NYSE:GEL Genesis Energy Q4 2023 Earnings Report $14.09 -0.26 (-1.81%) Closing price 04/25/2025 03:59 PM EasternExtended Trading$14.21 +0.12 (+0.85%) As of 08:40 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Genesis Energy EPS ResultsActual EPS-$0.08Consensus EPS $0.23Beat/MissMissed by -$0.31One Year Ago EPS$0.15Genesis Energy Revenue ResultsActual Revenue$774.10 millionExpected RevenueN/ABeat/MissN/AYoY Revenue Growth+8.40%Genesis Energy Announcement DetailsQuarterQ4 2023Date2/15/2024TimeBefore Market OpensConference Call DateThursday, February 15, 2024Conference Call Time10:00AM ETUpcoming EarningsGenesis Energy's Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled on Thursday, May 1, 2025 at 10:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Genesis Energy Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 15, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Greetings and welcome to Genesis Energy L. P. 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. Operator00:00:23I would now like to turn the conference over to your host, Duane Morley, Vice President of Investor Relations. Speaker 100:00:30Thanks, Rob. Good morning. Welcome to the 2023 Q4 conference call for Genesis Energy. Genesis Energy has 4 business segments. The Offshore Pipeline Transportation segment is engaged in providing the critical infrastructure to move oil produced in the long lived world class reservoirs in the Deepwater Gulf of Mexico to onshore refining centers. Speaker 100:00:50The Soda and Sulfur Services segment includes trona and trona based flooring, mining, processing, producing, marketing and selling activities as well as the processing of sour gas streams to remove sulfur at refining operations. The Onshore Facilities and Transportation segment is engaged in the transportation, handling, blending, storage and supply of energy products, including crude oil and refined products. The Marine Transportation segment is engaged in the marine transportation of primarily refined petroleum products. Genesis' operations are primarily located in Wyoming, the Gulf Coast States and the Gulf of Mexico. During this conference call, management may be making forward looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Speaker 100:01:36The law provides Safe Harbor protection to encourage companies to provide forward looking information. Genesis intends to avail itself of those Safe Harbor provisions and directs you to its most recently filed and future filings with the Securities and Exchange Commission. We also encourage you to visit our website at genesisenergy.com, where a copy of the press release we issued today is located. The press release also presents a reconciliation of non GAAP financial measures to the most comparable GAAP financial measures. At this time, I'd like to introduce Grant Sims, CEO of Genesis Energy LP. Speaker 100:02:09Mr. Sims will be joined by Kristin Jesselaitis, Chief Financial Officer and Chief Legal Officer Brian Sims, President and Chief Commercial Officer and Louis Nickel, Chief Accounting Officer. Speaker 200:02:20Thanks, Joanne. Good morning to everyone and thank you for listening to the call. As we mentioned in our earnings release this morning, our financial results for the Q4 came in ahead of our internal expectations and the performance of our diversified market leading businesses helped contribute towards a record year for Genesis. For the full year, we reported adjusted EBITDA of $756,000,000 which was above the top end of our most recent full year guidance and approximately 11% over our normalized 2022 results. During the quarter, our Offshore Pipeline Transportation segment benefited from steady and increasing volumes through our pipelines, while our Marine Transportation segment continued to exceed expectations, driven in large part by the continued structural tightness in the Jones Act market. Speaker 200:03:12Our soda ash business finished off the best year in its history and continued to perform in line with our expectations during the quarter despite softer soda ash prices and a more challenging grow environment in the back half of the year. This strong consolidated financial performance in the 4th quarter resulted in our leverage ratio as calculated by our senior secured lenders ending the quarter and the year at 3.96 times as well as a coverage ratio for the current distribution to all our common unitholders of 4.8 times. As we look ahead to 2024. We remain encouraged with the fundamentals and exciting prospects for our largest business in the Gulf of Mexico. Our Offshore Pipeline Transportation segment contribution is expected to be flat year over year, given a certain economic step down associated with 10 year anniversary of an existing one off life of lease transportation contract that will somewhat sequentially mask the financial contribution from the continued growth in volumes and strong activity levels around our irreplaceable assets. Speaker 200:04:22Importantly, we're now a short time away from completing the CHOPS expansion and commissioning our new sink pipeline. The fully contracted upstream developments underpinning these investments, Shenandoah and Salamanca, along with Other already identified subsea tiebacks are expected to come online will provide us with more than an incremental 100 $10,000,000 of annual offshore segment margin when fully ramped and would be reasonably expected to contribute for decades decades to come. The soda ash market remains looser than a year ago and is currently consistent with the macro conditions we saw and previously discussed in the back half of last year. While we expect to see contract prices in our domestic market flat to slightly up in the mid single digits year over year. It's most likely that we see weaker pricing in our export markets in 'twenty four versus our average realized prices last year. Speaker 200:05:24Even with an optimized Granger online, we would therefore reasonably expect margin from our soda ash business to be at or near the low end of our previously provided historical contribution margin range of $200,000,000 to $300,000,000 per