Greetings, and welcome to Genesis Energy Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dwayne Morley, Vice President, Investor Relations. Thank you. You may begin.

Good morning, and welcome to the 2024 fourth quarter conference call for Genesis Energy, L.P. Genesis Energy has four business segments. Offshore Pipeline Transportation segment is engaged in providing the critical infrastructure to move oil produced from the long-lived world reservoirs in the deepwater Gulf of America 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. 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's operations are primarily located within Wyoming, the Gulf Coast states, and the Gulf of America. 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 periods and exchange commission. We also encourage you to visit our website at genesisenergy.com. A copy of the press release we issued this morning is located. 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 Jesselaitis, Chief Financial Officer and Chief Legal Officer, Ryan Sims, President and Chief Commercial Officer, and Louis Nicholl, Chief Accounting Officer.

Thanks, Dwayne. Good morning to everyone, and thank you for listening to the call. As we mentioned in our earnings release this morning, we are now just a few short months away from reaching the inflection point when we will complete our current major capital spending program, be a short time away from a notable step change in realized segment margin, and most importantly, be in position to generate cash from operations in excess of the cash costs we're running and sustaining our businesses. Needless to say, this moment has been a long time coming and while we've had a few hiccups along the way, we remain on schedule. I get more and more encouraged with the long-term prospects of Genesis as each day passes. Instead of dwelling on what could have been in 2024, I'd rather focus my comments here today on what lies ahead for the remainder of 2025 and beyond. We remain encouraged with what is in front of us and are confident we are well-positioned to deliver meaningful sequential earnings growth over 2024 driven primarily by midyear startup of our new contracted offshore volumes and strong structural tailwinds in our marine segment. Even if we see static performance from our other two segments this year relative to last. Our offshore segment is expected to see significant growth of offshore volumes to segment margins associated with our two new contracted developments, Shenandoah and Salamanca. They remain on schedule, with first production from both developments expected in the second quarter. Based on recent conversations with both operators, we could see volumes from each development ramp very quickly to, if not above, their originally expected high cases. When combined with the eventual reception of the volumes from the fields that were negatively impacted last year, which we're now told should occur over the next several months.

Should be positioned to deliver upwards of 20+% sequential growth in our offshore pipeline transportation segment in 2025. Our marine transportation segment is again expected to deliver record results in 2025, driven in large part by more days on the water, as they say, for our offshore fleet rather than 2024, and steady to increasing day rates across all classes of our vessels. The macro story in marine remains constructive. We see reasonably steady demand, at the same time, we continue to see net supply reductions in the market, driven by the limited number of new barges being constructed while more and more older barges are being retired. We believe these structural indicators will persist in marine for quite some time and should support steady to marginally improving financial performance from our Marine Transportation segment throughout 2025. As we sit here today, we expect the challenging macro conditions in the soda ash market we saw in the back half of last year to persist into 2025, at least in the early part of the year. The combination of a well-supplied market and a mixed demand picture outside China is expected to keep a lid on soda ash prices, especially in our export market. While current prices are undoubtedly below the cash cost of high-cost synthetic, particularly in China, we expect the market continues to need a combination of further supply rationalizations and a resumption of historical demand growth to ultimately help prices recover.

I'll give a little more color later in my prepared remarks, but we are encouraged that these necessary supply reductions are starting to occur. And they will no doubt help tighten the market as we move through this year and into next. Given this market backdrop, however, and despite an improving operating performance and implementing certain cost savings initiatives, we expect the segment margin from our soda ash business to be at or near what we generated in 2024. Kind of a sideways year. Until we get to 2026, when we would otherwise expect prices to recover and more closely reflect at least the cash cost of the marginal suppliers. Similarly, we expect our legacy refinery services business in our onshore facility transportation segment also performed in line with their performance last year. While we would rather see all of our businesses hitting on all cylinders first, our path forward remains crystal clear. Even with this anticipated sideways action year over year in a couple of segments, in 2025, we will begin to harvest accelerating amounts of cash above and beyond the cash cost to operate and sustain our business we will use to strengthen and simplify our capital structure. We are committed to not pursuing any capital-intensive projects for the foreseeable future. We expect to use this excess cash flow to pay down debt in absolute terms, opportunistically redeem or retire our high-cost convertible preferred, both of which will lower the cash costs of running and sustaining our business, and look to return increasing amounts of capital to our unitholders in one form or another. All while managing our bank-calculated leverage ratio to our long-term target. We remain confident that the path we are on will allow us in the years ahead to deliver long-term value to everyone in…

Thank you. At this time, we'll be conducting a question and answer session. Our first question comes from Michael Blum with Wells Fargo. Please proceed with your question.

