GEL - Earnings call transcript Q3 2018

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Operator

Welcome to the 2018 Third 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 are 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 measures. website press a We to would financial Genesis Officer. encourage time, to is also genesisenergy.com, you joined CEO issued non-GAAP will of we reconciliation our to located. Financial comparable At the introduce L.P. Sims; Bob the like at financial of Mr. a press Sims by release Energy be GAAP visit I presents copy today The Grant where Chief this release of measures Deere, most

Grant Sims

welcome and to morning Good all.

the million proceeds River for outstanding approximately We received the Basin August. of of the net reduce facility. $XX proceeds we midstream $XXX our Powder in completed under During of option payment revolving assets the used million we the balance credit to inclusive sale quarter,

achievable. X.XXx As at were Adjusted our for EBITDA pleased of leverage feel end the of the credit the coupled the quarter. agreement facility we The confident ratio this X.Xx of term performance reasonably our at our XXXX of makes this to credit transaction, allows forma pro with transaction leverage report the our end financial target is of increasingly closing of businesses, that approaching improving us by

that than growth see infrastructure by would These Louisiana. the are driven we the increased expected the the if the financial businesses leverage in Wyoming expect XXX and to this well the In contribution you facility and be see divided coverage realization quarter business we over find our discussed to next facilities that financial our Louisiana sell believe pleased market as less fundamentals Baton represent contributions our of our our it are the through flowing to businesses four in our both distribution. volumes ratio onshore in Xx quarter, to from several over for in increase and baseline levels into generated volumes quarters in to periods. quarter. the results, certainly sequentially the from future interesting it results for X.XXx generally of proceeds times financial quarters. our say which several the volumes in receive of corridor provided sustainable that of were grow in few currently. We bank simply continued businesses We the believe our in of of next calculated terms this increased our performance transportation net perform consistent third margin results the Rouge the in the our the the primarily to Turning with environment recurring intact we operating well We assets, years. as of multiplied have last Texas debt outstanding We increasing we increasing

longer of the from we in ramp Powder these the our growth production experience have has at facilities sale than unscheduled investments. In results our see anticipated, scheduled of for our inordinate several contribution million underpinned the and offshore business, contributed longer taken negatives, Even in term downtime which, continued to River pleased that of to context, our organic term Gulf While beginning projects originally substantial for the offshore of of expected the the quite increased our contribution are in reflecting to after of segment than would we these bullish around facilities fees sequentially expect less onshore we footprint on, from physically with, marketing assets and or crude an quarter. to and and margin handling the quarter. the we our are volumes fourth $X assets, amount from infrastructure. merchant rather oil Mexico. This comes increase midstream in activity connected Basin transportation Notwithstanding short than third

currently for to being, Additionally, third seeing shore is we competitive pipelines are to that our pipelines increasing to dedicated in production estimation, assets from oversubscribed. currently due get but party such to demand is our unable

we on to in certain constraint from connectivity benefit our takeaway periods. excess Given of future systems, capacity this expect capacity and our

produce than continued be as inspection Worldwide prices, million high is tight Our to backfill to primarily XXXX and higher has the to input we reasonably are the pushed higher of operations our margin ash we than XXXX. and and discussed exports believe of $XXX driven unable slower $XXX ANSAC $XXX previously soda export domestic XXXX, ash continue out strong Turkish to environmental to This price to well for range supply expected continues therefore in higher from the China. pricing by original and expected for soda by export $XXX than in expectations. influenced be to tightened tighter priced expected on to continues resulted We by ramp expect in million. supply. even million million from been track exceed Kazan demand reduced up Chinese in market

increased continues our sequential third a to the expectations our a in basis quarterly business actually volumes row. slightly perform Margin segment at marine Our with on in quarter or for quarter. above the increased services in refinery

assets, continue next things leverage We several transportation we’ve fundamentals We years. any for at are significant significant improvement put the marine no leverage fleet have least operational the have we improve the a certainly of bottom expectation reasonably showing financial quarterly sooner. from through margin in hopeful to segment of entire and for our but if

path a ratio our balance de-lever coverage naturally continue strong to remain and enjoy our sheet. We on to

credit to currently in ever any to commitment cash and sale River prudent have revolving outstandings flexibility minimal financial Midstream partnership use plan safe, facility. diligent all responsible to With term horizon excess reliable capital allow be We plan we maintaining Powder of under reduce and opportunistically the basin our our to we long assets, the build under losing to our growth stakeholders operations. to value for and intend without

