Ladies and gentlemen, thank you for standing by, and welcome to the MMLP's Fourth Quarter 2022 Earnings Call. I would now like to turn the call over to Sharon Taylor, CFO. Please go ahead.

Thank you, operator, and good morning, everyone. With me today are Bob Bondurant, CEO; Randy Tauscher, COO; David Cannon, Controller; and Danny Cavin, Director of FP&A. Before we get started, 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, 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.

Thanks, Sharon. Before I get started with my normal discussion of our operating performance, I would like to discuss our thoughts around the recent decision to exit the butane optimization business. We experienced an EBITDA loss in the fourth quarter of $10.7 million in this line of business. While we took a noncash write-down of butane inventory to market prices at the end of the third quarter, on a cash basis, we carried approximately 1.65 million barrels into the fourth quarter selling season at an investment cost greater than market. We bought this inventory throughout the late spring and summer but we did not hedge our inventory as the forward pricing curve was significantly backward-dated. As we approach the fourth quarter selling season, butane pricing did not improve and we experienced losses from the actual volumes sold out of inventory, resulting in the $10.7 million EBITDA loss experienced in the fourth quarter. As a result of the significant negative financial performance in the fourth quarter of our butane optimization business, we concluded any future positive cash flow opportunity associated with this business line was no longer worth the commodity risk associated with carrying inventory from the summer purchasing season to the winter selling season. As a result of the decision to exit this particular business line, we will sell the remaining butane inventory in storage with the majority of inventories sold in Q1 and the remaining volume being sold in April and May. The cash realized from our butane inventory liquidation will be used to pay down our revolving line of credit. We believe proceeds from this inventory liquidation should approximate $45 million to $50 million. Going forward, our intent is to operate as a fee-based butane logistics business, primarily utilizing our North Louisiana underground storage assets, which have both…

Thank you, Bob. As always, I'll begin with our balance sheet metrics and liquidity, discuss capital expenditures in the fourth quarter, review the note offering and revolver amendment completed in February and conclude with a discussion of 2023 financial guidance. At December 31, 2022, the total of our long-term debt outstanding was $516 million, a reduction of $31 million from the last quarter. Outstanding debt consists of $171 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 $84 million under our revolving credit facility on December 31 2022. The Partnership's bank-compliant adjusted leverage ratio at the end of the quarter was 4.27 times which includes a $29.7 million debt carve-out, attributed to our seasonal NGL inventory build, when the inventory has been either forward sold or hedged. During the fourth quarter, we incurred $5.4 million in maintenance capital expenditures for a total of $24.3 million for the year. Of that number, $5.2 million was attributable to turnaround costs at our fertilizer plants and maintenance at the Smackover refinery. Gross CapEx was $1.4 million for the quarter and $6.9 million for the year. The full year total includes approximately $218,000 in expenditures related to the DSM joint venture. Turning to the new capital structure that was closed and funded in February of 2023. We have been communicating about our debt refinance for some time now and had hoped to initiate a transaction in late third quarter early fourth quarter of 2022. Internally, we worked on a few different avenues, but we're focused on a high-yield offering the timing of which did not materialize for us until January. On January 30, we announced a proposed senior secured second…

The floor is now open for your question. [Operator Instructions] We will now take a moment to run our roster. Our first question comes from the line of Selman Akyol from Stifel. Please proceed.

Thank you. Good morning all. Quick question, just where does the revolver stand today? How much is on it?

The revolver today has approximately $121 million borrowed.

So from there are you expected to get reduced by an additional $40 million to $50 million from the proceeds of the remaining butane?

It's somewhere probably between $35 million and $40 million at this time, because we have received the cash from the sales from January.

Got it. Okay. All right. And so then should I be thinking about it that as, sort of, like a $480 million or so debt outstanding against your $115 million.

Yes. Q – Selman Akyol: When you think about leverage outcome?

