Genesis Energy(GEL) - 2025 Q1 - Quarterly Report

PART I Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2025, highlighting the impact of the Alkali Business sale on all financial figures Condensed Consolidated Balance Sheets Total assets and liabilities decreased significantly as of March 31, 2025, primarily due to the Alkali Business sale, while cash and cash equivalents substantially increased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $377,360 | $7,352 | | Total current assets | $937,334 | $911,734 | | Net fixed assets | $3,535,877 | $3,539,886 | | Non-current assets - held for discontinued operations | — | $1,839,113 | | Total Assets | $5,211,859 | $7,037,692 | | Liabilities & Capital | | | | Total current liabilities | $632,970 | $858,755 | | Senior Unsecured Notes, net | $3,439,113 | $3,436,860 | | Long-term liabilities - held for discontinued operations | — | $529,558 | | Total Liabilities | $4,471,727 | $5,521,909 | | Total partners' capital | $187,609 | $702,194 | Unaudited Condensed Consolidated Statements of Operations The company reported a significant net loss of $460.3 million for Q1 2025, primarily driven by a substantial loss from the disposal of discontinued operations Consolidated Statements of Operations Highlights (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $398,311 | $434,447 | | Operating Income | $21,973 | $58,055 | | Net Income (Loss) from Continuing Operations | ($36,561) | $11,353 | | Loss from disposal of discontinued operations | ($432,193) | — | | Net Income (Loss) | ($460,306) | $18,956 | | Net Loss Attributable to Common Unitholders | ($497,477) | ($10,541) | | Net Loss Per Common Unit - Basic and Diluted | ($4.06) | ($0.09) | Unaudited Condensed Consolidated Statements of Cash Flows Operating cash flow decreased in Q1 2025, while investing activities were significantly positive due to asset sales, and financing activities focused on debt and preferred unit repayments Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $24,805 | $125,921 | | Net cash provided by (used in) investing activities | $921,343 | ($166,708) | | Net cash provided by (used in) financing activities | ($598,340) | $47,600 | | Net increase in cash and cash equivalents | $347,808 | $6,813 | - Key investing and financing activities in Q1 2025 included receiving $996.6 million from the disposal of discontinued operations, repaying $540.0 million on the senior secured credit facility, and using $262.5 million to redeem Class A Convertible Preferred Units[19] Notes to Unaudited Condensed Consolidated Financial Statements These notes detail significant accounting events, including the Q1 2025 segment reorganization, the Alkali Business sale, debt amendments, and preferred unit redemptions - In Q1 2025, the company reorganized its operating segments into three divisions: Offshore pipeline transportation, Marine transportation, and Onshore transportation and services The sulfur services business was moved into the onshore segment[21][26][73] - On February 28, 2025, the company sold its Alkali Business for a gross price of $1.425 billion, generating net proceeds of approximately $1.0 billion The sale resulted in a pre-tax loss of $432.2 million and is reported as a discontinued operation[23][36][37] - On March 6, 2025, the company redeemed 7,416,196 Class A Convertible Preferred Units for $262.5 million, plus accrued distributions[64][19] - Subsequent to the quarter end, on April 3, 2025, the company redeemed the remaining $406.2 million of its 8.000% senior unsecured notes due 2027, incurring a net loss of approximately $9 million[111] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, highlighting a net loss from continuing operations, decreased segment margin, and successful deleveraging efforts post-Alkali Business sale Results of Operations Operating income and total segment margin decreased in Q1 2025, primarily due to higher G&A expenses from the Alkali Business sale and lower segment performance across all divisions Segment Margin by Segment (in thousands) | Segment | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Offshore pipeline transportation | $76,548 | $97,806 | (22%) | | Marine transportation | $30,021 | $31,363 | (4%) | | Onshore transportation and services | $14,826 | $18,098 | (18%) | | Total Segment Margin | $121,395 | $147,267 | (18%) | - Offshore pipeline transportation Segment Margin decreased by $21.3 million (22%) due to a contractual rate step-down on a life-of-lease dedication and producer underperformance at major fields A return to normal production is expected by Q3 2025[135] - Marine transportation Segment Margin decreased by $1.3 million (4%) due to slightly lower inland barge utilization, which was partially offset by a contractual rate increase on the M/T American Phoenix[138] - Onshore transportation and services Segment Margin decreased by $3.3 million (18%) due to lower NaHS and caustic soda sales volumes, partially offset by increased rail unload volumes[144] - General and administrative expenses increased by $25.9 million, primarily due to $25.2 million in transaction costs associated with the sale of the Alkali Business[146][147] Liquidity and Capital Resources The company significantly improved its liquidity and capital structure in Q1 2025 by using Alkali Business sale proceeds to reduce debt and redeem preferred units, extending debt maturities - Completed the sale of the Alkali Business for $1.425 billion, using the proceeds to pay down the credit facility, redeem preferred units, and redeem senior notes[157] - Following the Alkali sale, the senior secured credit facility capacity was reduced from $900 million to $800 million As of March 31, 2025, there were no borrowings outstanding and $795.5 million of available capacity[158][166] - Growth capital expenditures are focused on expanding the CHOPS pipeline and constructing the SYNC Pipeline to service two new deepwater developments, Shenandoah and Salamanca, expected to come online in mid-2025[135][178][180] Capital Expenditures from Continuing Operations (in thousands) | Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Maintenance capital | $22,644 | $15,075 | | Growth capital | $27,263 | $70,094 | | Total capital expenditures | $49,907 | $85,169 | Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures, including Segment Margin and Available Cash before Reserves, which significantly decreased in Q1 2025 Reconciliation to Available Cash before Reserves (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) attributable to Genesis Energy, L.P. | ($469,075) | $11,353 | | Depreciation, amortization and accretion | $59,011 | $52,163 | | Loss on disposal of discontinued operations | $432,193 | — | | Maintenance capital utilized | ($16,900) | ($18,100) | | Distributions to preferred unitholders | ($19,942) | ($21,894) | | Available Cash before Reserves | $20,347 | $54,048 | Quantitative and Qualitative Disclosures about Market Risk The company states that there have been no material changes to its market risk disclosures since its last Annual Report - There have been no material changes in quantitative and qualitative disclosures about market risk since the last Annual Report[214] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of the end of the quarter - The company's CEO and CFO have concluded that disclosure controls and procedures are effective as of March 31, 2025[215] - No changes occurred during Q1 2025 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[217] PART II. OTHER INFORMATION Legal Proceedings There have been no material developments in legal proceedings since the filing of the company's Annual Report on Form 10-K - No material developments in legal proceedings have occurred since the last Annual Report[219] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report - No material changes to risk factors have occurred since the last Annual Report[221] Unregistered Sales of Equity Securities and Use of Proceeds The company reports that there were no sales of unregistered equity securities during the first quarter of 2025 - There were no sales of unregistered equity securities during the quarter[222] Exhibits This section lists the exhibits filed with the Form 10-Q, including the Membership Interest Purchase Agreement for the Alkali Business sale, an amendment to the credit agreement, and various officer certifications