April 25, 2018 - 4:01 PM EDT
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Martin Midstream Partners Reports 2018 First Quarter Financial Results
  • First Quarter 2018 Net Income of $12.8 million
  • Strong Quarterly Distribution Coverage Ratio of 1.36 times
  • First Quarter Distributable Cash Flow and Adjusted EBITDA Exceeds Guidance

KILGORE, Texas, April 25, 2018 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq:MMLP) (the "Partnership") announced today its financial results for the quarter ended March 31, 2018.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “I am pleased with our first quarter 2018 performance as the Partnership earned adjusted EBITDA of $44.7 million, approximately 2.0% ahead of our guidance.  As is typical with the seasonal nature of our businesses, we followed a strong fourth quarter 2017 with sequentially strong cash flow during the first quarter this year.  Correspondingly, our distribution coverage ratio for the quarter was similarly robust at 1.36 times.

“The Partnership's adjusted EBITDA for the quarter exceeded guidance by $0.8 million.  Looking across our operating segments, our Natural Gas Services segment exceeded guidance based primarily on the excellent performance in our wholesale propane business.  Propane saw vastly improved margins and volume demand driven by colder weather. Likewise, our Marine Transportation segment continued to benefit from improved cost measures and operational efficiencies while utilization of our equipment was solid, as cash flow exceeded guidance.  Performance in our sulfur services segment was in line with our guidance level.  And finally, our Terminalling and Storage segment modestly missed cash flow guidance as weakness in our shore based terminals and lubricants businesses was offset by lower operating expenses and better than forecasted cash flow at the Smackover refinery.

“During the quarter, we continued the planned expansion and extension of the WTLPG Pipeline into the Delaware Basin.  During 2018, we expect to invest a total of approximately $40.0 million in this project.  To accommodate financing, we successfully amended our revolving credit facility to allow for these ongoing capital expenditures; and our amendment grants us additional flexibility related to the seasonal inventory build of natural gas liquids during the second and third quarters.”

The Partnership had net income for the first quarter 2018 of $12.8 million, or $0.33 per limited partner unit.  The Partnership had net income for the first quarter 2017 of $13.6 million, or $0.36 per limited partner unit.  The Partnership's adjusted EBITDA for the first quarter 2018 was $44.7 million compared to adjusted EBITDA from for the first quarter 2017 of $46.8 million.

The Partnership's distributable cash flow for the first quarter 2018 was $26.7 million compared to distributable cash flow for the first quarter 2017 of $30.3 million.

Revenues for the first quarter 2018 were $284.2 million compared to the first quarter 2017 of $253.3 million.

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 and condensed financial statements as of and for the three months ended March 31, 2018 and certain prior periods.  These financial statements should be read in conjunction with the information contained in the Partnership's Quarterly Report on Form 10-Q, to be filed with the Securities and Exchange Commission on April 25, 2018.

An attachment accompanying this announcement is available at http://resource.globenewswire.com/Resource/Download/ff94e25f-5398-478c-a83f-cda29333cb8b

Investors' Conference Call

An investors conference call to review the first quarter results will be held on Thursday, April 26, 2018 at 8:00 a.m. Central Time. The conference call can be accessed by calling (877) 878-2695.  An audio replay of the conference call will be available by calling (855) 859-2056 from 11:00 a.m. Central Time on April 26, 2018 through 10:59 p.m. Central Time on May 7, 2018.  The access code for the conference call and the audio replay is Conference ID No. 1799846.  The audio replay of the conference call will also be archived on Martin Midstream Partners’ website at www.martinmidstream.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) 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 except where required to do so by law.

