|
|
|
|
| Total costs and expenses | | | | | | | | | | | |
| OPERATING INCOME | | | | | | | | | | | |
| Equity in earnings of equity investees | | | | | | | | | | | |
| Interest expense, net | () | | | () | | | () | | | () | |
| Other expense | () | | | () | | | () | | | () | |
| Income (loss) from continuing operations before income taxes | | | | () | | | () | | | | |
| Income tax benefit (expense) | () | | | | | | () | | | () | |
| NET INCOME (LOSS) FROM CONTINUING OPERATIONS | | | | () | | | () | | | | |
DISCONTINUED OPERATIONS (Note 4): | | | | | | | |
| Income from discontinued operations, net of tax | | | | | | | | | | | |
| Loss from disposal of discontinued operations | | | | | | | () | | | | |
| NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX | | | | | | | () | | | | |
| NET INCOME (LOSS) | | | | () | | | () | | | | |
| Net income attributable to noncontrolling interests | () | | | () | | | () | | | () | |
|
| NET INCOME (LOSS) ATTRIBUTABLE TO GENESIS ENERGY, L.P. | $ | () | | | $ | () | | | $ | () | | | $ | | |
| Less: Accumulated distributions and returns attributable to Class A Convertible Preferred Units | () | | | () | | | () | | | () | |
| NET LOSS ATTRIBUTABLE TO COMMON UNITHOLDERS | $ | () | | | $ | () | | | $ | () | | | $ | () | |
| | | | | | | |
Net loss from continuing operations per common unit - Basic and Diluted (Note 12) | $ | () | | | $ | () | | | $ | () | | | $ | () | |
Net loss per common unit - Basic and Diluted (Note 12) | $ | () | | | $ | () | | | $ | () | | | $ | () | |
| | | | | | | |
| WEIGHTED AVERAGE OUTSTANDING COMMON UNITS: | | | | | | | |
| Basic and Diluted | | | | | | | | | | | |
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Six Months Ended
June 30, |
| 2025 | | 2024 | | 2025 | | 2024 |
| Net income (loss) | $ | | | | $ | () | | | $ | () | | | $ | | |
| Other comprehensive income: | | | | | | | |
| Decrease in benefit plan liability held for discontinued operations | | | | | | | | | | | |
| Total Comprehensive income (loss) | | | | () | | | () | | | | |
| Comprehensive income attributable to noncontrolling interests | () | | | () | | | () | | | () | |
|
| Comprehensive income (loss) attributable to Genesis Energy, L.P. | $ | () | | | $ | () | | | $ | () | | | $ | | |
| | | | | | | |
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL (DEFICIT)
(In thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of Common Units | | Partners’ Capital (Deficit) | | Noncontrolling Interests | | Accumulated Other Comprehensive Income | | Total |
| Partners’ capital (deficit), March 31, 2025 | | | | $ | () | | | $ | | | | $ | | | | $ | | |
| |
| Net income (loss) | — | | | () | | | | | | — | | | | |
| Cash distributions to partners | — | | | () | | | — | | | — | | | () | |
| Cash distributions to noncontrolling interests | — | | | — | | | () | | | — | | | () | |
| Contributions from noncontrolling interests | — | | | — | | | | | | — | | | | |
| |
| |
| Distributions to Class A Convertible Preferred unitholders | — | | | () | | | — | | | — | | | () | |
| Partners’ capital (deficit), June 30, 2025 | $ | | | | $ | () | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | |
| Number of Common Units | | Partners’ Capital | | Noncontrolling Interests | | Accumulated Other Comprehensive Income | | Total |
| Partners’ capital, March 31, 2024 | | | | $ | | | | $ | | | | $ | | | | $ | | |
| |
| Net income (loss) | — | | | () | | | | | | — | | | () | |
| Cash distributions to partners | — | | | () | | | — | | | — | | | () | |
| |
| Cash distributions to noncontrolling interests | — | | | — | | | () | | | — | | | () | |
| Cash contributions from noncontrolling interests | — | | | — | | | | | | — | | | | |
| Non-cash contribution to noncontrolling interests | — | | | () | | | | | | — | | | | |
| Other comprehensive income | — | | | — | | | — | | | | | | | |
| Distributions to Class A Convertible Preferred unitholders | — | | | () | | | — | | | — | | | () | |
| Partners’ capital, June 30, 2024 | | | | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of Common Units | | Partners’ Capital (Deficit) | | Noncontrolling Interests | | Accumulated Other Comprehensive Income | | Total |
| Partners’ capital, December 31, 2024 | | | | $ | | | | $ | | | | $ | | | | $ | | |
| |
| Net income (loss) | — | | | () | | | | | | — | | | () | |
| Cash distributions to partners | — | | | () | | | — | | | — | | | () | |
| Cash distributions to noncontrolling interests | — | | | — | | | () | | | — | | | () | |
| Cash contributions from noncontrolling interests | — | | | — | | | | | | — | | | | |
| |
| Other comprehensive income | — | | | — | | | — | | | | | | | |
| Disposal of benefit plan held for discontinued operations | — | | | — | | | — | | | () | | | () | |
| Distributions and returns attributable to Class A Convertible Preferred unitholders | — | | | () | | | — | | | — | | | () | |
| Partners’ capital (deficit), June 30 2025 | $ | | | | $ | () | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | |
| Number of Common Units | | Partners’ Capital | | Noncontrolling Interests | | Accumulated Other Comprehensive Income | | Total |
| Partners’ capital, December 31, 2023 | | | | $ | | | | $ | | | | $ | | | | $ | | |
| |
| Net income | — | | | | | | | | | — | | | | |
| Cash distributions to partners | — | | | () | | | — | | | — | | | () | |
| |
|
|
| Amortization and write-off of debt issuance costs, premium and discount | | | | | |
Loss from disposal of discontinued operations (Note 4) | | | | | |
| Equity in earnings of investments in equity investees | () | | | () | |
| Cash distributions of earnings of equity investees | | | | | |
| Non-cash effect of long-term incentive compensation plans | | | | | |
| Deferred and other tax liabilities | () | | | () | |
| Unrealized gains on derivative transactions | () | | | () | |
|
| Other, net | | | | | |
Net changes in components of operating assets and liabilities (Note 15) | () | | | | |
| Net cash provided by operating activities | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
| Payments to acquire fixed and intangible assets | () | | | () | |
Proceeds from disposal of discontinued operations, net of cash divested (Note 4) | | | | | |
| Cash distributions received from equity investees - return of investment | | | | | |
| Investments in equity investees | | | | () | |
| Proceeds from asset sales | | | | | |
|
| Net cash provided by (used in) investing activities | | | | () | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
| Borrowings on senior secured credit facility | | | | | |
| Repayments on senior secured credit facility | () | | | () | |
|
Proceeds from issuance of senior unsecured notes (Note 10) | | | | | |
Repayment of senior unsecured notes (Note 10) | () | | | () | |
| Repayment of Alkali senior secured notes | | | | () | |
| Debt issuance costs | () | | | () | |
| Contributions from noncontrolling interests | | | | | |
| Distributions to noncontrolling interests | () | | | () | |
| Distributions to common unitholders | () | | | () | |
| Distributions to Class A Convertible Preferred unitholders | () | | | () | |
Redemption of Class A Convertible Preferred Units (Note 11) | () | | | | |
|
|
|
|
) | | () | |
5.
and 2024, we acted as a lessor in a revenue contract associated with our 330,000 barrel-capacity ocean going tanker, the M/T American Phoenix, included in our marine transportation segment. Our lease revenues for this arrangement were $ million and $ million for the three months ended and 2024, respectively, and $ million and $ million for the six months ended and 2024, respectively.The M/T American Phoenix is under contract through mid-2027. For the remainder of 2025, 2026, and through the expiration of the contract in 2027, we expect to receive undiscounted cash flows from lease payments of $ million, $ million, and $ million, respectively. Our agreements generally contain clauses that may limit the use of the asset or require certain actions be taken by the lessee to maintain the asset for future performance.
