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Genesis Energy L.P. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 29, 2012 12:17PM
Genesis Energy L.P. (GEL) filed Annual Report for the period ended 2011-12-31. Genesis Energy has a market cap of $2.29 billion; its shares were traded at around $31 with a P/E ratio of 33.2 and P/S ratio of 0.7. The dividend yield of Genesis Energy stocks is 5.5%. Genesis Energy had an annual average earning growth of 4.2% over the past 10 years.
Highlight of Business Operations:All of our operations are in the United States. Additionally, we transport and sell NaHS to customers in South America and Canada. Revenues from customers in foreign countries totaled approximately $19.7 million, $14.5 million and $9.5 million in 2011, 2010 and 2009, respectively. The remainder of our revenues was generated from sales to customers in the United States.
We will be considered to have terminated our partnership for federal income tax purposes if there is a sale or exchange of 50% or more of the total interests in our capital and profits within a twelve-month period. Our termination would, among other things, result in the closing of our taxable year for all unitholders, which would result in us filing two tax returns (and unitholders receiving two Schedule K-1s) for one fiscal year. Our termination could also result in a deferral of depreciation deductions allowable in computing our taxable income. In the case of a common unitholder reporting on a taxable year other than a fiscal year ending December 31, the closing of our taxable year may result in more than twelve months of our taxable income or loss being includable in his taxable income for the year of termination. Our termination currently would not affect our classification as a partnership for federal income tax purposes, but instead, we would be treated as a new partnership for tax purposes. If treated as a new partnership, we must make new tax elections and could be subject to penalties if we are unable to determine that a termination occurred.
Our revenues for the year ended December 31, 2011 increased $988.3 million, or 47% from 2010. Additionally, our costs and expenses increased $878.5 million or 41% between the two periods. The majority of our revenues and our costs are derived from the purchase and sale of crude oil and petroleum products. The significant increase in our revenues and costs between 2011 and 2010 is primarily attributable to the fluctuations in the market prices for crude oil and petroleum products. For example, prices for West Texas Intermediate, or WTI, crude oil on the New York Mercantile Exchange averaged $95.12 per barrel in 2011, as compared to $79.53 per barrel in 2010, or a 20% increase. Net income (attributable to us) increased $99.7 million in 2011 to $51.2 million from a net loss (attributable to us) of $48.5 million in 2010. The increase in net income during 2011 primarily reflects the non-cash charges of $76.9 million we recorded in 2010 for executive and equity-based compensation borne by our general partner. In addition, segment results for all of our segments improved during 2011 as volumes increased. Our increased segment results were partially offset by increases in depreciation and amortization expense and interest costs.
Revenues in 2010 increased $666 million or 46% from 2009. Excluding non-cash charges for executive compensation borne by our general partner, our costs and expenses increased $652 million, or 47%, between the periods. The increase in revenues and cost expenses primarily reflects a 29% increase in the per barrel price of WTI crude oil in 2010 as compared to 2009. Also contributing to the impact was an increase in volumes in all of our segments, particularly in our supply and logistics segment where volumes increased by almost 30% between 2010 and 2009. Net income (attributable to us) declined $56.5 million in 2010 from 2009 primarily reflecting an increase in non-cash charges of $62.8 million included in general and administrative expenses related to executive and equity-based compensation
As is common in the industry, our onshore crude oil tariffs incorporate a loss allowance factor that is intended to, among other things, offset losses due to evaporation, measurement and other losses in transit. We value the variance of allowance volumes to actual losses at the average market value at the time the variance occurred and the result is recorded as either an increase or decrease to tariff revenues. The increase in market prices for crude oil increased the value of our pipeline loss allowance volumes and, accordingly, our loss allowance revenues. Average crude oil market prices increased approximately $16 per barrel between the two periods. Based on historic volumes, a change in crude oil market prices of $10 per barrel has the effect of decreasing or increasing our pipeline loss allowance revenues by approximately $0.1 million per month.
Stocks Discussed: GEL,