY, L.P.
OPERATING DATA
THREE MONTHS ENDED
MARCH 31,
----------------------------
2006 2005
------------ ------------
PIPELINE THROUGHPUT (MMBtu/d)
South Texas 498,000 496,000
LIG Pipeline & Marketing 616,000 636,000
Other Midstream 204,000 141,000
------------ ------------
Total Gathering & Transmission Volume 1,318,000 1,273,000
NATURAL GAS PROCESSED
MMBtu/d 1,792,000 410,000
Commercial Services Volume (MMBtu/d) 192,000 176,000
Treating Plants in Service (1) 151 87
(1) Plants in Service represents plants in service on the last day of the
quarter.
CROSSTEX ENERGY, INC.
SELECTED FINANCIAL & OPERATING DATA
(All amounts in thousands except per unit numbers)
THREE MONTHS ENDED
MARCH 31,
----------------------------
2006 2005
------------ ------------
Revenues
Midstream $ 802,130 $ 539,564
Treating 14,566 9,907
Profit from Energy Trading Activities 423 518
------------ ------------
817,119 549,989
Cost of Gas
Midstream 755,568 516,416
Treating 2,433 1,493
------------ ------------
758,001 517,909
Gross Margin 59,118 32,080
Operating Expenses 21,970 11,547
General and Administrative 11,831 6,680
(Gain) Loss on Derivatives (2,159) 474
(Gain) Loss on Sale of Property 52 (44)
Depreciation and Amortization 17,069 6,946
------------ ------------
Total 48,763 25,603
Operating Income 10,355 6,477
Interest Expense (8,403) (3,288)
Other Income 2 26
------------ ------------
Total Other Income (8,401) (3,262)
------------ ------------
Income Before Income Taxes and Interest
of Non-controlling Partners in the
Partnership's Net Income 1,954 3,215
Income Tax Provision (9,335) (987)
Gain on Issuance of Units of the Partnership 18,955 -
Interest of Non-controlling Partners in the
Partnership's Net (Income) Loss 1,088 (656)
------------ ------------
Net Income Before Cumulative effect of Change
in Accounting 12,662 1,572
------------ ------------
Cumulative effect of Change in Accounting 170 -
------------ ------------
Net Income $ 12,832 $ 1,572
============ ============
Net Income per Common Share:
Basic Earnings per Common Share $ 1.01 $ 0.13
============ ============
Diluted Earnings per Common Share $ 1.00 $ 0.12
============ ============
Weighted Average Shares Outstanding:
Basic 12,763 12,346
============ ============
Diluted 12,864 12,949
============ ============
Dividends per Common Share $ 0.60 $ 0.41
============ ============