Sign Up for FREE Daily Energy News
CDN NEWS  |   US NEWS  | TIMELY. FOCUSED. REVELANT. FREE
BREAKING NEWS:

Sur-Flo Meters
Shocker PASS - Headwind Solutions
Hazloc Heaters
Shocker PASS - Headwind Solutions
Hazloc Heaters

Genesis Energy, L.P. Reports First Quarter 2019 Results


HOUSTON–(BUSINESS WIRE)–Genesis Energy, L.P. (NYSE: GEL) today announced its first quarter results.

We generated the following financial results for the first quarter of 2019:

  • Net Income Attributable to Genesis Energy, L.P. of $16.0 million for the first quarter of 2019 compared to Net Income Attributable to Genesis Energy, L.P. of $8.0 million for the same period in 2018.
  • Cash Flows from Operating Activities of $114.0 million for the first quarter of 2019 compared to $86.3 million for the same period in 2018, an increase of $27.7 million.
  • Total Segment Margin in the first quarter of 2019 of $173.6 million.
  • Available Cash before Reserves of $95.9 million for the first quarter of 2019, which provided 1.42X coverage for the quarterly distribution of $0.55 per common unit attributable to the first quarter.
  • We declared distributions on our preferred units in the form of 364,180 additional convertible preferred units attributable to the first two months of the quarter and a cash distribution of $0.2458 for each preferred unit attributable to the last month of the quarter, which equates to a cash distribution of approximately $6.1 million and is reflected as a reduction to Available Cash before Reserves to common unitholders.
  • Adjusted EBITDA of $164.0 million for the first quarter of 2019. Our bank leverage ratio, calculated consistent with our credit agreement, is 5.08X as of March 31, 2019 and is discussed further in this release.

Grant Sims, CEO of Genesis Energy, said, “We are pleased to announce Total Segment Margin of $173.6 million in the quarter which was negatively impacted by several non-recurring events that have or are expected to be resolved in the near future. Despite these challenges, we remain on track with our previously announced guidance for 2019.

During the quarter, our soda ash operations experienced lower production volumes due to unscheduled downtime caused by an electrical transformer failure at one of our production facilities which reduced quarterly segment margin by approximately $5.0 million. The transformer has since been replaced and we are back to running at full capacity. We expect to offset this first quarter negative with higher volumes and stronger pricing in both the domestic and export markets and remain on track for our full year guidance for 2019. The international market supply/demand balance continues to remain tight, and we believe prices are likely to strengthen in the coming years.

Our onshore facilities and transportation segment experienced a negative impact from the Alberta government’s imposed production curtailments, which was reflected in our first quarter with approximately zero volumes moved through our Scenic Station facility in February and March. On a sequential basis, this reduced segment margin by approximately $6.5 million assuming that volumes would have remained the same with the fourth quarter of 2018. Physical volumes resumed in April, albeit below the minimum take-or-pay volumes, but we now expect volumes in May and June to be at or above our minimum take-or-pay volumes. Future spreads indicate a tightening in takeaway capacity thus making rail movements out of Alberta economical. We expect our main customer to utilize pre-paid transportation credits from the first quarter for any over performance in the second quarter with any continued over performance not being reflected in our results until the second half of 2019.

Margin contribution from our marine transportation segment continues to perform at expectations. We remain optimistic that we are at the bottom for the quarterly segment contribution from our entire fleet of assets, and recent strength in near term day rates and utilization rates is reflective of an ever-so-slightly tightening market.

Our refinery services business continues to perform at expectations and we believe it will continue to do so for the foreseeable future.

Turning to our offshore business, during the quarter we saw increased volumes across our asset footprint and we began receiving volumes on Poseidon and CHOPS from production delivered to us by a third party pipeline that has insufficient capacity to directly deliver all of its committed volumes to shore. Given the activity levels in the Gulf of Mexico and our excess capacity and connectivity to multiple markets on certain of our systems, we expect to continue to benefit from this trend for the foreseeable future.

We remain on track to exit 2019 with an additional 40-50 thousand barrels per day, or kbd, relative to the fourth quarter of 2018, from infield development drilling and sub-sea tiebacks, including the LLOG-operated Buckskin prospect. Our team continues to finalize agreements adding incremental, dedicated volumes approaching 80 kbd in 2020 (including Atlantis Phase 3), 70 kbd in 2021 and 150 kbd in 2022 (including Mad Dog 2), none of which requires any capital expenditures by us. We are in early but active discussions regarding incremental volumes that could possibly come in the 2022-2025 time-frame. We believe we are well positioned to capture incremental volumes as we are the only major pipeline operator in the central Gulf that does not have affiliated capacity production to be concerned with and has current significant excess capacity to shore. However, unless and until the parties enter into definitive agreements, there is no guarantee that we will be successful in capturing some or any of these volumes.

Our businesses generated financial results that provided 1.42X coverage to our common unitholders, inclusive of the preferred cash distribution, and a leverage ratio that slightly decreased on a sequential basis. We expect our coverage ratio to be slightly lower in future periods, everything else the same, as we move completely out of the paid-in-kind period on our preferred units. We currently expect for our quarterly distribution rate to remain at $0.55 per common unit for the foreseeable future.

Our outlook for the remainder of 2019 remains unchanged from our previously stated guidance. We continue to enjoy a strong distribution coverage ratio and will use any excess cash flow to repay amounts outstanding under our revolving credit facility or to internally fund potential organic growth opportunities. This coupled with our expected growth from our existing asset footprint, which requires little or no capital, keeps us on track to naturally de-lever our balance sheet. We remain encouraged by our view of the operating environment for our businesses in 2019, especially in the Gulf of Mexico with a number of exciting tie-backs being completed in the second half of the year. As always, we intend to be prudent and diligent in maintaining our financial flexibility to allow the partnership to opportunistically build long term value for all stakeholders without ever losing our commitment to safe, reliable and responsible operations.”

Financial Results

Segment Margin

Variances between the first quarter of 2019 (the “2019 Quarter”) and the first quarter of 2018 (the “2018 Quarter”) in these components are explained below.

Segment margin results for the 2019 Quarter and 2018 Quarter were as follows:

Three Months Ended
March 31,

2019 2018
(in thousands)
Offshore pipeline transportation $ 76,390 $ 73,173
Sodium minerals and sulfur services 58,639 64,391
Onshore facilities and transportation 25,603 21,689
Marine transportation 12,932 10,987
Total Segment Margin $ 173,564 $ 170,240

Offshore pipeline transportation Segment Margin for the 2019 Quarter increased $3.2 million, or 4%, from the 2018 Quarter, primarily due to higher volumes on our crude oil pipeline systems. These increased volumes more than offset the approximately $3.9 million in pipeline capacity reservation fees, related to our interest in Poseidon Oil Pipeline, LLC (“Poseidon”), that we received during the 2018 Quarter. These minimum bill payments ended during June 2018. During the 2019 Quarter, we began receiving volumes on our CHOPS and Poseidon pipeline systems, due to deliveries from a third party pipeline that has insufficient capacity to directly deliver all of its committed volume to shore. Additionally, we are still anticipating several new dedicated tie-backs scheduled to come on-line in the second half of the year representing up to an additional 40-50 thousand barrels per day, or kbd, of throughput exiting 2019.

Sodium minerals and sulfur services Segment Margin for the 2019 Quarter decreased $5.8 million, or 9%, from the 2018 Quarter. This decrease is primarily due to lower soda ash volumes during the 2019 Quarter, which was due to the timing of certain maintenance activities and temporary electrical equipment failures at our plant sites that drove lower production volumes. Overall, the contributions from our soda ash business (our “Alkali Business”) have continued to exceed our expectations and we expect continued strong performance throughout the remainder of 2019. Costs impacting the results of our Alkali Business, many of which are similar in nature to costs related to our sulfur removal business, include costs associated with processing and producing soda ash (and other alkali products) and marketing and selling activities. In addition, costs include activities associated with mining and extracting trona ore (including energy costs and employee compensation). Additionally, our refinery services business continues to perform as expected. NaHS volumes slightly decreased during the 2019 Quarter due to lower deliveries to certain of our international mining customers, primarily located in South America, and our domestic pulp and paper customers.

Onshore facilities and transportation Segment Margin for the 2019 Quarter increased by $3.9 million, or 18%, from the 2018 Quarter. The 2019 Quarter was positively impacted by overall increased rail unload volumes at our Raceland facility relative to the 2018 Quarter. The total volumes at our Baton Rouge facilities, including rail, terminal and pipeline volumes, slightly declined overall due to the previously mentioned production curtailments in Alberta. However, we were able to recognize our minimum take or pay obligation in segment margin during the 2019 Quarter. This was offset partially by the margin recognized during the 2018 Quarter associated with our previously owned Powder River midstream assets that were divested in the fourth quarter of 2018.