6.
| December 31, 2024 | |
| Crude oil | $ | | | | $ | | |
| NaHS | | | | | |
| Caustic soda | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
| | | | $ | | |
(1)Capital expenditures in our offshore pipeline transportation segment for the six months ended June 30, 2025 and 2024 represent % of the costs incurred, including those funded by our noncontrolling interest holder.
.
| | $ | () | | | $ | () | | | $ | | | | Net income attributable to noncontrolling interests | () | | | () | | | () | | | () | |
|
| Corporate general and administrative expenses | | | | | | | | | | | |
| Depreciation, amortization and accretion | | | | | | | | | | | |
| Interest expense, net | | | | | | | | | | | |
Adjustment to include distributable cash generated by equity investees not included in income and exclude equity in investees net income(1) | | | | | | | | | | | |
| Unrealized gains on derivative transactions excluding fair value hedges, net of changes in inventory value | () | | | () | | | () | | | () | |
| Other non-cash items | () | | | () | | | () | | | () | |
|
|
Loss on extinguishment of debt (Note 10) | | | | | | | | | | | |
Differences in timing of cash receipts for certain contractual arrangements(2) | () | | | | | | () | | | | |
|
|
|
|
| Total Segment Margin | $ | | | | $ | | | | $ | | | | $ | | |
(1)Includes distributions attributable to the quarter and received during or promptly following such quarter.
(2)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.
14.
| | $ | | | | $ | | | | $ | | | | Costs and expenses: | | | | | | | |
| Amounts paid to our CEO in connection with the use of his aircraft | $ | | | | $ | | | | $ | | | | $ | | |
Charges for products purchased from Poseidon(1) | | | | | | | | | | | |
% interest in Poseidon.
Our CEO, Mr. Grant E. Sims, owns an aircraft which is used by us for business purposes in the course of operations. We pay Mr. Sims a fixed monthly fee and reimburse the aircraft management company for costs related to our usage of the aircraft, including fuel and the actual out-of-pocket costs. Based on current market rates for chartering of a private aircraft under long-term, priority arrangements with industry recognized chartering companies, we believe that the terms of this arrangement reflect what we would expect to obtain in an arms-length transaction.
Transactions with Unconsolidated Affiliates
Poseidon
include $ million and $ million, respectively, of fees we earned through the provision of services under that agreement. Our revenues for the three and six months ended June 30, 2024 include $ million and $ million, respectively, of fees we earned through the provision of services under that agreement. At and December 31, 2024, Poseidon owed us $ million and $ million for services rendered, respectively.
15.
) | | $ | | | | Inventories | () | | | | |
| Deferred charges | () | | | | |
| Other current assets | () | | | | |
| Increase (decrease) in: | | | |
| Accounts payable | | | | () | |
| Accrued liabilities | () | | | () | |
| Net changes in components of operating assets and liabilities | $ | () | | | $ | | |
Payments of interest and commitment fees were $ million and $ million for the six months ended and 2024, respectively.
We capitalized interest of $ million and $ million during the six months ended and June 30, 2024, respectively.
At and 2024, we had incurred liabilities for fixed and intangible asset additions totaling $ million and $ million, respectively, that had not been paid at the end of the quarter. Therefore, these amounts were not included in the caption “Payments to acquire fixed and intangible assets” under Cash Flows from Investing Activities in the Unaudited
and 2024 primarily relate to the capital expenditures associated with our offshore growth capital projects.16.
, we had a net broker receivable of approximately $ million (consisting of initial margin of $ million increased by $ million variation margin). As of December 31, 2024, we had a net broker receivable of approximately $ million (consisting of initial margin of $ million decreased by $ million of variation margin). At and December 31, 2024, none of our outstanding derivatives contained credit-risk related contingent features that would result in a material adverse impact to us upon any change in our credit ratings.Financial Statement Impacts
Unrealized gains are subtracted from net income (loss) and unrealized losses are added to net income (loss) in determining cash flows from operating activities. To the extent that we have fair value hedges outstanding, the offsetting change recorded in the fair value of inventory is also eliminated from net income (loss) in determining cash flows from operating activities. Changes in the cash margin balance required to maintain our exchange-traded derivative contracts also affect cash flows from operating activities.
, we had the following outstanding derivative contracts that were entered into to economically hedge inventory and fixed price purchase commitments. | | | | | | | | | | | | | | |
| | Sell (Short)
Contracts | | Buy (Long)
Contracts |
| Designated as hedges under accounting rules: | | | | |
| Crude oil futures: | | | | |
| Contract volumes (1,000 Bbls) | | | | | | |
| Weighted average contract price per Bbl | | $ | | | | $ | | |
| | | | |
| Not qualifying or not designated as hedges under accounting rules: | | | | |
| Crude oil futures: | | | | |
| Contract volumes (1,000 Bbls) | | | | | | |
| Weighted average contract price per Bbl | | $ | | | | $ | | |
|
|
|
| Crude oil swaps: | | | | |
| Contract volumes (1,000 Bbls) | | | | | | |
| Weighted average contract price per Bbl | | $ | | | | $ | | |
| Crude oil options: | | | | |
| Contract volumes (1,000 Bbls) | | | | | | |
| Weighted average premium received/paid | | $ | | | | $ | | |
and December 31, 2024: | | | | | | | | | | | | | | | | | |
| | Unaudited Condensed Consolidated Balance Sheets Location | | Fair Value |
| | | | December 31, 2024 |
| Asset Derivatives: | | | | | |
| |
| |
| Commodity derivatives - futures, swaps and options (undesignated hedges): | | | | | |
| Gross amount of recognized assets | Current Assets - Other(1) | | $ | | | | $ | | |
| Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets | Current Assets - Other(1) | | () | | | () | |
| Net amount of assets presented in the Unaudited Condensed Consolidated Balance Sheets | | | $ | | | | $ | | |
| Commodity derivatives - futures (designated hedges): | | | | | |
| Gross amount of recognized assets | Current Assets - Other(1) | | $ | | | | $ | | |
| Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets | Current Assets - Other(1) | | () | | | () | |
| Net amount of assets presented in the Unaudited Condensed Consolidated Balance Sheets | | | $ | | | | $ | | |
| Liability Derivatives: | | | | | |
| |
| |
| |
| Commodity derivatives - futures, swaps and options (undesignated hedges): | | | | | |
| Gross amount of recognized liabilities | Current Assets - Other(1) | | $ | () | | | $ | () | |
| Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets | Current Assets - Other(1) | | | | | | |
| Net amount of liabilities presented in the Unaudited Condensed Consolidated Balance Sheets | | | $ | | | | $ | | |
| Commodity derivatives - futures (designated hedges): | | | | | |
| Gross amount of recognized liabilities | Current Assets - Other(1) | | $ | () | | | $ | () | |
| Gross amount offset in the Unaudited Condensed Consolidated Balance Sheets | Current Assets - Other(1) | | | | | | |
| Net amount of liabilities presented in the Unaudited Condensed Consolidated Balance Sheets | | | $ | | | | $ | | |
| | $ | () | | | $ | | | | $ | () | | | Contracts not considered hedges under accounting guidance | Onshore transportation and services product costs | | () | | | () | | | () | | | () | |
| Total commodity derivatives | | | $ | | | | $ | () | | | $ | | | | $ | () | |
| |
| |
| |
| |
17.
and December 31, 2024. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | December 31, 2024 |
| Recurring Fair Value Measures | | Level 1 | | Level 2 | | Level 3 | | Level 1 | | Level 2 | | Level 3 |
| Commodity and fuel derivatives: | | | | | | | | | | | | |
| Assets | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Liabilities | | $ | () | | | $ | | | | $ | | | | $ | () | | | $ | | | | $ | | |
Our commodity derivatives include exchange-traded futures. The fair value of these exchange-traded derivative contracts is based on unadjusted quoted prices in active markets and is, therefore, included in Level 1 of the fair value hierarchy.
