SOURCE: Texas Petrochemicals Inc.

August 12, 2005 17:00 ET

Texas Petrochemicals Inc. Reports Fourth Quarter Fiscal 2005 Results

HOUSTON, TX -- (MARKET WIRE) -- August 12, 2005 -- Texas Petrochemicals Inc. ("TPI") (OTC: TXPI) announced net income of $14.3 million or basic and fully diluted earnings per share of $1.43 and $0.81, respectively, for the Company's fourth fiscal quarter ended June 30, 2005. The Company's full year results for its fiscal year ended June 30, 2005 were net income of $23.4 million or basic and fully diluted earnings per share of $2.34 and $1.37, respectively. This compares to net income of $189.1 million during the comparable quarter ended June 30, 2004 and $173.4 million of net income for the full fiscal year ended June 30, 2004 results, which included a $196.5 one time restructuring gain associated with fresh start accounting. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth fiscal quarter and full year fiscal 2005 were $24.7 million and $57.9 million, compared to $5.2 million and $32.7 million for the corresponding quarter and full year fiscal 2004, respectively.

Results of Operations

The Company generated revenues of $293.9 million for the three months ended June 30, 2005 compared to revenues of $172.9 million for the three months ended June 30, 2004, an increase of $121.0 million or approximately 70%. Revenues increased as a result of higher per unit sales prices for all products principally driven by the increase in raw material prices compared to the prior year. In addition, revenues were higher due to seasonal MTBE sales volumes during the fourth fiscal quarter.

Revenues and EBITDA generated from MTBE sales were $98.8 million and $11.0 million for the three months ended June 30, 2005 and $41.1 million and $4.2 million for the three months ended June 30, 2004, respectively. Revenues and EBITDA generated from MTBE sales were $223.5 million and $13.0 million for the full fiscal year ended June 30, 2005 and $143.2 million and $4.6 million for the full fiscal year ended June 30, 2004, respectively.

Liquidity and Capital Resources

The Company ended the quarter with $15.9 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 and an $18.4 million reduction in net working capital during the quarter.

Capital expenditures in the fourth fiscal quarter and full fiscal year ended June 30, 2005 were $5.0 million and $9.6 million, respectively, primarily related to 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    Twelve Months Ended
                                      June 30,               June 30,
                                   2005      2004         2005      2004
                                 -------   -------      -------   -------
Revenues                         $ 293.9   $ 172.9      $ 929.4   $ 646.2
Cost of goods sold                 248.9     144.5        797.5     532.8
                                 -------   -------      -------   -------
    Gross profit                    45.0      28.4        131.9     113.4

Operating costs                     14.1      20.4         59.6      69.3
SG&A expense                         6.3       2.5         14.9      11.5
Restructuring costs                    -       1.5            -       1.5
Depreciation and amortization        3.5       4.2         13.6      21.4
                                 -------   -------      -------   -------
    Operating costs                 23.9      28.6         88.1     103.7

    Operating income                21.1      (0.2)        43.8       9.7

Other income/(expense)
  Fresh start accounting               -     196.5            -     196.5
  Non-cash restricted
   stock expense                    (0.2)        -         (0.8)        -
  Gain on sale of
   intangible asset                  3.9         -          3.9         -
  Impairment of intangible asset    (0.4)        -         (0.4)        -
  Other income                       0.1       1.2          0.5       1.6
                                 -------   -------      -------   -------
    Other income/(expense)           3.4     197.7          3.2     198.1

Interest expense                     1.4       1.7          5.6      12.3
                                 -------   -------      -------   -------

    Income before reorganization
     items, income tax provision
     (benefit) and cumulative
     effect of accounting change    23.1     195.8         41.4     195.5

Reorganization costs                 0.2       4.2          2.1      23.9
                                 -------   -------      -------   -------

    Income before income tax
     provision (benefit) and
     cumulative effect of
     accounting change              22.9     191.6         39.3     171.6

