MMLP - Earnings call transcript Q4 2018 | Martin Midstream Partners L.P.

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Operator

Good morning, ladies and gentlemen and welcome to Martin Midstream Partners Fourth Quarter 2018 Earnings Conference Call and Webcast. [Operator Instructions] And as a reminder, today's conference is being recorded. I would now like to hand the conference over to Sharon Taylor, Director of Investor Relations. Please go ahead.

Sharon Taylor

Thank you, James. everyone. morning, Good our the CFO; in David Ruben CEO; [Denny Martin, the With Southard, room our Bondurant, Kevin] and Reporting; Scott of Development; of VP Bob FC. Director me Financial is Director of Cannon, Commercial

the be unit get use ability I statements forward-looking results flow, XXXX, EBITDA, before for and amortization, We and believe we this relating the it current and results, depreciation and be make and within generally to this provides information pay to because future comparisons quarter forecasts, Before financial meaningful also can make users meaningful in these and taxes, statements report earnings our such holders. financial full conference to made meaning the distributions. may SEC financial of fourth ash Regulation during results and to operational reported interest, or prior with results started performance, and of cash our year EBITDA. need to with we accepted distributions available the our G, measures a disclaimer. accounting We certain financial Certain adjusted measure accordance between measures with principles use non-GAAP financial it c Partnership's and as of call distribution

measures. flow financial in quarterly GAAP adjusted release also of to issued cash most press EBITDA, our comparable distributable and We EBITDA, EBITDA included yesterday a adjusted reconciliation the guidance

to the XXXX deck our Our release earnings that press release link our guidance. Further available is slide financial press mmlp.com. at is the website, in outlines

Bob to the Now Bondurant, call over I'll CFO. our turn

Robert Bondurant

Sharon. Thanks,

by certain and comment secured closed quarter transaction and a drop-down XXX XXX on credit debt effective fourth X, the revolving of of The XXXX was discussing trailers. to our million Martin begin trucks l performance, XX.X recent I financed million by of We price our acquisition purchase assumption would million. line January the drawing for transaction of Transport. our Before on like

As implying be for recall, have XXXX projection our confident times. we greater revenue and EBITDA many will purchase our acquisition mile per estimated Transport of the feel Martin X.X forecast. count our currently of than in is in still our that to million price you XX.X driver We

very refinery acquisition extending and believe a service remain strong lines. on strategic a growth value while bullish fit we business very So chain provides this organic our of it profile the with

like to I’d performance to our fourth Now discuss quarter quarter fourth compared our guidance.

guidance we per had gallon earnings per third services compared first reason EBITDA quarter optimization When EBITDA in we higher call compared quarter, spoke in storage. than of fourth as actual the butane had gallon adjusted guidance XX million. quarter to our to during the adjusted of X.X we million. was compared days For to of October for this was to XX, significantly adjusted XX.X our was our in our our as fourth going October XX.X were cost EBITDA believe was last our in the fourth our every guidance we butane of on forecast price optimization natural quarter million The average business to a in mix butane gas specifically which million XX adjusted segment $X.XX business achieve

of beginning of end butane falling In the October $X.XX November. fact the price to gallon by at $X.XX a per was

per crude crude price to X was married two XX% the this to November a gallon. fell decline oil butane price over compared So two-month October $X.XX over months although oil decline the butane Directionally of XX, XX%. decline the prices period from

relative prices fourth was we as in XXXX have quarter we forward sold backwardation quarter, beginning any inventory butane of to hedged approximately carrying of hedged the Although that not inventory inventory costs. in first in our had XX% at our be sales the to butane the those did months of

of impacted our XX.X write-down realized million write-down by quarter. unhedged As inventory This effectively throughout $X.X fourth price a the to typically result X.X over offsetting butane the quarter profits in the million NGL Marginally butane shortfall quarter. us cash had million we our quarter eliminating flow was and collapse, storage excess the the business business. this of in significant combined of guidance gas fourth the propane fourth

as by and million. segment terminals Terminalling our missed each missed Our guidance by X.X terminals shore-based $X.X million specially

shore basis reduced drilling activity and to continue sales for volumes throughput fuel at weak. our diesel experience to lubricants remains lubes support as We volumes offshore and demand marine

asset and of Our repairs was of X.X selling missed result miss result costs sulfuric balance maintenance the specialty our terminals forecast as The Nevada in of terminals of the our increased million operating expense. Dunphy primarily a outside specialty accretive was Partnership also business acid important footprint terminal this our services developing primary felt this it December. we outside transaction. Gulf and was the model, to on Coast our Since in execute for refinery

compared to forecast Sulfur dollar million. was X.X quarter hit Our fourth Services segment of million for the X.X the

