Genesis Energy(GEL) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Genesis Energy, L.P. for the quarter ended March 31, 2022, including balance sheets, statements of operations, comprehensive income (loss), partners' capital, and cash flows, along with detailed notes explaining accounting policies, segment information, debt, equity, and other financial instruments Condensed Consolidated Balance Sheets | Metric | March 31, 2022 (unaudited) (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------- | | ASSETS | | | | Cash and cash equivalents | $9,547 | $19,987 | | Accounts receivable - trade, net | $531,791 | $400,334 | | Total current assets | $669,599 | $542,484 | | Net fixed assets | $3,911,770 | $3,912,185 | | Total assets | $6,019,199 | $5,905,801 | | LIABILITIES AND CAPITAL | | | | Accounts payable - trade | $365,935 | $264,316 | | Total current liabilities | $597,205 | $496,939 | | Senior secured credit facility | $94,800 | $49,000 | | Senior unsecured notes, net | $2,932,003 | $2,930,505 | | Total liabilities | $4,076,093 | $3,925,666 | | Partners' capital | $885,749 | $930,452 | Unaudited Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total revenues | $631,947 | $521,219 | | Total costs and expenses | $580,276 | $493,198 | | Operating income | $51,671 | $28,021 | | Net income (loss) | $4,449 | $(29,435) | | Net loss attributable to Genesis Energy, L.P. | $(5,250) | $(34,224) | | Net loss per common unit (Basic and Diluted) | $(0.20) | $(0.43) | Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net income (loss) | $4,449 | $(29,435) | | Other comprehensive income: Decrease in benefit plan liability | $122 | $122 | | Total Comprehensive income (loss) | $4,571 | $(29,313) | | Comprehensive loss attributable to Genesis Energy, L.P. | $(5,128) | $(34,102) | Unaudited Condensed Consolidated Statements of Partners' Capital | Metric | December 31, 2021 (in thousands) | March 31, 2022 (in thousands) | | :------------------------------------------ | :------------------------------- | :------------------------------ | | Partners' capital, beginning of period | $930,452 | $930,452 | | Net income (loss) | $(5,250) | $(3,374) | | Cash distributions to partners | $(18,387) | $(18,387) | | Distributions to Class A Convertible Preferred unitholders | $(18,684) | $(18,684) | | Partners' capital, end of period | $885,749 | $885,749 | Unaudited Condensed Consolidated Statements of Cash Flows | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by operating activities | $54,245 | $77,159 | | Net cash used in investing activities | $(75,514) | $(30,051) | | Net cash provided by (used in) financing activities | $10,829 | $(40,339) | | Net increase (decrease) in cash and cash equivalents and restricted cash | $(10,440) | $6,769 | | Cash and cash equivalents and restricted cash at end of period | $14,552 | $33,787 | Notes to Unaudited Condensed Consolidated Financial Statements 1. Organization and Basis of Presentation and Consolidation - Genesis Energy, L.P. is a growth-oriented master limited partnership focused on the midstream crude oil and natural gas industry and natural soda ash production, primarily in the Gulf Coast, Wyoming, and Gulf of Mexico[23] - The company manages its businesses through four reportable segments: Offshore pipeline transportation, Sodium minerals and sulfur services, Onshore facilities and transportation, and Marine transportation[24][27] 2. Recent Accounting Developments - The company is evaluating ASU 2020-04, Reference Rate Reform (Topic 848), regarding the discontinuation of LIBOR in 2023, and has not yet determined the impact on its financial statements related to its senior secured credit facility[27] 3. Revenue Recognition | Revenue Category | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------- | :--------------------------------------------- | :--------------------------------------------- | | Fee-based revenues | $137,473 | $129,109 | | Product Sales | $467,575 | $369,601 | | Refinery Services | $26,899 | $22,509 | | Total revenues | $631,947 | $521,219 | - The majority of contracts qualify for expedients or exemptions from disclosing unsatisfied performance obligations, with remaining long-term contracts primarily in Offshore Pipeline Transportation and Onshore Facilities and Transportation[30][31] 4. Lease Accounting - The company leases transportation equipment, terminals, land, facilities, and