- Genesis Energy 1Q22 results beat. Segment margin beat our model by 14% and adjusted EBITDA beat by 4%. Management guided to high end of its previous range on the segment.
- New contracts/CHOPS expansion is more important. Management said it signed two agreements for an aggregate 160,000bpd on CHOPS.
- Raising outlook. Our 2023-2024E EBITDA by low single digits and our valuation outlook tracks higher.
- Balance sheet to continue strengthening: We forecast leverage to fall to 4.8x Debt/EBITDA by the end of 2022 and under 4x by the end of 2023 which would enable a strong increase to distributions/unit.
- Bottom line is, we forecast above average returns the next two years: We forecast the units to reach $15-$17 by the end of this year and $28-$30 by the end of 2023.
For further details see:
Genesis Energy: New Contracts For 160,000 Bpd Of Oil Transport On CHOPS Affirms Our Bullish Stance