Martin Midstream Partners L.P. (MMLP) Q4 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Martin Midstream Partners LP Fourth Quarter 2013 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to your host for today's conference, Mr. Wes Martin, Vice President for Corporate Development. Sir, you may begin.

Thank you, Nicholas. And to let everyone who else is on the call today, we have Ruben Martin, President and Chief Executive Officer; Bob Bondurant, Chief Financial Officer; and Joe McCreery, Vice President of Finance and Head of Investor Relations. Bob and I are switching places today, as Bob's voice has temporarily left him. He is available for questions, however, and we should be back to normal on the next call. Before we get started with the financial and operational results for the fourth quarter, I need to make this disclaimer. Certain statements made during this conference call may be forward-looking statements relating to financial forecasts, future performance and our ability to make distributions to unitholders. We report our financial results in accordance with Generally Accepted Accounting Principles and use certain non-GAAP financial measures within the meanings of SEC Regulation G, such as distributable cash flow; and earnings before interest, taxes, depreciation and amortization, or EBITDA; and also adjusted EBITDA. We use these measures because we believe it provides users of our financial information with meaningful comparisons between current results and prior reported results, and it can be a meaningful measure of the partnership's cash available to pay distributions. We also included in our press release issued yesterday, a reconciliation of EBITDA, adjusted EBITDA and distributable cash flow to the most comparable GAAP financial measure. Our earnings press release is available at our website, www.martinmidstream.com. Now I would like to discuss our fourth quarter performance. For the fourth quarter, we had adjusted EBITDA of $38.6 million compared to $26.8 million in the third quarter, an increase of 44% or $11.8 million. For the year, our adjusted EBITDA was $138 million compared to $121.3 million for last year, or an increase of $16.7 million or 14%. Our total distributable cash flow, or DCF, for the fourth quarter was $24.2 million, a distribution coverage of 1.13x. And for the year, our DCF was $87 million, a distribution coverage of 1.03x. This coverage ratio does not include any IDR payments to the general partner as we have suspended IDR payments until a cumulative suspension of $18 million is met. At December 31, 2013, our cumulative suspension amount was $9.6 million. As noted in our press release yesterday, Cardinal Gas Storage took a noncash impairment charge on their investment in Monroe Gas Storage. The financial impact to us flowed through the equity and loss of the unconsolidated entities in our income statement. The amount of this noncash impairment charge to us was $54 million. Monroe Gas Storage is a natural gas storage facility located in Eastern Mississippi and was purchased by Cardinal in 2011. This asset has had a storage of cash flow relative to the total investment for the last couple of years, which generated the impairment concern and, ultimately, the impairment charge. We received distributions from Monroe of $1.7 million in 2013, but we are forecasting to only receive $0.2 million this year. Therefore, this impairment charge will have no impact to the current distribution rate we are currently paying our unitholders. Cardinal's other 3 storage assets, located in North Louisiana near the Perryville hub, have no impairment issues, as they have been performing according to plan, have generated significant cash flow and are largely under a long-term contract. However, the cash flow from these assets is currently being swept to pay down project finance debt. As a result, we have not received distributions from the cash flow of these 3 natural gas storage facilities. The sweeping of this cash flow to pay down debt will continue until the existing project finance debt is refinanced into a structure that allows cash distributions. Now I would like to discuss our fourth quarter cash flow by segment compared to the third quarter. In the Terminalling segment, our fourth quarter EBITDA, which is defined as operating income plus depreciation and amortization, but excluding any gain or loss on sale of assets, was $15.9 million in the fourth quarter compared to $16.6 million in the third quarter. Our specialty terminals cash flow was $10.4 million in the fourth quarter compared to $12.1 million in the third quarter, a decrease of $1.7 million. Although we had a cash flow increase of $600,000 at our Corpus Christi crude terminal, we had a reduction of cash flow on our lubricant packaging business of $2 million. This fourth quarter decline is not unusual in the lubricant packaging business as demand for packaged lubricant slows down significantly, especially between Thanksgiving and the New Year. However, when compared to the 2012 fourth quarter, our packaged lubricant cash flow was actually up by $200,000. So while are we experienced expected negative seasonality in the lubricant packaging business in the fourth quarter, our lubricant packaging cash flow was greater than the previous year's fourth quarter. At our Corpus crude terminal, we saw the benefit our new dock being operational in late November. As a result of the new dock, our crude throughput increased by 15% to 117,000 barrels per day in the fourth quarter. We will see a bigger pickup in throughput volume the first quarter of 2014 as the new dock will be operational for the full quarter. Also, our 3 new crude tankers at Corpus are still scheduled to come online during the second quarter. So between the increased crude terminal throughput and the anticipated increase in lubricant packaging volumes, our specialty terminal cash flow should increase in the first quarter of 2014 when compared to the fourth quarter of 2013. On the shore-based side of the terminal business, EBITDA improved by $1 million in the fourth quarter compared to the third. This improvement was primarily a result of decreased operating expenses, primarily repairs and maintenance. For the year, our cash flow from our Terminal and Storage segment was $66.3 million in 2013 compared to $51 million in 2012. This overall increased cash flow year-over-year was primarily due to the Corpus Christi crude terminal and the Talen's Marine shore-based acquisition. Looking ahead to 2014, Terminalling cash flow should increase, primarily due to increased crude throughput volumes at Corpus. In our Sulfur Services segment, our cash flow was $8.4 million in the fourth quarter compared to $2.8 million in the third quarter. On the pure