Greetings, and welcome to the Genesis Energy LP Second Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dwayne Morley, Vice President of Investor Relations.

Good morning. Welcome to the 2022 Second Quarter Conference Call for Genesis Energy. Genesis has 4 business segments. The Offshore Pipeline Transportation segment is engaged in providing the critical infrastructure to move oil produced from the long-lived, world-class reservoirs from the deepwater Gulf of Mexico to onshore refining centers. The Sodium Minerals and Sulfur Services segment includes trona and trona-based exploring, mining, processing, producing, marketing and selling activities as well as the processing of sour gas streams to remove sulfur at refining operations. The Onshore Facilities and Transportation segment is engaged in the transportation, handling, blending, storage and supply of energy products, including crude oil and refined products. The Marine Transportation segment is engaged in the maritime transportation of primarily refined products. Genesis' operations are primarily located in Wyoming, the Gulf Coast states and the Gulf of Mexico. During this conference call, management may be making forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The law provides safe harbor provisions -- protection to encourage companies to provide forward-looking information. Genesis intends to avail itself of those safe harbor provisions and directs you to its most recently filed and future filings with the Securities and Exchange Commission. We also encourage you to visit our website at genesisenergy.com, where a copy of the press release we issued today is located. The press release also presents a reconciliation of non-GAAP financial measures to the most comparable GAAP financial measures. At this time, I'd like to introduce Grant Sims, CEO of Genesis Energy LP. Mr. Sims will be joined by Bob Deere, Chief Financial Officer; and Ryan Sims, Senior Vice President, Finance and Corporate Development.

Good morning to everyone, and thanks for listening in. The second quarter was a great quarter for Genesis as our market-leading businesses exceeded our internal expectations, setting the stage for what we believe is significant growth and improving financial performance over the coming quarters and years. These results were largely driven by a return to normal operations and increasing volumes in our offshore segment relative to the first quarter as well as sequential quarterly growth in each of our other segments, which is reflective of the constructive backdrop for each of our specific businesses. Because of our financial performance in the first half and our expectations for the remainder of 2022, we are today raising our full year guidance for adjusted EBITDA to a range of $670 million to $680 million, which includes the $37 million of nonrecurring benefits in the second quarter we outlined in our release. Importantly, we fully expect to exit 2022 with a leverage ratio as calculated by our senior secured lenders at or below 4.5x, which by the way, is the only relevant leverage covenant anywhere in our capital structure and the only calculation that I think is worth analyzing and talking about. As we mentioned in the release, this quarter just ended is the first time we have reported a leverage ratio under 4.5x since the fourth quarter of 2014. As we look ahead to 2023, we expect sequential growth in our full year financial results, driven primarily by visible growing volumes out of the Gulf of Mexico as well as increased volumes of soda ash as we restart our Granger facility in January and bring the full expansion online in the third quarter. Given the fixed cost economics in the Gulf of Mexico and the structural undersupply in the worldwide soda ash market,…

[Operator Instructions] Our first question is from Karl Blunden with Goldman Sachs.

Congrats on the strong results. I had a question just on the breaking news on the climate spending deal. Solar stocks are up materially today. I'd be interested in your thoughts. Is there a way to quantify the potential benefit to your business? And any context you can provide around that would be helpful?

Well, again, I think that as we've tried to emphasize, the soda ash business is intimately involved in the energy transition. It is an absolute necessary basic building block of glass that we use, specifically in solar panels. So we anticipate getting tailwinds associated with that. Also, it's also important to note that soda ash provides the carbonate and lithium carbonate, which is the fundamental building block of batteries that will go into electric vehicles as well as battery farms for maintaining and storing and distributing as needed power in the future from -- that is generated from solar and wind power and other applications. So we remain very excited about the incremental demand. And as I said in the prepared remarks, normally demand for soda ash kind of increases with industrial production. And so as such, a little bit of that is potentially, at least the growth could be affected by a slowdown and -- in economic activity. But in concert with this impetus and the tailwinds associated with the green initiatives and the transition to a low carbon marketplace, we feel very well about our businesses and how they're positioned to benefit from that.

Right. Just one on the balance sheet. If you take a look at how your bonds have traded, they've really performed really well over the last couple of weeks and have rallied within inside of 10% yields, even the longer-dated bonds. As you think about your priorities over the next year or so for potentially maturity extensions, how should we think about you approaching the 2024 maturities?

