- Announced divestiture of Corpus Christi, Texas terminalling assets
- Distribution declared creates coverage ratio of 1.1 times for the November 2016 distribution
- Clear path to balance sheet improvement
KILGORE, Texas, Oct. 26, 2016 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq:MMLP) (the "Partnership") announced today its financial results for the quarter ended September 30, 2016.
Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “As we announced last week, we have outlined a path forward to improve our leverage profile and distribution coverage ratio. We believe the divestiture of our Corpus Christi terminalling assets is a solid first step to lowering our cost of capital and returning to a growth trajectory. We expect the sale to close by year-end and receive net proceeds of approximately $93 million.
"For the third quarter ended September 30, 2016, our seasonally weaker quarter due to our fertilizer and butane businesses, the distribution coverage ratio was 1.10 times based on the quarterly distribution of $0.50 announced last week. Highlighting the third quarter was continued strength in our Cardinal Gas Storage division where interruptible services were again strong and are expected to continue during the fourth quarter. Also, we saw a modestly improved performance in our inland marine transportation segment. Although this is not yet a recovery, utilization of our fleet improved during the third quarter. As anticipated, our maintenance capital expenditures normalized and were lower in the third quarter compared to the levels achieved in the first six months of 2016.
"Looking toward the fourth quarter, we anticipate strong performance in our butane business based on current storage levels and contracted sales back to refineries. On that basis, we should realize significant working capital debt reduction due to butane inventory depletion, further strengthening the Partnership’s leverage ratio. Additionally, for 2017 and 2018, we expect a stronger distribution coverage ratio of at least 1.2 times."
The Partnership had a net loss for the third quarter of 2016 of $0.9 million, a loss of $0.03 per limited partner unit. Net income for the third quarter of 2015 was $3.3 million, which led to a loss of $0.02 per limited partner unit. The Partnership's adjusted EBITDA from continuing operations for the third quarter of 2016 was $33.3 million compared to adjusted EBITDA from continuing operations for the third quarter of 2015 of $41.4 million, a decrease of 20%.
Net income from continuing operations for the nine months ended September 30, 2016 was $13.8 million, or $0.16 per limited partner unit. Net income from continuing operations for the nine months ended September 30, 2015 was $30.3 million, or $0.52 per limited partner unit. Net income for the nine months ended September 30, 2016 was negatively impacted by a non-cash goodwill impairment charge in the Partnership's Marine Transportation segment of $4.1 million, or $0.12 per limited partner unit. The Partnership's adjusted EBITDA from continuing operations for the nine months ended September 30, 2016 was $124.2 million compared to adjusted EBITDA from continuing operations for the nine months ended September 30, 2015 of $136.8 million, a decrease of 9%.
The Partnership's distributable cash flow from continuing operations for the third quarter of 2016 was $19.9 million compared to distributable cash flow from continuing operations for the third quarter of 2015 of $29.1 million, a decrease of 32%.
The Partnership's distributable cash flow from continuing operations for the nine months ended September 30, 2016 was $77.9 million compared to distributable cash flow from continuing operations for the nine months ended September 30, 2015 of $98.1 million, a decrease of 21%.
Revenues for the third quarter of 2016 were $174.5 million compared to $226.0 million for the third quarter of 2015. Revenues for the nine months ended September 30, 2016 were $590.5 million compared to $782.5 million for the nine months ended September 30, 2015.
On February 12, 2015, the Partnership exited the natural gas liquids floating storage and trans-loading businesses as a result of the sale of its six liquefied petroleum gas pressure barges, collectively referred to as the "Floating Storage Assets", for $41.3 million. The Partnership recorded a gain on the disposition of $1.5 million.
The Partnership had no net income, distributable cash flow or adjusted EBITDA from discontinued operations related to the Floating Storage Assets for the three and nine months ended September 30, 2016.
The Partnership had no net income, distributable cash flow or adjusted EBITDA from discontinued operations related to the Floating Storage Assets for the three months ended September 30, 2015. The Partnership had net income from discontinued operations for the nine months ended September 30, 2015 of $1.2 million, or $0.02 per limited partner unit. Distributable cash flow and adjusted EBITDA from discontinued operations were $1.2 million for the nine months ended September 30, 2015.
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 directly 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, 2016 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 26, 2016.
An attachment accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/de5152db-7f6f-4f6d-b723-bb6e41d94a33.
Quarterly Cash Distribution
The quarterly cash distribution of $0.50 per common unit, which was announced on October 20, 2016, is payable on November 14, 2016 to common unitholders of record as of the close of business on November 7, 2016. The ex-dividend date for the cash distribution is November 3, 2016. The current distribution level represents total distributions to common unitholders of approximately $18.1 million for the quarter and reflects an annualized distribution rate of $2.00 per unit.