office space, with lease terms varying from short to long term, and recognizes lease expense for short-term leases (under 12 months) on a straight-line basis[33] - As a lessor, the company generated $4.1 million in lease revenues from the M/T American Phoenix in Q1 2022, up from $3.4 million in Q1 2021[36] 5. Inventories | Inventory Component | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | | Petroleum products | $795 | $998 | | Crude oil | $8,962 | $11,834 | | Caustic soda | $6,654 | $5,690 | | NaHS | $18,308 | $17,040 | | Raw materials - Alkali operations | $7,760 | $7,599 | | Work-in-process - Alkali operations | $10,058 | $7,496 | | Finished goods, net - Alkali operations | $17,669 | $13,681 | | Materials and supplies, net - Alkali operations | $13,888 | $13,620 | | Total | $84,094 | $77,958 | - Inventories are valued at the lower of cost or net realizable value; no adjustment was made in Q1 2022, but a $2.0 million reduction was recorded in Q4 2021[38] 6. Fixed Assets, Mineral Leaseholds, and Asset Retirement Obligations | Fixed Asset Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------- | | Crude oil and natural gas pipelines | $2,840,622 | $2,839,443 | | Alkali facilities, machinery & equipment | $675,940 | $670,880 | | Marine vessels | $1,018,919 | $1,018,284 | | Construction in progress | $400,840 | $350,137 | | Net fixed assets | $3,911,770 | $3,912,185 | | Mineral leaseholds, net | $547,985 | $549,005 | | Depreciation expense (Q1 2022 vs Q1 2021) | $65,750 vs $62,702 | | | Depletion expense (Q1 2022 vs Q1 2021) | $1,020 vs $912 | | | Asset Retirement Obligation (ARO) | Amount (in thousands) | | :-------------------------------- | :-------------------- | | ARO liability balance, Dec 31, 2021 | $220,906 | | Accretion expense | $3,447 | | Settlements | $(1,461) | | ARO liability balance, Mar 31, 2022 | $222,892 | 7. Equity Investees | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Genesis' share of operating earnings | $16,010 | $24,533 | | Amortization of differences attributable to Genesis' carrying value of equity investments | $(3,566) | $(3,873) | | Net equity in earnings | $12,444 | $20,660 | | Distributions received | $19,018 | $29,516 | - Poseidon Oil Pipeline Company, L.L.C., 64% owned by Genesis, is the most significant equity investment, with its revolving credit facility non-recourse to Genesis and secured by Poseidon's assets[49][51] 8. Intangible Assets | Intangible Asset Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------- | :------------------------------ | :------------------------------- | | Marine contract intangibles | $184 | $193 | | Offshore pipeline contract intangibles | $102,627 | $104,707 | | Other | $23,972 | $22,163 | | Total | $126,783 | $127,063 | | Amortization expense (Q1 2022 vs Q1 2021) | $2,588 vs $2,600 | | - Estimated amortization expense for the next five years is projected to be $8.988 million for the remainder of 2022, $11.733 million for 2023, $11.368 million for 2024, $11.143 million for 2025, and $10.843 million for 2026[52] 9. Debt | Debt Instrument | March 31, 2022 (Net Value, in thousands) | December 31, 2021 (Net Value, in thousands) | | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | | Senior secured credit facility-Revolving Loan | $94,800 | $49,000 | | 5.625% senior unsecured notes due 2024 | $339,243 | $339,029 | | 6.500% senior unsecured notes due 2025 | $530,679 | $530,382 | | 6.250% senior unsecured notes due 2026 | $356,584 | $356,389 | | 8.000% senior unsecured notes due 2027 | $993,803 | $993,408 | | 7.750% senior unsecured notes due 2028 | $711,694 | $711,297 | | Total long-term debt | $3,026,803 | $2,979,505 | - The company's new credit agreement, entered April 8, 2021, provides a $950 million senior secured credit facility, maturing March 15, 2024, with a $650 million Revolving Loan and a $300 million Term Loan (repaid in full Nov 2021)[54] - As of March 31, 2022, $94.8 million was outstanding under the Revolving Loan, with $553.7 million available for borrowings, subject to covenants[56] 10. Partners' Capital, Mezzanine Capital and Distributions - As of March 31, 2022, the company had 122,539,221 Class A common units, 39,997 Class B common units, and 25,336,778 Class A Convertible Preferred Units outstanding[60] | Distribution For | Date Paid | Per Unit Amount | Total Amount (in thousands) | | :--------------- | :---------- | :-------------- | :-------------------------- | | Common