Ladies and gentlemen, thank you for standing by. And welcome to the MMLP First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Ms. Sharon Taylor, Chief Financial Officer. Please go ahead.

Thank you, Operator, and good morning, everyone. I am joined by Bob Bondurant, President and CEO; Randy Tauscher, Chief Operating Officer; David Cannon, Controller; and Danny Kevin, Director of FP&A.

Thank you, Sharon. I would like to start the call off by saying I was very pleased with our cash flow performance in the first quarter, as we exceeded our internal guidance in spite of the extreme freeze caused by winter storm Uri. As we all know, this winter storm had significant impact to the Gulf Coast refineries and also had significant impact to our land transportation business. Again, in spite of the impact caused by this winter storm, we exceeded our internal guidance by more than 10%. Our first quarter adjusted EBITDA for 2021 was $30.9 million, compared to $31 million for the first quarter of 2020. However, including last year’s first quarter EBITDA was $2.7 million of non-recurring business interruption insurance proceeds that were related to our prilled sulfur ship-loader casualty loss, which occurred in May of 2019. Also, last year’s first quarter included $0.5 million of EBITDA from Mega Lubricants, which was sold in December of 2020. So without business interruption insurance proceeds and the cash flow contribution of the Mega Lubricants business, last year’s first quarter adjusted EBITDA would have been $27.8 million, compared to this year’s adjusted EBITDA of $30.9 million. Now first, let me begin the operating performance discussion by focusing on our Natural Gas Liquids segment, which was our largest cash flow contributor in the first quarter. This segment contributed adjusted EBITDA of $12.2 million, compared to $5.5 million a year ago. This cash flow improvement was primarily a result of the strong performance of our Butane Logistics business.

Thank you, Bob. At quarter end, the total of our long-term debt outstanding was $522 million, which consisted of $176 million drawn on our $300 million revolving credit facility, $54 million of secured $1.5 million notes due 2024 and $292 million of secured second lien notes due 2025. During the quarter, $29 million of senior unsecured notes matured and were redeemed using revolver availability, resulting in an increase to the revolver outstanding of $28 million quarter-over-quarter.

First question comes from Selman Akyol with Stifel.

Yeah. Appreciate all the detail in the prepared comments, I guess really it is, if we could just sort of address in terms of think about marketing and how does that look for the second quarter? Prices continued to be strong for the NGLs and I know it seasonally usually weaker, but is there any uplift from the stronger prices?

Yeah. Selman, this is Randy. Appreciate the question. Second quarter is a slow time for our NGL business, because the butane season and the propane season both end February, March timeframe and now we’re returning to the part of the season. We’re starting to think about building our inventories for the next winter quarter season. So the first quarter, April and May is generally slow time in building inventories and that bill starts picking up as we get later into the summer. For propane sales that has definitely slowed down significantly, the weather has improved. We still are seeing some butane sales going out in April. We did have some demand with -- while we had an inventory being shipped out. So I think April, we will still see a pretty good number from the butane business. But then after that I wouldn’t expect to see most from the NGL businesses until we get to next fall.

Very good. Appreciate that. And then just thinking about Transportation, and again, very appreciated in terms of thinking about sort of daily load counts by month. Can you just say what you’re seeing in April so far and how it’s tracking maybe to March? Is it flat with March or do you think it might be up?

April looks an awful lot like March. March was a very good month for the MTI business as Martin transport. February, we got clobbered, obviously, with the freeze and load count and the mileage and everything for two-week to three-week period went real well on us. But March was a good month, April through to 21 days has proven to be very good month. Demand is strong for certain services right now and getting stronger. And we think that’s going to continue through the summer.

All right. Thank you very much.

Thank you. And we have a question from Patrick Fitzgerald with Baird. Please go ahead.

Yeah. Hi, guys.

Good Morning.

Could you just clarify, I think, you talked about your leverage at the remaining elevated through the third quarter and then dropping? How do you feel with covenant headroom?

I think that as we looked at our EBITDA projections of between $95 million and $102 million, we remain within our covenants. As you know, our third quarter is typically our weakest quarter just in terms of the seasonality of our business. So where there is a little bit of tightness, we see that in the third quarter. But again, all of our internal projections show that we are well within our covenants going forward.

Okay. And then in terms of you said you had $3.7 million higher than budgeted internally. I’m just wondering is that -- you gave guidance of $95 million to $102 million. So was that like $3.7 million kind of better than you thought when you gave that guidance or was that just kind of based on the quarter, obviously, we had some difficult aspects to it this year.

Yeah. There’s a lot of -- this is Bob. There is a lot of give and take on that. I think my comments earlier about the fertilizer business, we probably had some the benefit there that we probably forecasted maybe a little bit in the second quarter. But there -- but we’re seeing the trucking business, probably running at a stronger than what our internal forecast might have been. But then the Marine business may be a little bit weaker than what we had been. So I think as you net-net this -- all these puts and takes, it’s probably built on somewhat in -- somewhere in the midpoint of that $95 million to $102 million at this time.

Okay. And then fertilizer, you said the second quarter is going to be down sequentially I think. Is that down year-over-year as well?

I have…

I don’t have the second quarter of last year in front of me. Do you remember, Randy?

I have it here. Yes. Yeah. I would anticipate we’re going to be down year-over-year from last year. And the reason for that is because our sales in the first quarter this year 2021 were very strong, our sales volumes. And so our inventory that we have available to sell in the second quarter this year are less than what we had a year ago in the second quarter. So I -- we still anticipate a strong second quarter. But from the second quarter of 2020, I would expect we will not get that same number.

Okay. And are you guys comfortable with the assets you have currently or is there any opportunity do you think to sell at a attractive multiple, any of your smaller segments -- smaller businesses?

I think that -- we’ve -- as we’ve discussed, we are open to looking at divesting at some of our non-core assets if the rate is appropriate. I think that during this time of kind of -- I don’t know if we want to say post-COVID, but maybe just leveling off of the COVID, we still don’t think that the multiples are there. But we are exploring and we continue to look at ways that we can deliver a little bit quicker than just relying on our annual earnings.

Okay. Thanks a lot.

Thank you, Patrick.

And we do not have any questions at this time. I’ll turn the call over to Mr. Bondurant.

Thank you. I’d like to thank everyone today who participated on the call. Despite winter storm Uri and continue to demand destruction from COVID impacting refinery utilization, we had a strong first quarter. As I spoke to in our last earnings call, we were highly optimistic around both the butane and fertilizer business. We were not disappointed as both businesses outperformed expectations. As we look forward, our emphasis remains on optimizing our assets to maximize free cash flow in order to reduce debt and strengthen the balance sheet. Our target of 3.7 times leverage remains and know it will take time we will continue to make this a priority. Last, I’d like to commend our employees who have been committed to supporting Martin, whether remotely or on location on a marine vessel or in a truck or wherever they may have been. Last year has been difficult for folks professionally and personally. Our employees have been diligent regarding the health and safety of each other, as well as the communities where they’re working with. I appreciate how tough it has been and applaud their dedication and ingenuity to get the job done. Thank you.

This concludes today’s conference call. You may now disconnect.