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 Fourth 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. At this time, I'd 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'll begin with our cautionary statement. During this call, management may be 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 fourth quarter and full year results.

Thanks, Sharon. I would now like to begin my discussion with a recap of Martin Midstream Partners’ execution of significant achievements in 2023. In February, we refinanced our existing secured notes, extending their maturity to February 2028. At the same time, we amended our revolving credit facility and extended its maturity to February 2027. In the second quarter of 2023, we completed our exit from the volatile butane optimization business, while retaining the stable cash flow component of the business associated with our North Louisiana underground storage assets. Also in 2023, we began construction of the Oleum Tower at our sulfuric acid plant in Plainview, Texas, in order to be the supplier of Oleum to the DSM Semichem joint venture. This joint venture is between us, Samsung, C&T America Inc., and Dongjin, USA. The joint venture is currently in the construction phase of facilities that will provide electronic-level sulfuric acid, commonly known as ELSA, to the semiconductor manufacturing industry. The final significant achievement we had in 2023 was exceeding our disclosed EBITDA guidance and also meeting our targeted leverage ratio of 3.75 times. I would like to acknowledge and thank our team of executive leadership, segment leadership, and the entire Martin Midstream workforce for executing our 2023 game plan in order to achieve these goals. Now, I would like to focus on our fourth quarter operating performance. For the fourth quarter, we had adjusted EBITDA of $29.2 million compared to a fourth-quarter revised guidance of $26.9 million, an improvement over guidance of $2.3 million or 9%. For the year, we had adjusted EBITDA of $117.7 million, exceeding our beginning-of-the-year guidance of $115.4 million. For the fourth quarter, our largest cash flow generator was our Transportation segment, which had adjusted EBITDA of $12 million compared to revised guidance of $11.3 million. Within this segment, our land transportation business had adjusted EBITDA of $9.6 million compared to revised guidance of $7.3 million. During the fourth quarter, our revenue per load was greater than forecasted as we began to see a recovery in our longer-distance loads. We also began to see a reduction in our equipment repair and maintenance costs, as we continue to lower the average age of our fleet with new leased equipment purchases. The effect of this recapitalization of our equipment fleet over the longer term will be to increase our equipment lease expense, which will be partially offset by reduced repair and maintenance costs. We also believe newer equipment will help our driver retention. Our marine transportation business had adjusted EBITDA of $2.3 million compared to revised guidance of $4 million. The primary reason for this EBITDA miss was due to supplemental insurance calls from our protection and indemnity insurance carrier. These supplemental costs totaling $1.1 million were due to losses incurred by our P&I carrier related to their overall underwriting losses. These losses were not the result of Martin Midstream's Marine Transportation loss performance but were the result of the entire global marine industry loss performance. This was a one-time charge hitting the fourth-quarter income statement. Our second strongest cash flow generator in the fourth quarter was our Terminalling and Storage segment, which had adjusted EBITDA of $9 million, which was the same as our fourth-quarter guidance. Overall, in this segment, our revenue slightly missed forecast by 3% primarily due to reduced throughput volumes, which were offset by a 5% reduction in operating expenses from lower utility costs when compared to guidance. Now, I would like to discuss the performance of our Sulfur Services segment, which was our third-largest cash flow generator in the fourth quarter. In this segment, we had adjusted EBITDA of $7.4 million compared to guidance of $6 million. Our fertilizer group had adjusted EBITDA of $3.9 million compared to guidance of $3 million. We have stronger fourth-quarter sales compared to forecast for both liquid fertilizer and degradable sulfur products. This positive sales performance compared to forecast was partially offset by reduced ammonium sulfate sales in the fourth quarter, which we believe are being delayed to the first quarter. The pure sulfur side of our Sulfur Services segment had adjusted EBITDA of $3.6 million compared to guidance of $3 million. We experienced very strong sulfur production from our refinery suppliers as total sulfur volume received was 17% greater than our fourth-quarter forecast, allowing this business line to exceed its financial forecast for the quarter. Finally, I would like to discuss the fourth-quarter performance of our Specialty Products segment. In this segment, we had adjusted EBITDA of $4.9 million compared to guidance of $4.9 million. In this segment, we had strength in our grease business line, offset by a slight underperformance in our packaged lubricant line of business. To summarize our fourth-quarter performance, we exceeded revised guidance by $2.3 million. The bulk of our outperformance came from our land transportation business and our Sulfur Services segment, partially offset by the one-time insurance charge in our marine transportation business. Now I would like to turn the call back over to Sharon to discuss our 2024 guidance, along with our balance sheet and capital resources.

