MMLP - Earnings call transcript Q2 2020 | Martin Midstream Partners L.P.

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Operator

Good morning, ladies and gentlemen, and welcome to the Martin Midstream Partners Second Quarter 2020 Earnings 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 turn the conference over to your host, Sharon Taylor, Director of Finance and Investor Relations.

Sharon Taylor

Whitney. Thanks, everyone. morning, Good Ruben Tauscher, and COO. with CFO; Bob and Randy Martin, here CEO; President Bondurant, I'm of Also Danny FP&A; Director Cavin, us Director Reporting. joining in of and the David room is Financial Cannon,

to I As materially forward-looking of could are impact impact factors actual making defined the based need we our as assumptions including get to you facts judgments may could statements Such that SEC. outcomes the COVID-XX performance different. that current the the Martin, pandemic, remind and by on future be management statements related of the started, regarding but be

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

table Investor historical We Bondurant. turn posted measures non-GAAP press non-GAAP over today's will Bob? on regarding section find a Relations now today's reconciliation discuss of call non-GAAP GAAP measures. measures our the in in release financial the Bob to our measures, to I'll including the those call. call information corresponding financial website of financial to to their in earnings refer referenced Please

Robert Bondurant

Thanks, by we compared call, walk actual as Sharon. our to segment, performance guidance. have quarterly our Historically, on through this performance we

calls for of COVID-XX. be for call the as due the uncertainty year, detailed segment to and However, actual quarterly we will our this not performance pulled this remaining comparing we guidance to guidance by

the entire we $XX a replaced which overall of quarterly range guidance partnership we specific for to an However, support. for $XXX with million to continue XXXX, million guidance

we actual was which guidance was and our adjusted quarter, our exceeded internal greater internally PADD our truck benefiting refinery as businesses. second transportation X the million, forecasted, sulfur utilization EBITDA than what For non-public $XX.X

provide segment second to limited discussion, I some corresponding in and outlook today's quarter performance by for like compare the for quarter. to last year's third XXXX Now our would quarter

EBITDA $XX.X quarter million last year. had million for of second of we of adjusted the For second the quarter $XX.X XXXX, compared to

XXXX. we XXXX, $XX.X of six first million first had For of the $XX.X compared to the adjusted for months million of months EBITDA six

the Services million weather million COVID-XX last adjusted year-ago. margin. largest EBITDA this which increase Sulfur impacted of conditions and from a we the $X.X compared minimal was experienced our in impact million had to compared second to to due $X.X business flow quarter of $X.X as adjusted cash segment fertilizer amounts in this better and had provider Last The XXXX. Our second was volume to a in year-ago. Within was compared primarily year our segment, tremendous EBITDA year year, $XX.X million quarter both rain,

the is decline third causing fertilizer the period Looking forward seasonal business flow normal demand to decrease. quarter, the as fertilizer the this harvest typically their experience farmers we significantly when should crops, to in cash

of this compared Sulfur our out Our of year, of of year. in and to last quarter year ship-loader This $X.X second $X.X normal service EBITDA which compared of the had Neches this our of side sulfur impacted In at impacted the from quarter. we sulfur million of May operations prilled casualty it adjusted to February and a segment terminal, sulfur XXXX pure weather due second operations our negatively operations to kept to a quarter last loss extreme experienced year-ago. Services the million the

negatively compared of reduced volume handled production refinery we year. was XX% However, did degree the This refinery PADD in experience last COVID-XX was less impacted utilization to a XX% utilization. sulfur X total impact quarter due from of as sulfur second to as

segment should and XX%. production of performance our of utilization pure approximately believe Services to third PADD the the corresponding the the financial least refinery At second level quarter holds, quarter, in side sulfur second XX% so than at X to be utilization Looking sulfur has which is forward of in July, far been greater the average similar this Sulfur quarter. we

