Martin Midstream Partners Reports Third Quarter 2022 Financial Results

  • Revises Fourth Quarter Guidance
  • Reported net loss of $10.0 million, including a $24.0 million inventory valuation write down, for the nine months ended September 30, 2022
  • Reported net loss of $28.0 million, including a $21.8 million inventory valuation write down, for the three months ended September 30, 2022
  • Reported adjusted EBITDA of $18.8 million and $97.1 million for the three and nine months ended September 30, 2022, respectively

KILGORE, Texas--()--Martin Midstream Partners L.P. (Nasdaq:MMLP) ("MMLP" or the "Partnership") today announced its financial results for the third quarter of 2022.

Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, stated, "During the third quarter, which is typically the Partnership’s weakest quarter due to seasonal lows in the fertilizer and butane businesses, both the Transportation and the Terminalling and Storage segments continued to outperform our internal projections. In the Transportation segment, demand for reliable, experienced tank truck hauling continues to be strong and our expansion in Florida has been positive. On the marine side, rates have now recovered to pre-pandemic levels and asset utilization has improved. In the Terminalling and Storage segment, the underlying drivers of the lubricants and specialty products businesses are positive resulting in higher than anticipated sales volumes. However, the Sulfur and Natural Gas Liquids segments experienced volatility during the third quarter. In the Sulfur segment, both the fertilizer and sulfur groups faced pricing instability resulting in lower fertilizer sales volumes. In addition, the pure sulfur business was impacted by unplanned maintenance expense related to the marine assets deployed in support of the business. Finally, within the NGL segment the butane blending market was negatively impacted by steeply falling prices in September, resulting in a significant non-cash inventory value adjustment.

“Although the markets and the factors that influence them are unpredictable at this time, the Partnership has been able to improve our financial results year over year. However, as commodity prices continue to move erratically from the risk of a global recession and fears of weak oil demand, we are revising our fourth quarter adjusted EBITDA guidance to between $19 and $24 million, resulting in a range of $116 to $121 million for full year 2022.”

THIRD QUARTER 2022 OPERATING RESULTS BY BUSINESS SEGMENT

TERMINALLING AND STORAGE (“T&S”)

T&S Operating Income for the three months ended September 30, 2022 and 2021 was $5.6 million and $4.4 million, respectively.

Adjusted segment EBITDA for T&S was $12.3 million and $11.2 million, for the three months ended September 30, 2022 and 2021, respectively, reflecting continued strength in our lubricant and specialty products divisions.

TRANSPORTATION

Transportation Operating Income for the three months ended September 30, 2022 and 2021 was $12.1 million and $3.9 million, respectively.

Adjusted segment EBITDA for Transportation was $15.1 million and $7.6 million for the three months ended September 30, 2022 and 2021, respectively, reflecting robust demand for land transportation services coupled with improving marine fleet utilization and higher day rates.

SULFUR SERVICES

Sulfur Services Operating Income (Loss) for the three months ended September 30, 2022 and 2021 was $(6.7) million, including a $(3.3) million inventory valuation write down, and $2.3 million, respectively.

Adjusted segment EBITDA for Sulfur Services was $(4.2) million and $4.9 million for the three months ended September 30, 2022 and 2021, respectively, reflecting decreased fertilizer sales volumes related to pricing instability and higher operating expenses in the sulfur business due to marine asset maintenance expense.

NATURAL GAS LIQUIDS (“NGL”)

NGL Operating Income (Loss) for the three months ended September 30, 2022 and 2021 was $(19.0) million, including an $(18.5) million inventory valuation write down, and $1.6 million, respectively, as the butane blending market was negatively impacted by steeply falling prices in September 2022.

Adjusted segment EBITDA for NGL was $(0.2) million and $1.8 million for the three months ended September 30, 2022 and 2021, respectively, primarily reflecting decreased NGL sales volumes and margins.

UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”)

USGA expenses included in operating income for the three months ended September 30, 2022 and 2021 were $4.3 million and $4.1 million, respectively.

USGA expenses included in adjusted EBITDA for the three months ended September 30, 2022 and 2021 were $4.2 million and $4.0 million, respectively, primarily reflecting an increase in employee related expenses.

CAPITALIZATION

At September 30, 2022, the Partnership had $547 million of total debt outstanding, including $202 million drawn on its $275 million revolving credit facility, $54 million of senior secured 1.5 lien notes due 2024 and $291 million of senior secured second lien notes due 2025. At September 30, 2022, the Partnership had liquidity of approximately $44 million from available capacity under its revolving credit facility. The Partnership’s adjusted leverage ratio, as calculated under the revolving credit facility, was 3.63 times and 3.46 times on September 30, 2022 and June 30, 2022, respectively. The Partnership was in compliance with all debt covenants as of September 30, 2022.

The Partnership’s revolving credit facility matures on August 31, 2023, therefore the outstanding borrowings under the facility are presented as a current liability on the September 30, 2022 financial statements. The Partnership is in the process of refinancing the credit facility, and although no assurance of success can be given, management presently believes the measures being taken will enable the Partnership to successfully extend the maturity of the credit facility.