sulfur side of the business, cash flow was $4.9 million in the fourth quarter compared to $3.3 million in the third quarter. We saw a 7% increase in our sulfur volumes sold and a 23% increase in our sulfur margins. Big picture, the price of sulfur fell in 2013 from $150 per ton in the first quarter, ultimately, to $75 per ton in the fourth quarter. However, the downward movement of sulfur pricing changed directions as the Tampa posted price rose in the first quarter of 2014 to $110 per ton. This increase in sulfur pricing foreshadows what we believe will be an increase in sulfur demand from the large DAP fertilizer producers in the first quarter of 2014, relative to the first quarter of 2013. Our fertilizer cash flow was $3.4 million in the fourth quarter compared to a negative $0.6 million in the third quarter, or an increase of $4 million. As we've previously discussed, in the third quarter, farmers had delayed their fertilizer purchasing decisions as corn prices had fallen by approximately $3 a bushel, and fertilizer prices were also falling. However, late in the fourth quarter, certain farmers felt fertilizer pricing had floored, and we saw a pickup in liquid fertilizer demand. This translated into the improved cash flow that we experienced in the fourth quarter when compared to the third quarter 2013. For the year, in our Sulfur Services segment, our cash flow was $34 million in 2013 compared to $44.9 million in 2012 or a decline of $10.9 million. Of this decline, fertilizer accounted for $8.9 million and the pure sulfur side accounted for approximately $2 million. Generally speaking, the cash flow decline for the Sulfur Services segment was the result of an overall softer fertilizer demand, driven by weaker agricultural commodity prices in 2013 when compared to 2012. Looking toward 2014, we feel our Sulfur Services cash flow will be slightly weaker than 2013 as a result of weaker fertilizer margins in 2014 when compared to 2013. In our Natural Gas Services segment, we had cash flow of $12.7 million in the fourth quarter compared to $5.2 million in the third quarter. The increase was primarily driven by the increase in sales volumes in both our Refinery Butane Services business and our Wholesale Propane business. Our sales volumes for Refinery Butane Services increased 111%, and our Wholesale Propane volume increased by 55%. These volume increases reflect normal seasonality demand, increases by refineries for winter butane and by propane retailers for winter sales of propane. We anticipate a strong first quarter in this business segment, as well as the demand for butane and propane by refineries and propane retailers should continue through March. For the year, our cash flow for Natural Gas Services segment was $31.4 million in 2013 compared to $14.5 million in 2012. The year-over-year increase primarily came from 3 businesses within this segment. First, the refinery butane services business had a full year of activity in 2013 compared to 9 months of business activity in 2012. Second, our wholesale propane margins were much stronger in 2013 compared to 2012, primarily as a result of colder weather in our market areas in 2013. And finally, we benefited from the startup of our NGL marine storage business operating in the Corpus Christi area. These 3 businesses within this segment accounted for $14.3 million of our $16.9 million cash flow increase year-over-year. Looking toward 2014, we believe our cash flow from our Natural Gas Services segment should be slightly improved when compared to 2013, primarily as a result of operating our NGL marine storage business for a full year. In our Marine Transportation segment, we had cash flow of $6.3 million in the fourth quarter compared to $5.2 million in the third quarter. The increase in cash flow was driven by the inland side of the business, as there were significant reduction in repair and maintenance costs and outside towing costs. The offshore cash flow was flat for both periods. For the year, cash flow for the Marine Transportation segment was $18.9 million in 2013 compared to $17.9 million in 2012. This cash flow increase for 2013 was primarily driven by increased utilization of our offshore assets. Looking toward 2014, we anticipate a slight reduction in Marine Transportation cash flow as our entire offshore fleet has required Coast Guard dry dockings in the first half of the year. So, overall cash flow will be less in 2014 than 2013, primarily in the first 6 months of the year. To summarize, we had cash flow from our 4 business segments of $43.3 million in the fourth quarter compared to $29.8 million in the third quarter. For the year 2013, we had cash flow in our 4 business segments of $150.6 million compared to $128.4 million in 2012, or an increase of 17%. Our unallocated SG&A costs were $5.6 million in the fourth quarter compared to $3.8 million in the third quarter. This increase was primarily the result of expensing due diligence costs related to 2 acquisition opportunities we ultimately were not able to close. For the year, our unallocated SG&A cost was $16.8 million in 2013 compared to $12 million in 2012. Included in unallocated SG&A cost is a noncash unit-based compensation expense, which was $0.9 million in 2013 and $0.4 million in 2012. Looking toward 2014, our total anticipated unallocated SG&A cost should approximate 2013 levels. In addition to our 4 business segments, we own 100% of Redbird Gas Storage, which now owns a 42.2% interest in Cardinal Gas Storage. For the fourth quarter, we had distributions from Cardinal of $0.2 million, which is the same as the third quarter. Looking toward 2014, we anticipate distributions to only be approximately $200,000 for the year because of the issues at Monroe we've already discussed. Also, our $15 million preferred stock investment in Martin Energy Trading, an affiliate of our General Partner, yielded a distribution of $0.6 million for both the third and the fourth quarters. We anticipate receiving distributions from this investment of $2.3 million in 2014. For the fourth quarter, we had maintenance capital expenditures of $4 million and total maintenance capital expenditures and turnaround cost for all of 2013 were $11.4 million. Looking toward 2014, our maintenance CapEx should increase to approximately $17 million to $19 million, and the reason for this increase is due to the Smackover refinery turnaround, which is currently in progress, and the dry docking of our entire offshore fleet during the first half of the year. As a result, approximately 65% to 70% of our maintenance CapEx will be spent in the first half of 2014. With that, I'd like to turn the call over to Joe McCreery, who will speak about liquidity, capital resources and recent Partnership activities.

