MMLP - Earnings call transcript Q2 2019 | Martin Midstream Partners L.P.

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Operator

Good day, ladies and gentlemen, and welcome to the Martin Midstream Second Quarter 2019 Earnings Conference Call Webcast. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Ms. Investor of Director Taylor, Relations. Sharon Ms. begin. Taylor, you may

Sharon Taylor

FP&A, room Good Ruben is Bondurant, Financial Director the Financial Director Executive morning. you, Josh. Chief of Cavin, Danny Thank with Officer; David Martin, Reporting. Bob Cannon, of me Officer; In and President Chief and

statements Martin, are factors get forward-looking of based future actual current regarding I’ll the on could be be started, the impact materially performance by we you that our defined Before may outcomes could SEC. that the management but remind making as Such statements different. judgments

risks should review form and You Martin's in discussed our opinions own with the future and factors SEC other information the performance. about filings your

on website measures referenced We reconciliation the posted corresponding refer call. financial in Please table to of Relations non-GAAP call press today's will GAAP financial to of section find measures. release discuss Investor measures a our today’s their to in non-GAAP in the our earnings

to I'm going turn over the call Now, opening to Ruben Martin. remarks for

Ruben Martin

Thanks, and morning. around strategy sale of the provide we these assets announced next call. our of the balance previously in the step refocus services our specialty Sharon efforts sheet in strengthen all sale operational June diversified was the legacy the The that natural closed you Good gas million. our today. assets to the On for call assets storage space. our for midstream XX, joining for joining $XXX Thank

revolving million, divestitures were credit the months proceeds last through the drop-down net down of in have We pay debt used received which the Transport $XXX of XX and facility. Martin to approximately under Incorporated,

an million approximately we only $XX.X savings we million. or debt, it $X.X reducing increased another flow of $XX.X annual that Further will expense benefit by by cash reduced while distributable from have say estimated way million, EBITDA interest because in approximately

utilization stronger look to to improved sheet Harbor reducing will and existing times. efficiency focused will concentrate company our our support strength, below operational grow with to on Island improving our outlook balance discipline a to assets, leverage continuing economic at of on to capitalizing and dedicated segments We on and we continue alliances through and while four Beaumont terminals. current capital business remain our strategic And

I'll it second the to quarter. to Now Bondurant Bob over turn discuss

Bob Bondurant

Okay. Thanks, Ruben.

our to adjusted second operations. businesses. performance store-based was The for midst EBITDA guidance our to Now, I'd like fertilizer we quarter primarily discontinued in in quarter, to $XX.X of both had adjusted million, and guidance $XX.X our the adjusted discuss compared of butane and second From guidance continuing compared and in terminals million.

which fertilizer performance by Services the plant Sulfur in business extremely flow our $X.X missed final farmers Our corn and collapsed impact April a we in flooding million, conditions. the decision the to $X.X as May. rain in June fertilizer in and field of cash with forced on to were target our guidance of make although forecast Midwest million business, was not wet

accounts a the As business sales this forecast below miss in June well June for and in second were our quarter. result

for the bad this year's season. news Now fertilizer that's

U.S. corn us fertilizer fertilizer reduced this levels normalized our prices products demand forward, niche and higher at Looking remain cash supply very year's for these season, based year. strong, next of should realize more significantly flow into in If risen prices be year. have planting anticipation also allowing improved sulfur corn corn going to next

experiencing the due business sulfur prilled missed sulfur in our side operating each operating Northern prilled the of sulfur both our Northern California molten a businesses most forecast been side sulfur terminal. The increased issues, miss prilled the weak the temporary pure result this was refineries and by that business of continued cost. silver stock in the molten side the have was miss production of $X.X million. year. the was sulfur of The to the supply of to This California sulfur due On refineries business, of in

revised looking Services as ship service have a Gulf our guidance Sulfur until ship of loader loader. storm result being And January previously of a our damaged that prilled This our out for prilling business, significantly cash our our at was Coast we operations disclosed flow lowered for in May of sulfur the our XXXX. result

with damage We a days. have $XXX,XXX of property XX deductible coverage coverage business and of that and search a has deductible interruption

recognize services by carrier. to Although, insurance are we income will we coverage, be have interruption prilled our until not actually business we any paid able loss

produce of payment As large a in the XXXX, do it When prilled in remainder business this spring. will we result, through we the reflect sulfur guidance our have for year. sulfur a interruption guidance lowered prilled forecast business

