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Genesis Energy, L.P. Reports Third Quarter 2012 Results

Stocks in this article: GEL

Subsequent to the end of the quarter, we facilitated the orderly exit of several large unitholders. I believe the important message in those transactions is that our largest unitholders and management actually significantly increased their ownership in the partnership.

As we look forward to the fourth quarter and into 2013, we would expect to see continuing sequential quarterly growth as we will benefit from the end to the extended maintenance at several offshore fields dedicated to our pipeline transportation segment, the return of development drilling at those dedicated fields, the contribution from our previously announced projects at Walnut Hill, in Texas City, and Natchez, as well as the continuing integration of our substantially expanded asset footprint, service capabilities and customer relationships. Consequently, we believe we are well positioned to achieve our goals of continuing to deliver double-digit growth in distributions, increasing our coverage ratio and maintaining a better than investment grade leverage ratio, all without ever losing sight of our commitment to safe, reliable and responsible operations.”

Financial Results

Available Cash before Reserves (a non-GAAP measure) increased to $45.9 million in the third quarter of 2012 as compared to $37 million for the same period in 2011. The primary components impacting Available Cash before Reserves are Segment Margin, corporate general and administrative expenses (excluding non-cash charges), interest expense and maintenance capital expenditures. Variances from the third quarter of 2011 in these components are explained as follows:

Segment Margin

Segment Margin is defined and reconciled later in this press release to income before income taxes. During the third quarter of 2012 (or “2012 Quarter”), Segment Margin increased $13 million over the third quarter of 2011 (or “2011 Quarter”) primarily reflecting the impact of acquisitions and higher volumes in our pipeline transportation and supply and logistics segments.

Segment results for the third quarters of 2012 and 2011 were as follows:

  Three Months EndedSeptember 30,
2012   2011
(in thousands)
Pipeline transportation $ 23,295 $ 16,030
Refinery services 18,983 17,992
Supply and logistics 23,651 18,909
Total Segment Margin (1) $ 65,929 $ 52,931

(1) We define Segment Margin as revenues less product costs, operating expenses (excluding non-cash charges, such as depreciation and amortization), and segment general and administrative expenses, plus our equity in distributable cash generated by our equity investees. In addition, our Segment Margin definition excludes the non-cash effects of our stock appreciation rights plan and includes the non-income portion of payments received under direct financing leases. A reconciliation of Segment Margin to income before income taxes is presented for periods presented in the table at the end of this release.

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