Thanks, Wes. I will start with our normal walk through the debt components of the balance sheet and our bank ratios. I will then highlight some of the Partnership's financing, growth and other activities during the quarter. At December 31, 2013, the Partnership had total funded debt of approximately $659 million. This consists of approximately $424 million of senior unsecured notes and approximately $235 million drawn under our, then, $600 million revolving credit facility. Thus, the Partnership's available liquidity on December 31 was $365 million. For the fourth quarter and year end 2013, our bank-compliant leverage ratios, as defined as senior secured indebtedness to adjusted EBITDA and total indebtedness to adjusted EBITDA were 1.66x and 4.66x, respectively. Additionally, our bank-compliant interest coverage ratio, as defined by adjusted EBITDA to consolidated interest expense, was 3.51x. Looking at the balance sheet, our total funded debt to total capitalization was 71.7% or, for comparative purposes, after adding back the $51.4 million equity impairment related to the Monroe Gas Storage write down to Partners Capital, our debt to cap would have been 67.7%, which is comparable to the quarter-ended September 30. Moving through the first quarter of 2014, we expect to see balance sheet improvement as we continue to deplete seasonally high working capital levels at year end, primarily associated with our butane business. In all, at December 31, 2013, the Partnership was in full compliance with all banking covenants, financial or otherwise. In reconciling our outstanding indebtedness from quarter end, December 31, 2013 to today, our current revolver balance of $250 million borrowed and given our recent revolver upsizing, our availability has improved to $387.5 million. Although there were no financing activities during the fourth quarter, as mentioned, the partnership did add one lender to its banking syndicate and revolving credit facility last week. With our new lender commitment of $37.5 million, our revolving credit facility is now $637.5 million. We believe this incremental availability and liquidity will provide additional flexibility to execute our near-term planned finance, and likewise, give us more dry powder for acquisition scenarios. Additionally, the Partnership recently filed a new registration statement on Form S-3, granting us the ability to raise additional equity proceeds at the market. This is commonly referred as an ATM program. Now commonplace among MLPs, our ATM program will give us yet another alternative raising capital. The ability to issue small amounts of equity without the market disruption and heavy discounting, which are typical follow on equity issuances. Now let's take a look at where we expect increased cash flow in the near and longer terms. As we discussed during the third quarter earnings call, we were rapidly constructing an additional dock at our Corpus Christi crude terminal to allow our customer quicker crude oil loading, which provides us increased terminal throughput. At the end of November last year, we successfully placed that dock into service. The dedicated dock and loading infrastructure allowed us to more than double our previous handling capacity, resulting in increased throughput at the terminal of approximately 40%, which was at the high end of our forecasted improvement range. The current throughput floor rates at the terminal are exceeding our forecast of 150,000 barrels per day. Next, let me quickly update the construction progress on the final 3 100,000-barrel tanks, numbers 7, 8 and 9 at the Corpus Christi terminal. Our new planned in-service dates call for tank 7 to be completed by mid-April, and both tanks 8 and 9 in service by the end of May. These dates are slightly delayed from the schedule we gave during our third quarter earnings call, primarily due to expedited completion of the new dock absorbing all available resources. Nonetheless, we are reaffirming our previous forecast of a 25% year-over-year increase in EBITDA contribution from the Corpus Christi crude terminal in 2014. Now let me provide an update on our previously announced intention to construct a crude oil condensate splitter in the Corpus Christi market. As we mentioned on the last call, we have been evaluating this opportunity for an extended period of time, and are well into detailed engineering and design. At this point in our evaluation, we are also strongly considering including a joint venture partner for this large-scale project. Under this scenario, MMLP has substantially negotiated a joint venture agreement with a reputable partner that we believe will bring a high level of credibility to our commercial contract counterparties. From