Martin Midstream Partners Reports 2018 Fourth Quarter Financial Results

Wall Street Business News

  • Net income of $44.1 million for 2018
  • Adjusted Leverage Ratio 4.61x at December 31, 2018
  • Financial Guidance for 2019

KILGORE, Texas, Feb. 13, 2019 (GLOBE NEWSWIRE) — Martin Midstream Partners L.P. (Nasdaq:MMLP) (the “Partnership”) announced today its financial results for the three months and year ended December 31, 2018.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, said, “Looking back at 2018, the Partnership deployed two strategic initiatives undertaken specifically to strengthen its balance sheet, reduce leverage and improve its distribution coverage ratio.  In the second quarter, we announced the first initiative – the sale of our partnership interest in the West Texas LPG Pipeline Limited Partnership (“WTLPG”).  The transaction closed on July 31, 2018 and the net proceeds of approximately $193.7 million were used to reduce outstanding borrowings under the revolving credit facility, lowering our adjusted leverage ratio from 5.46 times to 4.61 times at June 30, 2018 and December 31, 2018, respectively.  We announced the second initiative in conjunction with our third quarter earnings release and on January 1, 2019, we closed the acquisition of Martin Transport, Inc. (“MTI”) for $135.0 million.  MTI is expected to contribute approximately $23.6 million and $14.7 million of EBITDA and distributable cash flow, respectively, to the Partnership in 2019, contributing to an estimated distribution coverage of 1.1 times at December 31, 2019.

“With these strategic initiatives in position, we entered the fourth quarter of 2018 with optimism, as historically this quarter has been strong for our Natural Gas Services segment.  During this quarter, our butane optimization business begins its cyclical upswing as demand for butane increases with refineries entering the winter gasoline-blending season.  Though fundamentals remained constant in this cycle, we did not envision nor did we foresee the unprecedented, in terms of speed, drop in commodity prices that occurred from mid-October through December.  Although our carrying cost of refinery grade butane inventory at the end of the third quarter was well positioned, this dramatic pricing collapse in the fourth quarter resulted in a $13.5 million shortfall when compared to revised guidance for the butane optimization business.  This shortfall was slightly offset by modest outperformance in the remaining Natural Gas Services businesses, resulting in an overall shortfall of $12.7 million for the year compared to revised guidance.

“In our Terminalling and Storage segment results were slightly below revised fourth quarter and full year guidance estimates, primarily attributable to lower throughput volumes at our shore-based terminals, reduced lube margins, and unscheduled repairs and maintenance in our specialty terminals.  For the full year 2018, the Terminalling and Storage segment missed revised guidance by approximately $1.2 million.

“Our Sulfur Services segment was also slightly below fourth quarter revised guidance as the fertilizer business experienced reduced sales volumes due to weather conditions in South Texas, which were slightly offset by an increase in sulfur storage and transportation volumes.  For the full year 2018, the Sulfur Services segment shortfall to revised guidance was approximately $0.7 million.

“The Marine Transportation segment finished slightly above revised guidance expectations for both fourth quarter and full year 2018.  During the quarter, we benefitted from improved day rates and strong fleet utilization, which resulted in the Marine Transportation segment exceeding 2018 revised full year guidance by approximately $0.5 million.

“In total, the Partnership generated a Net Loss and Adjusted EBITDA of $0.9 million and $26.9 million, respectively, for the fourth quarter and Net Income and Adjusted EBITDA of $44.1 million and $126.9 million (which includes distributions from WTLPG of $3.2 million), respectively, for full year 2018.  Based on this performance, the Partnership’s distributable cash flow was approximately $9.4 million for the quarter and approximately $54.3 million for full year 2018, resulting in a distribution coverage ratio of 0.69 times, well below our targeted distribution coverage ratio of 1.25 times or greater.

“As we enter 2019, management remains committed to initiating strategies that reduce leverage and increase our distribution coverage ratio.  The Partnership expects to generate annual distributable cash flow of $85.6 million in 2019, resulting in a distribution coverage ratio of approximately 1.1 times, as stated earlier.  We estimate Net Income and Adjusted EBITDA to be $43.6 million and $159.5 million, respectively, for 2019, with the strongest quarters, due to the cyclical nature of our fertilizer and butane optimization businesses, being the first and fourth.  Management’s expectation is that the majority of the Partnership estimated adjusted EBITDA will be generated by fee-based services, with margin activities contributing approximately 38% of the total adjusted EBITDA estimate.  We are forecasting maintenance capital expenditures for 2019 to be between $20.0 million and $23.0 million, which includes a turnaround at the refinery of approximately $3.5 million.