RESULTS OF OPERATIONS

The Partnership had a net loss for the three months ended September 30, 2022 of $28.0 million, a loss of $0.71 per limited partner unit. The Partnership had a net loss for the three months ended September 30, 2021 of $6.9 million, a loss of $0.17 per limited partner unit. Adjusted EBITDA for the three months ended September 30, 2022 was $18.8 million compared to $21.5 million for the three months ended September 30, 2021. Net cash provided by (used in) operating activities for the three months ended September 30, 2022 was ($45.2) million, compared to $(18.5) million for the three months ended September 30, 2021. Distributable cash flow for the three months ended September 30, 2022 was $(3.5) million compared to $5.2 million for the three months ended September 30, 2021.

Revenues for the three months ended September 30, 2022 were $229.3 million compared to $211.3 million for the three months ended September 30, 2021.

The Partnership had a net loss for the nine months ended September 30, 2022 of $10.0 million, a loss of $0.25 per limited partner unit. The Partnership had a net loss for the nine months ended September 30, 2021 of $11.0 million, a loss of $0.28 per limited partner unit. Adjusted EBITDA for the nine months ended September 30, 2022 was $97.1 million compared to $74.9 million for the nine months ended September 30, 2021. Net cash provided by (used in) operating activities for the nine months ended September 30, 2022 was $(16.8) million, compared to $(12.4) million for the nine months ended September 30, 2021. Distributable cash flow for the nine months ended September 30, 2022 was $39.6 million compared to $25.3 million for the nine months ended September 30, 2021.

Revenues for the nine months ended September 30, 2022 were $775.5 million compared to $596.5 million for the nine months ended September 30, 2021.

EBITDA, adjusted EBITDA, distributable cash flow and adjusted free cash flow 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, Distributable Cash Flow and Adjusted Free Cash Flow" in order to show the components of these non-GAAP financial measures and their reconciliation to the most comparable GAAP measurement.

An attachment included in the Current Report on Form 8-K to which this announcement is included contains a comparison of the Partnership’s adjusted EBITDA for the third quarter 2022 to the Partnership's adjusted EBITDA for the third quarter 2021.

2022 REVISED FINANCIAL GUIDANCE

The Partnership now expects to generate adjusted EBITDA between $116 million and $121 million for full-year 2022, compared to the previously revised adjusted EBITDA guidance of between $126 million and $135 million. This decreased guidance reflects our expectation that the seasonal uplift in commodity prices, specifically normal butane prices as a percentage of crude oil, will be lower than historical patterns at least through year-end 2022.

Distributable cash flow is now expected to be between $38 million and $43 million for full-year 2022, compared to the previous distributable cash flow guidance of between $53 million and $62 million. Adjusted free cash flow is now expected to be between $29 million and $34 million, compared to the previous adjusted free cash flow guidance of between $44 million and $53 million.

MMLP does not intend at this time to provide financial guidance beyond 2022.

The Partnership has not provided comparable GAAP financial information on a forward-looking basis because it would require the Partnership to create estimated ranges on a GAAP basis, which would entail unreasonable effort as the adjustments required to reconcile forward-looking non-GAAP measures cannot be predicted with a reasonable degree of certainty but may include, among others, costs related to debt amendments and unusual charges, expenses and gains. Some or all of those adjustments could be significant.

Investors' Conference Call

Date: Thursday, November 3 2022
Time: 8:00 a.m. CT (please dial in by 7:55 a.m.)
Dial In #: (888) 330-2384
Conference ID: 8536096

Replay Dial In # (800) 770-2030 – Conference ID: 8536096

A webcast of the conference call along with the Third Quarter 2022 Earnings Summary and Revised Guidance Presentation will also be available by visiting the Events and Presentations section under Investor Relations on our website at www.MMLP.com.

About Martin Midstream Partners

MMLP, headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s four primary business lines include: (1) terminalling, processing, storage, and packaging services for petroleum products and by-products, including the refining of naphthenic crude oil; (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. To learn more, visit www.MMLP.com. Follow Martin Midstream Partners L.P. on LinkedIn and Facebook.

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, including (i) the current and potential impacts of the COVID-19 pandemic generally (including variants of the virus), on an industry-specific basis, and on the Partnership’s specific operations and business, (ii) the effects of the continued volatility of commodity prices and the related macroeconomic and political environment, and (iii) other factors, many of which are outside its 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 “SEC”). 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

To assist the Partnership's management in assessing its business, it uses the following non-GAAP financial measures: earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below) distributable cash flow available to common unitholders (“distributable cash flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("adjusted free cash flow"). 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.

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.

EBITDA and Adjusted EBITDA. The Partnership defines adjusted EBITDA as EBITDA before unit-based compensation expenses, gains and losses on the disposition of property, plant and equipment, impairment and other similar non-cash adjustments. Adjusted EBITDA is used as a supplemental performance and liquidity measure by the Partnership's management and by external users of its financial statements, such as investors, commercial banks, research analysts, and others, to assess:

  • the financial performance of the Partnership's assets without regard to financing methods, capital structure, or historical cost basis;
  • the ability of the Partnership's assets to generate cash sufficient to pay interest costs, support its indebtedness, and make cash distributions to its unitholders; and
  • its operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing methods or capital structure.

The GAAP measures most directly comparable to adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities, or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate adjusted EBITDA in the same manner.