Investors' Conference Call
An investors' conference call to review the third quarter results will be held on Thursday, October 27, 2016, at 8:00 a.m. Central Time. The conference call can be accessed by calling (877) 878-2695. Additionally, an accompanying slide and live webcast will be available by visiting Martin Midstream Partners’ website at www.martinmidstream.com. An audio replay of the conference call will be available by calling (855) 859-2056 from 11:00 a.m. Central Time on October 27, 2016 through 10:59 p.m. Central Time on November 7, 2016. The access code for the conference call and the audio replay is Conference ID No.94610525. The audio replay will also be archived under the Events and Presentations section of the Partnership’s website.
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) terminalling, storage and packaging services for petroleum products and by-products; (2) natural gas services, including liquids transportation and distribution services and natural gas storage; (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.
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
(903) 988-6425
| MARTIN MIDSTREAM PARTNERS L.P. | ||||||||
| CONSOLIDATED AND CONDENSED BALANCE SHEETS | ||||||||
| (Dollars in thousands) | ||||||||
| September 30, 2016 | December 31, 2015 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Cash | $ | 10 | $ | 31 | ||||
| Accounts and other receivables, less allowance for doubtful accounts of $453 and $430, respectively | 46,327 | 74,355 | ||||||
| Product exchange receivables | 159 | 1,050 | ||||||
| Inventories | 107,476 | 75,870 | ||||||
| Due from affiliates | 8,194 | 10,126 | ||||||
| Fair value of derivatives | 89 | 675 | ||||||
| Other current assets | 4,439 | 5,718 | ||||||
| Assets held for sale | 73,197 | — | ||||||
| Total current assets | 239,891 | 167,825 | ||||||
| Property, plant and equipment, at cost | 1,301,233 | 1,387,814 | ||||||
| Accumulated depreciation | (411,821 | ) | (404,574 | ) | ||||
| Property, plant and equipment, net | 889,412 | 983,240 | ||||||
| Goodwill | 17,296 | 23,802 | ||||||
| Investment in WTLPG | 129,794 | 132,292 | ||||||
| Note receivable - Martin Energy Trading LLC | 15,000 | 15,000 | ||||||
| Other assets, net | 48,951 | 58,314 | ||||||
| Total assets | $ | 1,340,344 | $ | 1,380,473 | ||||
| Liabilities and Partners’ Capital | ||||||||
| Trade and other accounts payable | $ | 60,462 | $ | 81,180 | ||||
| Product exchange payables | 10,188 | 12,732 | ||||||
| Due to affiliates | 3,879 | 5,738 | ||||||
| Income taxes payable | 550 | 985 | ||||||
| Fair value of derivatives | 209 | — | ||||||
| Other accrued liabilities | 14,804 | 18,533 | ||||||
| Liabilities held for sale | 23,400 | — | ||||||
| Total current liabilities | 113,492 | 119,168 | ||||||
| Long-term debt, net | 913,504 | 865,003 | ||||||
| Fair value of derivatives | — | 206 | ||||||
| Other long-term obligations | 2,435 | 2,217 | ||||||
| Total liabilities | 1,029,431 | 986,594 | ||||||
| Commitments and contingencies (Note 16) | ||||||||
| Partners’ capital | 310,913 | 393,879 | ||||||
| Total partners’ capital | 310,913 | 393,879 | ||||||
| Total liabilities and partners' capital | $ | 1,340,344 | $ | 1,380,473 | ||||
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 October 26, 2016.
| MARTIN MIDSTREAM PARTNERS L.P. | ||||||||||||||||
| CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (Dollars and units in thousands, except per unit amounts) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenues: | ||||||||||||||||
| Terminalling and storage * | $ | 30,770 | $ | 33,578 | $ | 93,565 | $ | 100,828 | ||||||||
| Marine transportation * | 13,846 | 18,977 | 44,531 | 59,956 | ||||||||||||
| Natural gas services* | 14,618 | 17,120 | 46,118 | 50,171 | ||||||||||||
| Sulfur services | 2,700 | 3,090 | 8,100 | 9,270 | ||||||||||||
| Product sales: * | ||||||||||||||||
| Natural gas services | 57,378 | 86,714 | 207,368 | 330,803 | ||||||||||||
| Sulfur services | 26,396 | 33,213 | 105,459 | 128,544 | ||||||||||||
| Terminalling and storage | 28,829 | 33,329 | 85,349 | 102,901 | ||||||||||||
| 112,603 | 153,256 | 398,176 | 562,248 | |||||||||||||
| Total revenues | 174,537 | 226,021 | 590,490 | 782,473 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of products sold: (excluding depreciation and amortization) | ||||||||||||||||
| Natural gas services * | 50,658 | 80,709 | 184,781 | 307,039 | ||||||||||||
| Sulfur services * | 21,510 | 26,144 | 73,734 | 95,685 | ||||||||||||
| Terminalling and storage * | 23,540 | 28,237 | 70,306 | 87,977 | ||||||||||||
| 95,708 | 135,090 | 328,821 | 490,701 | |||||||||||||
| Expenses: | ||||||||||||||||