See Note 16 for additional information on our derivative instruments. Other Fair Value Measurements
and December 31, 2024, our senior unsecured notes had a carrying value of approximately $ billion and $ billion, respectively, and a fair value of approximately $ billion and $ billion, respectively. The fair value of the senior unsecured notes is determined based on trade information in the financial markets of our public debt and is considered a Level 2 fair value measurement.
18.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following information should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and accompanying notes included in this Quarterly Report on Form 10-Q. The following information and such Unaudited Condensed Consolidated Financial Statements should also be read in conjunction with the audited financial statements and related notes, together with our discussion and analysis of financial position and results of operations, included in our Annual Report.
Included in Management’s Discussion and Analysis of Financial Condition and Results of Operations are the following sections:
•Overview
•Results of Operations
•Liquidity and Capital Resources
•Guarantor Summarized Financial Information
•Non-GAAP Financial Measures
•Forward Looking Statements
Overview
We reported Net Income from Continuing Operations of $10.0 million during the three months ended June 30, 2025 (the “2025 Quarter”) compared to Net Loss from Continuing Operations of $4.0 million during the three months ended June 30, 2024 (the “2024 Quarter”).
Net Income from Continuing Operations in the 2025 Quarter was impacted by: (i) an increase in operating income from our operating segments (see “Results of Operations” below for additional details); (ii) a decrease in interest expense, net, of $3.8 million (see “Results of Operations” below for additional details); and (iii) a decrease in general and administrative expenses of $3.6 million (see “Results of Operations” below for additional details) relative to the 2024 Quarter. These were partially offset by an increase in depreciation and amortization of $4.7 million during the 2025 Quarter (see “Results of Operations” below for additional details) and an increase in other expense of $7.5 million primarily related to the premium associated with the redemption of our 2027 Notes in April 2025 (see “Liquidity and Capital Resources” below for additional details).
We reported Net Income from Discontinued Operations, net of tax of $2.6 million during the 2024 Quarter associated with the Alkali Business that was sold on February 28, 2025.
Cash flow from operating activities was $47.0 million for the 2025 Quarter compared to $104.7 million for the 2024 Quarter. The decrease in cash flow from operating activities is primarily attributable to negative changes in working capital in the 2025 Quarter compared to the 2024 Quarter. In addition, cash flows provided by operating activities for the 2025 Quarter did not include activity from the Alkali Business, as it was sold on February 28, 2025, whereas the 2024 Quarter included a full quarter of activity from the Alkali Business.
Available Cash before Reserves (as defined below in “Non-GAAP Financial Measures”) to our common unitholders was $32.2 million for the 2025 Quarter, a decrease of $5.4 million, or 14%, from the 2024 Quarter primarily as a result of: (i) a decrease in Segment Margin of $2.0 million, which is discussed in more detail below; and (ii) the 2025 Quarter not including activity from the Alkali Business, as it was sold on February 28, 2025, whereas the 2024 Quarter included a full quarter of activity from the Alkali Business.
Segment Margin (as defined below in “Non-GAAP Financial Measures”) was $135.9 million for the 2025 Quarter, a decrease of $2.0 million, or 1%, from the 2024 Quarter. A more detailed discussion of our segment results and other costs are included below in “Results of Operations.” See “Non-GAAP Financial Measures” below for additional information on Segment Margin.
Market Update
Management’s estimates are based on numerous assumptions about future operations and market conditions, which we believe to be reasonable, but are inherently uncertain. The uncertainties underlying our assumptions could cause our estimates to differ significantly from actual results, including with respect to the duration and severity of the lasting impacts of international conflicts and the result of any economic recession or depression that has occurred or may occur in the future as a result of or as it relates to changes in governmental policies (including with respect to tariffs or proposed tariffs, taxes, duties and similar matters affecting international trade) aimed at addressing inflation or other conditions or events, which could cause fluctuations in global economic conditions, including capital and credit markets. We will continue to monitor the current market environment and to the extent conditions deteriorate, we may identify triggering events that may require future evaluations of the recoverability of the carrying value of our long-lived assets, intangible assets and goodwill, which could result in impairment charges that could be material to our results of operations.
Although the ultimate impacts of these international conflicts, changes in governmental policies (including with respect to tariffs or proposed tariffs, taxes, duties and similar matters) and fluctuations in global economic conditions, including capital and credit markets, are still unknown at this time, we believe the fundamentals of our core businesses continue to remain strong, and considering the current industry environment and capital market behavior, we have continued our focus on deleveraging our balance sheet as further explained below in “Liquidity and Capital Resources.”
Results of Operations
Revenues and Costs and Expenses
Our revenues for the 2025 Quarter decreased $52.8 million, or 12%, from the 2024 Quarter and our total costs and expenses decreased $70.8 million between the two periods with an overall net increase to operating income of $18.0 million as presented on the Unaudited Condensed Consolidated Statements of Operations. The increase in our operating income during the 2025 Quarter is primarily due to: (i) an increase in operating income from our offshore pipeline transportation segment due to the contractual minimum volume commitments (“MVC’s”) on our 100% owned SYNC Pipeline and 64% owned CHOPS Pipeline associated with the Shenandoah deepwater development and an increase in volumes on our CHOPS Pipeline primarily related to production from the Warrior and Winterfell projects, which produced first oil in late June 2024 and early July 2024, respectively; and (ii) a decrease in general and administrative expenses of $3.6 million (see further discussion below). These were partially offset by an increase in depreciation and amortization of $4.7 million during the 2025 Quarter (see further discussion below).
A substantial portion of our revenues and costs are derived from our onshore transportation and services segment, which includes the purchase and sale of crude oil in our crude oil marketing business as well as our other refinery-centric onshore operations. Additionally, our revenues and costs are derived from the operations within our offshore pipeline transportation segment and our marine transportation segment. We describe, in more detail below, the impact on revenues and costs for each of our businesses.
As it relates to our crude oil marketing business, the average closing price for West Texas Intermediate crude oil on the New York Mercantile Exchange (“NYMEX”) decreased to $64.57 per barrel in the 2025 Quarter, as compared to $81.81 per barrel in the 2024 Quarter. We expect changes in crude oil prices to continue to proportionately affect our revenues and costs attributable to our purchase and sale of crude oil, resulting in a minimal direct impact on Net income (loss), Segment Margin and Available Cash before Reserves. We have limited our direct commodity price exposure in our crude oil operations through the broad use of fee-based service contracts, back-to-back purchase and sale arrangements and hedges. As a result, changes in the price of crude oil would proportionately impact both our revenues and our costs, with a disproportionately smaller impact on Net income (loss), Segment Margin and Available Cash before Reserves. However, we do have some indirect exposure to certain changes in prices for crude oil, particularly if they are significant and extended. We tend to experience more demand for certain of our services when prices increase significantly over extended periods of time, and we tend to experience less demand for certain of our services when prices decrease significantly over extended periods of time. For additional information regarding certain of our indirect exposure to commodity prices, see our segment-by-segment analysis below and the section of our Annual Report entitled “ Risks Related to Our Business.”
We also have revenues and costs associated with our other refinery-centric operations including our sulfur services business, which we believe is one of the largest producers and marketers of NaHS in North and South America, and from our other logistical assets including pipelines, trucks, terminals, and rail unloading facilities.