“To conclude, Martin Midstream Partners remains a well-built company with strategically located assets integrated throughout the refinery services value chain.  Although 2018 proved to be a difficult year due to the speed of the commodity price collapse in the fourth quarter, the strategic positioning that occurred during the last half of 2018 will strengthen the company in 2019 and forward.  Further, we are actively pursuing strategic initiatives that will significantly reduce our leverage and narrow our focus to operating assets that serve the refinery services industry.”

The Partnership had a net loss from continuing operations for the fourth quarter 2018 of $0.9 million, a loss of $0.04 per limited partner unit.  The Partnership had net income from continuing operations for the fourth quarter 2017 of $17.1 million, or $0.47 per limited partner unit.  The Partnership’s adjusted EBITDA from continuing operations for the fourth quarter 2018 was $26.9 million compared to adjusted EBITDA from continuing operations for the fourth quarter 2017 of $48.1 million.

The Partnership had a net loss from continuing operations for the year ended December 31, 2018 of $7.6 million, a loss of $0.19 per limited partner unit.  Net income from continuing operations for the year ended December 31, 2017 was $13.0 million, or $0.33 per limited partner unit. The Partnership’s adjusted EBITDA from continuing operations for the year ended December 31, 2018 was $123.7 million compared to adjusted EBITDA for the year ended December 31, 2017 of $151.0 million.

The Partnership’s distributable cash flow from continuing operations for the fourth quarter of 2018 was $9.4 million compared to distributable cash flow from continuing operations for the fourth quarter of 2017 of $30.1 million.

The Partnership’s distributable cash flow from continuing operations for the year ended December 31, 2018 was $51.0 million compared to distributable cash flow from continuing operations for the year ended December 31, 2017 of $85.9 million.

Revenues for the fourth quarter of 2018 were $252.8 million compared to $305.7 million for the fourth quarter of 2017.  Revenues for the year ended December 31, 2018 were $972.7 million compared to $946.1 million for the year ended December 31, 2017.

As discussed above, on July 31, 2018, the Partnership divested of its 20 percent non-operating interest in WTLPG.  The Partnership recorded a gain on the disposition of $48.6 million.  The Partnership has presented the results of operations and cash flows relating to its investment in WTLPG as discontinued operations for the years ended December 31, 2018 and 2017.

The Partnership had net income from discontinued operations for the three months ended December 31, 2018 of $0.0 million, or $0.00 per limited partner unit.  The Partnership had net income from discontinued operations for the three months ended December 31, 2017 of $1.7 million, or $0.04 per limited partner unit.

The Partnership had net income from discontinued operations for the year ended December 31, 2018 of $51.7 million, or $1.30 per limited partner unit.  The Partnership had net income from discontinued operations for the year ended December 31, 2017 of $4.1 million, or $0.11 per limited partner unit.

Distributable cash flow and adjusted EBITDA from discontinued operations were $0.0 million for the three months ended December 31, 2018.  Distributable cash flow and adjusted EBITDA from discontinued operations were $1.2 million for the three months ended December 31, 2017.

Distributable cash flow and adjusted EBITDA from discontinued operations were $3.3 million for the year ended December 31, 2018.  Distributable cash flow and adjusted EBITDA from discontinued operations were $5.2 million for the year ended December 31, 2017.

Distributable cash flow, EBITDA and adjusted EBITDA are non-GAAP financial measures which are explained in greater detail below under the heading “Use of Non-GAAP Financial Information.” The Partnership has also included below a table entitled “Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow” in order to show the components of these non-GAAP financial measures and their reconciliation to the most comparable GAAP measurement.

Included with this press release are the Partnership’s consolidated financial statements as of and for the year ended December 31, 2018 and certain prior periods.  These financial statements should be read in conjunction with the information contained in the Partnership’s Annual Report on Form 10-K, to be filed with the SEC on February 19, 2019.