| Operating expenses * | 39,488 | 45,310 | 121,542 | 138,399 | ||||||||||||
| Selling, general and administrative * | 8,049 | 8,666 | 24,364 | 26,507 | ||||||||||||
| Loss on impairment of goodwill | — | — | 4,145 | — | ||||||||||||
| Depreciation and amortization | 22,129 | 23,335 | 66,266 | 68,737 | ||||||||||||
| Total costs and expenses | 165,374 | 212,401 | 545,138 | 724,344 | ||||||||||||
| Other operating income (loss) | 13 | (1,586 | ) | (1,582 | ) | (1,763 | ) | |||||||||
| Operating income | 9,176 | 12,034 | 43,770 | 56,366 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Equity in earnings of WTLPG | 1,120 | 2,363 | 3,602 | 5,752 | ||||||||||||
| Interest expense, net | (11,779 | ) | (11,994 | ) | (34,046 | ) | (32,465 | ) | ||||||||
| Gain on retirement of senior unsecured notes | — | 728 | — | 728 | ||||||||||||
| Other, net | 730 | 399 | 866 | 757 | ||||||||||||
| Total other expense | (9,929 | ) | (8,504 | ) | (29,578 | ) | (25,228 | ) | ||||||||
| Net income (loss) before taxes | (753 | ) | 3,530 | 14,192 | 31,138 | |||||||||||
| Income tax expense | (180 | ) | (200 | ) | (422 | ) | (814 | ) | ||||||||
| Income (loss) from continuing operations | (933 | ) | 3,330 | 13,770 | 30,324 | |||||||||||
| Income from discontinued operations, net of income taxes | — | — | — | 1,215 | ||||||||||||
| Net income (loss) | (933 | ) | 3,330 | 13,770 | 31,539 | |||||||||||
| Less general partner's interest in net (income) loss | 18 | (3,959 | ) | (8,062 | ) | (12,310 | ) | |||||||||
| Less (income) loss allocable to unvested restricted units | 3 | (16 | ) | (36 | ) | (127 | ) | |||||||||
| Limited partners' interest in net income (loss) | $ | (912 | ) | $ | (645 | ) | $ | 5,672 | $ | 19,102 | ||||||
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 October 26, 2016.
*Related Party Transactions Shown Below
| MARTIN MIDSTREAM PARTNERS L.P. | ||||||||||||||||
| CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (Dollars and units in thousands, except per unit amounts) | ||||||||||||||||
| *Related Party Transactions Included Above | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenues:* | ||||||||||||||||
| Terminalling and storage | $ | 20,649 | $ | 15,091 | $ | 62,197 | $ | 58,626 | ||||||||
| Marine transportation | 4,861 | 6,552 | 17,308 | 19,919 | ||||||||||||
| Natural gas services | 132 | — | 574 | — | ||||||||||||
| Product Sales | 723 | 1,731 | 2,391 | 5,079 | ||||||||||||
| Costs and expenses:* | ||||||||||||||||
| Cost of products sold: (excluding depreciation and amortization) | ||||||||||||||||
| Natural gas services | 2,946 | 6,470 | 10,829 | 20,198 | ||||||||||||
| Sulfur services | 3,678 | 3,387 | 11,300 | 10,629 | ||||||||||||
| Terminalling and storage | 3,766 | 3,227 | 11,232 | 14,261 | ||||||||||||
| Expenses: | ||||||||||||||||
| Operating expenses | 17,810 | 19,290 | 53,255 | 58,605 | ||||||||||||
| Selling, general and administrative | 5,748 | 5,922 | 18,091 | 17,765 | ||||||||||||
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 October 26, 2016.
| MARTIN MIDSTREAM PARTNERS L.P. | ||||||||||||||||
| CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (Dollars and units in thousands, except per unit amounts) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Allocation of net income (loss) attributable to: | ||||||||||||||||
| Limited partner interest: | ||||||||||||||||
| Continuing operations | $ | (912 | ) | $ | (645 | ) | $ | 5,672 | $ | 18,366 | ||||||
| Discontinued operations | — | — | — | 736 | ||||||||||||
| $ | (912 | ) | $ | (645 | ) | $ | 5,672 | $ | 19,102 | |||||||
| General partner interest: | ||||||||||||||||
| Continuing operations | $ | (18 | ) | $ | 3,959 | $ | 8,062 | $ | 11,836 | |||||||
| Discontinued operations | — | — | — | 474 | ||||||||||||
| $ | (18 | ) | $ | 3,959 | $ | 8,062 | $ | 12,310 | ||||||||
| Net income (loss) per unit attributable to limited partners: | ||||||||||||||||
| Basic: | ||||||||||||||||
| Continuing operations | $ | (0.03 | ) | $ | (0.02 | ) | $ | 0.16 | $ | 0.52 | ||||||
| Discontinued operations | — | — | — | 0.02 | ||||||||||||
| $ | (0.03 | ) | $ | (0.02 | ) | $ | 0.16 | $ | 0.54 | |||||||
| Weighted average limited partner units - basic | 35,346 | 35,308 | 35,358 | 35,309 | ||||||||||||
| Diluted: | ||||||||||||||||
| Continuing operations | $ | (0.03 | ) | $ | (0.02 | ) | $ | 0.16 | $ | 0.52 | ||||||
| Discontinued operations | — | — | — | 0.02 | ||||||||||||
| $ | (0.03 | ) | $ | (0.02 | ) | $ | 0.16 | $ | 0.54 | |||||||
| Weighted average limited partner units - diluted | 35,346 | 35,308 | 35,381 | 35,369 | ||||||||||||
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 October 26, 2016.