We conduct our offshore crude oil and natural gas pipeline transportation and handling operations in the Gulf of America through our offshore pipeline transportation segment, which focuses on providing a suite of services to integrated and large independent energy companies who make intensive capital investments (often in excess of a billion dollars) to develop large-reservoir, long-lived crude oil and natural gas properties located primarily in offshore Texas, Louisiana and Mississippi. We own interests in various offshore crude oil and natural gas pipeline systems, platforms and related infrastructure and generate cash flows from fees to customers to utilize our assets. Our costs are primarily related to expenses incurred for the maintenance of our assets, employee compensation, and other operating costs.
Our marine transportation segment consists of (i) our inland marine fleet, which transports intermediate refined petroleum products, including asphalt, principally serving refineries and storage terminals along the Gulf Coast, Intracoastal Canal and western river systems of the U.S., primarily along the Mississippi River and its tributaries; (ii) our offshore marine fleet, which transports crude oil and refined petroleum products, principally serving refineries and storage terminals along the Gulf Coast, Eastern Seaboard, Great Lakes and Caribbean; and (iii) our modern, double-hulled tanker, M/T American Phoenix. Our revenues are driven by the demand for our barge services and associated utilization of our fleets, as well as the day rates we charge, which can be dependent upon market conditions (including supply and demand in the market), amongst other factors. Our costs are principally related to the costs required to maintain our fleets, employee compensation, and other operating costs.
Refiners are the shippers of a majority of the volumes transported on our onshore crude oil pipelines, and refiners contracted for approximately 80% of the revenues from our marine transportation segment during the 2025 Quarter, which are used primarily to transport intermediate refined products (not crude oil) between refining complexes. Given these facts, we do not expect changes in commodity prices to impact our Net income (loss), Segment Margin or Available Cash before Reserves derived from our offshore crude oil and natural gas pipeline transportation and handling operations in the same manner in which they impact our revenues and costs derived from the purchase and sale of crude oil.
Segment Margin
We define Segment Margin as revenues less product costs, operating expenses and segment general and administrative expenses (all of which are net of the effects of our noncontrolling interest holders), plus or minus applicable Select Items (defined below). Although we do not necessarily consider all of our Select Items to be non-recurring, infrequent or unusual, we believe that an understanding of these Select Items is important to the evaluation of our core operating results. See “Non-GAAP Financial Measures” for further discussion surrounding total Segment Margin.
The contribution of each of our segments to total Segment Margin was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
June 30, | | Six Months Ended
June 30, |
| | 2025 | | 2024 | | 2025 | | 2024 |
| | (in thousands) | | (in thousands) |
| Offshore pipeline transportation | $ | 87,594 | | | $ | 86,131 | | | $ | 164,142 | | | $ | 183,937 | |
| Marine transportation | 29,817 | | | 31,543 | | | 59,838 | | | 62,906 | |
| Onshore transportation and services | 18,458 | | | 20,242 | | | 33,284 | | | 38,340 | |
| Total Segment Margin | $ | 135,869 | | | $ | 137,916 | | | $ | 257,264 | | | $ | 285,183 | |
A reconciliation of Income (Loss) from continuing operations before income taxes to total Segment Margin for the periods presented is as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
June 30, | | Six Months Ended
June 30, |
| | 2025 | | 2024 | | 2025 | | 2024 |
| Income (loss) from continuing operations before income taxes | $ | 10,356 | | | $ | (3,976) | | | $ | (26,061) | | | $ | 8,186 | |
| Net income attributable to noncontrolling interests | (10,417) | | | (7,357) | | | (19,186) | | | (14,960) | |
| Corporate general and administrative expenses | 15,068 | | | 19,405 | | | 56,744 | | | 34,616 | |
| Depreciation, amortization and accretion | 59,011 | | | 53,940 | | | 118,022 | | | 106,103 | |
| Interest expense, net | 60,754 | | | 64,539 | | | 130,792 | | | 126,873 | |
Adjustment to include distributable cash generated by equity investees not included in income and exclude equity in investees net income(1) | 5,595 | | | 4,879 | | | 11,687 | | | 11,687 | |
Unrealized gains on derivative transactions excluding fair value hedges, net of changes in inventory value | (133) | | | (289) | | | (204) | | | (42) | |
| Other non-cash items | (4,229) | | | (2,474) | | | (6,951) | | | (4,601) | |
|
|
| Loss on debt extinguishment | 8,935 | | | 1,429 | | | 9,779 | | | 1,429 | |
Differences in timing of cash receipts for certain contractual arrangements(2) | (9,071) | | | 7,820 | | | (17,358) | | | 15,892 | |
|
|
|
|
| Total Segment Margin | $ | 135,869 | | | $ | 137,916 | | | $ | 257,264 | | | $ | 285,183 | |
(1)Includes distributions attributable to the quarter and received during or promptly following such quarter.
(2)Includes the difference in timing of cash receipts from or billings to 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.
Offshore Pipeline Transportation Segment
Operating results and volumetric data for our offshore pipeline transportation segment are presented below:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
June 30, | | Six Months Ended
June 30, |
| | 2025 | | 2024 | | 2025 | | 2024 |
| | (in thousands) | | (in thousands) |
| Offshore crude oil pipeline revenue, net to our ownership interest and excluding non-cash revenues | $ | 83,775 | | | $ | 80,577 | | | $ | 153,589 | | | $ | 161,982 | |
| Offshore natural gas pipeline revenue, excluding non-cash revenues | 13,210 | | | 11,507 | | | 26,005 | | | 25,837 | |
| Offshore pipeline operating costs, net to our ownership interest and excluding non-cash expenses | (26,590) | | | (22,395) | | | (50,764) | | | (43,153) | |
|
Distributions from equity investments(1) | 17,199 | | | 16,442 | | | 35,312 | | | 39,271 | |
| Offshore pipeline transportation Segment Margin | $ | 87,594 | | | $ | 86,131 | | | $ | 164,142 | | | $ | 183,937 | |
| | | | | | | |
| Volumetric Data 100% basis: | | | | | | | |
| Crude oil pipelines (average Bbls/day unless otherwise noted): | | | | | | | |
| CHOPS | 324,533 | | | 296,325 | | | 318,787 | | | 297,319 | |
| Poseidon | 248,785 | | | 280,248 | | | 246,566 | | | 286,085 | |
| Odyssey | 71,309 | | | 64,213 | | | 67,545 | | | 63,955 | |
GOPL(2) | 1,383 | | | 1,465 | | | 1,532 | | | 1,911 | |
| Total crude oil offshore pipelines | 646,010 | | | 642,251 | | | 634,430 | | | 649,270 | |
| | | | | | | |
| Natural gas transportation volumes (MMBtus/day) | 403,703 | | | 357,687 | | | 402,739 | | | 382,621 | |
| | | | | | | |
Volumetric Data net to our ownership interest(3): | | | | | | | |
| Crude oil pipelines (average Bbls/day unless otherwise noted): | | | | | | | |
| CHOPS | 207,701 | | | 189,648 | | | 204,024 | | | 190,284 | |
| Poseidon | 159,222 | | | 179,359 | | | 157,802 | | | 183,094 | |
| Odyssey | 20,680 | | | 18,622 | | | 19,588 | | | 18,547 | |
GOPL(2) | 1,383 | | | 1,465 | | | 1,532 | | | 1,911 | |
| Total crude oil offshore pipelines | 388,986 | | | 389,094 | | | 382,946 | | | 393,836 | |
| | | | | | | |
| Natural gas transportation volumes (MMBtus/day) | 104,638 | | | 102,701 | | | 104,734 | | | 109,940 | |
(1)Offshore pipeline transportation Segment Margin includes distributions received from our offshore pipeline joint ventures accounted for under the equity method of accounting for the three and six months ended June 30, 2025 and 2024.
(2)One of our wholly-owned subsidiaries (GEL Offshore Pipeline, LLC, or “GOPL”) owns our undivided interest in the Eugene Island pipeline system.