Well, I think that we're looking at a variety. Obviously, that's the near-term maturity in the stack. Also because of that maturity, that's our senior secured facility has a tenor just inside that as the banks don't want to be outside of the maturity of an unsecured note. So clearly, it's our focus. We think that we have ample ways to deal with it, especially in the environment of an increasing performance across our businesses. And I mean, even if you look back 1.5 years ago, all of our banks had a proportional position in a term loan A of order of magnitude $350 million, which is pretty much the same amount as the 24. So we feel we have lots of arrows especially in -- given the trajectory of our businesses that we have lots of financial flexibility to deal with the 24s and by dealing with the 24s then also extend the senior secured facility out into 25 or 26 with a springing maturity depending upon how and when we take care of the 25. So we feel very good about where we are.

Our next question comes from T.J. Schultz with RBC.

Thanks for all the details on soda ash. Just as it relates to the outlook on 2023 EBITDA in the low to mid-$700 million range, I guess all equal grant, you threw out that 20% to 30% number as sort of a proxy on how maybe elevated prices are right now versus what is contracted. So as we think about that 2023 EBITDA, is that assuming average soda ash pricing 20% to 30% higher next year? Or is there upside to that? Just any context you can provide to help quantify some of the pricing improvements you're expecting to realize next year. Maybe what some impacts these recent force majeure events have had on prices and how we should kind of think price is trending over the next few months?

Yes. It's a good question, T.J. I'll try to -- the force majeure events, which have occurred in an already tight market, have obviously required spot prices to increase significantly. In our guidance range that we gave, we are being in, at least our view, reasonably conservative in how we view, how the pricing discussions are going to turn out for 2023. We do not expect our overall prices to go up to current market clearing prices simply because of the nature of our contracts with caps and collars. But importantly, my point was that we could have -- even at the margin, we could have a significant pullback in current pricing, and our overall pricing are still going to go up. So the dynamics are all set in place to have price increases. I think that the range, we will be able to tighten up probably on the third quarter call and certainly on the fourth quarter call when 23’s price discovery and negotiations are all set in stone. But -- and then there's a distinct possibility that, that overall range could go up depending upon if the market stays where it's at. But again, we tried to give the -- at least the structural drivers of what's leading to things, and it's really a matter of how we work through our portfolio of laddered contracts, which, as we've publicly said, contained caps and collars, which limit our ability to move everything up, but it's a very favorable environment as we sit here today.

Okay. Makes sense. And then as structurally short as the market is, I guess, it's a little surprising to me that we haven't seen more -- or some of these other kind of natural soda ash expansions or projects coming online similar to the Granger expansion. Is there an outlook that some of those -- are there other kind of natural soda ash expansions that you expect online? Or what's as soon as that some other extensions could occur?

It's our view, just evaluating publicly available information, and that's both from SEC documentation as well as other investor presentations from -- that are available out there in the public domain that we see little chance of anything of substance being on before as a practical matter. As we said, 2025 and probably 2026, I mean, there could be several hundred thousand tons here or there that could possibly be on a year or so tied to that, so in '24, but nothing is significant. So again, we feel that the dynamics are such that, ultimately, the market signals are going to be the more natural production is going to be wanted by the marketplace. But the reality of the time, especially on greenfield developments, is kind of 5 or 6 years. It's pretty aggressive in terms of just permitting and getting all of this done, plus the fact that this is -- we've seen dramatic increases, obviously, in construction costs. The good thing about Granger was is that we locked all of our costs in prior to the inflationary pressures coming. So the -- even the natural expansions in order to earn a -- that could possibly occur, are going to need prices at or above current levels in order to justify that investment given the underlying inflation associated with the construction. So the timing on -- in one sense, the timing on range or given that we FID-ed it 5 months from COVID, which nobody saw but allowed us to lock in our prices and then we delayed it for a year, but reinitiated and finalized all of our other installation contracts in early 2021 prior to the inflationary pressures, we think was very fortuitous, especially what it would cost in today's dollars, which every other natural expansion is going to face, is today's dollars, not the Granger kind of parameters so.

[Operator Instructions] There are no further questions at this time. I'd like to turn the call back to Grant Sims for any closing remarks.

Okay. Again, I appreciate everybody's participation. I know it's a busy week with macro news as well as other earnings. And so a lot of people are going to listen on to the tape. But again, appreciate everybody's interest, and we look forward to talking with everybody again in 90 days or so. So thanks very much.

This concludes today's conference. Thank you for your participation. You may now disconnect.