Martin Midstream Partners L.P.

Ladies and gentlemen, thank you for standing by, and welcome to the MMLP Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your speaker today, Sharon Taylor. Thank you. 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, Controller, and Danny Cabin, 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. Actual outcomes could be materially different. You should review the risk factors and other information discussed in our SEC filings and form your own opinions 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 section 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 third quarter results. Bob?

Thanks, Sharon. First, I want to let our investor base and our employees know that I'm very pleased with our performance in the third quarter. We exceeded our internal EBITDA forecast by over $2 million. As a result of this stronger third quarter performance, I believe we are positioned to exceed the range of our disclosed EBITDA forecast of 95 to 102 million for 2021. Our third quarter performance, along with the anticipated fourth quarter performance, will be a significant catalyst to helping us achieve our deleveraging goals. This should set us up for a beneficial refinancing of our high-cost secured notes next fall. I truly appreciate every employee at Martin Midstream for working together to help us positively position the company toward the refinancing of our notes. Let's now discuss our third quarter performance by business segment. Overall, for the third quarter, we had adjusted EBITDA of 21.5 million compared to 22.5 million in the third quarter of 2020. While our cash flow was less than a year ago, as I just said, we did exceed our internal forecast by over $2 million, which I believe positions us to exceed our range of EBITDA guidance provided at the first of the year. Our largest cash flow contributor for the third quarter was our terming and storage segment, which had adjusted EBITDA of $11.3 million compared to $14.2 million a year ago. While our cash flow from this segment in this quarter was less than a year ago, it was the strongest cash flow quarter in this segment this year, primarily due to strengthening margins in our packaged lubricant and grease business. Compared to a year ago, the cash flow at the Smackover Refinery was down $1.3 million. This was due to the scheduled contract adjustment to the throughput rate related to capital recovery fees, which became effective January 1st of this year. Additionally, the refinery experienced increased natural gas costs compared to a year ago. However, the refinery is protected against any natural gas cost above $4 per MCF by its throughput contract that runs through 2031. The cash flow from our specialty terminals was down 0.9 million compared to a year ago, primarily due to increased operating expenses for required mechanical integrity testing at our Beaumont area terminals. This particular testing requirement will not be repeated again for five years. Finally in this segment, our shore-based terminals were down 0.6 million compared to a year ago. However, cash flow in last year's third quarter included the early termination of a commercial contract, which carried an extraordinary exit payment of $1 million. So excluding the one-time exit payment from a year ago, our shore-based cash flow actually improved by $0.4 million. Looking toward the fourth quarter, we should see similar cash flow performance in this segment compared to the third quarter. Our next largest cash flow generator for the third quarter was our transportation segment, which had adjusted EBITDA of $7.6 million compared to $5.5 million a year ago. The increase in this segment is from our land transportation business as cash flow increased $3.1 million in the third quarter this year when compared to last year. Our load count was up 23% in the third quarter when compared to a year ago as last year's demand was very soft due to the pandemic, combined with two major hurricanes that made landfall near Lake Charles, Louisiana. This impacted refinery utilization and chemical transportation demand. Looking forward, we expect continued demand growth for our trucking services, which should offset the inflationary pressure on our cost structure and provide strong cash flow again in the fourth quarter. Our marine transportation was down $1 million in the third quarter when compared to a year ago. However, when compared to the previous quarter, our cash flow in our marine transportation segment increased almost $1 million. So we saw improvement to our marine transportation cash flow for the second consecutive quarter when compared to the previous quarter. We believe this improving trend will continue into the fourth quarter as our asset utilization continues to slowly strengthen. Our next largest cash flow generator in the third quarter was our sulfur services segment that had adjusted EBITDA of 4.9 million compared to 4.2 million a year ago. Fertilizer had a very strong quarter considering the third quarter is our seasonally weakest quarter. Cash flow for fertilizer was 2.2 million in the third quarter compared to 0.6 million a year ago. We had very strong demand in our ATS product line this year compared to a year ago, accounting for the majority of the improvement. Looking forward to the fourth quarter, we plan to take the ATS production facility down for turnaround in November, so we will have lower production volumes of ATS, which will limit some of our fixed cost absorption. Offsetting this could be early demand from farmers of AMS product, which we manufacture in Plainview. In our pure sulfur side of this segment, adjusted EBITDA was $2.7 million in the third quarter compared to $3.5 million a year ago and $1.9 million in the second quarter. Compared to a year ago, sulfur margins were down by 14%. Also a year ago, we received a contractual settlement of $0.2 million that did not occur this year. We also had no export sales out of our Stockton terminal in the third quarter, solely due to the timing of sales opportunities compared to a year ago when we had two large export vessel sales. More importantly, though, is the 0.8 million increase in cash flow from the second quarter of this year to the third quarter. This is primarily a result of sulfur production in Pad 3 becoming more stabilized and approaching normal levels. Looking toward the fourth quarter, our pure sulfur business should be similar to the third quarter, due to a more stabilized refinery production environment in Pad 3. Finally, I would like to discuss our natural gas liquid segment. For the third quarter, we had adjusted EBITDA of $1.8 million compared to $2.8 million a year ago. This quarterly cash flow difference can be explained by the timing of seasonal sales in last year's third quarter as deliveries to our refinery customers started earlier in the 2020 butane blending season. As prices hit today, we are currently positioned to have a strong fourth quarter in this segment based on our carrying cost of inventory and storage compared to current market prices. Now, 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.