adjusted decreased $XX.X flow $XX.X compared contributor a segment. next the of a was quarter $XXX,XXX second million. in quarter normal decline had This of and Lubricants of segment of million cost demand our sales in from Terminalling million inventory the our construction, selling of is price than decline margins reduced Packaged Our XXXX realized the cash in year-ago, what demand, compared exactly million in to oilfield flow prices result business our and to decline due was our we business primarily side Grease in as in of the we at business, EBITDA of Grease overall a this to on environment. Grease Terminalling largest anticipated new to of cash the Refinery. and our commercial fee-based smaller due business, and from Also, the Because Martin Smackover decline this $X.X COVID-XX, Lubricant $X the was declined the happened. a and second because to higher of sales

this see cash in June to in did we May. significant business and strengthening of a flow However, April compared

we grease believe the for So packaged and continuing improve. to lubricant outlook is

refinery year, the the Regarding the refinery of repricing year. the Smackover flow due in and processing anticipated beginning the of the cash cash were the fees, at reduced relative last to was decline effective transportation to lubricant which of flow

and minimal by Terminalling fee-based from volume cash is there has our towards the impact anticipate minimum forward. same third business Now been looking the primarily supported portion performance we going COVID-XX flow the quarter, of since contracts,

contract previously terminal. store Tampa oil Additionally, idle the signed in tank to just at a our crude long-term a partnership has

We fourth capital will be in upgrades the tank, to expect placed it be certain but the to service making quarter. in

reduced to guidance year-ago, million segment, the second we adjusted Services for quarter and contributor of be compared decline second EBITDA Transportation a $X.X This both $X.X decline year-ago. market this segment utilization by to not that overall X. expectation when April, largest to land due reduced certainly business, marine unexpected we impacted compared transportation result due of land million. was flow second XXXX pass of by slowdown adjusted Transportation services from to came our in XXXX, communicated our COVID-XX. $X.X Our $X.X economic the In This quarter. cash to refinery the caused to quarter second $X.X COVID-XX would In we a of of million This COVID-XX. transportation of during cash had the which in for a quarter PADD a in had Land the million EBITDA million was to our due demand reduced to primarily the in was third adjusted

was down mileage so majority is previous June saw May of business June, second trend April compared the previous in XXXX down our as to mileage A from reduced we the the mileage quarter and significant in year. occurred improving. Our XX% as the of XX% mileage only this

to Looking expansion. still our refinery a function primarily the of cash quarter, towards third X in flow addition PADD utilization will economic be

in far the is utilization higher July, second quarter. So than for average refinery X% average the

the to Our utilization, Marine million transportation, $X.X this Similar year-ago. million quarter on the second group Marine year. which lower Transportation Transportation our compared in was of EBITDA a to is business in second $X.X refinery significantly quarter had adjusted land dependent primarily

business. result, a inland utilization the As the barge our declined in side XX% of

Additionally, the the day recontracted a reduced the of year. at we offshore one operate beginning rate at was vessel

to flow was the in down from a year result, cash the COVID-XX. our As addition by decline inland caused offshore cash flow previous

This required the third we quarter, to we move transportation from fourth operating when see could quarter relative remaining position on quarter. us in the into we third capacity marine will plan four be the in accelerate regulatory dry Based third the maximum transportation barge the marine towards near-term weakness stronger to the quarter. this with utilization. believe quarter, fourth dockings Looking outlook, demand continue to weaker

Moving to our Natural segment. Gas Services

million in butane a inventory pricing year, $X.X limited a butane utilization. to not from due has second year-ago. year-ago, adjusted $X.X negative the experience was due write-downs, to compared remained we relatively as Our refinery decreased refineries supply EBITDA did quarter to we A experienced this which strong million

buying are is back of second gasoline also in in vapor time. refineries are butane that rules supply anticipation The relaxed to selling quarter at as and storing when October beginning pressure we

sales seasonal the demand, we to result, second flow the in minimal of have cash in are due quarter limited a a quarter. trough second refinery so typically As

butane third the moving will to storage, there minimal from cash continue into flow third in quarter. We also be this the in supply buy quarter, so business

like early offer, our participation sheet back exchange of and would liquidity. call turn I our the balance to results Now discuss Sharon over to to

