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
fourth-quarter and full-year 2011.
Fourth-Quarter 2011 – Crosstex Energy, L.P. Financial
Results
The Partnership’s adjusted EBITDA increased $4.5 million, or 9
percent, to $54.6 million, and distributable cash flow rose $3.5
million, or 12 percent, to $31.7 million for the fourth quarter of
2011 compared with the fourth quarter of 2010. Adjusted EBITDA and
distributable cash flow are non-GAAP financial measures and are
explained in greater detail under “Non-GAAP Financial Information.”
There is a reconciliation of these non-GAAP measures to net loss in
the tables of this news release.
The Partnership posted a net loss of $1.4 million for the fourth
quarter of 2011 compared with a net loss of $2.4 million in the
fourth quarter of 2010.
“In 2011, we successfully executed our business plan to maximize
the earnings and growth of each of our existing businesses. Our
focus on high-return projects during the last three years resulted
in record earnings last year for each of our core businesses. We
also enhanced our scale and diversification by expanding our
footprint through three significant projects,” said Barry E. Davis,
Crosstex President and Chief Executive Officer. “Our 2012 vision
remains unchanged – to be the best midstream energy solutions
provider in the industry. We will continue to focus on operating
our assets efficiently, managing our balance sheet conservatively,
and enhancing our scale and diversification. We are well positioned
to take advantage of the unprecedented growth opportunities
ahead.”
The Partnership’s fourth-quarter 2011 gross operating margin was
$97.8 million, an $8.4 million increase over the fourth quarter of
2010. The improvement was primarily the result of a favorable
processing and natural gas liquids (NGL) environment. Gross
operating margin 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 loss in the tables
of this news release.
The Partnership reports results by operating segment principally
based on regions served. Reportable segments consist of the natural
gas gathering, processing and transmission operations in the
Barnett Shale in north Texas and in the Permian Basin in west Texas
(NTX); the pipelines and processing plants in Louisiana (LIG); and
the south Louisiana processing and NGL assets, including gas and
NGL marketing activities (PNGL). Each business segment’s
contribution to the fourth-quarter 2011 gross operating margin
change versus the fourth-quarter 2010, and the factors affecting
those contributions, are described below:
- The PNGL segment’s gross operating
margin rose $4.8 million primarily due to the favorable processing
environment and greater NGL marketing and fractionation
activity.
- The LIG segment’s gross operating
margin increased $2.4 million, primarily the result of an improved
processing environment.
- The NTX segment’s gross operating
margin rose $1.2 million, primarily due to two gathering system
expansion projects that commenced operations in March 2011. The
increase was partially offset by higher losses on a certain
long-term delivery contract.
The Partnership’s fourth-quarter 2011 operating expenses of
$30.7 million increased $4.0 million, or 15 percent, from the
fourth quarter of 2010, primarily due to increased labor and
benefit costs and the accrual of $2.0 million for a legal judgment
that is under appeal. General and administrative expenses rose $1.9
million, or 15 percent, versus the fourth quarter of 2010 largely
due to increased labor and benefit costs and higher professional
fees and services costs. Depreciation and amortization expense for
the fourth quarter of 2011 increased $2.6 million, or nine percent,
compared with the fourth quarter of 2010, primarily the result of
an increase in amortization of intangibles. Interest expense
declined to $19.3 million for the fourth quarter of 2011 from $19.8
million for the fourth quarter of 2010.
The net loss per limited partner common unit for the fourth
quarter of 2011 was $0.12 compared with net loss of $0.11 per
limited partner common unit for the fourth quarter of 2010.
Full-Year 2011 – Crosstex Energy, L.P. Financial
Results
The Partnership realized adjusted EBITDA of $214.0 million and
distributable cash flow of $121.3 million for 2011 compared with
adjusted EBITDA of $186.9 million and distributable cash flow of
$91.2 million for 2010. The Partnership reported a net loss of $2.3
million for 2011, compared with a net loss of $25.8 million for
2010.
