Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Martin Midstream Partners LP (MMLP, Financial) exceeded its second-quarter guidance by $0.5 million, achieving an adjusted EBITDA of $31.7 million.
- The transportation segment outperformed expectations, with adjusted EBITDA of $11.2 million compared to guidance of $10.2 million.
- The sulphur services segment also exceeded guidance, with adjusted EBITDA of $10.6 million versus the forecasted $9.8 million.
- The company managed to keep operating expenses $0.4 million below forecast due to lower truck and trailer operating costs.
- Despite two casualty losses totaling $2 million, the company still managed to exceed its overall guidance.
Negative Points
- The marine transportation business underperformed, with adjusted EBITDA of $2.9 million compared to guidance of $3.8 million, primarily due to a $0.5 million casualty loss.
- The terminalling and storage segment missed its forecast, achieving adjusted EBITDA of $8 million compared to guidance of $9.4 million, due to a crude oil pipeline spill.
- The specialty products segment had mixed results, with underperformance in the packaged lubricant business offsetting gains in the grease business.
- The company increased its total anticipated CapEx spend for 2024 to $58.4 million, up from $49.4 million, which could impact future cash flows.
- The leverage ratio remains high at 3.88 times, with a goal to reduce it below 3.75 times on a sustained basis.
Q & A Highlights
Highlights from Martin Midstream Partners LP (MMLP) Q2 2024 Earnings Call
Q: Any update on the timing of the OEM tower completion?
A: (Randall Tauscher, COO) Everything is on track. The OEM tower and tie-ins to the Elsa plant will be completed by the end of July. We anticipate shipping feedstock by mid-August, with processing and testing to follow.
Q: Is there an opportunity to put marine transportation contracts on term?
A: (Randall Tauscher, COO) All current contracts are on some form of term, extending through the end of the third quarter, some to the end of the year, and others into early next year. We are looking to expand these terms as customers are willing.
Q: Are the bridge incident and pipeline leak fully resolved, or will there be ongoing regulatory impacts?
A: (Randall Tauscher, COO) The bridge incident is now in maintenance mode, and the crude oil spill is in remediation mode. We do not expect further economic impact as full deductibles have been accrued.
Q: Can you expand on the impact of Hurricane Barrel?
A: (Randall Tauscher, COO) The hurricane caused non-material damage to our facilities and a week-long operational downtime. We saw no impact on refinery sulphur production.
Q: Are there any expected refinery turnarounds in the upcoming quarter?
A: (Randall Tauscher, COO) Typically, turnarounds occur in late third quarter or early fourth quarter. We currently have no knowledge of any that would impact us.
Q: Can you provide a timeline for the buyout offer discussions?
A: (Sharon Taylor, CFO) Negotiations are ongoing between the MMLP Conflicts Committee and MRMC's advisory firm. No timeline or outcome can be speculated at this point.
Q: What are the fundamentals behind the strong land transportation performance in Q2?
A: (Randall Tauscher, COO) April and May were strong across all commodities and routes. June saw a drop in chemicals and lubricants. We expect an uptick in business as we move into August.
Q: How do you see the leverage ratio progressing with the higher CapEx budget?
A: (Sharon Taylor, CFO) We expect to exit the year at about the same leverage ratio of 3.8 times, considering the CapEx in the back half of the year.
Q: What returns are expected from the additional investment in the fertilizer business?
A: (Randall Tauscher, COO) The new warehouse will allow us to run harder during the summer, expecting a $600,000 to $800,000 bump in the fourth quarter.
Q: Can you provide details on the expected EBITDA from the Elsa project and remaining CapEx?
A: (Randall Tauscher, COO) We expect $900,000 in EBITDA from the reservation fee starting in October. Additional revenue will come from processing fees and sales ramping up in 2025. Total investment is expected to be $26-$27 million, with $3 million left on the OEM tower project.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
