HOUSTON–(BUSINESS WIRE)–Genesis Energy, L.P. (NYSE: GEL) today announced its fourth quarter results.
We generated the following financial results for the fourth quarter of 2024:
- Net Loss Attributable to Genesis Energy, L.P. of $49.4 million for the fourth quarter of 2024 compared to Net Income Attributable to Genesis Energy, L.P. of $12.0 million for the same period in 2023.
- Cash Flows from Operating Activities of $74.0 million for the fourth quarter of 2024 compared to $124.8 million for the same period in 2023.
- We declared cash distributions on our preferred units of $0.9473 for each preferred unit, which equates to a cash distribution of approximately $21.9 million and is reflected as a reduction to Available Cash before Reserves to common unitholders.
- Available Cash before Reserves to common unitholders of $43.3 million for the fourth quarter of 2024, which provided 2.14X coverage for the quarterly distribution of $0.165 per common unit attributable to the fourth quarter.
- Total Segment Margin of $172.5 million for the fourth quarter of 2024.
- Adjusted EBITDA of $160.6 million for the fourth quarter of 2024.
- Adjusted Consolidated EBITDA of $706.4 million for the trailing twelve months ended December 31, 2024 and a bank leverage ratio of 5.25X, both calculated in accordance with our senior secured credit agreement and discussed further in this release.
Grant Sims, CEO of Genesis Energy, said, “Our results for the fourth quarter were generally in-line with our expectations. More importantly we are now just a few short months away from reaching the inflection point we have been referencing for the last twelve to eighteen months. That is the point where our capital-intensive expansion projects are completed and paid for, and we start to reap the increased cash to be generated from such investments.
Over the last couple of years, we have deployed over one billion dollars of growth capital towards expanding and optimizing our two largest business segments for the long-term benefit of all Genesis stakeholders. These projects included constructing the new 105-mile SYNC deepwater lateral to connect the new Shenandoah floating production facility to our CHOPS pipeline system and expanding the throughput capacity on our CHOPS pipeline system by more than fifty percent from its previous nameplate capacity to facilitate recently contracted and future volumes from the central Gulf of America. In addition, we successfully completed the construction and commissioning of an attractive brownfield expansion of our Granger soda ash production facility. The project increased Granger’s nameplate capacity from approximately 500,000 tons per year to approximately 1.2-1.3 million tons per year, which in turn reduced its per unit operating costs to be in-line with some of the lowest cost, and lowest carbon footprint, soda ash production in the world. I can say that the Granger facility recently has consistently been producing around 3,900 tons of dense soda ash per day, a level at or even slightly above its design capacity.
Importantly, I’m happy to report that as of year-end, we have completed over 90% of the expected growth capital associated with our offshore expansion projects. We remain on schedule to turn cash flow positive, after all current cash obligations, in the second half of this year and remain committed to not pursuing any capital-intensive projects for the foreseeable future. Instead, we will be looking to harvest the increasing amounts of Adjusted EBITDA and cash flow from these organic growth projects in the coming years as our new contracted offshore developments ramp up, incremental offshore developments and sub-sea tiebacks are sanctioned and tied-in to our existing infrastructure, and as the fundamentals in the soda ash market ultimately improve.
As we look ahead to the remainder of 2025, I am confident that our businesses are well positioned to deliver sequential growth over 2024, driven primarily by our offshore pipeline transportation segment and the expected growth in offshore volumes primarily attributable to our two new contracted developments, Shenandoah and Salamanca. These two new developments remain on schedule for first production late in the second quarter of 2025, and in the aggregate will add upwards of 200,000 barrels per day of incremental production handling capacity to our pipeline system. In addition to these two new developments coming on-line, we also expect certain producer customers will resume producing volumes from wells that have experienced mechanical issues over the last several quarters that we have previously discussed. The restoration of these high margin volumes, when combined with the new volumes scheduled to come online in the middle of the year, is expected to drive significant sequential improvement in our offshore pipeline transportation segment in 2025.
In our soda ash business, we expect the challenging macro conditions we saw in the fourth quarter of 2024 to persist through at least the first half of 2025 as the market seems to remain well supplied and the demand picture in China and other regions around the globe is mixed. This combination of an oversupplied market and weak global demand continues to put pressure on prices, especially in our export markets. We continue to believe that current soda ash prices are below the cash costs of high-cost synthetic producers, particularly in China, which would suggest that prices really cannot go down much further from here. Assuming high-cost synthetic producers within China and Europe act rationally, we would expect to see additional supply rationalizations to help balance the global market in the near-term, in conjunction with, or until, global demand recovers to historical levels. Despite improving the physical operating performance of our own soda ash operations and further optimizing our operating cost structure, we expect the Segment Margin contribution from our soda ash business to be at or near what we generated in 2024. Having said that, we would reasonably, based on historical market behavior, expect prices to improve in future periods, if not over the last half of this year then certainly in 2026 and beyond. Our legacy refinery services business is also expected to perform consistently with its performance in 2024.
Our marine transportation segment is again expected to deliver sequential growth in 2025, driven in large part by steady market fundamentals and fewer dry-dock days in our offshore fleet relative to 2024. Market fundamentals remain constructive as we continue to see little to no new Jones Act vessels being constructed at the same time older equipment continues to be retired. During this period of declining supply, demand remains relatively steady, and we are seeing high utilization and steady to marginally increasing day rates across our fleet. We remain optimistic about the near-to-medium term outlook with our marine transportation segment and believe we are still in the early stages of a multi-year structural shift given the continued lack of newly constructed maritime equipment available in the marketplace.
Genesis has a very clear line of sight to Adjusted EBITDA growth in 2025 via the combination of our contracted offshore growth and the structural tailwinds in our marine transportation segment, and even if we see static performance from our other two segments. This earnings growth, in conjunction with getting our significant capital expenditures behind us, means 2025 really should be that inflection point we have all been working towards. With no near-term maturities, adequate liquidity and increasing cash flow, we will have the ability to deploy such increasing available cash flow across our capital structure to manage our bank calculated leverage ratio to our long-term target, periodically redeem or retire any high-cost securities within our capital structure, as well as return increasing amounts of capital to our unitholders in one form or another. Regardless of the ultimate timing of any such actions, we remain confident we are well positioned to manage and simplify our balance sheet and ultimately deliver long-term value for everyone in the capital structure for many years to come.
With that, I will briefly discuss our individual business segments in more detail.
In our offshore pipeline transportation segment, several operators continue to deal with mechanical issues that are affecting their production from several major fields attached to our infrastructure. While a small portion of the impacted volumes has been remedied to date, the majority remains offline with the expectation that those volumes will be restored at some point in 2025. It is important to note that currently three of the twenty-one available deepwater rigs working in the Gulf of America are working on and focused on remediating these issues and returning the production as soon as possible. In addition to the extended producer downtime, the fourth quarter also included some unplanned producer downtime associated with Hurricane Rafael. This storm formed very late in hurricane season, entering the Gulf of America in early-to-mid November and caused several producers to shut in production for several days, thus reducing the total volumes flowing through our pipelines during the quarter.
More importantly, our offshore construction projects are expected to be totally complete in the next few months. The balance of the work to be completed and capital to be spent is primarily associated with connecting the Shenandoah floating production system to our new SYNC pipeline. The Shenandoah production facility set sail from its shipyard in South Korea in mid-December and is expected to arrive in South Texas any day where it will complete its final outfitting and safety checks before being installed at its final location in advance of first production in the second quarter. Similarly, the Salamanca production facility is also nearing completion and remains on schedule for first production in the middle of the year. We continue to expect both developments and their combined almost 200,000 barrels of oil per day of incremental production handling capacity to ramp very quickly. These new stand-alone production facilities will serve as host platforms for future sub-sea developments or tie-back opportunities which will help sustain these incremental volumes and cash flows to us for years and years into the future.
In our soda ash business, the operating issues we experienced at Westvaco in 2024 are behind us, and as mentioned earlier, Granger has recently been performing at or above its design capacity. Late last year, we started to focus intensely on the cost side of our business and subsequently identified some initial opportunities and implemented a number of initiatives to reduce fixed and operating costs in the business. The cost side of our operations will continue to be a focal point for us as we navigate the current market fundamentals for soda ash and its implication for prices.
The global soda ash market picture remains relatively consistent with last quarter, with most markets remaining well supplied. We continue to believe demand must pick up and there must be additional reductions in high cost, and environmentally inferior, synthetic soda ash production for the worldwide market to come more into balance. Until it does, the price for soda ash, primarily in our export markets, will continue to be challenged.
This backdrop would suggest lower soda ash prices will likely persist through at least the first half of 2025. We have already seen some reduction in synthetic production capacity in Europe and believe it’s just a matter of time before other high-cost producers will have to react to these prices where they cannot even cover their variable operating costs of production. The market will come back into balance at some point, and based on history, it is likely to overreact and possibly tighten very quickly. Regardless of when prices improve, because of the steps we have already taken on the cost side, we believe we are well positioned to meaningfully benefit from such recovery in future periods.
Our marine transportation segment continues to perform in line with our expectations. Market fundamentals remain constructive, with relatively stable demand for all classes of Jones Act vessels and a shrinking supply driven by retirements of older vessels and very limited new construction. In 2025, we have only two scheduled dry docks for our offshore vessels compared with five that we had in 2024, which should in turn lower our maintenance capital requirements and allow for a greater number of days on the water this year when compared with last.
From a corporate finance perspective, we took multiple steps in 2024 to strengthen our balance sheet and preserve our financial flexibility. We opportunistically accessed the capital markets on two separate occasions last year and successfully issued $700 million in new 7.875% notes due 2032 in May and $600 million in new 8.000% notes due 2033 in December. These new notes allowed us to re-finance our 2026 unsecured notes and $575 million of our 2027 unsecured notes, respectively, adding significant runway between now and our nearest maturity and making the 2027’s a much more attractively sized tranche, with ample liquidity to re-finance them by using our senior secured facility if we so choose.
While 2024 might not have panned out like we had originally hoped or forecasted, we are undoubtedly excited and focused on 2025 and ensuring we do in fact reach that inflection point in just a few months, where we stop spending growth capital and start harvesting significant, and growing, cash flows in excess of the cash cost of running and sustaining our businesses. As we sit here today, we believe Adjusted EBITDA(1) in 2025 will be around $700 million and that 2026, assuming no meaningful improvement in our soda ash business, which could very well turn out to be a conservative assumption, could be around $800 million. In any event, the cash cost of running our businesses continues to be around $600-625 million a year. As a result, we believe we have adequate financial flexibility to allow us to hit and maintain our targeted leverage ratio, simplify our capital structure, lower our overall cost of capital, return capital to our unitholders and create long-term value for all stakeholders in our capital structure.
The management team and board of directors remain steadfast in our commitment to building long-term value for everyone in the capital structure, and we believe the decisions we are making reflect this commitment and our confidence in Genesis moving forward. I would once again like to recognize our entire workforce for their efforts and unwavering commitment to safe and responsible operations. I’m proud to have the opportunity to work alongside each and every one of you.”
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(1) Adjusted EBITDA is a non-GAAP financial measure. We are unable to provide a reconciliation of the forward-looking Adjusted EBITDA projections contained in this press release to its most directly comparable GAAP financial measure because the information necessary for quantitative reconciliations of Adjusted EBITDA to its most directly comparable GAAP financial measure is not available to us without unreasonable efforts. The probable significance of providing these forward-looking Adjusted EBITDA measures without directly comparable GAAP financial measures may be materially different from the corresponding GAAP financial measures. |
Financial Results
Segment Margin
Variances between the fourth quarter of 2024 (the “2024 Quarter”) and the fourth quarter of 2023 (the “2023 Quarter”) in these components are explained below.
Segment Margin results for the 2024 Quarter and 2023 Quarter were as follows:
|
Three Months Ended December 31, |
|||||
|
2024 |
2023 |
||||
|
(in thousands) |
|||||
|
Offshore pipeline transportation |
$ |
76,700 |
$ |
106,167 |
|
|
Soda and sulfur services |
58,305 |
64,695 |
|||
|
Marine transportation |
31,029 |
31,845 |
|||
|
Onshore facilities and transportation |
6,490 |
6,711 |
|||
|
Total Segment Margin |
$ |
172,524 |
$ |
209,418 |
|
Offshore pipeline transportation Segment Margin for the 2024 Quarter decreased $29.5 million, or 28%, from the 2023 Quarter primarily due to several factors including: (i) an economic step-down in the rate on a certain existing life-of-lease transportation dedication; (ii) producer underperformance at two of our major host platforms; and (iii) an increase in our operating costs. At the beginning of the third quarter of 2024, we reached the 10-year anniversary of a certain existing life-of-lease transportation dedication, which resulted in the contractual economic step-down of the associated transportation rate. The 2024 Quarter experienced an increase in producer downtime relative to the 2023 Quarter as a result of certain sub-sea operational and technical challenges at fields connected to two of our major host platforms, which began in the second quarter of 2024. The production from these wells impacted our results as they are molecules that we touch multiple times throughout our oil and natural gas pipeline infrastructure. These decreases were partially offset by committed volumes from the Warrior and Winterfell projects, which produced first oil in late June 2024 and early July 2024, respectively, and have begun to ramp up production. Activity in and around our Gulf of America asset base continues to be robust and we expect to benefit from additional in-field drilling at existing fields, such as the Monument development, which is currently expected to come on-line in mid to late 2026.
Soda and sulfur services Segment Margin for the 2024 Quarter decreased $6.4 million, or 10%, from the 2023 Quarter primarily due to lower export pricing in our Alkali Business during the 2024 Quarter and lower NaHS sales volumes and sales pricing, which was partially offset by higher soda ash sales volumes in the period. In our Alkali Business, the 2024 Quarter was impacted by a decline in export pricing as compared to the 2023 Quarter as global supply has continued to outpace demand in the global markets. Our Alkali Business experienced higher soda ash sales volumes in the 2024 Quarter as production from our expanded Granger facility came online in the 2023 Quarter and has since ramped up to levels near its nameplate capacity of approximately 100,000 tons of production per month. In our sulfur services business, we have experienced continued pressure on demand in South America, which has negatively impacted NaHS sales volumes and pricing. In addition, production was impacted by a slower than expected startup during the 2024 Quarter from a planned outage during the third quarter of 2024 at one of our largest and lowest cost host refineries, which has since ramped up production to normal levels as we exited 2024.
Marine transportation Segment Margin for the 2024 Quarter decreased $0.8 million, or 3%, from the 2023 Quarter primarily due to the increased number of regulatory dry-docking days in our offshore fleet during the 2024 Quarter. Partially offsetting this decrease was an increase in our overall day rates in our inland and offshore business, including the M/T American Phoenix, during the 2024 Quarter. Demand for our barge services to move intermediate and refined products remained high during the 2024 Quarter due to the continued strength of refinery utilization rates as well as the lack of new supply of similar type vessels (primarily due to higher construction costs and long lead times for construction) as well as the retirement of older vessels in the market.
Onshore facilities and transportation Segment Margin for the 2024 Quarter decreased $0.2 million, or 3%, from the 2023 Quarter primarily due to an overall decrease in volumes on our onshore crude oil pipeline systems. This decrease was mostly offset by an increase in the rail unload volumes at our Scenic Station facility.
Other Components of Net Income (Loss)
We reported Net Loss Attributable to Genesis Energy, L.P. of $49.4 million in the 2024 Quarter compared to Net Income Attributable to Genesis Energy, L.P. of $12.0 million in the 2023 Quarter.
Net Loss Attributable to Genesis Energy, L.P. in the 2024 Quarter was impacted by: (i) impairment expense of $43.0 million recorded during the 2024 Quarter as we terminated an on-going project related to the integration of certain of our corporate enterprise resource planning systems; (ii) an increase in interest expense, net, of $15.0 million; and (iii) an increase in depreciation, depletion and amortization of $9.7 million during the 2024 Quarter.
Earnings Conference Call
We will broadcast our Earnings Conference Call on Thursday, February 13, 2025, at 9:00 a.m. Central time (10:00 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, soda and sulfur services, onshore facilities and transportation and marine transportation. Genesis’ operations are primarily located in the Gulf of America, Wyoming and in the Gulf Coast region of the United States.
|
GENESIS ENERGY, L.P. |
|||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – UNAUDITED |
|||||||||||||||
|
(in thousands, except unit amounts) |
|||||||||||||||
|
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||||||
|
REVENUES |
$ |
725,553 |
$ |
774,104 |
$ |
2,966,216 |
$ |
3,176,996 |
|||||||
|
COSTS AND EXPENSES: |
