Good morning, ladies and gentlemen, and welcome to the Martin Midstream Partners First Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Bob Bondurant, Chief Financial Officer. Sir, you may begin.

Okay. Thank you, Bridgette. And to let everyone know who's on the call today, we have Joe McCreery, our VP of Finance and Head of Investor Relations; and Scott Southard, our VP of Commercial Development. Before we get started with the financial and operational results for the first 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 unit holders. 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, tax, depreciation, amortization, or EBITDA; and we also use 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, distributable cash flow and quarterly adjusted EBITDA guidance to the most comparable GAAP financial measure. Our earnings press release is available at our website, martinmidstream.com. Now, I would like to discuss our first quarter performance compared to the fourth quarter and also discuss our first quarter performance compared to our guidance. For the first quarter, we had adjusted EBITDA of $44.7 million, compared to $49.3 million in the fourth quarter of 2017. Our distributable cash flow for the first quarter was $26.7 million, which provided a quarterly distribution coverage of 1.36x. For the first quarter, our adjusted EBITDA are $44.7 million, compared favorably to guidance of $43.9 million. Now by segment, I would like to discuss our first quarter operating…

Thanks, Bob. Let's start with the normal walk-through of the debt conformance of our balance sheet, tying in our bank ratios at quarter-end and then discuss our capital spending during the first quarter and our planned full-year 2018 capital spending as it pertains to our leveraged ratios. On March 31, 2018, the partnership's balance sheet reflected total long term funded debt of approximately $795 million, a reduction of approximately $18 million from the year end 2017 level. Our balance sheet funded debt is shown before on amortized debt issuance and unamortized issuance premiums as actual funded debt outstanding was $802 million. Reconciling to this amount at quarter-end, our revolving credit facility balance was $428 million and the notional amount of our senior unsecured notes was $374 million. Thus, our total available liquidity on March 31 was $236 million based on our $664 million revolving credit facility. For the quarter ended March 31, 2018, our bank compliant leverage ratios defined as senior secured indebtedness to adjusted EBITDA and total indebtedness to adjusted EBITDA were 2.69x and 5.04x respectively. During the quarter, we reduced working capital by approximately $25 million through the continued sale of our NGL inventory. Commencing with our second quarter results, we'll begin using our recently-adopted working capital sub-limit to reduce leverage from our revolving credit facility. This sub-limit will exclude certain debt attributed to the seasonal NGL inventory build where the partnership has either forward-sold or hedged inventory from our total debt to EBITDA ratio. We anticipate the carve out will have a meaningful impact on our leveraged ratio during the second and third quarters when our revolver balances are elevated from our seasonal NGL inventory buildup. Our bank compliant interest coverage ratio as defined by adjusted EBITDA to consolidated interest expense was 3.31x. Looking at the balance…

[Operator Instructions] Our first question comes from the line of Matt Schmid with Stephens. Your line is open.

Hey, good morning, guys.

Good morning, Matt.

Good morning.

Looking at the quarter, the natural gas services segment continues to be strong. Obviously you got that propane boost in the first quarter, but interruptible trend seem like they should continue to be good throughout the year. Maybe can I get a little detail about your thoughts about how that interruptible business should churn throughout the year and maybe its potential to outperform versus guidance?

Well, I will say this, in the first quarter at our Cardinal Gas Storage, we did exceed internal forecast by about $0.5 million, just slightly above that for that very reason. And we don't really see any change in the near term. So a lot of that activity was at our Monroe Gas Storage facility, but there was also some activity in North Louisiana as well. So we feel relative to guidance that there could be some upside there.

Okay, great. Thanks. And moving through the West Texas LPG pipeline, is there any update there on any timing potentially of the right resolution?

Yes, Matt. The Hearing's Examiner -- if you will recall, the World Mission remanded the case back to the Hearing Examiner. The Hearing Examiner has set the merits hearing for September 26 through 28. That's the schedule as we know it today.

All right. Great. Thank you.

Our next question is from Robert Balsamo with B. Riley FBR. Your line is open.

Hey, good morning. First question, just I guess just housekeeping. You mentioned on maintenance CapEx, that you could spend a little well of forecast. Would that be pushing? Is that a timing issue now? To push to bump up 2019 or is that just the potential reduction in spend?

Rob, this is Joe. It's a combination of both, really. From the standpoint of it, it looks like some of our projects are going to come in under budget with these sorts of good thing and second to that, some timing with respect to projects that didn't make to the schedule completion for 2018 into 2019. But as I mentioned, we're tracking $4 million less currently.

Great. And then on the NGL assets, that came in a little below the guidance. I know in the past, you talked about some weakness in East Texas. Talk a little bit about those assets and is that something that will continue or is there any change expected to recover towards guidance levels?

