Management Conference Call Scheduled for 10:00 a.m. CT Today
Inergy, L.P. (NASDAQ:NRGY) and Inergy Holdings, L.P. (NASDAQ:NRGP) today
each reported record results of operations for the fiscal fourth quarter
and year ended September 30, 2008.
Inergy, L.P.
Inergy, L.P. (“Inergy”) reported Adjusted EBITDA of $239.0 million for
the year ended September 30, 2008, an increase of $27.8 million, or
approximately 13.2% from $211.2 million for the year ended September 30,
2007. Distributable cash flow was $174.3 million in fiscal 2008 compared
to $155.8 million in fiscal 2007, an increase of approximately 11.9%.
Net income, excluding certain items as discussed below, was $76.7
million for the year ended September 30, 2008, or $0.81 per diluted
limited partner unit, and $74.4 million or $0.98 per diluted limited
partner unit for the year ended September 30, 2007. Distributable cash
flow per unit on a fully distributed basis increased to $2.60 per
diluted limited partner unit in 2008 from $2.47 per diluted limited
partner unit in 2007.
As previously announced, the Board of Directors of Inergy’s general
partner increased Inergy’s quarterly cash distribution to $0.635 per
limited partner unit ($2.54 annually) for the quarter ended September
30, 2008. This represents an approximate 7% increase over the
distribution for the same quarter of the prior year. The distribution
was paid on November 14, 2008.
“Our performance in 2008 builds on our track record of consistently
delivering on our financial and operating objectives,” said John
Sherman, President and CEO of Inergy. “More importantly, fiscal 2009 is
off to a good start. The current energy price environment is favorable
to our propane business, and our midstream business is fee-based with
virtually no commodity price exposure. Our cash earnings are very
stable, our capital projects are discretionary, and we have visibility
to increased distributable cash flow from capital previously invested.
We are well positioned to navigate in the current environment on behalf
of our investors.”
Inergy also reiterates its previously announced adjusted EBITDA guidance
range for the full fiscal year ended September 30, 2009, of $277 million
to $294 million.
Fiscal Year-End Results
Retail propane gallon sales decreased to 331.9 million gallons for the
year ended September 30, 2008, from 362.2 million gallons sold in 2007.
This decrease was due primarily to customer conservation, which we
believe resulted, in large part, from the approximate 49% higher average
cost of Mt. Belvieu propane in fiscal 2008 compared to fiscal 2007.
Retail propane gross profit was $312.9 million for the year ended
September 30, 2008, compared to $313.3 million in 2007. Gross profit
from other propane operations, including wholesale, appliances, service,
transportation, distillates, and other was $97.4 million in the year
ended September 30, 2008, compared to $85.3 million in 2007. Gross
profit from midstream operations for the year ended September 30, 2008,
increased 59% to $92.0 million from $57.8 million in the prior year.
Operating and administrative expenses for the year ended September 30,
2008, were $265.6 million compared to $247.8 million in the same period
of 2007.
Exclusions from net income discussed above included a loss of $11.5
million and $8.0 million during fiscal 2008 and 2007, respectively,
recognized on the write-down and disposal of certain vehicles, tanks,
and real estate deemed to be excess, redundant, or underperforming
assets. Also excluded from net income and gross profit discussed above
were a non-cash loss of $0.1 million in 2008 and a non-cash gain of $0.6
million in 2007 resulting from derivative contracts associated with
retail propane fixed price sales.
Fourth Quarter Results
Inergy reported Adjusted EBITDA of $22.7 million for the three months
ended September 30, 2008, an increase of $8.9 million, or 64.5%, from
$13.8 million reported in the fourth quarter of last year. Net loss for
the quarter, excluding certain items as discussed below, was $(21.4)
million for the three months ended September 30, 2008, and $(22.0)
million for the three months ended September 30, 2007. Due to the
seasonal nature of the propane industry, Inergy typically reports a
quarterly loss in its fourth fiscal quarter. Net loss per limited
partner unit excluding the items discussed above for the quarter ended
September 30, 2008, was $(0.62) per diluted limited partner unit,
compared to $(0.59) per diluted limited partner unit in the same period
of the prior year.
In the quarter ended September 30, 2008, retail propane gallon sales
were 42.2 million gallons compared to 48.5 million gallons sold in the
same quarter of the prior year.