Unitholders | | | | | 2021 4th Quarter | Feb 14, 2022 | $0.15 | $18,387 | | 2022 1st Quarter | May 13, 2022 | $0.15 | $18,387 | | Class A Convertible Preferred Unitholders | | | | | 2021 4th Quarter | Feb 14, 2022 | $0.7374 | $18,684 | | 2022 1st Quarter | May 13, 2022 | $0.7374 | $18,684 | - Redeemable noncontrolling interests, primarily from Alkali Holdings preferred units purchased by BXC for the Granger Optimization Project, totaled $267.2 million as of March 31, 2022[69][70][76] 11. Net Loss Per Common Unit | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net loss attributable to Genesis Energy, L.P. | $(5,250) | $(34,224) | | Less: Accumulated distributions attributable to Class A Convertible Preferred Units | $(18,684) | $(18,684) | | Net loss attributable to common unitholders | $(23,934) | $(52,908) | | Weighted average outstanding units | 122,579 | 122,579 | | Basic and diluted net loss per common unit | $(0.20) | $(0.43) | - The assumed conversion of Class A Convertible Preferred Units was anti-dilutive for both periods and thus not included in diluted EPS calculation[79] 12. Business Segment Information - The company manages its businesses through four reportable segments: Offshore pipeline transportation, Sodium minerals and sulfur services, Onshore facilities and transportation, and Marine transportation[81][84] | Segment | Segment Margin (Q1 2022, in thousands) | Segment Margin (Q1 2021, in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Offshore pipeline transportation | $70,904 | $84,269 | | Sodium minerals and sulfur services | $67,375 | $43,720 | | Onshore facilities and transportation | $7,036 | $20,999 | | Marine transportation | $12,137 | $7,109 | | Total Segment Margin | $157,452 | $156,097 | | Segment | Total Assets (March 31, 2022, in thousands) | Total Assets (December 31, 2021, in thousands) | | :-------------------------------- | :------------------------------------------ | :--------------------------------------------- | | Offshore pipeline transportation | $2,101,728 | $2,103,140 | | Sodium minerals and sulfur services | $2,149,589 | $2,132,588 | | Onshore facilities and transportation | $1,014,005 | $923,064 | | Marine transportation | $698,209 | $703,030 | | Total consolidated assets | $6,019,199 | $5,905,801 | 13. Transactions with Related Parties | Transaction Type | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Revenues from services and fees to Poseidon | $3,238 | $3,786 | | Revenues from product sales to ANSAC | $88,182 | $67,955 | | Amounts paid to CEO for aircraft use | $165 | $165 | | Charges for services from Poseidon | $255 | $240 | | Charges for services from ANSAC | $845 | $178 | - The company provides management and administrative services to Poseidon (64% owned) and is a member of ANSAC, an organization for promoting U.S. natural soda ash sales outside the U.S[92][93] 14. Supplemental Cash Flow Information | Component of Operating Assets and Liabilities | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Accounts receivable (Increase) decrease | $(131,249) | $(99,504) | | Inventories (Increase) decrease | $(282) | $27,450 | | Accounts payable Increase (decrease) | $107,747 | $38,994 | | Accrued liabilities Increase (decrease) | $(15,513) | $22,561 | | Net changes in components of operating assets and liabilities | $(29,169) | $(5,062) | - Interest and commitment fees paid increased to $69.8 million in Q1 2022 from $35.4 million in Q1 2021, primarily due to the timing of interest payments on 2027 Notes[98] - Liabilities incurred for fixed and intangible asset additions not yet paid increased to $45.0 million in Q1 2022 from $27.1 million in Q1 2021, mainly due to the Granger Optimization Project (GOP) and offshore growth capital expenditures[99] 15. Derivatives - The company uses exchange-traded futures, options, and swap contracts to hedge commodity price exposure (crude oil, fuel oil, natural gas, petroleum products), with most petroleum product derivatives not designated as accounting hedges[100] | Derivative Type | Three Months Ended March 31, 2022 (Gain/Loss, in thousands) | Three Months Ended March 31, 2021 (Gain/Loss, in thousands) | | :------------------------------------ | :-------------------------------------------------------- | :-------------------------------------------------------- | | Commodity derivatives (designated