GEL - Earnings call transcript Q4 2017

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Operator

Welcome to the 2017 Fourth Quarter Conference Call for Genesis Energy. Genesis has four business segments: The Offshore Pipeline Transportation Division is engaged in providing the critical infrastructure to move oil produced from the long-lived world-class reservoirs from the Deepwater Gulf of Mexico to Onshore Refining Centers. The Sodium Minerals and Sulfur Services Division includes trona and trona-based exploring, mining, processing, producing, marketing and selling activities, as well as the processing of sour gas streams to remove sulfur and refining operations. The Onshore Facilities and Transportation Division is engaged in the transportation, handling, blending, storage and supply of energy products, including crude oil and refined products. The Marine Transportation Division is engaged in the maritime transportation of primarily refined petroleum products. located the Louisiana, Gulf primarily Florida, Mississippi, are and Wyoming of operations in Arkansas, Texas, Alabama, Genesis Mexico.

Commission. XXXX the During be this law Act provides of protection XXXX. making may Securities of Securities forward-looking provide recently statements safe Act Genesis harbor Exchange conference intends within the to directs you filed and the provisions future The to avail call, with of and itself companies the encourage management most to to forward-looking information. its and Exchange harbor meaning filings safe of those Securities

also website press a We most encourage is also genesisenergy.com, you issued non-GAAP we reconciliation our to located. the the at financial of a press to release visit presents copy time, be joined Karen today The Bob Officer; where release measures. like of Pape, of Officer. comparable would Chief CEO Sims, Financial this to by will Energy Grant GAAP L.P. Sims Accounting and Genesis financial I Deere, Chief Mr. introduce At measures

Grant Sims

will was resulting deliver the River long-term Good additional XXXX. also first we’re on XXXX, of XXXX downstream in our refinancing and terminal look May acquired in the morning. the operations, notes existing to acres longer-term and distribution the The deleveraging. sale of of facility to we in we we the and keeping segment, existing this quarter for into discussion trend started intermediate fourth the approximately we’ll with businesses. production box soda and In We think forward ash our clear quarter quarter, XX-K, XXX,XXX to extension and be of forward provide closing typical the Powder effectively in guidance individual path term well-positioned and our Wink West Texas, and our XXXX little the existing attempt an discussions. announced of extending view exciting growth quarterly previously adequately quarter comparable from last short, financial year’s credit on of a our comparison full If individual prior their releases, performance period the the the results expanded visible, to for to which each color for recently the and the we as Basin, the how the those achievable, commitments the skip transportation of around for included one, infrastructure quarterly earnings will long-term checks quarter our our to

press Before additional on the the Wink referenced would gain terminal the net related thought expenses, we of comment that, getting we non-GAAP fourth of in value gain accrual book quarter recognized quick which net or EBITDA available and the the a measures G&A in of I release. $XX.X make the offsetting I of ExxonMobil. into million $XX.X was of portion employee More quarter excess a In our regarding a recasting to million a in non-recurring our program. to sale than cash, compensation

net basis were those negatively a a of each. these else EBITDA by the everything same, available quarter So both items fourth million affected and total $X.X by – cash on is

segment. temporary With last Hurricane zero reportable and expected our although the disruption required. drilling XXXX alone and through path even to crude million to capital XX. systems at assets, pipelines quarter. first will production to a XXXX $X dedicated no of results in our or us oil said, the the an by cost relevant to third-party one have volumes quarterly dedicated with infill around excited being That connected second XXXX challenge segment million key the is to than the of Central days instead damage to customers’ that based that situation, approximately us XXXX at Offshore The quarter the Offshore yielding we’re from several is active, there’s $X which reflects that, nature biggest Turning These quarter and segments. during with margin and In We Hurricane only about Harvey. XX are on anticipate into of production insufficient timeframe. in move net permanent still any disruptions Nate, the platforms negatively anticipated owned capacity segment, bigger operated our which excess to its move were expect volumes their us to facilities Gulf XXXX/XXXX impacted for the on were to in

X, and In knowledge, is or Mad XXX,XXX capital first addition, Cameron required. barrel in is requires which one new dedicated into shore XXX% day tied per production in production to XXXX. no a both delivery being To zero XXXX we for to schedule have mid-XXXX, in XXXX for through Dog Highway back existing late agreements first on developments with our late ramping and another with our XXXX, capital subsea delivery hubs, contracted facility, owned two of connected pipeline again, still for executed our and