year. Having said that, we are of the mindset that the market is not as oversupplied as some might argue. We believe inventories are very low, demand is not really that bad, driven in large part by demand for solar panels and electric vehicles, and that the market might be underestimating the effects of reduced synthetic ash production and the change in physical flows of soda ash supplies we are seeing worldwide. We continue to As we move through 'twenty four and certainly into 'twenty five, the soda ash export markets in which we primarily compete, namely Asia outside of China and Latin America could fairly quickly come into better balance, which should help our soda ash business to a more normalized mid cycle earnings profile starting as early as 2025. In our Marine Transportation segment, We expect 2024 to be another strong, if not record year, driven in large part by the continuing tight supply and demand dynamics in the Jones Act market. Speaker 200:06:45This structural backdrop is expected to continue to support increasing day rates and full practical utilization across all classes of our marine vessels throughout 2024. Based on the backdrop currently expected in 2024, We expect to generate adjusted EBITDA this year in the range of $680,000,000 to $740,000,000 which includes Approximately $10,000,000 of one time incremental G and A cost as we conform our short term cash incentive programs to industry standards and approximately $10,000,000 of reduced margin from weather related events we budget for in the 3rd quarter, something that we fortunately did not experience in 2023. The range of outcomes we have laid out for 2024 will be driven primarily by the pace at which soda ash prices recover in our export markets throughout the year. The midpoint of our guidance range assumes a moderate recovery starting in the middle of the year, while the bookings of the range assume little to no recovery from the Q1 and a much faster recovery in the back half of the year, respectively. Despite the midpoint being marginally down versus our 2023 results, but still 5% or so above normalized 2022 earnings, It is important to remember that we have always viewed 2024 as the year during which we will reach the inflection point where our major capital spending will be complete and we will enter 2025 with a known and contracted significant step change in earnings from the offshore as well as likely momentum towards a back towards a mid cycle soda ash environment. Speaker 200:08:31The combination of these events will provide us with increasing amounts of free cash flow after all our cash obligations and generate increased financial flexibility to continue to simplify our capital structure, return to our stakeholders and ultimately allow us to continue to build long term value for everyone in the capital structure for many years ahead. Now I'll touch briefly on our individual business segments. Our Offshore Pipeline Transportation segment continued to perform in line with our expectations, driven in large part by steady and marginally increasing volumes across our system. We continue to see a steady increase in volumes from BP's Argos facility, which is now producing over 100,000 barrels per day along with steady volumes from Mad Dog, Atlantis, Kings Key, Spruance, Katmai, Shenzi, Constitution, Lucius and other major producing fields in the Central Gulf of Mexico. We also announced this morning that we recently entered into agreement Beacon and other interest owners to provide downstream transportation services for 100% of the crude oil associated with the Deepwater Gulf Winterfell development on our CHOPS pipeline to shore. Speaker 200:09:48Winterfell will be developed via new subsea tieback to the existing Heidelberg spar and importantly will require no capital by Genesis. It is anticipated to initiate deliveries as early as April of this year. In addition to Winterfell, BP and other working interest owners in the Mad Dog Tootfield also recently sanctioned the Mad Dog Argos Southwest Extension project. This will be a 3 well tie back to the existing Argos production facility that will come online and provide additional volumes on our CHOP system for transportation to shore in the not too the future. These are both yet again exciting and prime examples of subsea tiebacks that leverage an existing host platform that is already connected to our market leading infrastructure in the Central Gulf of Mexico. Speaker 200:10:42While we continue to have additional commercial discussions with multiple similar opportunities that could turn to additional volumes over the next few years, All of these recent new facilities like Shenandoah and Salamanca and other developments that have or soon will be connected to our system over the next 12 18 months will continue to provide Genesis with a solid foundation of volume growth to build upon starting in 2025. As we look out past 2025, we'd be remiss to not mention the results of the BOEM's most recently sold number 261, which was held on December 20, 2023. The results of the lease sale continue to solidify our and the upstream industry's belief and view that there remains significant long term interest in the geographies of the Central Gulf of Mexico, where our Existing lease sale raised approximately $381,000,000 in high bids for 311 tracks covering roughly 1 point 7,000,000 acres in federal waters of the Gulf of Mexico with about half of that or 883,000 located in the Central Gulf of Mexico. When combined with the results from lease sale 259, which was held in March 2023, We've seen over 3,400,000 acres leased in federal waters in the Gulf of Mexico with approximately point 6,000,000 acres leased in the Central Gulf of Mexico where our pipelines are located. Speaker 200:12:14Suffice it to say, The results from these 2 most recent lease sales will only be additive to the decades decades of inventory that already exist and valid leases in the Central Gulf. The combination of our continuing increasing base production volumes, the contracted opportunities we have coming online over the next 12 months and the ever expanding backlog of