hedges) | $(1,170) | $(5,897) | | Commodity derivatives (undesignated hedges) | $6,048 | $(3,921) | | Natural Gas Swap | $(1,102) | $(67) | | Preferred Distribution Rate Reset Election | $(4,258) | $(18,438) | - The Preferred Distribution Rate Reset Election, an embedded derivative in Class A Convertible Preferred Units, resulted in an unrealized loss of $4.3 million in Q1 2022 and $18.4 million in Q1 2021, recorded in 'Other expense'[112][120] 16. Fair-Value Measurements | Financial Instrument | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--------------------------------- | :------------------------------ | :------------------------------- | | Commodity derivatives (Assets) | $7,844 (Level 1: $7,544, Level 2: $300) | $2,226 (Level 1: $359, Level 2: $1,867) | | Commodity derivatives (Liabilities) | $(2,287) (Level 1: $(1,341), Level 2: $(946)) | $(3,197) (Level 1: $(2,589), Level 2: $(608)) | | Preferred Distribution Rate Reset Election (Liabilities) | $(87,468) (Level 3) | $(83,210) (Level 3) | - The fair value of the embedded derivative feature (Preferred Distribution Rate Reset Election) is based on a Level 3 valuation model, which includes management judgment on inputs like common unit price, dividend yield, discount yield, default probabilities, and equity volatility[120] - The fair value of senior unsecured notes was approximately $3.0 billion at both March 31, 2022, and December 31, 2021, classified as a Level 2 fair value measurement[122] 17. Commitments and Contingencies - The company is subject to environmental laws and regulations, and lawsuits in the normal course of business, but does not expect current matters to materially affect its financial position, results of operations, or cash flows[123][124] 18. Subsequent Events - On April 29, 2022, the company agreed to sell its Independence Hub platform for $40 million gross proceeds ($8 million attributable to noncontrolling interests), expecting to recognize a gain of approximately $40 million in Q2 2022[125] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2022, compared to the same period in 2021, covering overall performance, segment-specific results, liquidity, capital resources, and non-GAAP financial measures, highlighting key drivers of change and future outlook Overview | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net Loss Attributable to Genesis Energy, L.P. | $(5,250) | $(34,224) | | Cash flow from operating activities | $54,200 | $77,200 | | Available Cash before Reserves | $55,700 | $54,500 | | Segment Margin | $157,500 | $156,100 | - The improvement in Net Loss was primarily driven by increased operating income in the sodium minerals and sulfur services segment due to higher export pricing in the Alkali Business and a reduced unrealized loss from the Class A Convertible Preferred Units embedded derivative[129] - Cash flow from operating activities decreased due to changes in working capital, mainly higher interest payments in Q1 2022[130] Covid-19, Ukraine War and Market Update - The Covid-19 pandemic and the war in Ukraine have caused continued volatility in commodity prices, impacting oil, natural gas, petroleum products, and industrial products[135] - Management continues to monitor the market for potential impairment triggering events but believes core business fundamentals remain strong, with a focus on deleveraging the balance sheet[136][137] Results of Operations Revenues and Costs and Expenses | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total revenues | $631,947 | $521,219 | | Total costs and expenses | $580,276 | $493,198 | | Operating income | $51,671 | $28,021 | - Revenues increased by $110.7 million (21%) and total costs and expenses increased by $87.1 million (18%) in Q1 2022 compared to Q1 2021, leading to a $23.7 million increase in operating income[139] - The increase in operating income was primarily driven by higher export pricing in the Alkali Business within the sodium minerals and sulfur services segment[139] Segment Margin | Segment | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Offshore pipeline transportation | $70,904 | $84,269 | | Sodium minerals and sulfur services | $67,375 | $43,720 | | Onshore facilities and transportation | $7,036 | $20,999 | | Marine transportation | $12,137 | $7,109 | | Total Segment Margin | $157,452 | $156,097 | - Total Segment Margin increased by $1.4 million (1%) in Q1 2022 