DALLAS, May 9 /PRNewswire-FirstCall/ -- The Crosstex Energy
companies, Crosstex Energy, L.P. (NASDAQ:XTEX) (the Partnership)
and Crosstex Energy, Inc. (NASDAQ: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 http://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
(A) 16,979 6,873 Stock-Based Compensation 1,645 276 (Gain) Loss on
Sale of Property 52 (44) Proceeds from Sale of Property (B) ---
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 (A) 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. (B) 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 (A) 151 87 (A) 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 DATASOURCE: Crosstex
Energy, L.P.; Crosstex Energy, Inc. CONTACT: Jill McMillan,
+1-214-721-9271, or , for Crosstex Energy, L.P. and Crosstex
Energy, Inc. Web site: http://www.crosstexenergy.com/
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