Inergy Reports First Quarter Results

  Inergy Reports First Quarter Results

            Management to Host Conference Call Today at 10 a.m. CT

Business Wire

KANSAS CITY, Mo. -- February 5, 2013

Inergy, L.P. (NYSE:NRGY) (“Inergy”) today reported results of operations for
the quarter ended December 31, 2012, the first quarter of fiscal 2013.

Inergy reported Adjusted EBITDA of $57.4 million for the quarter ended
December 31, 2012, compared to $102.7 million in the quarter ended December
31, 2011. The reported Adjusted EBITDA in the quarter ended December 31, 2011,
includes our retail propane operations which were contributed to Suburban
Propane Partners, L.P. (“SPH”) on August 1, 2012. Excluding the retail propane
operations from Adjusted EBITDA in the prior year quarter, Inergy’s Adjusted
EBITDA of $57.4 million increased $9.7 million, or 20%, from approximately
$47.7 million for the quarter ended December 31, 2011.

Net income (loss) was $2.8 million for the quarter ended December 31, 2012,
and $(3.6) million in the same quarter of last year. Distributable cash flow
was $38.9 million for the quarter ended December 31, 2012, compared to $71.6
million reported in the same quarter of the prior year. Both measures of net
loss and distributable cash flow for the prior year period include results
from the retail propane operations contributed to SPH.

A table reconciling Adjusted EBITDA to net income (loss) as reported for the
quarter ended December 31, 2012, appears below.

“The fiscal 2013 first quarter represents the first full quarter of operations
after the sale of Inergy’s retail propane business,” said John Sherman,
Chairman and CEO of Inergy. “In our first quarter as a pure play midstream
company, the solid performance of our NGL business highlights the diversified
cash flow from our operations. As we look forward to the remainder of fiscal
2013, we are focused on executing on our objectives of growing our midstream
operations in developing shale plays, maintaining our strong balance sheet,
and delivering stable and growing cash earnings to investors.”

Recent Events

As previously announced, the Board of Directors of Inergy’s general partner
declared Inergy’s quarterly cash distribution of $0.29 per limited partner
unit ($1.16 annually) for the quarter ended December 31, 2012. The
distribution will be paid on February 14, 2013.

Quarterly Results

Marketing, supply and logistics gross profit was $32.0 million for the quarter
ended December 31, 2012, compared to $19.3 million for the same quarter in the
prior year.

Storage and transportation gross profit increased to $48.0 million for the
quarter ended December 31, 2012, compared to $45.3 million for the same
quarter in the prior year.

For the quarter ended December 31, 2012, operating and administrative expenses
decreased to $32.5 million, compared to $82.6 million reported for the same
quarter in the prior year.

Inergy, L.P. and Inergy Midstream, L.P. (NYSE:NRGM) will conduct a live
conference call and internet webcast today, February 5, 2013, to discuss
results of operations for the quarter ended December 31, 2012 and their
business outlook. The call will begin at 10:00 a.m. Central Time. 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.inergylp.com. A digital recording of the call will be available
for one week following the call by dialing 1-855-859-2056 and entering the
pass code 92710595.

About Inergy, L.P.

Inergy, L.P., headquartered in Kansas City, Missouri, is a publicly traded
master limited partnership. Inergy's operations include a natural gas storage
business in Texas and an NGL supply logistics, transportation, and marketing
business that serves customers in the United States and Canada. Through its
general partner interest and majority equity ownership interest in Inergy
Midstream, L.P., Inergy is also engaged in the development and operation of
natural gas, NGL and crude oil storage, transportation, and logistics
businesses in the Northeast region of the United States and in North Dakota.

About Inergy Midstream, L.P.

Inergy Midstream, L.P., headquartered in Kansas City, Missouri, is a publicly
traded master limited partnership engaged in the development and operation of
natural gas, NGL and crude oil storage, transportation, and logistics
businesses in the Northeast region of the United States and in North Dakota.

Corporate news, unit prices, and additional information about Inergy,
including reports from the United States Securities and Exchange Commission,
are available on the company’s website, www.inergylp.com. For more
information, contact Vince Grisell in Inergy’s Investor Relations Department
at 816-842-8181 or via e-mail at investorrelations@inergyservices.com.

EBITDA is a non-GAAP financial measure and is defined as income before income
taxes plus net interest expense, early extinguishment of debt, and
depreciation and amortization expense. Adjusted EBITDA represents EBITDA
excluding the gain or loss on derivative contracts associated with retail
propane fixed price sales contracts, the gain or loss on the disposal of
assets, long-term incentive and equity compensation expenses and transaction
costs. Transaction costs are third-party professional fees and other costs
that are incurred in conjunction with closing a transaction.

