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Press Release
Crosstex Reports Fourth Quarter and Full Year 2005 Results

DALLAS, March 10 /PRNewswire-FirstCall/ -- The Crosstex Energy companies, Crosstex Energy, L.P. (Nasdaq: XTEX) (the Partnership) and Crosstex Energy, Inc. (Nasdaq: XTXI) (the Corporation) today reported solid growth in results for the fourth quarter and the full year 2005. This growth allows the companies to continue their track record of increases in both distributions and dividends.

"We had a great fourth quarter and an outstanding year in 2005. The quarter and the year were distinguished by continued emphasis on maximizing profitable growth, including constructing a new pipeline in North Texas, the significant expansion in our treating business, and the strategic acquisition of the South Louisiana processing business," said Barry E. Davis, President and Chief Executive Officer.

Crosstex Energy, L.P. Financial Results

The Partnership reported net income of $10.5 million, or $0.33 per limited partner unit, in the quarter ended December 31, 2005, compared to net income in the fourth quarter of 2004 of $6.1 million, or $0.23 per unit. Net income in the fourth quarter of 2005 was impacted by a $2.3 million gain during the quarter from the mark-to-market valuation of the derivative financial instruments (puts) purchased to protect against liquid prices fluctuations in conjunction with the South Louisiana processing business.

Full year 2005 results for the Partnership were net income of $19.2 million, or $0.56 per unit, compared to net income of $23.7 million or $0.98 per unit in 2004. The year's net income was reduced by the impact of the fair value loss of $9.2 million from the puts previously described. Neither the gains associated with the puts in the fourth quarter nor the fair value loss for the year had any impact on distributable cash flow.

The Partnership's Distributable Cash Flow for the fourth quarter of 2005 was $22.2 million, or 3.48 times the amount required to cover its Minimum Quarterly Distribution of $0.25 per unit, and 1.31 times the amount required to cover its recently increased distribution of $0.51 per unit. This is an increase of $10.3 million, or 87 percent, over Distributable Cash Flow of $11.9 million in the 2004 fourth quarter. Fourth quarter 2005 Distributable Cash Flow was $3.6 million in excess of the amount needed to provide 1.1 times coverage of the fourth quarter distribution of $0.51. For the full year of 2005, Distributable Cash Flow was $64.6 million, or 2.53 times the amount required to cover the Minimum Quarterly Distribution and 1.29 times the amount required to cover its actual distributions of $50.1 million. Distributable Cash Flow for 2005 increased more than 53 percent from the 2004 figure of $42.2 million. 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 increase in Distributable Cash Flow in the fourth quarter 2005 was due to growth in the Partnership's gross margin to $56.4 million compared to $33.9 million in the corresponding 2004 period, an increase of 66 percent. Gross margin from the Midstream business segment increased by $18.9 million, or 72 percent, to $45.1 million driven in large part by South Louisiana processing margins of $14.1 million and market volatility.

The quarter was negatively impacted by reduced throughput volumes on the new South Louisiana processing assets as a result of damage by Hurricanes Katrina and Rita to production and pipeline facilities owned by others in the Gulf of Mexico. The Partnership took advantage of arbitrage opportunities resulting from market volatility in the aftermath of the hurricanes which more than offset the negative impact of the reduced volumes. Additionally, the Partnership had negotiated a purchase price reduction on these assets due to the negative impacts on volumes foreseen prior to their acquisition. Volumes should begin to increase in these assets over the first two quarters of 2006 as natural gas producers and pipelines complete repairs to their infrastructure and resume full production, although it may be the third quarter before volumes are back to levels consistent with original acquisition expectations. The excess cash flow generated in the fourth quarter of 2005 and the purchase price reduction obtained on the South Louisiana processing assets will be considered in setting the distribution in the first quarter of 2006.

Gross margin for the quarter from the Treating segment increased by $3.9 million, or 55 percent, to $10.8 million due to the increase in the number of plants in service. The number of treating plants in service increased from 74 at the end of the fourth quarter of 2004 to 112 at the end of the fourth quarter of 2005.

For similar reasons, overall gross margin for the year increased from $114.5 million to $162.5 million, an increase of 42 percent. Of the $48.0 million gross margin increase for the year, $35 million was contributed from the midstream segment. Treating margins improved $13 million year-over-year.

These improvements were offset by increases in operating expenses of $7.5 million and $18.4 million for the fourth quarter and full year, respectively, primarily associated with the new assets in service. General and administrative expenses increased by $3.3 million and $11.8 million for the fourth quarter and full year, respectively. This increase is related to the staffing increases from the South Louisiana processing acquisition, the North Texas Pipeline construction activity, the growth in treating plants and other growth.

Interest expense increased $3.4 million and $6.5 million for the fourth quarter and full year, respectively, due to increased debt to support growth activities. The Partnership's capital structure is still very conservative, having recently raised $228 million of equity, representing approximately 47 percent of the purchase price of the South Louisiana processing assets.

