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 Second Quarter 2024 Earnings Call. Today's conference is being recorded [Operator Instructions]. At this time, I would like to turn the conference over to Sharon Taylor, Chief Financial Officer. Please go ahead.

Thank you. Good morning, everyone. And welcome to the Martin Midstream Partners conference call to discuss second quarter 2024 earnings. During this call, we will make forward-looking statements as defined by the SEC. These statements are based upon our current beliefs as well as assumptions made by the management team and information currently available to us. Please refer to our earnings press release issued yesterday afternoon and posted on our Web site 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 materially from our expectations. We will discuss non-GAAP financial measures on today's call. The earnings press release includes a reconciliation of these non-GAAP financial measures to their comparable GAAP financial measures. With me on the call today are Bob Bondurant, CEO of Martin Midstream; Randy Tauscher, COO; David Cannon, Controller; and Danny Cavin, Director of FP&A. Now I'll turn it over to Bob to discuss second quarter earnings.

Thanks, Sharon. I would like to begin the discussion by focusing on our overall second quarter operating performance. For the second quarter, we exceeded guidance by $0.5 million as we had adjusted EBITDA of $31.7 million compared to second quarter guidance of $31.2 million. We exceeded guidance by $0.5 million despite two separate and distinct casualty losses that totaled $2 million in the second quarter. I will discuss these events later in my segment comments. For the second quarter, our largest cash flow generator was once again our Transportation segment, which had adjusted EBITDA of $11.2 million compared to guidance of $10.2 million. Within this segment, our land transportation business had adjusted EBITDA of $8.2 million compared to guidance of $6.5 million. Our revenue exceeded forecast by $1.4 million as we beat our second quarter forecasted mileage by 5%. Also, operating expenses were $0.4 million below forecast primarily due to lower truck and trader operating costs when compared to the forecast. This operating expense trend relative to guidance should continue as we slowly replace older equipment with new. Looking towards the third quarter, we continue to see strength in our sulfur hauling from Beaumont area refineries but have seen a bit of a slowdown in other product lines such as chemicals and lubricants. However, we believe we should be at or near guidance for the third quarter in our land transportation business. Our Marine Transportation business had adjusted EBITDA of $2.9 million compared to guidance of $3.8 million. The majority of the miss in our Marine Transportation performance can be explained by a $0.5 million [casualty] loss that occurred in May. This loss represents two separate insurance deductibles under our Marine Transportation protection and indemnity coverage policy and our whole coverage policy. This casualty loss was the result of a…

Thanks, Bob. As of June 30, 2024, we had total long term debt outstanding of $458 million, which was an $8 million increase from our balance on March 31st. Our revolving credit facility balance was $58 million and the notional amount of our second lien secured notes was $400 million. Our available borrowing capacity under our $150 million revolving credit facility was $83 million, which includes approximately $9 million of issued letters of credit. As you recall, that facility commitment dropped from $175 million to $150 million on June 30, 2024. At the end of the quarter, our bank compliant adjusted leverage ratio was 3.88 times and interest coverage was 2.21 times. Our leverage goal remains below 3.75 times on a sustained basis and we continue to work toward that. We spent a total of $20.2 million on capital expenditures during the second quarter with $12.4 million on growth capital projects. Of that number, gross capital spending related to the ELSA project was $10.6 million, which includes $4.1 million on the oleum tower and the $6.5 million contribution to the ELSA joint venture. For a variety of reasons, which I will discuss in a moment, we are adjusting our total anticipated CapEx spend for 2024 to $58.4 million, up from $49.4 million. Growth capital expenditures are now expected to be approximately $23.1 million, which is a $6 million increase from our original budget of $17.1 million. The majority of the increase is related to two projects. One in our fertilizer division to build additional storage capacity at our Seneca facility and the other in our Greece business for improvements at our Kansas City facility. On the maintenance side, we have increased forecasted CapEx by approximately $3.3 million to $35.3 million for the year as we have increased the anticipated turnaround costs at our fertilizer plants and incurred higher regulatory inspection costs on the marine equipment used in our Sulfur Services business. Our 2024 adjusted EBITDA guidance remains $116.1 million. Even though actual results for the quarter were slightly better, we have reduced full year guidance in the shore based terminals group in anticipation of maintenance expense impacts related to Hurricane Beryl. Please review the presentation attached to our earnings press release yesterday for 2024 adjusted EBITDA guidance for each individual business. In a moment, I will turn the call back to the operator. But first, I need to inform you that during the Q&A session of today's call, we will not be taking questions about the buyout offer we received from Martin Resource Management Corporation. The MMLP Conflicts Committee, which is made up of our three independent directors, remains in discussions with MRMC and we will not speculate as to the direction or outcome of those discussions. So please refrain from questions on this topic. With that, I'll turn it over to the operator for any other questions you may have.

