GEL - Earnings call transcript Q1 2018

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Operator

Welcome to the 2018 First Quarter Conference Call for Genesis Energy. Genesis has four business segments: The Offshore Pipeline Transportation Division is engaged in providing 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.

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

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 E. Sims

all. Good morning and welcome to

We in coming and certain are for of distribution X.X day of results to and which we expect of of guided range announce long-term our quarterly high-end our XX to be provided distribution track on forward achievable businesses visible, X.X announced remain growth our delivered increased the we previously clear hurdles deleveraging. financial with In guidance path quarter X.X sequentially quarters resolved to that spite our coverage times pleased at operational a the that to times.

disproportionate our XXXX. amount announced of growth During for the quarter spent capital a we

to quarter's gathering flow in calculated Baton our levels expect repaying facility expenditures infrastructure little earlier to borrowings same with Rather short, loading our of credit each at and a the Basin. of to us won't XXXX increasing the individual to the additional cash around and capital begin their results, lot under precedent longer-term that begin half in working we commissioned in a completed EBITDA of use view leverage position compared see This time We the a our River have back reducing spend of we successfully we at to and our front-end port revolving the this expansion the puts business. excess Powder the keeping we year ratio. of how intermediate, quarterly provide color together results on to In financial attempt time performances will segment, period. of Rouge

flat control certain of were the to adjusting Our expectations. underperforming sequentially and slightly our our number internal drivers in the offshore in for producer delays days beyond provided achieving essentially even and slightly Turnarounds quarters. results were main forecast when up respective the

particular been producer continue Although we expect issues. and day any mechanically turnarounds of to certain driven the physical second XX majority underperformance told to we in believe reservoir that's in period quarter, related not other price to overwhelming and the have extended reserves

remain In from of year of and we of encouraged in We deepwater and in barrels. $XX development current critical of the future base and and with we are by forecast Mexico. continuing an fact agree potential strategic to a the increasing the or been in XXXX very have deepwater asset Gulf producer investment the $XX to pleased production record our with driven prices the already breakeven activity amount

frame. have We systems to pipelines insufficient operated volumes the continuing later to dedicated this into way are time and possibly their to owned excess that continue XXXX to and volumes expect all party the third starting move from move year capacity to anticipated

another late refers required. our XXXX and capital delivery executed anticipated XXXX agreements third In of party hubs, then we in tied being developments operated have dedicated for and connected two subsea back was existing in late addition to zero one

a around Finally drilling hubs. development infield number our be there and in to dedicated continues of

to active dedicated continue host and we other have connected. operated through backs with discussed existing party discussions several subsea previously third tie and/or As

are all minus XXXX day or timeframe. in our plus X XXXX expected we first addition with barrels These new zero that several plus XXXX dedicated barrel late Dog in or XX,XXX minus deliveries to that be in RFBs a in or XXX,XXX sanctioned for downstream XXXX to standalone Mad the is are transportation with already developments to new responding expected from requires the capital. day a XXXX us Additionally or XXXX anticipated hub to of to tied

ash track Our meet expectations continued to and remain have or to operations soda previously guidance. exceed recently on exceed acquired discussed

pricing, This by in export robust a higher and trend being part than The continue expected increasingly impacted in first demand are could worldwide. driven is growth was we transact confident quarter positively periods. future by

producers are weighing our issues extremely within supply. or to there year-over-year factors a restraints certain operating China. for In trending as China Exports of other by placed soda and pollution number China environmental negatively of synthetic out of global result on prices high on address estimation are lower addition producers import a

Additionally orderly cost is XXXX in production investments we lagging would Kazan allow same demand the supply natural not as else delayed which to being developed as supply full grow mid up everything into to expected new fast to originally absorb the be market certain due ramping believe Turkish might the [ph]. logistics and the and advantage continue incremental to more global late

for facility to a farmland. of production adjacent Europe been in river neighboring undetermined an spill not resulting time unfortunate has synthetic an shut pollution recently insignificant and of a period and Finally due Eastern

appears a supply operations compete particular While market. to given what an our it have balanced a geography that direct affect in on could nonetheless reasonably no we to be otherwise don't effect worldwide