MMLP's perspective, the benefits of having a JV partner include sharing of capital requirements, which is particularly helpful should the Partnership ultimately decide on a larger-scale asset, a 100,000-barrel asset for example, and the risk associated with operating this type of asset. We believe the specific partner we have identified has similar points of view pertaining to developing a best-in-class asset that capitalizes on the growing Eagle Ford Shale condensate and presents a fee-based opportunity to its stakeholders. MMLP remains highly committed to the splitter project. We expect a decision will be made in the very near future regarding whether or not we partner up or go at it alone. With respect to acquisitions, as conveyed in yesterday's press release, unfortunately, the Partnership, together with our General Partner, co-owner, Alinda Capital, played a bridesmaid role in a very large acquisition opportunity in December 2013. Additionally, we walked away from another large opportunity due to unacceptable findings in our due diligence. Accordingly, we were forced to expense acquisition-related cost of approximately $1.9 million against our strong fourth quarter distributable cash flow. Regarding our Partnership with Alinda, we continue to work with them on growth initiatives. Presently, we are together again pursuing multiple acquisition targets simultaneously. Given the multitude of potential acquisition opportunities in the marketplace, we are currently less focused on Alinda drop downs at this time. Next, I would like to comment on our recent distribution growth and our distribution growth strategy. As most are aware, based on a solid fourth quarter performance Wes discussed earlier, our Board of Directors approved a $0.0025 or $0.01 annualized distribution increase. Though modest in size, this most recent action marks the fifth consecutive quarter distribution increase for the Partnership. Like other MLPs, our board makes quarterly decisions regarding distributions based on performance and outlook. I would like to refresh our publicly stated target range, where management would typically recommend a distribution increase to the board. Management feels more comfortable supporting distribution increases when our coverage ratio ranges from 1.10x to 1.15x for the quarter. We were pleased to achieve this level of performance during the fourth quarter 2013. And I want to reiterate the earlier comments that we see no adverse impact from the Monroe Gas Storage impairment to the continued ability to make distributions to our unitholders. As mentioned, cash flow from Monroe to MMLP was forecasted to be less than $200,000 for 2014, based on continued weak market conditions. Next, I would like to highlight a corporate organizational change that took place at MRMC during the fourth quarter. At year end, Martin Resource Management Corporation, the controlling owner of the General Partner of MMLP, became fully employee-owned. This action completed a journey that commenced long ago when Ruben's father, R.S. Martin Jr., began parceling out equity interest in his company to employees as a form of gratitude for their hard work and dedication. Today, Ruben Martin and our executive management share R.S.'s long-held belief that employees and ownership go hand-in-hand and should be one and the same. Since the mid-1980s, MRMC employees, through the company's ESOP and profit-sharing plans, owned at least a minority stake in the company. Today, we're proud to say that through the leverage buyout at year end, the employees and our ESOPs own and control 99.8% of MRMC. From the Partnership's perspective, MRMC's employee ownership solidifies the fact that current leadership and management team will be in place for the foreseeable future. This includes President and CEO, Ruben Martin, and other key members of management that were previously MRMC shareholders, who would like you to receive long-dated subordinated notes from the company instead of cashing out. MRMC is grateful to all of its employees, former shareholders and advisers, helping to make the goal of a full ESOP-owned ownership a reality. And finally, a short commercial. MMLP will be holding its first analyst and investor day in several years, next month. We'd like to invite those listening today to join us on the morning of March 25, 2014, at the Houstonian Hotel in Houston, Texas. If you'll join us in person that morning and listen to the presentation, Ruben will graciously buy your lunch. Registration for that event is now open on our website at www.martinmidstream.com. I hope all can attend. Nicholas, that concludes the prepared remarks this morning. We would now like to open the lines for Q&A. Thank you.