An attachment accompanying this announcement is available at http://resource.globenewswire.com/Resource/Download/88f9cd58-8d80-4df0-9518-c61ac53c78b2

2019 Guidance

The Partnership will discuss 2019 guidance during the investors’ conference call scheduled for Thursday, February 14, 2019 at 8:00 a.m.  Details of the conference call are below.  A presentation to accompany this discussion is available at http://resource.globenewswire.com/Resource/Download/8a631312-00a5-4730-b43d-4f1c214879aa

Investors’ Conference Call

An investors conference call to review the fourth quarter results and 2019 guidance will be held on Thursday, February 14, 2019 at 8:00 a.m. Central Time. The live conference call will be available by calling (877) 878-2695.  For a limited time, an audio replay of the conference call will be available by calling (855) 859-2056. The conference ID is 4780178. An archive of the replay will be on Martin Midstream Partners’ website at www.MMLP.com.

About Martin Midstream Partners
           
The Partnership is a publicly traded limited partnership with a diverse set of operations focused primarily in the United States Gulf Coast region. The Partnership’s primary business segments include: (1) natural gas services, including liquids transportation and distribution services and natural gas storage; (2) terminalling, storage and packaging services for petroleum products and by-products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) land and marine transportation services for petroleum products and by-products.

Forward-Looking Statements

Statements about the Partnership’s outlook and all other statements in this release other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements and all references to financial estimates rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the Partnership’s control, which could cause actual results to differ materially from such statements.  While the Partnership believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in anticipating or predicting certain important factors.  A discussion of these factors, including risks and uncertainties, is set forth in the Partnership’s annual and quarterly reports filed from time to time with the Securities and Exchange Commission.  The Partnership disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financial Information

The Partnership’s management uses a variety of financial and operational measurements other than its financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) to analyze its performance. These include: (1) net income before interest expense, income tax expense, and depreciation and amortization (“EBITDA”), (2) adjusted EBITDA and (3) distributable cash flow.  The Partnership’s management views these measures as important performance measures of core profitability for its operations and the ability to generate and distribute cash flow, and as key components of its internal financial reporting. The Partnership’s management believes investors benefit from having access to the same financial measures that management uses.

EBITDA and Adjusted EBITDA.  Certain items excluded from EBITDA and adjusted EBITDA are significant components in understanding and assessing an entity’s financial performance, such as cost of capital and historical costs of depreciable assets. The Partnership has included information concerning EBITDA and adjusted EBITDA because it provides investors and management with additional information to better understand the following: financial performance of the Partnership’s assets without regard to financing methods, capital structure or historical cost basis; the Partnership’s operating performance and return on capital as compared to those of other similarly situated entities; and the viability of acquisitions and capital expenditure projects.  The Partnership’s method of computing adjusted EBITDA may not be the same method used to compute similar measures reported by other entities. The economic substance behind the Partnership’s use of adjusted EBITDA is to measure the ability of the Partnership’s assets to generate cash sufficient to pay interest costs, support its indebtedness and make distributions to its unitholders.

Distributable Cash Flow.  Distributable cash flow is a significant performance measure used by the Partnership’s management and by external users of its financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by the Partnership to the cash distributions it expects to pay unitholders.  Distributable cash flow is also an important financial measure for the Partnership’s unitholders since it serves as an indicator of the Partnership’s success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not the Partnership is generating cash flow at a level that can sustain or support an increase in its quarterly distribution rates.  Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit’s yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.

EBITDA, adjusted EBITDA and distributable cash flow should not be considered alternatives to, or more meaningful than, net income, cash flows from operating activities, or any other measure presented in accordance with GAAP. The Partnership’s method of computing these measures may not be the same method used to compute similar measures reported by other entities.