| MARTIN MIDSTREAM PARTNERS L.P. | |||||||||||||||
| CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL | |||||||||||||||
| (Unaudited) | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||
| Partners’ Capital | |||||||||||||||
| Common Limited | General Partner Amount | ||||||||||||||
| Units | Amount | Total | |||||||||||||
| Balances - January 1, 2015 | 35,365,912 | $ | 470,943 | $ | 14,728 | $ | 485,671 | ||||||||
| Net income | — | 19,229 | 12,310 | 31,539 | |||||||||||
| Issuance of common units, net | — | (330 | ) | — | (330 | ) | |||||||||
| Issuance of restricted units | 91,950 | — | — | — | |||||||||||
| Forfeiture of restricted units | (1,250 | ) | — | — | — | ||||||||||
| General partner contribution | — | — | 55 | 55 | |||||||||||
| Cash distributions | — | (86,420 | ) | (13,526 | ) | (99,946 | ) | ||||||||
| Reimbursement of excess purchase price over carrying value of acquired assets | — | 1,500 | — | 1,500 | |||||||||||
| Unit-based compensation | — | 1,080 | — | 1,080 | |||||||||||
| Balances - September 30, 2015 | 35,456,612 | $ | 406,002 | $ | 13,567 | $ | 419,569 | ||||||||
| Balances - January 1, 2016 | 35,456,612 | $ | 380,845 | $ | 13,034 | $ | 393,879 | ||||||||
| Net income | — | 5,708 | 8,062 | 13,770 | |||||||||||
| Issuance of common units, net of issuance related costs | — | (28 | ) | — | (28 | ) | |||||||||
| Issuance of restricted units | 13,800 | — | — | — | |||||||||||
| Forfeiture of restricted units | (500 | ) | — | — | — | ||||||||||
| Cash distributions | — | (86,410 | ) | (13,680 | ) | (100,090 | ) | ||||||||
| Unit-based compensation | — | 712 | — | 712 | |||||||||||
| Reimbursement of excess purchase price over carrying value of acquired assets | — | 3,000 | — | 3,000 | |||||||||||
| Purchase of treasury units | (15,200 | ) | (330 | ) | — | (330 | ) | ||||||||
| Balances - September 30, 2016 | 35,454,712 | $ | 303,497 | $ | 7,416 | $ | 310,913 | ||||||||
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 October 26, 2016.
| MARTIN MIDSTREAM PARTNERS L.P. | ||||||||
| CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| (Dollars in thousands) | ||||||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 13,770 | $ | 31,539 | ||||
| Less: Income from discontinued operations, net of income taxes | — | (1,215 | ) | |||||
| Net income from continuing operations | 13,770 | 30,324 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 66,266 | 68,737 | ||||||
| Amortization and write-off of deferred debt issuance costs | 2,965 | 4,142 | ||||||
| Amortization of premium on notes payable | (230 | ) | (246 | ) | ||||
| Loss on sale of property, plant and equipment | 1,582 | 1,751 | ||||||
| Loss on impairment of goodwill | 4,145 | — | ||||||
| Gain on retirement of senior unsecured notes | — | (728 | ) | |||||
| Equity in earnings of unconsolidated entities | (3,602 | ) | (5,752 | ) | ||||
| Derivative income | (1,867 | ) | (2,137 | ) | ||||
| Net cash received for commodity derivatives | 1,666 | — | ||||||
| Net cash received for interest rate derivatives | 160 | — | ||||||
| Net premiums received on derivatives that settled during the year on interest rate swaption contracts | 630 | 2,495 | ||||||
| Unit-based compensation | 712 | 1,080 | ||||||
| Cash distributions from WTLPG | 6,100 | 7,800 | ||||||
| Change in current assets and liabilities, excluding effects of acquisitions and dispositions: | ||||||||
| Accounts and other receivables | 28,028 | 69,967 | ||||||
| Product exchange receivables | 891 | 909 | ||||||
| Inventories | (31,606 | ) | (3,134 | ) | ||||
| Due from affiliates | 1,932 | 3,348 | ||||||
| Other current assets | (4,693 | ) | 354 | |||||
| Trade and other accounts payable | (15,782 | ) | (59,124 | ) | ||||
| Product exchange payables | (2,544 | ) | 6,360 | |||||
| Due to affiliates | (1,859 | ) | (1,935 | ) | ||||
| Income taxes payable | (435 | ) | (386 | ) | ||||
