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News
Texas Petrochemicals Inc. Reports First Quarter Fiscal 2006 Results
HOUSTON (Wednesday, October 26, 2005) -- TPC Group Inc. (OTC: TXPI.PK - News) ("TPI") announced net income of $38.3 million or basic and fully diluted earnings per share of $3.83 and $2.27, respectively, for the Company's first fiscal quarter ended September 30, 2005. This compares to net income of $5.8 million or basic and fully diluted earnings per share of $0.58 and $0.40, respectively for the quarter ended September 30, 2004. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter were $59.6 million compared to $14.3 million for the corresponding quarter in the prior year.
Results of OperationsThe Company generated revenues of $346.5 million for the three months ended September 30, 2005 compared to revenues of $216.1 million for the three months ended September 30, 2004, an increase of $130.4 million or approximately 60%. Revenues increased as a result of higher per unit sales prices driven by the increase in commodity prices as compared to the prior year period. Sales revenue also increased as a result of an increase in MTBE sales volumes and prices during the quarter ended September 30, 2005 as compared to the prior year period.
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Revenues and EBITDA generated from MTBE sales were $143.7 million and $43.4 million for the three months ended September 30, 2005 and $50.0 million and $4.6 million for the three months ended September 30, 2004, respectively.
Liquidity and Capital ResourcesThe Company ended the quarter with $35.2 million of cash and no outstanding borrowings on its $50 million revolving credit facility. The increase in liquidity during the quarter was a result of higher levels of profitability.
Net working capital increased $18.6 million during the quarter, primarily due to Hurricane Rita, which caused delays in product shipments and collection of receivables at the end of the quarter. The Company successfully resumed operations at its Houston facility on September 27, 2005; currently, the Company's cash balance exceeds $43 million.
The Company increased its capital spending during the quarter to $6.5 million from $1.8 million in the prior year quarter. The increase is primarily related to capital investments being made in operational efficiencies in the plant and on committed environmental initiatives.
The Company is continually considering potential transactions, including, but not limited to, enhancement of existing processing facilities, the purchase of existing processing facilities or businesses from third parties, construction of new processing facilities, joint ventures involving Company facilities and the acquisition of other companies engaged in petrochemicals processing. Some of the potential transactions considered by the Company could, if completed, result in the expenditure of a material amount of funds or the issuance of a material amount of debt or equity securities.
TPI is a producer of quality C4 chemical products widely used as chemical building blocks for synthetic rubber, nylon carpets, adhesives, catalysts and additives used in high-performance polymers. TPI also manufactures fuel products used in the formulation of cleaner burning gasoline. The company has manufacturing facilities in the industrial corridor adjacent to the Houston Ship Channel and operates product terminals in Baytown, Texas and Lake Charles, Louisiana. For more information about TPI products and services visit the company online at www.txpetrochem.com.
Disclosure Regarding Forward-Looking Statements
This news release or any of its attachments may include forward-looking statements. Although TPI believes that its expectations are based upon reasonable assumptions, it can give no assurance that its expectations will materialize. Among the significant factors that could affect whether such expectations will be realized are the Company's reliance on a relatively small number of customers for a majority of its revenues; the recent substantial upward movement and potential volatility in raw material and energy costs; the possibility of additional or more stringent environmental regulation imposing unforeseen compliance costs on the Company; and the Company's dependence on a single operating facility, which is subject to all of the hazards associated with chemical manufacturing and the related storage and transportation of raw materials, products and wastes. Many of these factors are entirely outside of the Company's control. For additional information about these and other important factors that could affect these forward-looking statements, please refer to the Plan of Reorganization and Disclosure Statement, as supplemented, which are available on the Company's website. TPI disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in millions, except per share data)
(Unaudited)
Three Months Ended
September 30,
2005 2004
Revenues $ 346.5 $ 216.1
Cost of goods sold 268.8 184.4
-------- --------
Gross profit 77.7 31.7
Fixed operating costs 15.1 15.2
SG&A expense 3.6 2.4
Depreciation and amortization 3.5 3.2
-------- --------
Operating costs 22.2 20.8
Operating income 55.5 10.9
Other income/(expense)
Non-cash gain on fair value of
derivatives ** 4.8 -
Non-cash stock compensation expense (0.5) -
Other income 0.6 0.2
-------- --------
Other income/(expense) 4.9 0.2
Interest expense 1.4 1.5
-------- --------
Income before reorganization costs
and income tax provision 59.0 9.6
Reorganization costs - 0.7
-------- --------
Income before income tax provision 59.0 8.9
Income tax provision 20.7 3.1
-------- --------
Net income $ 38.3 $ 5.8
======== ========
Earnings per share, basic $ 3.83 $ 0.58
Earnings per share, fully diluted $ 2.27 $ 0.40
Weighted average shares, basic
(in millions) 10.0 10.0
Weighted average share, fully
diluted (in millions)* 17.3 16.4
*Fully diluted shares includes the impact of the conversion of the Senior
Secured Convertible Notes and 1.4 million shares issued pursuant to the
TPC Group Inc. 2004 Stock Award Plan approved in January 2005.