[Operator Instructions] We'll take our first question from Selman Akyol at Stifel.

So first of all, just in terms of [ELSA], everything on track there. Any update to timing, any chance tower comes on sooner than expected or anything to just note there?

Everything is on track. We will have the oleum tower and the tie-ins to the ELSA plant complete by the end of July. We anticipate beginning to ship them with speeds -- the stock in the middle of the OEM in the middle of August. And at that point, the also plant venture will begin their processing and testing and qualification with potential customers. And then the timing of sales potential hasn't changed since the last several times we spoke about it.

And then in terms of marine, and I heard you in terms of day rates. Any opportunity to put any of those contracts on term at all?

So we have all of our contracts. Currently, nothing is in the spot market. It's all on some sort of term. Much of it getting us through the end of the third quarter, some of us getting to the end of the year and two of the contracts into early the first quarter of next year. So we have been looking to expand the term as the customers have been wanting to do so.

And then in terms of the bridge incident and the pipeline leak. Is that all behind you or is there going to be any increased regulatory looks, is there anything that's going to linger beyond?

So the bridge allision which happened mid-May that is now in maintenance mode, which basically means we're monitoring the areas that were impacted by the spill, and we expect that, that could be behind us. On the crude oil spill in Smackover, which happened in the middle of last month, earlier this week, we went from emergency mode to remediation mode. So we still do have some weeks or months in front of us on remediation there. Bob, did you have anything to add…

No, I do not. Well, I will add this. We have accrued the full deductible, so we don't believe as far as economic impact to us, there should be any more. But that is, as Randy said, an ongoing monitoring of really both situations.

And then could you maybe just -- you alluded to Beryl, and it sounded like you guys were impacted. Can you just maybe expand on that a little bit?

That hurricane hit us, Beaumont over to the Houston area. We have several different sites in Houston that were impacted. I'd say, from a maintenance perspective, I’ll call it nonmaterial and then down from really being able to operate for over an entire week there, which as we work our way through the year probably won't impact us financially that much, but it also did hit our shore bases in Galveston and Port Arthur. And we'll just have to see how the customers all come back from that. We could have some impact financially on the shore based side in that regard. But I'd say the damage would be nonmaterial at our locations, although, we had damage at all of our facilities.

And I'll add we really saw no impact of refinery production of sulfur through that storm. Is that a fair statement?

That's true. As Bob mentioned earlier, we have 3,700 tons a day during the third quarter and -- during the second quarter. And then during July, we've just a tad under that, which I don't think Beryl had anything to do with that.

And then just sort of my last question here and it kind of relates to that topic. In terms of refinery turnarounds, anything expected or do you expect them -- no turnarounds during this upcoming quarter?

Typically, there are turnarounds late in the third quarter, early fourth quarter. We don't have any knowledge at this point of how the turnarounds would impact us.

We'll take our next question from Kyle May at Sidoti & Company.

So Sharon, I know you said you're not going to talk about the buyout offer. But maybe just from a different perspective, I was wondering if you can give us any information about the potential time line of the events going forward?

