Marlin Midstream Partners, LP Reports Third Quarter 2014 Financial Results

HOUSTON, Oct. 29, 2014 (GLOBE NEWSWIRE) -- Marlin Midstream Partners, LP (Nasdaq:FISH), a Delaware limited partnership ("Marlin" or "the Partnership"), today announced financial results for the third quarter of 2014.

For the third quarter of 2014, net income totaled $6.1 million, $0.33 per limited partner unit, and adjusted EBITDA¹ was $8.8 million. Distributable cash flow¹ for the third quarter of 2014 was $8.1 million resulting in a distribution coverage ratio¹ of over 1.2x for the period.

"We are pleased to announce yet another quarter of strong financial results for the Partnership," said Chairman and CEO W. Keith Maxwell III. "With the completion of our first dropdown at the beginning of August this quarter, we have again achieved a coverage ratio well ahead of target and have increased our third quarter distribution by 1.4% to $0.365 per unit or $1.46 on an annualized basis. As we proceed in the last quarter of 2014, we will continue to focus on steadily increasing distributions to our unitholders while executing on growth opportunities."

¹ Please see the tables at the end of this press release for a reconciliation of non-GAAP to GAAP measures and calculation of the coverage ratio.

Summary Third Quarter 2014 Financial Results

For the third quarter of 2014, Marlin reported gross margin¹ of $14.5 million compared to gross margin of $12.5 million for the third quarter of 2013. The gross margin increase is attributable to the new logistics contract entered into with Associated Energy Services, LP at the time of our initial public offering, the recent transloader dropdown, and the escalation of prices on existing contracts.

For the midstream natural gas gathering and processing segment, gross margin was $10.2 million for the third quarter of 2014. This compares to gathering and processing segment gross margin of $10.2 million for the third quarter of 2013.

For the crude oil logistics segment, gross margin was $4.2 million for the third quarter of 2014, compared to crude oil logistics segment gross margin of $2.3 million for the third quarter of 2013. The increase in crude oil logistics segment gross margin is primarily due to the recent transloader dropdown transaction that closed on August 1, 2014.

On October 16, 2014, the board of directors of Marlin's general partner declared a quarterly cash distribution of $0.365 per unit, or $1.46 per unit on an annualized basis, for the third quarter of 2014. This distribution represents an increase of 1.4% over the quarterly distribution of $0.360 per unit ($1.44 on an annualized basis) paid for the second quarter of 2014. The quarterly distribution will be paid on November 4, 2014 to unitholders of record as of October 30, 2014.

Conference Call and Webcast

Marlin will host a conference call to discuss third quarter 2014 results at 12:00 p.m. CT (1:00 p.m. ET) on Thursday, October 30, 2014.

Interested parties can listen to a live webcast of the call from the Events & Presentations page of the Marlin Investor Relations website at http://investor.marlinmidstream.com/events.cfm. An archived replay of the webcast will be available for 12 months following the live presentation.

The call can be accessed live over the telephone by dialing 1-877-815-2357, or 1-330-968-0354 for international callers. The conference ID for the call is 11841683. A telephonic replay of the call will be available through November 7, 2014 and can be accessed by dialing 1-855-859-2056, or 1-404-537-3406 for international callers, with conference ID number 11841683.

About Marlin

Marlin is a fee-based, growth oriented Delaware limited partnership formed to develop, own, operate and acquire midstream energy assets. Marlin currently provides natural gas gathering, transportation, treating and processing services, NGL transportation services and crude oil transloading services. Headquartered in Houston, Texas, Marlin's assets include two related natural gas processing facilities located in Panola County, Texas, a natural gas processing facility located in Tyler County, Texas, two natural gas gathering systems connected to its Panola County processing facilities, two NGL transportation pipelines that connect its Panola County and Tyler County processing facilities to third party NGL pipelines and three crude oil transloading facilities containing six crude oil transloaders.

www.marlinmidstream.com

Forward-Looking Statements

This press release may contain forward-looking statements concerning Marlin's operations, economic performance and financial condition. These statements can be identified by the use of forward-looking terminology including "may," "will," "believe," "expect," "anticipate," "estimate," "continue," or other similar words. These statements discuss future expectations, contain projections of results of operations or financial condition or include other "forward-looking" information. Although Marlin believes that the expectations reflected in such forward-looking statements are reasonable, the Partnership can give no assurance that such expectations will be realized.

These forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from expectations include, but are not limited to, the following risks and uncertainties:

• the volume of natural gas we gather and process and the volume of NGLs we transport;
• the volume of crude oil that we transload;
• the level of production of crude oil and natural gas and the resultant market prices of crude oil, natural gas and NGLs;
• the level of competition from other midstream natural gas companies and crude oil logistics companies in our geographic markets;
• the level of our operating expenses;
• regulatory action affecting the supply of, or demand for, crude oil or natural gas, the transportation rates we can charge on our pipelines, how we contract for services, our existing contracts, our operating costs or our operating flexibility;
• capacity charges and volumetric fees that we pay for NGL fractionation services;
• realized pricing impacts on our revenues and expenses that are directly subject to commodity price exposure;
• the creditworthiness and performance of our customers, suppliers and contract counterparties, and any material nonpayment or non-performance by one or more of these parties;
• damage to pipelines, facilities, plants, related equipment and surrounding properties caused by hurricanes, earthquakes, floods, fires, severe weather, explosions and other natural disasters and acts of terrorism including damage to third party pipelines or facilities upon which we rely for transportation services;
• outages at the processing or fractionation facilities owned by us or third parties caused by mechanical failure and maintenance, construction and other similar activities;
• leaks or accidental releases of products or other materials into the environment, whether as a result of human error or otherwise;
• the level and timing of our expansion capital expenditures and our maintenance capital expenditures;
• the cost of acquisitions, if any;
• the level of our general and administrative expenses, including reimbursements to our general partner and its affiliates for services provided to us;
• our debt service requirements and other liabilities;
• fluctuations in our working capital needs;
• our ability to borrow funds and access capital markets;
• restrictions contained in our debt agreements;
• the amount of cash reserves established by our general partner;
• other business risks affecting our cash levels; and
• other factors discussed below and elsewhere in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2013, as amended, and in our other public filings and press releases.

Such risks and uncertainties could cause actual results to differ materially from those contained in any forward-looking statement. Except as required by law, Marlin undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Gross Margin, Adjusted EBITDA and Distributable Cash Flow

Marlin uses gross margin, or revenues less cost of revenues, as its primary performance measure. Gross margin represents Marlin's profitability with minimal exposure to commodity price fluctuations, which it believes are not significant components of its operations. Marlin also uses adjusted EBITDA to analyze its performance and defines it as net income (loss) before interest expense (net of amounts capitalized) or interest income, income tax, non-cash equity based compensation, depreciation expense and any gain/loss from interest rate derivatives. Although Marlin has not quantified distributable cash flow on a historical basis, since the closing of the IPO Marlin now computes and presents this measure, defined as adjusted EBITDA plus interest income, less cash paid for interest expense, income tax, and maintenance capital expenditures.

Gross margin, adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management and external users of Marlin's condensed consolidated and combined financial statements, such as industry analysts, investors, commercial banks and others, may use to assess:

• the financial performance of Marlin's assets without regard to financing methods, capital structure or historical cost basis;
• the ability of Marlin's assets to generate earnings sufficient to support the decision to make cash distributions to the unitholders and our general partner;
• the ability to fund capital expenditures and incur and service debt;
• Marlin's operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure; and
• the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.

Marlin's partnership agreement requires that, within 45 days after the end of each quarter, all of Marlin's Available Cash, as such term is defined in the partnership agreement, be distributed to unitholders of record on the applicable record date.

Note Regarding Non-GAAP Financial Measures

Gross margin, adjusted EBITDA, and distributable cash flow are not financial measures presented in accordance with GAAP. Marlin believes that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing Marlin's financial condition and results of operations. The GAAP measure most directly comparable to gross margin is operating income. The GAAP measure most directly comparable to adjusted EBITDA and distributable cash flow is net income. These measures should not be considered as an alternative to operating income, net income, or any other measure of financial performance presented in accordance with GAAP. Each of these non-GAAP financial measures has important limitations as an analytical tool because it excludes some but not all items that affect net income. You should not consider these non-GAAP financial measures in isolation or as a substitute for analysis of Marlin's results as reported under GAAP. Additionally, because each of these non-GAAP financial measures may be defined differently by other companies in the industry, Marlin's definition of them may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

SEGMENT INFORMATION

The Partnership's revenues are derived from two operating segments: gathering and processing, and crude oil logistics. These segments, along with our corporate segment, are monitored separately by management for performance and are consistent with internal financial reporting. These segments have been identified based on the differing products and services, regulatory environment, and expertise required for their respective operations.

The following table presents financial information by segment:

KEY PERFORMANCE METRICS

Management uses a variety of financial and operating metrics to analyze performance. These metrics are significant factors in assessing the results of operations and profitability and include: (i) gross margin; (ii) volume commitments and throughput volumes (including gathering, plant, and transloader throughput); (iii) operation and maintenance expenses; (iv) adjusted EBITDA; and (v) distributable cash flow.

The following table presents a reconciliation of the non-GAAP financial measure of gross margin to the GAAP financial measure of operating income:

The following table presents a reconciliation of the non-GAAP financial measure of adjusted EBITDA to the GAAP financial measure of net income:

The following table presents a reconciliation of the non-GAAP financial measure of distributable cash flow and distribution coverage ratio to the GAAP financial measure of net income: