Overview

Genesis Energy, L.P. reported a Net Loss from Continuing Operations of $36.6 million in the first quarter of 2025, compared to a Net Income from Continuing Operations of $11.4 million in the first quarter of 2024. This was primarily due to higher general and administrative expenses, interest expense, depreciation and amortization, and lower equity earnings from investments.

The company also reported a Net Loss from Discontinued Operations of $423.7 million in the first quarter of 2025, compared to a Net Income from Discontinued Operations of $7.6 million in the first quarter of 2024. This was due to a loss on the sale of the Alkali Business segment.

Cash flow from operating activities decreased from $125.9 million in the first quarter of 2024 to $24.8 million in the first quarter of 2025, mainly due to the decrease in Segment Margin and negative changes in working capital. Available Cash before Reserves, which the company uses to evaluate its performance, decreased from $54.0 million to $20.3 million over the same period.

Segment Performance

The company’s three main business segments are:

1. Offshore Pipeline Transportation: This segment’s Segment Margin decreased by 22% to $76.5 million, primarily due to a contractual rate decrease, producer underperformance, and higher operating costs.

2. Marine Transportation: This segment’s Segment Margin decreased by 4% to $30.0 million, mainly due to slightly lower utilization rates in the inland barge service, partially offset by a rate increase on the company’s ocean-going tanker.

3. Onshore Transportation and Services: This segment’s Segment Margin decreased by 18% to $14.8 million, primarily due to lower NaHS and caustic soda sales volumes and decreased volumes on the company’s onshore crude oil pipelines, partially offset by higher rail unload volumes.

Liquidity and Capital Resources

In July 2024, the company entered into a new $900 million senior secured revolving credit facility that matures in 2028. In December 2024, the company issued $600 million of new senior unsecured notes due 2033 and used the proceeds to repurchase $575 million of its 2027 notes.

On February 28, 2025, the company completed the sale of its Alkali Business segment for $1.425 billion. It used the net proceeds to pay down its credit facility, repurchase some of its preferred units, and redeem a portion of its outstanding senior unsecured notes.

The company anticipates that its future cash flows and available credit facility will be sufficient to meet its capital needs, including maintenance capital expenditures, growth projects, and distributions to unitholders. It continues to focus on deleveraging its balance sheet and simplifying its capital structure.

Strengths and Weaknesses

Strengths:

• Diversified asset base across offshore pipelines, marine transportation, and onshore logistics
• Long-term customer contracts and fee-based revenues in many business lines
• Successful completion of the Alkali Business sale, which has improved the company’s financial position
• Ample liquidity and no near-term debt maturities

Weaknesses:

• Declining performance in the offshore pipeline and onshore transportation segments
• Exposure to commodity price fluctuations, although mitigated to some extent
• High leverage prior to the Alkali Business sale, though now improving

Outlook

The company believes the fundamentals of its core businesses remain strong, despite the current market uncertainties related to international conflicts, changes in governmental policies, and global economic conditions. It plans to continue focusing on deleveraging its balance sheet and simplifying its capital structure.

The company expects demand for its services to remain robust, particularly in its marine transportation segment, due to limited new supply of similar vessels and the retirement of older vessels in the market. It also anticipates incremental production from new offshore developments to support its offshore pipeline transportation business.

However, the company acknowledges the potential for future impairment charges if market conditions deteriorate significantly. It will continue to monitor the situation and make necessary adjustments to its operations and capital allocation.

Overall, while the company faced some challenges in the first quarter of 2025, its diversified asset base, long-term customer contracts, and improved financial position provide a solid foundation for the future. The company’s focus on deleveraging, cost management, and capitalizing on growth opportunities should help it navigate the current market environment.