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Martin Midstream Partners Reports 2018 Second Quarter Financial Results

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  • Agreement to Divest West Texas LPG Pipeline Interest
  • Improved Pro-Forma Total Leverage to 4.36 times
  • Quarterly Distribution Coverage Ratio In-Line with Guidance

KILGORE, Texas, July 25, 2018 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (NASDAQ:MMLP) (the "Partnership") announced today its financial results for the quarter ended June 30, 2018.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, "I am pleased to announce that the Partnership has entered into an agreement with ONEOK, Inc. to sell our 20 percent non-operating partnership interests in the West Texas LPG Pipeline Limited Partnership for $195.0 million.  We expect the transaction to close on July 31, 2018 and will use net proceeds of approximately $193.7 million to reduce outstanding borrowings under the Partnership's revolving credit facility.  Accordingly, our pro-forma leverage is 4.36 times compared to actual leverage of 5.46 times at June 30, 2018.  In addition, the Partnership's forecasted growth capital expenditures will be reduced by approximately $24.2 million for the remainder of 2018.

"Addressing our second quarter 2018 performance, the Partnership generated a distribution coverage ratio of 0.56 times.  While cash flow trailed guidance by approximately $5.7 million, our coverage ratio was substantially in line with our internal forecast based on lower maintenance capital expenditures.  Our second quarter results include a one-time negative inventory adjustment of $3.9 million in the fertilizer division of our Sulfur Services segment.  The adjustment is a result of utilizing newly implemented three-dimensional stockpile measurement technology to determine dry bulk inventory.  Partially offsetting the inventory adjustment was better than forecasted Marine Transportation performance driven by improving day rates and fleet utilization.

"Based on lower project costs and timing differences we are reducing our full year maintenance capital expenditure guidance by $5.0 million to $24.3 million.  After giving effect to the transaction, our six month pro-forma distribution coverage ratio is 1.01 times and our full year forecasted ratio remains at 1.00 times.

"Management continues to be focused on improving the leverage profile of the Partnership.  By executing the pipeline divestiture we achieve our goal of less than 4.50 times."

The Partnership had net loss for the second quarter 2018 of $7.2 million, a loss of $0.18 per limited partner unit.  The Partnership had net income for the second quarter 2017 of $1.0 million, or $0.03 per limited partner unit.  The Partnership's adjusted EBITDA for the second quarter 2018 was $29.4 million compared to adjusted EBITDA from for the second quarter 2017 of $33.0 million.

The Partnership had net income for the six months ended June 30, 2018 of $5.6 million, or $0.14 per limited partner unit.  The Partnership had net income for the six months ended June 30, 2017 of $14.6 million, or $0.38 per limited partner unit.  The Partnership's adjusted EBITDA for the six months ended June 30, 2018 was $74.2 million compared to adjusted EBITDA for the six months ended June 30, 2017 of $79.8 million.

The Partnership's distributable cash flow for the second quarter 2018 was $11.0 million compared to distributable cash flow for the second quarter 2017 of $19.6 million.

The Partnership's distributable cash flow for the six months ended June 30, 2018 was $37.6 million compared to distributable cash flow for the six months ended June 30, 2017 of $49.9 million.

Revenues for the second quarter 2018 were $216.6 million compared to the second quarter 2017 of $193.9 million.  Revenues for the six months ended June 30, 2018 were $500.8 million compared to the six months ended June 30, 2017 of $447.2 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 and six months ended June 30, 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 July 25, 2018.

An attachment accompanying this announcement is available at http://resource.globenewswire.com/Resource/Download/e506ace1-430e-429b-b0e5-669028cd4607.

Investors' Conference Call

A conference call to review the second quarter results will be held on Thursday, July 26, 2018 at 8:00 a.m. Central Time. The live conference call can be accessed 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 3192908. The replay 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:

Sharon Taylor - Head of Investor Relations
(877) 256-6644

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)

  June 30, 2018   December 31, 2017
  (Unaudited)   (Audited)
Assets      
Cash $              610     $ 27  
Accounts and other receivables, less allowance for doubtful accounts of $405 and $314, respectively 60,884     107,242  
Product exchange receivables 174     29  
Inventories (Note 6) 113,100     97,252  
Due from affiliates 21,031     23,668  
Other current assets 5,368     4,866  
Assets held for sale (Note 4) 8,158     9,579  
Total current assets 209,325     242,663  
       
