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Martin Midstream Partners Reports Second Quarter 2019 Financial Results and Revised Guidance


Martin Midstream Partners L.P. logo
Source: Martin Midstream Partners L.P.
  • Quarterly Distribution Coverage Ratio of 1.31 times
  • Second Quarter Net Loss from Continuing Operations of $10.6 million
  • Improved Pro-Forma Total Leverage to 5.12 times
  • Revised Guidance for 2019

KILGORE, Texas, July 24, 2019 (GLOBE NEWSWIRE) — Martin Midstream Partners L.P. (Nasdaq:MMLP) (the “Partnership”) announced today its financial results for the second quarter of 2019.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, said, “During the second quarter, the Partnership continued to execute on announced strategic initiatives designed to strengthen the balance sheet and increase liquidity.  Since mid-2018 the Partnership, through a series of divestitures and the acquisition of Martin Transport, Inc., has received net proceeds of approximately $283.0 million, used to reduce borrowings under the revolving credit facility.  As a result, the Partnership will benefit approximately $15.6 million from interest expense savings.

“Addressing the second quarter of 2019, the Partnership generated adjusted EBITDA of approximately $25.2 million, which does not include adjusted EBITDA from discontinued operations, and a total distribution coverage ratio of 1.31 times, as the Partnership continued to encounter challenges across all four operating segments.  The Terminalling and Storage segment faced reduced contract renewal rates as a result of ongoing depressed activity in the Gulf of Mexico.  The Sulfur segment experienced weak demand for fertilizer products in the last month of the quarter attributable to a shortened planting season caused by rain and flooding.  Historically, the second quarter is the weakest for our continuing operations in the Natural Gas Liquids segment as prices contract during the seasonal buying period, negatively impacting inventory valuation.  Finally, the Transportation segment saw softness in the land division compared to guidance attributable to reduced demand in the refining and chemicals sector, offset by solid performance in the marine division due to continuing strong fleet utilization and increasing day rates.

“In conclusion, while the Partnership experienced headwinds within our operating environments, we have effectively executed our strategic initiatives to strengthen the balance sheet by reducing leverage.  In addition, we successfully amended and extended our revolving credit facility recently which improves liquidity and, coupled with the Partnership’s commitment to capital discipline, provides support for near term opportunities and long term success.”

The Partnership reported a net loss from continuing operations for the second quarter 2019 of $10.6 million, a loss of $0.27 per limited partner unit.  The Partnership had a net loss from continuing operations for the second quarter 2018 of $9.5 million, or $0.31 per limited partner unit.  The Partnership had a net loss from continuing operations for the six months ended June 30, 2019 of $15.4 million, a loss of $0.39 per limited partner unit.  The Partnership had a net loss from continuing operations for the six months ended June 30, 2018 of $1.5 million, or $0.17 per limited partner unit.

Adjusted EBITDA from continuing operations for the second quarter of 2019 was $25.2 million compared to the second quarter of 2018 of $22.7 million.  Adjusted EBITDA from continuing operations for the six months ended June 30, 2019 was $50.8 million compared to the six months ended June 30, 2018 of $58.8 million.

Distributable cash flow from continuing operations for the second quarter of 2019 was $8.0 million compared to the second quarter of 2018 of $4.7 million.  Distributable cash flow from continuing operations for the six months ended June 30, 2019 was $12.7 million compared to the six months ended June 30, 2018 of $23.4 million.

The Partnership had a net loss from discontinued operations for the three months ended June 30, 2019 of $180.6 million, a loss of $4.55 per limited partner unit.  The Partnership’s net loss from discontinued operations for the three months ended June 30, 2019 includes a non-cash charge related to the disposition of its natural gas storage assets of $178.8 million.  The Partnership had net income from discontinued operations for the three months ended June 30, 2018 of $4.9 million, or $0.13 per limited partner unit.  The Partnership had a net loss from discontinued operations for the six months ended June 30, 2019 of $179.5 million, a loss of $4.52 per limited partner unit.  The Partnership’s loss from discontinued operations for the six months ended June 30, 2019 includes a non-cash charge related to the disposition of its natural gas storage assets of $178.8 million.  The Partnership had net income from discontinued operations for the six months ended June 30, 2018 of $12.0 million, or $0.31 per limited partner unit.