Yes. That is a pipeline that runs from East Texas near our office here in [indiscernible] to Boma and the truck volume that we feed into that, it goes under lodged [ph] refinery and Boma has been very muted and muting. However, we are exploring two options on that asset. Both have good viability and would improve our potential positions. So from a balance sheet side and on EBITDA and DCF side, we're in the middle of negotiations right now. We are finding alternatives that will help improve our position.

All right, great. Thanks a lot.

You bet.

And our next question comes from the line of Tom Murphy with Raymond James. Your line is open.

Hey, congrats on a solid quarter, guys. With regards to the West Texas LPG capital spending, can you remind me where the plan was to be at mid-year? Was that $35 million and then $5 million spilling into 3Q?

Yes, Tom. This is Joe. Essentially we're projecting to spend about $25 million of the $40 million in the first two quarters.

Okay. And then the rest is all on 3Q or should some of that fall into 4Q?

Some will fall in the 4Q and maybe a smidge into the next year, but the $40 million that we guided to is a 2018 number.

Okay, great. And then one more if I could. Is there any update on the progress for asset sales?

Asset sales?

Assets real progress?

Asset sales -- no real progress. I would say we're in the same position where we worked in the Q1.

Okay. It's all for me. Thank you.

I will make one comment to add to Joe's comment on the CapEx on West Texas LPG. We do believe new revenue will be coming online for us in the third quarter. That is still consistent.

Late in the third quarter.

Correct.

Okay, got it. Thank you.

You bet.

Our next question is from Mike Gyure with Janney. Your line is open.

Hey, good morning. Can you guys take a little bit -- I guess about the trend you're seeing in the asphalt business maybe through the first quarter and maybe really in the second quarter here?

Yes. Big picture trends, it's been a little slow start. I think weather has impacted activity on the volume side. Our company is involved in both the Texas Louisiana markets and then also into the Tampa market. I will say the Florida markets has been stronger than Texas and Louisiana. And we're not talking about this, I'm talking about our general partner side where they sell the volumes, but they do use our assets to throughput the volumes. But the majority of all our assets at MMLP are the take or pay contracts, so that cash flow is going to continue no matter what the volume situation is. But we believe the state of Texas still poise for growth. We think that spend really picks up in the back after the summer. New dollars have been allocated form the state of Texas and that increases significantly beginning about August-September. We do believe the slowness in the Texas-Louisiana market is because the kick offs is really not going to happen big until later in the summer.

Mike, this is Joe. Just to add, obviously we're well positioned for that given the Hondo acquisition about a year ago, first quarter of 2017. That asset is well-positioned to capture the expansion in growth that Bob just alluded to.

Great. And then maybe on the West Texas LPG spend of the $40 million. Do you guys still anticipate that's going to be financed primarily with debt or completely with debt?

Yes. This is Joe again. That is correct. As you saw in the first quarter, we went to our banks and amended our revolving credit facility to allow for that growth CapEx spend, essentially winding, expanding the covenant cushion that we have for a five-quarter period while that project is completed.

Great. Thanks very much, guys.

Thank you.

Our next question is from Patrick Wang with Baird. Your line is open.

Hey. Good morning, guys. Just back on the West Texas LPG rate case. With the window now effectively open until September, is there anything noteworthy from a competition other than the perspective that has come up with the ROC's consideration?

This is Scott. There is nothing that's significant and we continue to monitor some of the new competition out there. Recall that the remand provided for the consideration of additional relevant evidence include market studies and we are undertaking some of those activities to put additional evidence [indiscernible].

Got it. All right. As we gotten closer to this project and service date, is your thinking around still for another expansion side of that? Has your thinking around economic change at all?

No, it hasn't. Just that.

Okay, got it. Thanks. That's it for me.

Thank you. And our last question is from Selman Akyol with Stifel. Your line is open.

Thank you. Good morning. Just curious, from a high level in terms of the political front, are you seeing any changes at all for demand for fertilizer as you come into this season?

The buy move of corn acreage plan which is our key metric that we follow is down slightly from slightly, but we don't think it's going to be a significant impact to us on the volume side. There is a slight pick up in competition in one of our market areas that could impact margins, but overall, there's nothing that we're seeing as of today that would impact our guidance number that we gave everybody.

Okay. Thank you very much.

Okay. That was the last question. Once comment that we did have a good start to 2018 as we're ahead of plan on both EBITDA and DCF. As Joe mentioned, we are going to have heavier growth CapEx spending anticipating Q2 and Q3 as we look to complete our West Texas LPG project. And we do believe we have potential upward DCF guidance at mid year which may improve our forecast to distributable coverage ratio. Things look good and we appreciate your coverage and support of the company. Thank you.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone have a great day.