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
2009.
First-Quarter 2009 � Crosstex Energy, L.P. Financial
Results
The Partnership realized adjusted cash flow of $51.5 million in
the first quarter of 2009, compared with $67.7 million in the first
quarter of 2008. Adjusted cash flow is a non-GAAP financial measure
and is explained in greater detail under �Non-GAAP Financial
Information.� There is a reconciliation of this non-GAAP measure to
net income (loss) in the tables at the end of this news
release.
The Partnership reported a net loss of $15.3 million in the
first quarter of 2009, compared with net income of $3.7 million in
the first quarter of 2008. The first quarter 2009 net loss includes
a noncash loss of $4.7 million on the extinguishment of debt
compared with other income of $7.1 million included in the first
quarter 2008 net income that was related to a settlement of
disputed liabilities assumed in an acquisition.
The Partnership�s gross margin for the first quarter of 2009
decreased 11 percent to $83.0 million, compared with $93.3 million
in the first quarter of 2008. Gross margin from the Midstream
business segment decreased $13.6 million, or 17 percent, to $68.6
million. The decline, which was primarily related to reduced inlet
volumes and lower natural gas liquids prices at Crosstex�s
processing facilities, was partially offset by increased throughput
on the Partnership�s gathering and transmission systems. The
decrease was partially offset by an increase in the Treating
segment�s gross margin to $14.3 million in the first quarter of
2009 compared with $11.1 million in the first quarter of 2008. The
Treating segment�s gross margin increase was primarily related to
larger plants installed during the last six months, mainly in the
Haynesville shale.
�Consistent with guidance, our results were negatively impacted
by the decline in natural gas liquids prices and a slowdown in
drilling activity,� said Barry E. Davis, Crosstex President and
Chief Executive Officer. �However, we continue to make progress on
our plan to increase liquidity, reduce leverage and improve
profitability. With approximately $246 million currently available
under our revolving credit agreement, we believe we have sufficient
financial flexibility. We are confident that by strengthening our
balance sheet, closely managing costs, and focusing on our most
valuable assets in the Barnett and Haynesville shale plays, we will
be well-positioned as the economy recovers.�
As a result of the Partnership�s focus on expense reduction,
during the first quarter of 2009 operating expenses declined $4.4
million, or 12 percent compared with the first quarter of 2008, and
general and administrative expenses decreased $1.2 million or eight
percent compared with the first quarter of 2008. Depreciation and
amortization expense increased $2.7 million in the first quarter of
2009 compared with the first quarter of 2008 due to the
Partnership�s greater investment in its North Texas assets.
Interest expense declined to $22.3 million in the first quarter of
2009 from $24.6 million in the first quarter of 2008 primarily due
to the decrease in the noncash mark to market loss on interest rate
swaps.
The net loss per limited partner common unit in the first
quarter of 2009 was $1.06 compared with a net loss of $3.61 per
common unit in the first quarter of 2008. The 2009 and 2008 losses
per limited partner common unit were impacted by the allocation of
net income of $34.3 million and $121.1 million, respectively, to
the Partnership�s Senior Subordinated D and C Units. The units
converted to 4.1 million and 12.8 million common units in the first
quarters of 2009 and 2008, respectively. This allocation represents
a Beneficial Conversion Feature (BCF) under EITF 98-5 �Accounting
for Convertible Securities and Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios.� The Senior Subordinated
D Units were issued on March 23, 2007, at a discount to the market
price of the common units at that date, and could not participate
in distributions prior to their conversion to common units on March
23, 2009. The Senior Subordinated C Units were issued on June 29,
2006, at a discount to the market price of the common units at that
date, and could not participate in distributions prior to their
conversion to common units on February 16, 2008. The BCF allocation
is a noncash distribution equal to the discount to the common unit
market price that is treated the same way as a cash distribution
for earnings per unit computations.
First-Quarter 2009 � Crosstex Energy, Inc. Financial
Results
The Corporation reported a net loss of $8.8 million for the
first quarter of 2009 compared with net income of $10.7 million for
the comparable period in 2008. The Corporation�s loss from
continuing operations before income taxes (which includes interest
of non-controlling partners in the net income of the Partnership)
was $17.2 million in the first quarter of 2009, compared with a
loss of $4.2 million in the first quarter of 2008.