Retail propane gross profit was $39.2 million for the quarter ended
September 30, 2008, compared to $37.0 million for the quarter ended
September 30, 2007. Gross profit from other propane operations,
including wholesale, appliances, service, transportation, distillates,
and other was $22.4 million in the quarter ended September 30, 2008,
compared to $16.2 million for the same quarter in the prior year. Gross
profit from midstream operations increased to $25.5 million for the
quarter ended September 30, 2008, from $15.9 million for the same
quarter in the prior year.
Exclusions from net income discussed above included a loss of $12.3
million and $6.4 million on the disposal of excess property, plant, and
equipment during the three months ended September 30, 2008 and 2007,
respectively. Also excluded from net income and gross profit discussed
above was a non-cash gain of $0.6 million and $0.1 million during the
three months ended September 30, 2008 and 2007, respectively, resulting
from the derivative contracts associated with retail propane fixed price
sales.
For the quarter ended September 30, 2008, operating and administrative
expenses increased to $67.0 million compared to $56.0 million in the
same period of fiscal 2007.
Inergy Holdings, L.P.
As discussed above, the $0.635 per limited partner unit distribution by
Inergy, L.P. resulted in Inergy Holdings, L.P. receiving a total
distribution of $13.8 million with respect to the fourth fiscal quarter
of 2008. As a result of this Inergy, L.P. distribution, Inergy Holdings,
L.P. declared a quarterly distribution of $0.65 per limited partner unit
or $2.60 on an annualized basis. This represents an approximate 21%
increase over the $0.535 per limited partner unit paid for the same
quarter of the prior year. The distribution was paid on November 14,
2008.
Inergy, L.P. and Inergy Holdings, L.P. will conduct a live conference
call and internet webcast today, December 1, 2008, to discuss results of
operations for the fourth quarter and fiscal year end and its business
outlook. The call will begin at 10:00 a.m. CT. The call-in number for
the earnings call is 1-877-405-3427, and the conference name is Inergy.
The live internet webcast and the replay can be accessed on Inergy’s
website, www.inergypropane.com.
A digital recording of the call will be available for one week following
the call by dialing 1-800-642-1687 and entering the pass code 68806291.
Inergy, L.P., with headquarters in Kansas City, MO, is among the fastest
growing master limited partnerships in the country. The Company’s
operations include the retail marketing, sale, and distribution of
propane to residential, commercial, industrial, and agricultural
customers. Today, Inergy serves approximately 700,000 retail customers
from over 300 customer service centers throughout the eastern half of
the United States. The Company also operates a natural gas storage
business and a supply logistics, transportation, and wholesale marketing
business that serves independent dealers and multi-state marketers in
the United States and Canada.
Inergy Holdings, L.P.’s assets consist of its ownership interest in
Inergy, L.P., including limited partnership interests, ownership of the
general partners, and the incentive distribution rights.
This press release contains forward-looking statements, which are
statements that are not historical in nature such as our business
outlook. Forward-looking statements are subject to certain risks,
uncertainties, and assumptions. Should one or more of these risks or
uncertainties materialize or any underlying assumption proves incorrect,
actual results may vary materially from those anticipated, estimated, or
projected. Among the key factors that could cause actual results to
differ materially from those referred to in the forward-looking
statements are: weather conditions that vary significantly from
historically normal conditions; the general level of petroleum product
demand and the availability of propane supplies; the price of propane to
the consumer compared to the price of alternative and competing fuels;
the demand for high deliverability natural gas storage capacity in the
Northeast; our ability to successfully implement our business plan; the
outcome of rate decisions levied by the Federal Energy Regulatory
Commission; our ability to generate available cash for distribution to
unitholders; and the costs and effects of legal, regulatory, and
administrative proceedings against us or which may be brought against
us. These and other risks and assumptions are described in Inergy’s
annual reports on Form 10-K and other reports that are available from
the United States Securities and Exchange Commission.