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, and our ability to service debt obligations.
We believe that EBITDA provides additional information for evaluating our
ability to make the quarterly distribution and is presented solely as a
supplemental measure. We believe that Adjusted EBITDA provides additional
information for evaluating our financial performance without regard to our
financing methods, capital structure, and historical cost basis. Further,
EBITDA and Adjusted EBITDA, as we define them, may not be comparable to EBITDA
and Adjusted EBITDA or similarly titled measures used by other corporations or
partnerships.

This press release contains forward-looking statements, which are statements
that are not historical in nature. 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 supply; the demand for high deliverability natural gas storage capacity in
the Northeast and Texas; 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. Readers are cautioned not to place undue
reliance on forward-looking statements, which reflect management’s view only
as of the date made. We undertake no obligation to update any forward-looking
statement, except as otherwise required by law.


Inergy, L.P. and Subsidiaries
Consolidated Statements of Operations
For the Three Months Ended December 31, 2012 and 2011
(in millions, except unit and per unit data)

                                        Three Months Ended
                                             December 31,
                                             2012             2011
                                             (Unaudited)
Revenue:
Retail                                       $ -                   $ 295.0
Marketing, supply and logistics                370.8                 314.4
Storage and transportation                    67.8                59.2    
                                               438.6                 668.6
                                                                   
Cost of product sold (excluding
depreciation and amortization as
shown below):
Retail                                         -                     178.8
Marketing, supply and logistics                338.8                 295.1
Storage and transportation                    19.8                13.9    
                                               358.6                 487.8
                                                                   
Expenses:
Operating and administrative                   32.5                  82.6
Depreciation and amortization                  36.3                  48.7
Loss on disposal of assets                    0.8                 1.4     
Operating income                              10.4                48.1    
                                                                   
Other income (expense):
Interest expense, net                          (8.1    )             (28.0   )
Early extinguishment of debt                   -                     (24.9   )
Other income                                  0.6                 1.3     
Income (loss) before income taxes              2.9                   (3.5    )
Provision for income taxes                    0.1                 0.1     
Net income (loss)                              2.8                   (3.6    )
Net income attributable to                    (1.5    )            (0.4    )
non-controlling partners
Net income (loss) attributable to            $ 1.3                $ (4.0    )
partners
                                                                   
Total limited partners’ interest             $ 1.3                $ (4.0    )
in net income (loss)
                                                                   
Net income (loss) per limited
partner unit:
Basic                                        $ 0.01               $ (0.03   )
Diluted                                      $ 0.01               $ (0.03   )
                                                                   
Weighted-average limited partners’
units outstanding (in thousands):
Basic                                         128,769             122,556 
Diluted                                       131,582             122,556 
                                                                             
                                                                             

                                           Three Months Ended
                                               December 31,
                                               2012            2011
                                               (Unaudited)
Supplemental Information:
                                                                   
Cash and cash equivalents                      $ 1.8               $ 18.7
                                                                   
Outstanding debt:
Inergy credit agreement                        $ 332.1             $ 401.5
Inergy senior unsecured notes                    11.5                1,200.8
Inergy fair value hedge adjustment on            -                   0.1
senior unsecured notes
Inergy net bond/swap discount ^(e) (f)           -                   10.9
Inergy other debt                                2.9                 17.2
NRGM credit facility ^(h)                        179.8               80.2
NRGM senior unsecured notes ^(h)                500.0             -       
Total debt                                     $ 1,026.3          $ 1,710.7 
                                                                   
Total partners’ capital                        $ 1,373.9          $ 1,348.0 
                                                                   
Limited partner units outstanding (in
thousands):
Common units                                     131,741             125,725
Class B units ^(g)                              -                 5,784   
Total Common and Class B limited                131,741           131,509 
partner units
                                                                   
EBITDA:
Net income (loss)                              $ 2.8               $ (3.6    )
Interest expense, net                            8.1                 28.0
Early extinguishment of debt                     -                   24.9
Provision for income taxes                       0.1                 0.1
Depreciation and amortization                   36.3              48.7    
EBITDA ^(a)                                    $ 47.3             $ 98.1    
Non-cash loss on derivative contracts            3.4                 0.1
Long-term incentive and equity                   3.1                 3.1
compensation expense
Loss on disposal of assets                       0.8                 1.4
Transaction costs                               2.8               -       
Adjusted EBITDA ^(a)                           $ 57.4             $ 102.7   
                                                                   
Distributable cash flow:
Adjusted EBITDA ^(a)                           $ 57.4              $ 102.7
Cash interest expense ^(b)                       (4.9    )           (26.3   )
Maintenance capital expenditures ^(c)            (2.0    )           (4.0    )
Income tax expense                               (0.1    )           (0.1    )
Inergy Midstream distributions                  (11.5   )          (0.7    )
declared for minority unitholders ^(i)
Distributable cash flow ^(d)                   $ 38.9             $ 71.6    
                                                                   
