- Financial performance exceeds expectations in challenging environment
- Reported net loss of $10.8 million and $4.2 million for the three and nine months ended September 30, 2020, respectively, which were negatively impacted by an $8.5 million charge related to the exchange of our senior notes
- Reported adjusted EBITDA of $22.5 million and $77.5 million for the three and nine months ended September 30, 2020, respectively
- Generated distributable cash flow of $8.1 million and $38.9 million for the three and nine months ended September 30, 2020, respectively
- Successfully completed exchange offer and cash tender offer of senior notes
- Affirms guidance range for adjusted EBITDA and capital expenditures
KILGORE, Texas, Oct. 21, 2020 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq:MMLP) (the "Partnership") today announced its financial results for the third quarter of 2020.
Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “The Partnership delivered strong results in the third quarter even with the continuing impact on demand related to COVID-19 coupled with hurricanes in the Gulf Coast region effecting refinery operations. The diversity of our business model and customer base has proven resilient in these difficult and changing macro-economic times. Although the third quarter is typically our weakest, due to the cyclical nature of our businesses, we had year over year EBITDA growth in three of our four business segments. Our team continues to make every effort to provide our employees and customers with a safe and healthy operating environment.”
THIRD QUARTER 2020 OPERATING RESULTS BY BUSINESS SEGMENT
TERMINALLING AND STORAGE (“T&S”)
T&S Operating Income for the three months ended September 30, 2020 and 2019 was $7.0 million and $5.6 million, respectively.
Adjusted segment EBITDA for T&S was $14.2 million and $13.3 million for the three months ended September 30, 2020 and 2019, respectively, reflecting improved margins on packaged lubricants products from lower production cost and operating efficiencies, reduced operating expenses from lower repairs and maintenance and labor cost at our Specialty Terminals, offset by reduced grease volumes related to lower demand in the oil field and construction industries due to COVID-19, expired capital recovery fees at the Smackover Refinery and decreased fees related to a crude pipeline gathering rate adjustment.
TRANSPORTATION
Transportation Operating Income for the three months ended September 30, 2020 and 2019 was $1.1 million and $4.4 million, respectively.
Adjusted segment EBITDA for Transportation was $5.5 million and $8.2 million for the three months ended September 30, 2020 and 2019, respectively, reflecting lower marine utilization and reduced day rates along with lower land transportation load count related to demand destruction and lower refinery utilization as a result of COVID-19 and gulf coast hurricanes experienced during the three months ended September 30, 2020.
SULFUR SERVICES
Sulfur Services Operating Income for the three months ended September 30, 2020 and 2019 was $5.6 million and $0.3 million, respectively.
Adjusted segment EBITDA for Sulfur Services was $4.2 million and $3.1 million for the three months ended September 30, 2020 and 2019, respectively, reflecting resumed operations of the Neches Priller offset by reduced fertilizer volumes from extended fertilizer plant turnaround time and reduced fertilizer demand as a result of COVID-19.
NATURAL GAS LIQUIDS (“NGL”)
NGL Operating Income for the three months ended September 30, 2020 and 2019 was $1.8 million and $19.7 million, respectively.
Adjusted segment EBITDA from continuing operations for NGL was $2.8 million and $1.6 million for the three months ended September 30, 2020 and 2019, respectively, primarily reflecting an increase in volumes in 2020 from increased seasonal demand within the butane optimization business.
UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”)
USGA expenses included in operating income were $4.5 million for both the three months ended September 30, 2020 and 2019.
USGA expenses included in adjusted EBITDA were $4.2 million for both the three months ended September 30, 2020 and 2019.
2020 FINANCIAL GUIDANCE UPDATE
The majority of our refinery services are focused on the Gulf Coast Region whose states have reopened their economies. However, the impact on refinery utilization related to the demand reduction from COVID-19 and recent gulf coast hurricanes experienced during the quarter remains unclear. The Partnership believes that our performance through the first nine months coupled with expectations for the coming quarter will allow our annualized Adjusted EBITDA, Expansion Capital Expenditures and Maintenance Capital Expenditures to fall within the previously provided range below:
| MMLP 2020 Guidance | $ millions | |
| Adjusted EBITDA | $95 - 107 | |
| Expansion Capital Expenditures | $10 - 13 | |
| Maintenance Capital Expenditures | $14 - 16 |
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.