available acreage producers to identify, explore, pursue and develop incremental opportunities will allow us to remain well positioned to deliver steady, stable and growing cash flows from our offshore pipeline transportation segment for many, many years decades to come. Turning now to our Soda and Sulfur Services segment. Our soda ash business generally performed in line with our expectations during the quarter As the global macro conditions remained relatively consistent with the sloppiness we first started to see in mid Q2 of 2023, Despite the current challenging supply and demand dynamic, we continue to believe the market is not as far away as it might seem from balancing and that any sort of structural demand uptick or supply disruption could drive a rapid price increase. As we mentioned last quarter, we continue to believe it will be a combination of supply rationalization and a demand recovery that will ultimately help balance the market. Speaker 200:13:44In fact, we are starting to see glimpses of this balancing to occur. For instance, within China, The new natural production facility in Air Mongolia is reported to be up and running at or near full capacity. Despite headlines around the real estate sector in China, We believe the demand for soda ash in China grew around 7% in 2023, driven primarily by solar panel construction and electric vehicle manufacturing. We also believe approximately 2 3,000,000 tons of high cost synthetic production in Mainland China has been partially shut down or is capacity constrained due to environmental issues or other factors. These data points would lead us to believe that the market within China is reasonably balanced today and the vast majority of the new natural production is in fact being consumed and absorbed within China, putting pressure on higher cost synthetic producers within China. Speaker 200:14:48Export data does not support the notion of a wave of Chinese So they're looking for a home in other Asian economies. In fact, late last year and here in the Q1, given where prices were and or domestically in China, certain natural gas natural soda ash producers started to rotate production away from Europe and Southeast Asia and sold volumes into China directly to capture higher realized netback prices. As we look outside of China, we continue to believe certain other synthetic production facilities are uneconomic at these pricing levels and those producers are unable to cover their marginal operating costs. And as a result, we can continue to see further synthetic supply rationalization. For example, a certain European synthetic producer recently shuttered 300 tons of annual supply in Spain to optimize its production and adapt to changing market dynamics. Speaker 200:15:49Further, 3rd party research is estimating that approximately 150,000 tons will come offline this year from a producer in the United States, Not us. We further anticipate approximately 300,000 tons will leave Southeast Asia and return to Europe to take advantage of its logistical advantages and to avoid certain problematic shipping lanes that are further increasing transportation costs and impacting supply chain logistics for such tons to go from Europe to Asia. All of these data points indicated to us that the export markets in which we can peak could dramatically tighten and quite possibly sooner rather than later. As we stated in our earnings release, we reached substantial completion and commissioned our Grainger expansion project during the Q4. While we continue to work through typical start up matters, we ultimately expect the expansion to add upwards of approximately 750,000 tons a year with a very attractive marginal operating cost per ton to our supply capabilities in 2024. Speaker 200:16:56This will both increase our sales volumes and lower our operating cost per ton at Granger and throughout our entire soda ash operations, ultimately helping us offset some of the impacts of lower soda ash prices. Pro form a for the Granger expansion, we continue to believe our 4,700,000 to 4,800,000 tons of annual soda ash production will provide us with the cost structure and scale to be successful across all economic cycles as one of the largest and lowest cost suppliers in the world. Not a bad place to be for a commodity, which yes, has some pricing volatility, but has no known substitutes and solid long term fundamentals for many decades to come. It is interesting to note that with an optimized Granger facility, if soda ash prices were to return to actual prices we received in 2023 or 2022 for that matter, we would expect to realize well north of $300,000,000 a year in contribution from this business. Segment continues to meet or exceed our expectations as market conditions and demand fundamentals continue to remain steady. Speaker 200:18:14As mentioned in the release, we continue to operate with utilizations rate atornear100 percent of practical available capacity for all classes of our vessels as the supply and demand outlook for Jones Act tankage remains structurally tight. This structural change in market dynamics has been driven by a combination of steady and robust demand, the continued retirements of older equipment and effectively 0 new construction of our types of marine vessels. This lack New supply of marine tonnage combined with steady increase in demand continues to drive spot day rates and longer term contracted rates in both of our fleets to record levels. In addition, I'm happy to report that we also started the American Phoenix most recent charter a few weeks ago at a day rate approximately 22% higher than the day rate in the 4th quarter, which I'll remind you also escalates for the term of the agreement for the next 3.5 years. Based on recent industry commentary and various market data points, We continue to have the view that current day rates need to rise significantly in order to rationalize construction of new comparable marine equipment. Speaker 200:19:33Furthermore, limited shipyard availability, extended construction timelines and increasingly high cost of construction should provide support for elevated