Texas Petrochemicals Reports Fiscal 2009 Second Quarter Results
Second quarter results were affected by the aftermath of Hurricane Ike
and the impact of the economic recession
The Company has estimated the adverse impact of Hurricane Ike on second quarter Adjusted EBITDA to be substantial, and is preparing its claim to recover a portion of the loss under its business interruption insurance coverage. Despite the fact that the Company was able to restart all its plants by the end of the first fiscal quarter, its ability to receive raw materials and ship products continued to be significantly hampered as both suppliers’ and customers’ facilities were forced to take outages that have lasted up to several months.
“We have acted quickly in response to these challenging conditions to ensure that we maintain adequate liquidity and operational flexibility to respond to rapidly changing market conditions as we navigate our way through the next several quarters. I am pleased that our aggressive actions to align our current level of operations with demand have generated significant positive cash flow over the latter part of the second quarter and into the third quarter.
“We have funded necessary maintenance capital, but have delayed other discretionary spending and continue to tightly control our working capital. We are taking the necessary steps to manage through this challenging economic environment and are focused on serving our customers while operating responsibly in terms of our health, safety and environmental activities.”
Fiscal 2009 Second Quarter and Year-to-Date Results
- Total sales volume for the fiscal 2009 second quarter was up 16% compared to the first quarter, but was down 26% versus the prior year second quarter. Year-to-date total sales volume was down 30% compared to the comparable fiscal 2008 period.
- Total second quarter revenues were 25% lower than the immediately preceding quarter and 20% lower than the second quarter of the prior year. Year-to-date revenues were down 4% versus the comparable prior year period due to the impact of Hurricane Ike and the slowdown in demand in the second quarter.
- Second quarter total Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and additional items), was a loss of
$17.1 million compared to positive$18.3 million in the first quarter and$21.5 million in the prior year quarter. Year-to-date Adjusted EBITDA was$1.2 million versus$47.5 million in fiscal 2008. For additional information regarding Adjusted EBITDA (a non-GAAP financial measure), refer to the reconciliation table at the end of this press release.
- As a result of the rapid and large declines in the selling prices of our products, we recorded during the second fiscal quarter a lower-of-cost-or-market adjustment to our inventory of
$11.6 million , as ofDecember 31, 2008 . Excluding the impact of this write-down, second quarter Adjusted EBITDA would have been a loss of$5.5 million .
- Net loss in the second quarter was
$26.7 million , or$1.51 per diluted share, compared to net income of$1.4 million in the first quarter and$2.2 million in the second quarter last year. Six months year-to-date net loss was$25.3 million , or$1.43 per diluted share, versus positive$9.3 million , or$0.51 per diluted share, for the first six months of fiscal 2008.
- Our second quarter results reflect unprecedented erosion in demand for our products as the impact of the global economic crisis worsened over the course of the quarter. In addition to the impact of the depressed economic conditions during the second quarter, demand was also negatively impacted by customer efforts to reduce year-end inventory levels and lingering effects of the September hurricanes as some customers continued to struggle to recover from related plant outages. As a result, we shut down several of our production facilities in early December to balance demand and inventory.
Highlights:
- We have completed and successfully commissioned the new polyisobutylene (PIB) facility in
Houston . The plant is now fully operational and is supplying a full range of PIB products to our customers. This project essentially completes our capital expansion program that was undertaken back in 2007.
- We continue to pursue the process of SEC registration commenced in the second quarter. We anticipate being effective as an SEC registrant during the third fiscal quarter and will begin regular quarterly and annual reporting with the SEC beginning with our third fiscal quarter ended
March 31, 2009 .
- Cost reduction efforts undertaken during the second quarter included, among other things, temporary shutdowns of our C4 facility at our
Port Neches site and our Performance Products facilities at ourHouston site, as well as reductions in both our plant contractor workforce and employee headcount across all functional areas. ThePort Neches facility was down for the second half of December and theHouston -based Performance Products facilities were down for the entire month of December.
- During January we experienced an incremental improvement in demand and more stable pricing for most of our products. As a result, all plants have successfully restarted and are now operating. The level of customer orders and indications of demand are continuing to show improvement.
Results of Operations
The financial statements and segment information provided at the end of this press release should be referred to when reading the discussion of our second quarter and year-to-date operating results provided below.