| Other accrued liabilities | (3,729 | ) | (8,490 | ) | ||||
| Change in other non-current assets and liabilities | (765 | ) | (999 | ) | ||||
| Net cash provided by continuing operating activities | 61,735 | 114,336 | ||||||
| Net cash used in discontinued operating activities | — | (1,352 | ) | |||||
| Net cash provided by operating activities | 61,735 | 112,984 | ||||||
| Cash flows from investing activities: | ||||||||
| Payments for property, plant and equipment | (31,884 | ) | (40,123 | ) | ||||
| Acquisition of intangible assets | (2,150 | ) | — | |||||
| Payments for plant turnaround costs | (1,614 | ) | (1,754 | ) | ||||
| Proceeds from sale of property, plant and equipment | 2,174 | 1,985 | ||||||
| Proceeds from involuntary conversion of property, plant and equipment | 23,400 | — | ||||||
| Net cash used in continuing investing activities | (10,074 | ) | (39,892 | ) | ||||
| Net cash provided by discontinued investing activities | — | 41,250 | ||||||
| Net cash provided by (used in) investing activities | (10,074 | ) | 1,358 | |||||
| Cash flows from financing activities: | ||||||||
| Payments of long-term debt | (219,700 | ) | (224,310 | ) | ||||
| Proceeds from long-term debt | 270,700 | 209,000 | ||||||
| Proceeds from issuance of common units, net of issuance related costs | (28 | ) | (330 | ) | ||||
| General partner contribution | — | 55 | ||||||
| Purchase of treasury units | (330 | ) | — | |||||
| Payment of debt issuance costs | (5,234 | ) | (340 | ) | ||||
| Reimbursement of excess purchase price over carrying value of acquired assets | 3,000 | 1,500 | ||||||
| Cash distributions paid | (100,090 | ) | (99,946 | ) | ||||
| Net cash used in financing activities | (51,682 | ) | (114,371 | ) | ||||
| Net decrease in cash | (21 | ) | (29 | ) | ||||
| Cash at beginning of period | 31 | 42 | ||||||
| Cash at end of period | $ | 10 | $ | 13 | ||||
| Non-cash additions to property, plant and equipment | $ | 1,068 | $ | 4,389 | ||||
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
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 October 26, 2016.
| MARTIN MIDSTREAM PARTNERS L.P. | |||||||||||||||
| SEGMENT OPERATING INCOME | |||||||||||||||
| (Unaudited) | |||||||||||||||
| (Dollars and volumes in thousands, except BBL per day) | |||||||||||||||
| Terminalling and Storage Segment | |||||||||||||||
| Comparative Results of Operations for the Three Months Ended September 30, 2016 and 2015 | |||||||||||||||
| Three Months Ended September 30, | Variance | Percent Change | |||||||||||||
| 2016 | 2015 | ||||||||||||||
| (In thousands, except BBL per day) | |||||||||||||||
| Revenues: | |||||||||||||||
| Services | $ | 32,114 | $ | 35,144 | $ | (3,030 | ) | (9 | )% | ||||||
| Products | 28,829 | 33,329 | (4,500 | ) | (14 | )% | |||||||||
| Total revenues | 60,943 | 68,473 | (7,530 | ) | (11 | )% | |||||||||
| Cost of products sold | 24,118 | 28,765 | (4,647 | ) | (16 | )% | |||||||||
| Operating expenses | 18,299 | 20,268 | (1,969 | ) | (10 | )% | |||||||||
| Selling, general and administrative expenses | 1,439 | 995 | 444 | 45 | % | ||||||||||
| Depreciation and amortization | 10,828 | 9,624 | 1,204 | 13 | % | ||||||||||
| 6,259 | 8,821 | (2,562 | ) | (29 | )% | ||||||||||
| Other operating income | 254 | 2 | 252 | 12,600 | % | ||||||||||
| Operating income | $ | 6,513 | $ | 8,823 | $ | (2,310 | ) | (26 | )% | ||||||
| Lubricant sales volumes (gallons) | 5,196 | 5,974 | (778 | ) | (13 | )% | |||||||||
| Shore-based throughput volumes (gallons) | 25,313 | 36,383 | (11,070 | ) | (30 | )% | |||||||||
| Smackover refinery throughput volumes (BBL per day) | 5,924 | 6,205 | (281 | ) | (5 | )% | |||||||||
| Corpus Christi crude terminal (BBL per day) | 65,116 | 148,377 | (83,261 | ) | (56 | )% | |||||||||
| Comparative Results of Operations for the Nine Months Ended September 30, 2016 and 2015 | |||||||||||||||