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

Operator

question Instructions] your comes TJ first [Operator And Schultz. from

TJ Schultz

the in? be volumes have in And how any is Hey, can right morning. capacity guys, south just coming to Louisiana you versus Good on ramps and provide there? quarter what the Maybe on you now? physical what rail good context unload churned this may into

Grant Sims

unload it probably we a a but trains the a two which day. day to that would capacity the to equivalent the we that translate into to almost and of of could two think average approaching a railroads day, have about about subsequent trains schedule properly We three minimally actually approaching if could the We XXX,XXX to a currently We're quarter. day. are the end trains barrels the unload of

TJ Schultz

project? Louisiana, the competitive be and South been pipeline evolving from and obviously loop if all there's the in in provide area you some how you color for exports on focus Raceland. on this that all the any just dynamic may and some Okay of Can at amid proposed swordfish

Grant Sims

other know on by that we we or vessels being it the if of exported Not going to refineries, port currently at inconsequential are are domestic internationally receiving are We of it's exported loading our Baton currently amount but volumes don't Rouge. marine rail there.

is which some a as up taking are Clovelly down end by of interconnectivity of think Canadian dynamics. there. coming to volumes talked having crude being that with from under not facilities market proposed Riesling, we James about the volumes continues both current current, pipelines St. as So the ultimately may well our substantial may new of Several rail capable at domestic that are or

TJ Schultz

then to Webster what Texas. volumes Okay Are you moving just north flowing supply and expectations into to our and of Baytown?

Grant Sims

from a the above talked there. the minimum almost Baytown refinery to because we commitment issues year of in months time that ILI the of flowing that We're volume or on downstream have first close of the Webster. about for a number That's currently we the

is hoops that barrel increasing chops get from need everything Webster. going would refineries the that through towards as north the --we that heavier to referenced the from viscosity anticipate anticipate flowing would we and we So see it's complex to that think I else a volumes north XXXX saying

TJ Schultz

release Got And just understood. the dispute million it. select the one $XX there's a I in items last like the on kind quarter. a detailed during question of cost

you give some on Just can detail that?

Grant Sims

it for covenant We not arbitration calculating our compliance. actually reward. not material. purposes specifically It's a and is recurring by ignored banks not of EBITDA had bank It's for It's significant. negative

Operator

question Your from next May. Kyle comes

Unidentified Analyst

pipelines. offshore seeing us Good on and morning. an if see uplift from constraints third-party capacity was regarding could you just update timing potential the you're give I could or that wondering

Grant Sims

We're this starting to see it quarter. in

So for subsequent which of the end we're quarter reporting. to the

of are us. But in XXXX to other by yet competitive into approached exacerbated on pipelines shippers to number volumes and have we anticipate as year that the move been are dedicated have on accelerating end We of capacity would certainly the not that by the to volumes constraints the the a incremental contracted them. ramping that

Unidentified Analyst

any you more pipelines can And could which talk about of that benefit? see your

Grant Sims

Highway. Poseidon primarily It's Cameron and

Unidentified Analyst

alkali one And question business. on soda ash the great. or Okay,

magnitude how prices soda through? talk cadence the to uplift of timing Over think business price months, revenue? should in more you've of about ash the the last other about and these increases for you the segment. couple announced we roll Can products alkali And or will

Grant Sims

Typically third starting of fourth to and in one are domestic for contract quarter. generally are contracts prices XXXX three to quarter early set type year prices kind five late

seen specialty even in And into looks others and So especially view remarks the announcements XXXX I coming I tighter some products getting that think what on prepared that tight. the reflects reasonably our going you've from and be XXXX that to of our XXXX. us said of

So that of demand and suite I the show the XXXX that's that overall there mean, the upward that think effect results, given we anticipating it we're prices think pressure balances on in is fundamental the I --I will of that. products across what do supply

