Crosstex Energy Inc. (XTXI, Financial) filed Quarterly Report for the period ended 2010-03-31.
Crosstex Energy Inc. has a market cap of $340.9 million; its shares were traded at around $7.32 with and P/S ratio of 0.3. Crosstex Energy Inc. had an annual average earning growth of 2% over the past 5 years.XTXI is in the portfolios of Glenn Greenberg of Brave Warrior Capital, Inc., David Swensen of Yale University.
The favorable processing environment led to significant gross margin growth for processing plants in Louisiana for the three months ended March 31, 2010 over the same period in 2009. Overall the plants in the region reported a gross margin increase of approximately $9.3 million. The primary contributors to this improvement were the Plaquemine, Gibson and Eunice processing plants which had gross margin increases of $3.4 million, $2.5 million and $1.7 million, respectively. The LIG gathering and transmission system contributed gross margin growth of $4.9 million for the three months ended March 31, 2010, primarily due to improved pricing and higher volumes on the northern part of the system. In addition, the LIG results include a one time adjustment to revenue due to the refund of fees related to the settlement of a rate case on the system. The total financial impact of this adjustment is a reduction in gross margin of $1.2 million. The north Texas region had an overall gross margin decline for the comparable periods of $1.4 million. A throughput volume decrease on the gathering and transmission systems contributed to a gross margin decline of $2.0 million for the three months ended March 31, 2010 over the same period in 2009. This was partially offset by a gross margin increase of $0.6 million on the north Texas processing assets. The east Texas pipeline system and the Arkoma system, which were sold in January 2010 and April 2009, respectively, but not reported in discontinued operations, contributed a total gross margin decline of $2.1 million.
General and Administrative Expenses. General and administrative expenses were $13.5 million for the three months ended March 31, 2010 compared to $14.5 million for the three months ended March 31, 2009, a decrease of $1.0 million, or 7.0%. The decrease is a result of strategic initiatives undertaken to reduce expenses which yielded reductions of $1.6 million and $0.7 million in compensation related costs and utilities and rent, respectively. These reductions were partially offset by increased bad debt of $0.3 million on the SemStream bankruptcy settlement and $0.8 million in professional and consulting fees.
Interest Expense. Interest expense was $26.9 million for the three months ended March 31, 2010 compared to $17.5 million for the three months ended March 31, 2009, an increase of $9.3 million, or 53.2%. The increase in interest expense between periods was primarily due to increased borrowing rates on the facilities between periods and additional expense totaling $1.6 million associated with make-whole interest payments and the write-off of debt issue costs for the January repayment of debt with proceeds from the preferred unit sale and the east Texas asset sale. The Partnerships borrowing rates are higher in 2010 due to the late February 2009 amendments to the old credit facility and senior secured notes which were repaid in full in mid-February 2010 with proceeds from the issuance of the $725.0 million senior unsecured notes. Net interest expense consists of the following (in millions):
Income Taxes. Income tax benefit was $2.6 million for the three months ended March 31, 2010 compared to a tax expense of $2.0 million for the three months ended March 31, 2009. The income tax provision for the three months ended March 31, 2010 reflects a net tax benefit of $2.6 million for the current period loss. The income tax provision for the three months ended March 31, 2009 reflects a tax benefit of $2.2 million for current period loss offset by a $4.6 million income tax expense attributable to a tax basis adjustment in the Partnership related to the conversion of the senior subordinated series D units to common units on March 23, 2009.
Cash flows from investing activities for the three months ended March 31, 2010 and 2009 also include proceeds from property sales of $39.7 million and $11.0 million, respectively. The east Texas asset were sold in the quarter ending March 31, 2010 for $40.0 million. The Arkoma asset was sold in the quarter ending March 31, 2009 for $11.0 million.
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Crosstex Energy Inc. has a market cap of $340.9 million; its shares were traded at around $7.32 with and P/S ratio of 0.3. Crosstex Energy Inc. had an annual average earning growth of 2% over the past 5 years.XTXI is in the portfolios of Glenn Greenberg of Brave Warrior Capital, Inc., David Swensen of Yale University.