and years. annually business sequentially or is conditions The the shut onshore volumes the and result GDP to resolved our year customer that the up at pipelines by Interestingly by undertaken of refinery continues soda were primarily and especially quite We on and our expect tonnes supplied pipeline XX macro Texas potential we were as at a worldwide year commercial a XXXX we early Volumes many railroads positively for of affecting quarter earlier customer the of on a demand demand certain ash downstream and be facility from would of strong our to which at XXXX the last third our a factors in in from by quarter or primary on operations sometime Caribbean copper by Volumes upstream beyond well. activities reduced aluminum ramping the operating affected operated completed rates are recession market control. benefit are to which while great to ships. downstream growth significantly in turnaround downstream down the owned operating Volumes depths haven't basis represents bauxite service enhancement late restarted would as the operations refinery coal. Our operations almost in and resume integrity while in them. host to certain thereafter. and expect in see sequential Louisiana accordingly negatively on challenging those XXXX

producers We the a of the We the perhaps ramp full to in have a and longer Volumes case. by the in belief Basin. a our take increased maintained number throughout even was sequential that long see this until could to that Powder volumes we a fourth ramping that on activity be contribution our expect Wyoming still organic it it River year opportunities. and believe reflecting bit in basis from of XXXX quarter

development by results very from around acreage. capture recent well be encouraged drilling. We and existing rigs significant the our as skill in positioned increasing move upstream We're continue to to footprint full continue activity delineation to add volumes well and dedicated to producers and

contributing any that lease merchant crude or the us or is have or not way historic quarter trading million never versus truck remains and purchasing activity what logistics per million Our $X.X challenging focus done $X.X for business activities. to gathering really large average has and other goes XXXX. a quarter lease in an losing of in been for contributor supply others The the by for and business by

As we own or for volume for where pay either gathered third truck have in can commitments longer have some party take talked on geographies compete others or enroute via pipelines own time our barrels economically pipelines. no we about or

As Florida, touch to we have barrel we're the Wyoming to winding speak. and operations the and efforts focusing South down our process a and so in Texas in opportunity the where Alabama, West Mississippi, again result of in Louisiana,

a of these cost reflect to charge million of onetime unfolding second the expect We potentially or of couple actions. so a reflecting in quarter the

for Turning contract roll short amounting million the sequentially. one to Water slightly transportation, rates segment marine our quarter of and on to legacy our into off account with increased an taking last actually negative basis, approximately $X.X Blue margin given to term barges a spot current even after the repricing even sequential

any several in no have put the we transportation next least a of are so hopeful marine have at improvement we While now fundamentals for in reasonably grandiose expectations through potentially for we bottom, years. significant

quality responsible sheet, benefit contribution from of mariners our our and stakeholders commitment without the financially soda capital actions the liquidity we with ash positioned deliver long-term business to believe losing improvements financial integration our believe are fundamentals value indeed safe, operations. will. marine and equipment business, recent our whenever they In legacy program the recent increase ultimately to question of the to in we performance well ramp summary given along and to of do and expected to our ever positively organic to occur and reliable, they our given expected and continue our of we contribution continuing our levered volumes from we continued from However, and are the and all strengthen balance without

would are of to moderators with enough efforts turn it we As like with work. that questions. we fortunate of any to the commitment to and back the will those I for always whom recognize all And

Operator

your from Chen Instructions]. line first of Theresa comes the [Operator with question And Barclays.

Theresa Chen

related can contributor, about per tell was, purchasing it number have us is quarter the at question what's in the it XXXX-XXXX your first you a never in so crude comments XXXX, my lease been business much significant how Grant morning. peak? Good was to the X.X

Grant E. Sims

directly it XXXX at don't was I it most. but at million my $XX have I think around fingertips in

Theresa Chen

for a the terms do and EBITDA EBITDA contribution spend in how run expect how the in of will the million in looking over business and much going what's much onshore business whole you has $XXX past of been and it, currently the few noise, Got from phased good a forward? CAPEX already past as years phase rate this

Grant E. Sims

that say broken way. that of know on I volume levels. this we're I kind in out would don't that really At minimum basically it the currently point hitting we've

our development talking top downstream occurred. is the then on almost and downstream As this beyond exceeding issue volumes order were the kind of which ramping minimum Texas fourth by for And instance system when XX%. line we're actually the control, we early in about of magnitude quarter

amounts you MVC we're it's so resolved. will And until back collecting the to if

or kind we it So currently But at remaining call to exceed of it MVC commercial continue actual to taking ramp being story throughout levels reflected. or of the of XXXX. expect the long usage and short to high certainly the rest most levels are we significantly part those little

