Martin Midstream Partners Reports Increased Distributable Cash Flow and Adjusted EBITDA in 2015 Fourth Quarter and Year End Results

• Distributable cash flow from continuing operations increased 42% compared to the year ended 2014
• Adjusted EBITDA from continuing operations increased 26% compared to the year ended 2014
• Distribution coverage ratio for fiscal year 2015 of 1.00 times
• No capital markets dependency in 2016

KILGORE, Texas, Feb. 24, 2016 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (NASDAQ:MMLP) (the “Partnership”) announced today its financial results for the fourth quarter and year ended December 31, 2015.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, said, "I am pleased with the fourth quarter 2015 performance and our full year results. For the quarter, our distribution coverage ratio was 1.07x. For the year ended 2015, our distribution coverage ratio was 1.00x as we achieved record levels of distributable cash flow. Our overall business and asset performance was strong during the fourth quarter in an increasingly challenging environment. We continue to see the benefits of multiple lines of business as our diversification creates stability of cash flow. On a consolidated basis, our cash flow exceeded internal forecast for the full year by approximately $2.0 million.  Further, our distance from the wellhead and our refinery services centric model has continued to deliver solid performance in these conditions.

"Looking across our segments and starting with our Natural Gas Services segment, we experienced strong cash flow from both our Cardinal Gas Storage assets and our refinery grade butane businesses.  As anticipated, during 2015, the Natural Gas Services segment became our largest cash flow contributor across MMLP’s four segments.  Due to our new natural gas liquids rail terminal facility and the full year impact of our West Texas LPG Pipeline joint venture, we exceeded our cash flow guidance by approximately $2.4 million.  We anticipate that the Natural Gas Services segment will again be our largest cash flow contributor in 2016.

"In our Terminalling and Storage segment, we met our cash flow forecast in the fourth quarter by experiencing stronger than anticipated performance in our legacy specialty terminals. For the full year 2015, our Terminalling and Storage segment cash flow was $4.7 million below our guidance level due to underperformance within our Martin Lubricants platform and lower than forecasted crude oil throughput at our Corpus Christi Crude Terminal.  The lubricants division underperformed due to consistently weak market conditions throughout 2015. This is especially true during the first half of the year when base oil margins were at record low levels. Offsetting this weakness was better than projected cash flow at the Smackover refinery.

"During the fourth quarter, the pure sulfur side exceeded forecast in both the molten and prilled sulfur lines of business.  Volumes within our fertilizer business decreased during the quarter, however, sales migrated to higher margin product lines.  For 2015, we exceeded full year guidance by more than $8.6 million in the Sulfur Services segment based on margin improvement as raw material costs declined. Our Sulfur Services segment has proven to be resilient, even approaching a counter-cyclical nature to the current commodity price environment.  Based on 2016 agricultural planting forecasts, we are optimistic that fertilizer performance within our Sulfur Services segment will again be strong.

"In the fourth quarter, our Marine Transportation segment experienced a slight recovery from third quarter performance, however it did not achieve our forecasted performance due to lower than anticipated utilization and unanticipated repair and maintenance expenses.  For the full year, cash flow was approximately $4.3 million below our guidance primarily attributed to two offshore vessels being non-operational during the second half of 2015 and higher than forecasted repair and maintenance expenses.

"Looking ahead, MMLP has modest capital requirements for 2016. We do not anticipate needing to access the capital markets during the year as our growth capital expenditures are forecasted to be less than $30 million.  We envision utilizing our revolving credit facility for these growth capital needs. Our maintenance capital expenditures should be in-line with prior years, between $15 and $20 million.  In all, we continue to believe in our diverse refinery services based model and are confident we can perform through all commodity price cycles."

The Partnership's distributable cash flow from continuing operations for the fourth quarter of 2015 was $35.8 million.  This compared to distributable cash flow from continuing operations for the fourth quarter of 2014 of $33.5 million, an increase of 7%.

The Partnership's distributable cash flow from continuing operations for the year ended December 31, 2015 was $133.9 million.  This compared to distributable cash flow from continuing operations for the year ended December 31, 2014 of $94.4 million, an increase of 42%.       

The Partnership's adjusted EBITDA from continuing operations for the fourth quarter of 2015 was $51.4 million.  This compared to adjusted EBITDA from continuing operations for the fourth quarter of 2014 of $42.5 million.   Net income for the fourth quarter of 2015 was $6.8 million, or $0.08 per limited partner unit.  Net income was negatively impacted by $9.3 million and $1.3 million in non-cash asset impairment charges in the Partnership's Terminalling and Storage and Marine Transportation segments, respectively, or $0.26 and $0.04 per limited partner unit.  These non-cash transactions negatively impacted earnings but had no impact on distributable cash flow.  Net income for the fourth quarter of 2014 was $4.4 million, which resulted in a loss per limited partner unit of $0.07 after the incentive distribution rights were allocated to the general partner.

