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

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  • Execution of Strategic Initiatives Continues with Sale of East Texas Pipeline
  • Quarterly Distribution Coverage Ratio Above Internal Forecast
  • Update on Structure Damage at Neches Terminal

KILGORE, Texas, Oct. 23, 2019 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (NASDAQ:MMLP) (the "Partnership") announced today its financial results for the third quarter of 2019.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, "The sale of the East Texas Pipeline in the third quarter was the latest action in our strategic initiative plan designed to strengthen the balance sheet by reducing leverage.  The transaction closed on August 12, 2019 for net proceeds of $17.5 million which were used to reduce borrowings under our revolving credit facility.

"Highlighting the third quarter, which annually is our weakest due to seasonal troughs in the fertilizer and butane businesses, was the Natural Gas Liquids and Terminalling and Storage segments, as early season butane sales were above expectations and the lubricants business outperformed guidance as a result of increased margins.  This was offset by the Transportation and Sulfur Services segments as ongoing turnarounds and unplanned maintenance related to third party refineries continue to negatively impact sulfur tank truck hauling, and fertilizer margins and sales volumes were depressed due to higher fertilizer inventories caused by the delay in fall fertilizer application as a result of the late harvest season.

"For the third quarter, the Partnership generated a distribution coverage ratio of 0.84 times, well above our internal forecast of 0.47 times.  Although cash flow from operations was below our guidance level, maintenance capital spending was lower than anticipated at approximately $2.8 million, offsetting the impact to distributable cash flow.  Accordingly, we are reducing our maintenance capital expenditure guidance to approximately $19.6 million for the full year 2019.

"In May 2019, we announced the service disruption and structural damage to the mobile ship-loader at our Neches facility.  The damage rendered the terminal unable to load prilled sulfur onto ocean-going vessels.   We are now estimating that the terminal will be fully operational by February 2020 and anticipate the negative cash flow impact will be relieved with proceeds from our property and business interruption insurance policies, which receipt is expected during fourth quarter 2019 and first quarter 2020.

"Finally, we are revising our fourth quarter guidance to address lower expectations in the Natural Gas Liquids and Transportation segments.  Regarding the butane optimization business, we expect a lower seasonal uplift in pricing due to higher than normal inventories, which may be relieved by recently commissioned export capacity.  And while we are experiencing an improved number of scheduled tank truck loads in the fourth quarter, extended third party refinery turnarounds continue to create headwinds in our land transportation business.  With these revisions we expect the Partnership to generate a distribution coverage ratio of 1.71 times in the fourth quarter of 2019."

The Partnership reported net income from continuing operations for the third quarter 2019 of $13.3 million, or $0.33 per limited partner unit.  The Partnership had a net loss from continuing operations for the third quarter 2018 of $7.9 million, a loss of $0.28 per limited partner unit.  The Partnership had a net loss from continuing operations for the nine months ended September 30, 2019 of $2.1 million, a loss of $0.05 per limited partner unit.  The Partnership had a net loss from continuing operations for the nine months ended September 30, 2018 of $9.4 million, a loss of $0.45 per limited partner unit.

Adjusted EBITDA from continuing operations for the third quarter of 2019 was $22.0 million compared to the third quarter of 2018 of $22.9 million.  Adjusted EBITDA from continuing operations for the nine months ended September 30, 2019 was $72.8 million compared to the nine months ended September 30, 2018 of $81.7 million.

Distributable cash flow from continuing operations for the third quarter of 2019 was $8.3 million compared to the third quarter of 2018 of $4.4 million.  Distributable cash flow from continuing operations for the nine months ended September 30, 2019 was $21.0 million compared to the nine months ended September 30, 2018 of $27.8 million.

The Partnership had net income from discontinued operations for the three months ended September 30, 2019 of $0.0 million, or $0.00 per limited partner unit.  The Partnership had net income from discontinued operations for the three months ended September 30, 2018 of $50.4 million, or $1.28 per limited partner unit.   The Partnership's income from discontinued operations for the three months ended September 30, 2018 includes a non-cash gain related to the disposition of its West Texas LPG Pipeline Limited Partnership interests of $48.6 million.  The Partnership had a net loss from discontinued operations for the nine months ended September 30, 2019 of $179.5 million, a loss of $4.55 per limited partner unit.  The Partnership's loss from discontinued operations for the nine months ended September 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 nine months ended September 30, 2018 of $62.5 million, or $1.58 per limited partner unit.  The Partnership's income from discontinued operations for the nine months ended September 30, 2018 includes a non-cash gain related to the disposition of its West Texas LPG Pipeline Limited Partnership interests of $48.6 million.

Adjusted EBITDA from discontinued operations for the third quarter of 2019 was $0.0 million compared to the third quarter 2018 of $6.4 million.  Adjusted EBITDA from discontinued operations for the nine months ended September 30, 2019 was $10.7 million compared to the nine months ended September 30, 2018 of $28.2 million.

Distributable cash flow from discontinued operations for the third quarter of 2019 was $0.0 million compared to the third quarter of 2018 of $6.2 million.  Distributable cash flow from discontinued operations for the nine months ended September 30, 2019 was $9.8 million compared to the nine months ended September 30, 2018 of $26.7 million.

Revenues for the third quarter of 2019 were $177.9 million compared to the third quarter of 2018 of $234.0 million.  Revenues for the nine months ended September 30, 2019 were $605.3 million compared to the nine months ended September 30, 2018 of $752.9 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 nine months ended September 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 October 23, 2019.

An attachment accompanying this announcement is available at http://ml.globenewswire.com/Resource/Download/21e1a421-9e45-45d6-b8c8-334b37f520d9.

Investors' Conference Call

An investors conference call to review the third quarter results will be held on Thursday, October 24, 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 6381517. 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)

  September 30, 2019   December 31, 20181
  (Unaudited)   (Unaudited)
Assets      
Cash $ 1,802     $ 300  
Accounts and other receivables, less allowance for doubtful accounts of $512 and $576, respectively 65,927     83,488  
Product exchange receivables 2     166  
Inventories (Note 6) 95,971     84,265  
Due from affiliates 18,501     18,845  
Fair value of derivatives (Note 11) 1,616     4  
Other current assets 8,637     5,889  
Assets held for sale (Note 4) 5,052     5,652  
Current assets - Natural Gas Storage Assets (Note 4)     9,428  
Total current assets 197,508     208,037  
       
Property, plant and equipment, at cost 881,793     886,435  
Accumulated depreciation (459,822 )   (438,602 )
Property, plant and equipment, net 421,971     447,833  
       
Goodwill 17,785     17,785  
Right-of-use assets (Note 9) 25,691      
Deferred income taxes, net (Note 19) 23,681      
Other assets, net (Note 10) 4,495     4,584  
Non current assets - Natural Gas Storage Assets (Note 4)     395,389  
Total assets $ 691,131     $ 1,073,628  
       
Liabilities and Partners' Capital      
Current installments of finance lease obligations (Note 9) $ 5,975     $ 5,409  
Trade and other accounts payable 52,377     64,041  
Product exchange payables 4,846     12,103  
Due to affiliates 1,471     2,133  
Income taxes payable 510     445  
Other accrued liabilities (Note 10) 23,675     24,380  
Current liabilities - Natural Gas Storage Assets (Note 4)     3,240  
Total current liabilities 88,854     111,751  
       
Long-term debt, net (Note 8 ) 606,293     656,459  
Finance lease obligations (Note 9) 2,906     6,272  
Operating lease liabilities (Note 9) 17,606      
Other long-term obligations 8,842
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