**Reflects mark-to-market gain on the Company's derivative contracts
related to its MTBE hedging strategy.
RECONCILIATTION OF NON-GAAP FINANCIAL MEASURES
(Dollars in millions)
(Unaudited)
This earnings release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet, or statement of cash flows (or equivalent statements) of the registrant; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, TPI has provided a reconciliation of the non-GAAP financial measure (EBITDA) to the most directly comparable GAAP financial measure (net income).
Three Months Ended
September 30,
2005 2004
-------- --------
Net income $ 38.3 $ 5.8
Plus:
Provision for income taxes 20.7 3.1
Interest expense 1.4 1.5
Depreciation and amortization 3.5 3.2
Non-cash gain on fair value of
derivatives (4.8) -
Non-cash stock compensation expense 0.5 -
Reorganization costs - 0.7
-------- --------
EBITDA $ 59.6 $ 14.3
======== ========
EBITDA is presented in the earnings release because it has particular relevance in certain debt covenants and related compliance ratios and because management believes it is of interest to its investors and lenders.
Summary Consolidated Balance Sheet
(Dollars in millions)
(Unaudited)
Sept 30, 2005 June 30, 2005
------- -------
Current Assets:
Cash and cash equivalents $ 35.2 $ 15.9
Accounts receivable 103.0 77.5
Inventories 53.2 40.4
Other current assets 18.3 11.0
------- -------
Total current assets 209.7 144.8
Property, Plant & Equipment, net 155.0 151.9
Other Long-Term Assets 6.7 7.1
------- -------
Total Assets $ 371.4 $ 303.8
======= =======
Current Liabilities (excluding revolver
and note payable):
Accounts payable $ 77.7 $ 67.8
Accrued expenses 28.8 15.7
Bank overdraft 4.5 -
------- -------
Total current liabilities 111.0 83.5
Outstanding Debt:
Revolving Line of Credit - -
7.25% Senior Secured Convertible Notes 60.0 60.0
Note Payable - Financed Insurance
Premiums 2.4 -
------- -------
Total Debt 62.4 60.0
Deferred Income Tax Liability 42.3 43.3
Shareholders' Equity 155.7 117.0
------- -------
Total Liabilities and
Shareholders' Equity $ 371.4 $ 303.8
======= =======
Summary Consolidated Statement of Cash Flows
(Dollars in Millions)
(Unaudited)
Three Months Ended
September 30,
2005 2004
------- -------
Net Cash Provided By Operating Activities $ 18.9 $ 6.8
Cash Flows Used In Investing Activities (6.5) (1.8)
Net Cash Provided By (Used In) Financing
Activities 6.9 (5.2)
Net Increase (Decrease) in Cash and Cash
Equivalents $ 19.3 $ (0.2)
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Contact:
McCall Keyser
Email: mccall.keyser@txpetrochem.com
Phone: 713-475-7415
Contact:
Fred Pevow
Email: fred.pevow@txpetrochem.com
Phone: 713-475-5227