Adjusted EBITDA does not include interest expense, income tax expense, and depreciation and amortization. Because the Partnership has borrowed money to finance its operations, interest expense is a necessary element of its costs and its ability to generate cash available for distribution. Because the Partnership has capital assets, depreciation and amortization are also necessary elements of its costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, the Partnership believes that it is important to consider net income (loss) and net cash provided by (used in) operating activities as determined under GAAP, as well as adjusted EBITDA, to evaluate its overall performance.

Distributable Cash Flow. The Partnership defines distributable cash flow as net cash provided by (used in) operating activities less cash received (plus cash paid) for closed commodity derivative positions included in accumulated other comprehensive income (loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital expenditures and plant turnaround costs. 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 us 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 its 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.

Adjusted Free Cash Flow. The Partnership defines adjusted free cash flow as distributable cash flow less growth capital expenditures and principal payments under finance lease obligations. Adjusted free cash flow is a significant performance measure used by the Partnership's management and by external users of its financial statements and represents how much cash flow a business generates during a specified time period after accounting for all capital expenditures, including expenditures for growth and maintenance capital projects. The Partnership believes that adjusted free cash flow is important to investors, lenders, commercial banks and research analysts since it reflects the amount of cash available for reducing debt, investing in additional capital projects, paying distributions, and similar matters. The Partnership's calculation of adjusted free cash flow may or may not be comparable to similarly titled measures used by other entities.

The GAAP measure most directly comparable to distributable cash flow and adjusted free cash flow is net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow should not be considered alternatives to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP. Distributable cash flow and adjusted free cash flow have important limitations because they exclude some items that affect net income (loss), operating income (loss), and net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow may not be comparable to similarly titled measures of other companies because other companies may not calculate these non-GAAP metrics in the same manner. To compensate for these limitations, the Partnership believes that it is important to consider net cash provided by (used in) operating activities determined under GAAP, as well as distributable cash flow and adjusted free cash flow, to evaluate its overall liquidity.

MMLP-F

 

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED BALANCE SHEETS

(Dollars in thousands)

 

 

September 30,
2022

 

December 31,
2021

 

(Unaudited)

 

(Audited)

Assets

 

 

 

Cash

$

45

 

 

$

52

 

Accounts and other receivables, less allowance for doubtful accounts of $448 and $311, respectively

 

77,148

 

 

 

84,199

 

Inventories

 

135,638

 

 

 

62,120

 

Due from affiliates

 

2,393

 

 

 

14,409

 

Other current assets

 

17,134

 

 

 

12,908

 

Total current assets

 

232,358

 

 

 

173,688

 

 

 

 

 

Property, plant and equipment, at cost

 

904,159

 

 

 

898,770

 

Accumulated depreciation

 

(578,277

)

 

 

(553,300

)

Property, plant and equipment, net

 

325,882

 

 

 

345,470

 

 

 

 

 

Goodwill

 

16,823

 

 

 

16,823

 

Right-of-use assets

 

33,817

 

 

 

21,861

 

Deferred income taxes, net

 

16,210

 

 

 

19,821

 

Other assets, net

 

2,895

 

 

 

2,198

 

Total assets

$

627,985

 

 

$

579,861

 

 

 

 

 

Liabilities and Partners’ Capital (Deficit)

 

 

 

Current installments of long-term debt and finance lease obligations

$

200,651

 

 

$

280

 

Trade and other accounts payable

 

74,056

 

 

 

70,342

 

Product exchange payables

 

711

 

 

 

1,406

 

Due to affiliates

 

13,777

 

 

 

1,824

 

Income taxes payable

 

613

 

 

 

385

 

Other accrued liabilities

 

21,020

 

 

 

29,850

 

Total current liabilities

 

310,828

 

 

 

104,087

 

 

 

 

 

Long-term debt, net

 

342,566

 

 

 

498,871

 

Finance lease obligations

 

 

 

 

9

 

Operating lease liabilities

 

25,485

 

 

 

15,704

 

Other long-term obligations

 

8,323

 

 

 

9,227

 

Total liabilities

 

687,202

 

 

 

627,898

 

 

 

 

 

Commitments and contingencies

 

 

 

Partners’ capital (deficit)

 

(59,217

)

 

 

(48,853

)

Accumulated other comprehensive income (loss)

 

 

 

 

816

 

Total partners’ capital (deficit)

 

(59,217

)

 

 

(48,037

)

Total liabilities and partners' capital (deficit)

$

627,985

 

 

$

579,861

 

 

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per unit amounts)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

Terminalling and storage *

$

20,007

 

 

$

18,980

 

 

$

59,859

 

 

$

56,060

 

Transportation *

 

58,993

 

 

 

39,079

 

 

 

161,535

 

 

 

103,820

 

Sulfur services

 

3,085

 

 

 

2,950

 

 

 

9,253

 

 

 

8,849

 

Product sales: *

 

 

 

 

 

 

 

Natural gas liquids

 

80,891

 

 

 

91,764

 

 

 

299,034

 

 

 

257,081

 

Sulfur services

 

25,783

 

 

 

27,887

 

 

 

135,691

 

 

 

95,109

 

Terminalling and storage

 

40,546

 

 

 

30,598

 

 

 

110,130

 

 

 

75,606

 

 

 

147,220

 

 

