Q1 2024 Martin Midstream Partners LP Earnings Call

Operator: Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. Please wait; the conference will begin shortly.

Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines again will be placed on music hold.

Thank you for your patience.

Please wait the conference will begin shortly.

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Operator: 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. All lines have been placed on mute to prevent any background noise.

[music].

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.

Krista: The Martin Midstream Partners' first quarter 2024 earnings conference call all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question during that time simply press star followed by the number one on your telephone keypad.

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I will now turn the conference over to Sharon Taylor, Chief Financial Officer. Sharon, you may begin.

Krista: And if you'd like to withdraw that question again press star one. Thank you I will now turn the conference over to Sharon Taylor Chief Financial Officer, Sharon you may begin.

Sharon L. Taylor: Good morning, everyone, and welcome to the 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.

Sharon L. Taylor: Thank you.

Sharon L. Taylor: Good morning, everyone and welcome to the Martin Midstream Partners Conference call to discuss first quarter 2020 for earnings.

Sharon L. Taylor: During this call we will make forward looking statements as defined by the SEC.

Sharon L. Taylor: These statements are based upon our current beliefs as well as assumptions made by the management team and information currently available to us.

Sharon L. Taylor: 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 Cabin, Director of FP&A. Now I'll turn it over to Bob to discuss first quarter earnings.

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.

Sharon L. Taylor: 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 <unk> CEO of Martin Midstream, Randy Tauscher CFO Dave.

Sharon L. Taylor: We'd canon controller, and Danny Cavin director of <unk>.

Sharon L. Taylor: Now I'll turn it over to Bob to discuss first quarter earnings.

Thanks Sharon.

Robert D. Bondurant: 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.

Bob: I would like to begin the discussion by focusing on our overall first quarter operating performance.

Bob: 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.

Robert D. Bondurant: 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 turnaround. Also, operating expenses were $0.8 million below forecast due to lower truck and trailer maintenance expenses, 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.3 million.

Bob: Our revenue exceeded forecast by approximately $1 million as we beat our anticipated first quarter mileage by 8%.

Bob: Even though the number of loads from refinery sulfur producers was down significantly due to their extended turnarounds.

Bob: Also operating expenses were 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.

Bob: Our marine transportation business had adjusted EBITDA of $4 2 million compared to guidance of $3 1 million.

Bob: Marine transportation revenue exceeded forecast by $1 8 million as average inland transportation day rates exceeded forecast by 4%.

Bob: While achieving approximately 100% utilization.

Bob: Additionally, we had reduced operating expenses compared to forecast of approximately $3 million.

Robert D. Bondurant: Looking toward 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 terminaling 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 smack-over refinery. These costs were associated with the January restart of the refinery after we had taken it offline due to the extreme cold weather during the week of January 14.

Bob: 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.

Bob: 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.

Bob: While our revenues approximated our forecast our expenses were higher by approximately <unk> 5 million.

Bob: The primary cause of the expense over it was repair and maintenance cost at our snack over refinery.

Bob: These costs were associated with the January restart of the refinery. After we had taken it offline due to the extreme cold weather during the week of January 2014.

Robert D. Bondurant: Looking toward the second quarter, all of our terminal locations are continuing to operate normally, and based on the consistency of revenue generated by this segment's fee-based business model, our terming group should perform at forecast for the second quarter. Now I'd like to discuss the performance of our sulfur services segment, which was our third largest cash flow generator in the first quarter. In this segment, we had adjusted EBITDA of $6.7 million compared to guidance of $9.8 million. Our fertilizer group had adjusted EBITDA of $4.2 million compared to guidance of $6.6 million.

Bob: Looking towards the second quarter all of our terminal locations are continuing to operate normally and based on the consistency of revenue generated by this segment's fee based business model, our chairman and group should perform at forecast for the second quarter.

Bob: Now I would like to discuss the performance of our sulfur services segment, which was our third largest cash flow generator in the first quarter.

Bob: In this segment, we had adjusted EBITDA of $6 7 million compared to guidance of $9 8 million.

Bob: Our fertilizer group had adjusted EBITDA of $4 2 million compared to guidance of $6 6 million.

Robert D. Bondurant: Overall, for the first quarter, we had sales volume that exceeded our forecast of tons sold by 11%. All said this, we had lower product margins per ton than forecast. The combination of higher volume cells offset by lower margins fully accounts for the 2.4 million miss when compared to fertilizer guidance.