Theresa Chen

business, Got to you when much it, year color it the that product the Eastern facility on ash do mentioned, us open? turning produces you you in can will give synthetic can it how you soda that think Europe any explain and be production every

Grant E. Sims

The capacity metric facility of XXX,XXX is the notional tons. annual

how And of it of and operation. of it to as when the so knowledge we discussion, kind we again anticipated ago it a pointed do market we result ago months as kind we be incident even frame first-hand better nine will acquired the today off not is the were than any ten we but of as have or out tried what the much months within perception our long see

Theresa Chen

like buy in acquisitions quarter-over-quarter, lastly it items, ash Understood spend for planning the cost soda of transaction includes a because costs you total just certain the something at to integration is it that it in million for advance out are out select to the says just mainly of build else? up to related other curiosity and money call also footnote in specifically $X.X

Grant E. Sims

ongoing but specific is with virtually associated all of the operation. the integration It soda ash

Theresa Chen

it, you thank very Got much.

Grant E. Sims

Theresa. covers That it

Theresa Chen

much. very you Thank

Operator

comes with UBS. from the Your line Birnbaum Jeff next of question

Jeffrey Birnbaum

Hi, guys. good morning

pricing us as remind on contracts in is to hedged continue business, if place you the have multi-year the of of you the talk soda can off can first the wanted as soda discussion percentage upside domestic on ash Just downside business, and with wondering that what pricing ash kind well mechanisms you the mechanisms? about the for duration,

Grant E. Sims

have contracts year minus weighted the are often the or particular years let's three towards or two and that to wide three things. one call are the end almost domestic it Most and years plus kind X% probably in of so how of do plus we at powers

well as cost stability of and a our for we as are obviously from amount input it's both general because So, an price in important certain into their it stability it's having the provides perspective operations. perspective consumer's it's

prices typically shorter prices In parts one certain other duration contracts international time I transact in primarily Americas of markets are transact in the the areas are frame say. or with So probably would either year quarterly. a where or the Asia contract a ex quarterly month The probably cases redetermination In but duration. in shorter some even redeterminations structure China within fixed outside the is cards. one typically probably price

Jeffrey Birnbaum

rising rising sort cost following and sensitive on overall the comments producers market. about global relative wondering can prices of up sort for is soda higher as Okay, My view cost and cost their it your the producers? prices. some price the soda about of a are if ash of oil impacts pressure we the understanding as the oil about in to you was the how price positive to ash sort just you business impact I talk higher impact of oil of can global could structures, the your on that businesses to talk of general very in

Grant E. Sims

prices LNG power prices want process intensive going think that chemical and synthetic is prices, as or And undoubtedly I structure affecting productors of is with up it so is cost synthetic the prices oil a of the or to not sodium other into characterize or for however it extent and it power kind a ammonium to inputs chloride the you the processes. along rising proxy synthetic was oil the rather power production crude very yes, necessary

already having improves competitive So worldwide we're and in that the production position and of synthetic has because one a the -- that in largest synthetic lowest the our natural ash the one soda of been producer the production world on -- cost relative competing of basis. of structures given with natural

Jeffrey Birnbaum

Okay, fair enough.

leverage have you twin Any pay back of towards year. have to on front-end of talked excess but using cash CAPEX benefit you thoughts the rather? or this the spend debt only to EBITDA your buy not year metrics continuing loaded you and the of rising end how shares lower Sort is potentially about also and units improving of some the retained down

Grant E. Sims

a is value you on the first or there as believe cash. we year. Board below. -- consider that a situation. that's by addressed think down we at said think intent is that are, we have that that And everything unit some of that repurchases we something that's being leverage basis the getting I foremost X I the And end the the or -- this once close And ratio to would anticipate we of do prospective and that excess our point would certainly road we're but use else where saying that we possibility leverage given highest would that down

Jeffrey Birnbaum

Can sort you impact business, FIDed you of of to this to you final Shell question, do how outlook your Gulf have I talked some there, you the positive Okay, Gulf respect a positive Mexico of much one about production? just FIDO. able Mexico us think with give had rising recently this out [ph] EIAS and will with you think to capacity lot sensitivity of agreeing for the how handle to be commentary as

