Greetings, and welcome to the Genesis Energy L.P. First Quarter 2024 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. Please go ahead.

Good morning. Welcome to the 2024 First Quarter Conference Call for Genesis Energy. Genesis Energy 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 in the deepwater Gulf of Mexico to onshore refining centers. The Soda 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 marine 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 and encourage -- 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, 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. With that, I'll turn it over to Grant.

Good morning to everyone, and thank you for listening to the call. As we mentioned in our earnings release this morning, our financial results for the fourth quarter came in -- generally in line with our internal expectations. As we look ahead to the remainder of the year, we continue to view 2024 as kind of a transition year as we move increasingly closer to the important inflection point when our current growth capital spending program is completed. De minimis growth capital spending in future years, combined with the contracted and/or expected increased financial performance from our Offshore, Marine and Inorganic Chemical businesses over the coming years should provide us with the ability to generate significant amounts of cash in excess of all of the current cash obligations associated with running our businesses. In the aggregate, these current recurring cash obligations add up to approximately $600 million per year. This is comprised of roughly $320 million of cash interest expense, which includes interest and principal payments on our Alkali senior secured notes, approximately $120 million of cash maintenance capital expenditures, almost $90 million of preferred distributions and approximately $74 million of common unit distributions at the current level of $0.60 per unit per annum. Going forward, we expect the dollars we generate above these recurring cash obligations will be used to return capital to our stakeholders in one form or another. As we redeem more preferred and/or pay down aggregate debt, these recurring costs will obviously go down, giving us even more flexibility to return capital to unitholders. We expect our coverage of these cash costs to accelerate as we move through next year. As we sit here today, we believe we should be able to sustain, if not grow, such coverage of our cash costs for many years ahead…

[Operator Instructions] And our first question comes from the line of Michael Blum with Wells Fargo.

So just a couple of questions. One, you noted you might be able to make up some of the volumes on Granger this year. Is that already reflected within the guidance range? And if not, how much upside would that represent?

I think as we stated, that the operational issues at both Westvaco as well as the start-up commissioning issues at Granger probably [ dinged ] margin by around $8 million in the first quarter. If we have the opportunity to make up volumes, it would serve in the back half of the year, serve to make up some of that, Michael. So I mean, at this point, there's no guarantees, but we're pretty excited about the efficiency that we're seeing at Granger. And once we get the component parts replaced, we feel comfortable that we will, as I said -- referenced earlier that, we're quite capable of exceeding the design capacity of the expansion.

Okay. Perfect. And then the $250 million to $350 million of cash flow after all the obligations that you referenced today and in the press release. Is that a number you would expect to like materialize in 2025? Or is this more of a 2026 goal? And how much improvement in soda ash pricing or segment earnings would this assume?

Yes. I think that it's kind of a next 12 months run rate that we anticipate that, obviously, we don't expect to be there in calendar or fiscal '25. But on a visible next 12-month run rate certainly by the middle of '25, we would expect to hit that. And I would say that basically, that is a function of, if we stay in a low cycle or slightly below low cycle soda ash margin and we're at the lower end of that range. And we would be at the upper end of that range, if we get back to mid-cycle as we reference this $250 million to $350 million or more, that's really going to be driven by 2 things. First thing is, if the producers in the offshore approach or exceed 100% rather than 75%, which is kind of the number that we've used in the contemplation of our guidance and our initial thoughts around '25. That can be, as I said in our prepared remarks, meaningfully in excess of anticipated performance out of the offshore. And then obviously, if we get to exceed both on a volume basis as well as the margin basis on their sodas business that's going to drive -- if we get to kind of above cycle, and if you look at some of the forecasts and prognostications by other soda ash producers of -- the worldwide demand for soda ash going from, in round terms, around 65 million metric tons per year to 80 million metric tons per year by the end of this decade, and that's going to put pressure on prices and increase margins to us. So that's why we're very comfortable about that range, and we think that there's more bias to the upside than there is to the downside.

Our next question comes from the line of Wade Suki with Capital One.

On Shenandoah, you mentioned a $6 million impact later in the year fourth quarter. If some of us were including that in a full year '25 estimate, I mean, can you give us a better sense what that might be next year? Is it as simple as multiplying that by 5 or some kind of offset from additional tie-in opportunities? Any color you could give on that?

Yes, I don't. I mean, I think it's -- everything else is the same. It will somewhat affect '25 simply, although we haven't given any guidance on '25, but it will somewhat affect '25 because if we start in May time frame instead of full year, then we don't have it. But a couple of things can fill that hole. First of all, I'd like to make the comment that, that doesn't go away. It's just delayed. I mean, we're still going to get that whether or not your number is $30 million or whatever, we're still going to get that. So it's not a big deal. It can be offset by a number of things, including, as I said, even within Cal '25 in the event that instead of kind of running at 75%, they hit 100% of their forecast, and that more than makes up for missing that calculated $30 million in the front half of the year. Also, we believe we're going to have significant upside, at least on a stand-alone basis in the Marine business in '25 versus a record year in '24. So I mean there's ways to fill that gap. So I'm not -- while it's disappointing, it doesn't affect one way or the other from our perspective, the long-term or intermediate-term financial performance of the company.

Perfect. That's great. And just switching gears a little bit to Soda and Sulfur Services. Last year, you gave us -- I think it was last year, you gave us some really good guideposts in how to think about Soda and Sulfur Services on a normalized basis. Could you kind of refresh us on those ranges kind of as they stand today? And then let's say, maybe looking out next year once Granger is fully up and running.

Yes. I mean, we took into account the optimized Granger situation when we roll things out. But if we look at kind of 17, 18 years' worth of historical financial performance of the business, we said in kind of a low commodity cycle world that one would expect around $40 a ton margin, maybe slightly less this year, but at 4.8 million tons, which we're not going to produce this year because of the Granger ramp up, if you will, as well as the operational hiccups that we had at Westvaco in the first quarter, but around $40 a ton is kind of at the low end of the commodity cycle. And these are round terms, it could be less than that and $60 at the high end, which we exceeded both in '22 and '23 by meaningful margins. But kind of on average, over that 18-year period, $50 kind of feels like a right number. So if you get at 4.8 million tons of total production capability in sales, it's combined Westvaco as well as expanded Granger only at its design capacity. You're at a $240 million kind of run rate business. If you get to the $60, that's why you approach $300 million. And if you believe that any of these growth projects that are being [ bandied ] around that are going to cost at least $1,000 a ton per installed ton of production capacity. They're going to have to earn $100 margins just to get a simple return of 10% on investment, while they may have a slight cost advantage of $20 or $30 a ton, that would indicate that if they go forward, then we're looking at $70 to $80 ton margins in order to -- equivalent to us that would put the business in the $350 million, $400 million range. So that's why we think that the long-term thesis around soda ash is extraordinarily exciting and notwithstanding the trough pricing environment, where the 65 million metric ton market had to absorb 5 million tons of incremental production. But things work out over time, so.

That's perfect. Very helpful. Appreciate it.

Thank you. [Operator Instructions] There are no further questions at this time. Mr. Sims, back to you.

Thank you very much, and I appreciate everybody listening in and good questions, and we'll talk in another 90 days or so, if not sooner. So, thanks very much.

This concludes today's conference. You may now disconnect your lines. Enjoy the rest of your day.