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.martinmidstream.com or by contacting:

Joe McCreery, IRC - Vice President - Finance & Head of Investor Relations
(877) 256-6644

 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
 
 March 31,
2018
 December 31,
2017
 (Unaudited) (Audited)
Assets   
Cash$184  $27 
Accounts and other receivables, less allowance for doubtful accounts of $419 and $314, respectively84,554  107,242 
Product exchange receivables75  29 
Inventories (Note 6)73,894  97,252 
Due from affiliates25,866  23,668 
Fair value of derivatives (Note 10)82   
Other current assets6,004  4,866 
Assets held for sale (Note 4)9,442  9,579 
Total current assets200,101  242,663 
    
Property, plant and equipment, at cost1,265,516  1,253,065 
Accumulated depreciation(432,275) (421,137)
Property, plant and equipment, net833,241  831,928 
    
Goodwill17,296  17,296 
Investment in WTLPG (Note 7)130,644  128,810 
Other assets, net (Note 9)29,779  32,801 
Total assets$1,211,061  $1,253,498 
    
Liabilities and Partners’ Capital   
Trade and other accounts payable$86,751  $92,567 
Product exchange payables10,200  11,751 
Due to affiliates1,084  3,168 
Income taxes payable659  510 
Fair value of derivatives (Note 10)  72 
Other accrued liabilities (Note 9)15,234  26,340 
Total current liabilities113,928  134,408 
    
Long-term debt, net (Note 8)795,139  812,632 
Other long-term obligations10,808  8,217 
Total liabilities919,875  955,257 
    
Commitments and contingencies (Note 15)   
Partners’ capital (Note 11)291,186  298,241 
Total partners’ capital291,186  298,241 
Total liabilities and partners' capital$1,211,061  $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 Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on April 25, 2018.

 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
 
 Three Months Ended
 March 31,
 2018 2017
Revenues:   
Terminalling and storage *$24,064  $24,658 
Marine transportation *11,454  12,821 
Natural gas services*15,356  14,665 
Sulfur services2,787  2,850 
Product sales: *   
Natural gas services159,163  126,657 
Sulfur services34,900  39,527 
Terminalling and storage36,480  32,147 
 230,543  198,331 
  Total revenues284,204  253,325 
    
Costs and expenses:   
Cost of products sold: (excluding depreciation and amortization)   
Natural gas services *142,957  108,179 
Sulfur services *23,896  24,483 
Terminalling and storage *31,413  26,446 
 198,266  159,108 
Expenses:   
Operating expenses *33,001  35,057 
Selling, general and administrative *9,668  9,921 
Depreciation and amortization19,210  25,336 
  Total costs and expenses260,145  229,422 
    
Other operating loss(2) (155)
Operating income24,057  23,748 
    
Other income (expense):   
Equity in earnings of WTLPG1,595  905 
Interest expense, net(12,685) (10,920)
Other, net  30 
Total other expense(11,090) (9,985)
    
Net income before taxes12,967  13,763 
Income tax expense(149) (180)
Net income12,818  13,583 
Less general partner's interest in net income(256) (272)
Less income allocable to unvested restricted units(8) (35)
Limited partners' interest in net income$12,554  $13,276 
    
Net income per unit attributable to limited partners - basic$0.33  $0.36 
Net income per unit attributable to limited partners - diluted$0.32  $0.36 
Weighted average limited partner units - basic38,621  37,321 
Weighted average limited partner units - diluted38,630  37,367 

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on April 25, 2018.

*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
 
  Three Months Ended
 March 31,
 2018 2017
Revenues:*
    
Terminalling and storage $20,025  $19,704 
Marine transportation 3,613  4,325 
Natural gas services   112 
Product Sales 642  1,430 
Costs and expenses:*    
Cost of products sold: (excluding depreciation and amortization)    
Natural gas services 4,318  8,894 
Sulfur services 4,526  3,675 
Terminalling and storage 6,558  5,067 
Expenses:    
Operating expenses 13,384  16,376 
Selling, general and administrative 7,721  7,568 

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on April 25, 2018.