compared to Q1 2021[132] Offshore Pipeline Transportation Segment | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Offshore crude oil pipeline revenue, net | $60,868 | $62,662 | | Offshore natural gas pipeline revenue | $9,069 | $10,397 | | Offshore pipeline transportation Segment Margin | $70,904 | $84,269 | | Crude oil pipelines (avg barrels/day, 100% basis) | 518,889 | 601,057 | | Natural gas transportation volumes (MMBtus/day, 100% basis) | 223,662 | 325,669 | - Segment Margin decreased by $13.4 million (16%) due to unplanned operational maintenance downtime, incremental producer downtime, and lower distributions from equity investments (specifically Poseidon)[150] - Future volumes are expected to increase from the King's Quay floating production system (first oil April 2022) and Argos floating production system (first oil expected Q3 2022)[152] Sodium Minerals and Sulfur Services Segment | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | NaHS volumes (Dry short tons) | 32,169 | 28,802 | | Soda Ash volumes (short tons sold) | 744,788 | 762,820 | | Revenues associated with Alkali Business (in thousands) | $203,659 | $167,324 | | Segment Margin (in thousands) | $67,375 | $43,720 | | Average index price for NaOH per DST | $972 | $648 | - Segment Margin increased by $23.7 million (54%) due to higher export pricing in the Alkali Business and increased volumes and pricing in refinery services, driven by strong global demand and tight supply[155] - The company plans to restart its original Granger production facility (500,000 tons/year) in Q1 2023 and expects first production from the Granger Optimization Project (750,000 tons/year) in Q3 2023[155] Onshore Facilities and Transportation Segment | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Gathering, marketing, and logistics revenue | $213,644 | $178,562 | | Segment Margin | $7,036 | $20,999 | | Onshore crude oil pipelines total (avg barrels/day) | 113,373 | 110,059 | | Crude oil and petroleum products sales (avg barrels/day) | 23,887 | 31,462 | | Rail unload volumes (avg barrels/day) | 2,505 | 40,252 | - Segment Margin decreased by $14.0 million (66%) primarily due to $17.5 million in cash receipts from the previously owned NEJD pipeline in Q1 2021, which did not recur in Q1 2022[163] - The decrease was partially offset by higher volumes on the Texas pipeline, which benefited from the CHOPS pipeline being back in service[163] Marine Transportation Segment | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Inland freight revenues | $21,036 | $17,515 | | Offshore freight revenues | $18,938 | $14,526 | | Total segment revenues | $55,774 | $40,331 | | Segment Margin | $12,137 | $7,109 | | Inland Barge Utilization | 90.3% | 72.0% | | Offshore Barge Utilization | 96.6% | 95.7% | - Segment Margin increased by $5.0 million (71%) due to higher utilization and day rates in both inland and offshore businesses, including the M/T American Phoenix[167] - The company continues to enter into short-term contracts, believing current day rates have not fully recovered from cyclical lows[167] Other Costs, Interest, and Income Taxes | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Total general and administrative expenses | $15,122 | $11,666 | | Total depreciation, depletion and amortization expense | $69,506 | $66,286 | | Net interest expense | $55,104 | $57,829 | - General and administrative expenses increased by $3.5 million due to higher corporate costs and long-term incentive compensation[169] - Net interest expense decreased by $2.7 million due to lower outstanding balance on the senior secured credit facility and higher capitalized interest, partially offset by increased interest on senior unsecured notes[173][174] Liquidity and Capital Resources General - The company's new credit agreement (April 2021) provides a $950 million senior secured credit facility, with the Term Loan fully repaid in November 2021 from the sale of a 36% minority interest in CHOPS[177] - As of March 31, 2022, the company had $553.7 million available borrowing capacity under its Revolving Loan, with no scheduled long-term debt maturities until 2024[179] - A $40 million sale of the Independence Hub platform in April 2022 (net $32 million to ownership) will provide additional borrowing capacity[179] Capital Resources - Long-term debt totaled approximately $3.0 billion at March 31, 2022, consisting of $94.8 million