 

150,249

 

 

 

544,855

 

 

 

427,796

 

Total revenues

 

229,305

 

 

 

211,258

 

 

 

775,502

 

 

 

596,525

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of products sold: (excluding depreciation and amortization)

 

 

 

 

 

 

 

Natural gas liquids *

 

94,668

 

 

 

85,137

 

 

 

293,350

 

 

 

225,862

 

Sulfur services *

 

25,230

 

 

 

20,266

 

 

 

100,078

 

 

 

65,657

 

Terminalling and storage *

 

32,289

 

 

 

24,167

 

 

 

87,267

 

 

 

58,895

 

 

 

152,187

 

 

 

129,570

 

 

 

480,695

 

 

 

350,414

 

Expenses:

 

 

 

 

 

 

 

Operating expenses *

 

66,158

 

 

 

50,098

 

 

 

186,735

 

 

 

142,045

 

Selling, general and administrative *

 

10,273

 

 

 

9,739

 

 

 

31,420

 

 

 

29,308

 

Depreciation and amortization

 

13,721

 

 

 

13,945

 

 

 

43,007

 

 

 

42,862

 

Total costs and expenses

 

242,339

 

 

 

203,352

 

 

 

741,857

 

 

 

564,629

 

 

 

 

 

 

 

 

 

Other operating income (loss), net

 

790

 

 

 

61

 

 

 

1,050

 

 

 

(610

)

Gain on involuntary conversion of property, plant and equipment

 

 

 

 

186

 

 

 

 

 

 

186

 

Operating income (loss)

 

(12,244

)

 

 

8,153

 

 

 

34,695

 

 

 

31,472

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense, net

 

(13,906

)

 

 

(14,110

)

 

 

(39,181

)

 

 

(40,372

)

Other, net

 

(2

)

 

 

 

 

 

(4

)

 

 

(1

)

Total other expense

 

(13,908

)

 

 

(14,110

)

 

 

(39,185

)

 

 

(40,373

)

 

 

 

 

 

 

 

 

Net loss before taxes

 

(26,152

)

 

 

(5,957

)

 

 

(4,490

)

 

 

(8,901

)

Income tax expense

 

(1,891

)

 

 

(954

)

 

 

(5,469

)

 

 

(2,111

)

Net loss

 

(28,043

)

 

 

(6,911

)

 

 

(9,959

)

 

 

(11,012

)

Less general partner's interest in net loss

 

561

 

 

 

138

 

 

 

199

 

 

 

220

 

Less loss allocable to unvested restricted units

 

90

 

 

 

20

 

 

 

39

 

 

 

30

 

Limited partners' interest in net loss

$

(27,392

)

 

$

(6,753

)

 

$

(9,721

)

 

$

(10,762

)

 

 

 

 

 

 

 

 

Net loss per unit attributable to limited partners - basic

$

(0.71

)

 

$

(0.17

)

 

$

(0.25

)

 

$

(0.28

)

Net loss per unit attributable to limited partners - diluted

$

(0.71

)

 

$

(0.17

)

 

$

(0.25

)

 

$

(0.28

)

Weighted average limited partner units - basic

 

38,726,388

 

 

 

38,687,874

 

 

 

38,725,933

 

 

 

38,689,434

 

Weighted average limited partner units - diluted

 

38,726,388

 

 

 

38,687,874

 

 

 

38,725,933

 

 

 

38,689,434

 

 

*Related Party Transactions Shown Below

 

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per unit amounts)

 

*Related Party Transactions Included Above

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues:*

 

 

 

 

 

 

 

Terminalling and storage

$

16,065

 

$

15,866

 

$

49,685

 

$

46,741

Transportation

 

7,111

 

 

 

5,564

 

 

 

20,862

 

 

 

14,463

 

Product Sales

 

61

 

 

 

68

 

 

 

477

 

 

 

253

 

Costs and expenses:*

 

 

 

 

 

 

 

Cost of products sold: (excluding depreciation and amortization)

 

 

 

 

 

 

 

Sulfur services

 

2,616

 

 

 

2,441

 

 

 

7,884

 

 

 

7,379

 

Terminalling and storage

 

10,202

 

 

 

7,259

 

 

 

30,062

 

 

 

18,863

 

Expenses:

 

 

 

 

 

 

 

Operating expenses

 

23,856

 

 

 

20,088

 

 

 

68,682

 

 

 

58,046

 

Selling, general and administrative

 

7,626

 

 

 

7,659

 

 

 

23,932

 

 

 

23,624

 

 

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in thousands)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

Net loss

$

(28,043

)

 

$

(6,911

)

 

$

(9,959

)

 

$

(11,012

)

Changes in fair values of commodity cash flow hedges

 

 

 

 

(5,999

)

 

 

 

 

 

(5,999

)

Commodity cash flow hedging (gains) reclassified to earnings

 

(167

)

 

 

 

 

 

(816

)

 

 

 

Comprehensive loss

$

(28,210

)

 

$

(12,910

)

 

$

(10,775

)

 

$

(17,011

)

 

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)

(Unaudited)

(Dollars in thousands)

 

 

Partners’ Capital (Deficit)

 

 

 

Common Limited

 

General
Partner
Amount

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

 

Units

 

Amount

 

 

 