 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Dollars in thousands)
 
 Partners’ Capital  
 Common Limited General
Partner
Amount
  
 Units Amount  Total
Balances - January 1, 2017 35,452,062  $304,594  $7,412  $312,006
Net income  13,311  272  13,583 
Issuance of common units, net2,990,000  51,188    51,188 
Issuance of restricted units12,000       
Forfeiture of restricted units(1,500)      
General partner contribution    1,098  1,098 
Cash distributions  (17,725) (362) (18,087)
Unit-based compensation  186    186 
Excess purchase price over carrying value of acquired assets  (7,887)   (7,887)
Reimbursement of excess purchase price over carrying value of acquired assets  1,125    1,125 
Balances - March 31, 201738,452,562  $344,792  $8,420  $353,212 
        
Balances - January 1, 201838,444,612  $290,927  $7,314  $298,241 
Net income  12,562  256  12,818 
Issuance of common units, net of issuance related costs  (101)   (101)
Issuance of restricted units633,425       
Forfeiture of restricted units(7,000)      
Cash distributions  (19,213) (392) (19,605)
Unit-based compensation  132    132 
Excess purchase price over carrying value of acquired assets  (26)   (26)
Purchase of treasury units(18,800) (273)   (273)
Balances - March 31, 201839,052,237  $284,008  $7,178  $291,186 

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on April 25, 2018.

 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
 
 Three Months Ended
 March 31,
 2018 2017
Cash flows from operating activities:  
Net income$12,818  $13,583 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Depreciation and amortization19,210  25,336 
Amortization of deferred debt issuance costs819  721 
Amortization of premium on notes payable(77) (77)
Loss on sale of property, plant and equipment2  155 
Equity in earnings of WTLPG(1,595) (905)
Derivative (income) loss(2,470) 2,495 
Net cash received (paid) for commodity derivatives2,316  (6,332)
Unit-based compensation132  186 
Cash distributions from WTLPG1,500  1,200 
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:   
Accounts and other receivables22,693  19,110 
Product exchange receivables(46) (90)
Inventories23,306  20,580 
Due from affiliates(2,203) (477)
Other current assets(1,232) (491)
Trade and other accounts payable(3,621) (2,560)
Product exchange payables(1,551) (100)
Due to affiliates(2,084) (5,186)
Income taxes payable149  180 
Other accrued liabilities(13,310) (11,083)
Change in other non-current assets and liabilities634  281 
Net cash provided by operating activities55,390  56,526 
    
Cash flows from investing activities:   
Payments for property, plant and equipment(15,165) (6,477)
Acquisitions  (19,533)
Payments for plant turnaround costs  (1,394)
Proceeds from sale of property, plant and equipment(88) 1,481 
Contributions to WTLPG(1,739)  
Net cash used in investing activities(16,992) (25,923)
    
Cash flows from financing activities:   
Payments of long-term debt(101,000) (133,000)
Proceeds from long-term debt84,000  75,000 
Proceeds from issuance of common units, net of issuance related costs(101) 51,188 
General partner contribution  1,098 
Purchase of treasury units(273)  
Payment of debt issuance costs(1,236) (16)
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 
Cash distributions paid(19,605) (18,087)
Net cash used in financing activities(38,241) (30,579)
    
Net increase in cash157  24 
Cash at beginning of period27  15 
Cash at end of period$184  $39 
Non-cash additions to property, plant and equipment$1,905  $3,262 

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on April 25, 2018.

 
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 Three Months Ended March 31, 2018 and 2017
 
 Three Months Ended March 31, Variance Percent
Change

 2018 2017  
                              
 (In thousands, except BBL per day)     
Revenues:          
Services$25,503  $26,431  $(928) (4)%
Products36,480  32,147  4,333  13%
Total revenues61,983  58,578  3,405  6%
        
Cost of products sold31,955  27,011  4,944  18%
Operating expenses14,994  15,645  (651) (4)%
Selling, general and administrative expenses1,256  1,325  (69) (5)%
Depreciation and amortization10,159  15,477  (5,318) (34)%
 3,619  (880) 4,499  (511)%
Other operating loss  (13) 13  (100)%
Operating income (loss)$3,619  $(893) $4,512  (505)%
        