(3)Volumes are the product of our effective ownership interest throughout the period multiplied by the relevant throughput over the given period.
Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024
Offshore pipeline transportation Segment Margin for the 2025 Quarter increased $1.5 million, or 2%, from the 2024 Quarter primarily due to several factors including: (i) the commencement of contractual MVC’s on our 100% owned SYNC Pipeline and 64% owned CHOPS Pipeline associated with the deepwater Shenandoah development that began in June 2025 and contributed to our reported Segment Margin; and (ii) an increase in volumes on our CHOPS Pipeline primarily related to production from the Warrior and Winterfell projects, which produced first oil in late June 2024 and early July 2024, respectively. Production volumes from the Shenandoah floating production system (“FPS”) are life-of-lease dedicated to our 100% owned SYNC Pipeline and further downstream to our 64% owned CHOPS Pipeline. The Shenandoah FPS achieved first oil production in late July 2025, but we were able to recognize our MVC’s that began in the 2025 Quarter in Segment Margin. We expect the Shenandoah FPS to ramp up to its design capacity over the remainder of the year as the operator brings additional wells on-line.
These increases to Segment Margin in the 2025 Quarter were partially offset by: (i) an economic step-down in the rate on a certain existing life-of-lease transportation dedication; (ii) producer underperformance at several of the major fields attached to our pipeline infrastructure; 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. In addition, there was an increase in producer downtime in the 2025 Quarter relative to the 2024 Quarter as a result of several wells being shut in due to certain sub-sea operational and technical challenges. 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. Based on discussions with the producers from these impacted fields, the remediation work is nearing completion, and we expect production rates from these fields to, for the most part, return to more normalized rates by the end of the third quarter of 2025. Outside of these issues, activity in and around our Gulf of America asset base continues to be robust, including incremental in-field drilling at existing fields that tie into our infrastructure, and first oil from the Salamanca development, which is expected by the end of the third quarter of 2025.
Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024
Offshore pipeline transportation Segment Margin for the first six months of 2025 decreased $19.8 million, or 11%, from the first six months of 2024 primarily due to: (i) an economic step-down in the rate on a certain existing life-of-lease transportation dedication; (ii) producer underperformance at several of the major fields attached to our pipeline infrastructure; 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. In addition, there was an increase in producer downtime in the first six months of 2025 relative to the first six months of 2024 as a result of several wells being shut in due to certain sub-sea operational and technical challenges. 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. Based on discussions with the producers from these impacted fields, the remediation work is nearing completion, and we expect a return to more normalized production rates from these fields in the third quarter of 2025.
These decreases to Segment Margin in the first six months of 2025 compared to the first six months of 2024 were partially offset by: (i) the commencement of contractual MVC’s on our 100% owned SYNC Pipeline and 64% owned CHOPS Pipeline associated with the deepwater Shenandoah development that began in June 2025 and contributed to our reported Segment Margin; and (ii) an increase in volumes on our CHOPS Pipeline primarily related to production from the Warrior and Winterfell projects, which produced first oil in late June 2024 and early July 2024, respectively.
Marine Transportation Segment
Within our marine transportation segment, we own a fleet of 87 barges (78 inland and 9 offshore) with a combined transportation capacity of 3.0 million barrels, 43 push/tow boats (33 inland and 10 offshore), and a 330,000 barrel capacity ocean going tanker, the M/T American Phoenix. Operating results for our marine transportation segment were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Six Months Ended
June 30, |
| | 2025 | | 2024 | | 2025 | | 2024 |
| Revenues (in thousands): | | | | | | | |
| Inland freight revenues | $ | 34,252 | | | $ | 37,998 | | | $ | 67,462 | | | $ | 73,495 | |
| Offshore freight revenues | 30,784 | | | 26,054 | | | 61,776 | | | 53,350 | |
Other rebill revenues(1) | 14,581 | | | 17,819 | | | 31,023 | | | 38,600 | |
| Total segment revenues | $ | 79,617 | | | $ | 81,871 | | | $ | 160,261 | | | $ | 165,445 | |
| | | | | | | |
| Operating costs, excluding non-cash expenses (in thousands) | (49,800) | | | (50,328) | | | (100,423) | | | (102,539) | |
| | | | | | | |
| Segment Margin (in thousands) | $ | 29,817 | | | $ | 31,543 | | | $ | 59,838 | | | $ | 62,906 | |
| | | | | | | |
Fleet Utilization:(2) | | | | | | | |
| Inland Barge Utilization | 98.1 | % | | 100.0 | % | | 95.9 | % | | 100.0 | % |
| Offshore Barge Utilization | 97.3 | % | | 94.9 | % | | 96.8 | % | | 97.0 | % |
(1)Under certain of our marine contracts, we “rebill” our customers for a portion of our operating costs.
(2)Utilization rates are based on a 365-day year, as adjusted for planned downtime and dry-docking.
Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024
Marine transportation Segment Margin for the 2025 Quarter decreased $1.7 million, or 5%, from the 2024 Quarter. We experienced slightly lower utilization rates during the 2025 Quarter in our inland barge services primarily due to a slight decline in Midwest refinery demand for black oil equipment as a result of changing crude slates. This was partially offset by fewer dry-docking days in our offshore fleet during the 2025 Quarter and a higher contractual rate on our M/T American Phoenix in the 2025 Quarter as compared to the 2024 Quarter. Our offshore bluewater business began to experience pressure on day rates during the 2025 Quarter and as we entered the third quarter as certain third-party vessels were relocated to the East and Gulf coasts from the West Coast markets. While we did see some market challenges in the period, we still believe the fundamentals of our inland and offshore barge services are expected to remain strong through at least the remainder of the year.
Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024
Marine transportation Segment Margin for the first six months of 2025 decreased $3.1 million, or 5% from the first six months of 2024. We experienced slightly lower utilization rates during the first six months of 2025 in our inland barge services primarily due to a temporary decline in refinery utilization during the first quarter of 2025 and a slight decline in Midwest refinery demand for black oil equipment as a result of changing crude slates in the 2025 Quarter. This slight decline in Segment Margin was partially offset by fewer dry-docking days in our offshore fleet during the first six months of 2025 and a contractual rate increase on our M/T American Phoenix in the first six months of 2025 compared to the first six months of 2024. Our offshore bluewater business began to experience day rate pressure during the 2025 Quarter and as we entered the third quarter as certain third-party vessels were relocated to the East and Gulf coasts from the West Coast markets. While we did see some market challenges in the period, we still believe the fundamentals of our inland and offshore barge services are expected to remain strong through at least the remainder of the year.
Onshore Transportation and Services Segment
Our onshore transportation and services segment includes terminaling, blending, storing, marketing, and transporting of crude oil and petroleum products, as well as the processing of high sulfur (or “sour”) gas streams for refineries to remove the sulfur, and selling the related by-product, sodium hydrosulfide (or “NaHS,” commonly pronounced “nash”). Our onshore transportation and services segment utilizes an integrated set of pipelines, terminals, facilities, trucks and barges to facilitate the movement of crude oil, refined products, and other commodity products on behalf of producers, refiners and other customers. This segment includes crude oil and refined products pipelines, terminals, rail unloading facilities, and refinery processing locations operating primarily within the U.S. Gulf Coast market. In addition, we utilize our trucking fleet that supports the purchase and sale of gathered and bulk-purchased crude oil as well as the sale and delivery of NaHS and NaOH (also known as caustic soda) to customers. Through these assets we offer our customers a full suite of services, including the following as of June 30, 2025:
•facilitating the transportation of crude oil from producers and from our terminals, as well as those owned by third parties, to refineries via pipelines and trucks;
•purchasing/selling and/or transporting, storing, and blending crude oil from the wellhead to markets for ultimate use in refining;
•purchasing products from refiners, transporting those products to one of our terminals and blending those products to a quality that meets the requirements of our customers, storing, and selling those products (primarily fuel oil, asphalt and other heavy refined products) to wholesale markets;
•unloading railcars at our crude-by-rail terminals;
•providing sulfur removal services from crude oil processing operations at refining or petrochemical processing facilities;
•operating storage and transportation assets in relation to our sulfur removal services; and
•selling NaHS and caustic soda to large industrial and commercial companies.
