Martin Midstream Partners L.P.

Good day, and thank you for standing by. Welcome to the MMLP second quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, please press star 1 on your telephone keypad. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Sharon Taylor. Please go ahead.

Thank you, Operator, and good morning, everyone. I'm joined by Bob Bondurant, President and CEO, Randy Tauscher, Chief Operating Officer, David Cannon, our Controller, and Danny Cavan, Director of FP&A. Before we get started with our comments, I'll remind you that management may be making forward-looking statements as defined by the SEC. Such statements are based on our current judgments regarding the factors that could impact the future performance of Martin, including facts and assumptions related to the impact of the COVID-19 pandemic, but actual outcomes could be materially different. You should review the risk factors and other information discussed in our SEC filings and form your own opinion about Martin's future performance. We will discuss non-GAAP financial measures on today's call. Please refer to the table in our earnings press release posted in the investor relations segment of our website to find information regarding those non-GAAP financial measures, including a reconciliation of historical non-GAAP financial measures referenced in today's call to their corresponding GAAP measures. And now I will turn the call over to Bob for his remarks on our second quarter earnings results. Bob?

Thanks, Sharon. To begin, I would like to say that I am pleased with our first six months of performance in 2021, as it is on pace with our annual projected adjusted EBITDA of between $95 million to $102 million. Also, for the first six months, we have generated free cash flow of $15.6 million, also in line with our internal free cash flow forecast. Let's now discuss our second quarter performance by business segment. For the second quarter, our overall adjusted EBITDA was $22.5 million compared to $23.9 million in the second quarter of 2020. The adjusted EBITDA in our terminating natural gas liquids and transportation services segment were very similar in this year's second quarter compared to last year's second quarter. The one segment that underperformed compared to a year ago was our sulfur services segment, which I will discuss shortly. Our largest cash flow contributor for the second quarter was our terminating storage segment, which had adjusted EBITDA of $10.6 million both this year and last year. Even though our terminating storage cash flow was the same year over year, there was some variability within the segment. The cash flow at the smack over refinery was down $0.6 million compared to a year ago. This reduction was primarily due to the scheduled contract adjustment to the throughput rate related to capital recovery fees, which became effective January 1st of this year. Offsetting this was a $0.6 million improvement over last year in our lubricants and specialty products business. Both the supply of packaged lubricants and packaged greases remained very tight coming out of the pandemic, And as a result, we have experienced increasing sales volumes, which reflect current market conditions. We continue to believe this market will remain in tight supply over the near term, which should positively impact the third quarter. Our next largest cash flow contributor in the second quarter was our sulfur services segment, which had adjusted EBITDA of $8.9 million compared to $10.8 million a year ago. We were very pleased with the fertilizer portion of our sulfur services segment, as it had adjusted EBITDA of $6.9 million in the second quarter compared to $6.8 million a year ago. For the first six months, which is the primary earnings period for the fertilizer business, we had adjusted EBITDA of $14 million compared to $11.8 million for the first six months of 2020. Moving to the third quarter, we will see the normal seasonal decline in fertilizer earnings due to reduced demand. As such, we will perform the majority of our fertilizer plant maintenance work to coincide with the reduced seasonal demand for our products. This maintenance work also reduces our normal fertilizer production rates. As a result, we will see a normal decrease in cash flow for the third quarter in our fertilizer business. In our pure silver side of the segment, Adjusted EBITDA was $1.9 million in the second quarter compared to $3.9 million a year ago. Our pure sulfur volume was down 12% in the second quarter compared to a year ago. This was driven by reduced production volume from our suppliers compared to a year ago. Since our sulfur distribution system carries a significant amount of fixed costs, Dismissing incremental production volume from our suppliers has a significant negative impact to our cash flow. Looking to the third quarter, we are anticipating and now seeing improved sulfur volumes from our suppliers, which should allow our pure sulfur business line to produce cash flow more in line with our historical norms. Our third largest cash flow generator for the second quarter was our transportation segment, which had adjusted EBITDA of $5 million compared to $4.9 million a year ago. Despite this consistent cash flow performance, there was variability between our transportation business lines when comparing this year's second quarter to last year's. Our truck transportation business line had adjusted EBITDA of $5.5 million in the second quarter compared to $3.3 million a year ago. We experienced a 19% increase in mileage in this quarter compared to a year ago. Due to the pandemic, last year's pad-through refinery utilization was 76% in the second quarter compared to 89% in this year's second quarter. The improvement in refinery utilization was the main driver in the significant recovery in earnings this quarter compared to last year. Our marine transportation segment had adjusted at a negative $0.5 million in the second quarter compared to $1.6 million a year ago. A year ago, in spite of overall demand reduction for marine transportation due to the pandemic, we still had several inland tows under term contracts at higher term rates. In the second quarter of this year, our inland fleet was primarily in the spot market at reduced rates compared to a year ago. However, we are now beginning to experience slowly increasing demand for our marine transportation services as pad 3 refinery utilization has continued to increase. We will also see improved cash flow in our offshore marine transportation as the one offshore tow we have had sitting idle since January 1 went into service in late May under a new six-month contract. As a result of the improvement in both the inland and offshore side of the business, we expect Marine Transportation's adjusted EBITDA to improve in the third quarter compared to the second. Finally, I would like to discuss our natural gas liquid segment. For the second quarter, we had adjusted EBITDA of $1.7 million compared to $1.6 million a year ago. As a reminder, the second and third quarters are our seasonally weakest quarters for the natural gas liquids as refineries are accessing butane supply, which we move to underground storage using both truck and rail transportation. We then sell this stored butane inventory back to refiners in the fourth and first quarters. Also, our wholesale propane sales are minimal in the second and third quarter due to the warm weather during these months. Therefore, as a result of continued lack of significant seasonal demand in the third quarter for both butane and propane, we should see similar cash flow performance in the third quarter relative to the second quarter. This concludes my operating performance discussion, so I will now turn the call over to Sharon to discuss our balance sheet, liquidity, and capital resources.