Total

Balances - January 1, 2021

 

38,851,174

 

 

$

(48,776

)

 

$

1,905

 

 

$

 

 

$

(46,871

)

Net loss

 

 

 

 

(10,792

)

 

 

(220

)

 

 

 

 

 

(11,012

)

Issuance of restricted units

42,168

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of restricted units

 

(83,436

)

 

 

 

 

 

 

 

 

 

 

 

 

General partner contribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash distributions

 

 

 

 

(581

)

 

 

(12

)

 

 

 

 

 

(593

)

Unit-based compensation

 

 

 

 

336

 

 

 

 

 

 

 

 

 

336

 

Purchase of treasury units

 

(7,156

)

 

 

(17

)

 

 

 

 

 

 

 

 

(17

)

Gain recognized in AOCI on commodity cash flow hedges

 

 

 

 

 

 

 

 

 

 

(5,999

)

 

 

(5,999

)

Balances - September 30, 2021

 

38,802,750

 

 

$

(59,830

)

 

$

1,673

 

 

$

(5,999

)

 

$

(64,156

)

 

 

 

 

 

 

 

 

 

 

Balances - January 1, 2022

 

38,802,750

 

 

$

(50,741

)

 

$

1,888

 

 

$

816

 

 

$

(48,037

)

Net loss

 

 

 

 

(9,760

)

 

 

(199

)

 

 

 

 

 

(9,959

)

Issuance of restricted units

 

48,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash distributions

 

 

 

 

(583

)

 

 

(12

)

 

 

 

 

 

(595

)

Unit-based compensation

 

 

 

 

125

 

 

 

 

 

 

 

 

 

125

 

Gain reclassified from AOCI into income on commodity cash flow hedges

 

 

 

 

 

 

 

 

 

 

(816

)

 

 

(816

)

Excess purchase price over carrying value of acquired assets

 

 

 

 

65

 

 

 

 

 

 

 

 

 

65

 

Balances - September 30, 2022

 

38,850,750

 

 

$

(60,894

)

 

$

1,677

 

 

$

 

 

$

(59,217

)

 

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

 

 

Nine Months Ended

 

September 30,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net loss

$

(9,959

)

 

$

(11,012

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

43,007

 

 

 

42,862

 

Amortization of deferred debt issuance costs

 

2,356

 

 

 

2,585

 

Deferred income tax expense

 

3,611

 

 

 

1,419

 

(Gain) loss on sale of property, plant and equipment, net

 

(1,050

)

 

 

610

 

Gain on involuntary conversion of property, plant and equipment

 

 

 

 

(186

)

Derivative (income) loss

 

(901

)

 

 

1,825

 

Net cash paid for commodity derivatives

 

85

 

 

 

(2,982

)

Non cash unit-based compensation

 

125

 

 

 

336

 

Change in current assets and liabilities, excluding effects of acquisitions and dispositions:

 

 

 

Accounts and other receivables

 

7,076

 

 

 

(22,924

)

Inventories

 

(73,518

)

 

 

(44,353

)

Due from affiliates

 

12,016

 

 

 

4,674

 

Other current assets

 

(4,824

)

 

 

(1,912

)

Trade and other accounts payable

 

6,053

 

 

 

21,092

 

Product exchange payables

 

(695

)

 

 

1,014

 

Due to affiliates

 

11,953

 

 

 

5,034

 

Income taxes payable

 

228

 

 

 

(155

)

Other accrued liabilities

 

(13,435

)

 

 

(10,536

)

Change in other non-current assets and liabilities

 

1,116

 

 

 

203

 

Net cash used in operating activities

 

(16,756

)

 

 

(12,406

)

 

 

 

 

Cash flows from investing activities:

 

 

 

Payments for property, plant and equipment

 

(21,019

)

 

 

(11,449

)

Payments for plant turnaround costs

 

(4,262

)

 

 

(2,679

)

Proceeds from involuntary conversion of property, plant and equipment

 

 

 

 

274

 

Proceeds from sale of property, plant and equipment

 

2,209

 

 

 

225

 

Net cash used in investing activities

 

(23,072

)

 

 

(13,629

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Payments of long-term debt

 

(299,089

)

 

 

(211,790

)

Payments under finance lease obligations

 

(180

)

 

 

(2,648

)

Proceeds from long-term debt

 

341,000

 

 

 

243,500

 

Purchase of treasury units

 

 

 

 

(17

)

Payment of debt issuance costs

 

(30

)

 

 

(592

)

Excess purchase price over carrying value of acquired assets

 

(1,285

)

 

 

 

Cash distributions paid

 

(595

)

 

 

(593

)

Net cash provided by financing activities

 

39,821

 

 

 

27,860

 

 

 

 

 

Net increase (decrease) in cash

 

(7

)

 

 

1,825

 

Cash at beginning of period

 

52

 

 

 

4,958

 

Cash at end of period

$

45

 

 

$

6,783

 

Non-cash additions to property, plant and equipment

$

2,240

 

 

$

749

 

 

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, 2022 and 2021

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

2022

 

 

 

2021

 

 

Variance

 

Percent
Change

 

(In thousands, except BBL per day)

 

 

Revenues:

 

 

 

 

 

 

 

Services

$

21,578

 

$

20,628

 

$

950

 

