In This Article:
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Offshore Pipeline Transportation Segment Growth: Expected upwards of 20% sequential growth in 2025.
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Marine Transportation Segment Performance: Anticipated record results in 2025 with increasing day rates and high utilization.
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Soda Ash Segment Margin: Expected to be at or near 2024 levels due to challenging market conditions.
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Adjusted EBITDA: Projected to be around $700 million in 2025 and $800 million in 2026.
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Cash Cost of Operations: Estimated at $600 million to $625 million per year.
Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Genesis Energy LP (NYSE:GEL) is nearing the completion of its major capital spending program, which will soon allow the company to generate cash from operations in excess of cash costs.
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The offshore pipeline transportation segment is expected to see significant growth in 2025, with new developments Shenandoah and Salamanca on schedule for production.
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Marine transportation segment is projected to deliver record results in 2025 due to increased days on the water and rising day rates.
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The company is implementing cost-saving initiatives in its soda and sulfur services segment, which should benefit future financial performance.
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Genesis Energy LP (NYSE:GEL) plans to use excess cash flow to pay down debt and return capital to unit holders, strengthening its financial position.
Negative Points
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The soda ash market remains challenging, with prices expected to stay low due to a well-supplied market and mixed demand.
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Mechanical issues affecting offshore producers have impacted production, though some issues are expected to be resolved soon.
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The company anticipates a 'sideways' year for its soda ash business, with segment margins expected to remain flat compared to 2024.
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Genesis Energy LP (NYSE:GEL) is not pursuing any capital-intensive projects in the near future, which may limit growth opportunities.
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The company faces challenging macro conditions in its soda ash market, with a need for further supply rationalizations to help prices recover.
Q & A Highlights
Q: Can you discuss the potential cash flow impact if offshore production challenges persist throughout 2025? A: Grant Sims, CEO, stated that the guidance includes some cushion for potential delays, estimating the impact to be between $5 million and $10 million. However, some issues have already been resolved, and they do not foresee these challenges lasting throughout 2025.
Q: Does the 2026 EBITDA forecast of $800 million assume continued improvement in the marine business? A: Grant Sims, CEO, indicated that the forecast assumes a reasonably flat performance in the marine business, maintaining the current level of around $130 million to $140 million.