| Nine Months Ended September 30, | Variance | Percent Change | |||||||||||||
| 2016 | 2015 | ||||||||||||||
| (In thousands, except BBL per day) | |||||||||||||||
| Revenues: | |||||||||||||||
| Services | $ | 97,663 | $ | 104,893 | $ | (7,230 | ) | (7 | )% | ||||||
| Products | 85,351 | 102,901 | (17,550 | ) | (17 | )% | |||||||||
| Total revenues | 183,014 | 207,794 | (24,780 | ) | (12 | )% | |||||||||
| Cost of products sold | 71,939 | 90,076 | (18,137 | ) | (20 | )% | |||||||||
| Operating expenses | 54,740 | 62,947 | (8,207 | ) | (13 | )% | |||||||||
| Selling, general and administrative expenses | 3,546 | 2,806 | 740 | 26 | % | ||||||||||
| Depreciation and amortization | 30,904 | 29,030 | 1,874 | 6 | % | ||||||||||
| 21,885 | 22,935 | (1,050 | ) | (5 | )% | ||||||||||
| Other operating income (loss) | 354 | (199 | ) | 553 | (278 | )% | |||||||||
| Operating income | $ | 22,239 | $ | 22,736 | $ | (497 | ) | (2 | )% | ||||||
| Lubricant sales volumes (gallons) | 15,536 | 18,007 | (2,471 | ) | (14 | )% | |||||||||
| Shore-based throughput volumes (gallons) | 77,059 | 122,743 | (45,684 | ) | (37 | )% | |||||||||
| Smackover refinery throughput volumes (BBL per day) | 5,644 | 6,091 | (447 | ) | (7 | )% | |||||||||
| Corpus Christi crude terminal (BBL per day) | 77,394 | 166,129 | (88,735 | ) | (53 | )% | |||||||||
| MARTIN MIDSTREAM PARTNERS L.P. | |||||||||||||||
| SEGMENT OPERATING INCOME | |||||||||||||||
| (Unaudited) | |||||||||||||||
| (Dollars and volumes in thousands, except BBL per day) | |||||||||||||||
| Natural Gas Services Segment | |||||||||||||||
| Comparative Results of Operations for the Three Months Ended September 30, 2016 and 2015 | |||||||||||||||
| Three Months Ended September 30, | Variance | Percent Change | |||||||||||||
| 2016 | 2015 | ||||||||||||||
| (In thousands) | |||||||||||||||
| Revenues: | |||||||||||||||
| Services | $ | 14,618 | $ | 17,120 | $ | (2,502 | ) | (15 | )% | ||||||
| Products | 57,378 | 86,714 | (29,336 | ) | (34 | )% | |||||||||
| Total revenues | 71,996 | 103,834 | (31,838 | ) | (31 | )% | |||||||||
| Cost of products sold | 51,353 | 81,472 | (30,119 | ) | (37 | )% | |||||||||
| Operating expenses | 5,822 | 6,489 | (667 | ) | (10 | )% | |||||||||
| Selling, general and administrative expenses | 1,309 | 1,848 | (539 | ) | (29 | )% | |||||||||
| Depreciation and amortization | 7,050 | 8,522 | (1,472 | ) | (17 | )% | |||||||||
| 6,462 | 5,503 | 959 | 17 | % | |||||||||||
| Other operating loss | (7 | ) | — | (7 | ) | ||||||||||
| Operating income | $ | 6,455 | $ | 5,503 | $ | 952 | 17 | % | |||||||
| Distributions from unconsolidated entities | $ | 1,800 | $ | 3,400 | $ | (1,600 | ) | (47 | )% | ||||||
| NGL sales volumes (Bbls) | 1,592 | 3,138 | (1,546 | ) | (49 | )% | |||||||||
| Comparative Results of Operations for the Nine Months Ended September 30, 2016 and 2015 | ||||||||||||||
| Nine Months Ended September 30, | Variance | Percent Change | ||||||||||||
| 2016 | 2015 | |||||||||||||
| (In thousands) | ||||||||||||||
| Revenues: | ||||||||||||||
| Services | $ | 46,118 | $ | 50,171 | $ | (4,053 | ) | (8 | )% | |||||
| Products | 207,368 | 330,803 | (123,435 | ) | (37 | )% | ||||||||
| Total revenues | 253,486 | 380,974 | (127,488 | ) | (33 | )% | ||||||||
| Cost of products sold | 186,934 | 308,713 | (121,779 | ) | (39 | )% | ||||||||
| Operating expenses | 17,479 | 17,905 | (426 | ) | (2 | )% | ||||||||
| Selling, general and administrative expenses | 5,420 | 6,313 | (893 | ) | (14 | )% | ||||||||
| Depreciation and amortization | 21,007 | 25,297 | (4,290 | ) | (17 | )% | ||||||||
| 22,646 | 22,746 | (100 | ) | — | % | |||||||||
| Other operating loss | (103 | ) | (7 | ) | (96 | ) | 1,371 | % | ||||||
| Operating income | $ | 22,543 | $ | 22,739 | $ | (196 | ) | (1 | )% | |||||
| Distributions from unconsolidated entities | $ | 6,100 | $ | 7,800 | $ | (1,700 | ) | (22 | )% | |||||