Additional information concerning the Partnership is available on the Partnership’s website at www.MMLP.com or by contacting:

Sharon Taylor – Head of Investor Relations
(877) 256-6644
ir@mmlp.com

   
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
   
  December 31,
  2018   2017
Assets      
Cash $ 237     $ 27  
Trade and accrued accounts receivable, less allowance for doubtful accounts of $291 and $314, respectively 79,031     107,242  
Product exchange receivables 166     29  
Inventories (Note 7) 85,068     97,252  
Due from affiliates 18,609     23,668  
Fair value of derivatives (Note 13) 4      
Other current assets 5,275     4,866  
Assets held for sale (Note 5) 5,652     9,579  
Total current assets 194,042     242,663  
       
Property, plant and equipment, at cost 1,264,730     1,253,065  
Accumulated depreciation (466,381 )   (421,137 )
Property, plant and equipment, net (Note 8) 798,349     831,928  
       
Goodwill (Note 9) 17,296     17,296  
Investment in WTLPG (Note 11)     128,810  
Intangibles and other assets, net (Note 15) 23,711     32,801  
  $ 1,033,398     $ 1,253,498  
Liabilities and Partners’ Capital      
Trade and other accounts payable $ 63,157     $ 92,567  
Product exchange payables 13,237     11,751  
Due to affiliates 2,459     3,168  
Income taxes payable 445     510  
Fair value of derivatives (Note 13)     72  
Other accrued liabilities (Note 15) 22,215     26,340  
Total current liabilities 101,513     134,408  
       
Long-term debt, net (Note 16) 656,459     812,632  
Other long-term obligations 10,714     8,217  
Total liabilities 768,686     955,257  
Commitments and contingencies (Note 22)      
Partners’ capital (Note 17) 264,712     298,241  
Total partners’ capital 264,712     298,241  
  $ 1,033,398     $ 1,253,498  

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.

   
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
   
  Year Ended December 31,
  2018   2017   2016
Revenues:          
Terminalling and storage  * $ 96,287     $ 99,705     $ 123,132  
Marine transportation  * 50,370     48,579     58,290  
Natural gas storage services * 52,109     58,817     61,133  
Sulfur services 11,148     10,952     10,800  
Product sales: *          
Natural gas services 496,026     473,865     330,200  
Sulfur services 121,388     123,732     130,258  
Terminalling and storage 145,327     130,466     113,578  
  762,741     728,063     574,036  
Total revenues 972,655     946,116     827,391  
           
Costs and expenses:          
Cost of products sold: (excluding depreciation and amortization)          
Natural gas services * 463,939     421,444     289,516  
Sulfur services * 90,418     82,338     87,963  
Terminalling and storage * 130,253     116,495     100,714  
  684,610     620,277     478,193  
Expenses:          
Operating expenses  * 128,337     140,177     152,325  
Selling, general and administrative  * 37,677     38,764     34,320  
Impairment of long-lived assets     2,225     26,953  
Impairment of goodwill         4,145  
Depreciation and amortization 76,866     85,195     92,132  
   Total costs and expenses 927,490     886,638     788,068  
Other operating income (loss), net (379 )   523     33,400  
Operating income 44,786     60,001     72,723  
           
Other income (expense):          
Interest expense, net (52,037 )   (47,743 )   (46,100 )
Other, net 25     1,101     1,106  
Total other income (expense) (52,012 )   (46,642 )   (44,994 )
Net income before taxes (7,226 )   13,359     27,729  
Income tax expense (369 )   (352 )   (726 )
Income from continuing operations (7,595 )   13,007     27,003  
Income from discontinued operations, net of income taxes 51,700     4,128     4,649  
Net income 44,105     17,135     31,652  
Less general partner’s interest in net income (882 )   (343 )   (8,419 )
Less income allocable to unvested restricted units (28 )   (42 )   (90 )
Limited partner’s interest in net income $ 43,195     $ 16,750     $ 23,143  

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.

*Related Party Transactions Shown Below

   
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
   
*Related Party Transactions Included Above Year Ended December 31,
  2018   2017   2016
Revenues:          
Terminalling and storage $ 79,219     $ 82,205     $ 82,437  
Marine transportation 15,442     16,801     21,767  
Natural gas services     122     699  
Product sales 1,407     3,578     3,034  
Costs and expenses:          
Cost of products sold: (excluding depreciation and amortization)          
Natural gas services 14,816     18,946     22,886  
Sulfur services 17,418     15,564     15,339  
Terminalling and storage 28,304     17,612     13,838  
Expenses:          
Operating expenses 55,528     64,344     70,841  
Selling, general and administrative 28,246     29,416     25,890  

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.

