Genesis Energy(GEL) - 2025 Q1 - Quarterly Results

First Quarter 2025 Highlights and Strategic Overview Genesis Energy reported a significant net loss in Q1 2025 due to the soda ash business sale, while strategically deleveraging and advancing offshore growth projects Key Financial Highlights Genesis Energy reported a $469.1 million net loss in Q1 2025, a significant decline from Q1 2024 net income, primarily due to the soda ash business sale, with operating cash flows also decreasing Key Financial Metrics (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (million USD) | Q1 2024 (million USD) | Change (million USD) | | :------------------------------------------ | :-------------------- | :-------------------- | :------------------- | | Net Loss Attributable to Genesis Energy, L.P. | $(469.1)$ | $11.4$ | $(480.5)$ | | Cash Flows from Operating Activities | $24.8$ | $125.9$ | $(101.1)$ | | Available Cash before Reserves | $20.3$ | N/A | N/A | | Total Segment Margin | $121.4$ | N/A | N/A | | Adjusted EBITDA | $131.7$ | N/A | N/A | - Declared cash distributions on preferred units of $0.9473 for each preferred unit, totaling approximately $19.9 million[4] Strategic Actions and Balance Sheet Simplification Genesis Energy exited its soda ash business for $1.425 billion, using $1.0 billion net proceeds to reduce debt and preferred units, cutting annual capital costs by over $120 million - Closed the sale of the soda ash business to an indirect affiliate of WE Soda Ltd for an implied enterprise value of $1.425 billion[3] - Received approximately $1.0 billion in cash after associated transaction costs and expenses[3] - Used net proceeds to pay senior secured revolving credit facility to zero, call and redeem remaining 8.0% senior unsecured notes due 2027, and repurchase $250 million of Class A Convertible Preferred Units[3] - Reduced annual cash cost on capital underlying remaining businesses by more than $120 million annually, and ongoing cash cost of running the business to $425 - $450 million per year (including $70-$80 million annual soda ash maintenance capital savings)[3] Offshore Growth Projects Update Genesis Energy is completing Gulf of America growth projects, with Shenandoah pipeline commissioning by May and volumes in June, and Salamanca first oil expected in Q3 2025 - Shenandoah production facility successfully moored in April; SYNC pipeline commissioning anticipated towards the end of May, with volumes expected to begin in June[4][6] - Salamanca is anticipated to arrive at its final location any day now, with first oil expected in the third quarter[6] - These projects are expected to be an integral part of the Genesis growth story, positioning the company to generate cash in excess of ongoing costs[2][7] Segmental Business Performance and Outlook Offshore pipeline transportation faced mechanical issues but expects Q3 2025 recovery with new project volumes, while marine and onshore segments performed as expected with stable demand and anticipated H2 2025 volume increases - Offshore pipeline transportation segment negatively impacted by producer-related mechanical issues, but volumes exiting Q1 2025 were greater than exiting last year, with expected return to normalized levels by the end of Q3 2025[9] - Pre-built capacity available on new SYNC and expanded CHOPS pipelines to attract additional volumes without growth capital[10] - Marine transportation segment performed as expected, with constructive market dynamics, high utilization levels, and steady to increasing day rates due to limited new supply and stable demand[11] - Onshore transportation and services segment performed in line with expectations, anticipating a marginal increase in volumes through onshore terminals in H2 2025 from Shenandoah and Salamanca[12] Full Year 2025 Outlook and Macroeconomic Assessment Genesis Energy projects 2025 Adjusted EBITDA between $545 million and $575 million, contingent on offshore issue resolution and new project ramp-up, with minimal anticipated impact from macroeconomic headwinds on deepwater Gulf of America developments - Expected Adjusted EBITDA for 2025 is in the range of $545 - $575 million[13] - Variability in 2025 Adjusted EBITDA driven by timing of resolution of mechanical issues at impacted offshore fields and the rate at which Shenandoah and Salamanca ramp to anticipated production levels[14] - No significant impact anticipated from proposed tariffs, slowing economic activity, relatively low oil prices, or other current macro-economic headwinds, especially for long-term deepwater Gulf of America developments[15][16] Detailed Financial Results This section details Genesis