The Partnership's adjusted EBITDA from continuing operations for the year ended December 31, 2015 was $188.3 million.  This compared to adjusted EBITDA from continuing operations for the year ended December 31, 2014 of $149.0 million, an increase of 26%.  Net income for the year ended December 31, 2015 was $38.4 million, or $0.62 per limited partner unit.  Net income was negatively impacted by $9.3 million and $1.3 million in non-cash asset impairment charges in the Partnership's Terminalling and Storage and Marine Transportation segments, respectively, or $0.26 and $0.04 per limited partner unit.  Specific to the Terminalling and Storage segment impairment, the Partnership elected to discontinue pursuing its splitter project in the Corpus Christi market based on the federal government's decision to lift the exportation ban on crude oil.  As a result of a $30.1 million non-cash reduction in the carrying value of the Partnership's 42.2% unconsolidated investment in Cardinal, the Partnership reported a net loss for the year ended December 31, 2014 of $11.7 million, or a loss of $0.49 per limited partner unit. The reduction of the Cardinal investment occurred as a result of the Partnership's acquisition of the 57.8% controlling interest on August 29, 2014. The year ended December 31, 2014 also included a $3.4 million non-cash asset impairment charge related to one offshore tug and barge unit in the Partnership's Marine Transportation segment. These non-cash transactions negatively impacted earnings but had no impact on distributable cash flow.

Revenues for the fourth quarter of 2015 were $254.4 million compared to $377.0 million for the fourth quarter of 2014. Revenues were $1.0 billion for the year ended December 31, 2015 compared to $1.6 billion for the year ended December 31, 2014.  The decline in revenues is attributable primarily to significantly lower natural gas liquids prices.

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 in the fourth quarter of 2015.  This compared to a net loss from discontinued operations of $2.3 million, or $0.07 per limited partner unit, and distributable cash flow and adjusted EBITDA from discontinued operations of negative $1.8 million for the fourth quarter of 2014.

The Partnership had net income from discontinued operations for the year ended December 31, 2015 of $1.2 million, or $0.02 per limited partner unit.  Distributable cash flow and adjusted EBITDA from discontinued operations were negative $0.2 million for the year ended December 31, 2015.

Discontinued operations resulted in a net loss of $5.3 million, or $0.22 per limited partner unit, for the year ended December 31, 2014.   Distributable cash flow and adjusted EBITDA from discontinued operations were negative $3.8 million for the year ended December 31, 2014.

Distributable cash flow, EBITDA and adjusted EBITDA are non-GAAP financial measures which are explained in greater detail below under the heading "Use of Non-GAAP Financial Information." The Partnership has also included below a table entitled "Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow" in order to show the components of these non-GAAP financial measures and their reconciliation to the most comparable GAAP measurement.

Included with this press release are the Partnership's consolidated financial statements as of and for the year ended December 31, 2015 and certain prior periods.  These financial statements should be read in conjunction with the information contained in the Partnership's Annual Report on Form 10-K, to be filed with the SEC on February 29, 2016.

Investors' Conference Call

An investors’ conference call to review the fourth quarter results will be held on Thursday, February 25, 2016, at 8:00 a.m. Central Time.  The conference call can be accessed by calling (877) 878-2695.  An audio replay of the conference call will be available by calling (855) 859-2056 from 11:00 a.m. Central Time on February 25, 2016 through 10:59 p.m. Central Time on March 8, 2016.  The access code for the conference call and the audio replay is Conference ID No. 34231812.  The audio replay of the conference call will also be archived on Martin Midstream Partners’ website at www.martinmidstream.com. 

About Martin Midstream Partners L.P.

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 lines include: (1) terminalling, storage and packaging services for petroleum products and by-products; (2) natural gas services, including liquids transport 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 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 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 historic 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 unit holders.

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. 

Contact:   Robert D. Bondurant, Executive Vice President and Chief Financial Officer of Martin Midstream GP LLC, the Partnership's general partner at (903) 983-6200.

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 twelve months ended December 31, 2015 and 2014, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow from continuing operations.

The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for each of the quarters in the year ended December 31, 2015 and 2014, which represents Distributable Cash Flow from discontinued operations.