Genesis Energy LP
05/07/2026 | Press release | Distributed by Public on 05/07/2026 11:10
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
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 $19.1 million during the three months ended March 31, 2026 (the "2026 Quarter") compared to Net Loss from Continuing Operations of $36.6 million during the three months ended March 31, 2025 (the "2025 Quarter").
Net Income from Continuing Operations in the 2026 Quarter was impacted by: (i) an increase in operating income from our reportable segments, primarily from our offshore pipeline transportation segment (see "Results of Operations" below for additional details); (ii) a decrease in general and administrative expenses of $23.1 million (see "Results of Operations" below for additional details); and (iii) a decrease in interest expense, net of $2.1 million (see "Results of Operations" below for additional details). This increase was partially offset by: (i) an increase in other expense of $2.7 million primarily related to the write-off of unamortized issuance costs and the tender premium associated with the redemption of our 2028 Notes in March 2026 (see "Liquidity and Capital Resources" below for additional details); and (ii) an increase in depreciation and amortization of $2.7 million during the 2026 Quarter (see "Results of Operations" below for additional details).
We reported Net Loss from Discontinued Operations, net of tax of $423.7 million during the 2025 Quarter associated with the Alkali Business that was sold on February 28, 2025.
Cash flow from operating activities was $81.7 million for the 2026 Quarter compared to $24.8 million for the 2025 Quarter. The increase in cash flow from operating activities is primarily attributable to an increase in Segment Margin in the 2026 Quarter compared to the 2025 Quarter (as discussed further below) and positive changes in working capital in the 2026 Quarter compared to the 2025 Quarter. Partially offsetting these increases was the absence of cash flows provided by operating activities from the Alkali Business in the 2026 Quarter, as it was sold on February 28, 2025, whereas the 2025 Quarter included two months of activity from the Alkali Business.
Available Cash before Reserves (as defined below in "Non-GAAP Financial Measures") to our common unitholders was $43.8 million for the 2026 Quarter, an increase of $23.4 million, or 115%, from the 2025 Quarter primarily as a result of: (i) an increase in Segment Margin of $35.0 million, which is discussed in more detail below; and (ii) a decrease in accumulated distributions to our Class A Convertible Preferred unitholders of $6.4 million. Partially offsetting these increases was the exclusion of activity in the 2026 Quarter from the Alkali Business, as it was sold on February 28, 2025, whereas the 2025 Quarter included two months of activity from the Alkali Business.
Segment Margin (as defined below in "Non-GAAP Financial Measures") was $156.4 million for the 2026 Quarter, an increase of $35.0 million, or 29%, from the 2025 Quarter. A more detailed discussion of our segment results and other costs is 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, the result of any economic recession or depression that has occurred or may occur in the future, or the impact of 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 and commodity prices. 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 and commodity prices, 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 2026 Quarter increased $48.2 million, or 12%, from the 2025 Quarter and our total costs and expenses decreased $6.4 million, or 2%, between the two periods with an overall increase to operating income of $54.6 million as presented on the Unaudited Condensed Consolidated Statements of Operations. The increase in our operating income during the 2026 Quarter is primarily due to: (i) an increase in volumes and revenues across our offshore pipeline transportation network (see further discussion below); and (ii) a decrease in general and administrative expenses of $23.1 million during the 2026 Quarter (see further discussion below). These were partially offset by an increase in depreciation and amortization of $2.7 million during the 2026 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 onshore refinery-centric operations. Additionally, our revenues and costs are derived from the operations within our offshore pipeline transportation segment and our marine transportation segment. We describe the impact on revenues and costs for each of our businesses in more detail below.
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") increased to $72.74 per barrel in the 2026 Quarter (and exited the 2026 Quarter with crude oil prices above $100 per barrel), as compared to $71.78 per barrel in the 2025 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. The majority of operating costs in our offshore pipeline transportation segment are not directly correlated with crude oil prices. 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.
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, the 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. The majority of operating costs in our marine transportation segment are not directly correlated with crude oil prices.
Refiners are the shippers of a majority of the volumes transported on our onshore crude oil pipelines. Additionally, refiners contracted for the majority of the revenues from our marine transportation segment during the 2026 Quarter as the vessels in our marine transportation segment are used primarily to transport intermediate refined products (not crude oil) between refining complexes.
Included below is additional detailed discussion of the results of our operations focusing on Segment Margin and other costs including general and administrative expenses, depreciation and amortization, interest expense, net, and income taxes.
