Good morning. My name is Chris, and I'll be your conference operator today. At this time, I would like to welcome everyone to the MMLP Q2 2022 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. . Thank you. Sharon Taylor, Chief Financial Officer, you may begin.

Thank you, operator. And good morning, everyone. With me on the call today are Bob Bondurant, CEO; Randy Tauscher, COO; David Cannon, Controller; and Danny Cavin, Director of FP&A. Before we get started with our comments, I'll 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 opinions 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 second quarter 2022 results. Bob?

Thanks, Sharon. For the sixth consecutive quarter Martin Midstream Partners exceeded its EBITDA forecast as our second quarter 2022 adjusted EBITDA was $38.3 million compared to our published forecast guidance range of $23 million to $25 million. All four of our business segments beat our forecasts in the second quarter. The significant majority of our outperformance came from our Transportation and Sulfur segments, which I will discuss shortly in more detail. We believe the fundamentals in several of our business lines continue to remain strong in spite of the current inflation rate and current recessionary fears. Based on our revised outlook, we have increased guidance for the remainder of the year. Our new guidance range for 2022 is now $126 million to $135 million. Now I'd like to discuss our second quarter performance in more detail by business segment. Overall in the second quarter, as I mentioned earlier, our adjusted EBITDA was $38.3 million, compared to adjusted EBITDA of $22.5 million in the second quarter of 2021. For the first six months of 2022, our adjusted EBITDA was $78.3 million, compared to $53.4 million for the first six months of 2021. For the second quarter, our largest cash flow contributor was our Transportation segment, which had adjusted EBITDA of $14.6 million, compared to $5 million a year ago. The land transportation portion of this segment continues to improve its performance as adjusted EBITDA was $12.4 million compared to $5.5 million a year ago. During the second quarter, our daily load count average 475 loads per day compared to 401 a year ago. We have also increased our driver count 13% from a year ago. This growth has been driven by strong demand from our refinery and lubricant customers. Also we have expanded our trucking operations into Central Florida in order…

Thanks, Bob. First, let's walk through the debt components of our balance sheet and bank ratios. At June 30, 2022 the total of our long-term debt outstanding was $494 million, a slight increase of $5 million from $489 million at the end of the first quarter. This increase was expected as we entered into the butane inventory storage season in earnest, thus increasing our working capital needs. The components of the $494 million and outstanding debt were $149 million drawn under the revolving credit facility. $54 million of secured 1.5 lien notes due 2024 and $291 million of secured secondly notes due 2025. Total available liquidity was approximately $87 million under our revolving credit facility. At quarter end, our adjusted leverage ratio was 3.46x and our first lien leverage ratio was 0.99x. Both of these leverage calculations include our working capital sublimit carve out, which excludes certain debt attributed to our seasonal NGL inventory build when the inventory has been either forward sold or hedged. At June 30, the total debt related to the carve out and therefore excluded from the adjusted leverage and first lien leverage calculations was approximately $11 million. Looking forward, leverage in the third quarter may increase as we continue to purchase and store butane for the winter blending season. The partnerships interest coverage ratio was 2.81x at the end of the quarter, and we were in full compliance with all covenant banking or otherwise. Now I will address capital spending. Maintenance capital for the second quarter totaled $3.3 million, which was below our estimate for the quarter of $7 million, the majority of the shortfall being from project timing differences. However, we still expect our full-year maintenance capital spending to be approximately $25 million. As far as growth capital expenditures, Q2 expenditures were approximately $1.5…

Thank you. Our first question is from Selman Akyol with Stifel. Your line is open.

Thank you. Congratulations on a very nice quarter.

Thank you.

Yes, let me just start off on the transportation side. And I mean, clearly we've seen refinery utilization continue to tick up here early in the third quarter, I think most recently around 98%. So when you look forward and you noted your stronger transportation outlook, what are you assuming for turnarounds in there for providers?

Hi, Selman, this is Randy. Thank you for the question. We have spoken with our customers for the expectations for the remainder of the year and they continue to expect to operate at a very high level for the foreseeable future. The markets are demanding, products so we've been 95% to 98% through much of the second quarter, I think it'd be difficult to maintain that utilization. But it should be strong relative to normal. When you think about the turnaround, there has been one major refinery or one major refining company that has a large refinery in Louisiana and one in Texas that has noted in their release that they're going to have, they're going to have extended maintenance in the second half of this year. That would impact us to a very minor extent because we just primarily provide a little trucking out of that refinery. And then you have the four refineries in the Beaumont, Port Arthur area that we're so integrated with, particularly from the trucking and sulfur perspective, only one of those to our knowledge today is planning on has planned maintenance, and that would be four to six weeks, but sometime late in the third quarter. So the impacts on us, I think would be very moderate. A lot of it would be trucking, but we're having no problem today redeploying those truck drivers to other work, when a refinery would take some maintenance.

Got it. And then I think previously, you'd said you'd added 20 drivers. Can you just say where that count is, I guess year-to-date?