and marginally increasing day rates from many years ahead. These broader fundamentals combined with our increasingly termed out contracted portfolio, including the new 3.5 year contract for the American Phoenix I referenced, All lead me to believe our Marine Transportation segment is well positioned to deliver record and growing earnings over the coming years. As I mentioned earlier and will reiterate again, the long term story for Genesis has never been brighter and remains totally intact. We remain focused on completing our growth capital program in the next 9 months to 12 months, all while having No debt maturities until 2026, an increasingly clear line of sight to generating roughly $250,000,000 to $350,000,000 or more of free cash flow on an annualized basis after all cash obligations starting in 2025. I would also point out that this expectation remains on track even if it might take a little bit longer than we expect for the inevitable recovery in soda ash export crisis off the lows we're seeing here in early 2024. Speaker 200:20:59We will continue to evaluate the various levers we can pull to our stakeholders, including paying down debt, raising our common distribution, repurchasing additional amounts of our corporate continuing to purchase our common units or any mispriced debt securities, all while maintaining an appropriate level of liquidity and of course maintaining a focus on our long term leverage ratio. Finally, I'd like to say the management team and the Board of Directors remain steadfast in our commitment to building long term value for all our stakeholders. We believe the decisions we are making reflect this commitment and our confidence in Genesis moving forward. I would once again like to recognize our entire workforce for their individual efforts and unwavering commitment to safe and responsible operation. I am Operator00:22:33Our first question comes from Michael Blum with Wells Fargo. Please proceed with your question. Speaker 300:22:39Thanks. Good morning, everyone. I wanted to ask on Marine Transportation, obviously, really Strong outlook at this point. I wanted to ask first, is there given the market dynamics and ability to effectively lengthen the terms of these contracts to lock in these favorable rates? And then Kind of on the flip side, given how strong things are right now, is that a segment that you would consider divesting or that's something you've talked about in the past? Speaker 200:23:16We're approaching the current contracting world by putting extending the length and the percentage of our vessels which are under longer term contracts. So it's indeed a good time to lock in some of these rates. But we still believe that as we said in the comments that We view that rates have to kind of go up from here in order to really solve the structural issues. So we are maintaining a balance that are of vessels which are exposed to increasing day rates on the spot market. So we feel very good about the where we are. Speaker 200:24:01In terms of the potential to Ultimately exit the business, I think that we're committed to it. It's a very good business, obviously cyclical, The next 3 to 5 years, we view as very strong for the business and could be even beyond that and lessen until Other people initiate significant construction programs, which is the only way that you're going to solve or the supply demand imbalance for Jones Act tonnage. Speaker 300:24:39Got it. Thanks for that. And then just wanted to ask a little bit of left field here, but there's been some recent press about ideas to use sodium to replace lithium for EV batteries. Just curious if that's something you're hearing about from any potential customers as it relates to your soda ash business? Thanks. Speaker 400:25:00Yes, Michael, this is Ryan. We have seen reports of that. I think a lot of it's coming out of China the sodium ion batteries, and certainly, that would help from a demand perspective. We see some growth there. So I think overall it's a positive for the industry, but it's still in its early stages. Speaker 200:25:23Thank you. Even in the lithium carbonate world, if you look at some of the more recent public pronouncements of the large Public lithium producers, lithium demand being driven by EV batteries, which And most processes require 2 parts of soda ash per one part of lithium to make lithium carbonate The demand profile for soda ash is a drag along, if you will, from the Increased lithium demand is a very positive for our business. Operator00:26:26There are no further questions at this time. I'd like to turn the call back over to Grant Sims for closing comments. Speaker 200:26:32Again, thanks everybody for listening to the call and we look forward to visiting with you in 90 days, if not sooner. So thank you.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallGenesis Energy Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) Genesis Energy Earnings HeadlinesWhy Genesis Energy (GEL) Is Up the Most So Far in 2025April 26 at 7:03 PM | msn.comGenesis Energy LP (GEL) Shares Up 3.84% on Apr 14April 14, 2025 | gurufocus.comFrom Social Security to Social Prosperity?In less than a decade, Social Security could be out of money. But a surprising plan from Trump’s inner circle may not just save the system — it could unlock a major opportunity for savvy investors. Financial insider Jim Rickards calls it “Social Prosperity,” and says those who act now could see the biggest gains.April 28, 2025 | Paradigm Press (Ad)Genesis Energy, L.P. Declares Quarterly DistributionApril 10, 2025 | gurufocus.comGenesis Energy LP Announces Quarterly Cash Distribution and Upcoming Earnings CallApril 10, 2025 | gurufocus.comGenesis Energy, L.P. Declares Quarterly Distribution | GEL Stock NewsApril 10, 2025 | gurufocus.comSee More Genesis Energy Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Genesis Energy? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Genesis Energy and other key companies, straight to your email. Email Address About Genesis EnergyGenesis Energy (NYSE:GEL) provides integrated suite of midstream services in crude oil and natural gas industry in the United States. It operates through Offshore Pipeline Transportation, Soda and Sulfur Services, Marine Transportation, and Onshore Facilities and Transportation segments. The Offshore Pipeline Transportation segment engages in offshore crude oil and natural gas pipeline transportation and handling operations, as well as deep water pipeline servicing. This segment also owns interests in offshore crude oil and natural gas pipeline systems, platforms, and related infrastructure. The Soda and Sulfur Services segment produces, markets, and sells soda ash; and provides sulfur removal services. This segment also owns and operates soda ash production facilities, underground trona ore mines and brine solution mining operations and related equipment, and logistics and other assets; and sells sodium hydrosulfide and caustic soda to industrial and commercial companies involved in the mining of base metals. The Marine Transportation segment offers waterborne transportation of petroleum and crude oil in North America. This segment owns a fleet of 91 barges and 42 push/tow boats. The Onshore Facilities and Transportation segment offers onshore facilities and transportation services to crude oil refineries and producers by purchasing, transporting, storing, blending, and marketing crude oil and refined products; and operates trucks, trailers, railcars, and terminals and tankage in various locations along the Gulf Coast. This segment also transports crude oil, as well as owns four onshore crude oil pipeline systems and four operational crude oil rail unloading facilities. The company was incorporated in 1996 and is headquartered in Houston, Texas.View Genesis Energy ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Markets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Texas Instruments: Earnings Beat, Upbeat Guidance Fuel RecoveryMarket Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of Earnings Upcoming Earnings AstraZeneca (4/29/2025)Booking (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Regeneron Pharmaceuticals (4/29/2025)Starbucks (4/29/2025)American Tower (4/29/2025)América Móvil (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 5 speakers on the call. Operator00:00:00Greetings and welcome to Genesis Energy L. P. 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. Operator00:00:23I would now like to turn the conference over to your host, Duane Morley, Vice President of Investor Relations. Speaker 100:00:30Thanks, Rob. Good morning. Welcome to the 2023 Q4 conference call for Genesis Energy. Genesis Energy has 4 business segments. The Offshore Pipeline Transportation segment is engaged in providing the critical infrastructure to move oil produced in the long lived world class reservoirs in the Deepwater Gulf of Mexico to onshore refining centers. Speaker 100:00:50The Soda and Sulfur Services segment includes trona and trona based flooring, mining, processing, producing, marketing and selling activities as well as the processing of sour gas streams to remove sulfur at refining operations. The Onshore Facilities and Transportation segment is engaged in the transportation, handling, blending, storage and supply of energy products, including crude oil and refined products. The Marine Transportation segment is engaged in the marine transportation of primarily refined petroleum products. Genesis' operations are primarily located in Wyoming, the Gulf Coast States and the Gulf of Mexico. During this conference call, management may be making forward looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Speaker 100:01:36The law provides Safe Harbor protection to encourage companies to provide forward looking information. Genesis intends to avail itself of those Safe Harbor provisions and directs you to its most recently filed and future filings with the Securities and Exchange Commission. We also encourage you to visit our website at genesisenergy.com, where a copy of the press release we issued today is located. The press release also presents a reconciliation of non GAAP financial measures to the most comparable GAAP financial measures. At this time, I'd like to introduce Grant Sims, CEO of Genesis Energy LP. Speaker 100:02:09Mr. Sims will be joined by Kristin Jesselaitis, Chief Financial Officer and Chief Legal Officer Brian Sims, President and Chief Commercial Officer and Louis Nickel, Chief Accounting Officer. Speaker 200:02:20Thanks, Joanne. Good morning to everyone and thank you for listening to the call. As we mentioned in our earnings release this morning, our financial results for the Q4 came in ahead of our internal expectations and the performance of our diversified market leading businesses helped contribute towards a record year for Genesis. For the full year, we reported adjusted EBITDA of $756,000,000 which was above the top end of our most recent full year guidance and approximately 11% over our normalized 2022 results. During the quarter, our Offshore Pipeline Transportation segment benefited from steady and increasing volumes through our pipelines, while our Marine Transportation segment continued to exceed expectations, driven in large part by the continued structural tightness in the Jones Act market. Speaker 200:03:12Our soda ash business finished off the best year in its history and continued to perform in line with our expectations during the quarter despite softer soda ash prices and a more challenging grow environment in the back half of the year. This strong consolidated financial performance in the 4th quarter resulted in our leverage ratio as calculated by our senior secured lenders ending the quarter and the year at 3.96 times as well as a coverage ratio for the current distribution to all our common unitholders of 4.8 times. As we look ahead to 2024. We remain encouraged with the fundamentals and exciting prospects for our largest business in the Gulf of Mexico. Our Offshore Pipeline Transportation segment contribution is expected to be flat year over year, given a certain economic step down associated with 10 year anniversary of an existing one off life of lease transportation contract that