Second Quarter of Fiscal 2009 versus First Quarter of Fiscal 2009
Revenues
Total revenues for the second quarter of fiscal 2009 were
The
The
The higher second quarter revenues for Other products reflects higher sales volume of MTBE produced from crude C4 isobutylene. First quarter sales volume was curtailed due to the September hurricanes that impeded our ability to ship the product during the latter part of the first quarter.
Adjusted EBITDA
Total Adjusted EBITDA for the second quarter of fiscal 2009 was a loss of
The primary components of the C4 Products decline of
The
Second Quarter of Fiscal 2009 versus Second Quarter of Fiscal 2008
Revenues
Fiscal 2009 second quarter revenues of
The
The
The increase in Other product revenues primarily reflects sales of MTBE produced from crude C4 isobutylene in conjunction with the start-up of our isobutylene processing unit in second quarter of fiscal 2008. Sales of MTBE produced from crude C4 isobutylene have been reported as Other product sales since the third quarter of fiscal 2008.
Adjusted EBITDA
Fiscal 2009 second quarter Adjusted EBITDA loss of
The primary components of the C4 Products decline of
The
First Six Months of Fiscal 2009 versus First Six Months of Fiscal 2008
Revenues
Total revenues for the first six months of fiscal 2009 were
The
The
The higher Other product revenues of
Adjusted EBITDA
Total Adjusted EBITDA for the first half of fiscal 2009 was
The primary components of the C4 Products decline of
The
The decrease in Adjusted EBITDA of
Liquidity and Capital Resources
At
Operating cash flows for the quarter and six months ended
As of
Conference Call
The Company has scheduled a conference call for
Headquartered in
Cautionary Information Regarding Forward-Looking Statements
Certain oral and written information that the Company may make publicly available from time to time may constitute forward-looking statements. Such statements may relate to future operating results, existing and expected competition, financing and refinancing sources and availability, and plans related to strategic alternatives or future expansion activities and capital expenditures. Forward-looking statements involve a number of risks and uncertainties that may significantly affect the Company’s liquidity and results in the future and, accordingly, actual results may differ materially from those expressed in any forward-looking statements. Such risks and uncertainties include, but are not limited to, those related to effects of competition, leverage and debt service, financing and refinancing efforts, litigation and governmental investigations, environmental laws and regulations, general economic conditions and changes in laws or regulations.
Investor Relations
Contact: Robert Whitlow
Email: robert.whitlow@txpetrochem.com
Phone: 713-627-7474
Contact: Ruth Dreessen
Email: ruth.dreessen@txpetrochem.com
Phone: 713-627-7474
Media Relations
Contact: Sara Cronin
Email: sara.cronin@txpetrochem.com
Phone: 713-627-7474
- tables to follow -
texas petrochemicals, inc.
CONSOLIDATED BALANCE SHEETS
(in millions)
December 31, June 30,
------------ --------
2008 2008
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $0.6 $0.6
Accounts receivable - trade 72.9 200.5
Inventories 44.6 102.5
Other current assets 26.2 28.5
---- ----
Total current assets 144.3 332.1
Property, plant and equipment,
net 536.2 546.0
Investment in limited
partnership 3.0 2.4
Intangible assets, net 6.0 4.4
Other assets, net 21.9 20.4
---- ----
Total assets $711.4 $905.3
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $36.0 $218.6
Accrued liabilities 28.3 28.5
Current portion of long-term
debt 5.5 2.7
--- ---
Total current liabilities 69.8 249.8
Long-term debt 317.7 294.4
Deferred income taxes 49.5 61.6
---- ----
Total liabilities 437.0 605.8
Shareholders' equity 274.4 299.5
----- -----
Total liabilities and
shareholders' equity $711.4 $905.3
====== ======
Texas Petrochemicals, inc.