Marine transportation Segment Margin for the 2019 Quarter increased $1.9 million, or 18%, from the 2018 Quarter. The increase in Segment Margin is primarily attributable to higher overall utilization and improved day rates in both our spot and shorter term contracts. While we have seen a slight uptick in day rates, we have continued to enter into short term contracts (less than a year) in both the inland and offshore markets because we believe the day rates currently being offered by the market are still near cyclical lows. These increases were partially offset by an increase in operating costs during the 2019 Quarter due to an increase in our dry-docking costs.

Other Components of Net Income

In the 2019 Quarter, we recorded Net Income Attributable to Genesis Energy, L.P. of $16.0 million compared to Net Income Attributable to Genesis Energy, L.P. of $8.0 million in the 2018 Quarter. Net Income Attributable to Genesis Energy, L.P. in the 2019 Quarter benefited from an increase in segment margin of $3.3 million and an increase in equity in earnings of equity investees of $2.4 million, which was offset by higher depreciation, depletion, and amortization expense of $2.4 million. Additionally, the 2018 Quarter was negatively impacted by a loss on debt extinguishment associated with the redemption of our 2021 senior unsecured notes of $3.3 million.

Earnings Conference Call

We will broadcast our Earnings Conference Call on Thursday, May 2, 2019, at 8:30 a.m. Central time (9:30 a.m. Eastern time). This call can be accessed at www.genesisenergy.com. Choose the Investor Relations button. For those unable to attend the live broadcast, a replay will be available beginning approximately one hour after the event and remain available on our website for 30 days. There is no charge to access the event.

Genesis Energy, L.P. is a diversified midstream energy master limited partnership headquartered in Houston, Texas. Genesis’ operations include offshore pipeline transportation, sodium minerals and sulfur services, marine transportation and onshore facilities and transportation. Genesis’ operations are primarily located in Texas, Louisiana, Arkansas, Mississippi, Alabama, Florida, Wyoming and the Gulf of Mexico.

GENESIS ENERGY, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – UNAUDITED

(in thousands, except per unit amounts)

Three Months Ended
March 31,
2019 2018
REVENUES $ 620,009 $ 725,808
COSTS AND EXPENSES:
Costs of sales and operating expenses 468,656 579,798
General and administrative expenses 11,686 11,674
Depreciation, depletion and amortization 77,638 75,255
OPERATING INCOME 62,029 59,081
Equity in earnings of equity investees 12,997 10,572
Interest expense (55,701 ) (56,136 )
Other expense (2,976 ) (5,244 )
INCOME BEFORE INCOME TAXES 16,349 8,273
Income tax expense (402 ) (375 )
NET INCOME 15,947 7,898
Net loss attributable to noncontrolling interests 7 136
NET INCOME ATTRIBUTABLE TO GENESIS ENERGY, L.P. $ 15,954 $ 8,034
Less: Accumulated distributions attributable to Class A Convertible Preferred Units (18,415 ) (16,888 )
NET LOSS AVAILABLE TO COMMON UNITHOLDERS $ (2,461 ) $ (8,854 )
NET LOSS PER COMMON UNIT:
Basic and Diluted $ (0.02 ) $ (0.07 )
WEIGHTED AVERAGE OUTSTANDING COMMON UNITS:
Basic and Diluted 122,579 122,579
GENESIS ENERGY, L.P.
OPERATING DATA – UNAUDITED
Three Months Ended
March 31,
2019 2018
Offshore Pipeline Transportation Segment
Crude oil pipelines (barrels/day unless otherwise noted):
CHOPS 241,754 199,721
Poseidon (1) 253,469 238,693
Odyssey (1) 151,877 109,365
GOPL 8,337 9,756
Offshore crude oil pipelines total 655,437 557,535
Natural gas transportation volumes (MMbtus/d) (1) 419,999 464,757
Sodium Minerals and Sulfur Services Segment
NaHS (dry short tons sold) 35,743 37,214
Soda Ash volumes (short tons sold) 870,529 917,000
NaOH (caustic soda) volumes (dry short tons sold) (2) 20,802 30,260
Onshore Facilities and Transportation Segment
Crude oil pipelines (barrels/day):
Texas 42,981 29,526
Jay 11,483 16,911
Mississippi 5,916 7,613
Louisiana (3) 95,824 115,188
Wyoming 31,189
Onshore crude oil pipelines total 156,204 200,427
Free State- CO2 Pipeline (Mcf/day) 105,991 96,709
Crude oil and petroleum products sales (barrels/day) 33,752 52,376
Rail load/unload volumes (barrels/day) (4) 85,090 52,681
Marine Transportation Segment
Inland Fleet Utilization Percentage (5) 96.6 % 92.2 %
Offshore Fleet Utilization Percentage (5) 96.3 % 94.7 %

(1)

Volumes for our equity method investees are presented on a 100% basis. We own 64% of Poseidon and 29% of Odyssey, as well as equity interests in various other entities.

