Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the MMLP’s Third Quarter Earnings Conference Call. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] At this time, I would like to turn the conference over to Sharon Taylor, Chief Financial Officer. Please go ahead.

Thank you, Operator, and good morning, everyone, and thank you for joining us today. In the room are Bob Bondurant, CEO; Randy Tauscher, COO; David Cannon, Controller; and Danny Cavin, Director of FP&A. I will begin with our cautionary statement. During this call, management maybe making forward-looking statements as defined by the SEC. These statements are based upon our current beliefs, as well as assumptions and information currently available to us. Please refer to our press release issued yesterday afternoon, as well as our latest filings with the SEC for a list of factors that could impact the future performance of Martin and cause our actual results to differ from our expectations. We will discuss non-GAAP financial measures on today’s call, such as adjusted EBITDA, distributable cash flow and free cash flow. In addition, we will refer to adjusted EBITDA after giving effect to the exit of the butane optimization business. You will find a reconciliation of these non-GAAP measures to their nearest GAAP measures in our earnings press release posted on our website. Now I will turn the call over to Bob to discuss second quarter results by segment.

Thanks, Sharon. I would now like to discuss the performance of Martin Midstream’s operations, comparing the actual results of the third quarter to our third quarter revised guidance. As a reminder, the third quarter is typically our weakest cash flow quarter relative to the other three quarters of the year, primarily due to the seasonality in our fertilizer business, which is historically weaker in Q3. For the third quarter, we had adjusted EBITDA of $26.2 million, compared to our third quarter revised guidance of $25.1 million, an improvement over guidance of $1.1 million or 4.4%. For the treading 12 months ending September 30, 2023, excluding the results of our recently exited butane optimization business, we had adjusted EBITDA of $117.1 million. For the third quarter, our largest cash flow generator was our transportation segment, which had adjusted EBITDA of $9.5 million, compared to revised guidance of $12 million. Within this segment, our land transportation business had adjusted EBITDA of $6.7 million, compared to revised guidance of $8.5 million. The miss in adjusted EBITDA compared to our forecast for the land transportation business was primarily due to an 8% reduction in forecasted miles driven. While the third quarter had the strongest daily load count of the year, our long-haul load count was down due to a slowing demand primarily from our specialty industrial customers. We believe this is due to the weakening U.S. economy. As a result of the weakened economic outlook, which we believe will negatively impact the transportation requirements from our specialty industrial customer base, we have lowered guidance for land transportation for the fourth quarter by $1.1 million. Our marine transportation business had adjusted EBITDA of $2.8 million, compared to guidance of $3.5 million. While we missed guidance in the third quarter, we do see continued strength in…

Thank you, Bob. Total long-term debt outstanding on September 30th consisted of $62.5 million drawn on our $175 million revolver that matures in 2027 and $400 million of senior secured second lien notes due 2028 for a total of $462.5 million, which is an increase of $2.5 million from the end of last quarter. The slight increase quarter-over-quarter was expected as the semi-annual payment for interest related to our outstanding notes was due in August of the quarter. Our total bank compliant leverage was 3.95 times at the end of the quarter, compared to 4.14 times on June 30th, a 0.19 times reduction driven by an increase in our trailing 12-month EBITDA after giving effect to the exit of the butane optimization business. Rounding out our financial ratios, first lien leverage was 0.53 times and interest coverage was 2.2 times. Liquidity under the revolving credit facility was approximately $84 million and the partnership was in compliance with all covenants at the end of the quarter. Now let’s focus on capitalized spending during the quarter and how that projects for the rest of 2023. Maintenance capital expenditures for the quarter were $7.2 million, a slight increase from our forecast of $7.1 million. We are now forecasting maintenance CapEx to be $7.4 million in the fourth quarter, bringing our total for the year to $29.4 million, which is an increase of $2.8 million from our guidance. The majority of this increase is within the shore-based segment related to repairs on the Galveston bulkhead and to the Port Arthur dock structure. Growth CapEx was $3.4 million for the quarter or $2.1 million less than forecasted. Capital expenditures related to the oleum tower, which will provide feedstock to the DSM Semichem joint venture was $2.6 million of the quarterly total. The original budget for…

Thank you. [Operator Instructions] We will take our first question from Kyle May from Sidoti & Company.

Hi. Good morning, everyone.

Good morning.

Good morning.

Good morning.

Bob, wondering if you could maybe expand on the lower mileage in the transportation segment for this quarter, and I know you mentioned you have already made some adjustments for the fourth quarter, but just kind of how you are thinking about that aspect of the business and then when it could potentially turn around?