Consolidated Statements of OperationS
(Unaudited, in millions, except per share amounts)
Three Months Ended Six Months Ended
------------------ ----------------
September 30, December 31, December 31,
----------- ------------ ------------
2008 2008 2007 2008 2007
---- ---- ---- ---- ----
Revenues $543.3 $410.0 $509.9 $953.3 $996.0
Cost of sales 471.9 375.7 450.0 847.5 869.3
----- ----- ----- ----- -----
71.4 34.3 59.9 105.8 126.7
---- ---- ---- ----- -----
Operating expenses
Operating
expenses 35.8 31.7 31.2 67.5 60.2
Selling,
general and
administrative
expenses 9.9 10.1 9.4 20.1 22.5
Depreciation
and
amortization 10.0 10.6 8.9 20.7 16.5
Loss on sale
of assets - - 1.1 - 1.1
Lower-of-cost-
or-market
adjustment 9.4 11.6 - 21.0 -
Unauthorized
freight
payments - - - - 0.5
---- ---- ---- ----- -----
65.1 64.0 50.6 129.3 100.8
---- ---- ---- ----- -----
Income (loss)
from operations 6.3 (29.7) 9.3 (23.5) 25.9
--- ----- --- ----- ----
Other (income) expense
Interest
expense 4.1 5.2 5.5 9.3 10.7
Interest income - - (0.1) - (0.1)
Unrealized
loss on
derivatives 0.4 5.0 1.0 5.3 1.1
Other, net (0.4) (0.5) (0.5) (0.9) (0.9)
---- ---- ---- ---- ----
4.1 9.7 5.9 13.7 10.8
Income (loss)
before income
taxes 2.2 (39.4) 3.4 (37.2) 15.1
Income tax
(benefit)
expense 0.8 (12.7) 1.2 (11.9) 5.8
--- ----- --- ----- ---
Net income (loss) $1.4 $(26.7) $2.2 $(25.3) $9.3
==== ====== ==== ====== ====
Earnings (loss) per share:
Basic $0.08 $(1.51) $0.13 $(1.43) $0.53
Diluted $0.08 $(1.51) $0.12 $(1.43) $0.51
Weighted average shares
outstanding:
Basic 17.8 17.7 17.6 17.7 17.6
Diluted 18.2 17.7 18.1 17.7 18.1
TEXAS PETROCHEMICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
Three Months Six Months
Ended Ended
December 31, December 31,
------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
Cash flows from
operating activities:
Net income (loss) $(26.7) $2.2 $(25.3) $9.3
Distributions
received from joint
venture - 0.3 0.2 0.5
Adjustments to
reconcile net income
to net cash
provided by operating
activities:
Depreciation and
amortization 10.6 8.9 20.7 16.5
Loss on sale of
assets - 1.1 - 1.1
Amortization of
debt issuance
costs 0.3 0.3 0.6 0.6
Pension expense 0.3 0.3 0.6 0.6
Deferred income
taxes (12.0) (4.4) (12.0) (0.5)
Non-cash stock
compensation
expense 1.5 1.7 3.1 3.1
Unrealized loss on
derivatives 5.0 1.0 5.3 1.1
Earnings from
joint venture (0.5) (0.6) (0.8) (0.7)
Change in assets
and liabilities
Accounts
receivable 51.6 (3.9) 127.6 (17.0)
Inventories 101.4 10.0 57.8 (8.8)
Other assets 1.5 (1.3) (0.9) (5.9)
Accounts payable
and accrued
liabilities (149.8) 50.7 (188.8) 41.5
------ ---- ------ ----
Net cash provided by
(used in) operating
activities (16.8) 66.3 (11.9) 41.4
----- ---- ----- ----
Cash flows from
investing activities:
Capital expenditures (3.4) (28.0) (11.2) (40.0)
Purchase of business
assets - (70.0) - (70.0)
---- ----- ----- -----
Net cash used in
investing activities (3.4) (98.0) (11.2) (110.0)
---- ----- ----- ------
Cash flows from
financing activities:
Proceeds from term
loan borrowings - 70.0 - 70.0
Repayments on term
loans (0.7) (0.7) (1.4) (1.2)
Net proceeds from
revolving credit
facility borrowings 22.2 (24.7) 24.7 -
Proceeds from
insurance debt 0.2 - 5.9 6.4
Payments on
insurance debt (1.6) (1.8) (3.1) (3.4)
Exercise of stock
options - - - 0.2
Repurchase of common
stock - - (3.0) (0.3)
---- ---- ---- ----
Net cash provided by
financing activities 20.1 42.8 23.1 71.7
---- ---- ---- ----
Increase (decrease) in
cash and cash
equivalents (0.1) 11.1 (0.0) 3.1
Cash and cash
equivalents, at
beginning of period 0.7 1.5 0.6 9.5
--- --- --- ---
Cash and cash
equivalents, at end of
period $0.6 $12.6 $0.6 $12.6
==== ===== ==== =====
TEXAS PETROCHEMICALS, INC.
