Genesis Energy, L.P. Reports First Quarter 2025 Results

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

We generated the following financial results for the first quarter of 2025:

• Net Loss Attributable to Genesis Energy, L.P. of $469.1 million for the first quarter of 2025 compared to Net Income Attributable to Genesis Energy, L.P. of $11.4 million for the same period in 2024.
• Cash Flows from Operating Activities of $24.8 million for the first quarter of 2025 compared to $125.9 million for the same period in 2024.
• We declared cash distributions on our preferred units of $0.9473 for each preferred unit, which equates to a cash distribution of approximately $19.9 million (of which $5.1 million was paid in March 2025) and is reflected as a reduction to Available Cash before Reserves to common unitholders.
• Available Cash before Reserves to common unitholders of $20.3 million for the first quarter of 2025, which provided 1.01X coverage for the quarterly distribution of $0.165 per common unit attributable to the first quarter.
• Total Segment Margin of $121.4 million for the first quarter of 2025.
• Adjusted EBITDA of $131.7 million for the first quarter of 2025.
• Adjusted Consolidated EBITDA of $555.4 million for the trailing twelve months ended March 31, 2025 and a bank leverage ratio of 5.49X, both calculated in accordance with our senior secured credit agreement and discussed further in this release.

Grant Sims, CEO of Genesis Energy, said, “The first quarter of 2025 was indeed a busy and successful quarter for Genesis as we exited our soda ash business and used the net proceeds from the sale to simplify our balance sheet and significantly reduce our cost of capital. While the results from our remaining businesses during the quarter came in slightly below our original expectations, I am happy to report we have successfully reached our targeted inflection point where our capital-intensive growth projects in the Gulf of America are all but complete and paid for, and we are now in a position to generate cash in excess of the ongoing cash costs of running our businesses.

For those who might have missed it, in early March we announced that we had closed the sale of our soda ash business to an indirect affiliate of WE Soda Ltd for an implied enterprise value of $1.425 billion, inclusive of working capital at closing. The ORRI bonds, with approximately $413 million outstanding as of the transaction date, remained an ongoing obligation of the purchaser which allowed Genesis to receive approximately $1.0 billion in cash after our associated transaction costs and expenses. We used the net proceeds to pay our senior secured revolving credit facility to zero, call and redeem our remaining 8.0% senior unsecured notes due 2027 and repurchase $250 million of our Class A Convertible Preferred Units. These actions, combined with the cash savings of approximately $37 million of annual principal and interest payments due under the ORRI bonds, allowed us to reduce the annual cash cost on the capital underlying our remaining businesses by more than $120 million annually. When combined with the $70-$80 million of capital we were spending to maintain the soda ash business each year, we have cumulatively been able to reduce the ongoing cash cost of running our business to some $425 – $450 million per year.

Turning to our offshore expansion projects, I can now report that the Shenandoah production facility was successfully moored to the sea floor at its intended location in the Gulf of America in April. We anticipate commissioning our new SYNC pipeline towards the end of this month and expect volumes from Shenandoah to begin sometime in June and ramp over the subsequent few months, if not quicker. Salamanca, which is running about 4 to 6 weeks behind Shenandoah, primarily due to utilizing the same transportation and installation support vessels, left Ingleside, Texas on April 22nd and is anticipated to arrive at its final location any day now. Upon its arrival, the operator will finalize their connection to our existing SEKCO pipeline in advance of first oil in the third quarter. Similar to Shenandoah, we expect production from Salamanca to ramp over the subsequent few months, if not quicker, and be an integral part of the Genesis growth story moving forward.

With the imminent startup of these two new upstream developments, the strategic actions we took this past quarter with the sale of the soda ash business and the absence of any significant future growth capital expenditures, Genesis is increasingly well positioned to create long-term value for all of our stakeholders. With our nearest unsecured maturity not until early 2028, more than two and a half years away, the partnership has significant financial flexibility and more than adequate liquidity to allocate this anticipated cash flow towards an all of the above approach, including continuing to redeem our high-cost corporate preferred units, paying down absolute amounts of debt as well as considering increased distributions to our common unitholders in future quarters.

With that, I will briefly discuss our individual business segments in more detail.