XXXX several addition, so, and operated for and/or first dedicated to deliveries timeframe. continue sanctioned In responding to to discussions subsea third-party RFPs active anticipated with developments to XXXX be several in plus new new XXXX tiebacks to type in KBD have minus existing other we XX hub with the or host or standalone hubs connected

recent export River’s record tightened segment, the the in supply. fourth best record reaching the Sulfur higher done on to Genesis pricing, and quality higher pleased full-year X,XXX,XXX ash of tons, joint than we quarter all domestic to safety Chinese fourth and production inspections of than pricing employees which the This acquisition in The XXXX. environmental by Green previous driven positively ANSAC a that was expected the Sodium is by the record commitment which was history, soda by period the expected report record in volume be a in acquisition. and production beating best our was influenced at also X,XXX,XXX from while with our production impacted testament to in to quarter continued of resulting happy resulted the Turning that tons continue

to on come China. and therefore, Another schedule, from was Kazan that and was of and not positive priced Turkish unable backfill out the higher did thereduced exports supplier online reliably

ANSAC forward, – XXXX, ANSAC to to but XXXX price expect online. with Chinese contribution the Kazan we expect strong ex margin, ex We in million, Asia expect quarter. million and Asia influence at pricing in you both anticipate XXXX, can’t strong which records by break pricing Asia Looking and China we production call have and reliably quarter to $XXX every range the ANSAC it, $XXX comes first the China export rate impacted pricing volume

us, takeaway do ash macroeconomic the to negatively of improving quarter meaningful capacity result of With imbalance pipeline the to expect of lack conditions, Coast. early facilities businesses steadily continuing favorable macro decade. out out and differentials to to economic In as growth The in specifically of sulfur virtually the well. Canada, potentially relates growth to impacted the and with environment Our fourth certain Canada rail historic movements. material sulfur of and crude encourage it and/or by very modest the onshore perform to capacity and and by we railroad was encouraged transportation,we’re business sodium next ahead the continues by Gulf conditions despite continue

add second harvest delivery below by Webster third-party long-term rail quarter, continue was the the get unexpected We XXXX resources resolved back-half throughout point. volume pipeline railroads an In issue our this to with from in by due quarter, maintenance backup grain flow expect XXXX. the We levels and issues on physical ramping expect take-or-pay downstream commitments the be issue volumes to of shippers increasing of to during XXXX. fourth a the volumes as to to underpinned crude contracted the second to and resolved into operational expectations Texas to comes would quarter end this handle City, throughout the and

have it we it quarter ramp the would long opportunities, a organic maintained We XXXX our and still to number to contribution could fourth case. see the XXXX, believe belief throughout that expect be was of of volumes we until the that full from recent our that in a

during our commitments River transportation about excited our their from the also from and emerging Powder approximately for leading for additional existing secured infrastructure. a the quarter production acres in downstream We’re position XXX,XXX operator Basin, leading and on industry

pursue existing by the footprint, play. upstream gathering the encouraged are activity stat to in and meaningful continue very dedications increasing pay around and We our and opportunities in additional

Turning to Marine.

high, Our utilization rates, the spot or quite rates dirty but day especially are challenging. in remain service black oil

As around a view, that marine proposition, of capacity market the general is from point oversupplied something and not quickly. a that’s turns

just bottom. scheme it’s it’s Although so in margin, and from We of would even the significant to to the time overall things. in inland total it a in Having the backup said XXXX expect not Marine that, change occur represents were about deal supply market. that segment segment X% or if the our coastlines now dynamics either along demand little bouncing more big a the in seems they only quarterly of not time,

quickly financial Turning calculated coverage range goals, exceeded of targeted our to ratio our to X.X. targeted – X.X times our of X.XX our

had five-year the as rate ash Phoenix, Wyoming. our our capital as acquired Our year-end by other well soda from the maintenance in primarily high of reported calculated of XX. slightly higher regulatory spend as at than for going three spend dry in to docking at ocean run X.XX well X.XX regulatory the was as turns, vessels, dry American relatively we This went up recently driven docking a September operations leverage the ratio the We maintenance quarter.

associated the especially and or spend spend, million the robust. about the We quarter, deepwater At our as in during with remain coverage our back-half expect million total transmission Powder to crude $XX EBITDA Wyoming spend our we River $XX into grow would meaningfully same of regional the the system in distribution time, spend delivery gathering expect, at of in export marine, in XX and certainly we barges. maintenance three existing had as decrease, Basin, so as approximately the and our oil primarily Baton facilities XXXX. million both of there. growing part out growth About of of to the black of with Additionally, in and port our to build new part $XX capitals Rouge the growth

year, would coming to the be For expect self-funding. we totally

In balance see of ability our actually should the summary, us The at our occurring, a accelerate in combination ever and of we’ll with along these to concept actions and of the continuing of the and soda things, sheet, strengthen our ramp that without XXXX meet comfort business, last pay legacy to our believe stakeholders business higher continue responsible great which capital and continued to for integration levels and ash believe October. a we’re to and program that’s losing liquidity our EBITDA. deliver give given recent absolute increasingly I into and rollover to well-positioned commitment laid from our end long-term out up the where and debt, we reliable, beyond novel fact, contributions operations. down two targets leverage financial we organic beyond, we to increase value of safe, XXXX, we the XXXX and In contribution XXXX recent XXXX understand all

with we enough for would to moderator of any turn recognize all questions. With like work. to I’ll back and commitment efforts the that, As the are to we always, fortunate those it whom

Unidentified Company Representative

Kathlyne?