Bob: Overall for the first quarter, we had sales volume, which exceeded our forecast of tons sold by 11%.

Bob: Offsetting this were lower product margins per ton than forecasted.

Bob: The combination of higher volume sales offset by lower margins fully account for the $2 4 million Miss when compared to fertilizer guidance.

Robert D. Bondurant: Continued competitive pressure throughout the quarter did not allow us to realize higher forecasted sales prices, which negatively impacted first quarter fertilizer margins. Looking toward the second quarter, we continue to see solid sales volumes and believe that should continue throughout the quarter. However, we still see headwinds regarding margin expansion.

Bob: Continued competitive pressure throughout the quarter did not allow us to realize higher forecasted sales prices, which negatively impacted first quarter fertilizer margins.

Bob: Looking towards the second quarter, we continued to see solid sales volumes and believe that should continue throughout the quarter.

Bob: We still see headwinds regarding margin expansion and as a result, there is some chance we might not fully achieve our second quarter fertilizer forecast.

Robert D. Bondurant: And as a result, there's some chance we might not fully achieve our second quarter fertilizer forecast. For example, the pure sulfur side of our sulfur services segment had adjusted EBITDA of $2.5 million compared to guidance of $3.2 million. The primary driver of these myths and forecasts was reduced sulfur volumes produced by our Gulf Coast refinery suppliers. This was due to the extended turnarounds many of these refiners experienced in the first quarter. The actual volumes received were significantly less than forecast, as our average daily volume received was only 2,450 tons per day. This compares to the fourth quarter average daily volume received of 3,550 tons per day.

Bob: The pure sulfur side of our sulfur services segment had adjusted EBITDA of $2 5 million compared to guidance of $3 2 million.

Bob: The primary driver of the Miss in forecast was reduced sulfur volumes produced by our Gulf Coast refinery suppliers.

Bob: This was due to the extended turnarounds many of these refineries experienced in the first quarter.

Bob: Actual volumes received were significantly less than forecast as our average daily volume receipt was only 2450 tons per day.

Bob: This compares to the fourth quarter average daily volume received a 3550 tons per day.

Robert D. Bondurant: Looking toward the second quarter, Gulf Coast refineries are back to producing normal sulfur volumes, as we are currently receiving approximately 3,550 tons per day. Based on this data, we believe we should achieve our second quarter forecast for the pure sulfur side of our sulfur services sector. Finally, I would like to discuss the first quarter performance of our specialty product segment. In this segment, we had adjusted EBITDA of $5.4 million compared to guidance of $6 million.

Bob: Looking towards the second quarter Gulf Coast refineries are back to producing normal sulfur volumes as we are currently receiving approximately 3550 tons per day.

Bob: Based on this data we believe we should achieve our second quarter forecast for the pure sulfur side of our sulfur services segment.

Bob: Finally, I would like to discuss the first quarter performance of our specialty products segment.

Bob: In this segment, we had adjusted EBITDA of $5 4 million compared to guidance of $6 million.

Sharon L. Taylor: While our grease business, along with our remaining NGL businesses, achieved forecasts, the entire Ibbott-Dot-Miss can be accounted for by the underperformance of our packaged lubricant business. In the first quarter, this business actually achieved its forecasted sales volume while realizing slightly poorer margins than forecast. An additional problem for our packaged lubricant business in achieving its forecast were operating issues that occurred in the month of January, beginning with the same extreme cold weather that impacted our refinery.

While our grease business, along with our remaining NGL businesses achieved forecast the entire EBITDA Miss can be accounted for by the underperformance of our packaged lubricant business.

Bob: In the first quarter this business actually achieved its forecasted sales volume, while realizing slightly poor margins than forecasted.

Bob: An additional problem for our packaged lubricant business in achieving its forecast we're operating issues that occurred in the month of January beginning.

Bob: Beginning with the same extreme cold weather that impacted our refinery.

Sharon L. Taylor: Since January, management of this business has taken corrective actions and has been intimately involved in day-to-day operations. This has resulted in a more streamlined operating environment with improved blending process flows, which has positively driven operating results more toward forecasted performance. Looking toward the second quarter, we currently see significant improvement in our packaged lubricant business when compared to the first quarter, and believe our specialty product segment will achieve its second quarter guide.

Bob: Since January management of this business have taken corrective actions and have been intimately involved in day to day operations.