In our offshore pipeline transportation segment, we continue to be negatively impacted by ongoing producer-related mechanical issues that are still affecting a number of wells at three of the major fields attached to our pipeline infrastructure. We remain in active communication with our producer customers and are encouraged they all have deepwater drilling rigs on location that are actively working to remediate these impacted wells in conjunction with drilling new development wells that will be tied into these existing production facilities. As we sit here today, I am happy to report that the volumes from these impacted fields as we exited the first quarter were greater than what we saw exiting last year. Based on recent conversations with the operators, we reasonably expect to see this upward trend continue in the coming months, with the expectation of being back at, or near, expected volume levels as we exit the second quarter, but most certainly by the end of the third quarter.

As we look ahead, we now have pre-built capacity available on both our new SYNC pipeline and our recently expanded CHOPS pipeline system to attract additional volumes. We continue to have robust commercial discussions with multiple additional in-field, sub-sea and/or secondary recovery development opportunities that could turn to additional volumes over the next few years, all of which have been identified but not fully sanctioned by the producers and operators involved. To the extent we are successful in attracting any of these new volumes to this available capacity, we will be able to add significant additional offshore pipeline transportation Segment Margin in the coming years without having to spend any growth capital. The combination of these two new developments coming on-line in the near future, the restoration of the impacted high margin volumes, and the opportunity to add additional new volumes without having to spend any additional growth capital, should all combine to deliver sequentially increasing results from our offshore pipeline transportation segment in the coming years.

Our marine transportation segment continued to perform as expected through the first quarter. Market dynamics remain constructive, with little to no new net supply additions of Jones Act tonnage as most of the new barge construction is being built to replace older equipment that has been or will be retired in the near future. Against this backdrop, demand has remained relatively stable, resulting in high utilization levels and steady to increasing day rates across our fleet. We continue to monitor refinery utilization rates in both PADD II & PADD III as they remain the primary drivers of activity levels in our inland or brown water fleet. Activity levels in our offshore or blue water fleet continue to be supported by the steady demand to move refined products from the Gulf Coast to undersupplied markets along the Mid-Atlantic and East coast. We continue to maintain a constructive outlook for our marine transportation segment over the near- to- medium term and believe our mix of term and spot business amongst our inland and offshore fleets, combined with the long-term contract of the American Phoenix, should provide for steady to increasing financial results from our marine transportation segment in the quarters and years ahead.

The onshore transportation and services segment, which includes our legacy refinery services business and our previously reported onshore facilities and transportation segment, performed in line with our expectations during the quarter. We continue to expect to see steady volumes across our onshore pipeline systems along with a marginal increase in volumes through our onshore terminals in both Texas City, Texas and Raceland, Louisiana as new volumes come on-line from both Shenandoah and Salamanca in the second half of the year. Our legacy refinery service business performed in-line with expectations as we saw steady operating performance by our host refineries during the first quarter.

Touching quickly on the remainder of the year. Given the current market backdrop, the expected step change anticipated in our offshore pipeline transportation segment and steady performance from our other two segments, we would reasonably expect to be able to generate Adjusted EBITDA⁽¹⁾ in 2025 in the range of $545 – $575 million. The variability in the range is primarily driven by the timing around the resolution of the mechanical issues at the impacted offshore fields and the rate at which Shenandoah and Salamanca actually ramp to their anticipated production levels.

Given recent equity and bond market volatility, I wanted to reassure our investors that we do not anticipate seeing any significant, much less material, impact from proposed or increased tariffs, slowing economic activity, relatively low oil prices or other current macro-economic headwinds. Our big offshore capital projects, where we did in fact source certain materials internationally, are behind us. We believe it would take a significant, and lasting, slowdown in the domestic economy to affect the demand for Jones Act tonnage to the point of loosening the market fundamentals in the marine transportation business, especially given the continuing retirement of older vessels and virtually no new construction. We do not anticipate any significant effects on our onshore transportation and services businesses, and even if there were, it is such a small part of our business that any potential drag would be de minimus relative to our consolidated financial performance.