will somewhat sequentially mask the financial contribution from the continued growth in volumes and strong activity levels around our irreplaceable assets. Speaker 200:04:22Importantly, we're now a short time away from completing the CHOPS expansion and commissioning our new sink pipeline. The fully contracted upstream developments underpinning these investments, Shenandoah and Salamanca, along with Other already identified subsea tiebacks are expected to come online will provide us with more than an incremental 100 $10,000,000 of annual offshore segment margin when fully ramped and would be reasonably expected to contribute for decades decades to come. The soda ash market remains looser than a year ago and is currently consistent with the macro conditions we saw and previously discussed in the back half of last year. While we expect to see contract prices in our domestic market flat to slightly up in the mid single digits year over year. It's most likely that we see weaker pricing in our export markets in 'twenty four versus our average realized prices last year. Speaker 200:05:24Even with an optimized Granger online, we would therefore reasonably expect margin from our soda ash business to be at or near the low end of our previously provided historical contribution margin range of $200,000,000 to $300,000,000 per year. Having said that, we are of the mindset that the market is not as oversupplied as some might argue. We believe inventories are very low, demand is not really that bad, driven in large part by demand for solar panels and electric vehicles, and that the market might be underestimating the effects of reduced synthetic ash production and the change in physical flows of soda ash supplies we are seeing worldwide. We continue to As we move through 'twenty four and certainly into 'twenty five, the soda ash export markets in which we primarily compete, namely Asia outside of China and Latin America could fairly quickly come into better balance, which should help our soda ash business to a more normalized mid cycle earnings profile starting as early as 2025. In our Marine Transportation segment, We expect 2024 to be another strong, if not record year, driven in large part by the continuing tight supply and demand dynamics in the Jones Act market. Speaker 200:06:45This structural backdrop is expected to continue to support increasing day rates and full practical utilization across all classes of our marine vessels throughout 2024. Based on the backdrop currently expected in 2024, We expect to generate adjusted EBITDA this year in the range of $680,000,000 to $740,000,000 which includes Approximately $10,000,000 of one time incremental G and A cost as we conform our short term cash incentive programs to industry standards and approximately $10,000,000 of reduced margin from weather related events we budget for in the 3rd quarter, something that we fortunately did not experience in 2023. The range of outcomes we have laid out for 2024 will be driven primarily by the pace at which soda ash prices recover in our export markets throughout the year. The midpoint of our guidance range assumes a moderate recovery starting in the middle of the year, while the bookings of the range assume little to no recovery from the Q1 and a much faster recovery in the back half of the year, respectively. Despite the midpoint being marginally down versus our 2023 results, but still 5% or so above normalized 2022 earnings, It is important to remember that we have always viewed 2024 as the year during which we will reach the inflection point where our major capital spending will be complete and we will enter 2025 with a known and contracted significant step change in earnings from the offshore as well as likely momentum towards a back towards a mid cycle soda ash environment. Speaker 200:08:31The combination of these events will provide us with increasing amounts of free cash flow after all our cash obligations and generate increased financial flexibility to continue to simplify our capital structure, return to our stakeholders and ultimately allow us to continue to build long term value for everyone in the capital structure for many years ahead. Now I'll touch briefly on our individual business segments. Our Offshore Pipeline Transportation segment continued to perform in line with our expectations, driven in large part by steady and marginally increasing volumes across our system. We continue to see a steady increase in volumes from BP's Argos facility, which is now producing over 100,000 barrels per day along with steady volumes from Mad Dog, Atlantis, Kings Key, Spruance, Katmai, Shenzi, Constitution, Lucius and other major producing fields in the Central Gulf of Mexico. We also announced this morning that we recently entered into agreement Beacon and other interest owners to provide downstream transportation services for 100% of the crude oil associated with the Deepwater Gulf Winterfell development on our CHOPS pipeline to shore. Speaker 200:09:48Winterfell will be developed via new subsea tieback to the existing Heidelberg spar and importantly will require no capital by Genesis. It is anticipated to initiate deliveries as early as April of this year. In addition to Winterfell, BP and other working interest owners in the Mad Dog Tootfield also recently sanctioned the Mad Dog Argos Southwest Extension project. This will be a 3 well tie back to the existing Argos production facility that will come online and provide additional volumes on our CHOP system for transportation to shore in the not too the future. These are both yet again exciting and prime examples of subsea tiebacks that leverage an existing host platform that is already connected to our market leading infrastructure in the Central Gulf of Mexico. Speaker 200:10:42While we continue to have additional commercial discussions with multiple similar opportunities that could turn to additional volumes over the next few years, All of these recent new facilities like Shenandoah and Salamanca and other developments that have or soon will be connected to our system over the next 12 18 months will continue to