Adjusted EBITDA from discontinued operations for the second quarter of 2019 was $5.5 million compared to the second quarter 2018 of $10.1 million.  Adjusted EBITDA from discontinued operations for the six months ended June 30, 2019 was $10.7 million compared to the six months ended June 30, 2018 of $21.2 million.

Distributable cash flow from discontinued operations for the second quarter of 2019 was $4.9 million compared to the second quarter of 2018 of $9.6 million.  Distributable cash flow from discontinued operations for the six months ended June 30, 2019 was $9.8 million compared to the six months ended June 30, 2018 of $20.5 million.

Revenues for the second quarter of 2019 were $187.3 million compared to the second quarter of 2018 of $227.2 million.  Revenues for the six months ended June 30, 2019 were $427.4 million compared to the six months ended June 30, 2018 of $518.9 million.

Distributable cash flow, distributable cash flow from discontinued operations, EBITDA, adjusted EBITDA, and adjusted EBITDA from discontinued operations 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 and six months ended June 30, 2019 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 July 24, 2019.

An attachment reconciling net income to Adjusted EBITDA and with 2019 revised guidance is included at http://ml.globenewswire.com/Resource/Download/779f5bcb-6037-4c15-8903-50635dc96a4c.

Investors’ Conference Call

An investors conference call to review the second quarter results will be held on Thursday, July 25, 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 9578957. An archive of the replay will be on Martin Midstream Partners’ website at www.MMLP.com.

About Martin Midstream Partners

Martin Midstream Partners L.P. 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 lines include: (1) terminalling, processing, storage, and packaging services for petroleum products and by-products; (2) land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) natural gas liquids marketing, distribution and transportation services.

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, Adjusted EBITDA, and Adjusted EBITDA from Discontinued Operations.  Certain items excluded from EBITDA, adjusted EBITDA, and adjusted EBITDA from discontinued operations 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, adjusted EBITDA, and adjusted EBITDA from discontinued operations 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 and Distributable Cash Flow from Discontinued Operations.  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, adjusted EBITDA from discontinued operations, distributable cash flow, and distributable cash flow from discontinued operations, 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

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, 2019 December 31, 20181
(Unaudited) (Unaudited)
Assets
Cash $ 2,521 $ 300
Accounts and other receivables, less allowance for doubtful accounts of $618 and $576, respectively 64,606 83,488
Product exchange receivables 107 166
Inventories (Note 6) 81,220 84,265
Due from affiliates 35,598 18,845
Fair value of derivatives (Note 11) 4
Other current assets 9,638 5,889
Assets held for sale (Note 4) 5,132 5,652
Current assets – Natural Gas Storage Assets (Note 4) 9,428
Total current assets 198,822 208,037
Property, plant and equipment, at cost 880,603 886,435
Accumulated depreciation (451,359 ) (438,602 )
Property, plant and equipment, net 429,244 447,833
Goodwill 17,785 17,785
Right-of-use assets (Note 9) 25,682
Deferred income taxes, net (Note 19) 23,925
Other assets, net (Note 10) 5,050 4,584
Non-current assets – Natural Gas Storage Assets (Note 4) 395,389
Total assets $ 700,508 $ 1,073,628
Liabilities and Partners’ Capital
Current installments of finance lease obligations (Note 9) $ 6,059 $ 5,409
Trade and other accounts payable 61,357 64,041
Product exchange payables 7,717 12,103
Due to affiliates 3,367 2,133
Income taxes payable 576 445
Fair value of derivatives (Note 11) 2,069
Other accrued liabilities (Note 10) 29,160 24,380
Current liabilities – Natural Gas Storage Assets (Note 4) 3,240
Total current liabilities 110,305 111,751
Long-term debt, net (Note 8 ) 596,398 656,459
Finance lease obligations (Note 9) 4,259 6,272
Operating lease liabilities (Note 9) 17,913
Other long-term obligations 8,747 10,045
Non-current liabilities – Natural Gas Storage Assets (Note 4) 669
Total liabilities 737,622 785,196
Commitments and contingencies (Note 16)
Partners’ capital (deficit) (Note 12) (37,114 ) 288,432
Total partners’ capital (deficit) (37,114 ) 288,432
Total liabilities and partners’ capital $ 700,508 $ 1,073,628