Sharon Taylor

calls but their to the meet lending In on as We our full want start of that notes to with partnership. July the restructuring uncertain and $XXX the tender million, to virus between of our Obviously, notes XX total I a should investors offer are in see transaction with currently beyond approximately participation solicitation little until allow credit limits corresponding be noteholders of were the and will the interest XX, covenants, to with felt below the the notes partnership, our a from that the and required launch we lenders were was will It being it's none exchange to agreement threshold and the $XXX until support the when coverage X.XXx. not participation early the noteholders for On the transaction, offer negotiated XX.XX% our also still Bob. contained these that environment things, revolving our notes amount XX%. as tender August senior in unprecedented distributions plan times times. groups discussion million On Thanks, is August to over other of cash the want effective to offered amendment July we continue the is a support announced outstanding of as offer that the February to, of own the to moment noteholders expire of constructed partnership partnership and it XX% into transaction. management especially total closes. for was amendment market. and team. certain economy us XXXX. who that facility our exchange percentage our though exchange supporting million and average The while the leverage The thank leverage, partnership settle an in $XXX.X announced noted recover, these amendment commitments and be their to and in well or the effective. the offer our the for outstanding these expect in ability be revises offer lowers X, connection for our exchange knows The increase to the X.X attractive the among second and Friday, lien the entered We and support for for current percentage X. of exchange take I group the a fully means in of able of the the refinancing on due XX.

$XXX butane the approximately $XXX and as of reflected via quarter on quarter end, sheet remain unsecured sheet. million. will to our balance March February, our approximately current the not back-to-long-term September XX, funded refinanced due until the was earlier of XXXX, our slight revolving the This XX our the components. as million notes exchange installments in be partnership's which majority $XXX sheet credit was of and debt. season Any notional reclassified facility quarter-end optimization At offer the both a discussed for installment from balance the June our million amount will current amount XX was long-term debt notes tendered and senior balance our notes Moving includes buying The second million senior business. On balance increase, begins $XX current redeemed.

by quarter $XX secured the current and ratios total available X.Xx the out, bank ratio the carve debt revolving full the respectively. $XX.X all forward was $XXX hedged were our leverage liquidity senior to at letters approximately was of assigned leverage was the either Accordingly, inventory. debt for where in quarter NGL and based interest covenants this facility. credit capital had leverage seasonal is inventory carved which total on million with X.XXx, of At out we million Our sold compliant calculation. of reduced XX our working with X.XXx On to coverage or $XXX the total compliance end. June credit attributed has build all XX, total directly and on partnership June million million end, outstanding from finally, partnership of And

dollars the we that The offset million in $X.X the $X.X our included guidance received that expect included capital in Phoenix quarter million increasing Looking capital. which proceeds to contributor to of growth this expansion $X $X.X Amounts operational ship-loader quarter. the numbers. in related the holder largest that to be Bob are spend. That Switching million, to million Added first to was related ship lastly, $X.X updates the tank $XX million. are the by the receive to with Grease not range is our and third to Tampa approximately approximately expansion guidance to new plant, we $XX the and service Neches the range at to spent was million the third terminal on XXXX capital of we agreement the needed be have are that, will insurance terminal between amount spoke bringing The expected at CapEx capital. And additional in in capitalized replacement. maintenance to quarter, expansion earlier. spending by in quarter, long-term the associated XXXX, million

$XX.X The the total of of had are coverage. And approximately $X.X maintenance for million. total spent our million quarter $XX X.Xx cash of a $XX million. During distributable year-to-date we $X.X CapEx between million flow second or quarter, for XXXX estimated the million partnership we affirming and

our $XX million to the the forecasting economy, operator an now Whitney? are $XXX guidance back And call continue regarding the prepared stabilization remarks EBITDA concludes turn giving we XXXX, adjusted for million. range. for see between morning. the guidance This to Q&A. still for will our we I by and until Finally, we across intend annual

Operator

do a question Selman We Stifel. Instructions] from have Akyol with [Operator

Selman Akyol

a Good guess, you. couple quick Thank just morning. for questions me. I of

all, can sort that how agreement about you're Tampa total cash terminal, Bay you in for talk So first expecting that? just long is? of maybe of of And kind what flows on your