Transportation loss We this supports our fourth We cash flow. we business the but expenditures Transportation drydock to which reasons X.X exceeded ultimately December million December a segment area. of sulfur group X.X spite occurred quarter Although all exceeded our be utilization quarter accelerated Marine remain believe in of by This fertilizer March in tied continues business rates into which originally XXXX will more reverts and patterns. commercial finally precipitation realized to of reduce drydock to heavy will sales by of up X.X by current in accelerating had And rain the revenue. as forecasts million. transportation XXXX. X.X our peril in forecasts our capital of normal the to tow fertilizer move our for offshore offshore the when month of drydock Marine by strong which drydocking the of which planned vessel forecast fourth increased the molten also million, missed maintenance in million result occurred and December interim market our The in offshore

times be businesses accounted areas, by million. This most which as missed can miss downside. business Both two we the in and butane $X upside which year volatility optimization for XX.X of million of DCF had X.X our businesses potential for both distribution. the adjusted result of XX.X our So only missed by these are forecast a entire achieved our and adjusted fertilizer XXXX margin forecast and coverage business

are have significant we with upside. fertilizer thinking position in our about are the inventory We to downside trying the inventory hedge of which measuring and strategically how analyzing to This to a future. backwardation system while protect our its a raw In risk year alternatives we another issues XXXX physical should of million. not business, this butane inventory Partnership if faced similar cost we margin sulfate one-time limit our against margins not piles. experienced We're impact ammonium to write-down are like we positively of fertilizer we relative in is $X XXXX. XXXX should in when reduced adjustment to early material experiencing converted laser Also

I back turn the would Now sheet like over to capital to resources. Sharon to call balance discuss and our

Sharon Taylor

the Thanks quarter spending. quarter with components bank normal in sheet walk-through fourth tying balance a capital our we’ll review full at Bob. start of of debt We'll quick provide and at end. year the our Then ratios

for Ruben then XXX Next over funded turning December I’ll Martin total long-term initiatives XX, the and call the be around Partnership. discuss XXXX strategic balance debt I'll guidance of for million. On sheet XXXX to approximately Partnership's financial his remarks for reflected the

liquidity premiums actual before shown was issuance debt funded our Reconciling sheet as million. and unamortized revolving debt credit total XXX was million at balance outstanding and available million. unsecured revolving amortize senior balance was issuance this quarter on December based the debt million XXX credit XXX facility. facility notes notional funded amount and Our end was Thus XXX on XXX million our number XX was of our

For year EBITDA the adjusted as and ratios EBITDA, total secured indebtedness ended X.XXx X.XXx XX, compliant December to senior leverage adjusted quarter indebtedness our were and and defined respectively. bank XXXX to

carve Accordingly, carve EBITDA with hedged a our As debt from debt excluded sold seasonal was At the to debt is be our we our out total total either debt-to-adjusted certain X.XXx. December shown to debt-to-EBITDA ratio our this the our from out, amount or the our that would sublimit, total when attributed debt-to-EBITDA XXXX, allows calculation. Without from related build exclude Yes, $XX.X total XX, directly calculating our adjustments inventory us million. forward total ratio. calculated debt NGL inventory volumes are capital which reminder, build. to working

Our is was interest defined ratio coverage interest consolidated bank by X.XXx. compliant expense adjusted EBITDA to

debt covenants sheet, balance total XX.X%. December the XX, XXst total otherwise. December compliance partnership to capitalization was with In at in was the Looking banking or on all on full all

marine XXXX. total, the quarter million equipment. to of during fourth million for discuss full We year in $X And allocated our was start CapEx. that spending and $X of million Now spent with the $XX XXXX. a total approximately around quarter the growth I'll fourth year during full let's capital