[Operator Instructions] And our first question comes from the line of Edward Rowe with Raymond James.

With the Natural Gas Segment driving some upside and the potential for a butane oversupply, do you guy see some incremental opportunities to capture some of the widening margins in terms of butane?

This is Ruben. Yes, we do, we actually already evaluated 2 projects that will put us deeper into that market and give us more flexibility in that market, concerning different modes of transportation, concerning the butane, because we do see a surplus going forward in this area.

Okay, that's helpful. And in terms of the growth CapEx, organic, for '14, I know that MRMC has, I think, I believe, allocated around $60 million for Redbird and Cardinal, is that funding somewhat mandatory or have you guys considered allocating that capital to higher or better IRR projects?

This is Wes, the $60 million number dedicated for gas storage is -- that's high, I think we're really looking more along the lines of $10 million to $20 million. I would say a piece of that is discretionary and still subject to Board approval at the Cardinal level. So I'd say some of it is mandatory, but I think the bigger piece of it is sort of discretionary and still subject to board approval.

Okay. Last and final question, I know you guys provided a little bit color on the Alinda project. Can you share with us kind of the outlook on the potential Hosco drop down to MMLP? Is -- are you guys just looking for a good structure in moving those assets down? Or just trying to see in terms of a timing-wise when we should see this asset down MMLP?

Yes, sure. This is Wes again. Look, I mean, with respect to the timing, there's nothing on the books. There's no plan right now in terms of that timing. I think they're still doing some things at that facility, and again, I can't get into too much detail of it. But I think they're still working, making some investments at that facility where they're trying to optimize sort of the layout and the structure. So we're really not contemplating anything from -- with respect to that in the near future at all. I would just say that, obviously, again, in the long run, I think the economics and the math would make sense that something would happen there. But there's no obligation for them to drop anything down. And right now, as we continue to say, our plate is pretty loaded with respect to some of the stuff we've got going on, called the splitter and some other potential acquisition opportunities. So Ruben, do you have something to add?

Yes, Edward, I wanted add, you had asked about the excess butane and how the NGL is going and these guys are always afraid I'll say something stupid, so -- but they said I could get more specific, but we went out and purchased 6 inland pressure barges that we are currently using in Corpus Christi as marine storage, to transfer from land to offshore for marine storage. And then eventually, we'll be adding additional steel storage in Corpus Christi and put those barges out into the marketplace to do exactly what you're talking about. And we're also evaluating rail at our storage facilities, at different places, rail for movement of NGLs around. So the answer to your question is a definite yes, we see it coming and we're working hard to provide the customers with a service that we think they're going to need in the future.

Last and final question, kind of just modeling. In terms of the dry docking, I know you said, first half of the year. Is it going to be somewhat ratable in terms of the dry docking or is it going to be most of it already completed in the first quarter, that's all I had.

Yes, this is Bob, and I apologize for my voice. But it is evenly split between the first and second quarter. And so it's in the Marine Transportation segment, but also, we carry one offshore vessel in our Sulfur Services segment. The Margaret Sue and that will impact our sulfur business from that perspective, maintenance CapEx on our sulfur business. But I said it was kind of 50-50 first quarter, second quarter. I would say, it's probably 2/3 in the first quarter and 1/3 in the second quarter. But again, 60% -- 65% to 70% in the total first half of the year for the budget. So about $14 million, $9 million in the first quarter and probably $5 million in the second quarter.

And our next question comes from the line of Michael Peterson with MLV & Co. Michael D. Peterson - MLV & Co LLC, Research Division: I appreciate your candor this morning and the level of disclosure that you've been providing. I have 2 questions and a follow-up. The first one regards the fertilizer business. Both price and volume have been very positive in the fourth quarter. That wasn't the case for the early part of the year. And I'm trying to get a sense as to how you look at things going forward. Is it your expectation that the volumes are going to hold out and that we might see some seasonality on the price side? Or do you see both peak seasonality on the price side and maybe volumes going back down more into the range that we saw earlier in 2013?

