Thank you for standing by. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Martin Midstream Partners First Quarter 2024 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Sharon Taylor, Chief Financial Officer. Sharon, you may begin.

Thank you. Good morning, everyone and welcome to Martin Midstream Partners conference call to discuss first 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 website 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 first quarter earnings.

Thanks, Sharon. I would like to begin the discussion by focusing on our overall first quarter operating performance. For the first quarter, we had adjusted EBITDA of $30.4 million compared to first quarter guidance of $31.6 million. A modest $1.2 million miss compared to forecast. For the first quarter, our largest cash flow generator was once again our transportation segment, which had adjusted EBITDA of $13.2 million compared to guidance of $10.2 million. Within this segment, our land transportation business had adjusted EBITDA of $9 million compared to guidance of $7.1 million. Our revenue exceeded forecast by approximately $1 million as we beat our anticipated first quarter mileage by 8%. Even though the number of loads from refinery sulfur producers was down significantly due to their extended turnarounds. Also, operating expenses were $0.8 million below forecast due to lower truck and trailer maintenance expense, which should be a future trend as we continue to replace older equipment with new. Our marine transportation business had adjusted EBITDA of $4.2 million compared to guidance of $3.1 million. Marine transportation revenue exceeded forecast by $0.8 million as average inland transportation day rates exceeded forecast by 4%, while achieving approximately 100% utilization. Additionally, we had reduced operating expenses compared to forecast of approximately $0.3 million. Looking towards the second quarter, we believe the performance of both of our transportation business lines will continue to remain strong and both have the potential to outperform second quarter guidance. Our second strongest cash flow generator in the fourth quarter was our Terminalling and Storage segment, which had adjusted EBITDA of $9 million compared to guidance of $9.4 million. While revenues approximated our forecast, our expenses were higher by approximately $0.5 million. The primary cause of the expense overage was repair and maintenance costs at our Smackover refinery.…

Thank you, Bob. I'll begin with a normal walk through of the debt components of the balance sheet, discuss our bank ratios and liquidity, capital spending for the quarter and end with a brief discussion of 2024 guidance. On March 31, 2024, the partnership had total long-term debt outstanding of $450 million compared to $442.5 million on December 31, 2023. Our revolving credit facility balance was $50 million, and the notional amount of our second lien secured notes was $400 million. Our total liquidity was $101.4 million based on our $175 million revolving credit facility, adjusted for a slight leverage constraint and outstanding letters of credit. Looking ahead, the commitment under the revolving credit facility will decrease to $150 million on June 30, 2024. We anticipate this decrease in liquidity to have no operational impact on the partnership. At the end of the quarter, our bank compliant adjusted leverage ratio was 3.81x. Senior leverage was 0.42x and interest coverage was 2.21x. An adjusted leverage ratio of 3.75x or lower remains our long-term goal and management will continue to focus our efforts on that target as we contemplate capital allocation. Total capital investments in the first quarter were $17.4 million, which was comprised of $6.2 million for growth capital projects, $5.3 million in refinery turnaround costs and $5.9 million of maintenance capital expenditures. Included in the growth capital number was $4.8 million in improvements to our Plainview facility to produce oleum to be delivered to the DSM Semichem or ELSA joint venture. We are maintaining our 2024 adjusted EBITDA guidance of $116.1 million, even though the first quarter was a slight miss. The presentation attached to our earnings press release yesterday outlined the shift in forecasted earnings between the business segments when compared to the forecast we discussed on our last earnings call. The material differences in forecasted earnings are in the transportation and sulfur segment as we now anticipate higher earnings for both our land and marine transport division offset by competitive pressure on our fertilizer business and extended refinery turnarounds that reduced our sulfur services volumes in the first quarter. I'll now turn the call back to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Kyle May from Sidoti.

And thanks for all the additional detail today. I wanted to start with the transportation segment and again, I know you kind of gave a lot of details, but wondering if you could just kind of give us an update on the rate environment for both the marine and land transportation. And then secondly, maybe if you could kind of give us a little bit more color on the difference in 1Q results versus what you're seeing in your guidance for 2Q?

Kyle, this is Randy. Thank you for the question. I'll start with Marine. And to start with, Marine, I think you really have to go back to the end of the first quarter of 2022 and compare that to the end of the first quarter of 2023, we saw a 25% increase in rates. And then you go forward another year to the end of the first quarter of 2024, you see a 20% increase in rates. So we saw basically a 50% increase in rates in the marine business over the last 2 years. And over the course of the first quarter, they were still escalating. We were 8% higher at the end of the first quarter than we were at the end of the fourth quarter. So we have taken this opportunity now with the rates have gone to and locked in more term than we traditionally have or even toes in that business. And so we have basically all of our toes locked up term, except for those that are in dry dock now are going to dry dock over the next month. And so we have about 5 months term on that. And so the rates right now, and I'll tell you are between will give you a wide range between $11,000 and $12,000 a day. So very strong rates in the business, and we largely have it locked into the end of the third quarter of this coming year. Going to MTI, I would call the rates stable. We're certainly not seeing an increase in rate. We have fluctuations in our revenue per mile given some of the changes we've had in the trucking business over the last 90 days. For example, down in Beaumont, as Bob said in his comments, we had sulfur loads due to extended refinery turnarounds and that certainly impacted our performance there. But on the chemical and the lubricant side, we saw an increase from what we had expected and those are generally longer routes for us. And so we saw improvement there. So I would say, as we're looking forward in that business, the refineries in Beaumont are now running like we expect to see them run and like they like to run, which is a fairly high utilization. We're still having good long-haul sales to the chemicals in the lubricant space. So I would expect the rates for MTI to be stable, at least into the immediate future.