Thank you, Bob. As of December 31, 2023, the partnership had total long-term debt outstanding of $442.5 million, compared to $516.1 million on December 31, 2022, a $73.6 million reduction year-over-year. Of this balance, $42.5 million was drawn under our $175 million credit facility, leaving us with $109 million in availability under the facility after consideration of outstanding letters of credit and a slight constraint due to our leverage ratio covenant. For the last few years, the partnership has focused on strengthening the balance sheet through debt reduction, using free cash flow and divesting non-core assets in order to reach our targeted leverage ratio of 3.75x or lower. As Bob spoke to earlier, after adjusting for losses related to the exit of the butane optimization business, we met that goal as our bank-compliant adjusted leverage was 3.75x as of December 31. However, we know we still have work to do to ensure that we remain at or below that target on a sustainable basis, and that knowledge will continue to guide our decisions regarding capital allocation. Also, at December 31, our senior leverage was 0.36x and our interest coverage was 2.19x. At year-end, the partnership was in compliance with all covenants, debt or otherwise, and is forecasted to remain so. Moving on to capital expenditures. Total CapEx for the quarter was $12.1 million, of which $4.9 million was gross, including $3.7 million related to the DSM Semichem joint venture, also referred to as the ELSA project. Maintenance CapEx for the quarter was $7.2 million, which includes $2.5 million in turnaround costs at our fertilizer plant. Total CapEx for the year was $40.1 million, including $11 million for growth, of which $8.3 million was related to the ELSA project and $29.1 million was maintenance CapEx, including a total of $4.8 million for turnaround costs at our fertilizer plant. For the quarter, distributable cash flow was $8.6 million and adjusted free cash flow was $3.7 million, bringing distributable cash flow for the year to $32.8 million and adjusted free cash flow to $21.7 million. Both of those numbers presented after adjusting for losses associated with the butane optimization business. Now I'd like to walk through our guidance for 2024, which is on Page 5 of the presentation attached to our earnings press release yesterday afternoon and can also be found on our website. The partnership is forecasting approximately $116.1 million in adjusted EBITDA for 2024. Of the total, 71% is provided by fixed fee contracts with 29% being margin-based. Now let's look at each segment individually. In 2024, we anticipate transportation services to generate $41.2 million of adjusted EBITDA as compared to actual results of $46.8 million in 2023. While we anticipate the Marine Group to continue to benefit from the higher day rate environment we've experienced this past year, the Land Group will see reduced EBITDA from higher equipment lease expense offset somewhat by lower repairs and maintenance expense. The forecast for adjusted EBITDA in the Terminalling & Storage segment is $37.7 million, which is an improvement of $1.8 million from 2023's actual results. The businesses in this segment are fee-based with some contract escalators that along with anticipated reductions in operational expenses should improve results year-over-year. The Sulfur Services segment, adjusted EBITDA is projected to be $29.7 million in 2024, compared to 2023's results of $28.1 million. And while the pure sulfur side looks to remain relatively flat, we are projecting the Fertilizer business will experience higher margins, slightly offset by decreased sales volumes. And new to the Sulfur Services segment this year is approximately $835,000 of EBITDA, forecasted to begin in the fourth quarter for reservation fees associated with the ELSA project. Lastly, the Specialty Products segment is forecasted to generate $22.7 million in adjusted EBITDA. The businesses within this segment are projected to remain relatively stable, as compared to 2023's actual results of $22.8 million. For 2024 we are forecasting growth capital expenditures of approximately $17.4 million, with $10.4 million for the Oleum Tower expansion at Plainview, which is part of the capital spend relating to the ELSA project. Also included in the growth number is $6.5 million for our cash contribution related to the partnership's 10% ownership, in that joint venture. Maintenance capital is anticipated to be approximately $32 million for the year, which is above average for the partnership. We do have some larger expenditures forecasted, including $8.1 million for regulatory inspections related to our Marine Equipment; $4 million in Turnaround Costs at our Fertilizer Plant where 50% of that is at our Sulfuric Acid Plant in Plainview and $4.8 million for the Smackover Refinery turnaround which occurs every two years. Finally, for full year 2024, we anticipate distributable cash flow to be $30.4 million and free cash flow of $13.3 million.

With that, I will turn it back to the operator for Q&A.

Thank you. We'll go first to Kyle May at Sidoti & Company.

Hi. Good morning, everyone.

Good morning.