Operator

Ethan [Operator of from line Instructions] Your first please. Go question Baird. ahead comes the from Bellamy

open. line Your is

Ethan Bellamy

it Hey, good like that since quarter on I business, and lot With suitability What pretty business that learned you have now? I owned belt still a soda that, the it I respect to potential all. your of morning, skeptical full ash under respect you’ve MLP about of a you are have mean, that. and folks the but

Grant Sims

hydrosulfide situated Once the an in rates life. production from for we I a MLP it’s it know solution our the We It your is XX,XXX-foot market just other or it’s XXX-year mean, a at XXX market mining being starting secondary has advantage. business, ideally XXX structure. the recoveries it’s reserve excess in sodium-related level. or leader sodium and business. that a sulfur-related think, leader, of tremendous look current years, I which has been macro

But importantly, else group have relative to pre-acquisition get it been to to management as and the more I consistently think, and comfortable came as more the with committed our of we is analysis, the get that we best-in-class. that the they’re quality that business. know know same employees everything we

all of prepared in we So to to of the volatility be that $XXX a from very, pricing. that the up our $XXX a very that with slight contribution But I – guidance amount comfortable. million isn’t There as associated XXXX remarks on gave volatile the shaping million think margin is perspective.

to longwinded a business. Ethan, answer I it it’s very about think, – long a a We’ve So, tremendous known time. for

a they is Green probably XX,XXX the you of aware, year close As tons of to River are operations make caustic part around in soda.

their We have not consumed caustic for the is that production that purchaser largest soda made of been ash. processes locally of there that’s for decades soda, up

team. a kind also there of is operations vertical knowledge their prior the integration and So – of management and the

So tremendous in all. all business

long it in the economically on entry developable cost is You’re It’s life the infinite, of known no that as not the any out way, a compete relative shape has treadmill there synthetic deposits given elsewhere world because can form about as well it. is of Wyoming the world with natural of position Green in to or and production trona natural are production, soda that basically the production. River,

ash stability isn’t they of in MLP an lot a business are the structure. by but for understood, the people, understood not especially but capital So businesses

Ethan Bellamy

or contractual So did any after any recent industry the reluctance pushback customers on expansion? terms you see from

Grant Sims

are was going we’ve about think but are on the given make that’s I depends give and range the to of there in a everything, depends pricing, some and we not sales ANSAC. product overall and on it is, mean some know domestic which sales amount You what lot we I comments there through specific on of talked mix take of guiding, it versus

the on but in from bit out supply potential made to are little that of of acquisition to was coming of million advertised we prepared the reflect around I $XXX million, reference Kazan, to coming think being guiding $XXX that which think around I believe edge the the a out I million, the of the LTM So we and the conservative $XXX gate, remarks. too noise incremental EBITDA that

to other a if from – for investment downside, that’s other long the are do finding I type fairway" of relative that all will day middle what again people So, "more the things.

Ethan Bellamy

the back an you give one can at how on timing return and the Okay PRB if the other in us all? changed I’ll jump expectations and have question queue, investments, update

Grant Sims

and through lower in price obviously in XXXX continuing late think upon in, a starting XXXX environment. I based that XXXX slowdown activity and the to response

of kind We activity. are seeing recent dramatic in uptick

the look If basically fairway, the Converse out total speak. lies is of gone the to coming so which the and Total our middle production of where PRB you has of Campbell day heart XXXX, two and as production at counties, infrastructure and existing through were combined of a upon it recall available based in for between June, counties to a based – publicly and XX,XXX the I barrels approximately December information. we in think barrels I was day July XXX,XXX the

similarities as its it Midland has it. So tremendous The and we infancy, stack to given view of Permian, Delaware both a really of amount the in basins play nature

large number We as devoting have of are private that significant a the as active to operators public, resources large well play.

So comfortable adjacent the on would the the year acreage logical occur the we ramping is this into dedicated as which at this our XXXX point that well on and to we’re to as with – acreage, and ramps both up. very economically operators as commence anticipate facilities

Ethan Bellamy

you, Grant. Thank Okay.

Grant Sims

Ethan. Thanks,

Operator

further this over will questions no call I presenters. the There are at turn to time. the

Grant Sims

again are hung up we goals people achievement successes that guess you are in on and other we much. periods, we on further we so thank forward are about very other very that reporting excited continuing to and our our well, of where financial I think future Okay, look calls, but

Operator

This concludes today’s call. conference

may disconnect. now You

Grant Sims	Chief Executive Officer
Ethan Bellamy	Robert W. Baird & Co.

Genesis Energy (GEL) 15 Feb 182017 Q4 Earnings call transcript