Good day, ladies and gentlemen and welcome to the Martin Midstream Fourth Quarter 2015 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the conference over to Bob Bondurant, Chief Financial Officer. Please go ahead.

Thank you, Sabrina. And we will let everyone know who is on the call today, we have Rubin Martin, our CEO; Joe McCreery, Vice President of Finance and Head of Investor Relations and Wes Martin, Vice President of Corporate Development. 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 maybe 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 the SEC Reg G, such as distributable cash flow, or DCF and earnings before interest, taxes, depreciation, and amortization, or EBITDA and we also discuss 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, martinmidstream.com. Also, we plan to file our 10-K after the market closes on February 29. Now, I would like to discuss our fourth quarter 2015 performance compared to the third quarter and also discuss our performance for the year. For the fourth quarter, we had adjusted EBITDA of $51.4 million compared to $41.4 million in the third quarter. And for the year of 2015, we had adjusted EBITDA of $188.3 million compared to $149 million in 2014. Our distributable cash flow for the fourth quarter was $35.8 million creating a distribution coverage of…

Thanks Bob. I will start with a normal walk-through of the debt components of our balance sheet and the bank ratios, then discuss counterparty risk, and in particular, provide an increased level of transparency into the operations and financial conditions of MRMC, and finally, I will provide some full year benchmarks against the guidance cash flow we provided in early 2015. On December 31, 2015, the Partnership’s balance sheet reflected total long-term funded debt of approximately $865 million. This balance sheet funded debt level is before unamortized debt issuance and unamortized issuance premiums as actual funded debt outstanding was $872 million. Reconciling this year end amount, our revolving credit facility balance was $498 million and the notional amount of our senior unsecured notes was $374 million. Thus, the Partnership’s total available liquidity under our revolving credit facility on December 31 was $202 million based on our $700 million revolving credit facility. For the year end 2015, our bank compliant leverage ratios defined as senior secured indebtedness to adjusted EBITDA and total indebtedness to adjusted EBITDA were 2.62 times and 4.59 times respectively. This represents total leverage improvement of 26 basis points compared to the third quarter ratio and further represents our best year in total leverage position since 2012. At year end, we are pleased with the delevering we have demonstrated. Coupled with the solid financial performance of the fourth quarter, we are moving closer toward our longstanding publicly disclosed target leverage of 4.5 times. Our bank compliant interest coverage ratio, as defined by adjusted EBITDA to consolidated interest expense was 4.69 times. Looking at the balance sheet, total debt to total capitalization at December 31 was 68.7%. Our funded debt decreased during the quarter as we experienced the anticipated working capital reduction of approximately $17 million associated primarily with…

Thank you. [Operator Instructions] And we do have a question from the line of Charles Marshall of Capital One. Your line is now open.

Hello everyone.

Hi Charles good morning.

Quick question on the Corpus Christi crude terminal recognizing that you said volumes were likely to come down here in ‘16 relative to ‘15, understanding you have I think 85,000 barrel per day MBC with Shell, can you kind of just talk about that contract a little bit more and the volumes you are expecting in ’16, I mean do you expect getting volumes at the MBC level of 85,000 barrels or even below and if so, will you receive the efficiency payments. And I guess just a quick follow-up to that, can you talk about that – the tenure of that contract and how long that goes until?

This is Bob. I will speak to the tenure, the tenure goes through November of ‘17, our rates are I believe in the fourth quarter were 119,000 barrels if I am remembering right. It is running a little bit below that. It is running above the 85,000. Currently, it’s running about 95,000 barrels to 100,000 barrels a day. So we – our instincts are it’s going to settle at that rate as far as volume is going. Now, remember the incremental decline is that a much less rate. Unfortunately I can’t disclose what that rate is on a per barrel basis, but it is at lower level. So yes we are giving up volume, we are giving up cash flow. But on a relative basis, the first 85,000 barrels are at much higher price than what the next barrels are above 85,000.

Got it. And then I guess switching over and I appreciate all your color on the counterparties you provided in your opening comments, but with regards to sort of the one-third that you didn’t kind of highlight, is it safe to assume that those – that revenues are from non-investment grade entities and if that’s safe assumption, can you kind of talk about some of the backstops that you may have in terms of letters of credit, etcetera that you may have more comfort in that remaining one-third?

Sure. Chuck, this is Joe. So, when you think about our revenue kind of – it’s interesting it kind of falls into two buckets really. Our customers are really a service customer or a commodity customer and of course the commodity customers are in the NGL business typically. And you think about that our largest customer in fact of the entire Partnership is a non-investment grade entity that is on the natural gas liquids side. And so although they are not investment grade, they have been with us for decades at this point in time given the relationship with MRMC and then and ultimately MMLP, so we don’t think there is any risk there. We certainly know their business well and in fact we have spent some additional capital at the Partnership in 2015 to appease them and continue our relationship with them on a go forward basis. So if you take them out and they are about 12% of our entire revenue base being the largest. You are talking a very small percentage now 12% to 13% that’s left, that our customers that we have serviced from – for a number of years again with respect to the liquids business are on the refinery side, it could be in the lubricants customers as well. So they are typically margin based customers in that regard, but I don’t think we have any issue with any of them at this point.

I will go and comment on those lubricant customers and those propane type retail customers. It’s a very diverse group. It’s very low exposure to each and everyone. So I just wanted to go through that comment out.

Yes. And then the final comment I would make is the numbers that Joe was throwing out were revenue numbers. And I think when you look at it really on a true cash flow basis just given the fact that we are as Joe has mentioned on some of these like on our butanes, the revenue numbers sometimes get a little bit inflated. So if you look that at really more on a cash flow basis and tried to isolate those sort of investment grade percentage in the MRMC piece of the cash flow, what is – how much of that – of our total cash flow is attributable to those two, it’s higher than the two-thirds percentage. So revenues – I mean revenue is the number that we can go out and explicitly identify to Joe’s point. But I think on a cash flow basis it’s actually a higher percentage of investment grade and the MRMC related cash flow.

