Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the MMLP's Fourth Quarter 2022 Earnings Call. I would now like to turn the call over to Sharon Taylor, CFO. Please go ahead.

Sharon Taylor

Thank you, operator, and good morning, everyone. With me today are Bob Bondurant, CEO; Randy Tauscher, COO; David Cannon, Controller; and Danny Cavin, Director of FP&A.

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

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

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

Bob. And now, I will turn to over the call

Bob Bondurant

Sharon. Thanks,

normal decision million of to an the We Before our to EBITDA the with of loss like would business. quarter line get operating exit recent our $XX.X I started thoughts the in in business. experienced discuss this my discussion of butane optimization around performance, I fourth

market. We late at an investment did curve significantly backward-dated. took quarter this noncash X.XX third prices inventory pricing the butane the of cash at a was the write-down cost greater inventory and of as inventory throughout our market on season into the summer hedge bought than spring fourth not we barrels we to carried but end million a the basis, approximately selling forward quarter, we While

million the experienced we inventory, volumes the of approach EBITDA we selling sold butane actual experienced $XX.X quarter. and in in As quarter the improve loss the fourth resulting season, from did pricing fourth losses not out

performance butane opportunity business, longer the worth of any winter season. positive inventory we optimization of fourth with selling flow the summer business result quarter carrying the season from the no in As cash associated purchasing was risk commodity significant the to this concluded future negative with line associated financial a our

line, the QX May. from business majority inventory the used cash butane this sold the in $XX to to being and remaining liquidation proceeds with of volume our decision to result we a inventory and will credit. believe in remaining exit this The April particular sold As the $XX inventories from in storage sell will million. our approximate revolving inventory liquidation line pay We million should be realized of down butane of

assets truck movements. a Going primarily utilize logistics as logistics utilizing also intent storage to product North capability. will transportation This underground operate fee-based Louisiana both fee-based forward, business, our and is business our for assets, which butane rail truck our have

result a our inventory longer risk, will new we model, reduce commodity also working will this This requirements. flow capital substantially no lower business and As earnings of will carry going and butane cash volatility, eliminate any forward.

operating our quarter performance. would discussion move now a to to of fourth I like

an For of and the two EBITDA we fourth to the to million, compared million. negative swing loss $XX between million difference a of year $XX.X the $XX.X optimization EBITDA in fourth made had quarters had optimization of ago, the attributable year million EBITDA business. quarter, a butane In butane a this year quarter it The $XX.X million adjusted ago. is $XX.X

to Excluding of ago. EBITDA the the $XX.X adjusted million results butane both business year quarters, quarter fourth we fourth the of for optimization compared in million had $XX.X a

year negative ago of of compared million, EBITDA business, optimization For a in the million of $XXX.X a ago. negative Martin year million $XXX.X compared EBITDA positive EBITDA $X.X adjusted had had million. to the swing a year $XX.X we Midstream of This year, to million $XX.X butane

ago, $XX.X $XXX.X an approximately for year. a Excluding adjusted flow $XX year million, million compared cash the butane business in of million had results years, the both increase optimization of the of we to for EBITDA

EBITDA generator compared of was quarter, year fourth largest to million the ago. had $X.X flow adjusted cash $XX.X Transportation million which For our our a business,

land Our fourth a in had compared million ago. million $XX.X to last this a adjusted We EBITDA had quarter over of year, $X.X count we our year the load of as XX% transportation improved compared increases increase mile last in primarily Also year, count. a to the experiencing. our by have inflationary helped the corresponding increase over our revenue improved driven driver absorb which year, year been prior per we in cost

the $X.X Our last compared Marine Adjusted million, saw compared was fourth a EBITDA also improvement business year $X.X to Transportation of year. million to ago. quarter

compared greater compared XX% in XX% a utilization average rate ago. and M&A a Our quarter ago, year to the was improved approximately fourth to our year

to saw had significant compared business $XX.X adjusted $XX.X $XX.X million, to our improvement EBITDA year the compared million of of ago, our a $XX.X adjusted segment EBITDA as year million, increase had land ago. of in it For a million an $XX.X Transportation year, We million. transportation