Operator

comes Your Patrick Wang. question next from

Patrick Wang

customer comment Good were or morning. past improved you expectations, communication about could lagged all are whether all any planned has at those that improved has actually in communicated recall you at instances regarding recent we've I talked consistency downtime offshore In there? the on more months? seeing

Grant Sims

in simple unscheduled to of I to in no. pretty scheduled continue say see downtime. we bouts a nutshell, downtime of In would remarkable amounts drawn-out addition

actually it's facilities. cases I some preparation think in in to that expand

material reflected we'll downtime bumps the then that proposition quarter, So see show was some not will fairly could I think order necessarily of or fourth bit out just a mean and associated of weather-related I it's speed have of so a the as a otherwise in occasion ultimately not from it it's not it smaller bump to but quarter point significant, unusual that million with that is magnitude fruits of downtime. it third will the was a but wasn't the little up but which we've of had, I offshore, the a general anticipated. kind any there in be and kind again, that speed --it's short-term so,

Patrick Wang

additional then divestures further Okay, any Are And that's can helpful, baked at leverage on your bigger you divestiture XXXX thanks. target? in general? discuss year appetite picture for X.Xx

Grant Sims

have end that of of not in quite XXXX are that the kind affirming at X.X believe We we achievable.

arriving other that and target. reaffirming that We divestitures have not assumed of kind many and at

Operator

And George question comes next your Wang. from

George Wang

or trend cycles you did Just improve will segment of that on seeing the we transport so of this are you and for you near also forward can the just to kind segment, said you more down? segment more obviously marine color be going give expect the think might you it on slow the on bottom, do be that

Grant Sims

of inland I pricing the the that is of high or little utilization barge and things we're oil in inland a we're market, bit which and what rates side bottom. black indicative -- coming kind certainly of off seeing side the on think we're what the spot dirty are trying of increase saying the

coastwise our blue is re-service nine is. --offshore five or have focus which black that which what that The especially, barges. primarily were water total ocean we again offshore think I primarily our under oil barge going is

service clean We little four utilization that. pricing kind part The business reasonable rates and bit. really that struggles a high of it's it's are smaller of not have poor or because that in fairly our on a

we for like feels So I I at I sequentially gone all, all up know mean three in think said it of quarters hit, so kind it's we kind minimal after it's that expect of putting the we a George, mean And significant and dramatic in least bottom as indicative bottom as that had I are we to or row but don't we we a said, us improvement in. also near-term. any

George Wang

guys you to per just an try question high Then instant cash of fixed policy, ample you have turn Is the distribution last just try pay the debt, sequential debt. priority Got down the to thinking level down --still the that grow to distribution it, on is the coverage thanks. obviously quarter and kind when unchanged? use the but is increase pay

Grant Sims

And I it's at underlying but I the We, something doesn't think basis. will, quarterly we're continuing say at units evaluated the would level grow certainly the committed and try on a especially $X.XX in shock, sure make XX discuss often more pleased days value but to the board on per yield increase. every on the value on you day, I that this a that is. point, reason the end of XX the we or decision overly come what stay than as calculated Board that distribution year incremental business we the quarter of this a will not yield where to through I a think think, least the this of And at the but with if highest if I'm context capital that. of to a not we're

George Wang

Got I think with will, potential you the just discussion still you One last that on there long or here be going unit that's any update do follow of is terms buyback, think to Board? if going you. up the in

Grant Sims

of of again, that highest it's-- certainly consider. the I excess the again, think we would that use incremental the the value one believe have something we have. cash. And that we that's We would that's highest-valued it's of highest, use that's if choices with it's

Operator

this At no there questions. time, are

Grant Sims

Okay. Well, call. the end guess that's this quarterly of I

participation in another sooner. everybody's not we'll appreciate we days XX you. so to and And talk you if Thank

Grant Sims	Chief Executive Officer
TJ Schultz	RBC Capital Markets
Patrick Wang	Robert W. Baird & Co.
George Wang	Citigroup

Genesis Energy (GEL) 1 Nov 182018 Q3 Earnings call transcript