BUSINESS SEGMENT INFORMATION
(Unaudited, in millions)
Three Months Ended Six Months Ended
------------------ ----------------
September 30, December 31, December 31,
------------ ------------- ------------
2008 2008 2007 2008 2007
---- ---- ---- ---- ----
Sales volumes (lbs):
C4 Processing 499.9 548.8 791.1 1,048.7 1,545.8
Performance Products 165.3 184.0 205.1 349.3 363.6
MTBE (1) - - 66.8 - 172.6
Other (2) 11.6 51.0 - 62.6 -
---- ---- ---- ---- ----
676.8 783.8 1,063.0 1,460.6 2,082.0
===== ===== ======= ======= =======
Revenues:
C4 Processing $405.4 $303.8 $371.5 $709.2 $724.6
Performance Products 128.4 87.7 110.3 216.1 197.3
MTBE (1) - - 23.6 - 66.1
Other (2) 9.5 18.5 4.5 28.0 8.0
--- ---- --- ---- ---
$543.3 $410.0 $509.9 $953.3 $996.0
====== ====== ====== ====== ======
Cost of sales (3):
C4 Processing $357.9 $286.3 $328.7 $644.2 $642.6
Performance Products 104.4 70.0 91.4 174.3 160.6
MTBE (1) - - 25.8 - 59.2
Other (2) 9.6 19.4 4.1 29.0 6.9
--- ---- --- ---- ---
$471.9 $375.7 $450.0 $847.5 $869.3
====== ====== ====== ====== ======
Adjusted EBITDA:
C4 Processing $16.0 $(13.4) $19.9 $2.6 $37.7
Performance Products 14.7 8.0 10.8 22.7 20.3
MTBE (1) - - (2.7) - 6.2
Other (2) (5.5) (4.7) (0.2) (10.1) (0.1)
Corporate (6.9) (7.0) (6.3) (14.0) (16.6)
---- ---- ---- ----- -----
$18.3 $(17.1) $21.5 $1.2 $47.5
===== ====== ===== ==== =====
Notes to Business Segment Information
[1] As reported in the above table, the "MTBE" segment represents MTBE
produced by our Houston dehydrogenation units. In conjunction with the
start-up of our isobutylene processing unit in late first quarter of
fiscal 2008, the dehydrogenation units were idled and all MTBE produced
from those units was sold by the end of the second quarter of fiscal
2008. Beginning with third quarter of fiscal 2008, MTBE production from
crude C4 isobutylene was insignificant and related revenues and operating
results were included in the "Other" operating segment.
[2] The "Other" segment includes MTBE production and sales beginning with
third quarter of fiscal 2008. Prior to the third quarter of fiscal 2008,
the "Other" category included only production and sales of steam and
excess electricity.
[3] Excludes depreciation and amortization and operating expenses.
TEXAS PETROCHEMICALS, INC.
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME
(Unaudited, in millions)
This earnings release contains non-GAAP financial measures. For purposes
of Regulation G, a non-GAAP financial measure is a numerical measure of a
company'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 statements of operations, balance sheets, or statements of
cash flows (or equivalent statements) of the Company; 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, the Company has provided below a reconciliation of the
Adjusted EBITDA (non-GAAP financial measure) to net income (most directly
comparable GAAP financial measure.
Three Months Ended Six Months Ended
------------------ -----------------
September 30, December 31, December 31,
------------- ------------ ------------
2008 2008 2007 2008 2007
---- ---- ---- ---- ----
Adjusted EBITDA:
C4 processing $16.0 $(13.4) $19.9 $2.6 $37.7
Performance products 14.7 8.0 10.8 22.7 20.3
MTBE - - (2.7) - 6.2
Other (5.5) (4.7) (0.2) (10.1) (0.1)
Corporate (6.9) (7.0) (6.3) (14.0) (16.6)
Reconciliation:
Income tax (benefit)
expense (0.8) 12.7 (1.2) 11.9 (5.8)
Interest expense, net (4.1) (5.2) (5.4) (9.3) (10.6)
Depreciation and
amortization (10.0) (10.6) (8.9) (20.7) (16.5)
Loss on sale of assets - - (1.1) - (1.1)
Non-cash stock-based
compensation (1.6) (1.5) (1.7) (3.1) (3.1)
Unrealized loss on
derivatives (0.4) (5.0) (1.0) (5.3) (1.1)
---- ---- ---- ---- ----
Net income (loss) $1.4 $(26.7) $2.2 $(25.3) $9.3
==== ====== ==== ====== ====
EBITDA information is presented in this earnings release because
management believes it enhances understanding by investors and lenders of
the Company's financial performance.
SOURCE Texas Petrochemicals, Inc.