   
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
   
  Year Ended December 31,
  2018   2017   2016
Allocation of net income attributable to:          
Limited partner interest:          
Continuing operations $ (7,438 )   $ 12,715     $ 19,744  
Discontinued operations 50,633     4,035     3,399  
  $ 43,195     $ 16,750     $ 23,143  
General partner interest:          
Continuing operations $ (152 )   $ 260     $ 7,182  
Discontinued operations 1,034     83     1,237  
  $ 882     $ 343     $ 8,419  
           
Net income per unit attributable to limited partners:          
Basic:          
Continuing operations $ (0.19 )   $ 0.33     $ 0.55  
Discontinued operations 1.30     0.11     0.10  
  $ 1.11     $ 0.44     $ 0.65  
           
Weighted average limited partner units – basic 38,907     38,102     35,347  
           
Diluted:          
Continuing operations $ (0.19 )   $ 0.33     $ 0.55  
Discontinued operations 1.30     0.11     0.10  
  $ 1.11     $ 0.44     $ 0.65  
           
Weighted average limited partner units – diluted 38,923     38,165     35,375  

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.

       
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CAPITAL
(Dollars in thousands)
       
  Partners’ Capital    
  Common   General
Partner
   
  Units   Amount   Amount   Total
Balances – December 31, 2015 35,456,612     $ 380,845     $ 13,034     $ 393,879  
               
Net income     23,233     8,419     31,652  
Issuance of common units, net     (29 )       (29 )
Issuance of restricted units 13,800              
Forfeiture of restricted units (2,250 )            
Cash distributions     (104,137 )   (14,041 )   (118,178 )
Reimbursement of excess purchase price over carrying value of acquired assets     4,125         4,125  
Unit-based compensation     904         904  
Purchase of treasury units (16,100 )   (347 )       (347 )
Balances – December 31, 2016 35,452,062     304,594     7,412     312,006  
               
Net income     16,792     343     17,135  
Issuance of common units, net 2,990,000     51,056         51,056  
Issuance of restricted units 12,000              
Forfeiture of restricted units (9,250 )            
General partner contribution         1,098     1,098  
Cash distributions     (75,399 )   (1,539 )   (76,938 )
Reimbursement of excess purchase price over carrying value of acquired assets     1,125         1,125  
Excess purchase price over carrying value of acquired assets     (7,887 )       (7,887 )
Unit-based compensation     650         650  
Purchase of treasury units (200 )   (4 )       (4 )
Balances – December 31, 2017 38,444,612     290,927     7,314     298,241  
               
Net income     43,223     882     44,105  
Issuance of common units, net     (118 )       (118 )
Issuance of time-based restricted units 315,500              
Issuance of performance-based restricted units 317,925              
Forfeiture of restricted units (27,000 )            
Cash distributions     (76,872 )   (1,569 )   (78,441 )
Excess purchase price over carrying value of acquired assets     (26 )       (26 )
Unit-based compensation     1,224         1,224  
Purchase of treasury units (18,800 )   (273 )       (273 )
Balances – December 31, 2018 39,032,237     $ 258,085     $ 6,627     $ 264,712  

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.