Our response increased in Central count, growing ago, XX% a year load increase to in to driven by needs count the compared our driver and our in primarily expansion Florida. customer

mile manage improving per year. to to able revenue increases, by cost inflationary We overall our compared last also were

year we for a an in For an business, in inland barge both rates $X.X tight $X.X $X.X Marine increase EBITDA in barge overall increase tank million to our XX% million, the year, to from compared refined million of continue ago day a adjusted market XXXX. in we in to Transportation saw utilization XXXX, XXXX very products. experience We as and had

business, the million ago. in was cash Terminalling had fourth $XX which a our of to generator compared and Storage year Our EBITDA flow second adjusted million, strongest $XX.X quarter,

partner, throughput increase cash side, had compared positive which contract the as shore-based our amended ago, million terminals a year of in improved our throughput pricing. to an $X.X the we flow On with general

to new quarter terminals and cash both terminals per Offsetting forward. the flow improvement, were approximately lubricants EBITDA, packaged grease pricing specialty going adjusted our and of the shore-based $X enable million shore-based We our business. have believe contract will

compared increases. have increase Terminal near inflationary Terminals in been to due cost of significant adjustments, was to Specialty operating costs term CPI approximately so to our should with we revenue million a up contracts experiencing. amount ago, flow our the the year $X.X cash inflationary down A primarily Specialty have catch

adjusted and lubricant packaged $X.X to margin million, Our year primarily was to down due grease ago. compression compared a EBITDA

million had a year Storage EBITDA segment compared increase the of $X.X million, $XX.X our Terminal of million. adjusted $XX.X and For ago, an to year,

Our XXXX. improved compared XXXX, $XX.X margins packaged million lubricant to able to in $X.X expand million we our to as and grease business were

shore-based effective Our saw of primarily increased cash our flow new business X, $X.X the partner, with million, became pricing XXXX. contract to which due general October

to XXXX. had customer CPI will benefit Again, business in year, adjustments, the of cost our $X.X have contracts flow Specialty Specialty increases. cash decrease For due a inflationary Terminal primarily significant Terminals our which million, majority our of overall in us in a

Services We had our of EBITDA Sulfur to year Now, quarter, adjusted $X.X $XX.X compared decrease in a the $X.X a million million. I'd discuss segment. ago, like of fourth to million

of primarily the in the $X.X a fourth our $X.X purchases, down be compared EBITDA year Our to fertilizer in in business customers' million was fourth cash XX%. ago, a attributed total decrease flow had decline to quarter, The million quarter timing million. can the of adjusted as $X.X sold of volumes

a in of normal delayed This there so year is view normal that prices a rising ago QX into the their QX they XXXX, throughout into year, pricing. the held purchases some our fourth customers of hold QX. in our belief spring, up downside quarter, QX customers A they that sped now purchases pressure as be would

in However, planted for begin demand believe spring an be corn increase our this spring, based in we on of the to products strong forecast this acres will the fertilizer for year.

sale October side the sulfur This $X.X compared fully million $X.X by segment year of prilling is processing explained decline facility, had XXXX. of of closed of million, adjusted million. pure in ago, of Stockton sulfur this Our decline to which EBITDA a a $X.X our

year, EBITDA $XX.X a million, of Sulfur the of entire year our million. segment had a million Services ago, For $X.X decrease adjusted compared $XX.X to

business adjusted compared flow XXXX, $XX compared EBITDA ago, fourth XXXX. XXXX, year decrease customer of in in delayed million of annual had decrease buying by of $XX.X our to $X.X the million base in of can in again cash business explained fertilizer to activity a be the quarter our million. The a fertilizer Our

adjusted sulfur ago, of a impacted negatively the were sulfur million Both of year. business by unique our flow the compared a for year, XXXX, million. value of decrease In to $X.X the our the quarter, cash million $X.X of in year had negatively events. For sulfur a of in the $X.X side million, write-down $XX.X pure had EBITDA affecting third we years inventory

refinery In the in XXXX of XXXX, our and this negatively XXXX. from decreased decline pure of QX Lake corresponding area QX utilization impacted refineries Winter in Charles sulfur production sulfur by Ida impacted business which Beaumont and in was Uri and Storm Hurricane