Crosstex Energy, Inc. Financial Results

The Corporation reported net income of $45.1 million for the fourth quarter of 2005, compared to net income of $2.4 million for the fourth quarter of 2004. Net income for the fourth quarter included a non-cash gain on issuance of units of the Partnership of $65.1 million related to the Partnership's offering of 6.6 million units during the quarter. This gain was offset by non-cash income tax expense of $27.5 million for a net non-cash impact on fourth quarter earnings of $37.6 million. The Corporation's net income before income taxes and interest of non-controlling partners in the net income of the Partnership was $10.3 million in the fourth quarter of 2005 and $6.1 million in the fourth quarter of 2004.

The Corporation's share of distributions, including distributions on its 10 million limited partner units, its two percent general partner interest and the incentive distribution rights was $9.4 million for the fourth quarter of 2005 compared to $6.5 million in the fourth quarter of 2004, an increase of over 44 percent. Much of the increase is the result of the increase in the number of limited partner units receiving distributions. Such units increased by 6.6 million to 24.8 million units due to equity issued to finance the South Louisiana processing assets. Since the Corporation's initial public offering in 2004, dividends have grown from $0.30 to $0.56 per share, an increase of 86 percent in seven quarters.

Earnings Call

Crosstex will hold its quarterly conference call to discuss fourth quarter and year-end results today, Friday, March 10, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The dial-in number for the call is 800-322-5044, 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 84615803, or by going to the investor relations events page of the Company's Web site.

About the Crosstex Energy Companies

Crosstex Energy, L.P., a mid-stream natural gas company headquartered in Dallas, operates over 5,000 miles of pipeline, nine 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 non-generally accepted accounting principle financial measures of earnings before non-cash charges and less maintenance capital expenditures, which we refer to as Distributable Cash Flow. Distributable Cash Flow includes earnings before non-cash charges, less maintenance capital expenditures, plus, in 2005, 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," "plan" 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 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 operation 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; (6) natural disasters such as hurricanes may significantly disrupt operations; and (7) 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 and Operating Data
              (All amounts in thousands except per unit numbers)

                              Three Months Ended           Year Ended
                                 December 31,              December 31,
                              2005         2004         2005         2004

    Revenues
      Midstream           $1,054,544     $620,840   $2,982,874   $1,948,021
      Treating                14,542        8,163       48,606       30,755
      Profit from Energy
       Trading Activities        411          623        1,568        2,228
                           1,069,497      629,626    3,033,048    1,981,004
    Cost of Gas
      Midstream            1,009,405      594,580    2,860,823    1,861,204
      Treating                 3,710        1,182        9,706        5,274
                           1,013,115      595,762    2,870,529    1,866,478

    Gross Margin              56,382       33,864      162,519      114,526

    Operating Expenses        19,138       11,599       56,736       38,339
    General and
     Administrative           10,360        7,063       32,697       20,867
    (Gain) Loss
      on Derivatives          (3,711)         (92)       9,968         (279)
    Gain on Sale of Property    (341)         ---       (8,138)         (12)
    Depreciation
     and Amortization         13,890        6,535       36,024       23,034

          Total               39,336       25,105      127,287       81,949

    Operating Income          17,046        8,759       35,232       32,577

    Interest Expense          (6,444)      (3,006)     (15,767)      (9,220)
    Other Income                  12          544          392          798
          Total Other Income  (6,432)      (2,462)     (15,375)      (8,422)

    Net Income Before
     Minority Interest
     and Taxes                10,614        6,297       19,857       24,155

    Minority Interest
     in Subsidiary              (110)        (139)        (441)        (289)
    Income Tax Provision         (40)         (46)        (216)        (162)
    Net Income               $10,464       $6,112      $19,200      $23,704
    General Partner Share
     of Net Income            $3,435       $1,908       $8,651       $5,913
    Limited Partners Share
     of Net Income            $7,029       $4,204      $10,549      $17,791
    Net Income per
     Limited Partners' Unit:
       Basic                   $0.33        $0.23        $0.56        $0.98
       Diluted                 $0.30        $0.22        $0.51        $0.95
    Weighted Average Limited
     Partners' Units
     Outstanding:
       Basic                  21,554       18,086       19,006       18,081
       Diluted                23,809       18,713       20,527       18,633

    Distributions per
     Limited Partner Unit      $0.51        $0.45        $1.93        $1.70



                            CROSSTEX ENERGY, L.P.
           Reconciliation of Net Income to Distributable Cash Flow
                   (All amounts in thousands except ratios)

                                      Three Months Ended       Year Ended
                                         December 31,          December 31,
                                       2005       2004       2005       2004