Lubricant sales volumes (gallons)5,908  5,334  574  11%
Shore-based throughput volumes (guaranteed minimum) (gallons)20,000  41,667  (21,667) (52)%
Smackover refinery throughput volumes (guaranteed minimum) (BBL per day)6,500  6,500    %


 
Natural Gas Services Segment
 
Comparative Results of Operations for the Three Months Ended March 31, 2018 and 2017
 
 Three Months Ended March 31, Variance Percent
Change
 2018 2017  
                              
 (In thousands)
    
Revenues:       
Services$15,356  $14,665  $691  5%
Products159,163  126,657  32,506  26%
Total revenues174,519  141,322  33,197  23%
        
Cost of products sold143,748  109,303  34,445  32%
Operating expenses5,780  5,658  122  2%
Selling, general and administrative expenses                                                                   3,070  3,051  19  1%
Depreciation and amortization5,301  6,161  (860) (14)%
Operating income$16,620  $17,149  $(529) (3)%
        
Distributions from WTLPG$1,500  $1,200  $300  25%
        
NGL sales volumes (Bbls)3,441  2,810  631  22%


 
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 Three Months Ended March 31, 2018 and 2017
 
 Three Months Ended March 31, Variance Percent
Change
 2018 2017  
                              
 (In thousands)
    
Revenues:       
Services$2,787  $2,850  $(63) (2)%
Products34,900  39,527  (4,627) (12)%
Total revenues37,687  42,377  (4,690) (11)%
        
Cost of products sold23,987  24,574  (587) (2)%
Operating expenses2,912  3,247  (335) (10)%
Selling, general and administrative expenses                                                           1,035  1,021  14  1%
Depreciation and amortization2,064  2,033  31  2%
 7,689  11,502  (3,813) (33)%
Other operating loss(2) (22) 20  (91)%
Operating income$7,687  $11,480  $(3,793) (33)%
        
Sulfur (long tons)176  217  (41) (19)%
Fertilizer (long tons)88  94  (6) (6)%
Total sulfur services volumes (long tons)264  311  (47) (15)%


 
Marine Transportation Segment
 
Comparative Results of Operations for the Three Months Ended March 31, 2018 and 2017
 
 Three Months Ended March 31, Variance Percent
Change
 2018 2017  
           
 (In thousands)
  
Revenues$12,028  $13,414  $(1,386) (10)%
Operating expenses9,904  11,093  (1,189) (11)%
Selling, general and administrative expenses                                                     76  104  (28) (27)%
Depreciation and amortization1,686  1,665  21  1%
 $362  $552  $(190) (34)%
Other operating loss  (120) 120  (100)%
Operating income$362  $432  $(70) (16)%
               

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 three months ended March 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
 March 31,
 2018
 2017
    
 (in thousands)
Net income
 $ 12,818  $13,583 
Adjustments:   
Interest expense, net12,685  10,920 
Income tax expense149  180 
Depreciation and amortization19,210  25,336 
EBITDA44,862  50,019 
Adjustments:   
Equity in earnings of WTLPG(1,595) (905)
Loss on sale of property, plant and equipment2  155 
Unrealized mark-to-market on commodity derivatives(154) (3,837)
Distributions from WTLPG1,500  1,200 
Unit-based compensation132  186 
Adjusted EBITDA44,747  46,818 
Adjustments:   
Interest expense, net(12,685) (10,920)
Income tax expense(149) (180)
Amortization of debt premium(77) (77)
Amortization of deferred debt issuance costs819  721 
Payments for plant turnaround costs  (1,394)
Maintenance capital expenditures(6,002) (4,668)
Distributable Cash Flow$26,653  $30,300 

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Source: GlobeNewswire (April 25, 2018 - 4:01 PM EDT)

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