Genesis Energy Q4 Profit Down 34% Despite Higher Revenues

(RTTNews) - Genesis Energy L.P. (GEL) on Tuesday reported a 34 percent decline in profit for the fourth quarter from last year, reflecting derivative losses as well as higher depreciation and amortization expenses that offset an increase in revenues. Earnings per share for the quarter missed analysts' expectations.

In a separate statement, Genesis Energy said it plans to invest about $150 million to construct a new crude oil, intermediates and refined products import/export terminal in Baton Rouge, Louisiana.

The Houston, Texas-based midstream energy master limited partnership's net income for the fourth quarter was $17.89 million or $0.20 per common unit, down from $26.94 million or $0.34 per common unit in the prior-year period.

Net income from continuing operations declined to $16.72 million or $0.19 per unit, from $26.99 million or $0.34 per unit in the year-ago quarter. On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.36 per share for the quarter. Analysts' estimates typically exclude one-time items.

The decline in profit was mainly due to the combination of non-cash unrealized loss of $4.12 million on the company's derivative transactions, an increase in depreciation and amortization expense of $2.29 million due to the company's acquisition of its offshore marine transportation assets and recently completed internal growth projects, and higher interest expense of $2.1 million.

However, revenues for the quarter grew 5 percent to $961.04 million from $919.06 million in the year-ago period. Analysts had a consensus revenue estimate of $1.45 billion for the quarter.

Genesis Energy noted that its pipeline transportation segment, operating results were adversely affected by about $1.5 million due to lower than expected throughput volumes on the company's Free State CO2 pipeline due to repairs, and also reflecting foregone transportation revenues on the company's Texas pipeline system due to final tie-in of its new facilities.

In the supply and logistics segment, operating results were negatively impacted by about $3.3 million due to transition costs incurred in the company's offshore marine transportation acquisition, and continued challenges in the company's fuel oil business, the company expects will continue at least through the first quarter of 2014.

For fiscal 2013, Genesis Energy's net income declined to $86.11 million or $1.03 per common unit from $96.32 million or $1.23 per common unit in the prior year. Earnings from continuing operations were $1.00 per common unit, compared to $1.24 per common unit last year.

However, revenues for the year rose to $4.13 billion from $3.37 billion in the prior year.

Street expected the company to earn $1.19 per share for the year on revenues of $5.07 billion.

Genesis Energy said that on February 14, 2014, it paid a total quarterly distribution of $47.5 million attributable to its financial and operational results for the fourth quarter of 2013, based on its quarterly declared distribution of $0.5350 per unit. This compares to a quarterly distribution of $0.4850 per unit in the year-ago quarter.

Looking ahead, Grant Sims, CEO of Genesis Energy, said, "We continue to anticipate that we will realize an increasing contribution in 2014 from the combined effects of our recent acquisition and our organic projects. Our two largest projects scheduled for completion in 2014 - our SEKCO joint venture with Enterprise Products and our Scenic Station project around ExxonMobil's Baton Rouge refinery complex - should begin contributing in the second half of 2014 and accelerate into 2015."

Genesis Energy said that the Baton Rouge Terminal will be located on about 90 acres of land near the Port of Greater Baton Rouge and will be connected to the Port's existing deepwater docks on the Mississippi River. The company expects the Baton Rouge Terminal to be operational by the end of the second quarter of 2015.

Genesis Energy noted that the docks are capable of berthing vessels ranging from barges to Aframax class vessels. The company will initially construct about 1.1 million barrels of tankage for the storage of crude oil, intermediates and/or refined products with the capability to expand to provide additional terminaling services to its customers.

The Baton Rouge Terminal will also be connected to Exxon Mobil Corp.'s (XOM) facilities in the area, as well as to Genesis Energy's previously-announced Scenic Station unit train-capable rail facility. Genesis Energy has entered into definitive agreements with Exxon Mobil in which it has secured committed rights for a portion of the capacity at and through Genesis Energy's proposed facilities.

Following its completion, which remains on schedule for the second quarter of 2014, Scenic Station will provide shippers a low cost destination rail facility dually-connected to both the Canadian National Railway and the Kansas City Southern Railway that has interconnectivity with the Canadian Pacific Railway.

In Tuesday's regular session, GEL is trading at $54.72, down $1.55 or 2.75 percent on a volume of 81,637 shares.