Going forward, side sulfur of EBITDA conditions, normal business $XX under the for adjusted approximate the annual million. the pure should refinery operating

the finally I of performance discuss like would our Now, NGL segment. to

be EBITDA negative previously $X.X negative $XX.X decline we business. flow This ago, in adjusted explained to optimization For a million. swing butane year the of quarter, million by had fully of the fourth cash can million, significant a compared $XX.X EBITDA discussed

business fourth optimization million adjusted butane the included of the had year quarter, our NGL adjusted $X.X EBITDA ago. $X.X a compared fourth in million Without to the of segment quarter in EBITDA results,

our negative compared XXXX, million. adjusted had a million negative NGL year, full to the $XX.X segment of For million, EBITDA $X.X swing in $XX.X of

of by optimization the of in of our million, cash the NGL annual included in EBITDA EBITDA business. can decline be explained Again, performance segment adjusted optimization $X.X compared the the the butane had business flow significant million XXXX. adjusted Without in results, butane to $X.X

quarter our and performance segment year. business of discussion my fourth the concludes by the for both This

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

Sharon Taylor

Bob. Thank you,

million balance the December amendment I'll million revolver lien always, discussion review million, million of due of discuss million metrics XXXX, sheet expenditures At million lien financial from XXXX our capital long-term quarter, As in of XXXX. February fourth drawn secured with secured second credit begin last with due of of offering notes debt XXXX $XXX on notes and $XXX revolving Outstanding X.X and outstanding a the was of $XX our total $XXX $XXX liquidity, the note and guidance. completed and conclude quarter. in consists reduction XX, facility; debt the a our $XX

was the adjusted inventory Partnership's attributed been the leverage $XX was build, forward NGL times quarter our facility million revolving includes million end XXXX. when our under debt ratio sold has Total seasonal XX approximately available inventory either December which $XX.X hedged. credit to X.XX a of liquidity or the carve-out, The at on bank-compliant

total a we and at plants attributable expenditures $X.X quarter was year. million year. to for Of venture. and capital costs CapEx total year refinery. in of the includes million that maintenance the was for Smackover to $X.X joint $XXX,XXX related our $XX.X the maintenance incurred fourth quarter, expenditures million at the number, the During DSM the $X.X million turnaround approximately for for million Gross full The in fertilizer $X.X

funded that XXXX. capital the structure new of closed Turning was to and in February

to not initiate third hoped high-yield about transaction We had but a the communicating quarter Internally, fourth worked XXXX. we're our in focused early have now been of of late materialize on a we which January. avenues, for did some until refinance time timing us a different for debt and on offering few quarter

note of secured On XX.X% X. On offering. for be X% effective our notes, January tender senior we issue $XXX to priced offering with the with February pricing a notes offered we revolving and with along will announced time, which on the outstanding of At January lien the announced and million of X.X $XXX in at an original million closed our XX, proposed The senior of credit cash notes. an facility XX, issued that second we XXXX. announced interest mature discount lien closing funded also in two amendment would a secured note and that the

for and million carve-out to XX, capital with is coincide The exit million include includes no proceeds $XXX since longer one of to million cash June to does business received of $XXX that from amendment The inventory butane working leverage on from optimization facility with on the a June million purposes to revolving the commitment business. concern step further calculation, a credit not remaining XX, lower and reduction to the a XXXX down related the butane a facility further $XXX liquidating XXXX. sublimit $XXX optimization

of in leverage leverage lien X.X mature X.XX of XXXX. coverage March for maximum new first stepping of times. times X minimum interest down rate include to will times XX, XXXX facility and times, Covenants total of February the X.X The maximum on revolver

earnings is Next, our on be guidance, XXXX and our I'll website. as can release an found to review which attachment our press included

which of EBITDA approximately EBITDA expect after effect negative exit full adjusted optimization $X.X of year business, giving the XXXX the to $XXX million. We have to of forecast million butane we adjusted

have will range to few we You when line guidance have published note segment reviewing annual the by by providing we instead of returned last that the years. business guidance

optimization butane it businesses them the from needed up to exit segments we the roll realigned. be business, determined the operating contemplated and management As that into our that

in the and Natural Terminalling will beginning Storage part segment Grease segment. have Specialty Gas be Lubricants The reported now and as we segment roll segment. underground the will Products storage Liquids the now Further, the Products to into Specialty Storage. XXXX, and of So rename Martin's chosen Terminalling as of businesses instead up