|
Inergy, L.P. and Subsidiaries
Consolidated
Statements of Operations
For the Three Months and
Years Ended September 30, 2008 and 2007
(in
millions, except per unit data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
September 30,
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September 30,
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Propane
|
$
|
237.2
|
|
$
|
194.2
|
|
$
|
1,386.8
|
|
$
|
1,150.4
|
|
Other
|
|
103.7
|
|
|
79.3
|
|
|
492.1
|
|
|
332.7
|
|
|
|
340.9
|
|
|
273.5
|
|
|
1,878.9
|
|
|
1,483.1
|
|
|
|
|
|
|
|
|
|
|
Cost of product sold (excluding depreciation and amortization as
shown below):
|
|
|
|
|
|
|
|
|
Propane
|
|
191.0
|
|
|
153.3
|
|
|
1,053.0
|
|
|
820.0
|
|
Other
|
|
62.2
|
|
|
51.0
|
|
|
323.7
|
|
|
206.1
|
|
|
|
253.2
|
|
|
204.3
|
|
|
1,376.7
|
|
|
1,026.1
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
87.7
|
|
|
69.2
|
|
|
502.2
|
|
|
457.0
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Operating and administrative
|
|
67.0
|
|
|
56.0
|
|
|
265.6
|
|
|
247.8
|
|
Depreciation and amortization
|
|
25.9
|
|
|
22.5
|
|
|
98.0
|
|
|
83.4
|
|
Loss on disposal of assets
|
|
12.3
|
|
|
6.4
|
|
|
11.5
|
|
|
8.0
|
|
Operating income (loss)
|
|
(17.5)
|
|
|
(15.7)
|
|
|
127.1
|
|
|
117.8
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
(15.9)
|
|
|
(12.9)
|
|
|
(60.9)
|
|
|
(52.0)
|
|
Other income
|
|
0.9
|
|
|
0.5
|
|
|
1.0
|
|
|
1.9
|
|
Income (loss) before income taxes and interest of non-controlling
partners in ASC
|
|
(32.5)
|
|
|
(28.1)
|
|
|
67.2
|
|
|
67.7
|
|
|
|
|
|
|
|
|
|
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Provision for income taxes
|
|
(0.1)
|
|
|
(0.2)
|
|
|
(0.7)
|
|
|
(0.7)
|
|
Interest of non-controlling partners in ASC’s consolidated net
income (a)
|
|
(0.5)
|
|
|
-
|
|
|
(1.4)
|
|
|
-
|
|
Net income (loss)
|
$
|
(33.1)
|
|
$
|
(28.3)
|
|
$
|
65.1
|
|
$
|
67.0
|
|
|
|
|
|
|
|
|
|
|
Partners’ interest information:
|
|
|
|
|
|
|
|
|
Non-managing general partner and affiliates interest in net income
|
$
|
9.2
|
|
$
|
7.4
|
|
$
|
36.1
|
|
$
|
27.5
|
|
Beneficial conversion value of Special Units
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10.3
|
|
Distributions paid on restricted units
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
0.2
|
|
Total interest in net income not attributable to limited partners’
|
$
|
9.3
|
|
$
|
7.5
|
|
$
|
36.4
|
|
$
|
38.0
|
|
|
|
|
|
|
|
|
|
|
Total limited partners’ interest in net income (loss)
|
$
|
(42.4)
|
|
$
|
(35.8)
|
|
$
|
28.7
|
|
$
|
29.0
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per limited partner unit:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.85)
|
|
$
|
(0.72)
|
|
$
|
0.58
|
|
$
|
0.61
|
|
Diluted
|
$
|
(0.85)
|
|
$
|
(0.72)
|
|
$
|
0.57
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
Weighted average limited partners’ units outstanding (in thousands):
|
|
|
|
|
|
|
|
|
Basic
|
|
50,044
|
|
|
49,628
|
|
|
49,777
|
|
|
47,693
|
|
Diluted
|
|
50,044
|
|
|
49,628
|
|
|
49,851
|
|
|
47,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) We acquired a majority interest in the operations
of Steuben when we acquired 100% of the membership interest in
ASC. ASC holds a majority interest in the operations of Steuben.