Most importantly, we do not believe the recent fluctuations in commodity prices will have any impact, whatsoever, on the activity levels of our producer customers in the Gulf of America. Deepwater developments are capital intensive and are designed to produce for twenty, thirty or forty plus years. Investment decisions are not made on the next twelve-month strip of oil prices. Once the billions of dollars have been spent, the producers are incentivized to maximize production, given the relatively low marginal lifting costs when measured against the fixed or sunk costs. We have seen time and time again that producers in the Gulf of America have not significantly modified or altered their ongoing activity levels, outside of potentially adjusting the timing of some pre-planned maintenance schedules, in response to short-term changes in commodity prices. There is absolutely no reason to expect this time to be any different. Regardless of short-term macro headwinds, it is inconceivable that oil prices are going to stay at $50 to $60 per barrel for the next thirty or forty years, and therefore we believe the future in the deepwater Gulf of America remains exciting.

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. We are excited about refocusing our efforts on our core midstream business and could not be more encouraged with what lies ahead for the partnership in this next exciting chapter in our lifecycle. 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.”

Financial Results

Segment Margin

Segment Margin

In the first quarter of 2025, we reorganized our operating segments as a result of the way our chief operating decision maker (our Chief Executive Officer) evaluates the performance of operations, develops strategy and allocates resources, including capital. Our sulfur services business, formerly reported under our Soda and Sulfur Services reporting segment with our trona and trona-based exploring, mining, processing, producing, marketing, logistics and selling business based in Wyoming (the “Alkali Business”), is now reported under our onshore transportation and services reporting segment along with our previously reported onshore facilities and transportation segment. As a result of this change, we now manage our businesses through the following three divisions that constitute our reportable segments:

• Offshore pipeline transportation, which includes the transportation and processing of crude oil and natural gas in the Gulf of America;
• Marine transportation to provide waterborne transportation of petroleum products (primarily fuel oil, asphalt and other heavy refined products) and crude oil throughout North America; and
• Onshore transportation and services, which includes terminaling, blending, storing, marketing, and transporting 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”).

Variances between the first quarter of 2025 (the “2025 Quarter”) and the first quarter of 2024 (the “2024 Quarter”) in these components are explained below.

Segment Margin results for the 2025 Quarter and 2024 Quarter were as follows:

Offshore pipeline transportation Segment Margin for the 2025 Quarter decreased $21.3 million, or 22%, from the 2024 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 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 first encountered in the third 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. 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 by 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 new developments such as Salamanca and Shenandoah, which is expected in mid-2025.

Marine transportation Segment Margin for the 2025 Quarter decreased $1.3 million, or 4%, from the 2024 Quarter. We experienced slightly lower utilization rates during the 2025 Quarter in our inland barge service as a result of a temporary decline in refinery utilization during the first half of the period which recovered by the time we exited the 2025 Quarter. We expect demand for our service to remain strong throughout at least the remainder of 2025 as a result of the continued 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. This slight decline was partially offset by a contractual rate increase on our M/T American Phoenix during the 2025 Quarter.

Onshore transportation and services Segment Margin for the 2025 Quarter decreased $3.3 million, or 18%, from the 2024 Quarter primarily due to lower NaHS and caustic soda sales volumes and an overall decrease in volumes on our onshore crude oil pipeline systems. This decrease was partially offset by an increase in the rail unload volumes at our Scenic Station facility in the 2025 Quarter.

Other Components of Net Income (Loss)

We reported Net Loss from Continuing Operations of $36.6 million in the 2025 Quarter compared to Net Income from Continuing Operations of $11.4 million in the 2024 Quarter.

Net Loss from Continuing Operations in the 2025 Quarter was impacted by: (i) an increase in general and administrative expenses of $25.9 million primarily related to transaction costs associated with the sale of the Alkali Business during the 2025 Quarter; (ii) an increase in interest expense, net, of $7.7 million; (iii) an increase in depreciation and amortization of $6.8 million; and (iv) a decrease in equity in earnings from our equity investments of $3.9 million.

We reported Net Loss from Discontinued Operations, net of tax of $423.7 million during the 2025 Quarter compared to Net Income from Discontinued Operations, net of tax of $7.6 million during the 2024 Quarter. Net Loss from Discontinued Operations, net of tax in the 2025 Quarter was impacted by a loss from the sale of the Alkali Business reported in the period.

Earnings Conference Call

We will broadcast our Earnings Conference Call on Thursday, May 8, 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, marine transportation and onshore transportation and services. Genesis’ operations are primarily located in the Gulf of America and in the Gulf Coast region of the United States.

Contacts

Genesis Energy, L.P.

Dwayne Morley

Vice President – Investor Relations

(713) 860-2536

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