Yes. Got it. That makes sense. I appreciate it. And then just one last one for me and I will hop in the queue. I know you referenced about 6 Bcf rolling off at Arcadia, sort of a two-part question here are you – in your model are you assuming that all 6 Bcf get re-contracted at lower than historical rates?

Yes. We are the way that we looked at that is – and we have actually already re-contracted those and we did that back in the fourth quarter of last year. So those are re-contracted. And I think when you look across our whole universe of contracts on the gas storage side, I think we are something about 3.5 or 4 years, 4 plus years on a weighted average basis. So, when we are re-contracting those, yes, the rates are coming down, but we are still – our business model is still to enter into longer term contracts with respect to those assets.

Got it. And then just really quickly, on the – with respect to Monroe, how much is rolling off this year? Is that under certain stress from contract roll-offs as well or is that…

The interesting thing about Monroe is it’s been versus when we originally did that deal back in 2011 where some of the rates there were higher. All those contracts have since rolled off. So, on a market basis, they are really pretty much rolling over at flat rates. We have been rolling those over either – they are typically 1 to 2 year type contracts of that facility. So, where we are today is those contracts have been rolled over going into sort of the April 1 new storage year if you will. So, I think the 94% plus capacity is contracted there. So, I don’t see any really exposure specific to that facility on a year-over-year basis. And in fact, some of the interruptible that we have had is that facility continues to be positive in that effect. So, Monroe is actually on a year-over-year basis looking flat to even better for 2016.

Got it. That’s it for me, guys. Thanks, again and congrats on a good quarter.

Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of T.J. Schultz of RBC Capital Markets. Your line is now open.

Thanks, guys. Good morning. Just a couple of different ways to think about debt leverage, if you give me your expectations for where you expect leverage by the end of 2016 and then as we think about that, are there any asset sales that are being considered this year? And then I guess a third part of that is if you get some of the allowances you maybe seeking, what are your expectations or preferences to buyback debt or buyback units this year?

Yes, T.J., good morning. This is Joe. So, with respect to the balance sheet, you did see the improvement that we anticipated for the year end 2015 number. And we also mentioned the sort of the capital requirements for 2016 being on the growth side call it plus or minus $30 million. So, from that perspective given the fact that we don’t have a capital markets dependency in 2016, we will in fact use revolving credit facility. The net of all that is fast forward to year end 2016 and we see leverage back in the kind of the 4.6 to 4.7 range. So, a slight leverage creep kind of based on our cash flow prediction for 2016. I will pass to Wes and he can address the potential divestiture question.

Yes. I think without getting into any specifics I think just to be clear that there is no mandate from the Board or management at this point in time to go, sell assets. I think just the general answer to you question, we would be opportunistic on that front. I think given our sort of stated target leverage of 4.5x, clearly we would like to get to that level and as Joe just mentioned, the sort of target of 4.6, 4.7 by the end of the year potentially, so that slight leverage creep. So we would entertain the concept of some active sales, but given where we are looking for 2016, there is no mandate or no immediate need from our perspective to do that. But if the right opportunity comes along at an appropriate valuation, I am sure we would consider that.

And I will go ahead. We are all just going to address the open market purchases of our securities, T.J. I think as we think about it, we are hearing now that our bonds are trading in kind of the mid-80s as just a point of that sounds I think on a relative basis that may imply some strength in the credit markets. But nonetheless there is huge value there as you can see from our ability to go, buy those bonds, pickup plus or minus 400 basis points of interest expense before we get to the actual discount which we would include in our income. But nonetheless, from where we are today and where we stand, the basket is full as I mentioned and we would need lender approval to do that. If we were successful and that I think you could probably envision maybe another $25 million something like that on the debt side, interestingly, the unit purchase trigger is leverage governed. So to satisfy that, leverage would have to go below 4.25x, so then linkage of your two questions I think is in play with respect to if we were successful on some divestiture although not planned at this point in time. And then perhaps leverage would fall through an appropriate level where we could in fact go and buy our units in the open market. So leverage linked on the equity side and then debt is full for now. But we would seek lender approval perhaps in the future.

Okay, great. That’s all very helpful. I guess just last question, you spend quite a bit of time on MRMC, obviously they have been supportive in the past, just curious if there is levers that you maybe seeking to pull there to help the MLP during this cycle whether it’s IDR waivers or what have you?

This is Rubin. And the answer is that we are evaluating each one of those as that situation as we go along. We do have – we are willing to give out our support if it’s necessary to maintain the strength of the units. So we are evaluating as we go along, but MRMC can pull that trigger at any time that it wants to.

And one thing, this is Joe again, T.J., I mentioned with respect to an asset development project, the asphalt terminal that has been approved by MRMC. And so from that perspective, MRMC is going to be supportive in developing an asset that ultimately should find its way back to the Partnership when cost of capital is restored.

Okay, good. Thank you.

Thank you. And I am showing no further questions at this time. I would now like to turn the conference over to Rubin Martin, CEO for closing remarks.

I want to thank everybody for calling in today. And we did have a good strong fourth quarter performance and felt like our full results were very good at one-time’s coverage. And so the capital requirements for ‘16 are very, very modest and no capital markets issuance for ‘16 is expected and we have a strong support of MMLP. I don’t think we can overemphasize the MRMC support that we are willing to give for long-term contracts asset development and IDR support if we need to. So, we have had a good start to ‘16 and we expect similar cash flows compared to ‘15. So at MMLP all is good. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. You may all disconnect. Everyone have a great day.