Good morning.

Good morning.

Maybe starting with the Terminalling & Storage segment, you mentioned that volumes were lower in the fourth quarter. Just wondering if maybe you can provide some context of what happened in 4Q and then, how you're thinking about those volumes in 1Q and the remainder of 2024?

This is Randy. Thank you for the question, Kyle. Most of the shortfall in the fourth quarter was related to shore-based terminals, where we experienced very low diesel sales volumes in October and November. However, in December and through the first 45 days of 2024, those sales have significantly improved. We anticipate that this positive trend will continue, as we have established a new contract starting January 1, 2024, which includes minimum volume commitments that were not in place in 2023. Therefore, we expect this business to remain stable as we move into 2024.

Great. That's very helpful. And then maybe a question for Sharon. As we're thinking about the CapEx in 2024, I was wondering if maybe you could kind of help us out with the cadence. Because I know you've got the Oleum Tower and then you've got the $6.5 million contribution. So how should we think about that kind of through the course of the year?

Yes. We plan to spend $10.4 million in the first and second quarters of this year, with $6.5 million allocated for the beginning of the second quarter.

Sorry, this is Randy. I'll throw in on that that the $6.5 million is contingent on the completion of the DSM joint venture, and that's the ELSA plant itself. And that's projected to be done in the second quarter but that's something Martin doesn't really have control of. And to the extent that slips that $6.5 million commitment slips also.

Okay. Got it. That makes sense. And on the DSM Semichem, maybe can you give us a little bit more insight into the progression of that project? Because you do have the ELSA contribution showing in the fourth quarter – excuse me, in your guidance, but just maybe how we think about that going forward?

In the fourth quarter, the EBITDA contribution is attributed to the completion of our capital commitments for the Oleum Tower project. We anticipate that once this is finalized in the second quarter, we will start receiving payments by the fourth quarter. This is linked to the reservation fee from DSM. The additional EBITDA contribution we expect to come primarily from the DSM joint venture will commence when actual sales begin. We do foresee some sales in the fourth quarter, but they will be minimal as most of our intended customers are postponing their projects. Sales will only start once these projects have secured their raw materials, which we expect to happen in 2025.

Okay. Great. Appreciate the color this morning. I will jump back in the queue.

Thank you, Kyle.

We'll go next to Selman Akyol at Stifel.

Thank you. Good morning. So just following up on ELSA and DSM. So sales start in the fourth quarter and then roll forward into 2025. You're getting paid for reservation. Is there any, I guess, sort of where you would owe them services in lieu of the reservation fee? Or should we kind of think of this as a steady $1 million run rate as we enter into 2025?

Can you expand your question a little bit more? I had a tough time connecting. Selman, I apologize.

I understand you foresee about $850,000 coming from a reservation payment. As we move into 2025, if there are no associated volumes with that reservation, will there be any opportunity for catch-up? Specifically, when I consider the first quarter of 2025, will it still be a straightforward reservation fee of $850,000, or is there a possibility for catch-up that could affect the anticipated $1 million run rate as we progress?

Thank you. I understand clearly now. When you mentioned the $1 million, you were referring to a quarterly basis. So, yes, we get a reservation fee of approximately $1 million a quarter going forward. And we have costs that offset some of that, of course. But yes, there's no catch-up. That is going forward for the term of the agreement.

Got you. I know customers are shifting a bit, but I was wondering if there had been any discussions about potentially expanding this as you progress. Are those discussions still happening, or should we just focus on what you have currently planned for the next several years?

Yes. We haven't had any formal discussions about any expansion at that site, but we certainly have the ability from an oleum production standpoint to do that. And if you look at the fundamentals with the new plants getting built and the types of semiconductors that they're going to build, consumption of the asset we're producing, sure looks like that's poised for growth going forward. But we haven't had any significant discussions around that yet at this point in time.

Understood. And then just pivoting back to Transportation. On the marine rates, any locking up at all, or are you guys really still doing everything in the spot market there? Any one-year contracts or any discussions in and around that at all?

Yes. We've only locked up for a year length our offshore equipment those two units. The inland tows, we have 11 of those units. We have currently four on spot and seven on some sort of three to six-month contract arrangement. And that's what we anticipate going forward. We have five tows coming off of contract within the next 30 to 60 days and we anticipate renewing those at another three to six-month arrangement, but nothing longer than that.

Got it. And can you just say how pricing is going on that? Do you expect it to be at a higher level in line? Any indications you can give there?

