Ladies and gentlemen, thank you for standing by. And welcome to the Martin Midstream Partners First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Director of Finance and Investor Relations, Sharon Taylor. Madam, please go ahead.

Thank you, Sharon. Good morning to everyone and thank you for being on the call today. As we all know, the world has turned upside down since our last earnings call on January 29. The COVID-19 pandemic has grown and spread throughout the nation and we’ve seen oil prices drop down below zero for the first time in our lives. The economy has been disrupted and we’re all wondering when things will return to normal and what this normal will look like. So, here at Martin, we prioritize the health and safety of our employees, the businesses that we serve and the communities we live and work in. Specifically, we put safety initiatives in place to ensure that the virus would not be spread in our workplace or the locations we serve. To that end, we implemented work-from-home initiatives for all eligible employees and we staged equipment and resources so the support is readily available for them. We began awareness training for all of our drivers, our vessel crews, blending operators and other affected personnel regarding preventative measures when delivering to the locations they are working in or around our docks, vessels and trucks. Our communication lines are open 24/7 for the environmental health and safety division, land and marine logistics, and sales and marketing teams.

Okay, thank you Ruben. I’d like to begin with discussing our first quarter performance which fell short of forecast by 4.7 million or 13%. Actual adjusted EBITDA was 31 million compared to guidance of 35.7 million. Our terminaling services business exceeded guidance by $0.7 million, primarily at the smack over refinery, which benefited from lower utility costs and other operating expenses. We also exceeded forecast in our packaged lubricants business as a result of better than anticipated margins in the first quarter. As we think about the near-term and the impact of the economic shutdown from the COVID-19 virus on our terminaling segment, there should be minimal impact on the storage component of this business due to minimum volume commitment contracts. However, there is a downside risk in our packaged lubricant and grease businesses due to anticipated reduced demand from our oil and gas production customers and our construction customers. However, we should continue to see strong demand from our customers, which distribute our lubricant and grease products to the agricultural industry. And our transportation segment fell short of guidance by 0.3 million as we realized adjusted EBITDA of 7.9 million, compared to our forecast of 8.2 million. Our Marine transportation group exceeded guidance by 0.6 million as overall barge demand remains strong, and we continue to experience increased pricing primarily in our dirty toes.

Thank you, Bob. I’ll begin with a normal walk-through of the debt components of our balance sheet, define our bank ratios at quarter-end, then discuss our capital spending during the first quarter and then to our revised full-year 2020 guidance. On March 31, 2020, the partnership balance sheet reflected approximately 535 million of both long-term and current installments of funded debt. The current installment amount includes our senior unsecured notes due February 2021, which I will discuss further in a moment and current finance lease obligations. Long-term debt was related to our revolving credit facility. Our balance sheet funded debt is shown before the unamortized issuance and unamortized issuance premium as actual funded debt outstanding was 534 million. Reconciling this amount at quarter-end our revolving credit facility was 170 million and a notional amount of our senior unsecured notes was 364 million. Our total available liquidity on March 31 reducing those amounts by outstanding letters of credit of 17.1 million was 213 million based on our 400 million revolving credit facility. For the quarter ended March 31, 2020 our bank compliant leverage ratios defined as senior secured indebtedness to adjusted EBITDA and total indebtedness to adjusted EBITDA were 1.48 times and 4.7 times respectively. Our total debt ratio is shown without adjustments from the working capital carve out sublimit. This sublimit allows us to exclude certain debt directly attributed to the seasonal NGL inventory build where the partnership has either forward sold or hedged inventory from our total debt-to-EBITDA calculation. However, the first quarter is typically the end of our selling season and this year we have not begun the seasonal NGL inventory buildup. Therefore, that carve out mechanism was not utilized as of March 31. Our bank compliance interest coverage ratio as defined by adjusted EBITDA to consolidated interest expense was 2.72x. So, on March 31, the partnership was in full compliance with all covenants, either banking or otherwise. Now, I’ll move to a brief discussion of our senior unsecured notes. During the first quarter, the partnership repurchased and retired approximately 9 million of our senior unsecured notes. Since we repurchased our notes for a discount you’ll find a 3.5 million gain on the retirement within the other income statement – other income section of the income statement. We believe that with the current market disruption value can be created by repurchasing our notes at a discount.

Our first question comes from the line of T.J. Schultz of RBC Capital Markets. Your line is open.

