Martin Midstream Partners(MMLP) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $30.6 million for Q1 2023, which was in line with the guidance of $31.4 million, representing a 2% difference [4] - For the trailing 12 months, adjusted EBITDA was $117.6 million after accounting for the exit of the butane optimization business [5] - Total long-term debt outstanding was $500 million, a reduction of $16 million from the previous quarter [30] Business Line Data and Key Metrics Changes - The transportation segment generated adjusted EBITDA of $13.2 million, exceeding guidance of $11.6 million, driven by line haul revenue exceeding forecasts by $1 million [5] - The marine transportation business achieved adjusted EBITDA of $2.6 million, surpassing guidance of $2.1 million, with day rate revenue exceeding forecasts by $0.5 million [6][7] - The Terminalling and Storage business had adjusted EBITDA of $9.1 million, compared to guidance of $8.4 million, benefiting from lower operating costs [9] - The Sulfur Services segment reported adjusted EBITDA of $7.2 million, missing guidance of $9.6 million, primarily due to underperformance in the fertilizer group [10] - The Specialty Products segment had adjusted EBITDA of $5.2 million, below guidance of $6.1 million, driven by lower lubricant sales volume [17] Market Data and Key Metrics Changes - The company experienced a 27% miss in fertilizer volume forecasts due to unfavorable weather impacting agricultural demand [10] - Increased fertilizer demand was noted in April compared to March, with expectations to meet second quarter volume forecasts [11] Company Strategy and Development Direction - The company is focused on further debt reduction to achieve a leverage goal of 3.75 times [27] - The exit from the butane optimization business is expected to improve financial metrics and leverage ratios [28] - The company is optimistic about the performance of its land and marine transportation businesses despite potential economic slowdowns [6][41] Management Comments on Operating Environment and Future Outlook - Management acknowledged the possibility of a recession but remains optimistic about achieving annual guidance in the land transportation business [6] - The company expects to see improved performance in the Terminalling and Storage business starting in May [43] - Management is confident in the financial results for the year and the progress made in strengthening the balance sheet [20] Other Important Information - The company liquidated approximately 730,000 barrels of butane inventory in Q1 and expects to collect around $20 million from this liquidation [13] - Capital expenditures for Q1 were below expectations, with $6.6 million in maintenance CapEx and $800,000 in gross CapEx [31] - The company received permits for the construction of the ELSA production facility and is on schedule with capital expenditures for this project [32][33] Q&A Session Summary Question: Update on underground storage and contracting - Management indicated that interest in third-party contracting has been slight to moderate, with an expected contract between the MLP and the general partner in the next 30 to 45 days [22] Question: Performance of sulfur services - Management noted that volumes were better than anticipated, with over 3200 tons a day processed through terminals, contributing to better-than-expected performance [24] Question: Liquidation of butane and debt reduction expectations - Management confirmed expectations for debt reduction between $70 million to $80 million for the year, aligning with the liquidation of butane [25]