Year-to-date, we're running about in the 460 to 470 driver range, I think is at the higher end of that. And we continue to have a large number in training when I say large anywhere on a particular week, 20 to 30 up to sometimes 40. So we're very bullish on continuing to grow our driver count, a lot of that growth has been in our Florida market, we've expanded there really leveraging on large fertilizer customer that we've had a longtime sulfur relationship with. And so we've had the ability to grow that business. And it's helped our positioning in the trucking market in Central Florida because of that relationship.

The only thing I would add, that is the 470 that's what we're currently adding and we began the year at about 420. So we're up about 50 drivers over the course of the year.

Very helpful. And then I guess just thinking about marine, are you in a point where you're seeing enough strength where you can term things out and get sort of year long, two year long kind of contracts?

Both the business continues to be on spot basis, when somebody comes with term, that's generally so far under the spot market, that we're not interested in participating in that at this point in time. So the rates are continuing to escalate in that business even this month as we speak at the beginning, at the end of the first quarter, we were in sixes. And then we were kind of 7,500, 8,500 a day as we worked our way through the second quarter. And today as we speak, half of our spot fleet is over the $8,500 per day as a day rate. So the market can particularly for the heated barges continues to tighten. Rates continue to escalate. And no, we haven't put any in the on term yet. It's continued to be on spot.

Got you. And you're still having 95% to 100% utilization at those higher rates?

Yes, fleet utilization in the mid-90%, that is correct.

Got it. Okay, very helpful. And then as I think about the Sulfur segment, seems like margins were very strong for fertilizer. Any comment there anything and I know Ukraine and everything from that standpoint, I was just surprised to see how strong the margins were there. Is there anything I should be thinking about? And I get volumes coming down, but for whatever little volume there is, do you still expect strong margins in the back half of the year?

Yes, that's a good question. There's a lot to that question. So yes, the volumes in the second quarter were less than we've historically done and less than what we anticipated by about 30%, the margins depending upon which fertilizer product you're talking about are 33% to greater than 100% higher than we would typically anticipate in the fertilizer business. But that that wasn't unusual for the entire fertilizer business, we didn't see anything that just wasn't market driven. And so right now the margins have narrowed a little bit from where we were in the second quarter. But they're still strong. And we think the macro environment is such that as we enter into the winter season, they are going to continue to be strong in the winter season.

Got it. Helpful. And then as I think about sort of the butane business I mean, you're -- can you just sort of say what your demand is or how you think things are going to break out between Q1 and Q4?

So typically Q4, we're going to build to somewhere about a million and a half barrels of inventory, which is slightly less than we typically have. And we typically think about Q4, we get 60% of our sales. And then Q1 we will take about 40% at that time, and we do not anticipate given the market having a problem moving the inventory this year.

Got it, helpful. And then I guess, just real quickly on terminalling your fee based business, you would continue to expect to be there. And then it sounds like the lubricants that should continue to be strong going into Q3 and Q4 as well. I mean, sounds like prices continue to still be higher margin struck pretty strong there off of the non-fee-based business?

Yes, so everything you said, we agree with. That's all correct. We expect strong margins in the lubricants packaging and the grease business through the rest of the year.

And I will add one small comment there, typically in the fourth quarter, we do see a slowing of volume from Thanksgiving through New Year. We didn't really experience that last year. So that may or may not happen. I don't know that we have the full visibility on that. But there could be a slight tick down in cash flow in Q4 relative to Q3 if that phenomenon happens as normal.

Got you, okay. And I guess pitching more over the balance sheet. And I guess you originally talked about trying to do some refinancing on the notes. Can you just talk about what your plan is now and where you think the market is?

Yes, so as you know, those are two L notes will be callable at par sometime mid-August. So what we've done and what we've spoken to is that we're going to be opportunistic around refinancing those notes. And if the market is there, we want to be prepared to go out and reduce our interest rate. Those are currently 11.5, we think based on our earnings, and based on the strengthening of our balance sheet through the last call it 18 months, we should be able to bring that interest rate down and when we reissue those notes, so we're on the sidelines, we're watching the market. It's not there right now. So we'll continue to keep a watch on that.

Got you. Give me . I guess just in terms of your hedging, just remind me what are you actually directly hedging butane or you using another commodity to do the hedge?

We've directly hedge butane a majority of the time.

All right. Okay, that's all I got. Thank you. Once again, congrats.

Thank you, Selman.

Thanks, Selman.

And it appears that we have no further questions. I'll turn it over to Bob Bondurant for any closing remarks.

Thank you, Chris. I'd like to thank everyone on the call for your interest in Martin Midstream. In closing out a few comments on our unit price. For several years, our partnership is traded at a discounted multiple relative to our peers. As example today, the median enterprise value divided by EBITDA multiple for the Midstream sector is around 8.3 times, whereas our trading multiple is currently approximately five times and while capital flows in the energy space are still challenged relative to years past, I believe the moves we have made in the last few years including the sale of non-core assets, meaningful debt reduction, and a significant improvement in earnings should soon be recognized and begin to have a positive impact on our unit price. Our leadership team and our business leaders can only control what they can control, which is the operating performance of our company. As long as we all continue to focus on performance and execute our strategic plan, I believe the equity markets will ultimately value our company more in line with our peers. Thanks to all again.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.