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 in "Non-GAAP Financial Measures") from 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. 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 March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Offshore pipeline transportation | $ | 107,088 | $ | 76,548 | |||||||
| Marine transportation | 27,917 | 30,021 | |||||||||
| Onshore transportation and services | 21,435 | 14,826 | |||||||||
| Total Segment Margin | $ | 156,440 | $ | 121,395 | |||||||
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 March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| Income (loss) from continuing operations before income taxes | $ | 19,257 | $ | (36,417) | |||||||
| Net income attributable to noncontrolling interests | (12,345) | (8,769) | |||||||||
| Corporate general and administrative expenses | 17,238 | 41,676 | |||||||||
| Depreciation, amortization and accretion | 61,148 | 59,011 | |||||||||
| Interest expense, net | 67,978 | 70,038 | |||||||||
|
Adjustment to include distributable cash generated by equity investees not included in income and exclude equity in investees net income(1)
|
5,521 | 6,092 | |||||||||
|
Unrealized losses (gains) on derivative transactions excluding fair value hedges, net of changes in inventory value
|
815 | (71) | |||||||||
| Other non-cash items | (4,618) | (2,722) | |||||||||
| Loss on debt extinguishment | 3,540 | 844 | |||||||||
|
Differences in timing of cash receipts for certain contractual arrangements(2)
|
(2,094) | (8,287) | |||||||||
| Total Segment Margin | $ | 156,440 | $ | 121,395 | |||||||
(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 March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Offshore crude oil pipeline revenue, net to our ownership interest and excluding non-cash revenues | $ | 107,203 | $ | 69,814 | |||||||
| Offshore natural gas pipeline revenue, excluding non-cash revenues | 13,671 | 12,795 | |||||||||
|
Offshore pipeline operating costs, net to our ownership interest and excluding non-cash expenses(1)
|
(32,645) | (24,174) | |||||||||
|
Distributions from equity investments(2)
|
18,859 | 18,113 | |||||||||
| Offshore pipeline transportation Segment Margin | $ | 107,088 | $ | 76,548 | |||||||
| Volumetric Data 100% basis: | |||||||||||
| Crude oil pipelines (average Bbls/day unless otherwise noted): | |||||||||||
| CHOPS | 425,247 | 312,976 | |||||||||
| Poseidon | 269,827 | 244,323 | |||||||||
| Odyssey | 65,750 | 63,738 | |||||||||
|
GOPL(3)
|
1,402 | 1,682 | |||||||||
| Total crude oil offshore pipelines | 762,226 | 622,719 | |||||||||
| Natural gas transportation volumes (MMBtus/day) | 391,922 | 401,764 | |||||||||
|
Volumetric Data net to our ownership interest(4):
|
|||||||||||
| Crude oil pipelines (average Bbls/day unless otherwise noted): | |||||||||||
| CHOPS | 272,158 | 200,305 | |||||||||
| Poseidon | 172,689 | 156,367 | |||||||||
| Odyssey | 19,068 | 18,484 | |||||||||
|
GOPL(3)
|
1,402 | 1,682 | |||||||||
| Total crude oil offshore pipelines | 465,317 | 376,838 | |||||||||
| Natural gas transportation volumes (MMBtus/day) | 115,663 | 104,831 | |||||||||
(1)The increase in operating costs is primarily related to an increase in costs associated with accommodating our higher level of volumes in the 2026 Quarter, such as fuel and drag reducing agent costs, which are often rebilled to the associated producers and do not have a significant impact to our Segment Margin.
(2)Offshore pipeline transportation Segment Margin includes distributions received from our offshore pipeline joint ventures accounted for under the equity method of accounting for the 2026 Quarter and the 2025 Quarter.
(3)One of our wholly-owned subsidiaries (GEL Offshore Pipeline, LLC, or "GOPL") owns our undivided interest in the Eugene Island pipeline system.
(4)Volumes are the product of our effective ownership interest throughout the period multiplied by the relevant throughput over the given period.
Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025
Offshore pipeline transportation Segment Margin for the 2026 Quarter increased $30.5 million, or 40%, from the 2025 Quarter primarily due to: (i) production volumes associated with the deepwater Shenandoah floating production system ("FPS"), which ties into our 100% owned SYNC Pipeline for further transportation downstream to our 64% owned CHOPS Pipeline, that began producing in July 2025; and (ii) production volumes from the Salamanca FPS, which ties into our existing 100% owned SEKCO Pipeline for further transportation downstream on our 64% owned Poseidon Pipeline, that began producing in September 2025. In addition, the 2025 Quarter was impacted by producer downtime from several wells being shut in due to certain sub-sea
operational and technical challenges, which were mostly resolved by our producer customers as we exited 2025. These increases to the 2026 Quarter were partially offset by a scheduled turnaround at a key third party production platform, which was completed in early April.
