Good morning. Welcome to the 2020 First Quarter Conference Call for Genesis Energy. Genesis has four business segments. The Offshore Pipeline Transportation segment is engaged in providing 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 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 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 Bob Deere, Chief Financial Officer; and Ryan Sims, Senior Vice President, Finance and Corporate Development.

Good morning. I would doubt most of you are all that interested in the results for the quarter ended March 31st. Nonetheless, we had a pretty good quarter, as discussed in greater detail in the earnings release we issued earlier this morning. As we pointed out, several obvious challenges, by no means unique to Genesis, started to arise in February and March and continued into the second quarter. So, let's just cut to the chase. Our and virtually every other energy industrial company’s operating environment is the most challenging it has likely been in multiple generations, driven by the demand destruction of shutting down large swaths of economic activity across the world to deal with COVID-19. There will be a recovery, just no one knows when it will start, although maybe it has, or what it will look like. In our particular case, we believe we have already taken all the necessary steps and have all the tools we need in place to navigate through the next few quarters and be able to maintain our financial flexibility and manage our balance sheet, especially compliance with the covenants of our senior secured credit facility. With the proactive decision to reduce our quarterly distribution, we reduced our recurring annual cash obligations by approximately $200 million, bringing our run-rate to around $410 million to $420 million per year, inclusive of maintenance capital spent but before growth capital and asset retirement expenditures. With limited growth capital and asset retirement expenditures of approximately $50 million over the next 12 months, our adjusted EBITDA would have to be less than, let's say, $470 million for us to not be a net bearer of debt outstanding over this period. Looking forward, given our recurring cash obligations and minimal growth capital requirements outside of the Granger expansion, which can be funded through our agreements with GSO Capital Partners, we have no need to access the capital markets and therefore expect to be a net payer of debt for the foreseeable future. No matter how challenging the environment is and remains, we just can't come up with a scenario that becomes insurmountable. And that's a good segue into the discussion of our individual business segments. We expect total volumes out of the deepwater Gulf of Mexico to grow this year and for us, at least certainly over the next several years. While in the last 12 months, onshore rigs have fallen by somewhere between 50% to 55%, mobile offshore drilling units working in the deepwater Gulf of Mexico have remained constant. These are long-lived development and resource exploitation projects. As an example, just in March, we received an inquiry from a deepwater operator regarding capacity for more than 100,000 barrels a day, starting in late 2024 and going through 2046. Although the likely sanctioning of brand new projects like this might be delayed in the current environment, we see little risk to the completion of or significant delays in our contracts at known sanctioned projects in progress like Atlantis Phase 3, Argos, and King’s Quay, a significant portion of which have take-or-pay features, limiting our timing risk, and production and reserve risk. There's been a lot of speculation about potential shut-ins due to the current low-price environment in the Gulf of Mexico. While we've seen signs, they're not significant, much less material from a financial point of view for our offshore segment. Because of confidentiality obligations and the Interstate Commerce Act, we can't go into a lot of details, but I will summarize in general terms what we're seeing across our assets. We expect a total of approximately 12,000 to 15,000 barrels a day to be shut in in May and June across our footprint. In addition to this, we expect approximately 35,000 barrels a day to be shut in for the entire month of May. But this same production was going to be shut in for 7 to 10 days for certain planned maintenance in any event, and it is expected to be fully back online in June. Finally, on a minority-owned pipeline, not operated by us, we just became aware of additional shut-ins for at least the month of May, which could represent a total of less than $750,000 a month net to our ownership interest. In summary, the second and third quarters in the offshore would typically exhibit a lot of shut-ins for maintenance and often weather-related downtime. Given the low-price world, it would be logical to see extended maintenance. But, as described above, we do not expect significant declines in throughput or financial performance directly from this low-price environment. Turning to onshore. As we mentioned in the release, we would expect to see crude-by-rail volumes go to zero for the rest of the year. While we do have certain protections to the downside in terms of minimum take-or-pay commitments through 2020, stepping down in 2021 and lasting through the first quarter of '22, we nonetheless expect to experience some $15 million to $20 million less in terms of reported segment margin than we would have otherwise expected through the remainder of 2020. That being said, certain contango opportunities have appeared that will help to offset but by no means totally make up for lost segment margin this year. Other than that, we've not seen significant changes to