   
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
   
  Year Ended December 31,
  2018   2017   2016
Cash flows from operating activities:          
Net income $ 44,105     $ 17,135     $ 31,652  
Less:  Income from discontinued operations (51,700 )   (4,128 )   (4,649 )
Net income (loss) from continuing operations (7,595 )   13,007     27,003  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:          
Depreciation and amortization 76,866     85,195     92,132  
Amortization and write-off of deferred debt issue costs 3,445     2,897     3,684  
Amortization of premium on notes payable (306 )   (306 )   (306 )
(Gain) loss on disposition or sale of property, plant, and equipment 379     (523 )   (33,400 )
Impairment of long lived assets     2,225     26,953  
Impairment of goodwill         4,145  
Derivative (income) loss (14,024 )   1,304     4,133  
Net cash (paid) received for commodity derivatives 13,948     (5,136 )   (550 )
Net cash received for interest rate derivatives         160  
Net premiums received on derivatives that settled during the year on interest rate swaption contracts         630  
Unit-based compensation 1,224     650     904  
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:          
Accounts and other receivables 28,440     (26,739 )   (6,153 )
Product exchange receivables (137 )   178     843  
Inventories 11,844     (14,656 )   (6,761 )
Due from affiliates 5,059     (12,096 )   (1,441 )
Other current assets 1,178     (1,699 )   2,478  
Trade and other accounts payable (27,478 )   20,037     3,254  
Product exchange payables 1,486     4,391     (5,372 )
Due to affiliates (709 )   (5,306 )   2,736  
Income taxes payable (65 )   (360 )   (115 )
Other accrued liabilities (6,415 )   (3,187 )   686  
Change in other non-current assets and liabilities 332     2,416     (12,230 )
Net cash provided by continuing operating activities 87,472     62,292     103,413  
Net cash provided by discontinued operating activities 3,254     5,214     7,435  
Net cash provided by operating activities 90,726     67,506     110,848  
Cash flows from investing activities:          
Payments for property, plant, and equipment (37,090 )   (39,749 )   (40,455 )
Acquisitions, net of cash acquired     (19,533 )   (2,150 )
Payments for plant turnaround costs (1,893 )   (1,583 )   (2,061 )
Proceeds from sale of property, plant, and equipment 9,381     8,377     108,505  
Proceeds from repayment of Note receivable – affiliate     15,000      
Net cash provided by (used in) continuing investing activities (29,602 )   (37,488 )   63,839  
Net cash provided by (used in) discontinued investing activities 177,256     (390 )    
Net cash provided by (used in) investing activities 147,654     (37,878 )   63,839  
Cash flows from financing activities:          
Payments of long-term debt (557,000 )   (339,000 )   (386,700 )
Proceeds from long-term debt 399,000     341,000     331,700  
Net proceeds from issuance of common units (118 )   51,056     (29 )
General partner contributions     1,098      
Excess purchase price over carrying value of acquired assets (26 )   (7,887 )    
Reimbursement of excess purchase price over carrying value of acquired assets     1,125     4,125  
Purchase of treasury units (273 )   (4 )   (347 )
Payments of debt issuance costs (1,312 )   (66 )   (5,274 )
Cash distributions paid (78,441 )   (76,938 )   (118,178 )
Net cash used in financing activities (238,170 )   (29,616 )   (174,703 )
           
Net increase (decrease) in cash 210     12     (16 )
Cash at beginning of year 27     15     31  
Cash at end of year $ 237     $ 27     $ 15  
           

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.

           
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
           
Terminalling and Storage Segment
 
Comparative Results of Operations for the Twelve Months Ended December 31, 2018 and 2017
 
Year Ended
December 31,

           
 
2018
 
2017
 
Variance
  Percent
Change
                       
  (In thousands)       
Revenues:                      
Services $ 102,514   $ 105,703   $ (3,189 )   (3)%
Products   145,326     130,466     14,860     11%
Total revenues   247,840     236,169     11,671     5%
                       
Cost of products sold   132,384     118,832     13,552     11%
Operating expenses   54,129     63,191     (9,062 )   (14)%
Selling, general and administrative expenses   5,327     5,832     (505 )   (9)%
Impairment of long-lived assets       600     (600 )   (100)%
Depreciation and amortization   39,508     45,160     (5,652 )   (13)%
    16,492     2,554     13,938     546%
Other operating income, net   1,328     751     577     77%
Operating income $ 17,820   $ 3,305   $ 14,515     439%
                       
Lubricant sales volumes (gallons)   24,016     21,897     2,119     10%
Shore-based throughput volumes (guaranteed minimum) (gallons)   80,000     144,998     (64,998 )   (45)%
Smackover refinery throughput volumes (guaranteed minimum BBL per day)   6,500     6,500         —%

      

           
Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016
  Year Ended
December 31,
           
  2017   2016   Variance   Percent
Change
       
  (In thousands)    
Revenues:              
Services $ 105,703   $ 128,783   $ (23,080 )   (18)%
Products 130,466   113,580   16,886     15%
Total revenues 236,169   242,363   (6,194 )   (3)%
               
Cost of products sold 118,832   102,883   15,949     16%
Operating expenses 63,191   65,292   (2,101 )   (3)%
Selling, general and administrative expenses 5,832   4,677   1,155     25%
Impairment of long-lived assets 600   15,252   (14,652 )   (96)%
Depreciation and amortization 45,160   45,484   (324 )   (1)%
  2,554   8,775   (6,221 )   (71)%
Other operating income, net 751   35,368   (34,617 )   (98)%
Operating income $ 3,305   $ 44,143   $ (40,838 )   (93)%
               
