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 second quarter 2024 earnings 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'd 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 would like to turn the conference over to Sharon Taylor, Chief Financial Officer. Please go ahead.

Thank you. Good morning, everyone, and welcome to the Martin Midstream Partners conference call to discuss second 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 Bondrant, 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 second quarter earnings.

Thanks, Sharon. I would like to begin the discussion by focusing on our overall second quarter operating performance. For the second quarter, we exceeded guidance by $0.5 million as we had adjusted EBITDA of 31.7 million compared to second quarter guidance of 31.2 million. We exceeded guidance by 0.5 million despite two separate and distinct casualty losses that totaled 2 million in the second quarter. I will discuss these events later in my segment comments. For the second quarter, our largest cash flow generator was once again our transportation segment which had adjusted EBITDA of $11.2 million compared to guidance of $10.2 million. Within this segment, our land transportation business had adjusted EBITDA of $8.2 million compared to guidance of $6.5 million. Our revenue exceeded forecast by $1.4 million as we beat our second quarter forecasted mileage by 5%. Also, operating expenses were $0.4 million below forecast, primarily due to lower truck and trailer operating costs when compared to forecast. This operating expense trend relative to guidance should continue as we slowly replace older equipment with new. Looking toward the third quarter, we continue to see strength in our sulfur hauling from Beaumont area refineries, but have seen a bit of a slowdown in other product lines such as chemicals and lubricants. However, We believe we should be at or near guidance for the third quarter in our land transportation business. Our marine transportation business had adjusted EBITDA of 2.9 million compared to guidance of 3.8 million. The majority of the miss in our marine transportation performance can be explained by a 0.5 million casualty loss that occurred in May. This loss represents two separate insurance deductibles under our marine transportation protection and indemnity coverage policy and our whole coverage policy. This casualty loss was the result of a bridge elision in Galveston, Texas, which occurred in May. A balance of the underperformance relative to guidance was the result of lower inland fleet utilization than forecasted. This was the result of scheduled marine equipment and dry dock during the second quarter that took longer than forecasted. Also, we had reduced revenue from the inland tow that was involved in the Bridge Elysian incident. Looking toward the third quarter, we continue to see day rates stronger than our original forecast, and we also foresee full utilization of our marine fleet. providing the opportunity to exceed third quarter guidance in our marine transportation business. Our next strongest cash flow generator in the second quarter was our sulfur services segment, which had adjusted EBITDA of 10.6 million compared to guidance of 9.8 million. Our fertilizer group had adjusted EBITDA of 6.7 million, which was the same as our EBITDA guidance for the second quarter. While the volume of fertilizer sold in the second quarter was 15% less than forecast, we realized a 20% improvement in actual gross margin per ton relative to guidance. This margin improvement was a result of the mix of fertilizer products sold in the second quarter when compared to our forecast. Looking toward the third quarter, we anticipate the normal seasonal trough and cash flow for the fertilizer business as farmers transition from planting to harvesting their fields. The pure sulfur side of our sulfur services segment had adjusted EBITDA of $3.8 million compared to guidance of $3.1 million. The primary driver of this outperformance was the strong volume of sulfur production from our Gulf Coast refinery customers. The daily volume of sulfur handled was 14% greater than our forecast as we logistically managed approximately 3,700 tons per day of sulfur production into or through our Beaumont terminals. Looking toward the third quarter, subject to Gulf Coast weather events, we remain optimistic that sulfur production from our refinery customers will continue to remain at these higher levels, which should allow us to achieve or exceed guidance in the pure sulfur side of the business. Our third largest cash flow generator in the second quarter was our terminal and storage segment, which had adjusted EBITDA of $8 million compared to guidance of $9.4 million. While our specialty, shore-based, and underground storage terminals were spot-on relative to guidance, we missed our forecast at the Smackover Refinery due to a casualty loss caused by a crude oil pipeline spill that occurred in mid-June. The pipeline in question moves crude oil from our storage tanks to the refinery. Because of the spill, we accrued a casualty loss equaling our total insurance deductibles of 1.5 million under both our pollution policy and our general liability policy. The impact of this casualty loss fully explains the terminating and storage segment miss of 1.4 million when compared to guidance. Looking toward the third quarter, We believe this segment's cash flow should return to guidance. Finally, I would like to discuss the second quarter performance of our specialty product segment. In this segment, we had adjusted EBITDA of $5.7 million compared to guidance of $5.6 million. Relative to guidance, we had outperformance in our grease business, which was almost entirely offset by underperformance in our packaged lubricant business. The main driver of our grease business outperformance was an improvement in our margin per pound of grease sold compared to forecast. Conversely, the underperformance of our packaged lubricant business was due to a reduced margin per gallon when comparing actual margins to guidance. In the grease business, we have benefited from falling additive costs, while in the packaged lubricant business, we have had to substitute higher-cost third-party base oils, driving up our unit cost. Looking toward the third quarter, we believe we should continue to perform at or near guidance in our specialty product segment. Overall, barring any unusual operating or weather events, we believe Martin Midstream's third quarter performance should approximate guidance. Now I'd like to turn the call back over to Sharon to discuss our balance sheet, capital expenditures, and capital resources.