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 July 24, 2019.

1 Financial information for 2018 has been revised to include results attributable to Martin Transport, Inc. (“MTI”) acquired from Martin Resource Management Corporation. See Note 1 – Nature of Operations and Basis of Presentation.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2019 20181 2019 20181
Revenues:
Terminalling and storage * $ 21,377 $ 24,068 $ 44,481 $ 48,115
Transportation * 41,321 37,206 79,116 71,565
Sulfur services 2,858 2,787 5,717 5,574
Product sales: *
Natural gas liquids 57,398 90,625 173,872 249,787
Sulfur services 32,998 35,684 61,732 70,584
Terminalling and storage 31,371 36,794 62,438 73,257
121,767 163,103 298,042 393,628
Total revenues 187,323 227,164 427,356 518,882
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas liquids * 53,546 84,542 159,736 223,165
Sulfur services * 22,124 26,886 41,820 49,104
Terminalling and storage * 26,118 32,286 52,989 64,266
101,788 143,714 254,545 336,535
Expenses:
Operating expenses * 53,579 52,915 105,428 105,741
Selling, general and administrative * 10,226 8,894 20,426 18,833
Depreciation and amortization 15,087 16,946 29,988 32,258
Total costs and expenses 180,680 222,469 410,387 493,367
Other operating loss (1,633 ) (206 ) (2,353 ) (198 )
Operating income 5,010 4,489 14,616 25,317
Other income (expense):
Interest expense, net (14,986 ) (13,815 ) (28,657 ) (26,545 )
Other, net 1 5 4 5
Total other expense (14,985 ) (13,810 ) (28,653 ) (26,540 )
Net loss before taxes (9,975 ) (9,321 ) (14,037 ) (1,223 )
Income tax expense (639 ) (132 ) (1,335 ) (281 )
Loss from continuing operations (10,614 ) (9,453 ) (15,372 ) (1,504 )
Income (loss) from discontinued operations, net of income taxes (180,568 ) 4,927 (179,466 ) 12,014
Net income (loss) (191,182 ) (4,526 ) (194,838 ) 10,510
Less general partner’s interest in net (income) loss 3,824 145 3,897 (111 )
Less pre-acquisition (income) allocated to the general partner (2,720 ) (4,938 )
Less (income) loss allocable to unvested restricted units 65 6 67 (2 )
Limited partners’ interest in net income (loss) $ (187,293 ) $ (7,095 ) $ (190,874 ) $ 5,459

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 July 24, 2019.

1 Financial information for 2018 has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 1 – Nature of Operations and Basis of Presentation.

*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 Six Months Ended
June 30, June 30,
2019 20181 2019 20181
Revenues:*
Terminalling and storage $ 17,477 $ 20,485 $ 36,449 $ 40,493
Transportation 5,856 7,066 11,499 13,759
Product Sales 286 377 707 1,001
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Sulfur services 2,884 2,492 5,458 5,340
Terminalling and storage 7,203 7,089 13,112 12,668
Expenses:
Operating expenses 24,407 23,758 46,943 46,846
Selling, general and administrative 8,558 6,692 17,093 14,618

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 July 24, 2019.