Reviewing XXXX's Compared day to Group briefly, anticipate to to generate the some when from XXXX, Services increased to year million. XXXX adjusted benefit compared and rates segment $XX results. but for contraction from expect Transportation land EBITDA XXXX, are we and Marine of each we strong the have higher through XXXX, we utilization group forecasting have elevated another to

will that terminals will occurred million. increase remaining of $X fourth $XX.X results quarter operations The segment contract EBITDA renegotiation million, fee-based The escalators to with due are approximately year-over-year. this XXXX. in Terminalling Storage, shore-based contract a improve the that in and The forecasted is

segment the in to lastly, related fertilizer to Liquids margins The benefit earnings expected volumes. to $XX.X storage sulfur million will Sulfur be the EBITDA were Martin's businesses projected segment. Natural with adjusted and the return previously to historical And more that Gas from is projected and Services underground segment's reported

adjusted earnings California of Products the Specialty be to the million. slightly, giving after offset $XX.X sale is to the Stockton to business we exit segment have have will due which EBITDA, effect forecasted XXXX. $X.X optimization priller butane of to of the October project in Those in the of million Last, EBITDA negative Sulfur

Grease to businesses steady have from projected margin businesses compression year remain gasoline results natural and segment, the are strong and the some Lubricants this with and Within last propane year-over-year.

For to we Joint the of is growth million forecasting approximately with DSM Oleum at for Planview related are the of spend XXXX, expenditures capital $XX.X which million the Tower part $XX.X Venture. capital

approximately be year. is for to anticipated capital million Maintenance the $XX.X

plants, our our a repairs Marine larger for due to our in in bulk Galveston and on costs million related inspection XX-year tank the include head on inspections Group $X.X expenditures turnaround our at Some $X.X of fertilizer in $X.X equipment, million terminal. regulatory million sulfur a million $X.X at

cash distributable full flow anticipate year for $XX.X Finally, and we million million. of of flow $X cash XXXX, free

million for repayment of optimization to $XX liquidation $XX Additionally, generate the debt we expect cash approximately inventory. butane million the from of to

Q&A. turn operator This our call I'll remarks. concludes prepared the over the to for

Operator

moment roster. Instructions] our now We now take for your is open question. floor The [Operator run will a to

Akyol Our first question comes proceed. from from the line Stifel. Please of Selman

Selman Akyol

just you. Good does where much question, Thank all. it? today? revolver morning How the on stand Quick is

Sharon Taylor

today The revolver has approximately $XXX million borrowed.

Selman Akyol

million are proceeds you $XX get an $XX to So the from expected remaining there reduced by the from additional of million to butane?

Sharon Taylor

It's $XX we at from the because this cash from between $XX January. million time, sales the received somewhere million probably and have

Selman Akyol

it. Got

Okay. All right.

your so that then it $XXX should so thinking against like And as, sort about or million I of, a debt outstanding $XXX be million.

Sharon Taylor

Yes.

Selman Akyol

about think you When leverage outcome?

Sharon Taylor

Yes.

Selman Akyol

over in to since questions. Thanks. then limited Okay. And flipping just your we're JV

then investment now you of $XX any at original And investing anything good? investment-wise which Is timing. guess you we still looked be in lastly be Has anything And XQ about you're I million. thinking about? then should talked I this? $XX.X where release to timing reporting idea changed when million think you're I the XXXX going talked that about press an

Randy Tauscher

good morning. Selman,

Selman Akyol

Good morning

Randy Tauscher

No changed a from perspective. nothing has timing

to ask Our feel have to has more target changed investment of you capital more quarter from extent is free nothing still and And the the amount. questions first the questions. XXXX

Selman Akyol

right. that. I All appreciate Okay.

