Genesis Energy(GEL) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents Genesis Energy, L.P.'s unaudited condensed consolidated financial statements for Q1 2020, showing increased net income despite lower revenues Unaudited Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2020, shows a slight decrease in total assets to $6.43 billion from $6.60 billion at year-end 2019, primarily due to reduced current assets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total current assets | $496,880 | $593,074 | | Net fixed assets | $4,256,491 | $4,294,475 | | TOTAL ASSETS | $6,434,458 | $6,597,641 | | Total current liabilities | $324,809 | $415,495 | | Total liabilities | $4,143,786 | $4,251,222 | | Total partners' capital | $1,371,338 | $1,431,171 | | TOTAL LIABILITIES, MEZZANINE CAPITAL AND PARTNERS' CAPITAL | $6,434,458 | $6,597,641 | Unaudited Condensed Consolidated Statements of Operations For Q1 2020, total revenues decreased to $539.9 million from $620.0 million in Q1 2019, yet net income significantly increased to $29.0 million from $15.9 million Condensed Consolidated Statements of Operations Highlights (in thousands, except per unit amounts) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Total revenues | $539,923 | $620,009 | | Operating Income | $59,162 | $62,029 | | Net Income | $28,979 | $15,947 | | Net Income (Loss) Available to Common Unitholders | $6,225 | $(2,461) | | Basic and Diluted EPS | $0.05 | $(0.02) | Unaudited Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities decreased to $89.6 million in Q1 2020 from $114.0 million in Q1 2019, with $41.5 million in cash at period-end Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $89,552 | $114,021 | | Net cash used in investing activities | $(30,880) | $(23,829) | | Net cash used in financing activities | $(73,568) | $(89,288) | | Net increase (decrease) in cash | $(14,896) | $904 | | Cash, restricted cash and cash equivalents at end of period | $41,509 | $11,204 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail the company's four business segments, revenue recognition, debt structure changes, reduced common unit distribution, and derivative impacts, with no material COVID-19 effects on Q1 2020 results - The company operates through four reportable segments: Offshore pipeline transportation, Sodium minerals and sulfur services, Onshore facilities and transportation, and Marine transportation[22][26] - In January 2020, the company issued $750.0 million of 7.75% senior unsecured notes due 2028 and redeemed its 6.75% senior unsecured notes due 2022, resulting in a loss on extinguishment of approximately $23.5 million[59] - The quarterly distribution for common unitholders was reduced to $0.15 per unit for Q1 2020, down from $0.55 in the preceding quarters[61] Segment Margin by Business (in thousands) | Segment | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Offshore Pipeline Transportation | $85,246 | $76,390 | | Sodium Minerals & Sulfur Services | $36,941 | $58,639 | | Onshore Facilities & Transportation | $28,099 | $25,603 | | Marine Transportation | $19,002 | $12,932 | | Total Segment Margin | $169,288 | $173,564 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2020 financial results, highlighting increased net income due to an unrealized gain, segment performance, COVID-19 impact, reduced common unit distribution, and strong liquidity - Net Income Attributable to Genesis Energy, L.P. for Q1 2020 was $24.9 million, compared to $16.0 million in Q1 2019, primarily driven by a $32.5 million unrealized gain from an embedded derivative, offset by a $23.5 million loss on debt extinguishment[120] - Total Segment Margin for Q1 2020 was $169.3 million, a 2% decrease from $173.6 million in Q1 2019[123][136] - The quarterly distribution to common unitholders was reduced to $0.15 per unit for Q1 2020 to focus on de-leveraging the balance sheet in the current industry environment[124][129] - As of March 31, 2020, the company had a strong liquidity position with $721.5 million of borrowing capacity under its senior secured revolving credit facility[162] Results of Operations This section analyzes operating results by segment, noting increased margin in Offshore Pipeline and Marine Transportation, offset by a decline in Sodium Minerals and Sulfur Services - Offshore Pipeline Transportation: Segment Margin increased by $8.9 million (12%) YoY, driven by higher volumes from new production fields (Buckskin, Hadrian North) dedicated to the company's systems[141] - Sodium Minerals and Sulfur Services: Segment Margin decreased by $21.7 million (37%) YoY, primarily due to lower export pricing and sales volumes for soda ash, coupled with lower demand for NaHS[146] - Onshore Facilities and Transportation: Segment Margin increased by $2.5 million (10%) YoY, due to increased volumes on Texas and Louisiana crude oil pipeline systems[154] - Marine Transportation: Segment Margin increased by $6.1 million (47%) YoY, benefiting from improving rates in spot and short-term markets and high offshore barge utilization of 99.4%[156] Liquidity and Capital Resources The company maintained strong liquidity with $721.5 million available under its credit facility, with Q1 2020 capital expenditures totaling $32.6 million, including funding for the Granger Optimization Project - As of March 31, 2020, the company had $721.5 million of available borrowing capacity under its $1.7 billion credit facility[162] Capital Expenditures (in thousands) | Category | Three Months Ended March 31, 2020 | | :--- | :--- | | Maintenance capital expenditures | $20,558 | | Growth capital expenditures | $12,086 | | Total capital expenditures | $32,644 | - The Granger Optimization Project's construction timeline was extended by one year to mid-to-late 2023, with funding secured through preferred units issued to GSO[165][179] Non-GAAP Financial Measures This section defines and reconciles non-GAAP measures like Available Cash before Reserves and Segment Margin, with Available Cash before Reserves decreasing to $81.8 million in Q1 2020 Available Cash before Reserves Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net income attributable to Genesis Energy, L.P. | $24,909 | $15,954 | | Depreciation, depletion, amortization and accretion | $75,978 | $79,937 | | Plus (minus) Select Items, net | $4,806 | $12,016 | | Maintenance capital utilized | $(8,800) | $(6,125) | | Distributions to preferred unitholders | $(18,684) | $(6,138) | | Available Cash before Reserves | $81,780 | $95,896 | Quantitative and Qualitative Disclosures about Market Risk The company reports no material changes to its market risk disclosures since its last Annual Report, referring readers to Note 15 for derivative information - There have been no material changes affecting the quantitative and qualitative disclosures about market risk provided in the company's Annual Report[218] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2020, with no material changes to internal control over financial reporting identified - The company's CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[219] - No changes occurred during the first quarter of 2020 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[220] PART II. OTHER INFORMATION Legal Proceedings No material developments in legal proceedings have occurred since the filing of the company's last Annual Report on Form 10-K - No material developments in legal proceedings have occurred since the last annual report filing[223] Risk Factors A new risk factor was added to address the potential material adverse effects of the COVID-19 pandemic on the company's business, operations, and financial performance - A new risk factor was added to address the potential material adverse effects of the COVID-19 pandemic on the company's business, operations, and financial performance[227] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no sales of unregistered equity securities during the first quarter of 2020 - There were no sales of unregistered equity securities during the quarter ended March 31, 2020[228] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[229] Mine Safety Disclosures Information regarding mine safety for the company's mines in Green River and Granger, Wyoming is provided in Exhibit 95 of this Form 10-Q - Mine safety disclosures are included in Exhibit 95 to the Form 10-Q[230] Other Information The company reported no other information for this item - None[231] Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, debt agreements, and certifications - Lists exhibits filed with the report, such as the Tenth Amendment to the Credit Agreement and CEO/CFO certifications[233]