Martin Midstream Partners Reports 2011 Fourth Quarter and Annual Financial Results

KILGORE, Texas, Feb. 29, 2012 (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, 2011.

The Partnership reported net income for the fourth quarter of 2011 of $2.9 million, or $0.06 per limited partner unit. This compared to net income for the fourth quarter of 2010 of $6.5 million, or $0.30 per limited partner unit. Revenues for the fourth quarter of 2011 were $345.5 million compared to $262.1 million for the fourth quarter of 2010. Fourth quarter 2011 net income was positively impacted by a $0.1 million, or $0.00 per limited partner unit, non-cash derivative gain from certain commodity and interest rate swaps that are not accounted for using hedge accounting. Fourth quarter 2010 net income was negatively impacted by a $4.0 million, or $0.23 per limited partner unit, non-cash derivative loss from certain commodity and interest rate swaps that are not accounted for using hedge accounting.

The Partnership reported net income for the year ended December 31, 2011 of $24.3 million, or $0.92 per limited partner unit. This compared to net income for the year ended December 31, 2010 of $16.0 million, or $0.63 per limited partner unit. Revenues for the year ended December 31, 2011 were $1.2 billion, compared to revenues of $912.1 million for the year ended December 31, 2010. Net income for the year ended December 31, 2011 was positively impacted by a $3.3 million, or $0.17 per limited partner unit, non cash derivative gain from certain commodity and interest rate swaps that are not accounted for using hedge accounting. Net income for the year ended December 31, 2011 was positively impacted by $2.8 million, or $0.14 per limited partner unit, due to payments received in the third quarter for the early extinguishment of interest rate swaps. Net income for the year ended December 31, 2010 was negatively impacted by $4.2 million, or $0.24 per limited partner unit, due to the payment of fees for the early extinguishment of interest rate swaps in the first quarter 2010 ($3.8 million) and non-cash derivative losses from certain commodity and interest rate swaps that are not accounted for using hedge accounting ($0.4 million).

The Partnership's distributable cash flow for the three months ended December 31, 2011 was $16.1 million and for the year ended December 31, 2011 was $62.7 million. Distributable cash flow is a non-GAAP financial measure which is explained in greater detail below under "Use of Non-GAAP Financial Information." The Partnership has also included below a table entitled "Distributable Cash Flow" in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measurement.

Ruben Martin, President and Chief Executive Officer of MMGP, the general partner of the Partnership, said, "The fourth quarter 2011 demonstrated again the effectiveness of our diverse operations. For the quarter we finished with a distribution coverage ratio of 0.98 times. For the year ended December 31, 2011 our distribution coverage was 0.97 times. While these levels are not where we need to be long-term, we have invested and will continue to invest heavily in future growth. Much of this growth is organic and requires long lead times. Accordingly, we are incurring indebtedness that impacts our coverage during the construction periods of our projects. Since the beginning of the fourth quarter, we have spent approximately $50 million of growth capital yet to realize full cash flow potential. These include previously announced projects such as our Corpus Christi crude oil terminal, the Cross vacuum tower and the Waskom rail rack and capacity expansion. We expect these projects will enhance the cash flow of the Partnership for 2012. 

"During the fourth quarter we saw one very strong segment; two segments performed at or near plan and one segment fell short of expectations. As we have seen over time, the portfolio effect of having such a diverse set of operations serves our unit holders well. 

"Our Sulfur Services segment was strong during the fourth quarter. Margins were strong in both molten sulfur handling and in our fertilizer division. Sulfur based fertilizer had its best year for the Partnership during 2011. We saw strong demand for our products that continued well beyond the normal seasonal trough we see outside of the growing season. 

"Our Terminalling and Storage segments performed close to plan during the quarter. Terminalling and Storage, as our largest and most stable segment, is itself also diverse. For most of 2011, throughput volumes at our shore-based terminals remained challenged by lower overall offshore Gulf of Mexico activity. We believe we are well positioned as drilling permits and rig count slowly begin to gain traction. For the year ended 2011, our specialty terminals division provided a stable offset to the shore-based terminal weakness. Contracts for storage of hard-to-handle products tend to be longer-term in nature providing for more stable, fee-based cash flow. This includes our naphthenic lube oil processing facility that performed well during 2011. 

"Our Marine Transportation segment was stable for the quarter and performed near expectations. We saw continued high utilization of our inland fleet, partially offset by slightly weaker conditions for our offshore assets throughout 2011. We expect our inland marine assets to be nearly fully utilized in 2012. Further, we believe liquids off-take from the shale plays like the Eagle Ford will ultimately result in increased demand and stability for offshore tows like ours which have been historically more volatile working in the spot market.