$X out and another million So $X.X to then then then $X run invest a sometime $XX.X in XXXX. still approximately of still you to good go million rate there? EBITDA you're the million million going still that's estimate And to have

Randy Tauscher

being would the million have at the out then the of upon going to We facility $X spent start-up to or cash would we prior facility is. rest that That million-ish. $XX start-up JV. and It the point so anticipate last be

Selman Akyol

guess Got for things that. And pretty you at Marine. about in then you there Appreciate it. you lengthening seeing all? are talk I to alluded good contracting look Can any

Randy Tauscher

over way a come has business Marine the last Well, year. long the

at Our a than a were ago were they're and year higher in $X,XXX January than higher December. rates they are in day they

So continuing go the still to rates up. are

term the toe the have market. -- been contract As answer except maybe have months we six ago spot do in three everything one opposed would your for to to

that nine Today three, or we We're a to year but out. business, term talking talking in year term are have we're three opposed a on to not months four more as or longer term. toes even six of the

amount So most to time. back of of spot in consider I or short will business within the -- still a our spot be us most those being of the

Selman Akyol

Got it. think in turnaround they're what And I expect and sulfur? that maybe then you talk just Can bit looking for you season. little refinery heavier about a industry-wise a

Randy Tauscher

to sulfur, but Yes, and provide of of that early time maybe variant refineries the and have amount here that's trucking as impact to will March-April for get work guidance. come the second early the the for the But the degrees we sulfur pretty first all do going correct. turnarounds services over we Beaumont quickly and least and that to it's our end in when think trucking into the the you sites addressed business. coming with and certainly at varying quarter. at lengths frame May area have playing and about we us have the in And And to quarter we there

Selman Akyol

being orders Got turn planted Have fertilizer. need up you market for it. then seeing? for conversations sort any, having and you any of there or year, which strategy that of seen is either you're heard I in articles certainly this stronger confirmation a for seen higher and And corn I've on you acres guys Is , good you're certainly that year? this

Randy Tauscher

no. that to answer The is,

haven't We it seen yet.

slow very recall will sales. you as had we quarter third the to back Going

for through half to quarter quarter we range on place. the significantly normal We and fourth of was the the first would that low of the same end expected the fourth the we're up the in fourth February and consider pick quarter

of So number. planted a picked the though sales big projecting the XX is which USDA have not acres even million is significantly up corn

So made as edging the decision price internationally down They're we're We seeing just have little need to ammonia farmers think and it. down. purchases, the has prices sulfur to a delay they continued bit. decline come their until the

And that we we pick up business but to yet. do and pick to it that expect so expect haven't up, seen soon, we

Selman Akyol

just Got the one, then it. for And me. last

you that any caverns the can give just is going? signed. Is of how that's and got re-leasing, I you update kind On mean, contracts going? on how there

Randy Tauscher

very have some further customers, approach happening We and until can't approach meetings. be have still couple to potential will month comment that of and on Yes. the recently the those started February, days we within first we to of have really just March, and that we all and of

Selman Akyol

Understood. Thanks All much. very right.

Operator

Our next Fitzgerald question proceed. comes of from Please Baird. the from Patrick line

Patrick Fitzgerald

Hi, thanks questions. on a lot for And refinancing. congrats taking the the

So, your Is I'm confused then notes? and discount the bit little the and how of revolver your redemption so of wouldn't is if of given bond and low mind, was a you there all that all on account at into issued were they taking sources uses deal, the a after balance some.

Sharon Taylor

Yes. yes.

So...

Patrick Fitzgerald

expected the were on million revolver deal? the at believe of close I to $XXX you Because have

Sharon Taylor

and the is we cash That the proceeds of tenth our monthly sales, received correct, the but majority between we February the had following. butane the on XXth -- are of The month deal closed for X.

deal days the two closed sales. and butane in inventory then later, from received we approximately $XX So million proceeds the

Bob Bondurant

would that of Is note. September forma numbers as be to And XX. pro true? like would I the

Sharon Taylor

Yes.

Bob Bondurant

business also the well. fourth as collected from we butane So quarter money in

Patrick Fitzgerald

true. that's Yes, Okay.

