Genesis Energy(GEL) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's financial statements, including balance sheets, statements of operations, and detailed notes, reflecting the impact of the Alkali Business sale Financial Statements The financial statements for the period ended June 30, 2025, reflect significant changes primarily due to the sale of the Alkali Business, now reported as discontinued operations, leading to decreased assets and liabilities and a substantial net loss Condensed Consolidated Balance Sheets As of June 30, 2025, total assets significantly decreased to $4.84 billion from $7.04 billion at year-end 2024, primarily due to the Alkali Business sale, with total liabilities also decreasing to $4.12 billion from $5.52 billion - The significant reduction in assets and liabilities is primarily due to the sale of the Alkali Business, with assets and liabilities held for discontinued operations being zero at June 30, 2025, compared to $1.84 billion and $530 million respectively at December 31, 2024[10][22] Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $587,308 | $911,734 | | Total assets | $4,838,538 | $7,037,692 | | Total current liabilities | $621,905 | $858,755 | | Senior Unsecured Notes, net | $3,035,915 | $3,436,860 | | Total liabilities | $4,121,134 | $5,521,909 | | Total partners' capital | $164,881 | $702,194 | Unaudited Condensed Consolidated Statements of Operations For Q2 2025, Genesis Energy reported net income from continuing operations of $10.0 million, a shift from a $4.0 million net loss in Q2 2024, but a $432.2 million loss from discontinued operations led to a total net loss of $450.3 million for the six-month period Statement of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $377,348 | $430,179 | $775,659 | $864,626 | | Operating Income | $67,715 | $49,779 | $89,688 | $107,834 | | Net Income (Loss) from Continuing Operations | $10,011 | $(3,965) | $(26,550) | $7,388 | | Loss from disposal of discontinued operations | — | — | $(432,193) | — | | Net Income (Loss) | $10,011 | $(1,387) | $(450,295) | $17,569 | | Net Loss Attributable to Common Unitholders | $(15,274) | $(30,638) | $(512,751) | $(41,179) | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail the February 2025 sale of the Alkali Business for approximately $1.425 billion, its reclassification as a discontinued operation, and the subsequent reorganization of reporting segments and debt redemptions Note 1: Organization and Basis of Presentation and Consolidation Genesis Energy, L.P. reorganized its reporting segments in Q1 2025 following the sale of its Alkali Business, now operating through Offshore Pipeline Transportation, Marine Transportation, and Onshore Transportation and Services - On February 28, 2025, the company sold its Alkali Business for a gross price of approximately $1.425 billion, now reported as a discontinued operation with prior periods adjusted accordingly[22] - The company reorganized its segments in Q1 2025 into Offshore pipeline transportation, Marine transportation, and Onshore transportation and services[20][25] Note 4: Discontinued Operations The Alkali Business sale completed on February 28, 2025, for a gross purchase price of $1.425 billion, yielded net proceeds of approximately $1.0 billion and resulted in a $432.2 million loss from disposal for the six months ended June 30, 2025 - The Alkali Business was sold for a gross price of $1.425 billion, resulting in net proceeds of approximately $1.0 billion after transaction costs, assumption of debt, and cash divested[37] Financial Impact of Discontinued Operations (Six Months Ended June 30, 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Pretax income from discontinued operations | $8,464 | | Loss from the sale of the Alkali Business | $(432,193) | | Total pretax loss from discontinued operations | $(423,729) | Note 10: Debt Total long-term debt decreased to approximately $3.1 billion as of June 30, 2025, from $3.7 billion at year-end 2024, primarily due to the redemption of $406.2 million in senior unsecured notes using Alkali Business sale proceeds - 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 $8.9 million on the extinguishment[59] - Following the Alkali Business sale, the senior secured credit facility was amended to reduce total borrowing capacity to $800 million and modify leverage ratio calculation terms[57] Total Long-Term Debt (in thousands) | Date | Principal | Net Value | | :--- | :--- | :--- | | June 30, 2025 | $3,150,960 | $3,107,515 | | Dec 31, 2024 | $3,776,605 | $3,727,860 | Note 11: Partners' Capital, Mezzanine Capital and Distributions On March 6, 2025, the company repurchased 7,416,196 Class A Convertible Preferred Units at $35.40 per unit and declared a quarterly cash distribution of $0.165 per common unit for Q1 and Q2 2025 - On March 6, 2025, the company purchased 7,416,196 of its Class A Convertible Preferred Units at $35.40 per unit[69] Common Unit Distributions per Unit | Quarter | Per Unit Amount | | :--- | :--- | | Q1 2025 | $0.165 | | Q2 2025 | $0.165 | Note 13: Business Segment Information Following a Q1 2025 reorganization, the company's operations are managed through three reportable segments, with total Segment Margin slightly decreasing to $135.9 million in Q2 2025 from $137.9 million in Q2 2024 - The company reorganized its operating segments in Q1 2025, with the sulfur services business now reported under the onshore transportation and services segment[78] Segment Margin (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Offshore pipeline transportation | $87,594 | $86,131 | | Marine transportation | $29,817 | $31,543 | | Onshore transportation and services | $18,458 | $20,242 | | Total Segment Margin | $135,869 | $137,916 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a Net Income from Continuing Operations of $10.0 million for Q2 2025, driven by improved operating income and reduced expenses, while