our other onshore volumes and/or operations relative to the first quarter. Our marine group turned in their best quarter since the fourth quarter of 2015, excuse me. We expect the fundamentals in the second quarter to be relatively consistent with the first quarter. Performance was driven by strong utilization, improving fundamentals, and day rates across our inland and offshore fleets as the demand for our types of marine equipment continues to increase. Our inland fleet, which focuses on intermediate refined products and not crude oil and finished clean products, continues to benefit from refineries needing to move these intermediates from one location to another. Market volatility and uncertainty is actually a positive for us, as the flexibility represented by marine assets is highly valued in getting the right barrel to the right location at the right time. I'll turn now to our Sodium Minerals and Sulfur Services segment. Our legacy refinery services business has experienced some volume loss starting at the end of the first quarter and continuing into the second. There are really two sources of this, both of which we think will resolve themselves and turn around fairly quickly. First, a number of our mining customers in South America and primarily in Peru have been mandated to shut down in order to combat the spread of COVID-19. We expect as we move forward through the quarter, we will see a reopening of the mines and believe the lost volumes are likely to be exclusively in the second quarter, and we could return to normal volume levels in the third quarter and beyond. Second, a number of our pulp and paper customers are pushing out turnarounds and outages as long as possible to avoid having third-party service providers entering their facilities during current mitigation efforts regarding COVID-19. We do not believe that they can go much longer without replenishing the sulfur and sodium molecules in their processes. As a result, these currently missing sales we believe have a high probability of showing up in the back half of the year. Volumes in our soda ash business are challenged, especially in the second quarter because of the demand destruction from the mitigation efforts for the virus, primarily in the export markets. We've reacted to these diminished sales volumes by placing our Granger facility in hot hold mode, probably through the end of September, thereby reducing our total production in 2020 by some 300,000 tons. We believe this is the minimum necessary to balance our total anticipated sales, both domestically and internationally for calendar year 2020. Demand has slowed across all geographies with the flat glass segment being the most affected. With the year having started off with high inventory levels, as we explained in our fourth quarter call, and now with the demand issues resulting from COVID-19, the rest of 2020 and perhaps into 2021 is going to be challenging. While export prices are under some pressure, it is really not a matter of price. With large portions of economic activity still shuttered worldwide, there just isn't the demand. If it goes on much longer, we believe synthetic capacity could be shuttered and natural production will take market share, giving us tremendous cost advantage. As the world economy starts to reopen, demand for soda ash should ultimately take care of itself. We are seeing construction activities in more and more states pick up. Detroit is looking at May 18 as the targeted date to start most automobile factories. Germany, Austria, and Italy, as well as other European and Asian economies, are starting to open back up. I said earlier, there's going to be a recovery, we just don't know when and what it will look like. Anecdotally, we have picked up around 30,000 tons of incremental domestic sales, but all in the back half of the year. An interesting phenomenon coming out of the pandemic might be a change in consumer preferences. For instance, there is evidence starting to emerge that single-family homes might be increasingly desirable relative to apartments or high-rises in densely populated areas. Also, the demand for cars, as evidenced after the reopening of Wuhan, could be quite robust, given that public transportation and/or rideshare services might be considered risky from a personal health perspective for an extended period of time. If these patterns emerge and stick, they could potentially contribute to an even stronger recovery in both our soda ash and sulfur businesses. In summary, we and almost every business enterprise faces some challenges. We believe we have taken the steps and have the ability to manage our way through these challenges. We have confidence in the resiliency of our businesses. They have existed, survived, and thrived for many decades, not years, and through numerous previous cycles. There's no doubt that they will continue to do so. I would like to recognize our entire workforce, and especially our miners, mariners, and offshore personnel during this time of social distancing, and other mitigation efforts. We started screenings and other changes to our policies and procedures to protect our employees and their families and communities starting in late February, and continued to modify and communicate our procedures and protocols as local, state, and federal guidelines were updated. I can proudly say with their commitment, we have safely operated all of our assets under our company recommended procedures with no impact to our customers or our operations, and had less than a handful of confirmed cases of COVID-19 among our approximately 2,200 employees. It is a pleasure to have the opportunity to work alongside such quality people. With that, I'll turn it back to the moderator for any questions.