Despite some of the planned and unplanned downtime experienced in the 2026 Quarter, activity in and around our Gulf of America asset base continues to be robust. During the 2026 Quarter, a fourth well at the Salamanca FPS was successfully brought online with a fifth well expected to be drilled towards the end of 2026 or early 2027. In addition, the Monument development, a two-well sub-sea tieback to the Shenandoah FPS with production dedicated to our 100% owned SYNC Pipeline for further transportation downstream to our 64% owned CHOPS Pipeline, is expected to have first production in the fourth quarter of 2026.
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 March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| Revenues (in thousands): | |||||||||||
| Inland freight revenues | $ | 32,800 | $ | 33,210 | |||||||
| Offshore freight revenues | 29,741 | 30,992 | |||||||||
|
Other rebill revenues(1)
|
17,504 | 16,442 | |||||||||
| Total segment revenues | $ | 80,045 | $ | 80,644 | |||||||
| Operating costs, excluding non-cash expenses (in thousands) | (52,128) | (50,623) | |||||||||
| Segment Margin (in thousands) | $ | 27,917 | $ | 30,021 | |||||||
|
Fleet Utilization:(2)
|
|||||||||||
| Inland Barge Utilization | 95.9 | % | 93.6 | % | |||||||
| Offshore Barge Utilization | 99.1 | % | 96.2 | % | |||||||
(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-dockings.
Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025
Marine transportation Segment Margin for the 2026 Quarter decreased $2.1 million, or 7% from the 2025 Quarter primarily due to slightly lower day rates in our inland barge business during the 2026 Quarter and the impacts to our offshore barge business as a result of planned dry-dockings in our offshore fleet during the 2026 Quarter. During the third quarter of 2025, we experienced a decline in day rates due to a decrease in Midwest refinery demand for black oil equipment as a result of changing crude slates. Day rates have recovered at a slower pace than anticipated, and rates in the 2026 Quarter have not reached the levels we saw in the 2025 Quarter. In our offshore barge business, revenues for the 2026 Quarter were impacted by several required and planned regulatory dry-dockings, which included the dry-docking of one of our two largest vessels that is expected to be completed in the second quarter of 2026. These decreases in Segment Margin were partially offset by an increase in adjusted utilization from our inland and offshore fleets and a contractual rate increase on our M/T American Phoenix during the 2026 Quarter compared to the 2025 Quarter.
Onshore Transportation and Services Segment
Our onshore transportation and services segment includes terminaling, blending, storing, and marketing of crude oil, and transporting of crude oil and refined 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, storage tanks, terminals, facilities, trucks and barges to facilitate the movement of crude oil and refined 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 March 31, 2026:
•facilitating the transportation of crude oil and refined products 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 March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Gathering, marketing and logistics revenue | $ | 160,466 | $ | 143,979 | |||||||
| Crude oil pipeline tariffs and revenues | 8,205 | 4,925 | |||||||||
| Sulfur services revenues, excluding non-cash revenues | 33,475 | 37,853 | |||||||||
| Crude oil and products costs, excluding unrealized gains and losses from derivative transactions | (139,824) | (127,763) | |||||||||
| Operating costs, excluding non-cash expenses | (43,256) | (45,421) | |||||||||
| Other | 2,369 | 1,253 | |||||||||
| Segment Margin | $ | 21,435 | $ | 14,826 | |||||||
| Volumetric Data: | |||||||||||
| Onshore crude oil pipelines (average Bbls/day): | |||||||||||
| Texas | 119,998 | 61,924 | |||||||||
| Jay | 8,683 | 4,328 | |||||||||
| Mississippi | 1,016 | 1,189 | |||||||||
|
Louisiana(1)
|
60,548 | 38,173 | |||||||||
| Onshore crude oil pipelines total | 190,245 | 105,614 | |||||||||
| Crude oil product sales (average Bbls/day) | 22,158 | 19,968 | |||||||||
| Rail unload volumes (average Bbls/day) | 20,214 | 20,492 | |||||||||
| NaHS volumes (Dry short tons "DST" sold) | 19,783 | 25,873 | |||||||||
| NaOH (caustic soda) volumes (DST sold) | 8,609 | 8,545 | |||||||||
(1)Total daily volumes for the 2026 Quarter and the 2025 Quarter include 32,876 and 18,609 Bbls/day, respectively, of intermediate refined petroleum products and 25,857 and 19,564 Bbls/day, respectively, of crude oil associated with our Port of Baton Rouge Terminal pipelines.
Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025
Onshore transportation and services Segment Margin for the 2026 Quarter increased $6.6 million, or 45%, from the 2025 Quarter primarily due to an increase in volumes transported on our onshore crude oil pipeline systems and increased activity and volumes in our crude oil marketing business. We experienced an increase in volumes on our Texas pipeline system which is a key destination point for various grades of crude oil produced in the Gulf of America including those transported on our 64% owned CHOPS Pipeline and benefited from an increase in refined product volumes at our Baton Rouge terminal. In our sulfur services business, we experienced a decrease in NaHS sales volumes primarily as a result of operational challenges at our largest and lowest-cost host refinery, which was partially offset by an increase in index-based NaHS sales prices.
Other Costs, Interest and Income Taxes
General and administrative expenses
|
Three Months Ended March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| General and administrative expenses not separately identified below: | |||||||||||
| Corporate | $ | 14,250 | $ | 10,419 | |||||||
| Segment | 701 | 680 | |||||||||
| Long-term incentive compensation expense (gain) | (549) | 4,335 | |||||||||
|
Third party costs related to business development activities and growth projects
|
3,122 | 25,208 | |||||||||
| Total general and administrative expenses | $ | 17,524 | $ | 40,642 | |||||||
Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025
Total general and administrative expenses for the 2026 Quarter decreased by $23.1 million, or 57%, from the 2025 Quarter. This decrease is primarily due to: (i) a reduction in third party costs related to business development activities and growth projects as the 2025 Quarter included the transaction costs incurred associated with the sale of the Alkali Business on February 28, 2025, and (ii) a reduction in long-term incentive compensation expense as a result of how we valued the outstanding awards under our long-term incentive compensation plan in each period. These decreases were partially offset by higher corporate general and administrative expenses.
Depreciation and amortization expense
|
Three Months Ended March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Depreciation expense | $ | 56,378 | $ | 53,600 | |||||||
| Amortization expense | 2,531 | 2,571 | |||||||||
| Total depreciation and amortization expense | $ | 58,909 | $ | 56,171 | |||||||
Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025
Total depreciation and amortization expense for the 2026 Quarter increased $2.7 million, or 5%, from the 2025 Quarter. This increase is primarily attributable to our continued growth and maintenance capital expenditures and placing new assets into service, including assets associated with our CHOPS expansion project and SYNC Pipeline, subsequent to the 2025 Quarter.
Interest expense, net
|
Three Months Ended March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Interest expense, senior secured credit facility (including commitment fees), net | $ | 1,825 | $ | 4,025 | |||||||
| Interest expense, senior unsecured notes | 63,371 | 70,538 | |||||||||
| Amortization of debt issuance costs, premium and discount | 2,782 | 2,878 | |||||||||
| Capitalized interest | - | (7,403) | |||||||||
| Interest expense, net | $ | 67,978 | $ | 70,038 | |||||||
Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025
Interest expense, net for the 2026 Quarter decreased $2.1 million, or 3%, from the 2025 Quarter primarily due to: (i) a decrease in interest expense associated with our senior unsecured notes as we redeemed the remaining $406.2 million of principal outstanding on the 8.000% senior unsecured notes due January 15, 2027 (the "2027 Notes") on April 3, 2025 with a portion of the cash proceeds from the sale of the Alkali Business on February 28, 2025; and (ii) a reduction in interest expense, net on our senior secured credit facility as a result of a decrease in the average borrowings outstanding during the 2026 Quarter.
This decrease in interest expense, net was partially offset by a decrease in capitalized interest in the 2026 Quarter primarily attributable to the completion of the CHOPS expansion project and SYNC Pipeline subsequent to the 2025 Quarter.
Income tax expense
A portion of our operations are owned by wholly-owned corporate subsidiaries that are taxable as corporations. As a result, a substantial portion of the income tax expense we record relates to the operations of those corporations and will vary from period to period as a percentage of our income before taxes based on the percentage of our income or loss that is derived from those corporations. The balance of the income tax expense we record relates to state taxes imposed on our operations that are treated as income taxes under generally accepted accounting principles and foreign income taxes.
Liquidity and Capital Resources
General
On February 28, 2025 we completed the sale of the Alkali Business to an indirect affiliate of WE Soda Ltd. for a gross purchase price of $1.425 billion. We received cash of approximately $1.0 billion, which reflected the net proceeds after the payment of transaction costs and expenses and the assumption of our then outstanding Alkali senior secured notes by an indirect affiliate of WE Soda Ltd. We used the cash proceeds to pay down the outstanding balance on our senior secured credit facility as of February 28, 2025, purchase 7,416,196 Class A Convertible Preferred Units on March 6, 2025 at a purchase price of $35.40, and redeem the remaining $406.2 million of principal outstanding on the 2027 Notes on April 3, 2025.