The Partnership’s 2011 gross operating margin increased to
$375.2 million from $338.3 million for 2010. This improvement was
primarily related to favorable NGL market dynamics during the year,
as well as higher volumes on the Partnership’s gathering and
transmission assets. Each business segment’s contribution to the
2011 increase and the factors affecting those contributions are
described below:
- The favorable processing and NGL
marketing environments were the primary drivers of the $14.0
million increase in the PNGL segment’s gross operating margin in
2011 as compared with 2010.
- The LIG segment contributed $12.4
million of gross operating margin growth in 2011 compared with
2010. Processing activity contributed a $16.6 million gain, which
was partially offset by a $4.2 million decrease in LIG’s gathering
and transmission assets’ gross operating margin.
- The NTX segment’s gross operating
margin improved $10.5 million in 2011, primarily the result of
greater throughput volumes from two gathering system expansion
projects that commenced operations in March 2011, that contributed
$11.4 million. Processing margins increased $3.9 million due to
increased supply and the favorable processing environment. These
were partially offset by higher losses of $4.9 million on a certain
long-term delivery contract.
The Partnership’s operating expenses increased $6.7 million in
2011, or six percent, to $111.8 million versus $105.1 million in
2010 primarily due to $4.4 million in increased labor and benefit
costs and the accrual of $2.0 million for a legal judgment that is
under appeal. General and administrative expenses in 2011 rose by
$4.4 million from 2010 largely due to an increase in labor and
benefit costs of $3.2 million and a $1.0 million increase in bad
debt expense due to uncollectible gathering fees. Depreciation and
amortization expense increased $13.7 million in 2011 compared with
2010 primarily due to intangible amortization. Interest expense
decreased to $79.2 million in 2011 from $87.0 million in 2010
primarily due to the reduction in expense associated with
borrowings on the Partnership’s bank credit facility.
The net loss per limited partner common unit was $0.38 in 2011
compared with a net loss of $1.12 per limited partner common unit
in 2010.
Fourth-Quarter and Full-Year 2011 - Crosstex Energy, Inc.
Financial Results
The Corporation reported a $1.8 million net loss for the fourth
quarter of 2011 compared with a net loss of $2.1 million for the
fourth quarter of 2010. The net loss for 2011 was $6.0 million
compared with a net loss of $11.7 million for 2010.
The Corporation had $6.2 million of cash on hand and no debt at
the end of 2011.
Crosstex Provides Preliminary 2012 Guidance
The Partnership’s estimates of 2012 adjusted EBITDA and
distributable cash flow that are based on various commodity price
scenarios and other varying assumptions are included in the
following table. Assuming actual results are within the range of
guidance, it is expected the Partnership could generate sufficient
distributable cash flow to support distributions in the range of
$1.28 to $1.41 per unit for the year. It is also expected that the
Corporation could pay dividends in the range of $0.44 to $0.55 per
share for 2012, assuming the receipt of per unit distributions from
the Partnership in the range stated above. The payment and amount
of distributions and dividends will be subject to approval by the
Boards of Directors of the Partnership and Corporation and to
economic conditions and other factors existing at the time of
determination.
CROSSTEX ENERGY Forecast for Year 2012 Selected
Financial Metrics (In millions except prices, ratios, per unit
and per share amounts)
Low
Midpoint High Crosstex Energy, L.P. Adjusted
EBITDA* $ 205 $ 225 $ 245 Distributable cash flow* $ 114 $ 134 $
154 Distribution per Unit $1.28 $1.34 $1.41 Distribution coverage
1.1x 1.3x 1.4x EBITDA growth n/a 5% 14% Distribution
growth** n/a 13% 25% Growth Capital $ 294 $ 294 $ 294
Maintenance Capital $ 18 $ 17 $ 16
Crosstex Energy,
Inc. Cash available for dividends $ 21 $ 23 $ 27 Dividend per
share $0.44 $0.48 $0.55 Dividend growth** n/a 27% 74%
Key
Assumptions for Forecast Weighted Average Liquids Price
($/gallon) 1.04 1.21 1.38 Brent crude ($/Bbl) 93.00 107.50 122.60
Natural Gas ($/MMBtu) 4.00 3.48 3.00 Natural Gas Liquids to Gas
Ratio 307% 410% 543%
* Adjusted EBITDA and Distributable cash
flow are non-GAAP financial measures and are explained in greater
detail under "Non-GAAP Financial Information."