Lubricant sales volumes (gallons) 21,897   17,995   3,902     22%
Shore-based throughput volumes (guaranteed minimum) (gallons) 144,998   200,000   (55,002 )   (28)%
Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500   6,500       —%
Corpus Christi crude terminal (barrels per day)   66,167   (66,167 )   (100)%

 

                           
Natural Gas Services Segment                          
                           
Comparative Results of Operations for the Twelve Months Ended December 31, 2018 and 2017
  Year Ended
December 31,

           
 
2018
 
2017
 
Variance
  Percent
Change
                           
       
  (In thousands)
   
Revenues:                          
Services $ 52,109     $ 58,817     $ (6,708 )   (11)%
Products   496,026       474,091       21,935     5%
Total revenues   548,135       532,908       15,227     3%
                           
Cost of products sold   467,571       425,073       42,498     10%
Operating expenses   24,065       22,347       1,718     8%
Selling, general and administrative expenses   9,063       11,106       (2,043 )   (18)%
Depreciation and amortization   21,283       24,916       (3,633 )   (15)%
    26,153       49,466       (23,313 )   (47)%
Other operating loss, net   (1,215 )     (89 )     (1,126 )   (1,265)%
Operating income $ 24,938     $ 49,377     $ (24,439 )   (49)%
                           
NGLs Volumes (barrels)   10,223       10,487       (264 )   (3)%

 

                           
Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016
    Year Ended
December 31,

           
    2017       2016     Variance   Percent
Change
         
  (In thousands)      
Revenues:                          
Services $ 58,817     $ 61,133     $ (2,316 )   (4)%
Products   474,091       330,200       143,891     44%
Total revenues   532,908       391,333       141,575     36%
                           
Cost of products sold   425,073       292,573       132,500     45%
Operating expenses   22,347       23,152       (805 )   (3)%
Selling, general and administrative expenses   11,106       8,970       2,136     24%
Depreciation and amortization   24,916       28,081       (3,165 )   (11)%
    49,466       38,557       10,909     28%
Other operating loss, net   (89 )     (110 )     21     19%
Operating income $ 49,377     $ 38,447     $ 10,930     28%
                           
NGLs Volumes (barrels)   10,487       9,532       955     10%

 

 

                

 
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
 
Sulfur Services Segment
 
Comparative Results of Operations for the Twelve Months Ended December 31, 2018 and 2017
  Year Ended
December 31,

           
    2018       2017       Variance     Percent
Change
       
  (In thousands)
   
Revenues:                          
Services $ 11,148     $ 10,952     $ 196     2%
Products   121,388       123,732       (2,344 )   (2)%
Total revenues   132,536       134,684       (2,148 )   (2)%
                           
Cost of products sold   90,780       82,760       8,020     10%
Operating expenses   11,618       13,783       (2,165 )   (16)%
Selling, general and administrative expenses   4,326       4,136       190     5%
Depreciation and amortization   8,485       8,117       368     5%
    17,327       25,888       (8,561 )   (33)%
Other operating loss, net   (111 )     (26 )     (85 )   (327)%
Operating income $ 17,216     $ 25,862     $ (8,646 )   (33)%
                           
Sulfur (long tons)   688.0       807.0       (119.0 )   (15)%
Fertilizer (long tons)   277.0       276.0       1.0     —%
Sulfur services volumes (long tons)   965.0       1,083.0       (118.0 )   (11)%

                

                           
Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016
  Year Ended
December 31,

           
    2017       2016     Variance     Percent
Change
           
    (In thousands)
     
Revenues:                          
Services $ 10,952     $ 10,800     $ 152     1%
Products   123,732       130,258       (6,526 )   (5)%
Total revenues   134,684       141,058       (6,374 )   (5)%
                           
Cost of products sold   82,760       88,325       (5,565 )   (6)%
Operating expenses   13,783       13,771       12     —%
Selling, general and administrative expenses   4,136       3,861       275     7%
Depreciation and amortization   8,117       7,995       122     2%
    25,888       27,106       (1,218 )   (4)%
Other operating loss, net   (26 )     (291 )     265     91%
Operating income $ 25,862     $ 26,815     $ (953 )   (4)%
                           