In accordance with U.S. accounting standards, the Partnership
and Corporation classified certain assets, liabilities, and results
of its operations, as discontinued operations for all accounting
periods presented. Included in this release are tables of selected
financial data where amounts have been reclassified as discontinued
operations for each period presented.
Crosstex to Hold Earnings Conference Call Today
The Partnership and the Corporation will hold their quarterly
conference call to discuss first-quarter 2009 results today, May 8,
at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The dial-in
number for the call is 1-888-713-4214, and the passcode is
78165883. Callers outside the United States should dial
1-617-213-4866, and the passcode is 78165883. Investors are advised
to dial in to the call at least 10 minutes prior to the call time
to register. Participants may preregister for the call at
https://www.theconferencingservice.com/prereg/key.process?key=PJ6QXTV48.
Preregistrants will be issued a pin number to use when dialing in
to the live call, which will provide quick access to the conference
by bypassing the operator upon connection. Interested parties also
can access a live Web cast of the call on the Investors page of
Crosstex�s Web site at www.crosstexenergy.com.
After the conference call, a replay can be accessed until August
8, 2009, by dialing 1-888-286-8010. International callers should
dial 1-617-801-6888 for a replay. The passcode for all callers
listening to the replay is 66821770. Interested parties also can
visit the Investors page of Crosstex�s Web site to listen to a
replay of the call.
About the Crosstex Energy
Companies
Crosstex Energy, L.P., a midstream natural gas company
headquartered in Dallas, operates approximately 5,700 miles of
pipeline, 12 processing plants, four fractionators, and
approximately 190 natural gas amine-treating plants and dew-point
control plants. Crosstex currently provides services for 4.0
billion cubic feet per day of natural gas, or approximately eight
percent of marketed U.S. daily production.
Crosstex Energy, Inc. owns the two percent general partner
interest, a 33 percent limited partner interest and the incentive
distribution rights of Crosstex Energy, L.P.
Additional information about the Crosstex companies can be found
at www.crosstexenergy.com.
Non-GAAP Financial Information
This press release contains non-generally accepted accounting
principle financial measures that the Partnership refers to as
Distributable Cash Flow and Adjusted Cash Flow. Distributable Cash
Flow includes earnings before certain noncash charges, less
maintenance capital. Adjusted Cash Flow includes net income before
interest, income taxes, depreciation and amortization, stock-based
compensation and other miscellaneous noncash items. 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 the assets and to extend their
useful lives.
The Partnership believes these measures are useful to investors
because they 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 and Adjusted Cash Flow are not measures
of financial performance or liquidity under GAAP. They should not
be considered in isolation or as an indicator of the Partnership�s
performance. Furthermore, they should not be seen as measures of
liquidity or a substitute for metrics prepared in accordance with
GAAP. A reconciliation of these measures to net income is included
among the preceding and following tables.