Bob: This has resulted in a more streamlined operating environment with improved blending process flows which is positively driven operating results more towards forecasted performance.

Bob: Looking towards the second quarter, we currently see significant improvement in our packaged lubricant business when compared to the first quarter and believe our specialty products segment will achieve its second quarter guidance.

Sharon L. Taylor: Overall, looking to the second quarter for our entire company, we see potential upside to second quarter guidance in our transportation business, with some slight downside risk to guidance in our fertilizer business. All of our other business lines should approximate their forecast. Now, I would like to turn the call back over to Sharon to discuss our balance sheet, capital expenditures, and capital resources. Thank you, Bob. I'll begin with a normal walkthrough of the deck components.

Bob: Overall looking to the second quarter for our entire company, we see potential upside to second quarter guidance in our transportation business.

Bob: With some slight downside risk to guidance in our fertilizer business.

Bob: All of our other business lines should approximate their forecast.

Bob: Now I would like to turn the call back over to Sharon to discuss our balance sheet capital expenditures and capital resources. Thank you Bob.

Sharon L. Taylor: I'll begin with a normal walkthrough 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 31st, 2024, the partnership had total long-term debt outstanding of $450 million, compared to $442.5 million on December 31st, 2023. Our revolving credit facility balance was $50 million, and the notional amount of our second lien secured notes was $400 million.

Sharon L. Taylor: I'll begin with a normal walk through the debt components of the balance sheet.

Sharon L. Taylor: Our bank ratios and liquidity capital spending for the quarter and end with a brief discussion of 2020 for guidance.

Sharon L. Taylor: On March 31, 2024, the partnership had total long term debt outstanding of $450 million compared to $442 5 million on December 31 2023.

Sharon L. Taylor: Our revolving credit facility balance was $15 million and the notional amount of our second lien secured notes with $400 million.

Sharon L. Taylor: 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.

Sharon L. Taylor: Our total liquidity was 101 4 million based on our $175 million revolving credit facility adjusted for slight leverage constraint and outstanding letters of credit.

Sharon L. Taylor: Looking ahead the commitment under the revolving credit facility will decrease to $150 million on June 32024, we.

Sharon L. Taylor: We anticipate this decrease in liquidity tap no operational impact on the partnership.

Operator: At the end of the quarter, our bank-compliant adjusted leverage ratio was 3.81 times, senior leverage was 0.42 times, and interest coverage was 2.21 times. An adjusted leverage ratio of 3.75 times 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 in maintenance capital expenditures.

At the end of the quarter, our bank compliant adjusted leverage ratio was 381 time seeing.

Sharon L. Taylor: Senior leverage with <unk>.

Sharon L. Taylor: Four two times and interest coverage was 221 times and.

Sharon L. Taylor: And adjusted leverage ratio of 375 times or lower it remains our long term goal and management will continue to focus our efforts on that target as we contemplate capital allocation.

Sharon L. Taylor: 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 and refinery turnaround costs and $5 9 million of maintenance capital expenditures.

Operator: 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-Semicam or ELFIS 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 outlines the shift in forecasted earnings between the business segments when compared to the forecast we discussed on our last earnings call.

Sharon L. Taylor: <unk> and the growth capital number was $4 $8 million in improvements to our plainview facility to produce OEM to be delivered to the DSM semi chem or Elsa joint venture.

Sharon L. Taylor: We are maintaining our 2024 adjusted EBITDA guidance of $116 1 million, even though the first quarter was a slight miss.

Sharon L. Taylor: The presentation attached to our earnings press release yesterday outlines the shift and forecasted earnings between the business segments when compared to the forecast we discussed on our last earnings call.

Operator: 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 divisions, 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.

Sharon L. Taylor: The material differences and forecasted earnings are in the transportation and sulfur segment as we now anticipate higher earnings for both our land and Marine Transport Division.

Sharon L. Taylor: Offset by competitive pressure on our fertilizer business.

Sharon L. Taylor: <unk> refinery turnarounds that reduced our sulfur services volumes in the first quarter.

Speaker Change: I'll now turn the call back to the operator for Q&A.

Operator: Thank you. We will now begin the question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Kyle May from Sidoti; please go ahead.

Speaker Change: Thank you we will now begin the question and answer session, if you'd like to ask a question. Please press star.

Speaker Change: Star one on your telephone keypad to raise your hand and joined the queue.