I don't think that I can speak on that. The negotiations that will be occurring are still occurring between MMLP's Conflicts Committee and MRMC's advisory firm. I do not have a time line on when they anticipate completing those negotiations nor do I know if those will be if we will come to an agreement. So I wouldn't like to speculate there.

And then maybe in the transportation segment, like you pointed out, land transportation was really strong. Just wondering if you can maybe expand on some of the fundamentals of what you experienced in the second quarter and how you think that -- about that continuing in the third?

That's a great question and one that has us question our heads a little bit, too, because April and May were fabulous. We were strong across the board in all commodities and all around to June. June, we saw chemicals and lubricants drop. And then seasonally, the butane of course and the propane is weak. And that is the same trend as we saw a year ago, June and July, both be a little bit slower and then picking back up as we work our way through the summer. So we'll see how things go here over the next couple of months. In that regard, July, the first week was tremendous. The second week after Beryl tweaked down a little bit. We've had our Plainview acid plant, which we do -- we haul all of our raw materials into there by truck. We have had that down months of June and July and that will be coming back up in August. And so we're thinking as we get to August we might see an uptick again in that business.

And last one for me. Just with the higher CapEx budget this year. Wondering if you could give us an update on how you're thinking about the leverage ratio, maybe exiting the year? I know you're looking for that sustained -- the sustained target of 3.75 times on the leverage ratio. Just any thoughts about how you see the progression there.

I think that where we are right now at 3.88 times when we consider CapEx through the back half of the year, we think we'll exit the year at about the same level.

Next, we'll move to Patrick Fitzgerald at Baird.

Yes, is there any way you could talk about the kind of returns you're expecting to get out of the additional investment in the fertilizer business?

So that's going to -- warehouse is just about complete right now. We're going to -- what that's going to allow us to do up in the Illinois area is run harder during the summer months, because the fertilizer that we make up there is traditionally a fall and early winter fertilizer. So we're expecting $600,000 to $800,000 bump from doing that and we expect that to hit. I think we put in the fourth quarter -- the fourth quarter in the guidance.

And then the ELSA's coming online in the fourth quarter, you're expecting to get $0.9 million of EBITDA from that in the fourth quarter. Could you just remind us how that -- I'm looking at the slide from last year on kind of all the puts and takes, like could you remind us like how you expect that to ramp in terms of like additional EBITDA beyond just the fourth quarter, which you have guided out to, and like how much more CapEx needs to go into that? And then there's like $6.5 million in cash upon commencement of operations. So just if you could talk about that, that would be helpful.

So we have three different streams, which we're going to secure revenue by in those agreements. And the first is a reservation fee to pay us back for the capital we had to spend the oleum tower so we could provide the feedstock to the venture between the three parties. And that will begin in October and that's that 900,000-ish you see and that will be on -- per quarter, and that will be on building. And then the second stream would be a processing fee we get, we’re actually providing them the oleum. And that will ramp up when the sales for the partnership began to -- for the venture begin to ramp up. And we think there might be some sales in the fourth quarter yet this year, the marketing plan definitely has some sales in for early 2025. Marketing plan currently has as that ramping up in the second half of 2025. So that's contingent on the fab clients getting built and operating. And then at that point, of course, when the ELSA sales pick up the venture, we'll start seeing revenue on our percentage share of the venture. And ultimately, we expect a $5 million to $6 million of the total investment and the total investment we expect to be $26 million to $27 million, which was our capital project and the capital we're putting into the venture.

So I'll add on there. The $6.5 million that you spoke to, that was spent this quarter. That was the contribution to the ELSA joint venture itself. And as far as, through the oleum tower, we have an additional approximate $3 million left on that project.

And that concludes our Q&A session. I would like to turn the conference back over to Bob Bondurant for closing remarks.

Well, thank you, Audra. I appreciate everyone on the call today. And just a final note, we were pleased to have a ribbon cutting ceremony for the DSM Semichem plant with our Dongjin, Samsung partners on Monday and look forward to beginning production at the facility very soon. Thanks again.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.