Grant E. Sims

was running to Again the that kbd. you return at in press if operating at release are will I the but I that think quick and Poseidon real look quarter in them provided statistics XXX our

additional shots Under that plus was it current right I XXX could can comfortably run around XXX expanded pretty think to and can move configuration be it it ultimately kbd. punch. comfortably kbd XXX with XXX

of required the us, the to we So no leverage that have message significant capacity that out have the kind of it growth is of existing always EBITDA leverage, capital for that to Gulf try I incremental emphasize we is sure is, think that we Mexico.

to sanctioning infill occurring, its capacity no more X, subsea mean design lease $XX a of is facility, money math to spending more Mad As of more just development occurring back I do million basically to standalone drilling mean the I tie is the year that's and in projects. EBITDA us. then the incremental around Dog

Jeffrey Birnbaum

of at certainly is capital? there leverage say fair and -- plenty it is operating to Okay,

Grant E. Sims

Correct.

Jeffrey Birnbaum

you guys, Perfect, and the weekend. color appreciate thank really the enjoy

Grant E. Sims

you. Thank

Operator

comes Your [ph] Eric next King with the of question line from Citibank.

Unidentified Analyst

to going And the could be linked? what should and of do I challenges think you around morning. What around pipeline happen is all wanted on just expansions if with Louisiana? uncertainty with on are you a good some WCS. expand Canadian some Louisiana little Hi, I the you to to actually and the and bit get think more when you're signposts start see those really of

Grant E. Sims

mean premier railroads. what little out of rail headline CN overall Canada meeting I if to a Yeah, a the try the point and we read class year. is volumes we are is it out required the Alberta help with again I The and yesterday loaded one the I mean trying is primary CP in two figure back the think of some to increase coming to at debottleneck that situation.

the accelerating So hopefully is, the not trade in certainly just third to in unloading a start ramping starting we're get hopefully of the sometime quarter year. emphasize quarter from into to and fourth third the anticipate and when indications the and end the meaningfully it into volumes want paid I view again accelerate fee of we upon involved But it. based we and the quarter is our would kind for

Unidentified Analyst

turnaround, the finished also watching so refinery I be kind Okay, more side, was both? sort the we or turnaround a mentioned of just of refinery being of there think should rail you

Grant E. Sims

of ultimately but margin refinery ultimately going the investments both is the really because of development to exports from the increase Mobil ex anticipate Louisiana we in handling increased true behalf consumption out the think potential in on what I our to of drive ultimately of Rouge. of the out would it's are of increasing at of Baton at itself Rouge expansion going our port port rail contribution Exxon volumes capability Baton the and seeing

Unidentified Analyst

it I to kind this that your I of like another Okay, it few this low ask I sort violate happens near that leverage. straight to…? this point point sitting time stresses about XQ right think forward on of quarter but so you're kind what before likely get terms want in of like was fairly just you we and addressing to assume of would if bank your scenario, covenants you covenant but to in are know you looks at is

Grant E. Sims

It's our the quarter is as And second drops through third times covenants not times in likely bank to quarter. the we it the that covenant X.XX highlight will down and X.X thereafter.

we concerns no into situation. of So, getting volatile a have

think the I an of two ever think natural get the that revolver capacity simple for turn if another a a upon extra that banks concern committed or quarter embark we as it's we becomes I representing wanted the order vote majority to that deleveraging. of if our

Unidentified Analyst

at and probably talked and for that it wanted be as Okay, lesson about assume think end the that were you kind the I -- goals kind by this probably your would looking in the of the is year past, to X.XX you that were deleveraging I table. me you you and of approaching saying off

So through do I say we end quarter closer that you the of just you months think fourth mean you fourth you do we trailing now? and what and and well those are get targets there, look on then okay, provided a basis at quarter neighborhood annualized of not can how think by XX it you this trailing and if change year would sort be you do

Grant E. Sims

end X But getting challenging. able below going in Wyoming X may talked all quarter year the Well by to XXXX. get our a that the we because XXXX of of we're of on the it at this is little and still we little not be of to of X.XX X.X believe and about by increase end or We target to that year of investment end bit XXXX decision being at a way X.X end the the this XXXX. call of fourth this with the end X at the that consistent the first of all end to the when the think to was bit

I would we of you that yeah, be any would if there's it, the But fourth So we certainly filings we that's compliance. the bank we -- issue don't a run well think as on annualizing presented -- and think I kind that rate in as under then quarter our on any trailing agree basis basis believe would calculate X. in there way that our

Unidentified Analyst

Okay, thank you.