** Distribution and dividend growth calculated using
annualized fourth quarter declared amounts.
Crosstex to Hold Earnings Conference Call Today
The Partnership and the Corporation will hold a conference call
to discuss fourth-quarter and full-year 2011 financial results and
2012 guidance on Tuesday, February 28, at 10:00 a.m. Central time
(11:00 a.m. Eastern time). The dial-in number for the call is
1-888-680-0878. Callers outside the United States should dial
1-617-213-4855. The passcode is 22741159 for all callers. 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=PLF39Y84B.
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 the live webcast of the call on the Investors page of
Crosstex’s website at www.crosstexenergy.com.
After the conference call, a replay can be accessed until May
29, 2012, 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 96375840. Interested parties also can
visit the Investors page of Crosstex’s website 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 3,300 miles of
pipeline, nine processing plants and three fractionators. The
Partnership currently provides services for 3.2 billion cubic feet
of natural gas per day, or approximately six percent of marketed
U.S. daily production.
Crosstex Energy, Inc. owns the two percent general partner
interest, a 25 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
gross operating margin, adjusted EBITDA and distributable cash
flow. Gross operating margin is defined as revenue minus the cost
of purchased gas and NGLs. Adjusted EBITDA is defined as net income
(loss) plus interest expense, provision for income taxes and
depreciation and amortization expense, impairments, stock-based
compensation, loss on extinguishment of debt, (gain) loss on
noncash derivatives, transaction costs associated with successful
transactions, minority interest and certain severance and exit
expenses, and accrued expense of a legal judgment under appeal,
less gain on sale of property. Distributable cash flow is defined
as earnings before certain noncash charges and the gain on the sale
of assets less maintenance capital expenditures. 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.
Gross operating margin, adjusted EBITDA and distributable cash
flow, as defined above, 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 loss is included among the 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 guidance and future outlook, distribution and
dividend guidelines and future estimates and results of operations.
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’s profitability is
dependent upon prices and market demand for natural gas and NGLs;
(2) the Partnership’s substantial indebtedness could limit its
flexibility and adversely affect its financial health; (3) the
Partnership may not be able to obtain funding which would impair
its ability to grow; (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) the Partnership’s use of
derivative financial instruments does not eliminate its exposure to
fluctuations in commodity prices and interest rates; (8) the
Partnership may not be successful in balancing its purchases and
sales; (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 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 (12)
other factors discussed in the Partnership’s and the Corporation’s
Annual Reports on Form 10-K for the year ended December 31, 2011,
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. Summary Financial Data (All
amounts in thousands except per unit numbers)
Three Months Ended Years Ended December
31, December 31, 2011 2010 2011
2010 Unaudited Midstream revenues $ 480,939 $
427,235 $ 2,013,942 $ 1,792,676 Purchased gas and NGLs
383,127 337,803 1,638,777
1,454,376 Gross operating margin 97,812 89,432 375,165
338,300 Operating costs and expenses: Operating expenses
30,695 26,694 111,778 105,060 General and administrative 14,690
12,745 52,801 48,414 (Gain) loss on sale of property (53 ) 486 264
(13,881 ) Loss on derivatives 2,256 2,228 7,776 9,100 Impairments -
- - 1,311 Depreciation and amortization 32,084
29,454 125,284 111,551 Total
operating costs and expenses 79,672 71,607 297,903 261,555
Operating income 18,140 17,825 77,262 76,745 Interest
expense, net of interest income (19,282 ) (19,847 ) (79,233 )
(87,035 ) Loss on extinguishment of debt - - - (14,713 ) Other
income 50 (19 ) 707 295
Total other income (expense) (19,232 ) (19,866
) (78,526 ) (101,453 )
Loss before non-controlling interest and
income taxes
(1,092 ) (2,041 ) (1,264 ) (24,708 ) Income tax provision
(228 ) (312 ) (1,126 ) (1,121 ) Net loss $
(1,320 ) $ (2,353 ) $ (2,390 ) $ (25,829 )
Less: Net income (loss) attributable to
the non-controlling interest
81 31
(48
)
19 Net loss attributable to Crosstex Energy, L.P. $
(1,401 ) $ (2,384 ) $ (2,342 ) $ (25,848 )
Preferred interest in net income
attributable to Crosstex Energy, L.P.