On February 3, 2026, we entered into purchase agreements with one of our Class A Convertible Preferred unitholders whereby we purchased 741,620 Class A Convertible Preferred units at a purchase price of $33.71 per unit.
On March 4, 2026, we entered into the Eighth Amended and Restated Credit Agreement (our "credit agreement") to replace our Seventh Amended and Restated Credit Agreement. The credit agreement increased our senior secured credit facility borrowing capacity from $800 million to $900 million and extended the maturity to March 4, 2031, subject to extension at our request for one additional year on up to two occasions and subject to certain conditions, provided that if more than $150 million of our 2029 Notes remain outstanding as of October 16, 2028, the credit agreement matures on such date or if more than $150 million of our 2030 Notes remain outstanding as of January 14, 2030, the credit agreement matures on such date. The credit agreement also provides for additional covenant flexibility and increases our permitted investment baskets, enabling us to maintain a disciplined, yet opportunistic approach to our future capital allocation priorities.
Also on March 4, 2026, we issued $750.0 million in aggregate principal amount of 6.750% senior unsecured notes due March 15, 2034 (the "2034 Notes"). Interest payments are due March 15 and September 15 of each year, beginning on September 15, 2026. The issuance of our 2034 Notes generated net proceeds of approximately $735.9 million, net of issuance costs incurred. The net proceeds were used to purchase $416.1 million in principal of our 2028 Notes (which carried an interest rate of 7.750%) and pay the accrued interest, tender premium and fees on the notes that were validly tendered in the tender offer that ended March 20, 2026, and redeem the remaining $263.3 million in principal on our 2028 Notes and pay the related accrued interest on those redeemed notes on March 22, 2026.
On March 6, 2026, utilizing the remaining net proceeds from the issuance of our 2034 Notes, along with cash flow from operations and borrowings from the recently expanded capacity on our senior secured credit facility, we entered into a purchase agreement with one of our Class A Convertible Preferred unitholders whereby we opportunistically purchased 3,263,127 Class A Convertible Preferred Units at a purchase price of $34.38 per unit. The purchase of these Class A Convertible Preferred Units, which carried an annual coupon rate of 11.24%, has allowed us to lower our overall cost of capital.
The successful completion of the above events has extended our debt maturity profile, eliminated any near-term refinancing risk and lowered the overall cost of capital and reduced the cash costs of running our businesses significantly, while continuing to simplify and strengthen our capital structure.
We anticipate that our future internally-generated funds and the funds available under our senior secured credit facility will allow us to meet our ordinary course capital needs. Our primary sources of liquidity have been cash flows from operations, proceeds from the sale of assets, borrowing availability under our senior secured credit facility, the proceeds from issuances of
equity (common and preferred) and senior unsecured or secured notes and the creation of strategic arrangements to share capital costs through joint ventures or strategic alliances.
Our primary cash requirements consist of:
•working capital, primarily inventories and trade receivables and payables;
•routine operating expenses;
•growth capital (as discussed in more detail below) and maintenance projects;
•interest payments related to outstanding debt;
•asset retirement obligations;
•quarterly cash distributions to our preferred and common unitholders; and
•acquisitions of assets or businesses.
Capital Resources
Our ability to satisfy future capital needs will depend on our ability to raise substantial amounts of additional capital from time to time, including through equity and debt offerings (public and private), borrowings under our senior secured credit facility and other financing transactions, and to implement our growth strategy successfully. No assurance can be made that we will be able to raise necessary funds on satisfactory terms.
At March 31, 2026, the principal amount of long-term debt outstanding totaled approximately $3,224.1 million, consisting of $74.1 million borrowed under our senior secured credit facility and $3,150.0 million related to our senior unsecured notes. Our senior unsecured notes balance is comprised of $600.0 million of our 2029 Notes, $500.0 million of our 2030 Notes, $700.0 million of our 7.875% senior unsecured notes due May 15, 2032, $600.0 million of our 8.000% senior unsecured notes due May 15, 2033, and $750.0 million of our 2034 Notes.
The available borrowing capacity under our senior secured credit facility at March 31, 2026 is $819.1 million, subject to compliance with covenants. Our inventory financing sublimit as of March 31, 2026 was $17.9 million of the maximum allowed of $200.0 million. Our credit agreement does not include a "borrowing base" limitation except with respect to our inventory loans.