For the million the million $XX the quarter maintenance, $XX our for year million. to greater quarter projection maintenance $X third on CapEx approximately bringing spent during we This of million. $X fourth than roughly total number was approximately

As offshore Bob is of first XXXX. attributable scheduled to which maintenance this our mentioned quarter tow, of increase earlier, for the was

was quarter fourth for work to the accelerated the XXXX However, reasons. of commercial

segment XXXX capital also which website XXXX details be the presentation release financial found yesterday quarter. and mmlp.com. our for and flow attached guidance was our the by partnership; to cash Turning guidance provides to at can press spending the by on The

is $XX.X services will And division our the unallocated seasonality million. EBITDA at $XX.X forecasted $XXX.X third Transport for to while Our MTI. to largest our SG&A. And with EBITDA does to the remains million flow Terminalling adjusted reconciliation somewhat, includes is transportation acquisition EBITDA. of Martin be natural Inc. million, so adjusted or unallocated which gas of our our note move land flows. division then segment the guidance Sulfur our adjusted be totals and segment segment of at quarterly thing finally quarterly $XXX.X our $XX.X Xst as by was the EBITDA estimated forecasted of million, That seasonally cash effect the our the on quarter our contributor This followed cash of weakest. of Storage results million businesses help $XX.X on million January SG&A after One XXXX Services before $XX.X in million

up businesses make our XXXX. flows to majority the for cash Our of continue or fixed XX% forecasted fee

segment. Let's Natural Gas services move to our

cash We gas as fee based of have XXXX. flows of approximately average strong life years three a weighted multiple year contracts storage in year-end with

revenues Sulfur based in revenues In enjoy our long-term butane operations, refinery segment shore and based assets, within contracts agreement business. for Smackover have and for drilling We Sulfur based we sulfur long-term margin cash wholesale molten based based MRMC handling Terminalling marine fee contracts Storage Division. includes also our margin specialty and In group. our based fertilizer towing our we at our transportation our and have and flows Lubricants segment, our contracts terminal, the fee from margin with take-or-pay within NGL optimization our Services a which

day based sold our assets. assets and which estimates, million fee of haul XXXX, approximately newly the land line consists acquired based rates for rates $XXX.X which WTLPG, was segment number for XXXX. actual and XXXX XXXX bridge our gap transportation July between XX, Our related to $X our was adjusted marine EBITDA fee transportation for excludes results million, To

June all $XX in businesses, annually related which million butane had our approximately additional that our expire compared return of XXXX million reduction EBITDA to as Perryville flow million. estimated million that differences, our location. approximately XXXX contribution recall normals Netting cash we cash and resulted reduced of to forward. is to respectively. increased the $XX EBITDA of approximate And MPI to discussed, $XX we $XX from This million fertilizer XXXX. in cardinal have $XX together and of that's is an storage historical total will re-contracting both gas forecasted in those You for flows result XXXX and contracts for gas XXXX in Offsetting several at of storage

for million Moving $X.X our range turnaround tank. capital $XX maintenance a be ammonia for Smackover every that the XXXX. estimated to our XX million on for and and one million Included million year. refinery the $XX of $X due anticipate CapEx on which to occurs in inspection expenditures between for We years, X is year

million quarter spent be SG&A expenditures, XX% between forecasting $XX EBITDA $XX we approximately between the $XXX.X with capital with be $XX and fourth of CapEx now CapEx estimated and growth call the and in maintenance million million before XXXX expansion our of between going forecast $XX to of CEO, our million adjusted that being million $XX.X XXXX. For $XX will expenditures over capital Martin. million $XXX.X million million. or I'm summary, In Total million to turn in $XX and to $XX Ruben total. million to are is $XX million unallocated

Ruben Martin

but in that recently. participation potential Thank initiative media begin you the has with, most project read important reported you, Texas. multiple them. by early terminal in discuss to strategic ethane that in as of are Harbor let's and everyone. our begin Beaumont, To an the have two likely development very Sharon. that have the media inquires oil received launched result export stages Good projects two partnership I'll Island about briefly addressing are announce concerning and potential crude and export at we at a morning been terminal our These in then