under the senior secured credit facility and $2.9 billion in senior unsecured notes[182] - The Granger Optimization Project (GOP) completion is extended to H2 2023, with BXC committing up to $351.8 million in Alkali Holdings preferred units, of which 250,114 units were outstanding as of March 31, 2022[183][184] - The company has a universal shelf registration statement (2021 Shelf) on file with the SEC, allowing for unlimited equity and debt securities issuance until April 2024 to meet future liquidity needs[186] Cash Flows from Operations - Net cash flows provided by operating activities decreased to $54.2 million in Q1 2022 from $77.2 million in Q1 2021, primarily due to changes in working capital and higher interest payments[193] - Operating cash flows are impacted by changes in inventory, timing of accounts payable and receivable, and margin funding for commodity derivatives[187][191] Capital Expenditures and Distributions Paid to Our Unitholders | Capital Expenditure Type | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Total maintenance capital expenditures | $21,917 | $26,153 | | Total growth capital expenditures | $51,921 | $9,882 | | Total capital expenditures for fixed and intangible assets | $73,838 | $36,035 | | Capital expenditures related to equity investees | $1,323 | $0 | | Total capital expenditures | $75,161 | $36,035 | Growth Capital Expenditures - The Granger Optimization Project (GOP) is anticipated to be completed in H2 2023, increasing production by approximately 750,000 tons per year, with remaining capital expenditures now funded internally[196] - The company expects to spend approximately $600 million gross ($500 million net) over the next three years to expand the CHOPS pipeline and construct a new 105-mile SYNC pipeline for deepwater developments[197][198] - Growth capital expenditures will be funded by available borrowing capacity under the Revolving Loan and increasing cash flows from operations, driven by new offshore volumes and favorable Alkali Business pricing[199] Maintenance Capital Expenditures - Maintenance capital expenditures in Q1 2022 primarily related to marine transportation (barge and fleet upgrades) and the Alkali Business (equipment and facilities maintenance), as well as offshore transportation assets[200] Distributions to Unitholders - The company declared a quarterly distribution of $0.15 per common unit and $0.7374 per Class A Convertible Preferred Unit for Q1 2022, payable May 13, 2022[202] Guarantor Summarized Financial Information - The company's $3.0 billion senior unsecured notes are fully and unconditionally guaranteed by all 100% owned domestic Guarantor Subsidiaries, which largely own assets outside the Alkali Business[203] | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :------------------------------ | :------------------------------- | | Current assets | $438,728 | $325,666 | | Fixed assets, net | $2,179,728 | $2,197,127 | | Non-current assets | $812,652 | $817,199 | | Current liabilities | $461,609 | $341,782 | | Non-current liabilities | $3,386,132 | $3,334,091 | | Class A Convertible Preferred Units | $790,115 | $790,115 | | Revenues (Q1 2022) | $405,096 | | | Operating income (Q1 2022) | $12,907 | | | Net loss (Q1 2022) | $(34,307) | | | Net loss attributable to common unitholders (Q1 2022) | $(52,991) | | Non-GAAP Financial Measure Reconciliations | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net loss attributable to Genesis Energy, L.P. | $(5,250) | $(34,224) | | Income tax expense | $304 | $222 | | Depreciation, depletion, amortization and accretion | $72,948 | $68,997 | | Plus (minus) Select Items, net | $12,211 | $46,495 | | Maintenance capital utilized | $(13,500) | $(12,800) | | Cash tax expense | $(125) | $(100) | | Distributions to preferred unitholders | $(18,684) | $(18,684) | | Redeemable noncontrolling interest redemption value adjustments | $7,823 | $4,791 | | Available Cash before Reserves | $55,727 | $54,500 | Non-GAAP Financial Measures Segment Margin (Non-GAAP Definition) - Segment Margin is defined as revenues less product costs, operating expenses, and segment general and administrative expenses (net of noncontrolling interests), plus or minus applicable Select Items, excluding asset sale gains/losses[213] Available Cash before Reserves (Non-GAAP Definition) - Available Cash before Reserves is a non-GAAP measure used to assess financial