Yes. Q – Selman Akyol: Okay. Thanks. And then just flipping over to your JV since we're limited in questions. I think when I looked at the original press release you talked about 1Q 2024 timing. Is that still good? And then you talked about an investment of $20 million which I guess now you're investing $12.5 million. Has anything changed in timing investment-wise anything we should be thinking about? And then lastly any idea where you're going to be reporting this?

Selman, good morning. Q – Selman Akyol: Good morning

No nothing has changed from a timing perspective. Our target is still the first quarter of 2024 and nothing has changed from the investment capital amount. And to the extent you have more questions feel free to ask more questions. Q – Selman Akyol: Okay. All right. I appreciate that. So then you're going to invest $12.5 million and then you still have approximately another $7.5 million to go sometime in 2024. And then the EBITDA run rate still of $5 million to $6 million that's still a good estimate out there?

It is. We anticipate $13 million or so being spent prior to facility start-up and then upon facility start-up we would have the rest of the cash going out at that point to the JV. That would be the last $7 million-ish. Q – Selman Akyol: Got it. Appreciate that. And then you alluded to I guess things look pretty good for Marine. Can you talk about are you seeing any lengthening in contracting there at all?

Well, the Marine business has come a long way over the last year. Our rates are at $2,000 a day higher than they were a year ago and they're higher in January than they were in December. So the rates are still continuing to go up. As opposed to the answer to your term contract we do have three -- six months ago everything except for maybe one toe would have been in the spot market. Today we have three to four toes that are in more term business, but we're not even talking a year out. We're talking three, six or nine months of term as opposed to a year or longer on the term. So I still consider most of us -- most of our those being in the spot business or will be back to the spot within a short amount of time. Q – Selman Akyol: Got it. And then I think industry-wise they're looking for a heavier refinery turnaround season. Can you maybe just talk a little bit about that and what you expect in sulfur?

Yes, that's correct. And it's going to come at us pretty quickly here as we get to the end of the first quarter and early in the second quarter. And when you think about the Beaumont area at least for the refineries we work with there and provide services to for trucking and sulfur, but do have turnarounds playing to variant lengths and varying degrees over the March-April maybe early May time frame and that will certainly impact the amount of sulfur we have coming into the sites and the trucking business. But we have all that addressed in our guidance. Q – Selman Akyol: Got it. And then I heard you and I've seen certainly articles on higher acres being planted for corn this year, which certainly is good for you guys and need for fertilizer. Have you seen that strategy turn up in either conversations you're having or any orders that you're seeing? Is there any, sort of , confirmation of a stronger market this year?

The answer to that is, no. We haven't seen it yet. Going back to the third quarter we had as you will recall very slow sales. We expected the fourth quarter to pick up significantly and the fourth quarter was on the low end of the range that we would consider normal for the fourth quarter and through the first half of February we're in the same place. So the sales have not picked up significantly even though the USDA is projecting 92 million acres of corn planted which is a big number. So as the ammonia price has continued to come down and internationally we're seeing sulfur prices decline just a little bit. They're edging down. We think the farmers have made the decision to delay their purchases, until they need it. And so we do expect that business to pick up, and we expect that to pick up soon, but we haven't seen it yet. Q – Selman Akyol: Got it. And then just the last one, for me. On the caverns and re-leasing, how is that going? I mean, you got contracts signed. Is there any update you can kind of just give on how that's going?

Yes. We just very recently have started to approach potential customers, and we still have some to approach and that will all be happening within the month of February, and the first couple of days of March, and we really can't comment on that further until we have those meetings. Q – Selman Akyol: Understood. All right. Thanks very much.

Our next question comes from the line of Patrick Fitzgerald from Baird. Please proceed.

Hi, thanks a lot for taking the questions. And congrats on the refinancing. So, if you wouldn't mind, I'm a little bit confused on how your revolver balance is so low after given the sources and uses of your bond deal, and they were issued at a discount and then there was some. Is that taking into account all of the redemption of all the notes?

Yes. yes. So...

Because you were expected to have $161 million I believe on the revolver at close of the deal?