Shelf Registration Statement
We have the ability to issue additional equity and debt securities in the future to assist us in meeting our future liquidity requirements, particularly those related to opportunistically acquiring assets and businesses and constructing new facilities and refinancing outstanding debt.
We have a universal shelf registration statement (our "2024 Shelf") on file with the SEC which we filed on April 16, 2024 to replace our existing universal shelf registration statement that expired on April 19, 2024. Our 2024 Shelf allows us to issue an unlimited amount of equity and debt securities in connection with certain types of public offerings. However, the receptiveness of the capital markets to an offering of equity and/or debt securities cannot be assured and may be negatively impacted by, among other things, our long-term business prospects and other factors beyond our control, including market conditions. Our 2024 Shelf is set to expire in April 2027.
Cash Flows from Operations
We generally utilize the cash flows we generate from our operations to fund our common and preferred distributions and working capital needs. Excess funds that are generated are used to repay borrowings under our senior secured credit facility and/or to fund our capital expenditures. Our operating cash flows can be impacted by changes in items of working capital, primarily variances in the carrying amount of inventory and the timing of payment of accounts payable and accrued liabilities related to capital expenditures and interest charges, and the timing of accounts receivable collections from our customers.
We typically sell our crude oil in the same month in which we purchase it, so we do not need to rely on borrowings under our senior secured credit facility to pay for such crude oil purchases, other than inventory. During such periods, our accounts receivable and accounts payable generally move in tandem as we make payments and receive payments for the purchase and sale of crude oil.
The storage of our inventory of crude oil and petroleum products can have a material impact on our cash flows from operating activities. In the month we pay for the stored crude oil or petroleum products, we borrow under our senior secured credit facility (or use cash on hand) to pay for the crude oil or petroleum products, utilizing a portion of our operating cash flows. Conversely, cash flow from operating activities increases during the period in which we collect the cash from the sale of the stored crude oil or petroleum products. Additionally, for our exchange-traded derivatives, we may be required to deposit margin funds with the respective exchange when commodity prices increase as the value of the derivatives utilized to hedge the price risk in our inventory fluctuates. These deposits also impact our operating cash flows as we borrow under our senior secured credit facility or use cash on hand to fund the deposits.
See Note 15 in our Unaudited Condensed Consolidated Financial Statements for information regarding changes in components of operating assets and liabilities during the first three months of 2026 and the first three months of 2025.
Net cash flows provided by our operating activities for the three months ended March 31, 2026 were $81.7 million compared to $24.8 million for the three months ended March 31, 2025. The increase in cash flows from operating activities is primarily attributable to an increase in our reported Segment Margin and positive changes in working capital in the first three months of 2026 as compared to the first three months of 2025. These increases in cash flows from operating activities for the first three months of 2026 were partially offset by the fact that the first three months of 2025 included activity from the Alkali Business prior to the sale on February 28, 2025.
Capital Expenditures and Distributions Paid to Our Unitholders
We use cash primarily for our operating expenses, working capital needs, debt service, acquisition activities, internal growth projects and distributions we pay to our common and preferred unitholders. We finance maintenance capital expenditures and smaller internal growth projects and distributions primarily with cash generated by our operations. We have historically funded material growth capital projects (including acquisitions and internal growth projects) with borrowings under our senior secured credit facility, equity issuances (common and preferred units), the issuance of senior unsecured or secured notes, and/or the creation of strategic arrangements to share capital costs through joint ventures or strategic alliances.
Capital Expenditures for Fixed and Intangible Assets and Equity Investees
The following table summarizes our expenditures for fixed and intangible assets and equity investees in the periods indicated:
|
Three Months Ended March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Capital expenditures for fixed and intangible assets: | |||||||||||
| Maintenance capital expenditures: | |||||||||||
| Offshore pipeline transportation assets | $ | 2,742 | $ | 2,527 | |||||||
| Marine transportation assets | 10,452 | 16,825 | |||||||||
| Onshore transportation and services assets | 2,702 | 2,865 | |||||||||
| Information technology systems and corporate assets | 804 | 427 | |||||||||
| Total maintenance capital expenditures | 16,700 | 22,644 | |||||||||
| Growth capital expenditures: | |||||||||||
|
Offshore pipeline transportation assets(1)
|
3,277 | 26,787 | |||||||||
| Marine transportation assets | 3,470 | 165 | |||||||||
| Onshore transportation and services assets | 16 | 311 | |||||||||
| Total growth capital expenditures | 6,763 | 27,263 | |||||||||
| Total capital expenditures for fixed and intangible assets | 23,463 | 49,907 | |||||||||
|
Capital expenditures related to equity investees
|
2,776 | - | |||||||||
|
Total capital expenditures(2)
|
$ | 26,239 | $ | 49,907 | |||||||
(1)Growth capital expenditures in our offshore pipeline transportation segment for 2026 and 2025 represent 100% of the costs incurred, including those funded by our noncontrolling interest holder.
