Martin Midstream Partners(MMLP) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter adjusted EBITDA was $17.4 million, down from $35.5 million in Q4 2019, with full-year adjusted EBITDA at $94.9 million compared to $108.3 million in 2019 [9][29] - Distributable cash flow for Q4 was $0.8 million and approximately $40 million for the full year 2020 [33] - Long-term debt at year-end was $526 million, with an adjusted leverage ratio increasing to 5.36 times due to reduced EBITDA from COVID-19 impacts [29][31] Business Line Data and Key Metrics Changes - Natural gas services segment adjusted EBITDA fell to $2 million in Q4 from $11.4 million a year ago, primarily due to butane logistics issues [10] - Transportation segment adjusted EBITDA was $1.7 million in Q4, down from $9.1 million a year ago, with land transportation adjusted EBITDA at $3 million compared to $4.7 million [18] - Sulfur services segment adjusted EBITDA was $7.4 million in Q4, with pure sulfur adjusted EBITDA at $2.4 million, down from $3.9 million a year ago [24] - Terminal and storage segment adjusted EBITDA was $10.6 million in Q4, down from $11.5 million a year ago, primarily due to reduced shore-based terminal revenue [27] Market Data and Key Metrics Changes - Refinery utilization averaged 77% in Q4 compared to 91% in the previous year, negatively impacting transportation and logistics [19] - Butane prices rose from $0.80 per gallon to $1.14 per gallon in December, affecting purchasing decisions of refinery customers [12] Company Strategy and Development Direction - The company aims to reduce debt to a target level of 3.75 times annual cash flow by utilizing free cash flow [61] - There is a focus on optimizing asset utilization and increasing free cash flow to strengthen the balance sheet [31][32] - The company is committed to safety and environmental stewardship, with plans to enhance sustainability strategies [62][63] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for Q1 2021 cash flow, particularly in butane and fertilizer businesses, despite challenges from a recent weather event [6][61] - The rollout of COVID-19 vaccines is expected to improve refinery utilization and demand for transportation services in the second half of 2021 [23][36] - The marine transportation business outlook remains challenging until refinery utilization rates improve [37] Other Important Information - The company plans to provide more detailed guidance for each business segment as the economy recovers [35] - Capital expenditures for 2021 are expected to include maintenance CapEx of $17 million to $19 million and growth CapEx of $4 million to $5 million [35] Q&A Session Summary Question: What are the meaningful drivers for guidance? - Management indicated variability in the butane business and the timing of marine cash flow as key drivers for guidance [40] Question: What percentage of hedge volumes are in place for 2021? - Approximately 60% to 70% of anticipated sales are hedged for February, with January expected to be strong due to fewer hedges [41] Question: Are there plans for non-core asset sales? - The company is exploring opportunities to sell non-core assets to aid in deleveraging [42] Question: How will the company address covenant levels if refinery utilization is not robust? - Management is monitoring covenant levels and is prepared to address them with their bank if necessary [55] Question: What was the EBITDA contribution from Mega Lubricants in 2020? - The EBITDA from Mega Lubricants was approximately $315,000, with additional contributions from related segments [50][52]