Thank you. We have our first question from TJ Schultz with RBC.

Just on onshore. So, you've had periods before with zero rail volumes, but there have been some other moving parts. If we just look back to the first quarter of last year, I think there were zero volumes for much of the quarter and segment margin was in the $25 million range. Is that a fair snapshot of what the take-or-pay agreement supports? And then, if you can kind of walk through the step-down and the take-or-pay in '21 and '22, and if we assume zero volumes persist? Thanks.

TJ, I'm not sure what the specifics were in the first quarter of last year, but that seems quite high compared to the minimum volume levels. I don't have all the data in front of me to respond fully, but it does seem elevated based on an MVC run rate. If I remember correctly, it decreases to about 75% of what it was running in 2020 through most of 2021, and then another slight reduction, possibly to 50% of that in the first quarter of 2022. I believe it concludes at the end of 2022.

Okay. And then, in onshore marine, you pointed to some potential opportunities to benefit from contango. Can you just try to quantify that opportunity for you this year?

We don't really operate normal storage like others. However, we do have operational storage and some flexibility within our system. I would estimate that the total volume we could store operationally without hindering our ongoing operations is about 800,000 barrels across all facilities. The potential earnings from this, depending on the contango and market conditions, could be around $5 million to $10 million in 2020, possibly a bit more if the contango persists. I'm not entirely clear on the current strength in the front month given the overall macro fundamentals, but we'll have to wait and see how things develop.

Okay. I understood. Just last one. So, Granger facility holding in hot hold mode, it says through the end of September. Just kind of what are you looking for there to bring that back into production? Thanks.

The Granger facility is currently set up before we restore it to its original capacity of 1.2 million to 1.3 million tons per year, operating at approximately 550,000 to 600,000 tons annually. Reducing production for six months amounts to about 300,000 total tons. We need to assess the situation as we progress through 2020 and observe any recovery in 2021 to decide if we will resume production at the end of September. It comes down to balancing sales with production, as operating at around 40% of capacity incurs high costs due to inefficiencies. However, once we get it back to its original operating level, it will present a significant opportunity for expansion. We will have to monitor developments over the next six months before making a final decision.

Okay, understood. Thank you.

Thanks.

Your next line of question comes from Shneur with UBS.

Hi. Good morning, everyone. Grant, thank you for the sober and reflecting shift today. I just wanted to start off a little bit first on the Gulf of Mexico. Obviously, there's been a lot of reports about shut-ins and so forth. But, if I recall, you may not have exposure to some of the names that people are talking about with respect to shut-ins in the Gulf of Mexico. Is there a way for you to remind us where the majority of your exposure is, kind of like on an operator basis?

I'd rather not go from naming operators and stuff. I think, I tried to give again under confidentiality, and I don't know whether or not it's material from a public company point of view for us, but it's just not appropriate for us to name individual operators and/or individual fields. But I've tried to give you a little bit of flavor for that it’s not significant from our perspective from a financial point of view.

Okay, fair enough. Then, secondly, I was wondering, given where you’re currently trading at and so forth, do you see any opportunities to acquire debt in the open market or have you actually done so already at this stage?

We were somewhat surprised by the Federal Reserve's announcement on Thursday before Good Friday, whatever day that was, which I think was an extreme moral hazard of the Federal Reserve actually buying securities in the secondary market and not serving as a lender of last resort. Presumably, it was to fetch a bid in the high yield market for fallen angels. But nonetheless, the bonds have I think rallied back up into the high 80s or something like that. And at that point, I think that we have to evaluate whether or not that's a realistic opportunity, and whether or not we'd be interested in acquiring bonds at that.