$ 4,706 $ 3,824 $ 18,088 $ 13,750
Beneficial conversion feature attributable
to preferred units
$ - $ - $ - $ 22,279 General partner
interest in net loss $ (23 ) $ (776 ) $ (732 ) $ (4,371 ) Limited
partners’ interest in net loss $ (6,084 ) $ (5,432 ) $ (19,698 ) $
(57,506 ) Net loss per limited partners' unit: Basic and
diluted common unit $ (0.12 ) $ (0.11 ) $ (0.38 ) $ (1.12 )
Weighted average limited partners' units outstanding: Basic and
diluted common units 50,672 50,221
50,590 49,960 Series A convertible
preferred units outstanding 14,706 14,706
14,706 14,706
CROSSTEX
ENERGY, L.P. Reconciliation of Net Loss to Adjusted EBITDA
and Distributable Cash Flow (All amounts in thousands except
ratios and per unit amounts)
Three
Months Ended Years Ended December 31, December
31, 2011 2010 2011 2010 Net
loss attributable to Crosstex Energy, L.P. $ (1,401 ) $ (2,384 ) $
(2,342 ) $ (25,848 ) Depreciation, amortization and impairments
32,084 29,454 125,284 112,862 Stock-based compensation 1,803 2,170
7,308 9,276 Interest expense, net 19,282 19,847 79,233 87,035 Loss
on extinguishment of debt - - - 14,713 (Gain) loss on sale of
property (53 ) 486 264 (13,881 ) Noncash derivatives, taxes and
other (1) (2) 2,930 588 4,281
2,723 Adjusted EBITDA 54,645 50,161 214,028
186,880 Interest expense (3) (19,344 ) (19,847 ) (78,156 )
(83,385 ) Cash taxes and other cash expenses (510 ) (333 ) (1,964 )
(1,517 ) Maintenance capital expenditures (3,138 )
(1,875 ) (12,597 ) (10,751 ) Distributable cash flow
$ 31,653 $ 28,106 $ 121,311 $ 91,227
Distribution declared (common and preferred) $ 22,462 $ 17,616 $
85,343 $ 40,698 Distribution coverage 1.41x 1.60x 1.42x 2.24x
Distributions declared per limited partner unit $ 0.32
$ 0.26 $ 1.23 $ 0.51 Distributions
declared per preferred unit $ 0.32 $ 0.26 $ 1.23
$ 0.935
(1) Includes $443 thousand of startup
expenses related to successfully transacted growth projects for the
year ended December 31, 2011.
(2) Includes $2 million of non-cash,
non-recurring expenses related to a legal judgment under appeal for
the three months and year ended December 31, 2011.
(3) Excludes $678 thousand of debt
issuance cost amortization and $894 thousand of senior secured note
make-whole and call premium paid-in-kind interest resulting from
repayment of such notes from the proceeds of the preferred unit
sale and an asset sale for the year ended December 31, 2010.