|||||||||||||||
|
Costs of sales and operating expenses |
559,678 |
620,794 |
2,337,527 |
2,501,608 |
|||||||||||
|
General and administrative expenses |
10,835 |
17,526 |
59,432 |
65,779 |
|||||||||||
|
Depreciation, depletion and amortization |
79,937 |
70,223 |
313,158 |
280,189 |
|||||||||||
|
Impairment expense |
43,003 |
— |
43,003 |
— |
|||||||||||
|
OPERATING INCOME |
32,100 |
65,561 |
213,096 |
329,420 |
|||||||||||
|
Equity in earnings of equity investees |
18,003 |
16,592 |
58,291 |
66,198 |
|||||||||||
|
Interest expense, net |
(75,647 |
) |
(60,606 |
) |
(287,235 |
) |
(244,663 |
) |
|||||||
|
Other expense, net |
(13,938 |
) |
(2,815 |
) |
(15,367 |
) |
(4,627 |
) |
|||||||
|
INCOME (LOSS) BEFORE INCOME TAXES |
(39,482 |
) |
18,732 |
(31,215 |
) |
146,328 |
|||||||||
|
Income tax benefit (expense) |
(1,807 |
) |
1,767 |
(1,792 |
) |
19 |
|||||||||
|
NET INCOME (LOSS) |
(41,289 |
) |
20,499 |
(33,007 |
) |
146,347 |
|||||||||
|
Net income attributable to noncontrolling interests |
(8,090 |
) |
(8,549 |
) |
(30,940 |
) |
(28,627 |
) |
|||||||
|
NET INCOME (LOSS) ATTRIBUTABLE TO GENESIS ENERGY, L.P. |
$ |
(49,379 |
) |
$ |
11,950 |
$ |
(63,947 |
) |
$ |
117,720 |
|||||
|
Less: Accumulated distributions and returns attributable to Class A Convertible Preferred Units |
(21,894 |
) |
(21,505 |
) |
(87,576 |
) |
(90,725 |
) |
|||||||
|
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON UNITHOLDERS |
$ |
(71,273 |
) |
$ |
(9,555 |
) |
$ |
(151,523 |
) |
$ |
26,995 |
||||
|
NET INCOME (LOSS) PER COMMON UNIT: |
|||||||||||||||
|
Basic and Diluted |
$ |
(0.58 |
) |
$ |
(0.08 |
) |
$ |
(1.24 |
) |
$ |
0.22 |
||||
|
WEIGHTED AVERAGE OUTSTANDING COMMON UNITS: |
|||||||||||||||
|
Basic and Diluted |
122,464,318 |
122,464,318 |
122,464,318 |
122,535,480 |
|||||||||||
|
|
|||||||||||
|
OPERATING DATA – UNAUDITED |
|||||||||||
|
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||
|
2024 |
2023 |
2024 |
2023 |
||||||||
|
Offshore Pipeline Transportation Segment |
|||||||||||
|
Crude oil pipelines (average barrels/day unless otherwise noted): |
|||||||||||
|
CHOPS(1) |
246,049 |
296,941 |
286,160 |
274,527 |
|||||||
|
Poseidon(1) |
292,177 |
310,370 |
278,347 |
306,182 |
|||||||
|
Odyssey(1) |
73,684 |
51,868 |
67,810 |
59,535 |
|||||||
|
GOPL |
1,021 |
3,070 |
1,605 |
2,622 |
|||||||
|
Offshore crude oil pipelines total |
612,931 |
662,249 |
633,922 |
642,866 |
|||||||
|
Natural gas transportation volumes (MMBtus/day)(1) |
386,201 |
413,597 |
385,330 |
401,976 |
|||||||
|
Soda and Sulfur Services Segment |
|||||||||||
|
Soda Ash volumes (short tons sold) |
993,237 |
901,874 |
3,831,334 |
3,326,024 |
|||||||
|
NaHS (dry short tons sold) |
22,231 |
25,356 |
104,322 |
106,857 |
|||||||
|
NaOH (caustic soda) volumes (dry short tons sold) |
23,341 |
19,522 |
76,340 |
78,272 |
|||||||
|
Marine Transportation Segment |
|||||||||||
|
Inland Fleet Utilization Percentage(2) |
96.7 |
% |
100.0 |
% |
98.8 |
% |
100.0 |
% |
|||
|
Offshore Fleet Utilization Percentage(2) |
99.5 |
% |
99.5 |
% |
97.7 |
% |
98.1 |
% |
|||
|
Onshore Facilities and Transportation Segment |
|||||||||||
|
Crude oil pipelines (barrels/day): |
|||||||||||
|
Texas(3) |
52,879 |
83,044 |
65,059 |
70,032 |
|||||||
|
Jay |
5,672 |
6,039 |
5,189 |
5,793 |
|||||||
|
Mississippi |
1,775 |
3,951 |
2,390 |
4,635 |
|||||||
|
Louisiana(4) |
33,654 |
51,212 |
55,687 |
65,895 |
|||||||
|
Onshore crude oil pipelines total |
93,980 |
144,246 |
128,325 |
146,355 |
|||||||
|
Crude oil and petroleum products sales (barrels/day) |
22,269 |
23,655 |
21,591 |
23,170 |
|||||||
|
Rail unload volumes (barrels/day) |
15,127 |
— |
13,500 |
— |
|||||||
Contacts
Genesis Energy, L.P.
Dwayne Morley
Vice President – Investor Relations
(713) 860-2536