Oh, this is Ruben. As we see it right now, volumes are actually up, and we think that's going to continue. There is a lot of acreage compared to the other years getting planted this year. Now we do -- with that said, we do see margins down slightly. So that's the reason for the reduction in some of the -- going forward, but the volumes are still very good. Michael D. Peterson - MLV & Co LLC, Research Division: If I could follow-up on that, sir, any thoughts on the expectations for the drought and how that may change things?

We don't see a lot of -- a lot of the things that we're doing in our -- especially, in our Panhandle fertilizer, that's overall, irrigated, mostly irrigated land around the -- on the Cap Rock there in West Texas. And we don't see it in the Midwest. We haven't seen a big decrease due to the drought.

Yes, in California, we have a little.

In California, we do have a little.

Very little market in California.

Yes, because some of the products that we do in California are more tied to the wine industry. Michael D. Peterson - MLV & Co LLC, Research Division: Well, let's hope that doesn't stumble at all.

I'm telling you, I worry about it everyday. Michael D. Peterson - MLV & Co LLC, Research Division: Hopefully, not top of the list. Next question I have is another cut on understanding the prospectivity of your relationship with Alinda, and particularly, of the potential acquisitions. Now Wes, I understand that there is no obligation and I can appreciate your reticence to provide too much visibility on timing. I think a lot of us are hoping that 2014, we see some of that unfold. But my question is twofold, first, is it inappropriate for us to anticipate that there might be something forthcoming with that relationship specific to the Houston assets in 2014? And secondarily, given the scale of those assets in aggregate, can you give us a sense, whether it be in '14 or years ahead, as to what size you would be comfortable with in terms of maybe not taking the whole thing, but taking it in chunks?

Yes, I'll -- with respect to your first question, I'd say, let's just -- let's agree not to be presumptuous. I think for 2014, in terms of when we've gone to the board and had discussions with the board with respect to budget, acquisitions and organic growth projects, that's not been brought forward. And for our purposes, our plate's loaded right now for 2014. And as Joe mentioned on the splitter we've got a lot going on on that front as well as trying to finish up Corpus and some of these other things. So I -- yes, I would say, for 2014, let's assume that nothing happens. And then if it does, it would be a bonus. But definitely, really, we make no assumptions here internally as to the timing with respect to that. On the second -- the second question with respect to the size, it's a high teens million barrel storage facility, primarily resid-based. I think they're doing some things there to maybe try and change that profile without getting into too much detail. I think, overall, what would make the most sense for us is maybe to take it in tranches versus trying to swallow the whole thing at the same time. But with that said, I think that -- we'll look at it both ways, but I would expect chunks versus the full bite.

And I might just add, Michael, this is Joe again, with respect to Alinda, I mean, these guys just continue to show up with additional deal books all the time for things to look at. And so, as Wes alluded, our plate is thoroughly full with acquisition opportunities. And I'm almost looking at the drop downs as a "rainy day fund" that there's air and it's nice to have the halo. But right now, there's just a lot of wood to chop in the marketplace. And as long as these guys continue to bring deal books forward, we're going to assess those opportunities first in sort of real time.

Our next question comes from the line of TJ Schultz with RBC Capital Markets.

Just the 2 acquisition opportunities in the fourth quarter that did not go through, if you could just comment a little more there. Mainly the one where you said, you played bridesmaid as it is, so was that primarily a price or if there was something else in the process?

Yes, this is Wes. I'll take that. With respect to the bridesmaid deal, that was part of a process, right? So we gave it our best shot, but in the end, I think, just given where we are with respect to cost of capital and what our expectations for this specific or these assets was, we just couldn't hit the bid, if you will. Now I will say that, that's a deal that's out there, and it has not been announced, so we'll wait and see what happens on that front. But we think we were close, but in the end, I think it was a price issue. On the other one, that was a diligence issue, and I think it was a large acquisition. We -- it was a negotiated transaction. It had been -- we had been working on that relationship with that transaction for a period of, really, a couple of years. And ultimately, in diligence, we got in and found some things that we did -- we were concerned about and that we didn't necessarily like. And ultimately, the sellers thought that they could reap more value, I think, going elsewhere. So and then we also looked at another package that was part of a smaller process that was fairly interesting for us. And while that one didn't end up with a lot of cost, it had a lot of attraction for us, but we ultimately played second fiddle on that one as well.