CROSSTEX ENERGY, L.P. Operating Data
Three Months Ended Years Ended
December 31, December 31, 2011
2010 2011 2010 Pipeline
Throughput (MMBtu/d) LIG 919,000 921,000 912,000 902,000 NTX -
Gathering 782,000 711,000 773,000 730,000 NTX - Transmission
354,000 333,000 352,000 339,000
Total Gathering and Transmission Volume 2,055,000 1,965,000
2,037,000 1,971,000
Natural Gas Processed (MMBtu/d)
PNGL 811,000 840,000 829,000 874,000 LIG 259,000 276,000 247,000
283,000 NTX 252,000 206,000 249,000 209,000
Total Gas Volumes Processed 1,322,000 1,322,000
1,325,000 1,366,000
Commercial Services Volume
(MMBtu/d) 42,000 97,000 92,000 69,000
NGL's
Fractionated (Gal/d) 1,172,000 885,000 1,109,000 922,000
Realized weighted average Natural Gas
Liquids price ($/gallon)
1.37 1.12 1.31 1.03
Actual weighted average Natural Gas
Liquids-to-Gas price ratio
432 % 331 % 358 % 263 %
North Texas Gathering (1)
Wells connected 30 16 124 100
(1) 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.
CROSSTEX ENERGY, INC. Summary Financial Data (All
amounts in thousands except per unit numbers)
Three Months Ended Years Ended December
31, December 31, 2011 2010 2011
2010 (Unaudited) Midstream revenues $ 480,939
$ 427,235 $ 2,013,942 $ 1,792,676 Purchased gas and NGLs
383,127 337,803 1,638,777
1,454,376 Gross operating margin 97,812 89,432
375,165 338,300 Operating costs and expenses: Operating
expenses 30,695 26,695 111,778 105,060 General and administrative
15,433 13,272 55,516 51,172 (Gain) loss on sale of property (53 )
486 264 (13,881 ) Loss on derivatives 2,256 2,228 7,776 9,100
Impairments - - - 1,311 Depreciation and amortization 32,101
29,472 125,358 111,625
Total operating costs and expenses 80,432 72,153 300,692
264,387 Operating income 17,380 17,279 74,473 73,913
Other income (expense): Interest expense, net of interest income
(19,281 ) (19,845 ) (79,227 ) (87,028 ) Loss on extinguishment of
debt - - - (14,713 ) Other income 51 (21 )
707 294 Total other income (expense)
(19,230 ) (19,866 ) (78,520 ) (101,447 )
Loss before non-controlling interest and
income taxes
(1,850 ) (2,585 ) (4,047 ) (27,534 ) Income tax benefit 714
696 2,768 6,021
Net loss (1,136 ) (1,889 ) (1,279 ) (21,513 )
Less: Net income (loss) attributable to
the non-controlling interest
674 199 4,728
(9,862 ) Net loss attributable to Crosstex Energy, Inc. $ (1,810 )
$ (2,088 ) $ (6,007 ) $ (11,651 ) Net loss per common share: Basic
and diluted $ (0.03 ) $ (0.04 ) $ (0.12 ) $ (0.24 ) Weighted
average shares outstanding: Basic and diluted 47,194
46,894 47,150 46,732
CROSSTEX ENERGY, INC. Calculation of Cash Available for
Dividends (All amounts in thousands except per share amounts)
Three Months Ended Years
Ended
December 31,
December 31,
2011 2010 2011 2010
Distributions declared by Crosstex
Energy, L.P. associated with:
General Partner Interest (2%) $ 428 $ 346 $ 1,641 $ 677 Incentive
Distribution Rights 793 102 2,424 102 L.P. Units owned 5,253
4,268 20,190 8,372
Total share of distributions declared $ 6,474 $ 4,716 $ 24,255 $
9,151
Other non-partnership uses: General and administrative
expenses (500 ) (481 ) (1,937 ) (2,121 ) Cash reserved *
(597 ) (424 ) (2,232 ) (703 ) Cash available
for dividends $ 5,377 $ 3,812 $ 20,086 $ 6,327
Dividend declared per share $ 0.11 $ 0.08 $
0.40 $ 0.15
* Cash reserved represents a holdback of
cash by the Corporation to cover tax payments, equity matching
investments in the Partnership and other miscellaneous cash
expenditures. The amount is currently estimated at 10% of the
Corporation's share of Partnership distributions declared, net of
non-partnership general and administrative expenses.
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