and operating performance, project viability, and ability to satisfy non-discretionary cash requirements and make discretionary payments[215][220] Maintenance Capital Requirements - Maintenance capital expenditures are capitalized costs necessary to maintain existing assets' service capability, which can be discretionary or non-discretionary[217] - The company's maintenance capital expenditures have become more discretionary and material since 2014, particularly for non-pipeline assets like marine vessels and trucks[219] Maintenance Capital Utilized - Maintenance capital utilized is defined as the portion of previously incurred maintenance capital expenditures used during the quarter, allocated ratably over the useful lives of projects/components[221] - This measure serves as a proxy for non-discretionary maintenance capital expenditures and considers the relationship among maintenance capital expenditures, operating expenses, and depreciation[222] Critical Accounting Estimates - There have been no new or material changes to the critical accounting estimates discussed in the company's Annual Report[223] Forward Looking Statements - The report contains forward-looking statements regarding future activities, financial performance, and growth plans, which involve risks, uncertainties, and assumptions that could cause actual results to differ materially[224] - Key factors influencing future results include demand and price trends for commodities, execution of business strategies, throughput levels, regulatory changes, capital availability, and global economic conditions[225][228] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section states that there have been no material changes to the quantitative and qualitative disclosures about market risk previously provided in the company's Annual Report, with further details on derivative instruments and hedging activities available in Note 15 - No material changes have occurred in the quantitative and qualitative disclosures about market risk since the Annual Report[229] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2022, and states that there were no material changes to internal control over financial reporting during the quarter - The company's disclosure controls and procedures were evaluated and determined to be effective as of March 31, 2022[230] - No changes materially affected, or are reasonably likely to materially affect, internal control over financial reporting during Q1 2022[231] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section indicates that there have been no material developments in legal proceedings since the filing of the Annual Report on Form 10-K, and no environmental matters requiring disclosure under the $1 million threshold - No material developments in legal proceedings have occurred since the Annual Report filing[234] - No environmental matters requiring disclosure under the $1 million threshold were identified for the period[235] Item 1A. Risk Factors This section states that there has been no material change in the company's risk factors as previously disclosed in its Annual Report on Form 10-K - No material change in risk factors has occurred since the Annual Report on Form 10-K[236] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms that there were no sales of unregistered equity securities during the first quarter of 2022 - No sales of unregistered equity securities occurred during Q1 2022[237] Item 3. Defaults upon Senior Securities This section reports that there were no defaults upon senior securities during the period - No defaults upon senior securities occurred[238] Item 4. Mine Safety Disclosures This section refers to Exhibit 95 for information regarding mine safety and other regulatory actions at the company's mines in Green River and Granger, Wyoming - Mine safety disclosures are provided in Exhibit 95[239] Item 5. Other Information This section states that there is no other information to report for the period - No other information to report[240] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, unit certificates, certifications by the CEO and CFO, mine safety disclosures, and XBRL interactive data files - The exhibits include various corporate documents, certifications (31.1, 31.2, 32), mine safety disclosures (95), and XBRL interactive data files (101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF, 104)[242] SIGNATURES