Martin Midstream Partners L.P.

Good morning, my name is Audra and I will be your conference operator today. At this time, I would like to welcome everyone to the MMLP fourth quarter earnings conference call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I'd like to turn the conference over to Sharon Taylor, Chief Financial Officer. Please go ahead.

Thank you, Operator, and good morning, everyone, and thank you for joining us today. In the room are Bob Bondrant, CEO, Randy Tauscher, COO, David Cannon, Controller, and Danny Tavin, Director of FP&A. I'll begin with our cautionary statements. During this call, management may be making forward-looking statements as defined by the SEC. These statements are based upon our current beliefs as well as assumptions and information currently available to us. Please refer to our press release issued yesterday afternoon as well as our latest filings with the SEC for a list of factors that could impact the future performance of Martin and cause our actual results to differ from our expectations. We will discuss non-GAAP financial measures on today's call, such as adjusted EBITDA, distributable cash flow, and free cash flow. In addition, we will refer to adjusted EBITDA after giving effect to the exit of the butane optimization business. You will find a reconciliation of these non-GAAP measures to their nearest GAAP measures in our earnings press release posted on our websites. Now I will turn the call over to Bob to discuss fourth quarter and full year results.

Thanks, Sharon. I would now like to begin my discussion with a recap of Martin Midstream Partners' execution of significant achievements in 2023. In February, we refinanced our existing secured notes, extending their maturity to February 2028. At the same time, we amended our revolving credit facility and extended its maturity to February 2027. In the second quarter of 2023, we completed our exit from the volatile butane optimization business while retaining the stable cash flow component of the business associated with our North Louisiana underground storage assets. Also in 2023, we began construction of the oleum tower at our sulfuric acid plant in Plainview, Texas, in order to be the supplier of oleum to the DSM Semicam joint venture. This joint venture is between us, Samsung C&T America Inc., and Donjin USA. The joint venture is currently in the construction phase of facilities that will provide electronic level sulfuric acid, commonly known as ELSA, to the semiconductor manufacturing industry. The final significant achievement we had in 2023 was exceeding our disclosed EBITDA guidance and also meeting our targeted leverage ratio of 3.75 times. I would like to acknowledge and thank our team of executive leadership, segment leadership, and the entire Martin Midstream workforce for executing our 2023 game plan in order to achieve these goals. Now I would like to focus on our fourth quarter operating performance. For the fourth quarter, we had adjusted EBITDA of $29.2 million compared to a fourth quarter revised guidance of $26.9 million, an improvement over guidance of $2.3 million, or 9%. For the year, we had adjusted EBITDA of $117.7 million, exceeding our beginning of the year guidance of $115.4 million. For the fourth quarter, our largest cash flow generator was our transportation segment, which had adjusted EBITDA of $12 million compared to revised guidance of $11.3 million. Within this segment, our land transportation business had adjusted EBITDA of $9.6 million compared to revised guidance of $7.3 million. During the fourth quarter, our revenue per load was greater than forecasted as we began to see a recovery in our longer distance loads. We also began to see a reduction in our equipment repair and maintenance costs as we continue to lower the average age of our fleet with new leased equipment purchases. The effect of this recapitalization of our equipment fleet over the longer term will be to increase our equipment lease expense, which will be partially offset by reduced repair and maintenance costs. We also believe newer equipment will help our driver retention. Our marine transportation business had adjusted EBITDA of $2.3 million compared to revised guidance of $4 million. The primary reason for this EBITDA miss was due to supplemental insurance calls from our protection and indemnity insurance carrier. These supplemental calls totaling $1.1 million were due to losses incurred by our P&I carrier related to their overall underwriting losses. These losses were not the result of Martin Midstream's marine transportation loss performance, but were the result of the entire global marine industry loss performance. This was a one-time charge hitting the fourth quarter income statement. Our second strongest cash flow generator in the fourth quarter was our termling and storage segment, which had adjusted EBITDA of $9 million, which was the same as our fourth quarter guidance. Overall, in this segment, Our revenue slightly misforecast by 3%, primarily due to reduced throughput volumes, which were offset by a 5% reduction in operating expenses from lower utility costs when compared to guidance. Now I would like to discuss the performance of our sulfur services segment, which was our third largest cash flow generator in the fourth quarter. In this segment, we had adjusted EBITDA of $7.4 million, compared to guidance of 6 million. Our fertilizer group had adjusted EBITDA of 3.9 million compared to guidance of 3 million. We have stronger fourth quarter sales compared to forecast for both liquid fertilizer and degradable sulfur products. This positive sales performance compared to forecast was partially offset by reduced ammonium sulfate sales in the fourth quarter, which we believe are being delayed to the first quarter. The pure sulfur side of our sulfur services segment had adjusted EBITDA of 3.6 million compared to guidance of 3 million. We experienced very strong sulfur production from our refinery suppliers as total sulfur volume received was 17% greater than our fourth quarter forecast, allowing this business line to exceed its financial forecast for the quarter. Finally, I would like to discuss the fourth quarter performance of our specialty product segment. In this segment, we had adjusted EBITDA of $4.9 million compared to guidance of $4.9 million. In this segment, we had strength in our grease business line, offset by slight underperformance in our packaged lubricant line of business. To summarize our fourth quarter performance, we exceeded revised guidance by $2.3 million. The bulk of our outperformance came from our land transportation business and our sulfur services segment, partially offset by the one-time insurance charge in our marine transportation business. Now I would like to turn the call back over to Sharon to discuss our 2024 guidance, along with our balance sheet and capital resources.