Highlight of Business Operations:
Gross Margin and Gas and NGL Marketing Activities. Gross margin was $81.2 million for the three months ended March 31, 2010 compared to $68.9 million for the three months ended March 31, 2009, an increase of $12.2 million, or 17.8%. The increase was primarily due to gross margin improvement in the processing business due to a favorable NGL market. Gross margin from gas and NGL marketing activities increased for the comparative periods by approximately $1.6 million primarily due to an improved fee structure and an increase in activity in the liquids marketing business.The favorable processing environment led to significant gross margin growth for processing plants in Louisiana for the three months ended March 31, 2010 over the same period in 2009. Overall the plants in the region reported a gross margin increase of approximately $9.3 million. The primary contributors to this improvement were the Plaquemine, Gibson and Eunice processing plants which had gross margin increases of $3.4 million, $2.5 million and $1.7 million, respectively. The LIG gathering and transmission system contributed gross margin growth of $4.9 million for the three months ended March 31, 2010, primarily due to improved pricing and higher volumes on the northern part of the system. In addition, the LIG results include a one time adjustment to revenue due to the refund of fees related to the settlement of a rate case on the system. The total financial impact of this adjustment is a reduction in gross margin of $1.2 million. The north Texas region had an overall gross margin decline for the comparable periods of $1.4 million. A throughput volume decrease on the gathering and transmission systems contributed to a gross margin decline of $2.0 million for the three months ended March 31, 2010 over the same period in 2009. This was partially offset by a gross margin increase of $0.6 million on the north Texas processing assets. The east Texas pipeline system and the Arkoma system, which were sold in January 2010 and April 2009, respectively, but not reported in discontinued operations, contributed a total gross margin decline of $2.1 million.
General and Administrative Expenses. General and administrative expenses were $13.5 million for the three months ended March 31, 2010 compared to $14.5 million for the three months ended March 31, 2009, a decrease of $1.0 million, or 7.0%. The decrease is a result of strategic initiatives undertaken to reduce expenses which yielded reductions of $1.6 million and $0.7 million in compensation related costs and utilities and rent, respectively. These reductions were partially offset by increased bad debt of $0.3 million on the SemStream bankruptcy settlement and $0.8 million in professional and consulting fees.
Interest Expense. Interest expense was $26.9 million for the three months ended March 31, 2010 compared to $17.5 million for the three months ended March 31, 2009, an increase of $9.3 million, or 53.2%. The increase in interest expense between periods was primarily due to increased borrowing rates on the facilities between periods and additional expense totaling $1.6 million associated with make-whole interest payments and the write-off of debt issue costs for the January repayment of debt with proceeds from the preferred unit sale and the east Texas asset sale. The Partnerships borrowing rates are higher in 2010 due to the late February 2009 amendments to the old credit facility and senior secured notes which were repaid in full in mid-February 2010 with proceeds from the issuance of the $725.0 million senior unsecured notes. Net interest expense consists of the following (in millions):
Income Taxes. Income tax benefit was $2.6 million for the three months ended March 31, 2010 compared to a tax expense of $2.0 million for the three months ended March 31, 2009. The income tax provision for the three months ended March 31, 2010 reflects a net tax benefit of $2.6 million for the current period loss. The income tax provision for the three months ended March 31, 2009 reflects a tax benefit of $2.2 million for current period loss offset by a $4.6 million income tax expense attributable to a tax basis adjustment in the Partnership related to the conversion of the senior subordinated series D units to common units on March 23, 2009.
Cash flows from investing activities for the three months ended March 31, 2010 and 2009 also include proceeds from property sales of $39.7 million and $11.0 million, respectively. The east Texas asset were sold in the quarter ending March 31, 2010 for $40.0 million. The Arkoma asset was sold in the quarter ending March 31, 2009 for $11.0 million.
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