Martin Midstream Partners(US:MMLP)2021-07-23 17:30Financial Data and Key Metrics Changes - For the first half of 2021, the company is on pace with its annual projected adjusted EBITDA of between $95 million to $102 million, generating free cash flow of $15.6 million [5][20] - The overall adjusted EBITDA for Q2 2021 was $22.5 million, a decrease from $23.9 million in Q2 2020 [6] - The total long-term debt outstanding at the end of Q2 2021 was $526 million, with adjusted leverage ratios improving from 5.44x to 5.31x due to inventory working capital carve-out [18][19] Business Segment Performance - The Terminalling and Storage segment had adjusted EBITDA of $10.6 million, unchanged year-over-year, with variability noted in the Smackover Refinery cash flow [7][8] - The Sulfur Services segment's adjusted EBITDA was $8.9 million, down from $10.8 million a year ago, with fertilizer earnings showing slight improvement [9][10] - The Transportation segment's adjusted EBITDA was $5 million, with truck transportation showing a significant increase to $5.5 million due to a 19% increase in mileage [12][13] - The Natural Gas Liquids segment had adjusted EBITDA of $1.7 million, slightly up from $1.6 million, but is expected to remain weak in the upcoming quarters [16] Market Data and Key Metrics Changes - The company noted tight supply conditions in the lubricants and specialty products market, which is expected to positively impact sales volumes in the near term [8] - The sulfur deliveries into Beaumont increased significantly in July, indicating a recovery in refinery utilization and potential improvement in the sulfur business [30] Company Strategy and Industry Competition - The company plans to focus on reducing debt through free cash flow generation, aiming for an adjusted leverage ratio of 3.7x by year-end 2021 [20][23] - The company is addressing anticipated tightness around forecasted leverage and interest coverage ratios due to rising commodity prices [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery, noting improved refinery utilization and increased customer demand for services [48] - The ongoing COVID-19 pandemic, particularly the Delta variant, is acknowledged, but management believes it will not lead to a nationwide shutdown like last year [49] Other Important Information - The company amended its revolving credit facility to address anticipated working capital requirements due to elevated commodity prices [22] - Maintenance capital expenditures for the year totaled $8.1 million, with growth capital at $2 million, primarily for trailer conversions [21] Q&A Session Summary Question: Can you talk about sulfur supply and refinery utilization? - Management noted that sulfur deliveries were down due to reduced refinery utilization but have recently increased significantly in July, indicating a recovery [30] Question: Thoughts on Marine Transportation re-contracting? - Management expressed hope for continued operation in the Northeast following a successful 6-month contract for an offshore tow [31] Question: How is the butane business tracking for Q4 2021 and Q1 2022? - Management indicated that while the butane pricing environment is different from last year, they cannot provide a specific financial projection at this time [36][37] Question: Expectations for free cash flow? - Management expects free cash flow to align closely with adjusted free cash flow guidance [38] Question: Plans for capital structure management? - Management plans to address the capital structure, including the second lien notes, around August 2022 [39] Question: Current available liquidity? - As of June 30, the maximum available liquidity was $220 million, with about $40 million available [44]