(2)

Caustic soda sales volumes also include volumes sold from our Alkali Business.

(3)

Total daily volume for the three months ended March 31, 2019 includes 52,302 barrels per day of intermediate refined products associated with our Port of Baton Rouge Terminal pipelines. Total daily volume for the three months ended March 31, 2018 includes 40,330 barrels per day of intermediate refined products associated with our Port of Baton Rouge Terminal pipelines.

(4)

Indicates total barrels for which fees were charged for unloading at all rail facilities.

(5)

Utilization rates are based on a 365 day year, as adjusted for planned downtime and dry-docking.

GENESIS ENERGY, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS – UNAUDITED

(in thousands, except number of units)

March 31,
2019
December 31,
2018
ASSETS
Cash and cash equivalents $ 11,204 $ 10,300
Accounts receivable – trade, net 307,390 323,462
Inventories 80,147 73,531
Other current assets 41,329 35,986
Total current assets 440,070 443,279
Fixed assets and mineral leaseholds, net 4,937,439 4,977,514
Investment in direct financing leases, net 114,704 116,925
Equity investees 350,258 355,085
Intangible assets, net 150,494 162,602
Goodwill 301,959 301,959
Right of use assets, net 200,788
Other assets, net 119,099 121,707
Total assets $ 6,614,811 $ 6,479,071
LIABILITIES AND CAPITAL
Accounts payable – trade $ 144,629 $ 127,327
Accrued liabilities 258,337 205,507
Total current liabilities 402,966 332,834
Senior secured credit facility 942,000 970,100
Senior unsecured notes, net of debt issuance costs 2,464,247 2,462,363
Deferred tax liabilities 12,828 12,576
Other long-term liabilities 402,610 259,198
Total liabilities 4,224,651 4,037,071
Mezzanine capital:
Class A convertible preferred units 778,508 761,466
Partners’ capital:
Common unitholders 1,621,314 1,690,799
Accumulated other comprehensive income 939 939
Noncontrolling interests (10,601 ) (11,204 )
Total partners’ capital 1,611,652 1,680,534
Total liabilities, mezzanine capital and partners’ capital $ 6,614,811 $ 6,479,071
Common Units Data:
Total common units outstanding 122,579,218 122,579,218
GENESIS ENERGY, L.P.
RECONCILIATION OF NET INCOME TO SEGMENT MARGIN – UNAUDITED

(in thousands)

Three Months Ended
March 31,
2019 2018
Net income attributable to Genesis Energy, L.P. $ 15,954 $ 8,034
Corporate general and administrative expenses 11,100 10,460
Depreciation, depletion, amortization and accretion 79,937 78,008
Interest expense, net 55,701 56,136
Income tax expense 402 375
Equity compensation adjustments 65 (76 )
Provision for leased items no longer in use (190 ) 186
Plus (minus) Select Items, net 10,595 17,117
Segment Margin (1) $ 173,564 $ 170,240

(1)

See definition of Segment Margin later in this press release.

GENESIS ENERGY, L.P.

RECONCILIATIONS OF NET INCOME TO ADJUSTED EBITDA AND AVAILABLE CASH BEFORE RESERVES- UNAUDITED

(in thousands)

Three Months Ended
March 31,
2019 2018
(in thousands)
Net income attributable to Genesis Energy, L.P. $ 15,954 $ 8,034
Interest expense, net 55,701 56,136
Income tax expense 402 375
Depreciation, depletion, amortization, and accretion 79,937 78,008
EBITDA 151,994 142,553
Plus (minus) Select Items, net 12,016 19,597
Adjusted EBITDA, net 164,010 162,150
Maintenance capital utilized(1) (6,125 ) (4,300 )
Interest expense, net (55,701 ) (56,136 )
Cash tax expense (150 ) (150 )
Cash distributions to preferred unitholders (6,138 )
Other 6
Available Cash before Reserves(2) $ 95,896 $ 101,570

(1)

Maintenance capital expenditures in the 2019 Quarter and 2018 Quarter were $18.0 million and $10.0 million, respectively. Our maintenance capital expenditures are principally associated with our alkali and marine transportation businesses.