We also may use our terminal facilities to take advantage of contango market conditions for crude oil gathering and marketing and to capitalize on regional opportunities which arise from time to time for both crude oil and petroleum products.
Despite crude oil being considered a somewhat homogeneous commodity, many refiners are very particular about the quality of crude oil feedstock they process. Many U.S. refineries have distinct configurations and product slates that require crude oil with specific characteristics, such as gravity, sulfur content and metals content. The refineries evaluate the costs to obtain, transport and process their preferred feedstocks. That particularity provides us with opportunities to help the refineries in our areas of operation identify crude oil sources and transport crude oil meeting their requirements. The imbalances and inefficiencies relative to meeting the refiners’ requirements may also provide opportunities for us to utilize our purchasing and logistical skills to meet their demands. The pricing in the majority of our crude oil purchase contracts contains a market price component and a deduction to cover the cost of transportation and to provide us with a margin. Contracts sometimes contain a grade differential which considers the chemical composition of the crude oil and its appeal to different customers. Typically, the pricing in a contract to sell crude oil will consist of the market price components and the grade differentials. The margin on individual transactions is then dependent on our ability to manage our transportation costs and to capitalize on grade differentials.
Operating results from our onshore transportation and services segment were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Six Months Ended
June 30, |
| | 2025 | | 2024 | | 2025 | | 2024 |
| | (in thousands) | | (in thousands) |
| Gathering, marketing and logistics revenue | $ | 112,256 | | | $ | 177,246 | | | $ | 256,235 | | | $ | 352,609 | |
| Crude oil pipeline tariffs and revenues | 6,565 | | | 6,669 | | | 11,490 | | | 13,767 | |
| Sulfur services revenues, excluding non-cash revenues | 35,585 | | | 43,487 | | | 73,438 | | | 85,890 | |
| Crude oil and products costs, excluding unrealized gains and losses from derivative transactions | (92,611) | | | (159,443) | | | (220,374) | | | (319,584) | |
| Operating costs, excluding non-cash expenses | (42,639) | | | (50,198) | | | (88,060) | | | (98,066) | |
| Other | (698) | | | 2,481 | | | 555 | | | 3,724 | |
| Segment Margin | $ | 18,458 | | | $ | 20,242 | | | $ | 33,284 | | | $ | 38,340 | |
| | | | | | | |
| Volumetric Data: | | | | | | | |
| Onshore crude oil pipelines (average Bbls/day): | | | | | | | |
| Texas | 98,626 | | | 65,229 | | | 80,377 | | | 74,923 | |
| Jay | 4,036 | | | 5,332 | | | 4,181 | | | 5,396 | |
| Mississippi | 1,059 | | | 2,789 | | | 1,124 | | | 2,800 | |
Louisiana(1) | 48,178 | | | 56,172 | | | 43,203 | | | 64,514 | |
|
|
(1)Excluded from assets in the table above are net intercompany receivables of $96.7 million that are owed to Genesis Energy, L.P. and the Guarantor Subsidiaries from the non-Guarantor Subsidiaries as of June 30, 2025.
(2)There are no noncontrolling interests held at the Issuer or Guarantor Subsidiaries for the period presented.
(3)Excluded from revenues in the table above are $1.3 million of sales from Guarantor Subsidiaries to non-Guarantor Subsidiaries for the six months ended June 30, 2025.
Non-GAAP Financial Measure Reconciliations
For definitions and discussion of our Non-GAAP financial measures refer to the “Non-GAAP Financial Measures” as later discussed and defined.
Available Cash before Reserves for the periods presented below was as follows: | | | | | | | | | | | |
| | Three Months Ended
June 30, |
| | 2025 | | 2024 |
| (in thousands) |
| Net loss attributable to Genesis Energy, L.P. | $ | (406) | | | $ | (8,744) | |
| Income tax expense | 345 | | | (11) | |
| Depreciation, amortization and accretion | 59,011 | | | 53,940 | |
|
| Plus (minus) Select Items, net | 3,195 | | | 11,937 | |
Maintenance capital utilized(1) | (14,750) | | | (18,200) | |
| Cash tax expense | (300) | | | (300) | |
| Distributions to preferred unitholders | (14,868) | | | (21,894) | |
|
Other non-cash items from discontinued operations(2) | — | | | 20,853 | |
|
| Available Cash before Reserves | $ | 32,227 | | | $ | 37,581 | |
(1)For a description of the term “maintenance capital utilized,” please see the definition of the term “Available Cash before Reserves” discussed below. Maintenance capital expenditures in the 2025 Quarter and 2024 Quarter were $16.8 million and $29.4 million, respectively, which excludes maintenance capital expenditures of $17.7 million in the 2024 Quarter associated with the Alkali Business that was sold on February 28, 2025.
(2)Includes non-cash items such as depreciation, depletion and amortization and unrealized gains or losses on derivative transactions, amongst other items.
We define Available Cash before Reserves (“Available Cash before Reserves”) as Net income (loss) attributable to Genesis Energy, L.P. before interest, taxes, depreciation, and amortization (including impairment, write-offs, accretion and similar items) after eliminating other non-cash revenues, expenses, gains, losses and charges (including any loss on asset dispositions), plus or minus certain other select items that we view as not indicative of our core operating results (collectively, “Select Items”), as adjusted for certain items, the most significant of which in the relevant reporting periods have been the sum of maintenance capital utilized, interest expense, net, cash tax expense and cash distributions attributable to our Class A Convertible Preferred unitholders. Although we do not necessarily consider all of our Select Items to be non-recurring, infrequent or unusual, we believe that an understanding of these Select Items is important to the evaluation of our core operating results. The most significant Select Items in the relevant reporting periods are set forth below.
| | | | | | | | | | | | | | |
| | Three Months Ended
June 30, |
| | 2025 | | 2024 |
| | (in thousands) |
| I. | Applicable to all Non-GAAP Measures | | | |
| Differences in timing of cash receipts for certain contractual arrangements(1) | $ | (9,071) | | | $ | 7,820 | |
|
|
| Certain non-cash items: | | | |
| Unrealized gains on derivative transactions excluding fair value hedges, net of changes in inventory value | (133) | | | (289) | |
| Loss on debt extinguishment | 8,935 | | | 1,429 | |
| Adjustment regarding equity investees(2) | 5,595 | | | 4,879 | |
| Other | (4,229) | | | (2,474) | |
| Sub-total Select Items, net | 1,097 | | | 11,365 | |
| II. | Applicable only to Available Cash before Reserves | | | |
| Certain transaction costs | 310 | | | 37 | |
|
| Other | 1,788 | | | 535 | |
| Total Select Items, net(3) | $ | 3,195 | | | $ | 11,937 | |
(1)Includes the difference in timing of cash receipts from or billings to 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.
(2)Represents the net effect of adding distributions from equity investees and deducting earnings of equity investees net to us.
(3)Represents Select Items applicable to Adjusted EBITDA and Available Cash before Reserves.