Property, plant and equipment, at cost 1,273,392     1,253,065  
Accumulated depreciation (450,564 )   (421,137 )
Property, plant and equipment, net 822,828     831,928  
       
Goodwill 17,296     17,296  
Investment in WTLPG (Note 7) 141,114     128,810  
Other assets, net (Note 9) 28,202     32,801  
Total assets $ 1,218,765     $ 1,253,498  
       
Liabilities and Partners' Capital      
Trade and other accounts payable $ 72,945     $ 92,567  
Product exchange payables 13,015     11,751  
Due to affiliates 1,271     3,168  
Income taxes payable 400     510  
Fair value of derivatives (Note 10) 572     72  
Other accrued liabilities (Note 9) 23,093     26,340  
Total current liabilities 111,296     134,408  
       
Long-term debt, net (Note 8) 831,928     812,632  
Other long-term obligations 10,842     8,217  
Total liabilities 954,066     955,257  
       
Commitments and contingencies (Note 15)      
Partners' capital (Note 11) 264,699     298,241  
Total partners' capital 264,699     298,241  
Total liabilities and partners' capital $ 1,218,765     $ 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 July 25, 2018.

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,
  2018   2017   2018   2017
Revenues:              
Terminalling and storage * $ 24,090     $ 24,695     $ 48,154     $ 49,353  
Marine transportation * 12,739     12,433     24,193     25,254  
Natural gas services* 13,804     14,838     29,160     29,503  
Sulfur services 2,787     2,850     5,574     5,700  
Product sales: *              
Natural gas services 90,643     73,666     249,806     200,323  
Sulfur services 35,684     32,027     70,584     71,554  
Terminalling and storage 36,824     33,413     73,304     65,560  
  163,151     139,106     393,694     337,437  
Total revenues 216,571     193,922     500,775     447,247  
               
Costs and expenses:              
Cost of products sold: (excluding depreciation and amortization)              
Natural gas services * 87,642     70,198     230,599     178,377  
Sulfur services * 28,739     21,207     52,635     45,690  
Terminalling and storage * 33,206     29,897     66,166     58,026  
  149,587     121,302     349,400     282,093  
Expenses:              
Operating expenses * 31,510     32,552     62,964     65,926  
Selling, general and administrative * 8,572     8,909     18,240     18,830  
Depreciation and amortization 20,891     20,326     40,101     45,662  
Total costs and expenses 210,560     183,089     470,705     412,511  
               
Other operating income (loss) (490 )   15     (492 )   (140 )
Operating income 5,521     10,848     29,578     34,596  
               
Other income (expense):              
Equity in earnings of WTLPG 1,131     853     2,726     1,758  
Interest expense, net (13,766 )   (11,219 )   (26,451 )   (22,139 )
Other, net     520         550  
Total other expense (12,635 )   (9,846 )   (23,725 )   (19,831 )
               
Net income (loss) before taxes (7,114 )   1,002     5,853     14,765  
Income tax expense (132 )   (13 )   (281 )   (193 )
Net income (loss) (7,246 )   989     5,572     14,572  
Less general partner's interest in net (income) loss 145     (19 )   (111 )   (291 )
Less (income) loss allocable to unvested restricted units 6     (3 )   (2 )   (38 )
Limited partners' interest in net income (loss) $ (7,095 )   $ 967     $ 5,459     $ 14,243  
               
Net income (loss) per unit attributable to limited partners - basic $ (0.18 )   $ 0.03     $ 0.14     $ 0.38  
Net income (loss) per unit attributable to limited partners - diluted $ (0.18 )   $ 0.03     $ 0.14     $ 0.38  
Weighted average limited partner units - basic 38,722     38,357     38,829     37,842  
Weighted average limited partner units - diluted 38,722     38,414     38,834     37,895  

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 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   Six Months Ended
  June 30,   June 30,
  2018   2017   2018   2017
Revenues:*              
Terminalling and storage $ 20,507     $ 20,331     $ 40,532     $ 40,035  
Marine transportation 4,105     4,187     7,718     8,512  
Natural gas services     6         118  
Product Sales 426     724     1,068     2,154  
Costs and expenses:*              
Cost of products sold: (excluding depreciation and amortization)              
Natural gas services 3,099     2,909     7,417     11,803  
Sulfur services 4,345     3,767     8,871     7,442  
Terminalling and storage 8,009     4,119     14,567     9,186  
Expenses:              
Operating expenses 14,339     16,452     27,723     32,828  
Selling, general and administrative 6,498     6,500     14,219     14,068  