(2)Excluded from the table above were total capital expenditures of $6.4 million for the three months ended March 31, 2025 associated with the Alkali Business that was sold on February 28, 2025.
Growth Capital Expenditures
During 2025, we completed our two offshore growth capital projects, which included the CHOPS expansion and the SYNC pipeline projects. With the completion of these significant growth capital projects, and no significant future growth capital projects on the horizon, we do not expect significant growth capital expenditures in 2026. While we are committed to maintaining sufficient financial flexibility and liquidity, we will continue to evaluate any accretive incremental growth opportunities should they opportunistically emerge.
Maintenance Capital Expenditures
Maintenance capital expenditures incurred during the first three months of 2026 and 2025 from our continuing operations primarily related to expenditures in our marine transportation segment to replace and upgrade certain equipment associated with our barge and fleet vessels during our dry-docks. Additionally, our offshore transportation assets require maintenance capital expenditures to replace, maintain and upgrade equipment at certain of our offshore platforms and pipelines that we operate. See further discussion under "Available Cash before Reserves" for how such maintenance capital utilization is reflected in our calculation of Available Cash before Reserves.
Distributions to Unitholders
In January 2026, we declared our quarterly distribution to our common unitholders of $0.18 per unit related to the fourth quarter of 2025. With respect to our Class A Convertible Preferred Units, we declared a quarterly cash distribution of $0.9473 per Class A Convertible Preferred Unit (or $3.7892 on an annualized basis) for each Class A Convertible Preferred Unit held of record. These distributions were paid on February 13, 2026 to unitholders of record at the close of business on January 30, 2026.
In April 2026, we declared our quarterly distribution to our common unitholders of $0.18 per unit related to the 2026 Quarter. With respect to our Class A Convertible Preferred Units, we declared a quarterly cash distribution of $0.9473 per Class A Convertible Preferred Unit (or $3.7892 on an annualized basis) for each Class A Convertible Preferred Unit held of record. These distributions will be payable on May 15, 2026 to unitholders of record at the close of business on April 30, 2026.
Guarantor Summarized Financial Information
As of March 31, 2026, our $3.2 billion aggregate principal amount of senior unsecured notes co-issued by Genesis Energy, L.P. and Genesis Energy Finance Corporation are fully and unconditionally guaranteed jointly and severally by the Guarantor Subsidiaries, except for certain immaterial subsidiaries. The immaterial non-Guarantor Subsidiaries are indirectly owned by Genesis Crude Oil, L.P., a Guarantor Subsidiary. The Guarantor Subsidiaries largely own the assets that we use to operate our business. See Note 10 in our Unaudited Condensed Consolidated Financial Statements for additional information regarding our consolidated debt obligations.
The guarantees are senior unsecured obligations of each Guarantor Subsidiary and rank equally in right of payment with other existing and future senior indebtedness of such Guarantor Subsidiary, and senior in right of payment to all existing and future subordinated indebtedness of such Guarantor Subsidiary. The guarantee of our senior unsecured notes by each Guarantor Subsidiary is subject to certain automatic customary releases, including in connection with the sale, disposition or transfer of all of the capital stock, or of all or substantially all of the assets, of such Guarantor Subsidiary to one or more persons that are not us or a restricted subsidiary, the exercise of legal defeasance or covenant defeasance options, the satisfaction and discharge of the indentures governing our senior unsecured notes, the designation of such Guarantor Subsidiary as a non-Guarantor Subsidiary or as an unrestricted subsidiary in accordance with the indentures governing our senior unsecured notes, the release of such Guarantor Subsidiary from its guarantee under our senior secured credit facility, or liquidation or dissolution of such Guarantor Subsidiary (collectively, the "Releases"). The obligations of each Guarantor Subsidiary under its note guarantee are limited as necessary to prevent such note guarantee from constituting a fraudulent conveyance under applicable law. We are not restricted from making investments in the Guarantor Subsidiaries and there are no significant restrictions on the ability of the Guarantor Subsidiaries to make distributions to Genesis Energy, L.P.
The rights of holders of our senior unsecured notes against the Guarantor Subsidiaries may be limited under the U.S. Bankruptcy Code or state fraudulent transfer or conveyance law.