Great, thanks. Good morning everybody. I think just first, I appreciated the effort on the updated guidance and the range there, can you frame some of your assumptions in there to get to that range for 2020? What does the low-end or high-end assume for timing for some sort of recovery on the demand side or trend in refinery utilization?

This is Bob. The fundamental driver of course for us is refinery utilization. So, as we thought about it, we looked at, let me back up, we operate primarily in the – all really in the PADD 3 world of refinery on the Gulf Coast of the U.S. So, we focus on what we think refinery utilization will be in that world. You know current path for utilization I think is about 73.8%. As we thought about it, we actually thought about rates below that for Q2 on average slowly improving in Q3, and slowly improving again in Q4, but not getting back to full utilization at all this year. So that’s picture of thoughts. That's affecting the trucking business and the sulfur business primarily. And we think in our butane business the impact is really more on the supply side we’re getting this summer and we do think whatever we will be able to buy this summer and store on the butane business will be sold 100% back to refiners in the fourth quarter of this year and first quarter next year. So, we really don't have refinery utilization going back to normal in our thought process until next year.

Okay, makes sense. And then just moving to some of the barges, how much capacity do you have there to take advantage of store and crude oil on barges and have those discussions or arrangements already started at this point?

Yes, this is Randy. One week ago on the barges, utilization was very tight; our rates were continuing to go up. In the last week, due to change in some product flows the utilization is in its tied and the rates are going up at this point. We’re still not in a position with the current contango to be able to utilize barges to store oil for a significant amount of time, but the markets are quite volatile and we will just have to see what happens there.

Okay, good. Just lastly on the refinancing, so that August Springer date, I guess just first is there any potential to extend that date just given some of the logistical challenges and what you may have to address with your financial alternatives with your advisers or you also said, that you’re confident on refinancing those, so just any color you have on the progress or attraction you’re getting to address the? Thanks.

So, as you know, when we talked about we hired Stephens a few weeks back they have made some contact with some of our largest bondholders. The feedback there has been very positive and very constructive. So, at this point management believes that we will get those notes refinanced before we even have to look at addressing the Springer, but we have a very supportive bank group that we are in discussions with at all times. I feel confident and very optimistic that should the need arise for the Springer to be adjusted we would be able to push that out to allow the company additional times and the markets additional time to stabilize so we can finalize or refinance.

Make sense. Thank you very much.

Thank you, T.J.

Thank you. Our next question comes from the line of Kyle May of Capital One Securities. Your question, please.

Good morning. Kind of following up on T.J.'s question about the barges, are you able to use any of your other storage assets to take advantage of the contango opportunity in the market?

This is Randy again. Most of our stores assets, we already have contracted out, so we don't see a lot of volatility in the terminal section of the business. Now, we do have storage assets in Tampa, Florida which we currently do not have under contract and yes there are significant interests in those assets at this point in time.

Okay, got it, thank you. And then one other question, maybe looking at the lubricant section, first do you have the sales volumes for the first quarter? And then secondly, can you talk about your expectations for the balance of the year?

Yes, this is Bob. I don't have any volumes in front of me, I'll have to get back to you on that and expectations for the rest of the year, I think on the packaged lubricant side we’re still in slight volume decrease. We are primarily seeing an impact in our grease business. We sell a lot of grease into the frac oil side business. We also sell a certain type of grease for construction, what you call it, post tension grease, I couldn't figure the name. As far as volume decline, I think big picture in lubricant package business we’re impacting maybe a 10% to 12% decline in overall cash flow. So, I don't have a . I remember the big picture numbers.

No, that’s helpful. That's all from me today. Thank you.

Thanks, Kyle.

Thank you. Our next question comes from Selman Akyol of Stifel. Your line is open.

Thank you. Good morning, just a couple of little detail questions. On the prilling operation, you said, part of the miss is due to less business interruption insurance, 3 million was anticipated, 2.7 million came in, do you expect the remaining 0.3 to be coming in or is that just gone?

No, I think we’re done on that. I think we’ve fully collected the , but we do, as Sharon said earlier, we do anticipate cash, we’re only spending 700,000 in Q2 on the final property impact on the ship loader, we anticipate what you say 4.9 million coming in, 4,5. So we will have cash again in Q2 related to this activity, but it won't flow through the P&L it would just delever.

Alright, very good. And then just sort of following up on the last question, on the lubricants you referenced several markets there and I think you’d also talked about agriculture in your comments as well, so can you just sort of breakdown that as we think about it, if I were to say construction, agriculture versus oilfield services?