realized segment, Gas primarily quarter million as our the sales of trended Liquid barrels on quarter than the butane Natural quarter. business. which missed over we $X greater throughout our approximately inventory forecast carried second logistics in for a carrying XX,XXX butane downward We by the our cost had Now, price market first butane at end prices of the that was

good current The was is butane finally carrying all purchased news inventory that higher of cost our value last a significantly year. at have to that price is summer liquidated relative lower inventory we last and our

unforeseen through so any margins discounts improved pricing. positioned runs be We Belvieu -- collapse, March the will year and and Borrowing the butane season in ago XXXX. should during early doing a of to are third quarter to also price October which begins we during significantly sales at relative for currently Mont

values reflects Our on on carrying an curve inventory forward and based revised guidance pricing. based current is outlook of

renewal our the second of the million Of this result In took our Mexico. $X.X Services of came reduced result we of effect rig in count deepwater weakness the segment, Terminal rates Gulf quarter as was the $X.X missed business. by that contract a a forecast from in continued of offshore This Marine shore-based million. miss,

new reflected the guidance year. three the contract rig count collapse of the the the These lower remainder average The rates XX for from the of years. beginning are an XXXX deepwater Gulf XX for at Louisiana in to throughput of last in

In me, excuse our -- million. missed we in guidance Transportation $X.X segment, by our Marine

strengthening Our was which Marine million million. are $X.X forecast Transportation the forecast our to rates missed continues by business, this in be day by there transportation we land Offsetting business exceeded $X.X earning. as

quarter our second did over to flow land business extended of turnarounds the million to forecast as second XXXX second when result miss quarter. quarter carried business overall increased when from due our compared to Although this that downtime cash over $X.X transportation of refinery the has compared to a Gulf Coast guidance,

overall We demand our from chemical of customers. some also transportation experienced weaker

our quarter Looking have we contracts support forward, forward that beginning in the third guidance. several new

Gas loss those are primarily as business would Greenfield started rates investment these Cardinal from to XXXX of Finally, this much the development contracts storage. years. executed during address like We timeframe net I large We our in long-term higher higher XXXX the they that today. cost a at storage project rates supported were than when income selling the to

outlook long-term market was, in over EBITDA beginning value forecasted conditions of year-over-year future and steadily $XX.X contracts from the $XX.X million the sale, years, on of fell current our Cardinal. the to our course, course And to XXXX and received this XXXX, in adjusted began of based just these over However, in the business roll last completed for XXXX. four million

original a deleveraging million proceeds which a capitalized for was cost. $XXX As was MMLP, we event realized result, of investment significant gross than it much but sales our less

from million. a As discontinued operations a realized second of loss of quarter result, Cardinal $XXX.X we

like the to and would back will provide over Now, turn our I a discuss update. to balance who call Sharon liquidity sheet

Sharon Taylor

On million. Bob. sheet partnership's reflected Thanks the debt of June XXXX $XXX XX, balance long-term funded

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

times XX. ended times For X.XX March the XXXX, our adjusted were X.XX and to on total June indebtedness bank indebtedness X.XX secured X.XX quarter to as compliant and EBITDA ratios, times times leverage defined to EBITDA compared and respectively senior adjusted XX,

our directly those seasonal NGL As sold or are hedged. volumes forward to If a capital from total supplement, working us which ratio allows adjustments is with attributed carve out inventory build. either to our debt certain debt reminder, shown the exclude

debt our X.X X.XX total At from to that our XXXX, debt-to-EBITDA debt March our build related June at June times inventory total compared the calculated be ratio. to our was XX, amount when carve total we XX. EBITDA excluded out, XX, calculating times at would this Accordingly, $XX million. Without debt-to-adjusted

covenants banking the Our bank compliant June at on coverage June otherwise. expense interest times defined full was compared partnership to X.XX X.XX EBITDA in consolidated by to all March XX, ratio all And at with as was compliance times XX. XX adjusted or interest