Energy's Q1 2025 financial performance, including segment reorganization, margin analysis, and comprehensive statements of operations, balance sheets, and operating data Segment Reorganization Genesis Energy reorganized its operating segments in Q1 2025, moving sulfur services to onshore transportation and services, now managing three reportable segments: Offshore, Marine, and Onshore transportation and services - Reorganized operating segments in Q1 2025; sulfur services business now reported under onshore transportation and services[18] - Now manages businesses through three reportable segments: Offshore pipeline transportation, Marine transportation, and Onshore transportation and services[18][21] Segment Margin Analysis Total Segment Margin decreased by $25.9 million (17.6%) to $121.4 million in Q1 2025, primarily due to declines across all three operating segments Segment Margin Performance (Q1 2025 vs Q1 2024) | Segment | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :--------------------- | :--------------------- | :----------- | | Offshore pipeline transportation | $76,548 | $97,806 | $(21,258) | | Marine transportation | $30,021 | $31,363 | $(1,342) | | Onshore transportation and services | $14,826 | $18,098 | $(3,272) | | Total Segment Margin | $121,395 | $147,267 | $(25,872)| Offshore Pipeline Transportation Offshore pipeline transportation Segment Margin decreased by $21.3 million due to rate step-downs, producer underperformance, and increased operating costs, with normalized production expected by Q3 2025 - Offshore pipeline transportation Segment Margin decreased $21.3 million (22%) primarily due to an economic step-down in a transportation rate, producer underperformance at major fields, and increased operating costs[19] - Expect a return to more normalized production rates from impacted fields by the third quarter of 2025[19] Marine Transportation Marine transportation Segment Margin decreased by $1.3 million due to slightly lower inland barge utilization, partially offset by a contractual rate increase, with strong demand expected through 2025 - Marine transportation Segment Margin decreased $1.3 million (4%) due to slightly lower utilization rates in inland barge service from a temporary decline in refinery utilization[20] - The slight decline was partially offset by a contractual rate increase on the M/T American Phoenix[20] - Expect demand for service to remain strong throughout at least the remainder of 2025 due to continued lack of new supply and retirement of older vessels[20] Onshore Transportation and Services Onshore transportation and services Segment Margin decreased by $3.3 million due to lower NaHS and caustic soda sales volumes and reduced crude oil pipeline volumes, partially offset by increased rail unload volumes - Onshore transportation and services Segment Margin decreased $3.3 million (18%) primarily due to lower NaHS and caustic soda sales volumes and an overall decrease in volumes on onshore crude oil pipeline systems[22] - This decrease was partially offset by an increase in the rail unload volumes at the Scenic Station facility[22] Other Components of Net Income (Loss) Net Loss from Continuing Operations was $36.6 million in Q1 2025, impacted by increased G&A, interest, and depreciation, while Net Loss from Discontinued Operations of $423.7 million resulted primarily from the Alkali Business sale Net Income (Loss) Components (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (YoY) | | :------------------------------------------ | :--------------------- | :--------------------- | :----------- | | Net Loss from Continuing Operations | $(36,561)$ | $11,353$ | $(47,914)$ | | Net Loss from Discontinued Operations, net of tax | $(423,745)$ | $7,603$ | $(431,348)$ | - Net Loss from Continuing Operations impacted by a $25.9 million increase in general and administrative expenses (primarily related to transaction costs for the Alkali Business sale), a $7.7 million increase in interest expense, a $6.8 million increase in depreciation and amortization, and a $3.9 million decrease in equity in earnings from equity investments[24] - Net Loss from Discontinued Operations, net of tax, in Q1 2025 was impacted by a loss from the sale of the Alkali Business[25] Condensed Consolidated Statements of Operations The condensed consolidated statements of operations reflect a significant year-over-year shift from net income to net loss, primarily due to the loss from discontinued operations and increased expenses Condensed Consolidated Statements of Operations (Q1 2025 vs Q1 2024) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | REVENUES | $398,311 | $434,447 | | Costs of sales and operating expenses | $279,525 | $312,301 | | General and administrative expenses | $40,642 | $14,700 | | Depreciation and amortization | $56,171 | $49,391 | | OPERATING INCOME | $21,973 | $58,055 | | Equity in earnings of equity investees | $12,492 | $16,441 | | Interest expense, net | $(70,038)$ | $(62,334)$ | | NET INCOME (LOSS) FROM CONTINUING OPERATIONS | $(36,561)$ | $11,353 | | NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX | $(423,745)$ | $7,603 | | NET INCOME (LOSS) | $(460,306)$ | $18,956 | | NET INCOME (LOSS) ATTRIBUTABLE TO GENESIS ENERGY, L.P. | $(469,075)$ | $11,353 | | NET LOSS ATTRIBUTABLE TO COMMON UNITHOLDERS | $(497,477)$ | $(10,541)$ | | Net loss per common unit - Basic and Diluted | $(4.06)$ | $(0.09)$ | Operating Data Q1 2025 operating data shows mixed segment performance, with decreased offshore crude oil pipeline volumes (except CHOPS), slight marine fleet utilization declines, and significantly reduced onshore crude oil pipeline volumes offset by increased rail unload volumes Operating Data by Segment (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :------------------------------------------ | :---------- | :---------- | :----------- | | Offshore Pipeline Transportation Segment | | | | | CHOPS (average barrels/day) | 312,976 | 298,313 | +14,663 | | Poseidon (average barrels/day) | 244,323 | 291,922 | -47,599 | | Offshore crude oil pipelines total (bbl/day) | 622,719 | 656,290 | -33,571 | | Natural gas transportation volumes (MMBtus/day) | 401,764 | 407,556 | -5,792 | | Marine Transportation Segment | | | | | Inland Fleet Utilization Percentage | 93.6% | 100.0% | -6.4% | | Offshore Fleet Utilization Percentage | 96.2% | 99.2% | -3.0% | | Onshore Transportation and Services Segment | | | | | Texas (barrels/day) | 61,924 | 84,617 | -22,693 | | Louisiana (barrels/day) | 38,173 | 72,856 | -34,683 | | Onshore crude oil pipelines total (bbl/day) | 105,614 | 165,746 | -60,132 | | Crude oil product sales (barrels/day) | 19,968 | 23,437 | -3,469 | | Rail unload volumes (barrels/day) | 20,492 | 1,240 | +19,252 | | NaHS volumes (Dry short tons "DST") | 25,873 | 29,037 | -3,164 | | NaOH (caustic soda) volumes (DST sold) | 8,545 | 10,358 | -1,813 | Condensed Consolidated Balance Sheets The March 31, 2025 balance sheet reflects the soda ash business sale, with total assets decreasing from $7.04 billion to $5.21 billion and total liabilities from $5.52 billion to $4.47 billion, while cash and cash equivalents significantly increased Condensed Consolidated Balance Sheets (March 31, 2025 vs December 31, 2024) | (in thousands) | March 31, 2025 | December 31, 2024 | Change | | :------------------------------------------ | :------------- | :---------------- | :----- | | Total assets | $5,211,859 | $7,037,692 | $(1,825,833)$ | | Total liabilities | $4,471,727 | $5,521,909 | $(1,050,182)$ | | Cash and cash equivalents | $377,360 | $7,352 | $370,008$ | | Current assets held for discontinued operations | $— | $368,307 | $(368,307)$ | | Non-current assets held for discontinued operations | $— | $1,839,113 | $(1,839,113)$ | | Senior secured credit facility | $— | $291,000 | $(291,000)$ | | Class A Convertible Preferred Units | $552,523 | $813,589 | $(261,066)$ | | Common unitholders (deficit) | $(237,793)$ | $279,891 | $(517,684)$ | Non-GAAP Financial Measures and Reconciliations This section provides detailed reconciliations and definitions for Genesis Energy's non-GAAP financial measures, including Segment Margin, Adjusted EBITDA, Available Cash before Reserves, and the Adjusted Debt-to-Adjusted Consolidated EBITDA Ratio Reconciliation of Segment Margin This section reconciles Net income (loss) from operations before income taxes to Segment Margin, detailing adjustments for noncontrolling interests, corporate G&A, depreciation, interest, equity investees, and other non-cash items Reconciliation of Segment Margin (Q1 2025 vs Q1 2024) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income (loss) from operations before income taxes | $(36,417)$ | $12,162 | | Net income attributable to noncontrolling interests | $(8,769)$ | $(7,603)$ | | Corporate general and administrative expenses | $41,676 | $15,211 | | Depreciation, amortization and accretion | $59,011 | $52,163 | | Interest expense, net | $70,038 | $62,334 | | Adjustment to include distributable cash generated by equity investees not included in income (1) and exclude equity in investees net income | $6,092 | $6,808 | | Unrealized losses (gains) on derivative transactions excluding fair value hedges, net of changes in inventory value | $(71)$ | $247 | | Other non-cash items | $(2,722)$ | $(2,127)$ | | Loss on extinguishment of debt | $844 | $— | | Differences in timing of cash receipts for certain contractual arrangements (2) | $(8,287)$ | $8,072 | | Segment Margin | $121,395 | $147,267 | Reconciliation of Adjusted EBITDA and Available Cash Before Reserves This section reconciles Net income (loss) attributable to Genesis Energy, L.P. to Adjusted EBITDA, and then to Available Cash before Reserves, by adjusting for interest, taxes, depreciation, non-cash items, maintenance capital, cash taxes, and preferred distributions Reconciliation of Adjusted EBITDA and Available Cash Before Reserves (Q1 2025 vs Q1 2024) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income (loss) attributable to Genesis Energy, L.P. | $(469,075)$ | $11,353 | | Interest expense, net | $70,038 | $62,334 | | Income tax expense | $144 | $809 | | Depreciation, amortization and accretion | $59,011 | $52,163 | | Loss from disposal of discontinued operations | $432,193 | $— | | Interest expense and income tax expense from discontinued operations, net | $4,195 | $6,400 | | Other non-cash items from discontinued operations, net (1) | $15,584 | $18,990 | | EBITDA | $112,090 | $152,049 | | Plus (minus) Select Items, net (2) | $19,589 | $11,027 | | Adjusted EBITDA | $131,679 | $163,076 | | Maintenance capital utilized (4) | $(16,900)$ | $(18,100)$ | | Interest expense, net | $(70,038)$ | $(62,334)$ | | Cash tax expense | $(257)$ | $(300)$ | | Distributions to preferred unitholders (5) | $(19,942)$ | $(21,894)$ | | Interest expense and income tax expense from discontinued operations, net | $(4,195)$ | $(6,400)$ | | Available Cash before Reserves | $20,347 | $54,048 | Reconciliation of Net Cash Flows from Operating Activities to Adjusted EBITDA This reconciliation adjusts Net Cash Flows from Operating Activities to Adjusted EBITDA by accounting for interest, amortization, equity method investee effects, operating asset/liability changes, non-cash compensation, business development expenses, and cash receipt timing differences Reconciliation of Net Cash Flows from Operating Activities to Adjusted EBITDA (Q1 2025 vs Q1 2024) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Cash Flows from Operating Activities | $24,805 | $125,921 | | Adjustments to reconcile net cash flows from operating activities to Adjusted EBITDA: | | | | Interest expense, net (1) | $74,217 | $68,734 | | Amortization and write-off of debt issuance costs, premium and discount | $(3,857)$ | $(2,884)$ | | Effects from equity method investees not included in operating cash flows | $6,152 | $7,680 | | Net effect of changes in components of operating assets and liabilities | $32,368 | $(28,473)$ | | Non-cash effect of long-term incentive compensation plans | $(2,485)$ | $(4,315)$ | | Expenses related to business development activities and growth projects | $25,208 | $23 | | Differences in timing of cash receipts for certain contractual arrangements (2) | $(8,287)$ | $8,072 | | Other items, net (3) | $(16,442)$ | $(11,682)$ | | Adjusted EBITDA | $131,679 | $163,076 | Adjusted Debt-to-Adjusted Consolidated EBITDA Ratio As of March 31, 2025, Genesis Energy's Adjusted Debt was $3.05 billion, with Pro Forma LTM Adjusted Consolidated EBITDA of $555.4 million, resulting in an Adjusted Debt-to-Adjusted Consolidated EBITDA ratio of 5.49X Adjusted Debt-to-Adjusted Consolidated EBITDA Ratio (March 31, 2025) | (in thousands) | March 31, 2025 | | :------------------------------------------ | :------------- | | Senior secured credit facility | $— | | Senior unsecured notes, net of debt issuance costs, discount and premium | $3,439,113 | | Less: Outstanding inventory financing sublimit borrowings | $(10,700)$ | | Less: Cash and cash equivalents | $(377,028)$ | | Adjusted Debt | $3,051,385 | | | | | Consolidated EBITDA (per our senior secured credit facility) | $552,508 | | Consolidated EBITDA adjustments (2) | $2,929 | | Adjusted Consolidated EBITDA (per our senior secured credit facility) (3) | $555,437 | | | | | Adjusted Debt-to-Adjusted Consolidated EBITDA Ratio | 5.49X | Definitions of Non-GAAP Measures This section defines Genesis Energy's non-GAAP financial measures, including Available Cash before Reserves, Adjusted EBITDA, and Segment Margin, explaining their purpose and calculation Available Cash Before Reserves Available Cash before Reserves is a key metric for assessing financial performance, operating performance, project viability, and capacity for discretionary payments - Available Cash before Reserves is a quantitative standard used to assess financial performance, operating performance, project viability, ability to satisfy