And I'm going to add one comment back on Marine. We're always looking at what's the growth in new equipment coming online, and we're not seeing really any significant build programs by any of our competitors. So our vision is these rates will be higher for a longer period of time than what has historically been the case.

Okay. Great. That's all really helpful. And then maybe switching over to the fertilizer business if I'm looking at the guidance correctly, you raised the outlook for fertilizer in the fourth quarter of this year from $2.4 million to $3.2 million. Just kind of curious what's driving that change? If it's just timing or if there's something else going on?

Yes. We made a small growth investment up in Senate Cap where we have expanded our warehouse there. So we're going to be able to operate longer into the summer months, have more inventory, up there to sell during the season where we sell our dispersal, which is primarily the fall and early winter season. So we see an improvement in fertilizer EBITDA from what we were projecting earlier in the year to now.

Okay. That makes sense. And then one more for me. I think recently, there was news Samsung received a sizable grant that will be used to build a second chip making factory. I'm just curious of the second factory would fall under the DSM Semichem joint venture or maybe that's potential upside down the road?

Yes. The second shift factory and they have committed to a second shift factor. We don't know precisely what size of ships they're going to be producing it, which makes a difference into what asset they need. So that's an unknown. So no there's no commitment to us on a second ship factory down in Taylor, but that certainly is upside for the future.

Your next question comes from the line of Selman Akyol from Stifel.

So I guess just few follow-ups. So just kind of going back to the barge you talked about going into dry dock. Can you say how many are going into dry dock? Or is this going to be a heavier dry docking than others?

Yes. So this is a heavy dry-dock year for Marine. But we got a lot of that out of the way in the first quarter, Sel. And in the second quarter, we had 2 of our line barge toes going to dry-dock. And in the fourth quarter, we will only have one. So by the time we reach the end of the second quarter, we'll have most of our maintenance work done for the year in terms of the marine equipment.

Got it. Understood. And then just kind of going back to ELSA. Besides Samsung, are you guys having any other conversations with any other companies, given sort of the U.S. is trying to ramp up chip production?

The answer is yes. And Samsung is the marketer for the DSM Semichem joint venture. So they are handling those discussions. But yes, the answer is yes. We anticipate selling a significant amount to parties other than Samsung and Taylor through Samsung's efforts and marketing.

And any idea on when some of that might come to fruition?

Yes. I mean it's the same as when we spoke 60 days ago. The projects have been delayed, and we anticipate significant sales to begin occurring in the second half of 2025, which is about a year delay from when we entered into this project several years ago.

Right. And then -- but just when you get your oleum tower up and complete, we should still expect some revenue in the fourth quarter?

Yes. When we get the oleum tower up and complete, and the ELSA plan is commissioned, we will start receiving a reservation fee. And that's what the capital that we spent to construct the holding tower and the tie-ins and that will happen no later than October 2024.

Got it. Got it. And then just kind of going back to transportation, anything in terms of just sort of like potentially new contracts you guys could be inking out there? Are you seeing any sort of increased demand for your services?

I would say that we would define the services in both the marine and the trucking as stable. We're not looking at any new opportunities for significant growth in this business, just utilizing our current assets and possibly some incremental growth on the trucking side to the extent we think we can get the truck driver, get all the equipment we need to do it and be able to sell the services.

Okay. Last one for me. On the turnaround expense for you guys, was there anything unusual about that? I mean, it just seems awfully large to us. I'm just trying to understand, was there something unusual? Or are we just seeing inflation there?

We had a heavy turnaround year. Inflation is certainly part of that equation, Selman. But we have a heavy year. We budgeted at the beginning of the year, $32 million were still there. The first quarter, we had a significant part of that because we had a refinery turnaround in the first quarter, and that was in excess of $5 million. That's an every other year event in the second quarter. So you're not surprised we'll also be large I would say by the end of the second quarter of our $32 million, we're going to have spent $24.5 million to $26.5 million because of the refinery, because of the Plainview turnaround that we move forward this year earlier than typical, so we can tie into DSM Semichem and provide good operations for them going forward. And then because of the maintenance program we've had on the marine vessel which were very heavy this year. We have both offshore units already in the shipyard this year and then we had about 40% of our barges and vessels had to go this year. And that's all just regulatory driven and timing driven.

That concludes our question-and-answer session. I will now turn the call back over to Bob Bondurant for closing remarks.

Thank you, operator. I want to thank Kyle and Selman for the questions and interest today. And we look forward to continuing to execute our business plan and feel optimistic about our future performance. This will conclude our first quarter call.

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