The July senior revolving notes, facility over an maturity XX, matures XXX refinanced XXXX and amended the by primary with we three August announced ahead for to now and facility. that extended days which the of provision February are our of is our of of XX of source time. extended On if years springing closing not a notes liquidity was the credit

dollars, $XXX of will on paying facility committed fewer still forecasted enough future the to the based is our Our less used million from spending level benefit partnership capital and and $XXX in compared fees retain needs. million. With previous committed liquidity the

lenders smaller total as lending of to our the will Likewise, forward from be syndicate going XX we XX. reduce number

the retains to increase requirements million MMLP commitment additional feature As agreement through facility credit was the its should up $XXX ability accordion to the previously in case, amount an arise.

our basis out Martin. years banks we our actually stepped our pleased maturity tremendously -- three We commitments to appreciate and increase of their grid, view our with And refinancing has XX leverage up coming of date out are of as will we been relationship that favorable. borrowing across outcome long-term the points and pushed based cost the the fact very increase many which of while over by

mmlp.com. yesterday financial third the on the to quarter million, revised to to and found results Full press which has half been $XX.X can quarter Moving approximately XXXX our was and includes EBITDA actual outlook. revised at and be $XXX.X fourth XXXX release which for of million reduced attached website adjusted first XXXX year the guidance,

to any storm half the to related to Natchez guidance damage Revisions our removing revenues storage year due second of the includes the Gas of and reducing Cardinal

reductions rate earlier both shore-based remarks. recontracting of which his terminals and terminal spoke Bob to the in segment in

spending. to capital Turning our

of the million. approximately during second $X quarter capital Our XXXX growth totaled

the our holder insurance spring $XX to in is majority revising are ship received ship be loader its at that will capital the of related expenditures million, the the $X funded by to of growth should of million, be new full The construction We costs of approximately an to increase proceeds facility. which the Natchez related year XXXX.

maintenance in million approximately during accelerated of totaled million, for for into for was purposes. was maintenance which which the projection was offshore quarter decrease that the $X quarter to barge an Our the our first expenditures the This second planned capital than $X quarter was sulfur attributable quarter. tug, scheduling and less XXXX

approximately For million. plant. Natchez equipment higher year, CapEx revised $XX.X maintenance an maintenance increase and at to turnaround the our million will cost related full of our be our marine $X.X on That's

our call this prepared the will Q&A Josh concludes to for This remarks for the back I morning. turn session.

Operator

you. [Operator Our from first with One Kyle comes Thank Capital question May Instructions] Securities.

question. You may proceed with your

Kyle May

to of Storage the the walk those and I start went through length through segment; business can wanted us morning. Good the of you contracts? contract the and Terminalling renewals that new percentage with then

Bob Bondurant

significantly. had the a fell area And Mexico. Gulf volume was of result business. the of our our in was one -- of the remains in a same, the rollover we really minimum shore-based that this the commitment demand lack while pricing And Well, the contract

shore-based So is you'll million This rollover forward; a -- this guidance. going we think our forecast our guidance, contract decrease see have in reflected year. And it that was I $XX guidance the only our is real in for business the in original had.

million. is Our revised guidance now $X.X

Ruben Martin

or had so. for And in place that contract years five been

Bob Bondurant

Well, yes.

Ruben Martin

just rolling I XX. years. Five There's there's over probably like And there. one-time out peaked was five or XX six after years, said at it rigs

about certain we've our And there's that those but anywhere to percentages. had from it's -- percentage a business. Now business XX, now. And XX% up always I still of to It's understand. dropped

Bob Bondurant

at million the for total guidance Storage, the $XX So original was if Terminalling you look our and year.

whole, a as Now XX.X%. it's

shore So it's it's all basically. base -- in business the

Kyle May

for place length got you six were five what's the years, it. the Okay, had contract? those to in And mentioned contracts previously on new like

Bob Bondurant

that. it's just on It's – probably, annually

Sharon Taylor

contract. It’s just annual an

Bob Bondurant

definitely is It annually.

Kyle May

it. That helps. got Okay

Ruben Martin

It's got to up. nowhere but go,

Bob Bondurant

the -- I flow. little very all yeah think cash there's So really

coming more from little you at I'll at If -- shore-based year clarity, the a the so from look About you business, only X.X% and is guidance this contract. throughput be lubricant of about sales. million we'll this give now that’s majority $X [ph] coming

the in these Gulf extent the of Mexico be upside So ever to will there comes back, numbers.

upstream based we've and no there's have. we our remaining And think in real to more contract our now this relative I position upstream upon downside business current basically the exposure anymore. is

Kyle May

helpful. one ask Okay And got thing other That's then it. to I wanted about.