I would say the majority of our business, because our largest customers are distributors to the agricultural business. So, the majority of our business on the package lubricant side and grease tends to migrate toward agriculture, but we know that incremental, I think on the earlier question from Kyle, our impact is about 10% to 12% of EBITDA in the overall packaged lubricant/grease business and that’s coming from those two areas. So, I don't have the exact detail of the breakdown, but I know Ag is probably the largest piece. Randy, do you have any comments or am I speaking it all.

In both grease and the packaging, the oilfields is a component of the sales, a smaller component, but a component nonetheless. And in grease, tension grease to the construction business is a more significant component. So, when you're thinking about the grease and lubricants going forward and what we have seen in March and April, I think that there is a probability that we’re going to be 10% to 20% decline in that business is a reasonable probability.

Appreciate that. And the last one for me, you guys think about Padd 3 refinery utilization. You referenced the 73, I guess two questions; number one, is currently any one shutdown that you are serving? And then number two, do you anticipate anyone shutting down as you go through the second quarter for the balance of the year? Thank you.

Yes. So, the Padd 3, you have the largest most complex refineries in the United States and the world in the Padd 3 and while we’ve seen a decline there from the declines we’ve seen in the other Padd’s has been greater. The refineries that we serve significantly in our MTI and our sulfur business, particularly in the Beaumont Port Arthur area, we have seen them – their declines to be less than what we have observed in other parts of Padd 3. And we can't sit here today and project what we think is going to happen going forward because it is such a wide range of outcomes, but we have not seen them other than one refinery, which had a planned turnaround have any significant reductions in the services we provide for them yet.

Thank you very much.

Thank you. Our next question comes from Sunil Sibal of Seaport Global Securities. Your question please.

Yes, hi, good morning guys and thanks for all the clarity. I just wanted to go back on the refinancing, I think previously you talked about trying to access the private markets also for the refinancing. I was wondering if you could talk a little bit about what are you seeing in that market and what kind of spread, you know or the – say public markets is that market seeing right now?

Good morning, Sunil. So, I think on the public side we will look at that first. You’ve seen a little bit of opening in the high-yield market. I think that it’s early days on that and while we’ve hired Stevens to be able to advise us. On the private side, we continue to have discussions with private capital, mostly to assist with our refinancing to bring in maybe a new money component through discussions with them, but we don't have a lot of detail that we’re going to share today just our optimism from discussions that we feel like we are going to be successful in the refinancing and we won't need to address the revolving credit maturity or Springer.

Okay, got it. And then just a follow-up on some information provided earlier. So, I think you mentioned one storage asset in Florida, which you could utilize for contango, could you talk about how big is that terminal?

Well the three things that we don't have contacted today is a little over a quarter of the million barrel storage. And then the rates that are out there today for storage depends what kind of term you can get, shorter term obviously you can go get a higher rate longer-term, the rates are 30% to 40% depressed from what the short-term rates would be. So the point is, there is of upside in our Tampa tanks to the extent we can get them leased out.

And I’ll follow on with that just be clear that in our revised guidance we do not contemplate any additional EBITDA associated with those tanks.

Okay. And to the extent that you have used some of your terminals, how should we think about duration of those contracts that you’ve recently signed?

Could you repeat the question? Didn't follow it.

So, I was curious to the extent that you have signed recent contracts on terminals for storage, what is the typical duration on those?

Yes. Approximately three years.

Okay. Thanks guys. Thanks. That's all I have.

Thank you, Sunil.

Thank you. At this time, I like to turn the call back over to CFO, Bob Bondurant for closing remarks. Sir?

Thank you, Latif. Our company has been very resilient over the years managing through difficult operating environments. We have a plan to manage through these very unusual circumstances as well. Beginning in 2018, our partnership has taken steps to refocus the company by selling assets in order to eliminate our direct upstream exposure and to also reduce our financial leverage. We believe the strategy to primarily become our refinery services focus company will serve us well over the long-term and refineries typically run at normal utilization no matter the price of crude oil. However, with the recent crude price collapse there has also been a reduction in third-party refinery utilization due to the economic shutdown from COVID-19. We know this reduced utilization will impact our cash flow to a certain degree in the near-term, but nothing like it would have been if we still had direct upstream exposure. We believe this lack of direct upstream exposure and the general stability of our cash flow will benefit us in the long run and also in the near term as we execute our plan of refinancing our notes during the second quarter. Thank you all for your time today.

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