| NGL sales volumes (Bbls) | 6,520 | 10,227 | (3,707 | ) | (36 | )% | ||||||||
| MARTIN MIDSTREAM PARTNERS L.P. | |||||||||||||||
| SEGMENT OPERATING INCOME | |||||||||||||||
| (Unaudited) | |||||||||||||||
| (Dollars and volumes in thousands, except BBL per day) | |||||||||||||||
| Sulfur Services Segment | |||||||||||||||
| Comparative Results of Operations for the Three Months Ended September 30, 2016 and 2015 | |||||||||||||||
| Three Months Ended September 30, | Variance | Percent Change | |||||||||||||
| 2016 | 2015 | ||||||||||||||
| (In thousands) | |||||||||||||||
| Revenues: | |||||||||||||||
| Services | $ | 2,700 | $ | 3,090 | $ | (390 | ) | (13 | )% | ||||||
| Products | 26,396 | 33,213 | (6,817 | ) | (21 | )% | |||||||||
| Total revenues | 29,096 | 36,303 | (7,207 | ) | (20 | )% | |||||||||
| Cost of products sold | 21,601 | 26,235 | (4,634 | ) | (18 | )% | |||||||||
| Operating expenses | 4,089 | 3,427 | 662 | 19 | % | ||||||||||
| Selling, general and administrative expenses | 946 | 934 | 12 | 1 | % | ||||||||||
| Depreciation and amortization | 1,997 | 2,129 | (132 | ) | (6 | )% | |||||||||
| 463 | 3,578 | (3,115 | ) | (87 | )% | ||||||||||
| Other operating loss | (234 | ) | (5 | ) | (229 | ) | 4,580 | % | |||||||
| Operating income | $ | 229 | $ | 3,573 | $ | (3,344 | ) | (94 | )% | ||||||
| Sulfur (long tons) | 241 | 203 | 38 | 19 | % | ||||||||||
| Fertilizer (long tons) | 47 | 51 | (4 | ) | (8 | )% | |||||||||
| Total sulfur services volumes (long tons) | 288 | 254 | 34 | 13 | % | ||||||||||
| Comparative Results of Operations for the Nine Months Ended September 30, 2016 and 2015 | |||||||||||||||
| Nine Months Ended September 30, | Variance | Percent Change | |||||||||||||
| 2016 | 2015 | ||||||||||||||
| (In thousands) | |||||||||||||||
| Revenues: | |||||||||||||||
| Services | $ | 8,100 | $ | 9,270 | $ | (1,170 | ) | (13 | )% | ||||||
| Products | 105,459 | 128,544 | (23,085 | ) | (18 | )% | |||||||||
| Total revenues | 113,559 | 137,814 | (24,255 | ) | (18 | )% | |||||||||
| Cost of products sold | 74,006 | 95,961 | (21,955 | ) | (23 | )% | |||||||||
| Operating expenses | 10,288 | 11,697 | (1,409 | ) | (12 | )% | |||||||||
| Selling, general and administrative expenses | 2,834 | 2,859 | (25 | ) | (1 | )% | |||||||||
| Depreciation and amortization | 5,978 | 6,360 | (382 | ) | (6 | )% | |||||||||
| 20,453 | 20,937 | (484 | ) | (2 | )% | ||||||||||
| Other operating loss | (266 | ) | (5 | ) | (261 | ) | 5,220 | % | |||||||
| Operating income | $ | 20,187 | $ | 20,932 | $ | (745 | ) | (4 | )% | ||||||
| Sulfur (long tons) | 579 | 641 | (62 | ) | (10 | )% | |||||||||
| Fertilizer (long tons) | 217 | 229 | (12 | ) | (5 | )% | |||||||||
| Total sulfur services volumes (long tons) | 796 | 870 | (74 | ) | (9 | )% | |||||||||
| MARTIN MIDSTREAM PARTNERS L.P. | ||||||||||||||||
| SEGMENT OPERATING INCOME | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (Dollars and volumes in thousands, except BBL per day) | ||||||||||||||||
| Marine Transportation Segment | ||||||||||||||||
| Comparative Results of Operations for the Three Months Ended September 30, 2016 and 2015 | ||||||||||||||||
| Three Months Ended September 30, | Variance | Percent Change | ||||||||||||||
| 2016 | 2015 | |||||||||||||||
| (In thousands) | ||||||||||||||||
| Revenues | $ | 14,920 | $ | 19,522 | $ | (4,602 | ) | (24 | )% | |||||||
| Operating expenses | 12,332 | 15,855 | (3,523 | ) | (22 | )% | ||||||||||
| Selling, general and administrative expenses | 149 | (59 | ) | 208 | (353 | )% | ||||||||||
| Depreciation and amortization | 2,254 | 3,060 | (806 | ) | (26 | )% | ||||||||||
| 185 | 666 | (481 | ) | (72 | )% | |||||||||||
| Other operating loss | — | (1,583 | ) | 1,583 | (100 | )% | ||||||||||
| Operating income (loss) | $ | 185 | $ | (917 | ) | $ | 1,102 | (120 | )% | |||||||