1 Financial information for 2018 has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 1 – Nature of Operations and Basis of Presentation.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2019 20181 2019 20181
Allocation of net income (loss) attributable to:
Limited partner interest:
Continuing operations $ (10,398 ) $ (11,857 ) $ (15,060 ) $ (6,426 )
Discontinued operations (176,895 ) 4,762 (175,814 ) 11,885
$ (187,293 ) $ (7,095 ) $ (190,874 ) $ 5,459
General partner interest:
Continuing operations $ (212 ) $ (303 ) $ (307 ) $ (16 )
Discontinued operations (3,612 ) 158 (3,590 ) 127
$ (3,824 ) $ (145 ) $ (3,897 ) $ 111
Net income (loss) per unit attributable to limited partners:
Basic:
Continuing operations $ (0.27 ) $ (0.31 ) $ (0.39 ) $ (0.17 )
Discontinued operations (4.55 ) 0.13 (4.52 ) 0.31
$ (4.82 ) $ (0.18 ) $ (4.91 ) $ 0.14
Weighted average limited partner units – basic 38,871 38,722 38,912 38,829
Diluted:
Continuing operations $ (0.27 ) $ (0.31 ) $ (0.39 ) $ (0.17 )
Discontinued operations (4.55 ) 0.13 (4.52 ) 0.31
$ (4.82 ) $ (0.18 ) $ (4.91 ) $ 0.14
Weighted average limited partner units – diluted 38,871 38,722 38,912 38,834

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 July 24, 2019.

1 Financial information for 2018 has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 1 – Nature of Operations and Basis of Presentation.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Dollars in thousands)
Partners’ Capital
Parent Net
Investment1
Common Limited General
Partner
Amount
Units Amount Total
Balances – January 1, 2018 $ 24,240 38,444,612 $ 290,927 $ 7,314 $ 322,481
Net income 4,938 5,461 111 10,510
Issuance of common units, net (118 ) (118 )
Issuance of restricted units 633,425
Forfeiture of restricted units (7,000 )
Cash distributions (38,433 ) (784 ) (39,217 )
Deemed contribution to Martin Resource Management Corporation (8,857 ) (8,857 )
Unit-based compensation 520 520
Purchase of treasury units (18,800 ) (273 ) (273 )
Excess purchase price over carrying value of acquired assets (26 ) (26 )
Balances – June 30, 2018 $ 20,321 39,052,237 $ 258,058 $ 6,641 $ 285,020
Balances – January 1, 2019 $ 23,720 39,032,237 $ 258,085 $ 6,627 $ 288,432
Net loss (190,941 ) (3,897 ) (194,838 )
Issuance of common units, net of issuance related costs (259 ) (259 )
Issuance of restricted units 16,944
Forfeiture of restricted units (154,288 )
Cash distributions (28,851 ) (589 ) (29,440 )
Unit-based compensation 715 715
Excess purchase price over carrying value of acquired assets (102,393 ) (102,393 )
Deferred taxes on acquired assets and liabilities 24,781 24,781
Contribution to parent (23,720 ) (23,720 )
Purchase of treasury units (31,504 ) (392 ) (392 )
Balances – June 30, 2019 $ 38,863,389 $ (39,255 ) $ 2,141 $ (37,114 )

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 July 24, 2019.