I would like to withdraw your question simply press Star One again, if you called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Your first question comes from the line of Kyle May from Sidoti. Please go ahead.

Kyle May: Hi, good morning, everyone, and thanks for all the additional detail today. Good morning. I wanted to start with the transportation segment, and again, I know you kind of gave a lot of details, but I was wondering if you could just kind of give us an update on the rate environment for both 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 May: Hi, good morning, everyone and thanks for all the additional detail today.

Kyle May: Good morning Gordon.

Kyle May: I wanted to start with the transportation segment and.

Kyle May: Again, I know you kind of gave a lot of details, but I'm 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.

Kyle May: If you could kind of give us a little bit more color on the difference in <unk> results versus what youre seeing in your.

Randall L. Tauscher: Okay, Kyle, this is Randy. Good morning, and thank you for the question. I'll start with Maureen.

Your guidance for <unk>.

Kyle May: Hey, Kyle this is Randy good morning, and thank you for the question.

Randy: I'll start with split Marine and just 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.

Randall L. Tauscher: And to start with Maureen, 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. And we saw a 25% increase in rates. And then you go forward another year to the end of the first quarter of 2024, and you see a 20% increase in rates. So we have seen basically a 50% increase in rates in the marine business over the last two years. And over the course of the first quarter, they were still escalating.

Randy: A 25% increase in rates and then you go forward another year. So as we entered the first quarter of 2024, and you see a 20% increases in rates. So we saw basically a 50% increase in rates in the marine business over the last two years and over the course of the first quarter they were still escalating.

Randall L. Tauscher: 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 that rates have gone up and locked in more term than we traditionally have on our inland toes in that business. And so we have basically all of our tows locked up for the term except for those that are in dry dock now are going to dry dock over the next.

Randy: 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 <unk>.

Randy: Locked in more term than we traditionally have on our inland tows in that business.

Randy: And so we have that.

Randy: 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.

Randall L. Tauscher: And so we had about a five-month term on that. And so the rates right now, I'll tell you, are between, I'll give you a wide range, between $11,000 and $12,000 a day. So it's a very strong race in the marine business, and we largely have that locked into the end of the third quarter of this coming year. If we go to MTI, I would call the rates stable. We're certainly not seeing an increase in rates.

Randy: So we had about five months term on that and so the rates right now.

Randy: You are between.

Randy: So I'll give you a wide range between 11 and $12000 a day.

Randy: So very strong rates in the marine business, we largely have that locked into the end of the third quarter.

This coming year.

Randy: Going to MTI.

MTI: I would call the rates stable.

MTI: We're certainly not seeing an increase in rates, we have fluctuations in our revenue per mile.

Randall L. Tauscher: 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 a dearth of sulfur loads due to an extended refinery turnaround, 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, so we saw improvement there.

MTI: Given gives us some of the changes we've had in the trucking business over the last 90 days.

MTI: Excuse me for example down it down in Beaumont as Bob said in his comments we.

MTI: We had a dearth of sulfur loads due to extended refinery turnarounds.

MTI: Lee impacted our performance there.

MTI: But on the chemical in the lubricants side, we saw an increase from what we had expected and those are generally longer.

MTI: Longer routes for us and so we saw improvement there. So I would say as we're looking forward in that business the refineries and Beaumont are now running like we.

Randall L. Tauscher: I expect to see them run, and as they like to run, which is 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.

MTI: We expect to see that run in like they like to run which is fair.

MTI: Fairly high utilization.

We're still having good long haul sales to the chemicals in the lubricant space.

MTI: So I would expect to rates for MTI to be stable at least into the immediate the immediate future.

Randall L. Tauscher: And I'm going to add one comment back on Marine. You know, we're always looking at 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 that these rates will be higher for a longer period of time than what has historically been the case.

Speaker Change: 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.

Speaker Change: Build programs by any of our competitors. So our vision is these rates will be higher for a longer period of time and then what has historically been the case.

Kyle May: Okay, great. That's, that's all really helpful.

Speaker Change: Okay, Great that's all really helpful.

Kyle May: And then maybe switching over to the fertilizer businesses. 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.

Speaker Change: And then maybe switching over to the fertilizer business, if im looking at the guidance correctly.

Raised the outlook for fertilizer in the fourth quarter of this year from $2 4 million to $3 two.

Speaker Change: Just kind of curious what's driving that change it was just timing or is there something else going on.

Speaker Change: No.