Income tax provision (benefit)       8.6       2.5         15.9      (3.9)

Cumulative effect of accounting
 change, net of $1.1 million
 income tax benefit                    -         -            -       2.1
                                 -------   -------      -------   -------

    Net income                   $  14.3   $ 189.1      $  23.4   $ 173.4
                                 =======   =======      =======   =======

    Earnings per share, basic    $  1.43        NM      $  2.34        NM
    Earnings per share,
     fully diluted*              $  0.81        NM      $  1.37        NM

    Weighted average shares,
     basic (in millions)            10.0        NM         10.0        NM
    Weighted average shares,
     fully diluted
    (in millions)*                  17.7        NM         17.1        NM

*Fully diluted shares includes the impact of the conversion of the Senior
 Secured Convertible Notes and 1.3 million shares issued pursuant to the
 Texas Petrochemicals Inc. 2004 Stock Award Plan approved in January 2005.


              RECONCILIATION 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/loss).

                                Three Months Ended    Twelve Months Ended
                                      June 30,               June 30,
                                   2005      2004         2005      2004
                                 -------   -------      -------   -------

Net income                       $  14.3   $ 189.1      $  23.4   $ 173.4
Plus:
    Fresh start accounting             -    (196.5)           -    (196.5)
    Provisions (benefit)
     for income taxes                8.6       2.5         15.9      (3.9)
    Interest expense                 1.4       1.7          5.6      12.3
    Depreciation and amortization    3.5       4.2         13.6      21.4
    Non-cash restricted
     stock expense                   0.2         -          0.8         -
    Gain on sale of intangible      (3.9)        -         (3.9)        -
    Impairment of intangible         0.4         -          0.4         -
    Reorganization costs             0.2       4.2          2.1      23.9
    Cumulative effect of
     accounting change                 -         -            -       2.1
                                 -------   -------      -------   -------

EBITDA                           $  24.7   $   5.2      $  57.9   $  32.7
                                 =======   =======      =======   =======


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)

                                          June 30, 2005   June 30, 2004
                                          -------------   -------------

Current Assets:
   Cash and cash equivalents                 $    15.9       $    0.4
   Accounts receivable                            77.7           48.4
   Inventories                                    40.4           39.2
   Other current assets                           10.6           16.8
                                             ---------       --------
Total current assets                             144.6          104.8

Property, Plant & Equipment, net                 151.9          155.7
Other Long-Term Assets                             7.1            7.4
                                             ---------       --------
           Total Assets                      $   303.6       $  267.9
                                             =========       ========

Current Liabilities (excluding revolver
  and note payable):
   Accounts payable                          $    68.1       $   42.5
   Accrued expenses                               15.7            7.3
   Other current liabilities                         -            0.9
                                             ---------       --------
            Total current liabilities             83.8           50.7
Outstanding Debt:
   Revolving Line of Credit                          -           18.9
   7.25% Senior Secured Convertible Notes         60.0           60.0
                                             ---------       --------
        Total Debt                                60.0           78.9

Deferred Income Tax Liability                     43.3           46.0

Shareholders' Equity                             116.5           92.3
                                             ---------       --------
           Total Liabilities and
            Shareholders' Equity             $   303.6       $  267.9
                                             =========       ========



                   Summary Consolidated Statement of Cash Flows
                            (Dollars in Millions)
                                  (Unaudited)

                                   Three Months Ended  Twelve Months Ended
                                          June 30,          June 30,
                                      2005      2004     2005       2004
                                      ----      ----     ----       ----

Net Cash Provided by (Used In)
 Operating Activities              $  34.7   $ (22.9)  $  44.6   $   6.9

Cash Flows Used In Investing
 Activities                           (5.0)     (5.4)     (9.6)     (8.6)

Net Cash Provided By (Used In)
 Financing Activities                (14.0)     (0.3)    (19.5)      1.5

Net Increase (Decrease) in Cash
 and Cash Equivalents              $  15.7   $ (28.6)     15.5      (0.2)

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