Okay. Moving on, I was just wondering if we can talk about Granger the hot idle. What are the costs to keep it in hot idle mode, either by month or by quarter? Like, how should we think about that from a cost perspective, so, if you don't have the revenue coming in?

I don't have the exact figures right now. We're considering reallocating resources, with the main costs being personnel, power, and consumables. We are planning to redeploy some employees, and we have made an agreement with the union for voluntary furloughs during the period we will keep the facility in hot idle mode. It's not a significant ongoing cost, and at these price levels, it may not be worthwhile for us to continue operations. There is limited storage available, so this was the best option to align our production with our sales.

Okay, fair enough. I’ve just got two more questions. You gave a lot of good color on the soda ash market and kind of what the drivers are and so forth. But, given the fact that Asia tends to reprice more often in the soda ash market, and that's where the recovery is starting first. Have you seen any positive price developments coming out of the Chinese market, or is there demand currently just being satisfied by inventory from elsewhere in the world being redirected to China?

I believe that inventories were elevated in China and in other Asian economies as we approached the end of the year, alongside the outbreak and response measures related to the virus. It's likely that the production capacity for synthetic products will return before May, which will probably exceed the recovery of demand. What we are likely to see is that many global economies will find it easier to ramp up industrial production than to see a corresponding rise in the demand for industrial products. In short, we do not anticipate the conditions that would lead to increased pricing. However, as mentioned in the prepared remarks, the focus right now is on the total quantity demanded rather than pricing. If demand does not rebound swiftly, we believe that synthetic producers in China, both for domestic sales and exports, may be operating at a loss on a cash basis. It will be interesting to see how long they continue this before making adjustments to their production.

Okay. And one last final question, if I may. You put Granger on hot idle, obviously expense reduction there. Are there any other cost-cutting measures that you're taking throughout the organization right now? And it didn’t sound like it would be more lasting than just due to the coronavirus environment?

I believe our primary focus over the past few months has been on ensuring the safety of our employees while continuing to provide safe and responsible products and services to our customers. We feel confident that we have accomplished this. Moving forward, we will concentrate on understanding what the next normal entails. Currently, there are four of us in the office in a space designed for around 22 people, indicating significant changes are on the horizon. We aim to share more insights on this by the time of our second-quarter call.

Perfect. Well, thank you, Grant. I really appreciate the color today. And stay safe.

Thank you, Shneur.

Our next question comes from the line of Kyle May with Capital One Securities.

Good morning. I wanted to start by revisiting your guidance for the year for just a moment. You mentioned that Genesis expects to finish the year at the bottom end of the guidance range, if not below. Can you help us kind of frame up some of the different scenarios that would place you, either at the bottom end of the range or kind of help understand like what is the potential below?

I'm not sure we're prepared to go much beyond that. However, there are various scenarios to consider, and while I don't want to suggest that we face significant uncertainty, you might see bookings align more closely with a range of 620 to 640, possibly exceeding our initial expectations. That said, we're just five weeks into the second quarter, and several factors are in play. The main influences on the variability from now until the end of the year will be the speed of recovery in demand for soda ash and NaSH, which is primarily used in copper mining and the pulp and paper industries. Ultimately, it's the balance of pricing and volumes that will determine the difference between a lower or higher outcome for the year.

Okay. That's helpful. And even though it sounds like you're not really expecting any volume declines in the Gulf of Mexico, can you remind us if there's any MVC contracts in the Offshore Pipeline Transportation segment, or is that all based on throughput?

The older generation contracts, specifically those from 1995 to 2010, are still producing, highlighting the longevity of these agreements, and primarily do not have MVC agreements. In contrast, the newer generation contracts, particularly those from 2010 to 2012 and onward, mostly include MVC agreements. We seldom collect under the MVCs mainly due to timing issues. However, there are very few cases where the producer fails to meet and exceed the MVCs, especially since they have invested billions of dollars. In some cases, we may not invest anything at all.

Okay. That's helpful. Thank you.

Okay. Thank you.

And that was our last question.

Okay. Well, thanks everybody. And we'll chat again in three months or so. Thank you.

This concludes today's conference call. You may now disconnect.