Okay.

to of $XX you're then lose if $XX you and $XX unwinding say million EBITDA, and you million half. million did -- so you expected first million more in just it, adjusted got then $XX $XX -- expected and So so million $XX you million to of the to

neutral, wrong from here, understanding the of that or that? is of it's So kind

Sharon Taylor

of a $XX from $XX $XX to side, Well, I first is left was Bob's September and our pro that million XX the point million number, debt think to all December from on the million XX to $XX forward. million forma

And of piece there. was the other then, disconnect I'm there another sorry. slight a -- your there's Patrick, question So

Patrick Fitzgerald

is more cash business? the going be much exit butane to how you by the time released, Just

Bob Bondurant

the revolver, about $XX the left at of million on end butane be unwind. the Should

the be So, total $XXX or $XXX debt plus the $XX million million. million would

Sharon Taylor

Yes.

Patrick Fitzgerald

Well, Okay. that's great.

it business So that and that no gone, or fee business then how that -- is you, does has to a -- will just anymore, one do pay work?

Randy Tauscher

Yes.

that know I business. familiar So, you're with

winter were that that's turning buying it on the just around going months. way, So risk, not we to we and take we're And in and of point taking going management are the months the as forward. summer from sell this in

we're -- into going So, as that a to fee we're Bob mentioned his business. comments, turn in

there an have storage Arcadia, Louisiana has assets We that in rail XXXX. in invested underground in

truck are that there. think capabilities value There there. we refineries will have certain having storage We

our doing. this so if and fee-based to intent person way not. on And We don't -- And is to we're be the if don't entertain took somebody willing on service know looking that to were out we to we we we position might opposed or turn into take the happen would yes, for that as there's going there, that. that's

Patrick Fitzgerald

Got you.

Thanks. Okay.

your of for of In in visibility you for have each segment, Transportation declining that quarter least of business kind and land. -- thank helpful. the in your the of visibility you very at remainder very, providing in the projections, terms terms the year, But it's

assumptions there because to How a what's much of is business. risk for those of your So underpinning that's that forecasts? spot I believe segment market and kind -- more

Randy Tauscher

Yes.

know land of not the our to the the environment we of were middle about the that's were have was business end customers. OpEx than we going received The transportation think was you rising. feedback back our when forever. So XXXX happen And and from to quicker we rising in go rates our XXXX, to

selling be refineries, pulling historically they the year. what continue got bit as have. strong from than year, a to less expect through the the get producers little we've Now they feedback The throughout we we the chemical back run to may

the EBITDA Land the chosen year. the two we have Transportation contributed we those So work as down factors, to through bring from

Patrick Fitzgerald

Okay. Thanks.

-- kind butane was always expect your each of year. Now to really that the with -- gone, didn't what know

butane to forecast now business which with like So hardest the right gone? feel of yours you is do

Randy Tauscher

million-ish years fertilizer one that business think and we going be have I would that the volatility million forward think annualized, largest the in over and we $XX seen between anticipate business most margin-based so have in. we left, and the $XX I is the

Patrick Fitzgerald

right. All a lot Appreciate Thanks guys. it.

Sharon Taylor

you, Patrick. Thank

Operator

Instructions] appears over are questions Bondurant to the there time. this to Bob would now It turn for at [Operator remarks. like I further call no closing

Bob Bondurant

Thanks call on capital. your Martin our the pushing XXXX Midstream. significantly interest had closest we quick optimization in the refinanced of business decided XXXX earnings everyone our reduce today to maturity Mandeep. order volatility to and and for great the to We've start in future deal exit a working debt to butane you, Thank out as to remove a from

time the future. improve In the further company from time substantially Thanks your have cash of our in balance butane to more using lowered again near a short frame, we do profile intend the the outstanding proceeds liquidation we by reduce and to sheet inventory risk debt and morning. for of the our this

Operator

participation. Thank concludes you call. you, your ladies and Thank for today's gentlemen. This

You may disconnect. now

Sharon Taylor	Chief Financial Officer
Bob Bondurant	Chief Executive Officer
Randy Tauscher	Chief Operating Officer
Selman Akyol	Stifel
Patrick Fitzgerald	Baird

Martin Midstream Partners (MMLP) 16 Feb 232022 Q4 Earnings call transcript