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
Supplemental Information:
|
|
|
|
|
|
|
|
Retail gallons sold
|
|
42.2
|
|
|
48.5
|
|
|
331.9
|
|
|
362.2
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
$
|
17.3
|
|
$
|
7.7
|
|
|
|
|
|
Outstanding debt:
|
|
|
|
|
|
|
|
|
Working capital facility
|
|
|
|
|
$
|
65.0
|
|
$
|
31.0
|
|
Acquisition facility
|
|
|
|
|
|
182.0
|
|
|
40.0
|
|
Senior unsecured notes
|
|
|
|
|
|
826.9
|
|
|
622.4
|
|
Bond premium (e)
|
|
|
|
|
|
3.8
|
|
|
-
|
|
ASC credit agreement
|
|
|
|
|
|
10.9
|
|
|
-
|
|
Other debt
|
|
|
|
|
|
18.0
|
|
|
16.8
|
|
Total debt
|
|
|
|
|
$
|
1,106.6
|
|
$
|
710.2
|
|
|
|
|
|
Total partners’ capital
|
|
|
|
|
$
|
637.8
|
|
$
|
741.2
|
|
|
|
|
|
EBITDA:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(33.1)
|
|
$
|
(28.3)
|
|
$
|
65.1
|
|
$
|
67.0
|
|
Interest expense, net
|
|
15.9
|
|
|
12.9
|
|
|
60.9
|
|
|
52.0
|
|
Interest of non-controlling partners in ASC’s ITDA (f)
|
|
(0.1)
|
|
|
-
|
|
|
(0.8)
|
|
|
-
|
|
Provision for income taxes
|
|
0.1
|
|
|
0.2
|
|
|
0.7
|
|
|
0.7
|
|
Depreciation and amortization
|
|
25.9
|
|
|
22.5
|
|
|
98.0
|
|
|
83.4
|
|
EBITDA (a)
|
$
|
8.7
|
|
$
|
7.3
|
|
$
|
223.9
|
|
$
|
203.1
|
|
Non-cash (gain) loss on derivative contracts
|
|
(0.6)
|
|
|
(0.1)
|
|
|
0.1
|
|
|
(0.6)
|
|
Loss on the disposal assets
|
|
12.3
|
|
|
6.4
|
|
|
11.5
|
|
|
8.0
|
|
Non-cash compensation expense
|
|
2.3
|
|
|
0.2
|
|
|
3.5
|
|
|
0.7
|
|
Adjusted EBITDA (a)
|
$
|
22.7
|
|
$
|
13.8
|
|
$
|
239.0
|
|
$
|
211.2
|
|
|
|
|
|
Distributable cash flow:
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (a)
|
$
|
22.7
|
|
$
|
13.8
|
|
$
|
239.0
|
|
$
|
211.2
|
|
Cash interest expense (b)
|
|
(15.4)
|
|
|
(12.2)
|
|
|
(58.6)
|
|
|
(49.6)
|
|
Maintenance capital expenditures (c)
|
|
(1.8)
|
|
|
(2.2)
|
|
|
(5.4)
|
|
|
(5.1)
|
|
Income tax expense
|
|
(0.1)
|
|
|
(0.2)
|
|
|
(0.7)
|
|
|
(0.7)
|
|
Distributable cash flow (d)
|
$
|
5.4
|
|
$
|
(0.8)
|
|
$
|
174.3
|
|
$
|
155.8
|
|
|
|
(a) EBITDA is defined as income (loss) before taxes,
plus net interest expense (inclusive of write-off of deferred
financing costs) and depreciation and amortization expense.
Adjusted EBITDA represents EBITDA excluding (1) non-cash gains or
losses on derivative contracts associated with fixed price sales
to retail propane customers, (2) long-term incentive (one-time
conversion bonuses) and equity compensation expense and (3) gains
or losses on disposal of property, plant and equipment. EBITDA and
Adjusted EBITDA should not be considered an alternative to net
income, income before income taxes, cash flows from operating
activities, or any other measure of financial performance
calculated in accordance with generally accepted accounting
principles as those items are used to measure operating
performance, liquidity or ability to service debt obligations.
EBITDA and Adjusted EBITDA are presented because such information
is relevant and is used by management, industry analysts,
investors, lenders and rating agencies to assess the financial
performance and operating results of our fundamental business
activities. We believe that the presentation of EBITDA and
Adjusted EBITDA is useful to lenders and investors because of
their use in the propane industry and for master limited
partnerships as an indicator of the strength and performance of
the ongoing business operations, including the ability to fund
capital expenditures, service debt and pay distributions.
Additionally, we believe that EBITDA and Adjusted EBITDA provide
useful information to our investors for trending, analyzing and
benchmarking our operating results as compared to other companies
that may have different financing and capital structures. The
presentation of EBITDA and Adjusted EBITDA allow investors to view
our performance in a manner similar to the methods used by
management and provide additional insight to our operating results.
|
|
(b) Cash interest expense is net of amortization
charges associated with deferred financing costs.
|
|
(c) Maintenance capital expenditures are defined as
those capital expenditures which do not increase operating
capacity or revenues from existing levels.
|
|
(d) Distributable cash flow is defined as Adjusted
EBITDA, less cash interest expense, maintenance capital
expenditures and income taxes. We believe that distributable cash
flow provides additional information for evaluating Inergy’s
ability to declare and pay distributions to unitholders.
