Genesis Energy(GEL) - 2019 Q2 - Quarterly Report

Financial Performance - Net Income Attributable to Genesis Energy, L.P. for Q2 2019 was $40.1 million, a significant increase from $11.0 million in Q2 2018, driven by a $10.3 million increase in segment margin and positive changes in estimated abandonment costs[147] - Cash flow from operating activities rose to $81.6 million in Q2 2019, up from $64.5 million in Q2 2018, primarily due to the increase in segment margin[148] - Available Cash before Reserves decreased by $7.5 million, or 7.5%, to $93.5 million in Q2 2019 compared to Q2 2018, which included an $18.7 million cash distribution to preferred unitholders[149] - Revenues for Q2 2019 decreased by $117.6 million, or 16%, while total costs and expenses decreased by $143.7 million, or 21%, compared to Q2 2018[153] - The company declared a quarterly distribution of $0.55 per common unit and $0.7374 per preferred unit for Q2 2019, payable on August 14, 2019[151] - Operating cash flow for the six months ended June 30, 2019, increased to $195.6 million from $150.8 million in the same period of 2018, reflecting a rise in overall segment margin and higher distributions from equity investees[198] - Available Cash before Reserves for the three months ended June 30, 2019, was $93.468 million, compared to $101 million in the same period of 2018[207] - The net income attributable to Genesis Energy, L.P. for the three months ended June 30, 2019, was $40.120 million, significantly higher than $10.997 million in 2018[207] Segment Performance - Segment Margin for Q2 2019 was $184.1 million, reflecting a $10.3 million increase, or 6%, from $173.9 million in Q2 2018[150] - Offshore pipeline transportation Segment Margin increased to $76.5 million in Q2 2019 from $71.6 million in Q2 2018, with offshore crude oil pipeline revenue rising to $60.0 million[161] - Offshore pipeline transportation segment margin increased by $4.9 million, or 7%, in Q2 2019 compared to Q2 2018, driven by higher volumes from crude oil pipeline systems[163] - For the first six months of 2019, offshore pipeline transportation segment margin rose by $8.1 million, or 6%, primarily due to increased volumes from CHOPS and Poseidon systems[164] - Sodium minerals and sulfur services segment margin decreased by $6.8 million, or 11%, in Q2 2019 compared to Q2 2018, attributed to lower volumes in soda ash and refinery services[166] - In the first half of 2019, sodium minerals and sulfur services segment margin fell by $12.6 million, or 10%, due to increased downtime and lower volumes[167] - Onshore facilities and transportation segment margin increased by $10.2 million, or 40%, in Q2 2019 compared to Q2 2018, supported by increased volumes at rail facilities[175] - For the first six months of 2019, onshore facilities and transportation segment margin rose by $14.1 million, or 30%, compared to the same period in 2018, despite production curtailments in Alberta[176] - Marine transportation segment revenues for Q2 2019 were $58.706 million, a 4.5% increase from $56.185 million in Q2 2018[177] - Segment margin for Q2 2019 increased by $2.0 million, or 17%, compared to Q2 2018, driven by higher inland and offshore barge utilization[179] Capital Expenditures and Debt - Total capital expenditures for fixed and intangible assets for the six months ended June 30, 2019, were $74.428 million, down from $89.609 million in 2018, with maintenance capital expenditures totaling $43.251 million and growth capital expenditures totaling $31.177 million[201] - Maintenance capital expenditures in the 2019 Quarter were $25.2 million, compared to $22.2 million in the 2018 Quarter[207] - Long-term debt as of June 30, 2019, totaled approximately $3.4 billion, including $1.0 billion under the credit facility and $2.5 billion of senior unsecured notes[188] - The company plans to issue additional equity and debt securities to meet future liquidity requirements and support growth strategies[189] Market Conditions and Risks - Average closing prices for West Texas Intermediate crude oil decreased by 11.9% to $59.79 per barrel in Q2 2019, compared to $67.85 per barrel in Q2 2018, impacting revenues and costs[154] - The company expects changes in commodity prices to have a limited direct impact on Segment Margin, Net Income, and Available Cash before Reserves from its offshore Gulf of Mexico operations[154] - Factors affecting future results include demand and supply for crude oil and natural gas, throughput levels, and tariff rate changes[229] - Risks include service interruptions, changes in laws and regulations, and potential cyber-attacks on information systems[232] Strategic Outlook - The company plans to allocate a substantial portion of excess cash flow to reduce the outstanding balance under its revolving credit facility[199] - The company does not anticipate spending material growth capital expenditures on any individual projects for the remainder of 2019[202] - The company continues to pursue a long-term growth strategy that may require significant capital, focusing on acquiring assets that meet criteria for stable cash flows[201] - The company emphasizes the importance of identifying and closing strategic acquisitions and integrating them into existing operations[232] Miscellaneous - General and administrative expenses for Q2 2019 were $13.412 million, a slight decrease from $13.529 million in Q2 2018[181] - Net interest expense decreased by $2.4 million in Q2 2019, totaling $55.507 million compared to $57.909 million in Q2 2018[183] - As of June 30, 2019, the company had $731.9 million of remaining borrowing capacity under its $1.7 billion senior secured revolving credit facility[186] - Total depreciation, depletion, and amortization expense increased by $1.7 million in Q2 2019, totaling $79.353 million compared to $77.680 million in Q2 2018[182] - There have been no material changes to the commitments and obligations as reflected in the Annual Report for the year ended December 31, 2018[226] - The company has no off-balance sheet arrangements or financing partnerships beyond those disclosed in the Annual Report for the year ended December 31, 2018[227] - Forward-looking statements include expectations regarding business growth, future capital expenditures, and financial performance, which are subject to risks and uncertainties[228] - The maintenance capital utilized measure is defined as the portion of previously incurred maintenance capital expenditures utilized during the relevant quarter, which is crucial for determining Available Cash before Reserves[224] - Future maintenance capital utilized calculations will only reflect expenditures incurred since December 31, 2013[225] - The company does not intend to update forward-looking statements unless required by applicable securities laws[231]