This press release contains forward-looking statements within
the meaning of the federal securities laws. These statements are
based on certain assumptions made by the Partnership and the
Corporation based upon management's experience and perception of
historical trends, current conditions, expected future developments
and other factors the Partnership and the Corporation believe are
appropriate in the circumstances. These statements include, but are
not limited to, statements with respect to the Partnership�s and
the Corporation�s future liquidity. Such statements are subject to
a number of assumptions, risks and uncertainties, many of which are
beyond the control of the Partnership and the Corporation, which
may cause the Partnership's and the Corporation's actual results to
differ materially from those implied or expressed by the
forward-looking statements. These risks include the following: (1)
the Partnership may not be able to obtain funding due to the
deterioration of the credit and capital markets and current
economic conditions; (2) the Partnership will not be able to pay
cash distributions until its liquidity position improves and it
refinances and pays certain of its indebtedness; (3) volatility in
natural gas and natural gas liquids prices may occur due to weather
and other natural and economic forces; (4) the Partnership and the
Corporation do not have diversified assets; (5) drilling levels may
decrease due to deterioration in the credit and commodity markets;
(6) the Partnership's credit risk management efforts may fail to
adequately protect against customer nonpayment; (7) customers may
increase collateral requirements from the Partnership or reduce
business with the Partnership to reduce credit exposure; (8)
exposure to fluctuations in commodity prices and interest rates may
result in financial losses or reduced income;(9) the amount of
natural gas transported in the Partnership's gathering and
transmission lines may decline as a result of reduced drilling by
producers, competition for supplies, reserve declines and reduction
in demand from key customers and markets; (10) the level of the
Partnership's processing and treating operations may decline for
similar reasons; (11) operational, regulatory and other
asset-related risks, including weather conditions such as
hurricanes, exist because a significant portion of the
Partnership�s assets are located in southern Louisiana and the Gulf
Coast of Texas; and (12) other factors discussed in the
Partnership's and the Corporation's Annual Reports on Form 10-K for
the year ended December 31, 2008, and other filings with the
Securities and Exchange Commission. 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 Data(All
amounts in thousands except per unit numbers) � � �
Three Months
Ended March 31, 2009 2008
(Unaudited) Revenues Midstream $ 352,437 $ 798,902 Treating
14,312 11,080 Profit on energy trading activities � 714 � � 856 �
367,463 810,838 � Midstream purchased gas 284,506 717,584 � Gross
margin 82,957 93,254 � Operating expenses 31,928 36,342 General and
administrative 14,213 15,455 Gain on sale of property (878 ) (260 )
Gain on derivatives (4,336 ) (986 ) Depreciation and amortization �
31,565 � � 28,882 � Total 72,492 79,433 � Operating income 10,465
13,821 � Interest expense, net (22,289 ) (24,562 ) Loss on
extinguishment of debt (4,669 ) - Other income (expense) � (50 ) �
7,104 � Total other income (expense) (27,008 ) (17,458 )
Loss from continuing operations
before non-controlling interest and income taxes
(16,543 ) (3,637 ) Income tax provision � (558 ) � (343 ) Loss from
continuing operations, net of tax (17,101 ) (3,980 ) Income from
discontinued operations � 1,795 � � 7,835 � Net income (loss) �
(15,306 ) � 3,855 �
Less: Net income attributable to
the non-controlling interest
� 32 � � 144 � Net income (loss) attributable to Crosstex Energy,
L.P. $ (15,338 ) $ 3,711 � General partner interest in net income
(loss) $ (940 ) $ 10,650 � Limited partners' interest in net income
(loss) $ (14,398 ) $ (6,939 ) � Net income (loss) per limited
partners' unit Basic and diluted common unit $ (1.06 ) $ (3.61 ) �
Basic and diluted senior
subordinated series C unit
$ - � $ 9.44 � �
Basic and diluted senior
subordinated series D unit
$ 8.85 � $ - � � Weighted average limited partners� units
outstanding:
Basic and diluted common units
� 45,318 � � 34,981 � � �
CROSSTEX ENERGY, L.P.
Reconciliation of Net Income to Adjusted Cash Flow and
Distributable Cash Flow (All amounts in thousands except ratios
and distributions per unit) � � �
Three Months Ended
March 31, 2009 2008 (Unaudited) Net
income (loss) $ (15,338 ) $ 3,711 Depreciation and amortization (1)
34,645 32,436 Stock-based compensation 1,606 2,630 Interest
expense, net (2) 26,348 28,209 Loss on extinguishment of debt 4,669
- Taxes and other � (398 ) � 677 � Adjusted cash flow 51,532 67,663
� Interest (2)(3) (26,291 ) (20,294 ) Cash taxes and other (851 )
(67 ) Maintenance capital expenditures � (2,095 ) � (3,592 )
Distributable cash flow $ 22,295 � $ 43,710 � Actual distribution $
- $ 40,413 Distribution coverage - 1.08 � Distributions declared
per limited partner unit $ - � $ 0.62 � �
(1) Excludes minority interest share of depreciation and
amortization of $71 for the three months ended March 31, 2009, and
$66 for the three months ended March 31, 2008. Includes
discontinued operation depreciation and amortization of $3,151 for
the three months ended March 31, 2009, and $3,620 for the three
months ended March 31, 2008.