the Alkali Business sale significantly enhanced liquidity and reduced debt Overview In Q2 2025, Genesis reported $10.0 million in Net Income from Continuing Operations, reversing a $4.0 million loss in Q2 2024, despite a slight 1% decrease in Segment Margin to $135.9 million and reduced cash flow from operations Q2 2025 vs Q2 2024 Key Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income from Continuing Ops | $10.0M | $(4.0)M | +$14.0M | | Segment Margin | $135.9M | $137.9M | -1% | | Available Cash before Reserves | $32.2M | $37.6M | -14% | Results of Operations Total operating income increased by $18.0 million in Q2 2025, primarily due to improved offshore pipeline transportation segment performance, while marine and onshore segments experienced margin declines Offshore Pipeline Transportation Segment The Offshore Pipeline Transportation segment's margin increased by $1.5 million (2%) to $87.6 million in Q2 2025, driven by new minimum volume commitments from the Shenandoah development and increased volumes from other projects - Segment Margin increased due to new MVCs on the SYNC and CHOPS pipelines for the Shenandoah development, which began in June 2025[138] - Growth was partially offset by a contractual rate step-down on a 10-year-old transportation dedication and producer downtime at several fields, expected to return to normal rates by the end of Q3 2025[139] Offshore Segment Margin (in thousands) | Period | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Segment Margin | $87,594 | $86,131 | Marine Transportation Segment The Marine Transportation segment's margin decreased by $1.7 million (5%) to $29.8 million in Q2 2025, mainly due to lower inland barge utilization from reduced Midwest refinery demand, partially offset by fewer dry-docking days - Inland barge utilization was slightly lower (98.1% vs 100.0% in Q2 2024) due to a decline in Midwest refinery demand for black oil equipment[143][145] - Performance was partially supported by fewer dry-docking days in the offshore fleet and a higher rate on the M/T American Phoenix[145] Marine Segment Margin (in thousands) | Period | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Segment Margin | $29,817 | $31,543 | Onshore Transportation and Services Segment The Onshore Transportation and Services segment's margin decreased by $1.8 million (9%) to $18.5 million in Q2 2025, primarily due to lower NaHS and caustic soda sales volumes, partially offset by increased rail unload volumes - The decrease in segment margin was primarily due to lower NaHS and caustic soda sales volumes[152] - The decline was partly offset by an increase in rail unload volumes (24,979 Bbls/day vs 19,811 Bbls/day in Q2 2024) and higher volumes on the Texas pipeline system[151][152] Onshore Segment Margin (in thousands) | Period | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Segment Margin | $18,458 | $20,242 | Liquidity and Capital Resources The company's liquidity significantly improved following the Alkali Business sale, generating approximately $1.0 billion in cash proceeds used for debt reduction and preferred unit repurchases, with no major debt maturities until 2028 - Completed the sale of the Alkali Business for approximately $1.425 billion gross, receiving approximately $1.0 billion in cash proceeds[169] - Used proceeds to redeem the remaining $406.2 million of 2027 Notes and repurchase 7,416,196 Class A Convertible Preferred Units, lowering the overall cost of capital[171][172] Capital Expenditures (in thousands) | Period | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Maintenance Capital | $39,411 | $44,503 | | Growth Capital | $54,406 | $136,372 | | Total Capital Expenditures | $93,817 | $181,160 | Quantitative and Qualitative Disclosures about Market Risk No material changes have occurred regarding the company's market risk disclosures since the Annual Report, with continued exposure to commodity price changes managed through derivative instruments - No material changes have occurred that would affect the quantitative and qualitative disclosures about market risk provided in the company's Annual Report[224] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[225] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[227] PART II. OTHER INFORMATION This section covers other required disclosures, including legal proceedings, risk factors, equity sales, defaults, mine safety, and a list of exhibits Legal Proceedings There have been no material developments in legal proceedings since the filing of the company's Annual Report on Form 10-K, and no environmental proceedings requiring disclosure - No material developments in legal proceedings have occurred since the last Annual Report[229] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material change in risk factors has been identified since the disclosure in the Annual Report[231] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no sales of unregistered equity securities during the second quarter of 2025 - There were no sales of unregistered equity securities during the 2025 Quarter[232] Defaults upon Senior Securities The company reported no defaults upon senior securities during the period - None[233] Mine Safety Disclosures Following the sale of its mine in Green River, Wyoming, on February 28, 2025, the company is no longer required to provide mine safety disclosures - The company is no longer required to provide mine safety disclosures as it sold its mine on February 28, 2025[234] Other Information The company reported no other information for this item - None[235] Exhibits The report lists several exhibits, including the Membership Interest Purchase Agreement for the Alkali Business sale, certificates of limited partnership, and CEO/CFO certifications, along with XBRL data files - Exhibits filed include the purchase agreement for the Alkali business sale, formation documents, and required CEO/CFO certifications[237]