Okay. There's a comment in the press release that you're exploring growth initiatives for Martin Lubricants, if you could just expand on that. What some of the options are for that business as we think about the growth pipeline?

Yes, this is Wes. With respect to that, we're looking on both fronts, both organic opportunities and then also acquisition opportunities. These are smaller deals. Typically on the organic growth projects, we're talking about small expenditures, like buying cork fillers and packaging equipment, which is less than $2 million to $3 million, typically, on standalone basis. So we're looking at multiple smaller organic opportunities there. But we're also looking at acquisitions. And that's based -- we're being pretty selective on that. We're only looking for certain niche-based opportunities, more specialty talent, if you will, and assets. There's nothing that's imminent on that front, but we are talking to various parties with respect to opportunities on that front. But overall, those are smaller deals in general.

Okay, understood. What's the 2014 growth CapEx expectation? And where do you expect total debt to EBITDA to be by the end of this year or where would you like it to be?

Yes, growth CapEx this year we're roughly $58 million to $60 million. Some of that is Corpus terminals and there's lots of smaller odds and ends. The largest being a $3.5 million type of number on down. So very modest on the current plate for organic growth.

Yes, and I would add to that. That excludes any sort of splitter project that we've been talking about that has not been brought to the Board for final approval yet. So to the extent that one of those -- that we move forward with that opportunity, both either by ourselves or with a partner, that could add a significant amount of capital going forward.

And then, TJ, this is Joe. With respect to leverage or debt to EBITDA, our target being pretty open with this, publicly stated, is about 4.25x. 4.25x is ideal for us. We came out of this quarter with some improved -- about 20 basis points improvement to 4.6x. And I think, given the fact that we still have some high levels of inventory, particularly in butane and unrealized cash flow, I think there's leverage improvement on the way with respect to the first quarter of 2014. So we're going to let that play out. We're not running to the equity window or anything like that. At this point, I think we're in good shape, and we'll work our way to our target of 4.25x.

Okay, on the ATM, have you used that yet or your expectation is that's your primary source of equity this year?

We have not used it yet, our intention is to file our 10-K next Monday and then sometime thereafter, commence bringing down units that -- to that methodology. Our target there is probably something in the $50 million range on an annual basis for the next few years. So I would say, given where we are, we can manage through that. Nonetheless, the extent that we -- we're successful, and Wes and the team are successful in acquisitions, I think that will be the main driver to follow on offerings as you're seeing done typically with the other MLPs.

Our next question in the queue comes from the line of Michael Gaiden with Robert W. Baird. Michael W. Gaiden - Robert W. Baird & Co. Incorporated, Research Division: I wanted to ask, outside of the splitter and the currently contemplated 2014 CapEx and expansion in the terminalling in Corpus Christi area, what other notions, what other projects could we expect over the intermediate to long term from Martin as it relates to capitalizing on growth in the Eagle Ford?

Well, aside that, we're also looking at pipelines in the area. We're looking at a natural gas liquids, small export type terminal, handling NGLs in that area. When Bob said that there was how many -- $50 million to $60 million, that's what's approved by the board. Right now, we're probably working on internally here another $400 million plus of projects, not counting all the acquisitions and so forth that we're looking at. So we've got plenty on our plate as we're going forward, but we don't -- I don't like to go to the board until I know that we've got all of our numbers in place and everything lined up for the board presentation. So in the Eagle Ford, we're looking with finishing the expansion on that. We're also talking to some people about some additional tanks down there on some other property that we have. So we've got a lot going on concerning all of these types of projects. But internal growth is something that I try to emphasize and follow very, very closely.

The number Ruben threw out, $400 million, that development time would be over a 2 to 3-year period.

Yes, what I'm talking, it would be mainly '15 and '16. Michael W. Gaiden - Robert W. Baird & Co. Incorporated, Research Division: Great. And for your 2014 growth CapEx of $58 million to $60 million, could you refresh us on what multiple or range of multiples of EBITDA you expect to realize on those deployments?

Yes, just looking real quick at the, again, these are smaller deals, and typically, with the smaller sized stuff that we work on, we have better multiples on those kind of things. But I'd say, probably if you took the whole thing and blended the sort of EBITDA multiples across all of these, these are probably 5 to 8 on the high-end. But I'd say, closer to the 5 side on an average basis. Michael W. Gaiden - Robert W. Baird & Co. Incorporated, Research Division: And can I also follow up on your commentary regarding the employee stock plan at MRMC. Can you confirm that Ruben Martin continues to drive the MRMC vehicle, or has that changed at all with this transaction?