1 Financial information for 2018 has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 1 – Nature of Operations and Basis of Presentation.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six Months Ended
June 30,
2019 20181
Cash flows from operating activities:
Net income (loss) $ (194,838 ) $ 10,510
Less:  (Income) loss from discontinued operations, net of income taxes 179,466 (12,014 )
Net loss from continuing operations (15,372 ) (1,504 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 29,988 32,258
Amortization of deferred debt issuance costs 2,478 1,689
Amortization of premium on notes payable (153 ) (153 )
Deferred taxes 856
Loss on sale of property, plant and equipment 2,353 198
Derivative loss (gain) 2,322 (2,069 )
Net cash received (paid) for commodity derivatives (249 ) 2,569
Unit-based compensation 715 520
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables 28,073 44,772
Product exchange receivables 59 (145 )
Inventories 3,044 (15,482 )
Due from affiliates (15,947 ) 3,241
Other current assets (3,061 ) 60
Trade and other accounts payable (2,800 ) (16,155 )
Product exchange payables (4,386 ) 1,196
Due to affiliates 428 (495 )
Income taxes payable 131 (103 )
Other accrued liabilities (3,043 ) (6,158 )
Change in other non-current assets and liabilities (693 ) 931
Net cash provided by continuing operating activities 24,743 45,170
Net cash provided by discontinued operating activities 7,770 23,999
Net cash provided by operating activities 32,513 69,169
Cash flows from investing activities:
Payments for property, plant and equipment (14,102 ) (22,450 )
Acquisitions (23,720 )
Payments for plant turnaround costs (4,742 )
Proceeds from sale of property, plant and equipment 659 500
Net cash used in continuing investing activities (41,905 ) (21,950 )
Net cash provided by (used in) discontinued investing activities 209,155 (15,139 )
Net cash provided by (used in) investing activities 167,250 (37,089 )
Cash flows from financing activities:
Payments of long-term debt and finance lease obligations (362,672 ) (199,765 )
Proceeds from long-term debt 298,000 218,000
Proceeds from issuance of common units, net of issuance related costs (259 ) (118 )
Purchase of treasury units (392 ) (273 )
Deemed distribution to Martin Resource Management Corporation (8,857 )
Payment of debt issuance costs (386 ) (1,240 )
Excess purchase price over carrying value of acquired assets (102,393 ) (26 )
Cash distributions paid (29,440 ) (39,217 )
Net cash used in financing activities (197,542 ) (31,496 )
Net increase in cash 2,221 584
Cash at beginning of period 300 89
Cash at end of period $ 2,521 $ 673
Non-cash additions to property, plant and equipment $ 2,248 $ 1,811

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 July 24, 2019.

1 Financial information for 2018 has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 1 – Nature of Operations and Basis of Presentation.

