Good morning. My name is Sandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the MMLP Fourth Quarter 2021 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. . Sharon Taylor, CFO, you may begin your conference.

Thank you, operator. And good morning, everyone. I'm joined by Bob Bondurant, President and CEO; Randy Tauscher, Chief Operating Officer; David Cannon, Controller; and Danny Cavin, Director of FP&A. Before we get started with our comments, I will remind you that management may be making forward-looking statements as defined by the SEC. Such statements are based on our current judgments regarding the factors that could impact the future performance of Martin, including facts and assumptions related to the impact of the COVID-19 pandemic, but actual outcomes could be materially different. You should review the risk factors and other information discussed in our SEC filings and form your own opinion about Martin's future performance. We will discuss non-GAAP financial measures on today's call. Please refer to the table in our earnings press release posted in the Investor Relations section of our website to find information regarding those non-GAAP financial measures, including a reconciliation of historical non-GAAP financial measures referenced in today's call to their corresponding GAAP measures. And now I will turn the call over to Bob for his remarks on our fourth quarter and full year 2021 results.

Thank you, Sharon. First, I want to let our investor base and our employees know that for the fourth consecutive quarter, we have exceeded our internal EBITDA forecast. Our fourth quarter adjusted EBITDA was $39.7 million, which exceeded our forecast by almost $11 million. For the year, our adjusted EBITDA was $114.5 million compared to our disclosed adjusted EBITDA range of $95 million to $102 million for the year of 2021. This strong performance benefits us financially primarily in two ways. First, it helps us pay down our absolute debt at a much faster pace. And it also accelerates the reduction of our leverage ratio closer to our stated goal of below 4 times. Second, I believe this strong cash flow performance, along with significantly improved financial metrics should position us well with the bond rating agencies. This is a significant step to improving our ability to achieve a beneficial refinancing of our existing bonds by the end of the third quarter at a much cheaper cost of capital compared to what we are now paying. I'm very pleased that we are better positioned to achieve that goal. Now we need to continue to execute strong cash flow performance in 2022 in order to ultimately achieve our third quarter goal of refinancing this debt at a much lower cost. I'm very confident we can execute this plan. Now I'd like to discuss both our fourth quarter and our full year performance by business segment. Overall, as I previously mentioned, we had adjusted EBITDA of $39.7 million in the fourth quarter. This compared to adjusted EBITDA of $17.4 million in the fourth quarter of 2020. For the full year, we had adjusted EBITDA of $114.5 million compared to $94.9 million in 2020. For the fourth quarter, our largest cash flow contributor…

Thanks, Bob. I'll begin with a walk-through of the debt components of our balance sheet and leverage ratio, briefly discuss the general partner ownership changes that occurred during the quarter and conclude with a discussion of 2022 financial guidance. At December 31, 2021, the total of our long-term debt outstanding was $506 million, a reduction of $49 million from the end of the third quarter. Outstanding debt consisted of $160 million drawn on our $275 million revolving credit facility, $54 million of secured 1.5 lien notes due 2024 and $292 million of secured second lien notes due 2025. Total available liquidity was approximately $93 million under our revolving credit facility on December 31, 2021. At quarter end, our adjusted leverage was 4.19 times, which is more than a turn lower from the third quarter when adjusted leverage peaked for the year at 5.47 times. Now as a reminder, this calculation excludes certain debt attributed to the seasonal NGL inventory build when the inventory has been either forward sold or hedged. At December 31, the total debt excluded from the adjusted leverage calculation was $23 million. The significant reduction in leverage was driven by, as Bob discussed earlier, our strong financial performance, allowing us to pay down debt at an accelerated rate as compared to our forecast. Total capital expenditures for the fourth quarter were $8.5 million. Maintenance CapEx was $7.2 million of the total, bringing full year 2021 maintenance capital expenditures to $18.2 million, including $4.1 million for turnaround costs compared to our guidance of between $17 million and $19 million. Growth capital expenditures for the fourth quarter were $1.4 million for a 2021 total of $4.7 million compared to guidance of between $4 million and $5 million for the year. Concerning the changes to our general partners' ownership structure,…

Thank you. And we'll go first to Selman Akyol with Stifel.

Thank you. Good morning. Just a couple of questions for me. So let me just start off on the transportation side of things. Should we be expecting any large expenses maintenance wise for the fleet at all? Is this fleet still young enough that it's not requiring a lot of capital or there are going to be some capital injected this year?

Selman, this is Randy. Good morning. For the marine fleet, we have a very low maintenance CapEx year relative to normal. We don't have much of our equipment going into dry dock or ABS or coast guard inspections for the 2022 year. We did have a large capital expense on our M6000 unit up in the Northeast, but that occurred late in the fourth quarter. And all that work was completed before 2022 began.

Okay. And then on the fertilizer segment, it seemed like you had some stronger quarters than not. So I'm just wondering, do you think demand has been pulled forward at all as you look out into 2022? Or should we just think of it as sort of the normal seasonality that we'll see?