Sulfur (long tons)   807.0       797.0       10.0     1%
Fertilizer (long tons)   276.0       262.0       14.0     5%
Sulfur services volumes (long tons)   1,083.0       1,059.0       24.0     2%

 

 

 

 
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
 
Marine Transportation Segment
 
Comparative Results of Operations for the Twelve Months Ended December 31, 2018 and 2017
  Year Ended
December 31,

           
                           
    2018       2017     Variance     Percent
Change
         
  (In thousands)
     
Revenues $ 52,830     $ 51,915     $ 915     2%
Operating expenses   41,086       44,028       (2,942 )   (7)%
Selling, general and administrative expenses   1,060       358       702     196%
Impairment of long-lived assets         1,625       (1,625 )   (100)%
Depreciation and amortization   7,590       7,002       588     8%
    3,094       (1,098 )     4,192     382%
Other operating loss, net   (381 )     (113 )     (268 )   (237)%
Operating income (loss) $ 2,713     $ (1,211 )   $ 3,924     324%

                

 
Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016
  Year Ended
December 31,
           
  2017   2016   Variance   Percent
Change
         
   (In thousands)      
Revenues $ 51,915     $ 61,233     $ (9,318 )   (15)%
Operating expenses   44,028       53,118       (9,090 )   (17)%
Selling, general and administrative expenses   358       18       340     1,889%
Impairment of long lived assets   1,625       11,701       (10,076 )   (86)%
Impairment of goodwill         4,145       (4,145 )   (100)%
Depreciation and amortization   7,002       10,572       (3,570 )   (34)%
    (1,098 )     (18,321 )     17,223     94%
Other operating loss, net   (113 )     (1,567 )     1,454     93%
Operating loss $ (1,211 )   $ (19,888 )   $ 18,677     94%
                           

Non-GAAP Financial Measures

The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the quarter and years ended December 31, 2018 and 2017, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow.

 
Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
       
  Three Months Ended   Twelve Months Ended
  2018   2017   2018   2017
               
Net income $ (913 )   $ 18,849     $ 44,105     $ 17,135  
Less:  Income from discontinued operations, net of income taxes     (1,726 )   (51,700 )   (4,128 )
Income (loss) from continuing operations (913 )   17,123     (7,595 )   13,007  
Adjustments:              
Interest expense 12,446     13,066     52,037     47,743  
Income tax expense (3 )   51     369     352  
Depreciation and amortization 18,024     19,247     76,866     85,195  
EBITDA 29,554     49,487     121,677     146,297  
Adjustments:              
(Gain) loss on sale of property, plant and equipment (497 )   (850 )   379     (523 )
Impairment of long-lived assets     2,225         2,225  
Unrealized mark-to-market on commodity derivatives (2,972 )   205     (76 )   (3,832 )
Hurricane damage repair accrual     (3,068 )       657  
Asset retirement obligation revision             5,547  
Unit-based compensation 352     132     1,224     650  
Transaction costs associated with acquisitions 465         465      
Adjusted EBITDA 26,902     48,131     123,669     151,021  
Adjustments:              
Interest expense (12,446 )   (13,066 )   (52,037 )   (47,743 )
Income tax expense 3     (51 )   (369 )   (352 )
Amortization of deferred debt issuance costs 882     727     3,445     2,897  
Amortization of debt premium (76 )   (76 )   (306 )   (306 )
Non-cash mark-to-market on interest rate derivatives              
Payments for plant turnaround costs (1,014 )       (1,893 )   (1,583 )
Maintenance capital expenditures (4,886 )   (5,586 )   (21,505 )   (18,080 )
Distributable Cash Flow $ 9,365     $ 30,079     $ 51,004     $ 85,854  
               
Income from discontinued operations $     $ 1,726     $ 51,700     $ 4,128  
Adjustments:              
Equity in earnings     (1,767 )   (3,382 )   (4,314 )
Distributions from unconsolidated entities     1,200     3,500     5,400  
                       
Gain from disposition of Investment in WTLPG         (48,564 )    
Adjusted EBITDA and Distributable Cash Flow from Discontinued Operations $     $ 1,159     $ 3,254     $ 5,214  

 

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