Distributable cash flow should not be considered an alternative to
cash flow from operating activities or any other measure of
financial performance in accordance with accounting principles
generally accepted in the United States. Distributable cash flow,
as we define it, may not be comparable to distributable cash flow
or similarly titled measures used by other corporations and
partnerships.
|
|
(e) In April 2008, the Company announced the placement
of a $200 million add-on to its existing 8.25% senior unsecured
notes under Rule 144A to eligible purchasers. The proceeds from
the bond issuance were $204 million, representing a premium of $4
million to par. The $4 million premium will be amortized on a
non-cash basis over the term of the senior notes.
|
|
(f) ITDA – Interest, taxes, depreciation and
amortization.
|
|
|
Inergy Holdings, L.P. and Subsidiaries
Consolidated
Statements of Operations
For the Three Months and Years
Ended September 30, 2008 and 2007
(in millions,
except per unit data)
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Propane
|
$
|
237.2
|
|
$
|
194.2
|
|
$
|
1,386.8
|
|
$
|
1,150.4
|
|
Other
|
|
103.7
|
|
|
79.3
|
|
|
492.1
|
|
|
332.7
|
|
|
|
340.9
|
|
|
273.5
|
|
|
1,878.9
|
|
|
1,483.1
|
|
|
|
Cost of product sold (excluding depreciation and amortization as
shown below):
|
|
|
|
|
|
|
|
|
Propane
|
|
191.0
|
|
|
153.3
|
|
|
1,053.0
|
|
|
820.0
|
|
Other
|
|
62.2
|
|
|
51.0
|
|
|
323.7
|
|
|
206.1
|
|
|
|
253.2
|
|
|
204.3
|
|
|
1,376.7
|
|
|
1,026.1
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
87.7
|
|
|
69.2
|
|
|
502.2
|
|
|
457.0
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Operating and administrative
|
|
67.2
|
|
|
56.2
|
|
|
266.6
|
|
|
248.6
|
|
Depreciation and amortization
|
|
25.9
|
|
|
22.5
|
|
|
98.0
|
|
|
83.4
|
|
Loss on disposal of assets
|
|
12.3
|
|
|
6.4
|
|
|
11.5
|
|
|
8.0
|
|
Operating income (loss)
|
|
(17.7)
|
|
|
(15.9)
|
|
|
126.1
|
|
|
117.0
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
(16.3)
|
|
|
(13.5)
|
|
|
(62.6)
|
|
|
(54.4)
|
|
Other income
|
|
0.9
|
|
|
0.5
|
|
|
1.0
|
|
|
1.9
|
|
Income (loss) before gain on issuance of units in Inergy, income
taxes and interest of non-controlling partners in Inergy, L.P. and
ASC
|
|
(33.1)
|
|
|
(28.9)
|
|
|
64.5
|
|
|
64.5
|
|
Gain on issuance of units in Inergy, L.P.
|
|
-
|
|
|
-
|
|
|
-
|
|
|
80.6
|
|
Provision for income taxes
|
|
(0.1)
|
|
|
-
|
|
|
(1.4)
|
|
|
(6.5)
|
|
Interest of non-controlling partners in Inergy, L.P.’s net income
|
|
38.4
|
|
|
32.8
|
|
|
(26.2)
|
|
|
(36.0)
|
|
Interest of non-controlling partners in ASC’s consolidated net income
|
|
(0.5)
|
|
|
-
|
|
|
(1.4)
|
|
|
-
|
|
Net income
|
$
|
4.7
|
|
$
|
3.9
|
|
$
|
35.5
|
|
$
|
102.6
|
|
|
|
|
|
|
|
|
|
|
Partners’ interest information:
|
|
|
|
|
|
|
|
|
Less distribution paid on restricted units
|
$
|
0.2
|
|
$
|
- -
|
|
$
|
0.5
|
|
$
|
- -
|
|
Net income available to limited partners’ units
|
$
|
4.5
|
|
$
|
3.9
|
|
$
|
35.0
|
|
$
|
102.6
|
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unit:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.23
|
|
$
|
0.19
|
|
$
|
1.75
|
|
$
|
5.13
|
|
Diluted
|
$
|
0.23
|
|
$
|
0.19
|
|
$
|
1.73
|
|
$
|
5.06
|
|
|
|
|
|
|
|
|
|
|
Weighted average limited partners’ units outstanding (in
thousands):
|
|
|
|
|
|
|
|
|
Basic
|
|
20,018
|
|
|
20,006
|
|
|
20,011
|
|
|
20,003
|
|
Diluted
|
|
20,142
|
|
|
20,299
|
|
|
20,222
|
|
|
20,258
|
Inergy, L.P.
Mike Campbell, 816-842-8181
investorrelations@inergyservices.com