provide Genesis with a solid foundation of volume growth to build upon starting in 2025. As we look out past 2025, we'd be remiss to not mention the results of the BOEM's most recently sold number 261, which was held on December 20, 2023. The results of the lease sale continue to solidify our and the upstream industry's belief and view that there remains significant long term interest in the geographies of the Central Gulf of Mexico, where our Existing lease sale raised approximately $381,000,000 in high bids for 311 tracks covering roughly 1 point 7,000,000 acres in federal waters of the Gulf of Mexico with about half of that or 883,000 located in the Central Gulf of Mexico. When combined with the results from lease sale 259, which was held in March 2023, We've seen over 3,400,000 acres leased in federal waters in the Gulf of Mexico with approximately point 6,000,000 acres leased in the Central Gulf of Mexico where our pipelines are located. Speaker 200:12:14Suffice it to say, The results from these 2 most recent lease sales will only be additive to the decades decades of inventory that already exist and valid leases in the Central Gulf. The combination of our continuing increasing base production volumes, the contracted opportunities we have coming online over the next 12 months and the ever expanding backlog of available acreage producers to identify, explore, pursue and develop incremental opportunities will allow us to remain well positioned to deliver steady, stable and growing cash flows from our offshore pipeline transportation segment for many, many years decades to come. Turning now to our Soda and Sulfur Services segment. Our soda ash business generally performed in line with our expectations during the quarter As the global macro conditions remained relatively consistent with the sloppiness we first started to see in mid Q2 of 2023, Despite the current challenging supply and demand dynamic, we continue to believe the market is not as far away as it might seem from balancing and that any sort of structural demand uptick or supply disruption could drive a rapid price increase. As we mentioned last quarter, we continue to believe it will be a combination of supply rationalization and a demand recovery that will ultimately help balance the market. Speaker 200:13:44In fact, we are starting to see glimpses of this balancing to occur. For instance, within China, The new natural production facility in Air Mongolia is reported to be up and running at or near full capacity. Despite headlines around the real estate sector in China, We believe the demand for soda ash in China grew around 7% in 2023, driven primarily by solar panel construction and electric vehicle manufacturing. We also believe approximately 2 3,000,000 tons of high cost synthetic production in Mainland China has been partially shut down or is capacity constrained due to environmental issues or other factors. These data points would lead us to believe that the market within China is reasonably balanced today and the vast majority of the new natural production is in fact being consumed and absorbed within China, putting pressure on higher cost synthetic producers within China. Speaker 200:14:48Export data does not support the notion of a wave of Chinese So they're looking for a home in other Asian economies. In fact, late last year and here in the Q1, given where prices were and or domestically in China, certain natural gas natural soda ash producers started to rotate production away from Europe and Southeast Asia and sold volumes into China directly to capture higher realized netback prices. As we look outside of China, we continue to believe certain other synthetic production facilities are uneconomic at these pricing levels and those producers are unable to cover their marginal operating costs. And as a result, we can continue to see further synthetic supply rationalization. For example, a certain European synthetic producer recently shuttered 300 tons of annual supply in Spain to optimize its production and adapt to changing market dynamics. Speaker 200:15:49Further, 3rd party research is estimating that approximately 150,000 tons will come offline this year from a producer in the United States, Not us. We further anticipate approximately 300,000 tons will leave Southeast Asia and return to Europe to take advantage of its logistical advantages and to avoid certain problematic shipping lanes that are further increasing transportation costs and impacting supply chain logistics for such tons to go from Europe to Asia. All of these data points indicated to us that the export markets in which we can peak could dramatically tighten and quite possibly sooner rather than later. As we stated in our earnings release, we reached substantial completion and commissioned our Grainger expansion project during the Q4. While we continue to work through typical start up matters, we ultimately expect the expansion to add upwards of approximately 750,000 tons a year with a very attractive marginal operating cost per ton to our supply capabilities in 2024. Speaker 200:16:56This will both increase our sales volumes and lower our operating cost per ton at Granger and throughout our entire soda ash operations, ultimately helping us offset some of the impacts of lower soda ash prices. Pro form a for the Granger expansion, we continue to believe our 4,700,000 to 4,800,000 tons of annual soda ash production will provide us with the cost structure and scale to be successful across all economic cycles as one of the largest and lowest cost suppliers in the world. Not a bad place to be for a commodity, which yes, has some pricing volatility, but has no known substitutes and solid long term fundamentals for many decades to come. It is interesting to note that with an optimized Granger facility, if soda ash prices were to return to actual prices we received in 2023 or 2022 for that matter, we would expect to realize well north of $300,000,000 a year in contribution from this business. Segment continues to meet or exceed our expectations as market conditions and demand fundamentals continue to remain