Thank you. Good morning. So wanted to ask about the offshore producers that continue to have challenges. Can you maybe bracket like, the outer bounds of outcomes in 2025? So, for example, if this production stays offline for all of 2025, how much cash flow are you sort of forgoing? And then if it came on, let's say, in the second quarter of this year, how much incremental cash flow would you realize for the year?

At this point, we are baking into the guidance that we just gave basically what the producers are telling us with us taking a little bit of liberty to build in some cushion in the event that it slides to the right a little bit. I'm not sure that we have ever classified it but so you know, it's in I mean, I think order of magnitude is between $5 million and $10 million assuming that all of it was off, but we are seeing some of it has already been rectified and some of it is within a week or so of coming back at least according to the operator. So Michael, I mean, we don't really as we sit here today, we don't see a scenario where this is a lasting issue throughout 2025.

Okay. Perfect. That's super helpful. And then on the 2026 EBITDA forecast of $800 million. Does that assume a continued improvement in the marine business or does that assume more of like a flat outlook relative to 2025?

I would consider it to yes, it's reasonably flat. I mean, so in the world where we're generating kind of no. While there could be more upside in that, that's kind of you know, we're just kind of penciling that in to be reasonably flat '26 relative to what we expected in '25.

Right. Got it. Thank you so much.

Our next question comes from Wade Suki with Capital One. Please proceed with your question.

Good morning, everyone. Thank you for taking my questions. For some capital allocation, just quick, I'm wondering if you could remind us how the banks are looking at the press just sort of in the context of your capital return priorities. How the banks are looking at? Yes, exactly in terms of lending.

Yes. Our banks, which are obviously insiders and have read all of the agreements, they treat they give it a 100% equity treatment in the calculation of our compliance with them. That's not necessarily how rating agencies and others necessarily look at it. They'd have spent as much time as the inside banks have to make that determination. So yeah. For us to rapidly, you know, we can't really or not intent on levering up to take it out because it has a double whammy, if you will, about converting equity into debt in one respect. So you know, I think it's fair to say that our intent is to really use the excess cash flow. We're not prohibited from in fact, we have some flexibility under our senior secured credit facilities to harvest it. And so as we continue to get closer to our long-term target of four turns on the bank-calculated leverage ratio, we will have the ability in future periods to potentially take it out at a more rapid pace because we have the flexibility under our covenants, but so no. So we have the ability to deal with it and but it is given a 100% equity treatment, which is appropriate treatment from our perspective.

Great. Thank you. And just as we approach the sort of free cash flow inflection point later this year, can you help us in terms of how to think about the timing and maybe even order of magnitude of potential distribution increases?

I think that the Board will evaluate that at the appropriate time. Again, I think that as we discussed that my view, but obviously, the board needs to weigh in on it is that it's likely, you know, use of capital is or capital allocation is going to be kind of a little all of the above. But in what's absolute and or relative uses of that. I can't speak at this point. Speak to at this point.

Understood. Appreciate that. If I could please a multipart question and one more just on soda ash. Grant, you always give us a really good color on sort of supply demand. Would you mind maybe touching on how the contracting season went? Where you are on that front and then maybe talk a little bit about some of the end market demand you're seeing or the weaker areas are and areas of resilience as well? Thank you very much.

Yeah. No. I mean, it's contracting season went about as expected. I mean, obviously, in the environment of being in a well-supplied market, there was where we had caps and collars and we typically would price towards the lower end of that range. But we are purposely under the belief that or under yeah. Our belief that the prices are gonna rise as we go through 2025, especially as I said. I mean, we've seen a reduction of almost 4% of the total supply outs have helped significantly balance the market. We went short term as much as we could and didn't lock in low prices so that we will benefit prices increase throughout this year. And then as we get into if we continue to see a demand recovery and especially additional removal of high-priced synthetic production from the market and we believe this macro fundamentals will improve and that when we go into 2026 recontracting that will be in a significantly different environment than what we were in late 2024 approaching 2025 contracts season.

Thank you. Appreciate it. Thank you again. Bye.

We have reached the end of the question and answer session. I'd now like to turn the call back over to management for closing comments.

Again, thanks everybody for listening in and we'll talk to you in another 90 days if not sooner. So thanks again.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.