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 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     14,281     291     14,572  
Issuance of common units, net 2,990,000     51,071         51,071  
Issuance of restricted units 12,000              
Forfeiture of restricted units (1,750 )            
General partner contribution         1,098     1,098  
Cash distributions     (36,952 )   (754 )   (37,706 )
Unit-based compensation     405         405  
Purchase of treasury units (200 )   (4 )       (4 )
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 - June 30, 2017 38,452,112     $ 326,633     $ 8,047     $ 334,680  
               
Balances - January 1, 2018 38,444,612     $ 290,927     $ 7,314     $ 298,241  
Net income     5,461     111     5,572  
Issuance of common units, net of issuance related costs     (118 )       (118 )
Issuance of restricted units 633,425              
Forfeiture of restricted units (7,000 )            
Cash distributions     (38,433 )   (784 )   (39,217 )
Unit-based compensation     520         520  
Excess purchase price over carrying value of acquired assets     (26 )       (26 )
Purchase of treasury units (18,800 )   (273 )       (273 )
Balances - June 30, 2018 39,052,237     $ 258,058     $ 6,641     $ 264,699  

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 25, 2018.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

  Six Months Ended
  June 30,
  2018   2017
Cash flows from operating activities:      
Net income $ 5,572     $ 14,572  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 40,101     45,662  
Amortization of deferred debt issuance costs 1,689     1,445  
Amortization of premium on notes payable (153 )   (153 )
Loss on sale of property, plant and equipment 492     140  
Equity in earnings of WTLPG (2,726 )   (1,758 )
Derivative (income) loss (2,069 )   2,392  
Net cash received (paid) for commodity derivatives 2,569     (6,429 )
Unit-based compensation 520     405  
Cash distributions from WTLPG 3,000     2,500  
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:      
Accounts and other receivables 46,592     29,522  
Product exchange receivables (145 )   (13 )
Inventories (15,900 )   (19,065 )
Due from affiliates 2,632     (9,726 )
Other current assets (699 )   (1,372 )
Trade and other accounts payable (17,333 )   (4,067 )
Product exchange payables 1,264     246  
Due to affiliates (1,897 )   (5,774 )
Income taxes payable (110 )   (468 )
Other accrued liabilities (5,480 )   (2,761 )
Change in other non-current assets and liabilities 584     490  
    Net cash provided by operating activities 58,503     45,788  
       
Cash flows from investing activities:      
Payments for property, plant and equipment (23,566 )   (19,756 )
Acquisitions     (19,533 )
Payments for plant turnaround costs     (1,591 )
Proceeds from sale of property, plant and equipment 98     1,597  
Proceeds from repayment of Note receivable - affiliate     15,000  
Contributions to WTLPG (12,578 )   (145 )
    Net cash used in investing activities (36,046 )   (24,428 )
       
Cash flows from financing activities:      
Payments of long-term debt (199,000 )   (184,000 )
Proceeds from long-term debt 218,000     155,000  
Proceeds from issuance of common units, net of issuance related costs (118 )   51,071  
General partner contribution     1,098  
Purchase of treasury units (273 )   (4 )
Payment of debt issuance costs (1,240 )   (40 )
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 (39,217 )   (37,706 )
    Net cash used in financing activities (21,874 )   (21,343 )
       
    Net increase in cash 583     17  
Cash at beginning of period 27     15  
Cash at end of period $ 610     $ 32  
Non-cash additions to property, plant and equipment $ 1,811     $ 3,666  

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 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 June 30, 2018 and 2017

  Three Months Ended
June 30,
          Percent 
  2018   2017   Variance
  Change
                                 
  (In thousands, except BBL per day)    
Revenues:              
Services 25,491     26,148     $ (657 )           (3 )%
Products 36,823     33,413     3,410     10 %
Total revenues 62,314     59,561     2,753     5 %
               
