Martin Midstream Partners(MMLP) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company exceeded its internal EBITDA forecast by over $2 million, positioning it to exceed the disclosed EBITDA forecast range of $95 million to $102 million for 2021 [4] - Adjusted EBITDA for Q3 2021 was $21.5 million, down from $22.5 million in Q3 2020 [5] - Distributable cash flow for Q3 totaled $5.2 million, with a year-to-date total of $25.3 million [17] Business Segment Performance - The Terminalling and Storage segment had adjusted EBITDA of $11.3 million, down from $14.2 million a year ago, but was the strongest cash flow quarter for this segment in 2021 [5] - The Transportation segment's adjusted EBITDA increased to $7.6 million from $5.5 million a year ago, driven by a 23% increase in load count [8] - The Sulfur Services segment's adjusted EBITDA was $4.9 million, up from $4.2 million a year ago, with strong demand in the fertilizer product line [10] - The Natural Gas Liquids segment had adjusted EBITDA of $1.8 million, down from $2.8 million a year ago, attributed to the timing of seasonal sales [12] Market Data and Key Metrics Changes - Refinery utilization in PADD 3 improved throughout the year but saw a decline due to Hurricane Ida, with current utilization around 82% to 83% [20] - The butane market fundamentals remain favorable, with low inventory levels and high export rates compared to the previous year [29] Company Strategy and Industry Competition - The company aims to use cash flows to deleverage its balance sheet, which is seen as a means to return value to unitholders [34] - The company is positioned to benefit from strengthening cash flows despite supply chain disruptions and inflationary pressures [34] Management's Comments on Operating Environment and Future Outlook - Management noted that the increase in leverage at the end of Q3 was expected and transitory due to the cyclical nature of the butane and fertilizer businesses [34] - The company anticipates continued demand growth for trucking services, which should help offset inflationary pressures [8] Other Important Information - The total long-term debt outstanding was $555 million, with first lien leverage and adjusted leverage ratios at 1.72x and 5.47x respectively [15] - The company plans to take the ATS production facility down for turnaround in November, which may limit production volumes [10] Q&A Session Summary Question: Activity pace in refineries and outlook for Q4 - Management indicated that refinery utilization in PADD 3 has improved but has recently declined due to Hurricane Ida, with expectations of a heavier turnaround slate in early 2022 [20] Question: Impact of Hurricane Ida on assets and market - Management confirmed that their assets were not impacted by Hurricane Ida, and they have seen an uptick in marine equipment utilization recently [23] Question: Hedging position for butane and market outlook - The company is approximately 33% hedged on its butane book and remains confident in the favorable market fundamentals for butane [26][29] Question: Inflation and cost adjustments - Management stated they have been effective in passing through inflationary costs to customers, particularly in the trucking business, and have CPI adjustments in their contracts [30]