Business Segment Information

In the fourth quarter of 2016, we reorganized our operating segments as a result of the way our Chief Executive Officer, who is our chief operating decision maker, evaluates the performance of operations, develops strategy and allocates resources. The results of our onshore pipeline transportation segment, formerly reported under its own segment, are now reported in our onshore facilities and transportation segment. The onshore facilities and transportation segment was formerly named our supply and logistics segment. This segment was renamed in the second quarter of 2017 to more accurately describe the nature of its operations. This change is consistent with the increasingly integrated nature of our onshore operations.

On September 1, 2017, we acquired Tronox’s Alkali Business for approximately $1.325 billion in cash. We funded that acquisition and the related transaction costs with proceeds from a $750 million private placement of convertible preferred units, a $550 million public offering of notes, our revolving credit facility, and cash on hand. At the closing, we entered into transition service agreements to facilitate the transition of operations and uninterrupted services for both employees and customers. We will report the results of our Alkali Business in our renamed sodium minerals and sulfur services segment, which will include our Alkali Business as well as our existing refinery services operations.

As a result of the above changes, we currently manage our businesses through four divisions that constitute our reportable segments - offshore pipeline transportation, sodium minerals and sulfur services, onshore facilities and transportation and marine transportation. Our disclosures related to prior periods have been recast to reflect our reorganized segments.

We currently manage our businesses through four divisions that constitute our reportable segments:


•	Offshore pipeline transportation – offshore pipeline transportation and processing of crude oil and natural gas in the Gulf of Mexico;


•	Sodium minerals and sulfur services – trona and trona-based exploring, mining, processing, producing, marketing and selling activities, as well as processing high sulfur (or “sour”) gas streams as part of refining operations to remove the sulfur and selling the related by-product, NaHS;


•	Onshore facilities and transportation – terminalling, blending, storing, marketing and transporting crude oil, petroleum products (primarily fuel oil, asphalt, and other heavy refined products) and CO₂.


•	Marine transportation – marine transportation to provide waterborne transportation of petroleum products and crude oil throughout North America; and

Substantially all of our revenues are derived from, and substantially all of our assets are located in, the United States.

We define Segment Margin as revenues less product costs, operating expenses (excluding non-cash gains and charges, such as depreciation, depletion 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 legacy stock appreciation rights plan and includes the non-income portion of payments received under direct financing leases.

Our chief operating decision maker (our Chief Executive Officer) evaluates segment performance based on a variety of measures including Segment Margin, segment volumes, where relevant, and capital investment.

Segment information for the periods presented below was as follows:



	Offshore Pipeline Transportation			Sodium Minerals & Sulfur Services			Marine Transportation		Onshore Facilities & Transportation			Total
Three Months Ended September 30, 2017
Segment margin (a)	$	78,228		$	30,031		$	12,649	$	25,606		$	146,514
Capital expenditures (b)	$	2,356		$	1,330,947		$	23,831	$	26,578		$	1,383,712
Revenues:
External customers	$	80,671		$	111,756		$	46,084	$	247,603		$	486,114
Intersegment (c)	—			(1,991		)	2,450		(459		)	—
Total revenues of reportable segments	$	80,671		$	109,765		$	48,534	$	247,144		$	486,114
Three Months Ended September 30, 2016
Segment margin (a)	$	86,557		$	20,526		$	16,697	$	17,560		$	141,340
Capital expenditures (b)	$	3,977		$	488		$	26,937	$	85,348		$	116,750
Revenues:
External customers	$	89,717		$	48,069		$	53,573	$	268,691		$	460,050
Intersegment (c)	—			(2,344		)	1,712		632			—
Total revenues of reportable segments	$	89,717		$	45,725		$	55,285	$	269,323		$	460,050
Nine Months Ended September 30, 2017
Segment Margin (a)	$	243,528		$	63,864		$	39,768	$	71,999		$	419,159
Capital expenditures (b)	$	8,498		$	1,331,892		$	44,496	$	115,663		$	1,500,549
Revenues:
External customers	$	244,653		$	204,237		$	143,599	$	715,839		$	1,308,328
Intersegment (c)	(1,216		)	(6,358		)	8,439		(865		)	—
Total revenues of reportable segments	$	243,437		$	197,879		$	152,038	$	714,974		$	1,308,328
Nine Months Ended September 30, 2016
Segment Margin (a)	$	249,457		$	61,586		$	53,695	$	63,969		$	428,707
Capital expenditures (b)	$	35,175		$	1,645		$	62,928	$	258,681		$	358,429
Revenues:
External customers	$	242,672		$	136,437		$	155,197	$	750,134		$	1,284,440
Intersegment (c)	2,165			(6,852		)	4,733		(46		)	—
Total revenues of reportable segments	$	244,837		$	129,585		$	159,930	$	750,088		$	1,284,440

Total assets by reportable segment were as follows:



	September 30, 2017		December 31, 2016
Offshore pipeline transportation	$	2,507,540	$	2,575,335
Sodium minerals and sulfur services	1,826,815		395,043
Onshore facilities and transportation	1,939,355		1,875,403
Marine transportation	811,870		813,722
Other assets	52,054		43,089
Total consolidated assets	7,137,634		5,702,592


(a)	A reconciliation of total Segment Margin to net income attributable to Genesis Energy, L.P. for the periods is presented below.


(b)	Capital expenditures include maintenance and growth capital expenditures, such as fixed asset additions (including enhancements to existing facilities and construction of growth projects) as well as acquisitions of businesses and contributions to equity investees related to same.


(c)	Intersegment sales were conducted under terms that we believe were no more or less favorable than then-existing market conditions.

Reconciliation of total Segment Margin to net income:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Total Segment Margin	$	146,514		$	141,340		$	419,159		$	428,707
Corporate general and administrative expenses	(18,230		)	(10,420		)	(33,694		)	(32,269		)
Depreciation, depletion, amortization and accretion	(66,436		)	(57,103		)	(184,213		)	(168,491		)
Interest expense	(47,388		)	(34,735		)	(122,117		)	(104,657		)
Adjustment to exclude distributable cash generated by equity investees not included in income and include equity in investees net income ⁽¹⁾	(7,136		)	(9,063		)	(25,566		)	(30,818		)
Non-cash items not included in Segment Margin	(4,788		)	993			(6,218		)	(3,366		)
Cash payments from direct financing leases in excess of earnings	(1,751		)	(1,586		)	(5,127		)	(4,645		)
Differences in timing of cash receipts for certain contractual arrangements ⁽²⁾	5,847			3,624			11,694			9,629
Gain on sale of assets	—			—			26,684			—
Non-cash provision for leased items no longer in use	—			—			(12,589		)	—
Income tax expense	(320		)	(949		)	(878		)	(2,959		)
Net income attributable to Genesis Energy, L.P.	$	6,312		$	32,101		$	67,135		$	91,131


(1)	Includes distributions attributable to the quarter and received during or promptly following such quarter.


(2)	Certain cash payments received from customers under certain of our minimum payment obligation contracts are not recognized as revenue under GAAP in the period in which such payments are received.