Cost of products sold 33,596     30,474     3,122     10 %
Operating expenses 12,909     13,198     (289 )   (2 )%
Selling, general and administrative expenses 1,334     1,444     (110 )   (8 )%
Depreciation and amortization 11,690     10,327     1,363     13 %
  2,785     4,118     (1,333 )   (32 )%
Other operating income (loss) (36 )   10     (46 )   (460 )%
Operating income $ 2,749     $ 4,128     $ (1,379 )   (33 )%
               
Lubricant sales volumes (gallons) 6,408     5,361     1,047     20 %
Shore-based throughput volumes (guaranteed minimum) (gallons) 20,000     41,666     (21,666 )   (52 )%
Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500     6,500         %

       Comparative Results of Operations for the Six Months Ended June 30, 2018 and 2017

  Six Months Ended
June 30,
      Percent
  2018   2017   Variance
  Change
                                   
  (In thousands, except BBL per day)    
Revenues:              
Services $    50,994     $    52,579     $ (1,585 )   (3 )%
Products 73,303     65,560     7,743     12 %
Total revenues 124,297     118,139     6,158     5 %
               
Cost of products sold 67,098     59,168     7,930     13 %
Operating expenses 26,356     27,160     (804 )   (3 )%
Selling, general and administrative expenses 2,590     2,769     (179 )   (6 )%
Depreciation and amortization 21,849     25,804     (3,955 )   (15 )%
  6,404     3,238     3,166     98 %
Other operating loss (36 )   (3 )   (33 )   1,100 %
Operating income $ 6,368     $ 3,235     $ 3,133     97 %
               
Lubricant sales volumes (gallons) 12,318     10,695     1,623     15 %
Shore-based throughput volumes (guaranteed minimum) (gallons) 20,000     83,332     (63,332 )   (76 )%
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)

Natural Gas Services Segment

       Comparative Results of Operations for the Three Months Ended June 30, 2018 and 2017

  Three Months Ended
June 30,
      Percent
  2018   2017   Variance
  Change
                     
  (In thousands)    
Revenues:              
Services $ 13,804     $ 14,838     $ (1,034 )   (7 )%
Products 90,643     73,666     16,977     23 %
Total revenues 104,447     88,504     15,943     18 %
               
Cost of products sold 88,394     71,003     17,391     24 %
Operating expenses 5,895     5,567     328     6 %
Selling, general and administrative expenses 1,759     2,115     (356 )   (17 )%
Depreciation and amortization 5,304     6,205     (901 )   (15 )%
  3,095     3,614     (519 )   (14 )%
Other operating income (loss) (120 )   5     (125 )   (2,500 )%
Operating income $ 2,975     $ 3,619     $ (644 )   (18 )%
               
Distributions from WTLPG $ 1,500     $ 1,300     $ 200     15 %
               
NGL sales volumes (Bbls) 1,743     1,794     (51 )   (3 )%

       Comparative Results of Operations for the Six Months Ended June 30, 2018 and 2017

  Six Months Ended
June 30,
      Percent
  2018   2017   Variance
  Change
                     
  (In thousands)    
Revenues:              
Services $ 29,160     $ 29,503     $ (343 )   (1 )%
Products 249,806     200,323     49,483     25 %
Total revenues 278,966     229,826     49,140     21 %
               
Cost of products sold 232,142     180,306     51,836     29 %
Operating expenses 11,675     11,225     450     4 %
Selling, general and administrative expenses 4,829     5,166     (337 )   (7 )%
Depreciation and amortization 10,605     12,366     (1,761 )   (14 )%
  19,715     20,763     (1,048 )   (5 )%
Other operating income (loss) (120 )   5     (125 )   (2,500 )%
Operating income $ 19,595     $ 20,768     $ (1,173 )   (6 )%
               
Distributions from WTLPG $ 3,000     $ 2,500     $ 500     20 %
               
NGL sales volumes (Bbls) 5,184     4,604     580     13 %

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, 2018 and 2017

  Three Months Ended
June 30,
      Percent
  2018   2017   Variance
  Change
                             
  (In thousands)    
Revenues:              
Services $ 2,787     $ 2,850     $ (63 )   (2 )%
Products 35,684     32,027     3,657     11 %
Total revenues 38,471     34,877     3,594     10 %
               