non-discretionary cash requirements, and capacity for discretionary payments[47][50] - Defined as Adjusted EBITDA adjusted for maintenance capital utilized, interest expense (net), cash tax expense, and cash distributions paid to Class A Convertible Preferred unitholders[48] - Uses 'maintenance capital utilized' as a proxy for non-discretionary maintenance capital expenditures, calculated as the portion of previously incurred maintenance capital expenditures utilized during the relevant quarter, allocated ratably over useful lives[49][55][56] Adjusted EBITDA Adjusted EBITDA is a key metric for evaluating asset financial performance, operating performance, project viability, and cash generation for various payments - Adjusted EBITDA is used to assess financial performance of assets, operating performance compared to peers, project viability, and the ability to generate cash for non-discretionary and discretionary payments[57][59] - Defined as Net income (loss) attributable to Genesis Energy, L.P. before interest, taxes, depreciation, depletion and amortization (including impairment, write-offs, accretion and similar items) after eliminating other non-cash revenues, expenses, gains, losses and charges, plus or minus certain 'Select Items' not indicative of core operating results[57] Select Items Adjustments for Adjusted EBITDA (Q1 2025 vs Q1 2024) | Select Items (in thousands) | Q1 2025 | Q1 2024 | | :------------------------------------------ | :------ | :------ | | Differences in timing of cash receipts for certain contractual arrangements | $(8,287)$ | $8,072$ | | Unrealized losses (gains) on derivative transactions excluding fair value hedges, net of changes in inventory value | $(71)$ | $247$ | | Loss on debt extinguishment | $844$ | $—$ | | Adjustment regarding equity investees | $6,092$ | $6,808$ | | Other (applicable to all Non-GAAP Measures) | $(2,722)$ | $(2,127)$ | | Certain transaction costs | $25,208$ | $23$ | | Other (applicable only to Adjusted EBITDA and Available Cash before Reserves) | $(1,475)$ | $(1,996)$ | | Total Select Items, net | $19,589 | $11,027 | Segment Margin Segment Margin is a key performance indicator used by the chief operating decision maker to evaluate the financial performance of each operating segment - Segment Margin is a key measure used by the chief operating decision maker to evaluate segment performance[61] - Defined as revenues less product costs, operating expenses, and segment general and administrative expenses (net of noncontrolling interests), plus or minus applicable 'Select Items'[61] Additional Information This section provides details on the earnings conference call, company description, forward-looking statements, and investor contact information Earnings Conference Call Genesis Energy will host its Q1 2025 Earnings Conference Call on May 8, 2025, at 9:00 a.m. Central time, with a replay available online for 30 days - Earnings Conference Call on Thursday, May 8, 2025, at 9:00 a.m. Central time (10:00 a.m. Eastern time)[26] - Access via www.genesisenergy.com (Investor Relations button); a replay will be available for 30 days[26] Company Description Genesis Energy, L.P. is a diversified midstream energy master limited partnership headquartered in Houston, Texas, operating offshore and onshore pipeline transportation, and marine transportation in the Gulf of America and Gulf Coast - Genesis Energy, L.P. is a diversified midstream energy master limited partnership headquartered in Houston, Texas[27] - Operations include offshore pipeline transportation, marine transportation and onshore transportation and services, primarily located in the Gulf of America and in the Gulf Coast region of the United States[27] Forward-Looking Statements This press release contains forward-looking statements subject to uncertainties and risks, including market, weather, economic, and operational factors, with no obligation for the company to update or revise them - This press release includes forward-looking statements that rely on a number of assumptions concerning future events and are subject to uncertainties, factors, and risks that could cause results to differ materially[43] - Such risks and uncertainties include weather, political, economic and market conditions, inflation, tariffs, demand for services, disease, international military conflicts, and operational uncertainties[43] - The company undertakes no obligation to publicly update or revise any forward-looking statement[43] Contact Information This section provides contact information for investor relations inquiries - Contact: Dwayne Morley, Vice President - Investor Relations, (713) 860-2536[62]