Greetings, and welcome to the Genesis Energy First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to your host, Dwayne Morley, Vice President of Investor Relations. Thank you. You may begin.

Good morning. Welcome to the 2023 first quarter conference call for Genesis Energy. Genesis has four 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. Sodium 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 petroleum 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 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 would like to introduce Grant Sims, CEO of Genesis Energy, L.P. Mr. Sims will be joined by Kristen Jesulaitis, Chief Financial Officer and Chief Legal Officer; Ryan Sims, President and Chief Commercial Officer; and Louie Nicol, Chief Accounting Officer.

Good morning to everyone. Thanks for listening in. As we mentioned in our earnings released this morning, our financial results for the first quarter were generally in line and consistent with our annual guidance. They did end up below our internal expectations for reasons well beyond our control. Most notably, our soda ash business was negatively impacted by the coldest first quarter in the last 23 years in southwest Wyoming, which challenged our operations and significantly impacted rail service, which in turn reduced our production and sales volumes during the quarter. We only have storage on site for about five days worth of production. When loaded rail cars aren't pulled and empty cars aren't returned on a timely basis, we have no choice but to curtail production. As a result, we estimate that we suffered a reduction in realized segment margin and adjusted EBITDA of approximately $15 million for the first quarter and fiscal year. Unfortunately, these weather and third-party service related headwinds in our soda ash operations masked the over performance in our offshore and our marine segments during the quarter. Despite these challenges, we are reaffirming our previously announced guidance range for adjusted EBITDA of $780 million to $810 million for the full year and still expected to exit the year with a leverage ratio is calculated by our banks below four times. So here we are having delivered on our targeted leverage ratio. It should now hopefully be clear that the actions we have taken over the last several years, along with the underlying resilience of our market leading businesses has positioned us with ample liquidity and significant financial flexibility going forward. As we look ahead to the remainder of 2023, the fundamentals in macro conditions across our business segments continue to appear strong. The central Gulf…

Thank you. [Operator Instructions] Our first question comes from Michael Blum with Wells Fargo. Please state your question.

Thanks. Good morning. Just wanted to start with the first quarter, the railroad issues. I’m just wondering is there any – do you have any recourse with the railroads and is there anything you can do to mitigate this going forward? I don’t know if that means adding storage or just anything you could do to mitigate this going forward? Thanks.

No. I mean, I think unfortunately there’s nothing that we can do for the operating conditions, which existed in the first quarter, and quite frankly it has continued a little bit to an extent in April. We are a, working with the railroad on a commercial basis as well as having discussion with the regulatory agencies, the Surface Transportation Board to work together collaboratively to increase the level of commercial service that we have for very important product that is made in the U.S. and supports a lot of jobs and supports a lot of export activities. So unfortunately it is what it is at this point. We’ve never experienced this type of thing given the – in essence emptied cars can serve as storage if we can get them in, but we weren’t able to get them in and pull the full cars on a timely basis. So I think that we’ll try to resolve it and work with the railroads. I mean, we’ve been in this business – in this location for 75 years now. This is the first time in our most – the most serious operating issues that are caused by a third-party service provider, but we think that we have a path to get it fixed at this point.

Okay, great. Thanks for that. And then I just wanted to clarify that your comments – just better understanding your comments on the soda ash market. Are you saying that supply has just kind of caught up with demand so it’s more balanced? Or are you actually seeing demand being impacted by like an economic slowdown or something like that?

As we said, we’re starting to hear from some of our distributor customers as well as direct customers, primarily in the export markets that they are seeing a slowdown in demand. So everything else is saying the demand side is bringing the market back into a balance where it is. Certainly over the last several periods has been a supply constraint that there wasn’t enough supply to meet the demand. So it’s the demand side slowing somewhat, again, primarily in the export markets and not domestic markets, which are – which is bringing the market back into balance near-term.

Okay, got it. And then if I could just squeeze one more in on the soda ash market. So you have 90% of your pricing locked in for this year. But if you continue to see a softening in that market on the demand side this year would that mean you’d come in kind of at the low end of guidance, you think? Or is that coming below that end, or do you think it’s pretty locked in? Thanks.

Again, to come to that range of guidance we built into our – reaffirmation of that guidance range, we built in the anticipation of some amount of softening at the midpoint over the remainder of the year. If the softening occurs and is greater than whether we expected, we would tend towards the low end of the range. But if the softening doesn't occur and then we'd probably get to the high end of the range, if not exceed the high end if it doesn't occur.

Great. Thank you so much.

Thanks.

Thank you. [Operator Instructions] Our next question comes from TJ Schultz with RBC. Please state your question.

Hey, Grant. Just to follow up on the soda ash, so the 300,000 tons that have come off that you've cited, are volumes still being curtailed? Just trying to understand if that grows as we think about kind of the Mike's point, the balancing of the supply and demand going forward through this year?

Yes. I think it's basically, everything was resolved and back to operate – normal operations in April. So we think that the cumulative effect of the – out of the trona patch and Green River that the cumulative across all of ourselves as well as our three neighbors is a total of a little over 300,000 tons, which did not get produced and unfortunately, can't really be made up because it's not that it was stored on site. It just wasn't produced. So ultimately, that supply shock, I mean, that's the equivalent of force majeures occurring at Searles Valley Mineral or Solvay last year from production upsets, which probably cumulatively took 200,000 tons off of the market. This is actually a bigger event. And ultimately, we believe, given the travel times and to various markets that ultimately this missing $300,000 is going to be felt as a supply constraint in the market, which will tend to, in our opinion, offset any potential demand weakening that we talked about in the previous question.

Okay. Understood. Just second one for me. Just any outlook on potential asset sales that would accelerate your delevering plans, including, I suppose, even soda ash, just given the comps on greenfield newbuild cost? Or are you comfortable with the current mix of assets in your portfolio? Thanks.

Well, I mean we don't – we're comfortable with what we have. We think the fundamentals are very good. I mean, at the end of the day, almost anything is for sale at the right price. But I think that the fundamentals of our businesses, the macro fundamentals are very good. We like the position that we're in, and we like the intermediate and longer-term outlook for all the businesses. So we're pretty comfortable with where we're at. But not – that's not to say that if the right opportunity came along to – and we've demonstrated it over the last couple of years, being an opportunistic seller of assets to accelerate things. But I mean, we're at 4x. So I don't – are under 4x. I don't know that we have a lot more need to accelerate things. We have all the financial flexibility that we need to finish up our growth projects or start harvesting, as we like to say, the hundreds of millions of dollars of year of incremental cash that's going to come out of these projects as well as the strong fundamentals of our underlying business. So we're very comfortable about the position that we're currently in.

Okay, thank you.

Thank you. There are no further questions at this time. I will hand the floor back to Grant Sims for closing remarks.

Okay. Well, again, thanks, everyone, for joining and are listening in on a delayed basis, but we appreciate your interest. And we look forward to visiting with you again in the near future. So thanks very much.

Thank you. And this concludes today's conference. All parties may disconnect. Have a great day.