EBITDA:
Net cash provided by operating                 $ 28.0              $ 23.2
activities
Net changes in working capital                   18.1                36.0
balances
Non-cash early extinguishment of debt            -                   (8.3    )
Provision for doubtful accounts                  (0.1    )           0.1
Amortization of deferred financing
costs, swap premium and net bond                 (3.3    )           (1.5    )
discount
Long-term incentive and equity                   (3.1    )           (3.1    )
compensation expense
Loss on disposal of assets                       (0.8    )           (1.4    )
Deferred income tax                              0.3                 0.1
Interest expense, net                            8.1                 28.0
Early extinguishment of debt                     -                   24.9
Provision for income taxes                      0.1               0.1     
EBITDA                                         $ 47.3             $ 98.1    
Non-cash loss on derivative contracts            3.4                 0.1
Long-term incentive and equity                   3.1                 3.1
compensation expense
Loss on disposal of assets                       0.8                 1.4
Transaction costs                               2.8               -       
Adjusted EBITDA                                $ 57.4             $ 102.7   
                                                                             

          EBITDA is defined as income (loss) before income taxes, plus net
          interest expense, early extinguishment of debt, and depreciation and
          amortization expense. As indicated in the table, Adjusted EBITDA
          represents EBITDA excluding the gain or loss on derivative contracts
          associated with retail propane fixed price sales contracts,
          long-term incentive and equity compensation expenses, the gain or
          loss on the disposal of assets and transaction costs. Transaction
          costs are third-party professional fees and other costs that are
          incurred in conjunction with closing a transaction. EBITDA and
          Adjusted EBITDA should not be considered an alternative to net
          income, income before income taxes, cash flows from operating
(a)    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, and our
          ability to service debt obligations. We believe that EBITDA provides
          additional information for evaluating our ability to make the
          quarterly distribution and is presented solely as a supplemental
          measure. We believe that Adjusted EBITDA provides additional
          information for evaluating our financial performance without regard
          to our financing methods, capital structure, and historical cost
          basis. Further, EBITDA and Adjusted EBITDA, as we define them, may
          not be comparable to EBITDA and Adjusted EBITDA or similarly titled
          measures used by other corporations or partnerships.
          
(b)       Cash interest expense is book interest expense less amortization of
          deferred financing costs.
          
          Maintenance capital expenditures are defined as those capital
(c)       expenditures which do not increase operating capacity or revenues
          from existing levels.
          
          Distributable cash flow is defined as Adjusted EBITDA, less cash
          interest expense, maintenance capital expenditures, income taxes,
          and Inergy Midstream distributions declared and paid for minority
          unitholders. Distributable cash flow should not be considered an
          alternative to cash flows from operating activities or any other
          measure of financial performance calculated in accordance with
(d)       generally accepted accounting principles as those items are used to
          measure operating performance, liquidity, or the ability to service
          debt obligations. We believe that distributable cash flow provides
          additional information for evaluating our ability to declare and pay
          distributions to unitholders. 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.
          
          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
(e)       to eligible purchasers. The proceeds from the bond issuance were
          $204 million, representing a premium of $4 million to par. The $4
          million premium was amortized on a non-cash basis over the term of
          the senior notes.
          
          In February 2009, the Company closed on a $225 million offering of
          senior notes under Rule 144A to eligible purchasers. The 8¾% notes
(f)       were issued at 90.191%, which resulted in a discount of $22.1
          million. The discount was amortized on a non-cash basis over the
          term of the senior notes.
          
          The Class B units have similar rights and obligations of Inergy,
          L.P. common units except that the units pay distributions in kind
          rather than in cash for a certain period of time. Immediately after
          the payment of the Inergy, L.P. common unit distribution on November
          14, 2012, approximately 5.9 million outstanding Class B units
(g)       converted into common units of Inergy, L.P. and were entitled to
          receive cash distributions; thus, no Class B units were outstanding
          as of December 31, 2012. For a complete description of the Class B
          units, please see the Third Amended and Restated Agreement of
          Limited Partnership of Inergy, filed on Form 8-K on November 5,
          2010.
          
          Inergy and each of its wholly owned subsidiaries do not provide
(h)       credit support nor do they guarantee any amounts outstanding under
          the NRGM Credit Facility or senior notes.
          
          The amount of distributions for the three months ended December 31,
          2012, includes amounts that are to be received by Inergy Midstream’s
          minority unitholders based on the $0.39 distribution per limited
(i)       partner unit declared on January 25, 2013. The amount of
          distributions for the three months ended December 31, 2011, included
          amounts that were to be received by Inergy Midstream’s minority
          unitholders based on the $0.04 distribution declared on January 27,
          2012.

Contact:

Inergy, L.P.
Vince Grisell, 816-842-8181
investorrelations@inergyservices.com