steady. Speaker 200:18:14As mentioned in the release, we continue to operate with utilizations rate atornear100 percent of practical available capacity for all classes of our vessels as the supply and demand outlook for Jones Act tankage remains structurally tight. This structural change in market dynamics has been driven by a combination of steady and robust demand, the continued retirements of older equipment and effectively 0 new construction of our types of marine vessels. This lack New supply of marine tonnage combined with steady increase in demand continues to drive spot day rates and longer term contracted rates in both of our fleets to record levels. In addition, I'm happy to report that we also started the American Phoenix most recent charter a few weeks ago at a day rate approximately 22% higher than the day rate in the 4th quarter, which I'll remind you also escalates for the term of the agreement for the next 3.5 years. Based on recent industry commentary and various market data points, We continue to have the view that current day rates need to rise significantly in order to rationalize construction of new comparable marine equipment. Speaker 200:19:33Furthermore, limited shipyard availability, extended construction timelines and increasingly high cost of construction should provide support for elevated and marginally increasing day rates from many years ahead. These broader fundamentals combined with our increasingly termed out contracted portfolio, including the new 3.5 year contract for the American Phoenix I referenced, All lead me to believe our Marine Transportation segment is well positioned to deliver record and growing earnings over the coming years. As I mentioned earlier and will reiterate again, the long term story for Genesis has never been brighter and remains totally intact. We remain focused on completing our growth capital program in the next 9 months to 12 months, all while having No debt maturities until 2026, an increasingly clear line of sight to generating roughly $250,000,000 to $350,000,000 or more of free cash flow on an annualized basis after all cash obligations starting in 2025. I would also point out that this expectation remains on track even if it might take a little bit longer than we expect for the inevitable recovery in soda ash export crisis off the lows we're seeing here in early 2024. Speaker 200:20:59We will continue to evaluate the various levers we can pull to our stakeholders, including paying down debt, raising our common distribution, repurchasing additional amounts of our corporate continuing to purchase our common units or any mispriced debt securities, all while maintaining an appropriate level of liquidity and of course maintaining a focus on our long term leverage ratio. Finally, I'd like to say the management team and the Board of Directors remain steadfast in our commitment to building long term value for all our stakeholders. We believe the decisions we are making reflect this commitment and our confidence in Genesis moving forward. I would once again like to recognize our entire workforce for their individual efforts and unwavering commitment to safe and responsible operation. I am Operator00:22:33Our first question comes from Michael Blum with Wells Fargo. Please proceed with your question. Speaker 300:22:39Thanks. Good morning, everyone. I wanted to ask on Marine Transportation, obviously, really Strong outlook at this point. I wanted to ask first, is there given the market dynamics and ability to effectively lengthen the terms of these contracts to lock in these favorable rates? And then Kind of on the flip side, given how strong things are right now, is that a segment that you would consider divesting or that's something you've talked about in the past? Speaker 200:23:16We're approaching the current contracting world by putting extending the length and the percentage of our vessels which are under longer term contracts. So it's indeed a good time to lock in some of these rates. But we still believe that as we said in the comments that We view that rates have to kind of go up from here in order to really solve the structural issues. So we are maintaining a balance that are of vessels which are exposed to increasing day rates on the spot market. So we feel very good about the where we are. Speaker 200:24:01In terms of the potential to Ultimately exit the business, I think that we're committed to it. It's a very good business, obviously cyclical, The next 3 to 5 years, we view as very strong for the business and could be even beyond that and lessen until Other people initiate significant construction programs, which is the only way that you're going to solve or the supply demand imbalance for Jones Act tonnage. Speaker 300:24:39Got it. Thanks for that. And then just wanted to ask a little bit of left field here, but there's been some recent press about ideas to use sodium to replace lithium for EV batteries. Just curious if that's something you're hearing about from any potential customers as it relates to your soda ash business? Thanks. Speaker 400:25:00Yes, Michael, this is Ryan. We have seen reports of that. I think a lot of it's coming out of China the sodium ion batteries, and certainly, that would help from a demand perspective. We see some growth there. So I think overall it's a positive for the industry, but it's still in its early stages. Speaker 200:25:23Thank you. Even in the lithium carbonate world, if you look at some of the more recent public pronouncements of the large Public lithium producers, lithium demand being driven by EV batteries, which And most processes require 2 parts of soda ash per one part of lithium to make lithium carbonate The demand profile for soda ash is a drag along, if you will, from the Increased lithium demand is a very positive for our business. Operator00:26:26There are no further questions at this time. I'd like to turn the call back over to Grant Sims for closing comments. Speaker 200:26:32Again, thanks everybody for listening to the call and we look forward to visiting with you in 90 days, if not sooner. So thank you.Read morePowered by