 

5

%

Products

 

40,571

 

 

 

30,598

 

 

 

9,973

 

 

33

%

Total revenues

 

62,149

 

 

 

51,226

 

 

 

10,923

 

 

21

%

 

 

 

 

 

 

 

 

Cost of products sold

 

32,998

 

 

 

24,618

 

 

 

8,380

 

 

34

%

Operating expenses

 

15,232

 

 

 

13,789

 

 

 

1,443

 

 

10

%

Selling, general and administrative expenses

 

1,596

 

 

 

1,528

 

 

 

68

 

 

4

%

Depreciation and amortization

 

6,747

 

 

 

7,049

 

 

 

(302

)

 

(4

) %

 

 

5,576

 

 

 

4,242

 

 

 

1,334

 

 

31

%

Other operating income, net

 

 

 

 

11

 

 

 

(11

)

 

(100

) %

Gain on involuntary conversion of property, plant and equipment

 

 

 

 

186

 

 

 

(186

)

 

(100

) %

Operating income

$

5,576

 

 

$

4,439

 

 

$

1,137

 

 

26

%

 

 

 

 

 

 

 

 

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 Nine Months Ended September 30, 2022 and 2021

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2022

 

 

 

2021

 

 

Variance

 

Percent
Change

 

(In thousands, except BBL per day)

 

 

Revenues:

 

 

 

 

 

 

 

Services

$

64,724

 

 

$

60,945

 

$

3,779

 

 

6

%

Products

 

110,218

 

 

 

75,639

 

 

 

34,579

 

 

46

%

Total revenues

 

174,942

 

 

 

136,584

 

 

 

38,358

 

 

28

%

 

 

 

 

 

 

 

 

Cost of products sold

 

89,150

 

 

 

60,318

 

 

 

28,832

 

 

48

%

Operating expenses

 

44,069

 

 

 

39,246

 

 

 

4,823

 

 

12

%

Selling, general and administrative expenses

 

4,961

 

 

 

4,495

 

 

 

466

 

 

10

%

Depreciation and amortization

 

22,084

 

 

 

21,150

 

 

 

934

 

 

4

%

 

 

14,678

 

 

 

11,375

 

 

 

3,303

 

 

29

%

Other operating income (loss), net

 

(35

)

 

 

6

 

 

 

(41

)

 

(683

) %

Gain on involuntary conversion of property, plant and equipment

 

 

 

 

186

 

 

 

(186

)

 

(100

) %

Operating income

$

14,643

 

 

$

11,567

 

 

$

3,076

 

 

27

%

 

 

 

 

 

 

 

 

Shore-based throughput volumes (guaranteed minimum) (gallons)

 

60,000

 

 

 

60,000

 

 

 

 

 

%

Smackover refinery throughput volumes (guaranteed minimum) (BBL per day)

 

6,500

 

 

 

6,500

 

 

 

 

 

%

Transportation Segment

 

Comparative Results of Operations for the Three Months Ended September 30, 2022 and 2021

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

2022

 

 

 

2021

 

 

Variance

 

Percent
Change

 

(In thousands)

 

 

Revenues

$

63,514

 

$

42,568

 

$

20,946

 

 

49

%

Operating expenses

 

46,499

 

 

 

33,053

 

 

 

13,446

 

 

41

%

Selling, general and administrative expenses

 

1,962

 

 

 

1,920

 

 

 

42

 

 

2

%

Depreciation and amortization

 

3,598

 

 

 

3,710

 

 

 

(112

)

 

(3

) %

 

 

11,455

 

 

 

3,885

 

 

 

7,570

 

 

195

%

Other operating income, net

 

618

 

 

 

42

 

 

 

576

 

 

1,371

%

Operating income

$

12,073

 

 

$

3,927

 

 

$

8,146

 

 

207

%

 

Comparative Results of Operations for the Nine Months Ended September 30, 2022 and 2021

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2022

 

 

 

2021

 

 

Variance

 

Percent
Change

 

(In thousands)

 

 

Revenues

$

176,313

 

$

114,886

 

$

61,427

 

 

53

%

Operating expenses

 

130,229

 

 

 

94,042

 

 

 

36,187

 

 

38

%

Selling, general and administrative expenses

 

5,920

 

 

 

5,578

 

 

 

342

 

 

6

%

Depreciation and amortization

 

10,761

 

 

 

12,039

 

 

 

(1,278

)

 

(11

) %

 

$

29,403

 

 

$

3,227

 

 

$

26,176

 

 

811

%

Other operating income, net

 

901

 

 

 

59

 

 

 

842

 

 

1,427

%

Operating income

$

30,304

 

 

$

3,286

 

 

$

27,018

 

 

822

%

 

Sulfur Services Segment

 

Comparative Results of Operations for the Three Months Ended September 30, 2022 and 2021

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

2022

 

 

 

2021

 

 

Variance

 

Percent
Change

 

(In thousands)

 

 

Revenues:

 

 

 

 

 

 

 

Services

$

3,085

 

 

$

2,950

 

$

135

 

 

5

%

Products

 

25,783

 

 

 

27,887

 

 

 

(2,104

)

 

(8

) %

Total revenues

 

28,868

 

 

 

30,837

 

 

 

(1,969

)

 

(6

) %

 