Pricing has been good. I mean two years ago and last year, it went up $2,000 a day on average. A year ago to now, it's up about $1,000 to $1,500 a day. Our spot agreements are above our contract agreements. So, I would assume the contract agreements are going to move up a little bit when those are renegotiated but they haven't been negotiated yet.

Got you. And then does your guidance also assume that? Or did you guys guide fairly conservative there?

Yes, our guidance assumes that.

Okay. And then last one for me just on the free cash flow. Sharon, if I heard everything correctly that will just be directed at debt reductions. And so hopefully, at the end of the year you're $10 million-plus a little less?

Yes. We will continue to direct free cash flow to reducing outstanding under the revolver. And we talked about what we're trying to do is to state, yes, we're at 3.75x when we consider the cadence of our capital expenditures this year, which are heavily weighted to the first half of the year, along with our interest payments on our notes. We see that by the end of the year we're still below the 3.75x, but quarter-over-quarter in 2024, we could see some lift in that leverage ratio.

I want to add that we do not expect significant changes in working capital. There may be some minor fluctuations in working capital that could slightly affect that number.

Got you. Yeah, I know you guys have been chasing that leverage ratio for a while, so congratulations on the improvement.

Thank you.

Thanks.

We'll go next to Patrick Fitzgerald at Baird.

Thanks for taking the questions. $32 million in maintenance CapEx. Could you provide a little more detail on where that's going? Yeah. So, like, if you bought some new tank trucks to replace old tank trucks, is that maintenance or is that growth or how do you think about that?

So the maintenance CapEx, and I think Sharon hit this a little bit in her comments, we have about $32 million, which is up almost $30 million this past year. We have from a marine perspective, if you take our MES equipment out of it, so you just look at our 11 two barge tows and our offshore equipment, we have 16 pieces of equipment out of our 37 or 38 going to dry dock. So we have almost 40% of our marine fleet going to dry dock this year, which is a very high number because with two barge tows, they only go up to five years. So we have a larger percentage of marine equipment going to dry dock than normal. And then the turnarounds, the refinery turnaround is an every other year event. We happen to have one in 2024. And then the turnarounds for the fertilizer plants at Plainview and ATS down in Beaumont are annual. And if you add all that up, that's 55% of the maintenance CapEx. The trucking and the new equipment there and the replacement has very little to do. We don't spend very much of the $32 million in the trucking business. Most of theirs would fall through on repairs and maintenance and just flow through the EBITDA calculation.

And this is Bob. An additional comment to that is the equipment we do buy in the trucking business is under effectively an operating lease. So it doesn't really flow through capital investment, i.e., maintenance CapEx.

Could you provide insights into the transportation segment, particularly regarding the contract length on the trucking side? It seems like forecasting this segment might be challenging. Can you explain your forecasting process? Additionally, how much of your business is driven by spot market activity compared to contractual agreements? Thank you.

Yes. While we do have some contracts that are annualized in that business, most of the land transportation operations rely on relationships and performance. Our forecasting is influenced by the reinvestment we have made in upgrading our fleet of trucks and acquiring new trailers to offer the necessary services. This investment has impacted our operating expenses. You are correct that land transportation, aside from fertilizer, is our most challenging segment to forecast. The key factor in this business is our customers meeting our service requirements, which involves their plants operating as expected and having the volume of shipments they anticipate, all of which we must be prepared to manage.

And this is Bob again. I'll say from a macro level as far as forecasting, we run a very consistent number of miles per month or per year. And so that's the fundamental starting point in the forecast is, you estimate your mileage, you estimate your revenue per mile which has been ticking up in these inflationary times over time. So that's the fundamental beginning place, knowing our consistency with our customer base, because of our strong performance and service we provide our customers.

Thanks a lot. That’s helpful.

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

Well, thank you, Audra. I'll conclude the call with further comments on the DSM Semichem joint venture or ELSA project. As the partnership has concentrated on debt reduction and improved leverage over the past few years, we have told you that our strategy for revenue and cash flow growth lies within expanding our services to current customers and creating strategic alliances around our existing core assets. The ELSA project is a result of focus on that strategy. This alliance with Samsung and Dongjin utilizes our existing assets in Plainview as a base for expansion as low capital requirements and provides an entry point into an industry poised for a decade of growth. Even with the delays in construction of our facilities due to labor and material availability, the ELSA project is an exciting growth opportunity for the partnership and our investors. Thanks for joining the call this morning. We look forward to speaking with you again on the next quarterly investor call. Thank you.

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