Yeah. So big picture, as I made in my comments, was our total load count was the highest average per day in the quarter. So what does that mean? How is your mileage down when your load counts up? And we have had a shift to a shorter haul kind of scenario around refinery bases, et cetera, because the demand in long hauling is down, a lot of it coming from the chemical industry, some from longer term from the lubricant business, just the demand because the economic slowdown is happening. So when you think about it, as you run a shorter haul, that’s more expensive, you have got a higher pay rate to keep a driver employed, he’s got to get paid, even though he’s running shorter versus a longer term haul. So that’s one piece of it. Another piece is the frequency of short-hauls, you have more over time, repair and maintenance related to that. So bigger picture, if you will, a shorter haul rate has probably a higher operating cost per mile it does versus a long-haul. So all that kind of plays into the equation. So when is this going to turn around? We have seen late in the third quarter pickup in our chemical hauling and it’s carried over a little bit into October. So hopefully that’s boding well for us. We are going to also try to increase our customer base. We have a fleet of chemical traders that need to have a higher utilization. So we are going to try and expand our chemical base -- customer base, if you will. So all that combined, I think we are going to see a slower fourth quarter, overall, but probably, it will trend along with the U.S. economy, probably, later first quarter into the second quarter. That’s our instinct. Any addition?

Yeah. This is Randy. I just add that we have a seasonality aspect to the chemical and lubricant business and typically we see a little slowdown beginning around Thanksgiving time through the first of the year. But the element of the 4Q that we normally see an improvement is from the LPGs, particularly if we have any kind of long and sustained winter from the propane side. But our butane business or our customers in the butane business and our propane business typically elevates for the trucking department quite a bit in the fourth quarter and the first quarter.

Okay. Great. That’s helpful. And then I also wanted to ask about, I believe the release mentioned in some of your prepared comments, talked about delays in the semiconductor manufacturing facility. Just wonder if you can give us kind of an update on the current status of development and then should we expect any delays in the overall project completion?

This is Randy again. So the answer to that is we expect a slight delay in the project completion and then now I am talking about our oleum plant to the second quarter of 2024 from late first quarter 2024. And then, yes, I mean, absolutely, when our intended customers are announcing delays of their plant, our demand will be kicked down the road a little bit, likely much of it into 2025.

Okay. Great. That’s helpful. Appreciate the time this morning.

Thank you, Kyle.

Thanks.

[Operator Instructions] We will go next to Selman Akyol with Stifel.

Hi, guys. This is Tim on for Selman. Thanks for taking the time. Previously you guys had highlighted some potential projects in and around Beaumont. Just wondering if you could expand on what kind of projects you guys are seeing and potentially the scale of those projects?

Yeah. So the scale of those projects to us would be very similar to what you saw on our high purity deal. So we are not -- we are talking a couple of tens of millions of dollars. That would be our contribution to the project that we had discussed previously. Now, those projects have slowed down, in one case the project has been deferred, because of the inability to get the carbon capture managed on their side. So I’d say there’s -- we are still talking to people and there’s more to come on that, but nothing else to report at this time.

Got it. Thanks. And you guys had also mentioned some one-time SG&A and OpEx costs within a couple of your segments. Is there any way for you guys to quantify how much that impact was for the quarter, and obviously, since they were one-time, we should see a step up in 4Q cash flow?

So I want to clarify first, we are talking about the one-time expenses in the Marine Group.

Correct. And then I think there was also some, I thought you guys had mentioned some expenses within terminalling and storage?

So we have what some of those are related to in both terminalling and in the Marine Group is some phantom units that we gave out to management in July. So a couple of things happened. In June, we already had two tranches of those on the books and the unit price had come down to a point where we made an adjustment in June and then we issued another tranche to our employees in July and so that tranche they came on in the third quarter and so when you look at those SG&A costs, you had a reduction in the second quarter and an additional tranche in the third quarter. So that’s some of those differences there.

Got it. Makes sense. And then the last one for me is just wondering if you could give an update on your guys’ business down in Florida, in Tampa?

Yeah. The trucking business in Tampa has continued to be strong. We are getting the types of returns in Tampa that we see throughout our trucking business and that’s been a good growth area for us. And we would anticipate for the rest of this winter and next spring and early next summer that the phosphate business do quite well and there would be a lot of need for us moving products around there.

Understood. That’s all I had. Thank you guys for the time.

Yeah.

Thank you.

And there are no further questions at this time. I would like to turn the conference over to Bob Bondurant for closing remarks.

Thank you, Audra. We are pleased with our third quarter results, beating guidance by a little over $1 million as our diversified refinery services model continues to return stable cash flows, allowing us to continue to strengthen the balance sheet and get closer to our leverage goal of below 3.75 times. During the call, we discussed the delayed startup of the ELSA plant. Even with the delay, we remain positive about the strategic alliance with Samsung, C&T America and Dongjin USA, Inc., expanding our existing asset base to fuel growth and grow both revenue and cash flows with low capital requirements. Finally, I want to say that here at Martin, we are saddened by the recent attacks on Israel, the ongoing conflict and unimaginable human suffering. Our hearts go out to every person and family impacted by these horrific events. We pray for resolution to the conflict soon. That concludes our call. Thanks for joining us shortly today.

And that does conclude today’s conference call. Thank you for your participation. You may now disconnect.