 

 

 

 

 

 

 

Cost of products sold

 

27,201

 

 

 

21,799

 

 

 

5,402

 

 

25

%

Operating expenses

 

3,978

 

 

 

2,849

 

 

 

1,129

 

 

40

%

Selling, general and administrative expenses

 

1,509

 

 

 

1,321

 

 

 

188

 

 

14

%

Depreciation and amortization

 

2,786

 

 

 

2,594

 

 

 

192

 

 

7

%

 

 

(6,606

)

 

 

2,274

 

 

 

(8,880

)

 

(391

) %

Other operating income, net

 

(70

)

 

 

8

 

 

 

(78

)

 

(975

) %

Operating income

$

(6,676

)

 

$

2,282

 

 

$

(8,958

)

 

(393

) %

 

 

 

 

 

 

 

 

Sulfur (long tons)

 

95

 

 

 

145

 

 

 

(50

)

 

(34

) %

Fertilizer (long tons)

 

24

 

 

 

57

 

 

 

(33

)

 

(58

) %

Total sulfur services volumes (long tons)

 

119

 

 

 

202

 

 

 

(83

)

 

(41

) %

Comparative Results of Operations for the Nine Months Ended September 30, 2022 and 2021

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2022

 

 

 

2021

 

 

Variance

 

Percent
Change

 

(In thousands)

 

 

Revenues:

 

 

 

 

 

 

 

Services

$

9,253

 

 

$

8,849

 

$

404

 

 

5

%

Products

 

135,691

 

 

 

95,109

 

 

 

40,582

 

 

43

%

Total revenues

 

144,944

 

 

 

103,958

 

 

 

40,986

 

 

39

%

 

 

 

 

 

 

 

 

Cost of products sold

 

105,640

 

 

 

69,619

 

 

 

36,021

 

 

52

%

Operating expenses

 

11,233

 

 

 

7,662

 

 

 

3,571

 

 

47

%

Selling, general and administrative expenses

 

4,550

 

 

 

3,777

 

 

 

773

 

 

20

%

Depreciation and amortization

 

8,377

 

 

 

7,882

 

 

 

495

 

 

6

%

 

 

15,144

 

 

 

15,018

 

 

 

126

 

 

1

%

Other operating income (loss), net

 

(34

)

 

 

14

 

 

 

(48

)

 

(343

) %

Operating income

$

15,110

 

 

$

15,032

 

 

$

78

 

 

1

%

 

 

 

 

 

 

 

 

Sulfur (long tons)

 

327

 

 

 

364

 

 

 

(37

)

 

(10

) %

Fertilizer (long tons)

 

170

 

 

 

236

 

 

 

(66

)

 

(28

) %

Total sulfur services volumes (long tons)

 

497

 

 

 

600

 

 

 

(103

)

 

(17

) %

 

Natural Gas Liquids Segment

 

Comparative Results of Operations for the Three Months Ended September 30, 2022 and 2021

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

2022

 

 

 

2021

 

 

Variance

 

Percent
Change

 

(In thousands)

 

 

Products revenues

$

80,891

 

 

$

91,764

 

$

(10,873

)

 

(12

) %

Cost of products sold

 

97,322

 

 

 

87,551

 

 

 

9,771

 

 

11

%

Operating expenses

 

1,210

 

 

 

1,088

 

 

 

122

 

 

11

%

Selling, general and administrative expenses

 

968

 

 

 

954

 

 

 

14

 

 

1

%

Depreciation and amortization

 

590

 

 

 

592

 

 

 

(2

)

 

%

 

 

(19,199

)

 

 

1,579

 

 

 

(20,778

)

 

(1,316

) %

Other operating income, net

 

242

 

 

 

 

 

 

242

 

 

 

Operating income (loss)

$

(18,957

)

 

$

1,579

 

 

$

(20,536

)

 

(1,301

) %

 

 

 

 

 

 

 

 

NGL sales volumes (Bbls)

 

1,180

 

 

 

1,435

 

 

 

(255

)

 

(18

) %

 

Comparative Results of Operations for the Nine Months Ended September 30, 2022 and 2021

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2022

 

 

 

2021

 

 

Variance

 

Percent
Change

 

(In thousands)

 

 

Products revenues

$

299,037

 

 

$

257,081

 

 

$

41,956

 

 

16

%

Cost of products sold

 

303,376

 

 

 

234,239

 

 

 

69,137

 

 

30

%

Operating expenses

 

3,397

 

 

 

3,144

 

 

 

253

 

 

8

%

Selling, general and administrative expenses

 

3,287

 

 

 

3,858

 

 

 

(571

)

 

(15

) %

Depreciation and amortization

 

1,785

 

 

 

1,791

 

 

 

(6

)

 

%

 

 

(12,808

)

 

 

14,049

 

 

 

(26,857

)

 

(191

) %

Other operating income (loss), net

 

218

 

 

 

(689

)

 

 

907

 

 

132

%

Operating income (loss)

$

(12,590

)

 

$

13,360

 

 

$

(25,950

)

 

(194

) %

 

 

 

 

 

 

 

 

NGL sales volumes (Bbls)

 

3,930

 

 

 

4,839

 

 

 

(909

)

 

(19

) %

 

Unallocated Selling, General and Administrative Expenses

 