Carlyle and of Corpus announced the with for Group, export As Island. we at Harbor the actively Carlyle the by exploring developments Group was crude previously Christi oil terminal are

Although agreements value there are to in believe project. terminal no strategic our definitive we place, the add existing

export terminal water the terminal. to export terminal ethane is existing Beaumont, Texas; has access to construction our proposed which to that conducive the in ethane ethane announced, of deep nature's Moving American an site has

issue agreements. licenses and that addition permits state are to agencies, developed the this terminal operations may are efforts to reported, by Specifics commercial upon time the multiple in ethane been Government export and none which permits our As today. its ethane reach in with place has Chinese U.S. being project of conjunction and is definitive regarding in contingent the at

in has step and take timing focus storage toward the is balance the being strengthen expertise been Cardinal next our current operational believe time refinery We that for to strategy our around now partnership some to Finally, the steps our efforts the industry. to right sheet services meaningful market our goals, gas assets. for our our

two XX assist process we us hired approximately weeks weeks. have that take an We advisor will the estimate into to in

sale in long-term constant. significant remains A result estimates and leverage transaction, pursue strengthening reduction with from in process. XXXX partnership, successful guidance, culmination for our our at strategic Xx leverage the the initial of of the ability proceeds forma partnerships coupled objective our Our pro to providing below the

concludes the now that this our for can question-and-answer. open lines James, and morning remarks Okay, prepared we

Operator

with from line comes of [Operator Instructions] question TJ Our Capital the first Markets. Schultz RBC

Your line is now open.

TJ Schultz

a look kind lot there offer. delevering of and I and process at think the something parts first moving in you as of

Just asset on MRMC's context and color the the sale flow. distribution how the also cash on scope for the the capitalization much policy that of in have to? flexibility for you do proposed maybe level and need Same XXXX of

Robert Bondurant

drop-down As far debt MRMC bank is our MCI concerned with minimal. is the transaction very

as but you least to delever are and there need lot all for initiatives X.XXx. the we the any have that proceeds transaction as it on we those goals received will distributions say the Ruben focused a large is strategic discussed cardinal Would what our on entertaining depends so So include of distribution in XXXX. I not And in have and partnership past, cover as ideas has maybe a at all goal that this been by what from us it that suggested the get the

TJ Schultz

the or ethane terminal accruing American is are there the economics there any you On to as measure, any pending? deals

Scott Southard

is This Scott Southard. a

with process early negotiate We them to the we in agreement. definitive are very continue

more we So to share. say anything don't time would have this I

Ruben Martin

is when LPG this say supply the to at talking will about strategically very I it that all we’re for comes area. Beaumont are located in Ruben. that is This assets that

negotiation the the a will land, of not only land lot that's for strategic terminal. Beaumont so our the location our use docks available and And have the expansion we and that at of terminal involve of

other and And to the of the that good Partnership. and close area be is be able Beaumont and a that going the will the avenues, growth supply in negotiate product pipeline to so lot a for with we

Operator

questions And queue. any not I seeing Instructions] [Operator am further in

remarks. call turn over I’ll to closing for So back Martin any Mr. the

Ruben Martin

realized for delever projects. will for the with anticipated up XXXX our a in the to proceeds you. a strategic this cost try the difference WTLPG thank long-term assets in the us result view sale shaping from cash is the In flows MTI the in and MTI. versus the beginning to of with XXXX, Further the closing acquisition of Transport a between partnership. allowing will flows on of substantially combined of the net will be us Cardinal Cardinal from pursue picture James. like support the Martin to of that of pivotal From we with surplus X you continued Thank big year, joining of each sale Thanks estimated cash our WTLPG year to partnership call from January non-core I'd from proceeds cash acquisition gas. and

Operator

and you. gentlemen very that Thank participation. Thank your Ladies today's you does conclude conference. much for

all disconnect. may You a day. Have wonderful

Martin Midstream Partners (MMLP) 14 Feb 192018 Q4 Earnings call transcript