(2) Includes interest allocated to discontinued operations of
$4,059 for the three months ended March 31, 2009, and $3,647 for
the three months ended March 31, 2008.
(3) Excludes noncash interest rate swap mark to market and PIK
interest expense.
� � �
CROSSTEX ENERGY, L.P.Operating Data � �
Three Months Ended March 31, 2009 2008
�
Pipeline Throughput (MMBtu/d) LIG Pipeline & Marketing
894,000 1,054,000
South�Texas
422,000 392,000 North Texas - Gathering 809,000 563,000 North Texas
- Transmission 303,000 322,000 Other Midstream 180,000 � � 212,000
�
Total Gathering and Transmission Volume (1) 2,608,000
2,543,000 �
Natural Gas Processed (MMBtu/d) South Louisiana
630,000 1,458,000 LIG System 250,000 369,000 South Texas 191,000
214,000 North Texas 221,000 � � 177,000 �
Total Gas Volumes
Processed (2) 1,292,000 2,218,000 � Realized weighted average
Natural Gas Liquids price ($/gallon) 0.66 1.36 Actual weighted
average Natural Gas Liquids to Gas ratio 152.4 % 198.8 % �
Commercial Services Volume (MMBtu/d) 113,000 80,000 �
North Texas Gathering (3) Wells connected 44 43 �
Treating Plants in Service and GPM Treating and DPC plants
in service (4) 190 190 Total GPM of treating plants in service (5)
10,092 9,820 �
(1) Total Gathering and Transmission Volumes include volumes
attributable to assets held for sale.
(2) Total Gas Volumes Processed include volumes attributable to
assets held for sale.
(3) North Texas Gathering wells connected are as of the last day
of the period and include Centralized Delivery Point ("CDP")
connections where Crosstex connects multiple wells at a single
meter station.
(4) Treating plants and Dew Point Control ("DPC") plants in
service represents plants in service as of the last day of the
period and includes assets held for sale.
(5) Total Gallons per Minute ("GPM") capacity of amine treating
plants in service as of the last day of the period and includes
assets held for sale.
� � �
CROSSTEX ENERGY, INC.Selected Financial
Data(All amounts in thousands except per share numbers) � �
Three Months Ended March 31, 2009 2008
(Unaudited) Revenues Midstream $ 352,437 $ 798,902 Treating
14,312 11,080 Profit on energy trading activities � 714 � � 856 �
367,463 810,838 � Midstream purchased gas 284,506 717,584 � Gross
margin 82,957 93,254 � Operating expenses 31,928 36,345 General and
administrative 14,859 16,106 Gain on sale of property (878 ) (260 )
Gain on derivatives (4,336 ) (986 ) Depreciation and amortization �
31,584 � � 28,894 � Total 73,157 80,099 � Operating income 9,800
13,155 � Interest expense, net (22,289 ) (24,492 ) Loss on
extinguishment of debt (4,669 ) - Other income (expense) � (21 ) �
7,104 � Total other income (expense) (26,979 ) (17,388 ) � Loss
from continuing operations before income taxes (17,179 ) (4,233 )
Income tax (provision) benefit � (2,406 ) � 4,186 � Loss from
continuing operations, net of tax (19,585 ) (47 ) Income from
discontinued operations-net of tax � 1,538 � � 6,680 � Net income
(loss) � (18,047 ) � 6,633 �
Less: Interest of non-controlling
partners in the Partnership's net income (loss)
� (9,205 ) � (4,073 ) Net income (loss) attributable to Crosstex
Energy, Inc. $ (8,842 ) $ 10,706 � � Net income (loss) per common
share: Basic and diluted $ (0.19 ) $ 0.23 � � Weighted average
shares outstanding: Basic � 46,439 � � 46,262 � � Diluted � 46,439
� � 46,610 � � Dividends declared per common share $ - � $ 0.36 �
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