Non-GAAP Financial Measures
General
To help evaluate our business, this Quarterly Report on Form 10-Q includes the non-generally accepted accounting principle (“non-GAAP”) financial measure of Available Cash before Reserves. We also present total Segment Margin as if it were a non-GAAP measure. Our non-GAAP measures may not be comparable to similarly titled measures of other companies because such measures may include or exclude other specified items. The schedules above provide reconciliations of Available Cash before Reserves to its most directly comparable financial measures calculated in accordance with generally accepted accounting principles in the United States of America (GAAP). A reconciliation of Income (loss) from continuing operations before income taxes to total Segment Margin is included in our segment disclosure in Note 13 to our Unaudited Condensed Consolidated Financial Statements, as well as previously in this Item 2. Our non-GAAP financial measures should not be considered (i) as alternatives to GAAP measures of liquidity or financial performance or (ii) as being singularly important in any particular context; they should be considered in a broad context with other quantitative and qualitative information. Our Available Cash before Reserves and total Segment Margin measures are just two of the relevant data points considered from time to time. When evaluating our performance and making decisions regarding our future direction and actions (including making discretionary payments, such as quarterly distributions) our board of directors and management team have access to a wide range of historical and forecasted qualitative and quantitative information, such as our financial statements; operational information; various non-GAAP measures; internal forecasts; credit metrics; analyst opinions; performance; liquidity and similar measures; income (loss); cash flow expectations for us; and certain information regarding some of our peers. Additionally, our board of directors and management team analyze, and place different weight on, various factors from time to time. We believe that investors benefit from having access to the same financial measures being utilized by management, lenders, analysts and other market participants. We attempt to provide adequate information to allow each individual investor and other external user to reach her/his own conclusions regarding our actions without providing so much information as to overwhelm or confuse such investor or other external user.
Segment Margin
We define Segment Margin as revenues less product costs, operating expenses, and segment general and administrative expenses (all of which are net of the effects of our noncontrolling interest holders), plus or minus applicable Select Items (defined below) from our continuing operations. Although we do not necessarily consider all of our Select Items to be non-recurring, infrequent or unusual, we believe that an understanding of these Select Items is important to the evaluation of our core operating results. Our CODM evaluates segment performance based on a variety of measures including Segment Margin, segment volumes, and, where relevant, capital investment.
A reconciliation of Income (loss) from continuing operations before income taxes to total Segment Margin is included in our segment disclosure in Note 13 to our Unaudited Condensed Consolidated Financial Statements, as well as previously in this Item 2. Available Cash before Reserves
Purposes, Uses and Definition
Available Cash before Reserves, often referred to by others as distributable cash flow, is a quantitative standard used throughout the investment community with respect to publicly traded partnerships and is commonly used as a supplemental financial measure by management and by external users of financial statements such as investors, commercial banks, research analysts and rating agencies, to aid in assessing, among other things:
(1) the financial performance of our assets;
(2) our operating performance;
(3) the viability of potential projects, including our cash and overall return on alternative capital investments as compared to those of other companies in the midstream energy industry;
(4) the ability of our assets to generate cash sufficient to satisfy certain non-discretionary cash requirements, including interest payments and certain maintenance capital requirements; and
(5) our ability to make certain discretionary payments, such as distributions on our preferred and common units, growth capital expenditures, certain maintenance capital expenditures and early payments of indebtedness.
Disclosure Format Relating to Maintenance Capital
We use a modified format relating to maintenance capital requirements because our maintenance capital expenditures vary materially in nature (discretionary vs. non-discretionary), timing and amount from time to time. We believe that, without such modified disclosure, such changes in our maintenance capital expenditures could be confusing and potentially misleading to users of our financial information, particularly in the context of the nature and purposes of our Available Cash before Reserves measure. Our modified disclosure format provides those users with information in the form of our maintenance capital utilized measure (which we deduct to arrive at Available Cash before Reserves). Our maintenance capital utilized measure constitutes a proxy for non-discretionary maintenance capital expenditures and it takes into consideration the relationship among maintenance capital expenditures, operating expenses and depreciation from period to period.
Maintenance Capital Requirements
Maintenance capital expenditures are capitalized costs that are necessary to maintain the service capability of our existing assets, including the replacement of any system component or equipment which is worn out or obsolete. Maintenance capital expenditures can be discretionary or non-discretionary, depending on the facts and circumstances.
Prior to 2014, substantially all of our maintenance capital expenditures were (a) related to our pipeline assets and similar infrastructure, (b) non-discretionary in nature and (c) immaterial in amount as compared to our Available Cash before Reserves measure. Those historical expenditures were non-discretionary (or mandatory) in nature because we had very little (if any) discretion as to whether or when we incurred them. We had to incur them in order to continue to operate the related pipelines in a safe and reliable manner and consistently with past practices. If we had not made those expenditures, we would not have been able to continue to operate all or portions of those pipelines, which would not have been economically feasible. An example of a non-discretionary (or mandatory) maintenance capital expenditure would be replacing a segment of an old pipeline because one can no longer operate that pipeline safely, legally and/or economically in the absence of such replacement.
Beginning with 2014, we believe a substantial amount of our maintenance capital expenditures from time to time have been and will continue to be (a) related to our assets other than pipelines, such as our marine vessels, trucks and similar assets, (b) discretionary in nature and (c) potentially material in amount as compared to our Available Cash before Reserves measure. Those expenditures will be discretionary (or non-mandatory) in nature because we will have significant discretion as to whether or when we incur them. We will not be forced to incur them in order to continue to operate the related assets in a safe and reliable manner. If we chose not to make those expenditures, we would be able to continue to operate those assets economically, although in lieu of maintenance capital expenditures, we would incur increased operating expenses, including maintenance expenses. An example of a discretionary (or non-mandatory) maintenance capital expenditure would be replacing an older marine vessel with a new marine vessel with substantially similar specifications, even though one could continue to economically operate the older vessel in spite of its increasing maintenance and other operating expenses.
In summary, as we continue to expand certain non-pipeline portions of our business, we are experiencing changes in the nature (discretionary vs. non-discretionary), timing and amount of our maintenance capital expenditures that merit a more detailed review and analysis than was required historically. Management’s increasing ability to determine if and when to incur certain maintenance capital expenditures is relevant to the manner in which we analyze aspects of our business relating to discretionary and non-discretionary expenditures. We believe it would be inappropriate to derive our Available Cash before Reserves measure by deducting discretionary maintenance capital expenditures, which we believe are similar in nature in this context to certain other discretionary expenditures, such as growth capital expenditures, distributions/dividends and equity buybacks. Unfortunately, not all maintenance capital expenditures are clearly discretionary or non-discretionary in nature. Therefore, we developed a measure, maintenance capital utilized, that we believe is more useful in the determination of Available Cash before Reserves.
Maintenance Capital Utilized
We believe our maintenance capital utilized measure is the most useful quarterly maintenance capital requirements measure to use to derive our Available Cash before Reserves measure. We define our maintenance capital utilized measure as that portion of the amount of previously incurred maintenance capital expenditures that we utilize during the relevant quarter, which would be equal to the sum of the maintenance capital expenditures we have incurred for each project/component in prior quarters allocated ratably over the useful lives of those projects/components.
Our maintenance capital utilized measure constitutes a proxy for non-discretionary maintenance capital expenditures and it takes into consideration the relationship among maintenance capital expenditures, operating expenses and depreciation from period to period. Because we did not initially use our maintenance capital utilized measure before 2014, our maintenance capital utilized calculations will reflect the utilization of solely those maintenance capital expenditures incurred since December 31, 2013.
Critical Accounting Estimates
There have been no new or material changes to the critical accounting estimates discussed in our Annual Report that are of significance, or potential significance, to the Company.