Robert Bondurant

XX spend to We're Tampa growth $X.X a days The lease XX over CapEx. next five-year is million of Yes. the Tank to over agreement. little a going

half we that this the overall, tanks there. on in will into we three meaningful. contribution And the for to the But generating somewhere value about XXXX last so put on EBITDA is for remember So begin revenue quarter, and we time that you $X.X ballpark contract of million not lease $X lease. we that, fourth of if had million captured spoke,

Selman Akyol

leasing mean, Got two comment it. Or then, And you is discussions the I on? other potential there? make there going can any for there tanks? there still are is

Robert Bondurant

tanks. The other moment. there two eminent the the opportunities. at But smaller We are tanks are anything have don't

Selman Akyol

the about All you there? you the right. Appreciate I things can then the talk maybe kind little and a out guess, refinery what seeing to on, expect of just more you're that. And year side, second going bit into play of how half

Robert Bondurant

about our refinery? Smackover thinking You're

Selman Akyol

Yes.

Robert Bondurant

Yes.

well. running So the refinery is

chemical our We and are slightly means reduced less. rate, costs are which running at gas a and our or chemical fuel

third and fourth So and refinery quarter we the the at low would the expect to outperformance in due fuel cost.

Selman Akyol

Okay. Thank you very much.

Operator

the from of Wells Michael is question next line Your Blum with Fargo.

Michael Blum

I everyone. of morning, Good Great. strategy had just one question. high-level sort really

in how debt with Just to to ahead regards restructuring. you the decide go dealt

thought Thanks. another that remain on route, taken public your and would versus why to which go curious taking chose private? a Just it – you route company versus have process

Sharon Taylor

Michael, this is Sharon.

the public there's route with although currently challenges the right that Martin. management as continuing say and our team a out. MLP management all rates what you've short-term I'll the structure, both, corporate look at I company at and would we to XXXX opportunities And as opportunities right that there we outcome. of I to Directors, don't you a pointed notes longer or was And know refinancing what as when with as for Board term think think team, tax looked That investors. a and refinance the convert. the and it notes, a take is

Robert Bondurant

equity could were we because the transaction, what be values an years, delever, should stay of make piece. or next to public can lower of we three, two, unit because in we believe an if really equity could price price expansion That the private next and the a valuations, grow believed I'll any four thought these to there off two at we debt severely there. get additional today uplift for delever. years, over value changes over and better even the this one rise. world we that, to can always refinancing. extent valuations we We there's comment. relative the grow three trade to we And was And price of our course the was We think equity of those believe depressed unit overhang that

we about going decided to why We going route. that and be So did I'm go our we to – – it, think analysis not do did frank. that but I'm to out was be

Michael Blum

much. All it. right. Thanks very Appreciate

Operator

am questions showing now [Operator further no conference Bob Instructions] I Bonderant. I this at the would time. to turn back like to

Robert Bondurant

Okay. bond approval. has our Thank early which offer, currently you, are XX% we the of Whitney. very results pleased with Again, exchange

We we'll XX will are the facility credit maturity forced of bond the that through exchange execution The has bank issue eliminate go an be to over any exchange for by confident bankruptcies and be been the and year. last execute prepackaged to company able highly reprocess. not our overhang that both the August

be debt forward, retain plan on our internal flow to to will will leverage as laser our execute reduction that focused at than then cost to management This projects growth earnings would future levels cash Going we of on opportunistic able reducing our capital. be team achieve create position us greater goal.

Finally, want you been we issues bank through both and group maturity noteholders for to thank supporting our facing. the to I say looming have debt publicly our us

to all support, return long-term Thanks combined for now their unitholders. equity and on today. our With for to to current us growing joining value focusing are we positioned

Operator

conference. Thank your wonderful Ladies you and have a and gentlemen, today's this concludes for participation day.

disconnect. all may You

Martin Midstream Partners (MMLP) 28 Jul 202020 Q2 Earnings call transcript