Robert D. Bondurant: Yes, we've made a small Growth Investment up in Seneca where we have expanded our warehouse there, so we're going to be able to operate longer into the summer months, and 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 EBIDTA from what we were projecting earlier in the year.

Speaker Change: Yes.

Speaker Change: We made a small.

Speaker Change: Growth investments.

Speaker Change: In semi cap, we have expanded our warehouse there so we're going to be able to.

Speaker Change: Operate longer into the summer months.

Speaker Change: Have more inventory there to sell during.

Speaker Change: During the season, where we sell our <unk>, which is primarily the fall and early winter season.

Speaker Change: So we see an improvement in and fertilizer EBITDA from what we were projecting.

Speaker Change: Earlier in the year to now.

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

Speaker Change: Okay that makes sense.

Speaker Change: And then one more for me I think recently.

Speaker Change: There was news Samsung received a sizable grant that will be used to build a second chip making factory.

Speaker Change: I'm just curious if the second factory with fall under the DSM semi chem joint venture or if maybe thats potential upside down the road.

Speaker Change: Yes.

Robert D. Bondurant: Yeah, the second chip factory, and they have committed to a second chip factory. We don't know precisely what size of chips they're going to be producing yet, which makes a difference to what acid they need. So that's an unknown. So no, there's no commitment to us on a second chip factory down in Taylor, but that certainly is upside for the future.

Speaker Change: Yes.

Speaker Change: Second chip factory and they have committed to a second shift that because we don't know precisely what size. It ships theyre going to be producing at which makes a difference until I'd ask that they need. So so that's an unknown.

Speaker Change: No. There is no commitment to us on a second chip factory down in <unk>.

Speaker Change: But that certainly is upside for the future.

Kyle May: Okay, great. I appreciate all the information. I'll jump back in.

Speaker Change: Okay, Great I appreciate all the information I'll jump back in queue.

Speaker Change: Yes.

Operator: Your next question comes from the line of Selman Akyol from Stiefel. Please go ahead.

Speaker Change: Your next question comes from the line of Zelman.

Zelman: From Stifel. Please go ahead.

Selman Akyol: Thank you. Good morning, all.

Zelman: Thank you good morning all.

Selman Akyol: So I guess just a few follow-ups. So just kind of going back to the part you talked about going in a dry dock. Can you say how many are going in a dry dock, or is this going to be a heavier dry docking?

Zelman: So I guess just a few.

Zelman: Follow up 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 just going to be a heavier dry docking.

Zelman: Others.

Randall L. Tauscher: Yeah, so this is a heavy dry dock here from. But we got a lot of that out of the way in the first quarter, and in the second quarter, we have two of our Lynn Barstow's 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 marine equipment.

Speaker Change: Yes. So this is a heavy drydock year for marine.

Speaker Change: But we've got a lot of that out of the way in the first quarter.

Speaker Change: And in the second quarter, we have two of our inland barge tons go into dry dock.

Speaker Change: And in the fourth quarter, we will only have one so by the time, we reached the end of the second quarter. We will have most of our maintenance work done for the year.

Speaker Change: In terms of the marine equipment.

Selman Akyol: 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 that sort of the U.S. is trying to ramp up chip production.

Speaker Change: Got it understood.

Speaker Change: And then just kind of going back to <unk>.

Speaker Change: Besides Samsung are you guys, having any other conversations with any.

Speaker Change: Other companies.

Speaker Change: Given sort of the U S is trying to ramp up ship production.

Robert D. Bondurant: The answer is yes, and Samsung is the marketer for the DSM Semicam joint venture, so they are handling those discussions. But the answer is yes, we anticipate selling a significant amount to parties other than Samsung and Taylor through Samsung's efforts in marketing.

Speaker Change: The answer is yes, and Samsung as a marketer.

Speaker Change: For the DSM semi chem joint venture so they are handling those discussions.

Speaker Change: But yes. The answer is yes, we anticipate selling a significant amount.

Speaker Change: Two parties other than Samsung Taylor.

Speaker Change: Through through Samsung's efforts in marketing.

Speaker Change: And.

Selman Akyol: Any idea when some of that might come to fruition?

Speaker Change: Any idea on when some of that might come to fruition.

Robert D. Bondurant: Yeah, 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 delayed from when we entered into this project several years ago.

Speaker Change: Yes.

Speaker Change: It's the same as when we spoke 60 days ago.