| Comparative Results of Operations for the Nine Months Ended September 30, 2016 and 2015 | ||||||||||||||||
| Nine Months Ended September 30, | Variance | Percent Change | ||||||||||||||
| 2016 | 2015 | |||||||||||||||
| (In thousands) | ||||||||||||||||
| Revenues | $ | 46,854 | $ | 62,354 | $ | (15,500 | ) | (25 | )% | |||||||
| Operating expenses | 41,400 | 48,284 | (6,884 | ) | (14 | )% | ||||||||||
| Selling, general and administrative expenses | (112 | ) | 251 | (363 | ) | (145 | )% | |||||||||
| Loss on impairment of goodwill | 4,145 | — | 4,145 | |||||||||||||
| Depreciation and amortization | 8,377 | 8,050 | 327 | 4 | % | |||||||||||
| Operating income | $ | (6,956 | ) | $ | 5,769 | $ | (12,725 | ) | (221 | )% | ||||||
| Other operating loss | (1,567 | ) | (1,552 | ) | (15 | ) | 1 | % | ||||||||
| Operating income (loss) | $ | (8,523 | ) | $ | 4,217 | $ | (12,740 | ) | (302 | )% | ||||||
| Distributions from Unconsolidated Entities | ||||||||||||||||
| Comparative Results of Operations for the Three Months Ended September 30, 2016 and 2015 | ||||||||||||||||
| Three Months Ended September 30, | Variance | Percent Change | ||||||||||||||
| 2016 | 2015 | |||||||||||||||
| (In thousands) | ||||||||||||||||
| Distributions from WTLPG | $ | 1,800 | $ | 3,400 | $ | (1,600 | ) | (47 | )% | |||||||
| Comparative Results of Operations for the Nine Months Ended September 30, 2016 and 2015 | |||||||||||||||
| Nine Months Ended September 30, | Variance | Percent Change | |||||||||||||
| 2016 | 2015 | ||||||||||||||
| (In thousands) | |||||||||||||||
| Distributions from WTLPG | $ | 6,100 | $ | 7,800 | $ | (1,700 | ) | (22 | )% | ||||||
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 nine months ended September 30, 2016 and 2015.
| Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net income (loss) | $ | (933 | ) | $ | 3,330 | $ | 13,770 | $ | 31,539 | |||||||
| Less: Income from discontinued operations, net of income taxes | — | — | — | (1,215 | ) | |||||||||||
| Income (loss) from continuing operations | (933 | ) | 3,330 | 13,770 | 30,324 | |||||||||||
| Adjustments: | ||||||||||||||||
| Interest expense | 11,779 | 11,994 | 34,046 | 32,465 | ||||||||||||
| Income tax expense | 180 | 200 | 422 | 814 | ||||||||||||
| Depreciation and amortization | 22,129 | 23,335 | 66,266 | 68,737 | ||||||||||||
| EBITDA | 33,155 | 38,859 | 114,504 | 132,340 | ||||||||||||
| Adjustments: | ||||||||||||||||
| Equity in earnings of unconsolidated entities | (1,120 | ) | (2,363 | ) | (3,602 | ) | (5,752 | ) | ||||||||
| (Gain) loss on sale of property, plant and equipment | (13 | ) | 1,586 | 1,582 | 1,751 | |||||||||||
| Loss on impairment of goodwill | — | — | 4,145 | — | ||||||||||||
| Unrealized mark-to-market on commodity derivatives | (742 | ) | 358 | 795 | 358 | |||||||||||
| Gain on retirement of senior unsecured notes | — | (728 | ) | — | (728 | ) | ||||||||||
| Distributions from unconsolidated entities | 1,800 | 3,400 | 6,100 | 7,800 | ||||||||||||
| Unit-based compensation | 226 | 330 | 712 | 1,080 | ||||||||||||
| Adjusted EBITDA | 33,306 | 41,442 | 124,236 | 136,849 | ||||||||||||
| Adjustments: | ||||||||||||||||
| Interest expense | (11,779 | ) | (11,994 | ) | (34,046 | ) | (32,465 | ) | ||||||||
| Income tax expense | (180 | ) | (200 | ) | (422 | ) | (814 | ) | ||||||||
| Amortization of debt premium | (77 | ) | (82 | ) | (230 | ) | (246 | ) | ||||||||
| Amortization of deferred debt issuance costs | 718 | 2,400 | 2,965 | 4,142 | ||||||||||||
| Non-cash mark-to-market on interest rate derivatives | — | — | (206 | ) | — | |||||||||||
| Payments for plant turnaround costs | (430 | ) | — | (1,614 | ) | (1,754 | ) | |||||||||
| Maintenance capital expenditures | (1,609 | ) | (2,438 | ) | (12,818 | ) | (7,621 | ) | ||||||||
| Distributable Cash Flow | $ | 19,949 | $ | 29,128 | $ | 77,865 | $ | 98,091 | ||||||||
