Martin Midstream Partners L.P.

Thank you for standing by. My name is Krista and I'll be your conference operator today. At this time, I would like to welcome everyone to the Martin Midstream Partners first quarter 2024 earnings conference call. 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'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I will now turn the conference over to Sharon Taylor, Chief Financial Officer. Sharon, you may begin.

Thank you. Good morning, everyone, and welcome to the Martin Midstream Partners conference call to discuss first quarter 2024 earnings. During this call, we will make forward-looking statements as defined by the SEC. These statements are based upon our current beliefs as well as assumptions made by the management team and information currently available to us. Please refer to our earnings press release issued yesterday afternoon and posted on our website 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 materially from our expectations. We will discuss non-GAAP financial measures on today's call. The earnings press release includes a reconciliation of these non-GAAP financial measures to their comparable GAAP financial measures. With me on the call today are Bob Bondurant, CEO of Martin Midstream, Randy Tauscher, COO, David Cannon, Controller, and Danny Cavan, Director of FP&A. Now I'll turn it over to Bob to discuss first quarter earnings.

Thanks, Sharon. I would like to begin the discussion by focusing on our overall first quarter operating performance. For the first quarter, we had adjusted EBITDA of $30.4 million, compared to first quarter guidance of $31.6 million, a modest $1.2 million dollar miss compared to forecast. For the first quarter, our largest cash flow generator was once again our transportation segment, which had adjusted EBITDA of $13.2 million compared to guidance of $10.2 million. Within this segment, our land transportation business had adjusted EBITDA of $9 million compared to guidance of $7.1 million. Our revenue exceeded forecast by approximately $1 million as we beat our anticipated first quarter mileage by 8%, even though the number of loads from refinery sulfur producers was down significantly due to their extended turnarounds. Also, operating expenses were $0.8 million below forecast due to lowered truck and trailer maintenance expense, which should be a future trend as we continue to replace older equipment with new. Our marine transportation business had adjusted EBITDA of 4.2 million compared to guidance of 3.1 million. Marine transportation revenue exceeded forecast by 0.8 million as average inland transportation day rates exceeded forecast by 4%, while achieving approximately 100% utilization. Additionally, we had reduced operating expenses compared to forecast of approximately 0.3 million. Looking toward the second quarter, we believe the performance of both of our transportation business lines will continue to remain strong and both have the potential to outperform second quarter guidance. Our second strongest cash flow generator in the fourth quarter was our terminaling and storage segment, which had adjusted EBITDA of 9 million compared to guidance of 9.4 million. While revenues approximated our forecast, Our expenses were higher by approximately 0.5 million. The primary cause of the expense overage was repair and maintenance costs at our smackover refinery. These costs were associated with the January restart of the refinery after we had taken it offline due to the extreme cold weather during the week of January 14th. Looking toward the second quarter, all of our terminal locations are continuing to operate normally. And based on the consistency of revenue generated by this segment's fee-based business model, our terminating group should perform at forecast for the second quarter. Now I would like to discuss the performance of our sulfur services segment, which was our third largest cash flow generator in the first quarter. In this segment, we had adjusted EBITDA of 6.7 million compared to guidance of 9.8 million. Our fertilizer group had adjusted EBITDA of 4.2 million compared to guidance of 6.6 million. Overall for the first quarter, we had sales volume which exceeded our forecast of tons sold by 11%. Offsetting this were lower product margins per ton than forecasted. The combination of higher volume sales offset by lower margins fully account for the 2.4 million missed when compared to fertilizer guidance. Continued competitive pressure throughout the quarter did not allow us to realize higher forecasted sales prices, which negatively impacted first quarter fertilizer margins. Looking toward the second quarter, we continue to see solid sales volumes and believe that should continue throughout the quarter. We still see headwinds regarding margin expansion, and as a result, there is some chance we might not fully achieve our second quarter fertilizer forecast. The pure sulfur side of our sulfur services segment had adjusted EBITDA of $2.5 million compared to guidance of $3.2 million. The primary driver of the miss in forecasts was reduced sulfur volumes produced by our Gulf Coast refinery suppliers. This was due to the extended turnarounds many of these refiners experienced in the first quarter. Actual volumes received were significantly less than forecast, as our average daily volume received was only 2,450 tons per day. This compares to the fourth quarter average daily volume received of 3,550 tons per day. Looking toward the second quarter, Gulf Coast refineries are back to producing normal sulfur volumes as we are currently receiving approximately 3,550 tons per day. Based on this data, we believe we should achieve our second quarter forecast for the pure sulfur side of our sulfur services segment. Finally, I would like to discuss the first quarter performance of our specialty product segment. In this segment, we had adjusted EBITDA of $5.4 million compared to guidance of $6 million. While our grease business, along with our remaining NGL businesses, achieved forecasts, The entire EBITDA mix can be accounted for by the underperformance of our packaged lubricant business. In the first quarter, this business actually achieved its forecasted sales volume while realizing slightly poorer margins than forecasted. An additional problem for our packaged lubricant business in achieving its forecast were operating issues that occurred in the month of January, beginning with the same extreme cold weather that impacted our refinery. Since January, management of this business have taken corrective actions and have been intimately involved in day-to-day operations. This has resulted in a more streamlined operating environment with improved blending process flows, which has positively driven operating results more toward forecasted performance. Looking toward the second quarter, we currently see significant improvement in our packaged lubricant business when compared to the first quarter, and believe our specialty product segment will achieve its second quarter guidance. Overall, looking to the second quarter for our entire company, we see potential upside to second quarter guidance in our transportation business with some slight downside risk to guidance in our fertilizer business. All of our other business lines should approximate their forecast. Now, I would like to turn the call back over to Sharon to discuss our balance sheet capital expenditures, and capital resources.