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 June 30, 2019 and 2018
Three Months Ended
June 30,
Variance Percent
Change
2019 2018
(In thousands, except BBL per day)
Revenues:
Services $ 22,966 $ 25,491 $ (2,525 ) (10 )%
Products 31,385 36,823 (5,438 ) (15 )%
Total revenues 54,351 62,314 (7,963 ) (13 )%
Cost of products sold 27,497 33,596 (6,099 ) (18 )%
Operating expenses 13,257 12,909 348 3 %
Selling, general and administrative expenses 1,378 1,334 44 3 %
Depreciation and amortization 7,826 11,690 (3,864 ) (33 )%
4,393 2,785 1,608 58 %
Other operating income (loss) 7 (36 ) 43 119 %
Operating income $ 4,400 $ 2,749 $ 1,651 60 %
Shore-based throughput volumes (guaranteed minimum) (gallons) 20,000 20,000 %
Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 %
Comparative Results of Operations for the Six Months Ended June 30, 2019 and 2018
Six Months Ended
June 30,
Variance Percent
Change
2019 2018
(In thousands, except BBL per day)
Revenues:
Services $ 47,766 $ 50,994 $ (3,228 ) (6 )%
Products 62,477 73,303 (10,826 ) (15 )%
Total revenues 110,243 124,297 (14,054 ) (11 )%
Cost of products sold 55,774 67,098 (11,324 ) (17 )%
Operating expenses 26,610 26,356 254 1 %
Selling, general and administrative expenses 2,727 2,590 137 5 %
Depreciation and amortization 15,663 21,849 (6,186 ) (28 )%
9,469 6,404 3,065 48 %
Other operating income (loss) 17 (36 ) 53 147 %
Operating income $ 9,486 $ 6,368 $ 3,118 49 %
Shore-based throughput volumes (guaranteed minimum) (gallons) 40,000 40,000 %
Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500 6,500 %
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
Transportation Segment
Comparative Results of Operations for the Three Months Ended June 30, 2019 and 2018
Three Months Ended
June 30,
Variance Percent
Change
2019 2018
(In thousands)
Revenues $ 47,233 $ 43,553 $ 3,680 8 %
Operating expenses 36,512 36,055 457 1 %
Selling, general and administrative expenses 1,980 1,452 528 36 %
Depreciation and amortization 3,778 2,550 1,228 48 %
4,963 3,496 1,467 42 %
Other operating loss (1,649 ) (186 ) (1,463 ) (787 )%
Operating income $ 3,314 $ 3,310 $ 4 %
Comparative Results of Operations for the Six Months Ended June 30, 2019 and 2018
Six Months Ended
June 30,
Variance Percent
Change
2019 2018
(In thousands)
Revenues $ 92,419 $ 85,490 $ 6,929 8 %
Operating expenses 71,777 71,495 282 %
Selling, general and administrative expenses 4,065 2,868 1,197 42 %
Depreciation and amortization 7,348 5,016 2,332 46 %
$ 9,229 $ 6,111 $ 3,118 51 %
Other operating loss (2,385 ) (176 ) (2,209 ) (1,255 )%
Operating income $ 6,844 $ 5,935 $ 909 15 %
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 June 30, 2019 and 2018
Three Months Ended
June 30,
Variance Percent
Change
2019 2018
(In thousands)
Revenues:
Services $ 2,858 $ 2,787 $ 71 3 %
Products 32,998 35,684 (2,686 ) (8 )%
Total revenues 35,856 38,471 (2,615 ) (7 )%
Cost of products sold 23,676 28,829 (5,153 ) (18 )%
Operating expenses 2,789 2,929 (140 ) (5 )%
Selling, general and administrative expenses 1,251 1,046 205 20 %
Depreciation and amortization 2,854 2,086 768 37 %
5,286 3,581 1,705 48 %
Other operating income (loss) (1 ) 16 (17 ) (106 )%
Operating income $ 5,285 $ 3,597 $ 1,688 47 %
Sulfur (long tons) 182 178 4 2 %
Fertilizer (long tons) 88 93 (5 ) (5 )%
Total sulfur services volumes (long tons) 270 271 (1 ) %
Comparative Results of Operations for the Six Months Ended June 30, 2019 and 2018
Six Months Ended
June 30,
Variance Percent
Change
2019 2018
(In thousands)
Revenues:
Services $ 5,717 $ 5,574 $ 143 3 %
Products 61,732 70,584 (8,852 ) (13 )%
Total revenues 67,449 76,158 (8,709 ) (11 )%
Cost of products sold 45,242 52,816 (7,574 ) (14 )%
Operating expenses 4,952 5,841 (889 ) (15 )%
Selling, general and administrative expenses 2,429 2,081 348 17 %
Depreciation and amortization 5,722 4,150 1,572 38 %
9,104 11,270 (2,166 ) (19 )%
Other operating income (loss) (1 ) 14 (15 ) (107 )%