Cost of products sold 28,829     21,297     7,532     35 %
Operating expenses 2,929     3,417     (488 )   (14 )%
Selling, general and administrative expenses 1,046     1,007     39     4 %
Depreciation and amortization 2,086     2,030     56     3 %
  3,581     7,126     (3,545 )   (50 )%
Other operating income 16         16      
Operating income $ 3,597     $ 7,126     $ (3,529 )   (50 )%
               
Sulfur (long tons) 178     192     (14 )   (7 )%
Fertilizer (long tons) 93     71     22     31 %
Total sulfur services volumes (long tons) 271     263     8     3 %

       Comparative Results of Operations for the Six Months Ended June 30, 2018 and 2017 

  Six Months Ended
June 30,
      Percent
  2018   2017   Variance
  Change
                     
  (In thousands)    
Revenues:              
Services $ 5,574     $ 5,700     $ (126 )   (2 )%
Products 70,584     71,554     (970 )   (1 )%
Total revenues 76,158     77,254     (1,096 )   (1 )%
               
Cost of products sold 52,816     45,871     6,945     15 %
Operating expenses 5,841     6,664     (823 )   (12 )%
Selling, general and administrative expenses 2,081     2,028     53     3 %
Depreciation and amortization 4,150     4,063     87     2 %
  11,270     18,628     (7,358 )   (39 )%
Other operating income (loss) 14     (22 )   36     (164 )%
Operating income $ 11,284     $ 18,606     $ (7,322 )   (39 )%
               
Sulfur (long tons) 354     409     (55 )   (13 )%
Fertilizer (long tons) 181     165     16     10 %
Total sulfur services volumes (long tons) 535     574     (39 )   (7 )%

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 Three Months Ended June 30, 2018 and 2017

  Three Months Ended
June 30,
      Percent
  2018   2017   Variance
  Change
                     
  (In thousands)    
Revenues $ 13,168     $ 13,144     $ 24     %
Operating expenses 10,374     11,062     (688 )   (6 )%
Selling, general and administrative expenses 87     71     16     23 %
Depreciation and amortization 1,811     1,764     47     3 %
  896     247     649     263 %
Other operating loss (350 )       (350 )    
Operating income $ 546     $ 247     $ 299     121 %

       Comparative Results of Operations for the Six Months Ended June 30, 2018 and 2017

  Six Months Ended
June 30,
      Percent
  2018   2017   Variance
  Change
                     
  (In thousands)    
Revenues $ 25,196     $ 26,558     $ (1,362 )   (5 )%
Operating expenses 20,278     22,155     (1,877 )   (8 )%
Selling, general and administrative expenses 163     175     (12 )   (7 )%
Depreciation and amortization 3,497     3,429     68     2 %
  $ 1,258     $ 799     $ 459     57 %
Other operating loss (350 )   (120 )   (230 )   192 %
Operating income $ 908     $ 679     $ 229     34 %


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, 2018 and 2017, 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,
  2018   2017   2018   2017
               
  (in thousands)
Net income (loss) $ (7,246 )   $ 989     $ 5,572     $ 14,572  
Adjustments:              
Interest expense, net 13,766     11,219     26,451     22,139  
Income tax expense 132     13     281     193  
Depreciation and amortization 20,891     20,326     40,101     45,662  
EBITDA 27,543     32,547     72,405     82,566  
Adjustments:              
Equity in earnings of WTLPG (1,131 )   (853 )   (2,726 )   (1,758 )
(Gain) loss on sale of property, plant and equipment 490     (15 )   492     140  
Unrealized mark-to-market on commodity derivatives 654     (200 )   500     (4,037 )
Distributions from WTLPG 1,500     1,300     3,000     2,500  
Unit-based compensation 388     219     520     405  
Adjusted EBITDA 29,444     32,998     74,191     79,816  
Adjustments:              
Interest expense, net (13,766 )   (11,219 )   (26,451 )   (22,139 )
Income tax expense (132 )   (13 )   (281 )   (193 )
Amortization of debt premium (76 )   (76 )   (153 )   (153 )
Amortization of deferred debt issuance costs 870     724     1,689     1,445  
Payments for plant turnaround costs     (197 )       (1,591 )
Maintenance capital expenditures (5,370 )   (2,618 )   (11,372 )   (7,286 )
Distributable Cash Flow $ 10,970     $ 19,599     $ 37,623     $ 49,899  

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