I'm going to let Ruben answer that.

Thanks, yes. I'm not sure about driving. But I suppose it's this way, I'm on the front bumper because they keep hitting me. But the -- now, basically what happened in that situation was that the employee stock ownership plan owns the stock, but all of the management and the stock that we had before, and we not only received a note that it's due anywhere from 5 most people, the longer-term note, 8 years out, we received that, but we're also our equity position in the economic development of the company is the same. And so everybody that is involved in the management, we have the same economic drive, the same economic incentive, so to speak, to increase the value of the company. So when you look at economic benefits, nothing changed for management. And that's the way I am, everybody is. I'm feeling pretty good and so I'm 62 years old, but I got a couple more years left in me so.

So I think just a short answer to your question, I think the answer is yes, he's still front and center, and I think there was no change with respect to management on that front. And I think the key out of all of that, in my opinion, is just the fact that now the employees are effectively the owners of the corporation. They were on a minority basis prior to that, but now, we, as the collective employee group, own the private company, and I think that's great for the future of this company.

And our last question comes from the line of James Spicer with Wells Fargo. James Spicer - Wells Fargo & Company: Just a couple of follow-ups for me. First of all, on the condensate splitter, I think on the last call, you had talked about $200 million to $300 million as sort of a total spend range for that project. If you could just confirm that that's still a good way to think about it. And then if the project does get approved, how much of that you think might be spent in 2014? And then also, finally, if you brought in a partner, how they would share in those costs?

Yes, okay. So on the first side, we'll talk on 100% basis and then, I'll get your question on the partner economics, if you will, under that scenario. It's obviously contingent upon the size of the splitter. We've been evaluating anything from a 50,000-barrel-a-day splitter up to 100,000-barrel a day splitter. And generally speaking, on a 100% basis, the costs of that are anywhere from -- and it's a broad range, so bear with me here. But it's anywhere from, call it, $200 million, $250 million, up to maybe $500 million. So that's a broad range, I know, but now I'll answer your third point or I guess third question, second, which is in terms of partnering, if we were to partner up with somebody like that, what we've envisioned and what we've been discussing with potential counterparties is a 50-50 concept where a 50% capital responsibility, but also 50% of the economics. So you can take those numbers and depending upon the ultimate size of the splitter, you could take the $200 million to $500 million and cut it in half, if we were to do that from our perspective. And then finally, the second, your second question with respect to the timing of the CapEx, I would basically -- if we move forward, the year 1 piece of the overall CapEx is probably in the range of 10% to 20% of the overall cost of the project. So it's pretty heavily year 2 weighted CapEx in terms of the capital spend. James Spicer - Wells Fargo & Company: Okay, great. That's very helpful. And then secondly, for me, can you just talk a little bit about the plans to refinance the project debt down at Cardinal so you can upstream those distributions?

Yes, James, this is Joe. So where we are there, as Bob mentioned, Wes, I should say, mentioned, with respect to Cadeville, Perryville and Arcadia, those projects are operating well and cash-flowing as planned. And the debt is still a little too high. I think as we look at it on a consolidated basis, we're probably moving our refinancing target into 2015 at this point. And I think we said probably 1 year, 1.5 years ago that we thought it would be at the end of 2014. I think that's, at this point, not as realistic given the leverage multiples, but nonetheless, it's still our intention to go ahead and do that to consolidate those financings into a Cardinal level financing, if you will. And then from that point, have upstream distributions to the sponsors. And I would give guidance now, I think that we can assume cash flow would be coming to the partnership being 2016 conservatively.

Thank you. And I'm not showing any further questions in the queue. I would like to turn the call back over to the speakers for any closing remarks.

Okay, great. Thanks guys for dialing in and we appreciate your interest in our business, it's Ruben. And so overall, we were -- felt very good about the fourth quarter and we think we've got a good lift or a good start for Q1, especially in the NGL, of course, helped by the colder-than-normal weather that we've experienced throughout the United States. So fifth consecutive quarter that we have been able to raise our distribution, and hopefully, that will be able to continue on as we go forward. The splitter project, the other projects that we have going around the Eagle Ford and other locations, in Louisiana and so forth, we continue to be fully committed to these projects, and going forward, to a lot of other organic growth projects. We don't want to lose focus on those organic growth projects. And we are continuing to chase acquisitions. But again, as you've seen, we've been a bridesmaid on a couple and we're not going to jump out there and overpay for what we've done. So anyway, with that, we appreciate everybody's time and we will talk to you next time. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Have a great day, everyone.