Comparative Results of Operations for the Three and Nine Months Ended September 30, 2022 and 2021

 

 

Three Months Ended
September 30,

 

 

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2022

 

 

 

2021

 

 

Variance

 

Percent
Change

 

 

2022

 

 

 

2021

 

 

Variance

 

Percent
Change

 

(In thousands)

 

 

 

(In thousands)

 

 

Indirect selling, general and administrative expenses

$

4,260

 

$

4,074

 

$

186

 

5

%

 

$

12,772

 

$

11,773

 

$

999

 

8

%

Non-GAAP Financial Measures

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and nine months ended September 30, 2022 and 2021, which represents EBITDA, Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow:

 

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

(in thousands)

 

(in thousands)

Net loss

$

(28,043

)

 

$

(6,911

)

 

$

(9,959

)

 

$

(11,012

)

Adjustments:

 

 

 

 

 

 

 

Interest expense

 

13,906

 

 

 

14,110

 

 

 

39,181

 

 

 

40,372

 

Income tax expense

 

1,891

 

 

 

954

 

 

 

5,469

 

 

 

2,111

 

Depreciation and amortization

 

13,721

 

 

 

13,945

 

 

 

43,007

 

 

 

42,862

 

EBITDA

 

1,475

 

 

 

22,098

 

 

 

77,698

 

 

 

74,333

 

Adjustments:

 

 

 

 

 

 

 

(Gain) loss on disposition of property, plant and equipment

 

(790

)

 

 

(61

)

 

 

(1,050

)

 

 

610

 

Gain on involuntary conversion of property, plant and equipment

 

 

 

 

(186

)

 

 

 

 

 

(186

)

Unrealized mark-to-market on commodity derivatives

 

 

 

 

(412

)

 

 

 

 

 

(207

)

Lower of cost or market and other non-cash adjustments

 

18,084

 

 

 

 

 

 

20,326

 

 

 

 

Unit-based compensation

 

46

 

 

 

48

 

 

 

125

 

 

 

336

 

Adjusted EBITDA

$

18,815

 

 

$

21,487

 

 

$

97,099

 

 

$

74,886

 

 

Reconciliation of Net Cash provided by Operating Activities to Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

(in thousands)

 

(in thousands)

Net cash provided by operating activities

$

(45,207

)

 

$

(18,491

)

 

$

(16,756

)

 

$

(12,406

)

Interest expense 1

 

13,118

 

 

 

13,046

 

 

 

36,825

 

 

 

37,787

 

Current income tax expense

 

584

 

 

 

293

 

 

 

1,858

 

 

 

692

 

Lower of cost or market and other non-cash adjustments

 

18,084

 

 

 

 

 

 

20,326

 

 

 

 

Commodity cash flow hedging gains reclassified to earnings

 

167

 

 

 

 

 

 

901

 

 

 

 

Net cash paid for closed commodity derivative positions included in AOCI

 

 

 

 

950

 

 

 

(85

)

 

 

950

 

Changes in operating assets and liabilities which (provided) used cash:

 

 

 

 

 

 

 

Accounts and other receivables, inventories, and other current assets

 

(5,651

)

 

 

40,263

 

 

 

59,250

 

 

 

64,515

 

Trade, accounts and other payables, and other current liabilities

 

38,691

 

 

 

(14,584

)

 

 

(4,104

)

 

 

(16,449

)

Other

 

(971

)

 

 

10

 

 

 

(1,116

)

 

 

(203

)

Adjusted EBITDA

 

18,815

 

 

 

21,487

 

 

 

97,099

 

 

 

74,886

 

Adjustments:

 

 

 

 

 

 

 

Interest expense

 

(13,906

)

 

 

(14,110

)

 

 

(39,181

)

 

 

(40,372

)

Income tax expense

 

(1,891

)

 

 

(954

)

 

 

(5,469

)

 

 

(2,111

)

Deferred income taxes

 

1,307

 

 

 

661

 

 

 

3,611

 

 

 

1,419

 

Amortization of deferred debt issuance costs

 

788

 

 

 

1,064

 

 

 

2,356

 

 

 

2,585

 

Payments for plant turnaround costs

 

(2,662

)

 

 

(985

)

 

 

(4,262

)

 

 

(2,679

)

Maintenance capital expenditures

 

(5,994

)

 

 

(1,945

)

 

 

(14,548

)

 

 

(8,386

)

Distributable Cash Flow

 

(3,543

)

 

 

5,218

 

 

 

39,606

 

 

 

25,342

 

Principal payments under finance lease obligations

 

(61

)

 

 

(753

)

 

 

(180

)

 

 

(3,344

)

Expansion capital expenditures

 

(926

)

 

 

(671

)

 

 

(5,482

)

 

 

(2,648

)

Adjusted Free Cash Flow

$

(4,530

)

 

$

3,794

 

 

$

33,944

 

 

$

19,350

 

1 Net of amortization of debt issuance costs and discount, which are included in interest expense but not included in net cash provided by operating activities.

 

Contacts

Sharon Taylor - Vice President & Chief Financial Officer
(877) 256-6644
investor.relations@mmlp.com

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Contacts

Sharon Taylor - Vice President & Chief Financial Officer
(877) 256-6644
investor.relations@mmlp.com