(2)

Represents the Available Cash before Reserves to common unitholders.

GENESIS ENERGY, L.P.

RECONCILIATION OF NET CASH FLOWS FROM OPERATING ACTIVITIES TO ADJUSTED EBITDA – UNAUDITED

(in thousands)

Three Months Ended
March 31,
2019 2018
Cash Flows from Operating Activities $ 114,021 $ 86,328
Adjustments to reconcile net cash flow provided by operating activities to Adjusted EBITDA:
Interest Expense, net 55,701 56,136
Amortization of debt issuance costs and discount (2,682 ) (4,161 )
Effects of available cash from equity method investees not included in operating cash flows (1) 5,425 9,277
Net effect of changes in components of operating assets and liabilities (3,200 ) 3,782
Non-cash effect of long-term incentive compensation expense (1,702 ) (20 )
Expenses related to acquiring or constructing growth capital assets 117 1,687
Differences in timing of cash receipts for certain contractual arrangements (1) (2,287 ) (3,331 )
Loss on debt extinguishment 3,339
Other items, net (1,383 ) 9,113
Adjusted EBITDA $ 164,010 $ 162,150

(1)

Includes the difference in timing of cash receipts from customers during the period and the revenue we recognize in accordance with GAAP on our related contracts. For purposes of our Non-GAAP measures, we add those amounts in the period of payment and deduct them in the period in which GAAP recognizes them.

GENESIS ENERGY, L.P.

ADJUSTED DEBT-TO-ADJUSTED CONSOLIDATED EBITDA RATIO – UNAUDITED

(in thousands)

March 31, 2019

Senior secured credit facility $ 942,000
Senior unsecured notes 2,464,247
Less: Outstanding inventory financing sublimit borrowings (23,600 )
Less: Cash and cash equivalents (11,204 )
Adjusted Debt (1) $ 3,371,443
Pro Forma LTM
March 31, 2019
Consolidated EBITDA (per our senior secured credit facility) (2) $ 674,891
Acquisitions, material projects and other Consolidated EBITDA adjustments (3) (10,753 )
Adjusted Consolidated EBITDA (per our senior secured credit facility) (4) $ 664,138
Adjusted Debt-to-Adjusted Consolidated EBITDA 5.08X

(1)

We define Adjusted Debt as the amounts outstanding under our senior secured credit facility and senior unsecured notes (including any unamortized premiums or discounts) less the amount outstanding under our inventory financing sublimit, less cash and cash equivalents on hand at the end of the period.

(2)

Consolidated EBITDA for the four-quarter period ending with the most recent quarter, as calculated under our senior secured credit facility.

(3)

This amount reflects the adjustment we are permitted to make under our senior secured credit facility for purposes of calculating compliance with our leverage ratio. It includes a pro rata portion of projected future annual EBITDA from material projects (i.e. organic growth) and includes Adjusted EBITDA (using historical amounts and other permitted amounts) since the beginning of the calculation period attributable to each acquisition completed during such calculation period, regardless of the date on which such acquisition was actually completed. This adjustment may not be indicative of future results.

(4)

Adjusted Consolidated EBITDA for the four-quarter period ending with the most recent quarter, as calculated under our senior secured credit facility.

This press release includes forward-looking statements as defined under federal law. Although we believe that our expectations are based upon reasonable assumptions, we can give no assurance that our goals will be achieved. Actual results may vary materially. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including but not limited to statements relating to future financial and operating results and our strategy and plans, are forward-looking statements, and historical performance is not necessarily indicative of future performance. Those forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties, factors and risks, many of which are outside our control, that could cause results to differ materially from those expected by management. Such risks and uncertainties include, but are not limited to, weather, political, economic and market conditions, including a decline in the price and market demand for products, the timing and success of business development efforts and other uncertainties.

Contacts

Genesis Energy, L.P.
Ryan Sims
SVP – Finance and Corporate Development
(713) 860-2521

Read full story here



Share This:



More News Articles


New SHOWCASE Directory Companies

 

T.A. Cook
Gardner Denver
Presto GeoSystems
STEP Energy Services