That is correct, but we had -- we closed the deal on February 8. The majority of our butane cash proceeds for the monthly sales, are received between the tenth and the 15th of the month following. So the deal closed and then two days later, we received approximately $30 million in proceeds from the butane inventory sales.

I would like to note. And would the numbers be pro forma as of September 30. Is that true?

Yes.

So we also collected money in the fourth quarter from butane business as well.

Okay. Yes, that's true. Okay. So -- and then you -- so if you expected $40 million to $45 million of unwinding it, and you just got did you say $30 million so $10 million to $15 million more and then you're expected to lose $10 million of adjusted EBITDA, in the first half. So from here, it's kind of neutral, or is that the wrong understanding of that?

Well, I think first of all the $40 million to $45 million to Bob's point on the debt side, that was pro forma from a September 30 number, and our $45 million to $50 million left is from December 31 forward. So there's a slight disconnect there. And then, the other -- there was another piece of your question Patrick, I'm sorry.

Just how much more cash is going to be released, by the time you exit the butane business?

Should be about $80 million left on the revolver, at the end of the butane unwind. So, total debt would be the $400 million plus the $80 million or $480 million.

Yes.

Okay. Well, that's great. So -- and then is that business -- that business has just gone, no one will pay you, a fee to do it anymore, or how does that work?

Yes. So, I know you're familiar with that business. So that's the way, we're taking as we were buying in the summer months and turning around and sell it in winter months. And we just are not going to take on the management of that risk, from this point going forward. So, we're -- as Bob mentioned in his comments, we're going to turn that into a fee business. We have an underground storage in Arcadia, Louisiana that has invested in rail assets there in 2014. We have truck capabilities there. There are certain refineries that we think will value having storage there. And so our intent is to turn that into service fee-based as opposed to the way we were doing. And yes, we don't -- if there's somebody out there, and we're looking for this person that might be willing to take on the position we took on we would entertain that. We don't know if that's going to happen or not.

Got you. Okay. Thanks. In terms of your visibility -- and thank you for providing the projections, it's very, very helpful. But in terms of your visibility in the Transportation segment, you kind of have that business declining each quarter for the remainder of the year, at least in land. So what's kind of underpinning your assumptions for that segment and -- because I believe that's more of a spot market business. How much risk is there to those forecasts?

Yes. So when you think about the land transportation business and go back to the middle of 2021 to the end of 2022, the environment we were in was our rates were rising quicker than our OpEx was rising. And we know that's not going to happen forever. The feedback we have received from our customers. Now the refineries, we expect to continue to run strong throughout the year. The feedback we've got from the chemical producers as we get through the year, they may be selling less pulling back a little bit than what they historically have. So those two factors, we have chosen to bring the EBITDA contributed from the Land Transportation down as we work through the year.

Okay. Thanks. Now with the butane gone, that was always kind of -- didn't really know what to expect your -- each year. So which business do you feel like is the hardest to forecast of yours right now with butane gone?

I think fertilizer is the largest margin-based business we have left, and over the years we have seen between $14 million and $24 million-ish in that business annualized, and so I think going forward that would be the one we anticipate the most volatility in.

All right. Thanks a lot guys. Appreciate it.

Thank you, Patrick.

[Operator Instructions] It appears there are no further questions at this time. I would now like to turn the call over to Bob Bondurant for closing remarks.

Thank you, Mandeep. Thanks to everyone on the call today for your interest in Martin Midstream. We've had a quick start to 2023 as we refinanced our debt pushing the closest maturity out to 2027 and decided to exit the butane optimization business in order to remove a great deal of volatility from our earnings and significantly reduce future working capital. In a short time frame, we have substantially lowered the risk profile of our company and we intend to do more by using the cash proceeds from the liquidation of the butane inventory to reduce outstanding debt and further improve our balance sheet in the near future. Thanks again for your time this morning.

Thank you, ladies and gentlemen. This concludes today's call. Thank you for your participation. You may now disconnect.