"Our Natural Gas Services segment experienced the most head wind in the fourth quarter. Like others, we are not immune to the current market conditions seen in natural gas. Continued low natural gas prices and migration of producers' capital spending to liquids-rich plays have resulted in underperformance within this segment. In addition, we recently lost a key producer whose volume was dedicated to our Waskom facility. This resulted in our processing levels at Waskom coming in below plan. In this pricing environment, we continue to believe producers will seek liquids-rich production areas which are central to our gathering systems and the Waskom facility."                                   

Included with this press release are the Partnership's consolidated financial statements as of and for the quarter and year ended December 31, 2011 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, filed with the SEC on March 5, 2012.

Investors' Conference Call

An investors' conference call to review the fourth quarter and fiscal year results will be held on Thursday, March 1, 2012 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 March 1, 2012 through 10:59 p.m. Central Time on March 15, 2012. The access code for the conference call and the audio replay is Conference ID No. 47532709. The audio replay of the conference call will also be archived on Martin Midstream Partners' website at www.martinmidstream.com.

About Martin Midstream Partners LP

Martin Midstream Partners LP 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: terminalling and storage services for petroleum products and by-products; natural gas gathering, processing and NGL distribution; sulfur and sulfur-based products processing, manufacturing, and distribution; and marine transportation services for petroleum products and by-products.

Additional information concerning the Partnership is available on the Partnership's website at www.martinmidstream.com.

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 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.

Use of Non-GAAP Financial Information

The Partnership reports its financial results in accordance with United States generally accepted accounting principles (GAAP).  However, from time to time, the Partnership uses certain non-GAAP financial measures such as distributable cash flow because the Partnership's management believes that this measure may provide users of this financial information with meaningful comparisons between current results and prior reported results and a meaningful measure of the Partnership's cash available to pay distributions. Distributable cash flow should not be considered an alternative to cash flow from operating activities or any other measure of financial performance in accordance with GAAP. Distributable cash flow is not intended to represent cash flows for the period, nor is it presented as an alternative to income from continuing operations. Furthermore, it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. This information may constitute non-GAAP financial measures within the meaning of Regulation G adopted by the SEC.  Accordingly, the Partnership has presented herein, and will present in other information it publishes that contains this non-GAAP financial measure, a reconciliation of this measure to the most directly comparable GAAP financial measure.

The Partnership has included below a table entitled "Distributable Cash Flow" in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measure. The Partnership calculates distributable cash flow as follows: net income (as reported in statements of operations), plus depreciation and amortization, amortization of debt discount, and amortization of deferred debt issue costs (as reported in statements of cash flows), plus (less) deferred income taxes (as reported in statements of cash flows), plus costs related to the early extinguishment of interest rate swaps (as reported under the caption "Long-Term Debt and Capital Leases" in the Partnership's Annual Report on Form 10-K to be filed with the SEC on March 5, 2012), plus distribution equivalents from unconsolidated entities (as described below), plus (less) invested cash in unconsolidated entities (as described below), less equity in earnings of unconsolidated entities (as reported in statements of operations), plus non-cash mark-to-market on derivatives (as reported in statements of cash flows), less maintenance capital expenditures (as reported under the caption "Liquidity and Capital Resources" in the Partnership's Annual Report on Form 10-K to be filed with the SEC on March 5, 2012), plus (less) gain/(loss) on disposition or sale of property, plant and equipment (as reported in statements of cash flows), less payments for plant turn around costs (as reported in statements of cash flows), plus unit-based compensation (as reported in statements of changes in capital).

The Partnership's distribution equivalents from unconsolidated entities is calculated as distributions from unconsolidated entities (as reported in statements of cash flows), plus return of investments from unconsolidated entities (as reported in statements of cash flows), plus distributions in-kind from unconsolidated entities (as reported in statements of cash flows). For the quarter ended December 31, 2011, the Partnership's distributions from unconsolidated entities, return of investments from unconsolidated entities and distributions in-kind from equity investments were $0.0 million, $1.2 million and $3.7 million, respectively. For the year ended December 31, 2011, the Partnership's distributions from unconsolidated entities, return of investments from unconsolidated entities and distributions in-kind from equity investments were $0.0 million, $2.9 million and $12.7 million, respectively.

The Partnership's invested cash in unconsolidated entities is calculated as distributions from (contributions to) unconsolidated entities for operations (as reported in statements of cash flows), plus expansion capital expenditures in unconsolidated entities (as reported under the caption "Liquidity and Capital Resources" in the Partnership's Annual Report on Form 10-K to be filed with the SEC on March 5, 2012). For the quarter ended December 31, 2011, the Partnership's distributions from (contributions to) unconsolidated entities for operations and capital expenditures in unconsolidated entities were $(9.4) million and $9.0 million, respectively. For the year ended December 31, 2011, the Partnership's distributions from (contributions to) unconsolidated entities for operations and capital expenditures in unconsolidated entities were $(19.0) million and $18.8 million, respectively.

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.