Operating income $ 9,103 $ 11,284 $ (2,181 ) (19 )%
Sulfur (long tons) 291 354 (63 ) (18 )%
Fertilizer (long tons) 155 181 (26 ) (14 )%
Total sulfur services volumes (long tons) 446 535 (89 ) (17 )%
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
Natural Gas Liquids Segment
Comparative Results of Operations for the Three Months Ended June 30, 2019 and 2018
Three Months Ended
June 30,
Variance Percent
Change
2019 2018
(In thousands)
Products Revenues $ 57,398 $ 90,643 $ (33,245 ) (37 )%
Cost of products sold 57,392 88,389 (30,997 ) (35 )%
Operating expenses 1,680 1,717 (37 ) (2 )%
Selling, general and administrative expenses 1,097 738 359 49 %
Depreciation and amortization 629 620 9 1 %
(3,400 ) (821 ) (2,579 ) (314 )%
Other operating income 10 10  —
Operating loss $ (3,390 ) $ (821 ) $ (2,569 ) (313 )%
NGL sales volumes (Bbls) 1,457 1,743 (286 ) (16 )%
Comparative Results of Operations for the Six Months Ended June 30, 2019 and 2018
Six Months Ended
June 30,
Variance Percent
Change
2019 2018
(In thousands)
Products Revenues $ 173,872 $ 249,806 $ (75,934 ) (30 )%
Cost of products sold 168,701 232,122 (63,421 ) (27 )%
Operating expenses 3,386 3,389 (3 ) %
Selling, general and administrative expenses 2,197 2,745 (548 ) (20 )%
Depreciation and amortization 1,255 1,243 12 1 %
(1,667 ) 10,307 (11,974 ) (116 )%
Other operating income 16 16  —
Operating income (loss) $ (1,651 ) $ 10,307 $ (11,958 ) (116 )%
NGL sales volumes (Bbls) 4,364 5,184 (820 ) (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 and six months ended June 30, 2019 and 2018, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
Three Months Ended Six Months Ended
June 30, June 30,
2019 20181 2019 20181
(in thousands) (in thousands)
Net income (loss) $ (191,182 ) $ (4,526 ) $ (194,838 ) $ 10,510
Less:  (Income) loss from discontinued operations, net of income taxes 180,568 (4,927 ) 179,466 (12,014 )
Loss from continuing operations (10,614 ) (9,453 ) (15,372 ) (1,504 )
Adjustments:
Interest expense, net 14,986 13,815 28,657 26,545
Income tax expense 639 132 1,335 281
Depreciation and amortization 15,087 16,946 29,988 32,258
EBITDA from Continuing Operations 20,098 21,440 44,608 57,580
Adjustments:
Loss on sale of property, plant and equipment 1,633 206 2,353 198
Unrealized mark-to-market on commodity derivatives 2,220 654 2,073 500
Transaction costs associated with acquisitions 40 224
Non-cash insurance related accruals 500 500
Lower of cost or market adjustments 303 303
Unit-based compensation 363 388 715 520
Adjusted EBITDA from Continuing Operations 25,157 22,688 50,776 58,798
Adjustments:
Interest expense, net (14,986 ) (13,815 ) (28,657 ) (26,545 )
Income tax expense (639 ) (132 ) (1,335 ) (281 )
Amortization of debt premium (76 ) (76 ) (153 ) (153 )
Amortization of deferred debt issuance costs 1,583 870 2,478 1,689
Deferred income taxes 487 856
Payments for plant turnaround costs (915 ) (4,742 )
Maintenance capital expenditures (2,628 ) (4,857 ) (6,487 ) (10,100 )
Distributable Cash Flow from Continuing Operations $ 7,983 $ 4,678 $ 12,736 $ 23,408
Income (loss) from discontinued operations, net of income taxes $ (180,568 ) $ 4,927 $ (179,466 ) $ 12,014
Adjustments:
Depreciation and amortization 4,080 4,684 8,161 9,362
EBITDA from Discontinued Operations (176,488 ) 9,611 (171,305 ) 21,376
Equity in earnings of unconsolidated entities (1,131 ) (2,726 )
Distributions from unconsolidated entities 1,500 3,000
Loss on sale of property, plant and equipment 178,781 120 178,781 120
Non-cash insurance related accruals 3,213 3,213
Adjusted EBITDA from Discontinued Operations 5,506 10,100 10,689 21,770
Maintenance capital expenditures (576 ) (512 ) (912 ) (1,271 )
Distributable Cash Flow from Discontinued Operations $ 4,930 $ 9,588 $ 9,777 $ 20,499

1 Financial information for 2018 has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 1 – Nature of Operations and Basis of Presentation.



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