    Net Income                      $ 10,464   $  6,112   $ 19,200   $ 23,704
    Depreciation
     and Amortization (A)             13,820      6,478     35,751     22,852
    Stock-Based Compensation           1,398        235      4,057      1,001
    Gain on Sale of Property            (342)       ---     (8,138)       (12)
    Proceeds from Sale of Property       ---        ---      9,313        611
    Puts Mark-to-Market               (2,304)       ---      9,243        ---
    Deferred Tax Benefit                 501        (22)       216       (190)
    Cash Flow                         23,537     12,803     69,642     47,966

    Maintenance Capital Expenditures  (1,319)      (915)    (5,046)    (5,729)
    Distributable Cash Flow          $22,218    $11,888    $64,596    $42,237
    Minimum Quarterly
     Distribution (MQD)               $6,379     $4,615    $25,515    $18,458
    Distributable Cash Flow/MQD         3.48       2.58       2.53       2.29
    Actual Distribution              $16,913    $10,164    $50,050    $37,032
    Distribution Coverage               1.31       1.17       1.29       1.14

     (A)  Excludes minority interest share of depreciation and amortization of
          $70,000 and $272,000 for the three months and year-end
          December 31, 2005, respectively, and $57,000 and $182,000 for the
          three months and year-ended December 31, 2004 respectively.



                            CROSSTEX ENERGY, L.P.
                                Operating Data

                                Three Months Ended         Year Ended
                                   December 31,            December 31,
                                2005        2004         2005        2004

    Pipeline Throughput
     (MMBtu/d)
      South Texas             524,000     548,000       517,000     555,000
      LIG Pipeline
       & Marketing            604,000     619,000(A)    613,000     603,000(A)
      Other Midstream         204,000     125,000       172,000     131,000

    Total Gathering and
     Transmission Volume    1,332,000   1,292,000     1,302,000   1,289,000

    Natural Gas Processed
      MMBtu/d               1,730,000(B)  432,000(A)  1,825,000(B)  425,000(A)

    Commercial Services
     Volume                   168,000     212,000       181,000     210,000

    Treating Plants
     in Service (C)               112          74           112          74

     (A)  Includes LIG volumes after April 1, 2004 acquisition.
     (B)  Includes South Louisiana Processing volumes after November 1, 2005.
     (C)  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        Twelve Months Ended
                                 December 31,               December 31,
                               2005        2004          2005          2004

    Revenues
        Midstream          $1,054,544    $620,840    $2,982,874    $1,948,021
        Treating               14,542       8,163        48,606        30,755
        Profit from Energy
         Trading Activities       411         623         1,568         2,228
                            1,069,497     629,626     3,033,048     1,981,004

    Cost of Gas
        Midstream           1,009,405     594,580     2,860,823     1,861,204
        Treating                3,710       1,182         9,706         5,274
                            1,013,115     595,762     2,870,529     1,866,478

    Gross Margin               56,382      33,864       162,519       114,526

    Operating Expenses         19,155      11,628        56,768        38,396
    General and Administrative 10,850       7,317        34,145        22,005
    (Gain) Loss on Derivatives (3,711)        (92)        9,968          (279)
    Gain on Sale of Property     (341)        ---        (8,138)          (12)
    Impairments                   ---         ---           ---           981
    Depreciation
     and Amortization          13,901       6,535        36,070        23,034

        Total                  39,854      25,388       128,813        84,125

    Operating Income           16,528       8,476        33,706        30,401

    Interest Expense           (6,286)     (2,949)      (15,332)       (9,115)
    Other Income                   13         548           391           802
        Total Other Income     (6,273)     (2,401)      (14,941)       (8,313)

    Income Before Income
     Taxes and Interest
     of Non-controlling
     Partners in the
     Partnership's
     Net Income                10,255       6,075        18,765        22,088
    Income Tax Expense        (27,519)     (1,645)      (30,047)       (5,149)
    Gain on Issuance of
     Units of the
     Partnership               65,070         ---        65,070           ---
    Interest of
     Non-controlling
     Partners in the
     Partnership's Net
     (Income) Loss             (2,743)     (2,023)       (4,652)       (8,239)

    Net Income                $45,063      $2,407       $49,136        $8,700

    Preferred Stock Dividends    $---        $---          $---          $132

    Net Income Available
     to Common                $45,063      $2,407       $49,136        $8,658

    Net Income per Common
     Share:

        Basic Earnings
         per Common Share       $3.53       $0.20         $3.88         $0.72

        Diluted Earnings

         per Common Share       $3.47       $0.19         $3.79         $0.67

    Weighted Average Shares
     Outstanding:

        Basic                  12,760      12,214        12,652        11,849

        Diluted                12,982      12,932        12,957        12,899

    Dividends per Common Share  $0.56       $0.39         $1.86         $1.37
SOURCE  Crosstex Energy
    -0-                             03/10/2006
    /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 /
    (XTEX XTXI)

CO:  Crosstex Energy, L.P.; Crosstex Energy, Inc.
ST:  Texas
IN:  OIL
SU:  ERN CCA

AH-GN
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1449 03/10/2006 07:04 EST http://www.prnewswire.com