Forward Looking Statements
The statements in this Quarterly Report on Form 10-Q that are not historical information may be “forward looking statements” as defined under federal law. All statements, other than historical facts, included in this document that address activities, events or developments that we expect or anticipate will or may occur in the future, including things such as plans for growth of the business, future capital expenditures, competitive strengths, goals, references to future goals or intentions, estimated or projected future financial performance, and other such references are forward-looking statements, and historical performance is not necessarily indicative of future performance. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. They use words such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “could,” “plan,” “position,” “projection,” “strategy,” “should” or “will,” or the negative of those terms or other variations of them or by comparable terminology. In particular, statements, expressed or implied, concerning future actions, conditions or events (including production rates and other conditions and events), future operating results, the ability to generate sales, income or cash flow, the timing and anticipated benefits of our development projects and the expected performance of our offshore assets and other projects and business segments, the ability to simplify our capital structure and lower our cost of capital, and the availability of borrowing capacity to fund our growth capital expenditures are forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond our ability or the ability of our affiliates to control or predict. Specific factors that could cause actual results to differ from those in the forward-looking statements include, among others:
•demand for, the supply of, our assumptions about, changes in forecast data for, and price trends related to crude oil, liquid petroleum, natural gas, NaHS, and caustic soda, all of which may be affected by economic activity, capital expenditures and operational and technical issues experienced by energy producers, weather, alternative energy sources, international conflicts and international events (including the war in Ukraine, the Israel and Hamas war and broader geopolitical tensions in the Middle East and Eastern Europe), global pandemics, inflation, the actions of OPEC and other oil exporting nations, conservation and technological advances;
•our ability to successfully execute our business and financial strategies;
•our ability to continue to realize cost savings from our cost saving measures;
•throughput levels and rates;
•changes in, or challenges to, our tariff rates;
•our ability to successfully identify and close strategic acquisitions on acceptable terms (including obtaining third-party consents and waivers of preferential rights), develop or construct infrastructure assets, make cost saving changes in operations and integrate acquired assets or businesses into our existing operations;
•service interruptions in our pipeline transportation systems or processing operations, including due to adverse weather events;
•shutdowns or cutbacks at refineries, petrochemical plants, utilities, individual plants, or other businesses for which we transport crude oil, petroleum, natural gas or other products or to whom we sell petroleum or other products;
•risks inherent in marine transportation and vessel operation, including accidents and discharge of pollutants;
•changes in laws and regulations to which we are subject, including tax withholding issues, regulations regarding qualifying income, accounting pronouncements, and safety, environmental and employment laws and regulations;
•the effects of production declines resulting from a suspension of drilling in the Gulf of America or otherwise;
•the effects of future laws and regulations, including increased tariffs and proposed tariffs, taxes, duties and similar matters affecting international trade;
•planned capital expenditures and availability of capital resources to fund capital expenditures, and our ability to access the credit and capital markets to obtain financing on terms we deem acceptable;
•our inability to borrow or otherwise access funds needed for operations, expansions or capital expenditures as a result of our credit agreement and the indentures governing our notes, which contain various affirmative and negative covenants;
•loss of key personnel;
•cash from operations that we generate could decrease or fail to meet expectations, either of which could reduce our ability to pay quarterly cash distributions (common and preferred) at the current level or to increase quarterly cash distributions in the future;
•an increase in the competition that our operations encounter;
•cost and availability of insurance;
•hazards and operating risks that may not be covered fully by insurance;
•our financial and commodity hedging arrangements, which may reduce our earnings, profitability and cash flow;
•changes in global economic conditions, including capital and credit markets conditions, inflation and interest rates, including the result of any economic recession or depression that has occurred or may occur in the future;
•the impact of natural disasters, international military conflicts (such as the war in Ukraine, the Israel and Hamas war and broader geopolitical tensions in the Middle East and Eastern Europe), global pandemics, epidemics, accidents or terrorism, and actions taken by governmental authorities and other third parties in response thereto, on our business financial condition and results of operations;
•reduction in demand for our services resulting in impairments of our assets;
•changes in the financial condition of customers or counterparties;
•adverse rulings, judgments, or settlements in litigation or other legal or tax matters;
•the treatment of us as a corporation for federal income tax purposes or if we become subject to entity-level taxation for state tax purposes;
•the potential that our internal controls may not be adequate, weaknesses may be discovered or remediation of any identified weaknesses may not be successful and the impact these could have on our unit price; and
•a cyberattack involving our information systems and related infrastructure, or that of our business associates.
You should not put undue reliance on any forward-looking statements. When considering forward-looking statements, please review the risk factors described under “Risk Factors” discussed in Item 1A of our Annual Report . These risks may also be specifically described in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K (or any amendments to those reports) and other documents that we may file from time to time with the SEC. New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. Except as required by applicable securities laws, we do not intend to update these forward-looking statements and information.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The following should be read in conjunction with Quantitative and Qualitative Disclosures About Market Risk included under Item 7A in our Annual Report. There have been no material changes that would affect the quantitative and qualitative disclosures provided therein. Also, see Note 16 to our Unaudited Condensed Consolidated Financial Statements for additional discussion related to derivative instruments and hedging activities. Item 4. Controls and Procedures
We maintain disclosure controls and procedures and internal controls designed to ensure that information required to be disclosed in our filings as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Our chief executive officer and chief financial officer, with the participation of our management, have evaluated our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q and have determined that such disclosure controls and procedures are effective in ensuring that material information required to be disclosed in this Quarterly Report on Form 10-Q is accumulated and communicated to them and our management to allow timely decisions regarding required disclosures.
There were no changes during the three months ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Information with respect to this item has been incorporated by reference from our Annual Report. There have been no material developments in legal proceedings since the filing of such Form 10-K.
Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe will exceed a specified threshold. Pursuant to recent SEC amendments to this item, we will be using a threshold of $1 million for such proceedings. We believe that such threshold is reasonably designed to result in disclosure of environmental proceedings that are material to our business or financial condition. Applying this threshold, there are no environmental matters to disclose for this period.
Item 1A. Risk Factors
There has been no material change in our risk factors as previously disclosed in our Annual Report.
For additional information about our risk factors, see Item 1A of our Annual Report, as well as any other risk factors contained in other filings with the SEC, including Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Form 8-K/A and other documents that we may file from time to time with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no sales of unregistered equity securities during the 2025 Quarter.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
We sold our mine in Green River, Wyoming on February 28, 2025, and therefore are no longer required to provide information required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104).
Item 5. Other Information
.
Item 6. Exhibits.
(a) Exhibits
| | | | | | | | | | | |
| 2.1# | | Membership Interest Purchase Agreement, dated February 28, 2025, by and among Genesis Energy, L.P., Genesis Alkali Holdings, LLC, Genesis Alkali Holdings Company, LLC, Ciner Enterprises Inc., and WE Soda US LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated February 27, 2025, File No. 001-12295). |
| 3.1 | | Certificate of Limited Partnership of Genesis Energy, L.P. (incorporated by reference to Exhibit 3.1 to Amendment No. 2 of the Registration Statement on Form S-1 filed on November 15, 1996, File No. 333-11545). |
| 3.2 | | |
| 3.3 | | |
| 3.4 | | |
| 3.5 | | |
| 3.6 | | |
| 3.7 | | |
| 4.1 | | |
|
|
|
|
|
| * | 31.1 | | |
| * | 31.2 | | |
| * | 32 | | |
|
| 101.INS | | XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | | XBRL Schema Document. |
| 101.CAL | | XBRL Calculation Linkbase Document. |
| 101.LAB | | XBRL Label Linkbase Document. |
| 101.PRE | | XBRL Presentation Linkbase Document. |
| 101.DEF | | XBRL Definition Linkbase Document. |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL). |
| | | | | |
| * | Filed herewith |
| # | Exhibits and Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | |
| | GENESIS ENERGY, L.P.
(A Delaware Limited Partnership) |
| | |
| By: | GENESIS ENERGY, LLC,
as General Partner |
| | | | | | | | | | | |
| Date: | July 31, 2025 | By: | /s/ KRISTEN O. JESULAITIS |
| | | Kristen O. Jesulaitis |
| | | Chief Financial Officer |
| | | (Duly Authorized Officer) |
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