You that process give us potential asset about sales. Can how about update previously those any on talked And maybe assets? non-core is you details an going?

Sharon Taylor

is but process expect what are we the we'll we So give about want future some announce now, what said that to any we year-end we have to we able right be and that looking at in detail by are don't sales.

Kyle May

That’s for got Okay, it. you. all Thank me.

Sharon Taylor

Kyle. Thanks

Operator

from Thank [Operator Akyol Selman you. Stifel. comes Our Instructions] next with question

with proceed question. may your You

Selman Akyol

just your thinking hedging you. talk I strategies you Thank me butane basis? on start go-forward let I guess about there a out guess, with, just and can about your

Bob Bondurant

contango sales and when closer had when them hedges some to get we into Well the we will We we typically, recently. hedging. profits. took consider what And off gets we we on that's realized some do, the market as season here

there's hedge this flat will If a sense purchasing market backward our But strategy. of hedging in it So make to as and inventory the selling you're to hedge, just cycle, some it's at a holding dated, cycle. where or as tend opportunism sales or that's in especially that bit to point goes into our breakeven contango. so the we little loss, doesn't get at closer the we

Ruben Martin

half flat. where contracts, And about the now from so And a with XX% year, pretty we're at that even in coming last we is the we're to it's were values that's almost crude buying of in less than things last year. the of XX% number we're

So crude, it's relative substantial now. to a differential

late October, that it or product we're And determine. so looking start in And it September to pretty will will out at And every day single fast. moving that moving. early moves start here

going a in the lot So a But types we're a advent less. again, there market And hedges, that. sometimes like just of certain lot that's different but the it's is of storage amount. where there's in difficult

Selman Akyol

little anytime think Okay. weaker are on And you you for soon? Are continue? I a side. transportation, chemical about looking seeing terms of in long any bit expect then to Can demand referenced sort you in pickup you how you just the of that or talk

Sharon Taylor

up but guidance. transportation I more with expect pick our back more think we to can to I of see have any manager details the towards business around really see according year some there. that, you the end our don't

the the We contracts have left have it front the numbers. support next And as year, Bob the in those that XX the within back year. increased we do that quarter from half of half days out of mentioned, started or starting

Selman Akyol

either contracts about volume related? or Anything guess those result Are MDCS take-or-pays? I to think

Bob Bondurant

rights the are pays, that regular exclusive actually pay require the Yes, if contracts will on freight on and We that trailer a in for transportation or were pay The rates trailer. capital return customer it's the contracts us us customer that most have for the it. contracts of specialty we trailer a the the trailer give on where business. the the

the pretty due as concerning but business that hurricane shut in. always saw overall, due we steady. some to chemicals, can down slow in the to certain things some down it's the marketplace plants. We decrease that And So came

Of course, catch overall, very they But up. got steady. it's back to very,

Selman Akyol

All right. Thanks much. very

Operator

to Thank not would call you. remarks. like this time. over any I'm questions any showing further the for now Bondurant further to at turn Bob back I

Bob Bondurant

you today. the thank to And like call Josh. all you, Thank I'd for joining

from commodity faced partnership been business historically the Now segments, specifically over sheet for delever and headwinds With and were quarters, range under control. fertilizer we and in impacted our by our the or in dealing planting in five while in but our negatively future, we results not the the our have to with price last most collapse butane. fast factors strategy the during have throughout flooding strengthen not even distracted balance season, the U.S. of

made times, First, accomplished? to So have gotten we below our leverage. what continue while of stated have we on initiatives And four we lower goal have concentrated will that strategic not progress. we and to progress our

simplified asset on diversified operations non-core Gulf concentrated to back through the sales region. specialty have Next, our our roots and services Coast we of gotten

sales we within besides limited truly these asset up our of remains which refocusing is group. benefit only upstream our Shore-based exposure, non-core that terminal Another have

half as follow-up though one cut will you. our environment Martin as be in questions may our look for And last the we distribution even desirable, operating annual not we times ensuring challenging ratio Thank in have. you when to the any popular, above Thank nor interest answering coverage you that is Midstream and forward year. your will

Sharon Taylor

ahead. Go

Operator

thank have in day. Everyone may Ladies for program gentlemen, and you wonderful today's today's does you disconnect. This a participating conference. all and conclude

Martin Midstream Partners (MMLP) 25 Jul 192019 Q2 Earnings call transcript