Speaker Change: The projects have been delayed and we anticipate significant sales to began occurring in the second half of 2025, which is about a year delay from when we entered into this project several years ago.

Selman Akyol: Right and then, but just when you get your oil tower up and complete, should we still expect some revenue in the fourth quarter?

Speaker Change: Alright, and then just when you get your all even tower up and complete we should still expect some revenue in the fourth quarter.

Robert D. Bondurant: Yes, when we get the OEM tower up and complete, and the ELSA plan is commissioned, we will start receiving a reservation. And that's the capital that we spent to construct the old tower and the tie-ins, and that will happen no later than October of 2024.

Speaker Change: Yes.

We get the <unk> complete.

Speaker Change: And we also plan is commissioned we will start receiving a reservation fee.

Speaker Change: And that's where the capital that we spent to construct building towers Italians.

Speaker Change: That will happen no later than October of 2024.

Speaker Change: Got it got.

Speaker Change: Got it.

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

Speaker Change: And then just kind of going back to transportation.

Speaker Change: Anything in terms of just sort of like.

Speaker Change: Essentially new contracts you guys could be inking out there or are you seeing any sort of increased demand for your services.

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

Speaker Change: I would say that.

<unk> services in both the marine and.

Speaker Change: The trucking is stable.

Speaker Change: We're not we're not looking at any.

Speaker Change: New opportunities for significant growth in those business.

Speaker Change: 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.

Selman Akyol: Okay, last one for me on the turnaround expense. For you guys, was there anything unusual about that? I mean, it just seemed awfully large to us, and I'm just trying to understand was there anything unusual, or are we just seeing inflation?

Speaker Change: Okay last one for me on the turnaround expense.

Speaker Change: For you guys.

Speaker Change: <unk>.

Speaker Change: Was there anything unusual about that I mean, just seemed awfully large to us and I'm just trying to understand was there something unusual or are we just seeing inflation there.

Randall L. Tauscher: We had a heavy turnaround here. Inflation is certainly part of that equation, so We have a heavy year, you know; we budgeted, beginning of the year, $32 million; we're still there. The first quarter, we had a significant part of that because we had our refinery turnaround in the first quarter, and that was in excess of $5 million. That's an every other year event. The second quarter, so you're not surprised, will also be large.

Speaker Change: We had a heavy turnaround year inflation is certainly part of that equation Selman.

Selman: Whereas we have a heavy year, we budgeted at the beginning of the year $32 million were still there.

Selman: The first quarter, we had a significant part of that because we had a refinery turnarounds in the first quarter and that was in excess of $5 million Thats, an every other year events.

Selman: The second quarter, so you're not surprised we will also be large I would say by the end of the second quarter of our 32 million, we're going to have 24, 5% to $26 5 million.

Selman Akyol: I would say by the end of the second quarter of our $32 million, we're going to have spent $24.5 to $26.5 million, because of the refinery, because of the plenty turnaround that we've moved forward this year, earlier than typical so we can tie into DSM Semicam and provide good operations for them going forward, and then because of the maintenance program we've had on the Marine Vest, which was very heavy this year. We have both offshore units already in the shipyard this year. And then we had about 40% of our inland barge, and vessels had to go this year. That's all just regulatory driven and timing driven.

Selman: Because of the refinery because of the play of the turnaround that we move forward this year.

Selman: Earlier than typical.

Selman: We can tie into PSM semi chem in and provide good operations for them going forward and then because of the maintenance program. We've had on the marine vessels.

Selman: Which we're very heavy this year, we have both offshore units already in the shipyard. This year and then we had about 40% of Ireland barges.

Selman: The vessels have to go this year, that's all just regulatory driven and timing driven.

Selman Akyol: I understand. Thank you so much.

Speaker Change: Understood. Thank you so much.

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

Speaker Change: Thank you for that case that concludes our question and answer session I will now turn the call back over to Bob Bondurant for closing remarks.

Operator: I want to thank Kyle and Selman for their questions and interest today, and we look forward to continuing to execute our business plan and feeling 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. Please wait; the conference will begin shortly.

Robert D. Bondurant: Thank you operator.

Robert D. Bondurant: I want to thank Colin Shannon 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.

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

Speaker Change: Please wait the conference will begin shortly.

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

Speaker Change: Sure.

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Metadata: Robert Bondurant, Selman Akyol, Kyle May, and Martin Midstream Partners LP

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Speaker Change: [music] community.