Yeah, there has been some demand pull forward, about 10% of our demand that we would typically have in inventory at the end of the calendar year was pulled forward into the fourth quarter of 2021. Now with that said, margins, particularly on our ammonium -- nitrogen-based fertilizers are very strong. And so we continue to think we're going to have a very strong year in the fertilizer business.

Got you. And then on the sulfur side, so with the improving refinery utilization, we should continue to expect those volumes to stay relatively strong as well, if I'm thinking about it correctly.

Yeah. And the sulfur performance, we would expect to improve year-over-year because of that.

Great. And then I guess, Sharon, can you just talk a little bit about what you're expecting in terms of when you do the refinancing at all, when you go to call those bonds? And any idea where you might get priced at or what you're going to be thinking about? And then same thing, I guess, on the revolver. And I guess as you're having to do the revolver in conjunction with that because it's going to want its maturity eventually in front of whatever you renegotiate on the bonds?

So the way we're thinking about it right now is, as we said, we'll look at those things together in August, both the revolver and redoing the notes. One thing we would want to do is take out both the 2Ls and the 1.5 at that time. And we really believe that they're 11.5% and 10%. We think the market is there to where we're going to get a significant reduction in that interest rate. I don't know that I want to comment on where we believe it will come out at. But I don't think that we're going to end up, will be more historical interest rates on our notes than where we are right now.

Okay. Great. That does it for me. Thanks so much.

Thank you, Selman.

We'll go next to Patrick Fitzgerald at Baird.

Hi. Thanks for taking the questions. Now when you refinance -- now is the expectation that you're going to be able to kind of increase distributions to unitholders going forward? Is that kind of the goal of it? Or is it just absolutely get a lower rate and continue to pay down debt? What's your thinking there?

So the number one goal is to get a better rate and to continue to pay down debt. I think we've been clear about that. Now we will look further down the road at capital allocation and where those additional free cash flow dollars should be placed. So we'll look at increasing distributions as a part of that total kind of consideration at that time.

Yeah, this is Bob. There's really 3 options. That what Sharon just said, growth CapEx opportunities that we probably have kind of punted on a little bit. That's another option. And then finally, if the market doesn't recognize our valuation, which our consistent theme has been we're undervalued as far as an enterprise valuation multiple, there could be a possibility of buying back units. We'll do what's in the best economic interest of our unitholders at that time.

Okay. What about M&A in terms of free cash flow?

There's nothing on plate as far as M&A goes at this time.

I mean if you look at your guidance, it's kind of the average over the last two years. And I know that like the butane business kind of fell into the first quarter of this year, a little bit of the fourth quarter of last year. Is that really kind of the -- and you also said you're probably on the conservative side of guidance, is that really kind of the difference in year-over-year, the $10 million difference?

Yeah, we did take a conservative approach in our margin businesses, primarily butane and the fertilizer. We brought those down because we had really good years in '21. We actually bought both within them below our 10-year average, just to be conservative. I think our margin-based business is just a little bit tougher to predict. To Randy's point, we think maybe the volume sales fertilizer could be down, but we think we can realize increased margins. But at the beginning of the year, it's just unclear to see all that visibility throughout the coming year. So we did -- those are the 2 areas we are very conservative on.

Okay. All right. And then just on the -- I know there was kind of a reset in pricing on the Smackover refinery. But going forward from here, is it -- should we expect kind of stable EBITDA, I guess?

Yes, you should. I think we've spoken to those capital recovery fees that rolled off both in '20 and in '21. So at this time, there's no more change to the throughput rate based on any of those capital recovery fees rolling off.

Okay. All right. Thank you very much.

Thank you, Patrick.

And that does conclude the question-and-answer session. At this time, I would like to turn the conference back to Bob Bondurant.

Thank you, operator. Throughout 2021, our business leaders were focused on optimizing our current asset base and expanding our business through long-term relationships with our partners. We remain intentional with respect to capital discipline resulting in our year-over-year debt reduction and a 117 basis point improvement to our adjusted leverage ratio. And at the end of the year, we had beaten our internal guidance each quarter and exceeded our earnings expectations for 2021. And as successful as 2021 was, it's time to turn the page and build on these positive results in 2022. We will do that by continuing to be innovative in our thinking and diligent in our work. We will continue to reduce debt and free cash flow, strengthening our balance sheet to attract investors and deliver value. We have provided what I believe is a conservative guidance for 2022. I see more opportunity to the upside than threat to the downside, opportunity to expand services with our business partners, particularly in the terminalling and land transportation groups, opportunity in higher utilization of our marine assets and opportunities as we pursue new alliances and consider potential means to enhance our services. I look forward to speaking to you on our next call. And as always, thank you for your interest in Martin Midstream.

And that does conclude today's conference. Again, thank you for your participation. You may now disconnect.