The following is the summarized financial information for Genesis Energy, L.P. and the Guarantor Subsidiaries on a combined basis after elimination of intercompany transactions among the Guarantor Subsidiaries (which includes related receivable and payable balances) and the investment in and equity earnings from the non-Guarantor Subsidiaries.
| Balance Sheets | Genesis Energy, L.P. and Guarantor Subsidiaries | ||||
| March 31, 2026 | |||||
| (in thousands) | |||||
|
ASSETS(1):
|
|||||
| Current assets | $ | 663,643 | |||
| Fixed assets, net | 2,130,623 | ||||
|
Non-current assets
|
694,643 | ||||
|
LIABILITIES AND CAPITAL:(2)
|
|||||
| Current liabilities | 709,003 | ||||
| Non-current liabilities | 3,549,894 | ||||
| Class A Convertible Preferred Units | 411,547 | ||||
| Statement of Operations | Genesis Energy, L.P. and Guarantor Subsidiaries | ||||
|
Three Months Ended March 31, 2026 |
|||||
| (in thousands) | |||||
|
Revenues(3)
|
$ | 378,119 | |||
| Operating costs | 335,854 | ||||
| Operating income | 42,265 | ||||
| Loss from continuing operations | (15,204) | ||||
|
Net loss(2)
|
(15,204) | ||||
| Net loss attributable to Genesis Energy, L.P. | (15,204) | ||||
(1)Excluded from assets in the table above are net intercompany receivables of $7.2 million that are owed to Genesis Energy, L.P. and the Guarantor Subsidiaries from the non-Guarantor Subsidiaries as of March 31, 2026.
(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 $0.8 million of sales from Guarantor Subsidiaries to non-Guarantor Subsidiaries for the 2026 Quarter.
Non-GAAP Financial Measures and Reconciliations
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 below 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
Definition, Purposes and Uses
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.
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.
Available Cash before Reserves for the periods presented below was as follows:
|
Three Months Ended March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net income (loss) attributable to Genesis Energy, L.P. | $ | 6,800 | $ | (469,075) | |||||||
| Income tax expense | 112 | 144 | |||||||||
| Depreciation, amortization and accretion | 61,148 | 59,011 | |||||||||
| Plus (minus) Select Items, net | 4,824 | 19,589 | |||||||||
|
Maintenance capital utilized(1)
|
(15,250) | (16,900) | |||||||||
| Cash tax expense | (300) | (257) | |||||||||
| Distributions to preferred unitholders | (13,565) | (19,942) | |||||||||
| Loss on disposal of discontinued operations | - | 432,193 | |||||||||
|
Other non-cash items from discontinued operations(2)
|
- | 15,584 | |||||||||
| Available Cash before Reserves | $ | 43,769 | $ | 20,347 | |||||||
(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 2026 Quarter and 2025 Quarter were $16.7 million and $22.6 million, respectively, which excludes maintenance capital expenditures of $4.6 million in the 2025 Quarter associated with our discontinued operations.
(2)Includes non-cash items such as depreciation, depletion and amortization and unrealized gains or losses on derivative transactions, amongst other items.
|
Three Months Ended March 31, |
||||||||||||||
| 2026 | 2025 | |||||||||||||
| (in thousands) | ||||||||||||||
| I. | Applicable to all Non-GAAP Measures | |||||||||||||
|
Differences in timing of cash receipts for certain contractual arrangements(1)
|
$ | (2,094) | $ | (8,287) | ||||||||||
| Certain non-cash items: | ||||||||||||||
| Unrealized losses (gains) on derivative transactions excluding fair value hedges, net of changes in inventory value | 815 | (71) | ||||||||||||
| Loss on debt extinguishment | 3,540 | 844 | ||||||||||||
|
Adjustment regarding equity investees(2)
|
5,521 | 6,092 | ||||||||||||
| Other | (4,618) | (2,722) | ||||||||||||
| Sub-total Select Items, net | 3,164 | (4,144) | ||||||||||||
| II. | Applicable only to Available Cash before Reserves | |||||||||||||
| Certain transaction costs | 3,122 | 25,208 | ||||||||||||
| Other | (1,462) | (1,475) | ||||||||||||
|
Total Select Items, net(3)
|
$ | 4,824 | $ | 19,589 | ||||||||||
(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.
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, and the timing and anticipated benefits of our or third party development projects and the expected performance of our offshore assets and other projects and business segments 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 and Iran, 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 and Iran, 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.
Genesis Energy LP published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 07, 2026 at 17:10 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]