Operator

Your line Jared next of MUFG question the from Blashki Securities. comes with [ph]

Unidentified Analyst

asked, roll of guys, a the contracts? marine Hey in last just legacy of questions, been volatility couple any of haven’t hope probably the off with the increase

Grant E. Sims

was not million think from as you had vessel. so room market in seeing that actual barges of mean water and is that internal sequential which spot of kind type $XX,XXX else that Utilization know bottoming said to that. is continues the inland of our when spot the offsetting heater but day you everything that at a reasonable a and or reprocess brown for I stability I type of least $XX,XXX high for side appears be it that for I day values believe on it to side. it a the No, very negative same, we're the a kind $X.X particular Then

things and an to going be being quickly. to that but supply business. to we're -- we we're take for in we've try I around in bottom going say a very think and be to rationalization are we I it's as turn think -- the put efficient not not hopeful marine are It's the a prepared while there pollyannish mean that in remarks going to demand of So

Unidentified Analyst

any of seeing other things on negative be the detract kind or horizon turnaround you're or the us from could onshore Okay that lines? then and

Grant E. Sims

going to operating going are its has when dependent talked we're drivers downstream Louisiana. that major Texas Again of be be this we resolved think to at and the conditions the point. it's what is we contributor Nothing pipeline aware upon volumes in about

Unidentified Analyst

record, this from it any last Okay, is and policy a have and front one on really impact then just change? to the housekeeping

Grant E. Sims

XX% as less under segment that, a X% were than even total assets out generated is that X% intraday less are put of even X/XXth As less than result further when down than of And the X%. we margin really by though jurisdiction. units our said of we it's

Our is by akin rate a cost anything that margin service segment making. to generated is of

bad searching ask and it's like that's later. So, policing first kind of questions

Unidentified Analyst

you. thank Okay,

Operator

[Operator Instructions].

Your from Baird. of next with question comes line Patrick Wang

Patrick Wang

My on question here? business. like you is in likely barge around It has prepared range into comment looks your and do apply the to further first any spot the Grant. remarks morning both you bottom mark risk marine and does would utilization a to rates specifically there, settled from mentioned stable not good Hey, that recovering utilization and pricing see

Grant E. Sims

utilization quite I into it yeah, has seems think the is -- and quarter. second good the continued

not As response, a an mentioned actually spot rates. extremely seen modest on if I I earlier stabilization in increase think

So the not thing rapid of that of seemingly but kind projecting again is any a is we're combination recovery. good

Patrick Wang

us through balance just to your that for understood you moving soda then outlook talk this better and and the positive, on does for needs investors understand quarter ash those can the outlook looks the CAPEX like Okay, business the sound timing your solid of help are and the and and needs delivered another what here business? year

Grant E. Sims

we range Yeah, XXX of we contribution margin XXX soda million segment anticipate guided ash a of I that think that would million the operations. for to XXX XXXX previously had

run incremental The of of of capital define run footprint. that how us the capital ability same generate capital operations a million remarks basis rate we the in growth magnitude capital based capital to of we that basis primarily year produce out in I well our of think and that upon feel be spend rate. as we be any stream and type would have XX% On at maintenance order given and debottlenecking that year the is growth we combination to ash to to can to soda maintenance certainly XX% that from intimate a give combination growth versa. revenue more high of as or sometimes a range. the on vice base $XX an alkali of And today therefore prepared tried the end rate

internationally I there very given that of very So the both and line well kind business, market a partners. think we think for a as is tremendous it attractive a think business, again was as position of long stable domestically our we opportunity

Patrick Wang

Hey, for got sense. Thanks. it me. makes it, That's

Grant E. Sims

you. thank Okay,

Operator

And at there this other questions are time. no

Grant E. Sims

the you. good. very Well that's in another talk end our we of will remarks XX Hey, thank prepared and days,

Operator

concludes conference This call. today's

You may now disconnect.

Genesis Energy (GEL) 4 May 182018 Q1 Earnings call transcript