LIQUIDITY
At September 30, 2020, the Partnership had $205 million drawn on its $300 million revolving credit facility, a $24 million increase from June 30, 2020. The majority of the increase was attributable to the NGL inventory working capital sub-limit which increased $20 million quarter over quarter. As previously announced, on August 12, 2020, the Partnership successfully completed an exchange offer and cash tender offer (together the “Offers”) for its senior unsecured notes due February 2021. As a result of the Offers, the Partnership has the following outstanding senior notes: senior unsecured notes due 2021 of $28.8 million, senior secured notes of $53.8 million due 2024 and senior secured notes of $291.9 million due 2025, for a total of senior notes outstanding of $374.5 million. Accordingly, the Partnership’s leverage ratio, as calculated under the revolving credit facility, was 4.9 times on September 30, 2020 compared to 4.8 times on June 30, 2020. The Partnership is in compliance with all debt covenants as of September 30, 2020.
QUARTERLY CASH DISTRIBUTION
The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended September 30, 2020. The distribution is payable on November 13, 2020 to common unitholders of record as of the close of business on November 6, 2020. The ex-dividend date for the cash distribution is November 5, 2020.
COVID-19 RESPONSE
The Partnership initiated protocols in response to the COVID-19 pandemic which include work from home initiatives to protect the health and safety of our employees as well as the communities where we operate, travel restrictions, and training personnel regarding preventative measures when accessing docks, vessels and operating locations. At this time all facilities are operational and monitored closely.
RESULTS OF OPERATIONS
The Partnership had a net loss from continuing operations for the three months ended September 30, 2020 of $10.8 million, a loss of $0.27 per limited partner unit. The Partnership had net income from continuing operations for the three months ended September 30, 2019 of $13.3 million, or $0.33 per limited partner unit. Adjusted EBITDA from continuing operations for the three months ended September 30, 2020 was $22.5 million compared to the three months ended September 30, 2019 of $22.0 million. Distributable cash flow from continuing operations for the three months ended September 30, 2020 was $8.1 million compared to the three months ended September 30, 2019 of $8.3 million.
The Partnership had no net income, adjusted EBITDA or distributable cash flow from discontinued operations for the three months ended September 30, 2020 or 2019. The Partnership had no adjusted EBITDA from discontinued operations for the three months ended September 30, 2020 or 2019.
The Partnership had a net loss from continuing operations for the nine months ended September 30, 2020 of $4.2 million, a loss of $0.11 per limited partner unit. The Partnership had a net loss from continuing operations for the nine months ended September 30, 2019 of $2.2 million, a loss of $0.05 per limited partner unit. Adjusted EBITDA from continuing operations for the nine months ended September 30, 2020 was $77.5 million compared to the nine months ended September 30, 2019 of $72.8 million. Distributable cash flow from continuing operations for the nine months ended September 30, 2020 was $38.9 million compared to the nine months ended September 30, 2019 of $21.0 million.
The Partnership had no net income from discontinued operations for the nine months ended September 30, 2020 compared to a loss of $179.5 million, or $4.55 per limited partner unit for the nine months ended September 30, 2019. The Partnership had no adjusted EBITDA from discontinued operations for the nine months ended September 30, 2020 compared to $10.7 million for the nine months ended September 30, 2019. The Partnership had no distributable cash flow from discontinued operations for the nine months ended September 30, 2020 compared to $9.8 million for the nine months ended September 30, 2019.
Revenues for the three months ended September 30, 2020 were $152.5 million compared to the three months ended September 30, 2019 of $177.9 million. Revenues for the nine months ended September 30, 2020 were $492.1 million compared to the nine months ended September 30, 2019 of $605.3 million.
Distributable cash flow from continuing operations, distributable cash flow from discontinued operations, EBITDA, adjusted EBITDA from continuing operations, and adjusted EBITDA from discontinued operations 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 from continuing operations, 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.
An attachment accompanying this announcement and 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 2020 to the Partnership's Adjusted EBITDA for the third quarter 2019 and is available at http://ml.globenewswire.com/Resource/Download/02a3d060-d2b7-4fa2-932c-da0c46109eff.
Investors' Conference Call
An investors conference call to review the third quarter results will be held on Thursday, October 22, 2020 at 8:00 a.m. Central Time. The live conference call will be available by calling (877) 878-2695. For a limited time, an audio replay of the conference call will be available by calling (855) 859-2056. The conference ID is 9123705. An archive of the replay will be on Martin Midstream Partners’ website at www.MMLP.com.
About Martin Midstream Partners
Martin Midstream Partners L.P. 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, processing, storage, and packaging services for petroleum products and by-products; (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.
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 or operational 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, 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 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
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, Adjusted EBITDA from Continuing Operations, and Adjusted EBITDA from Discontinued Operations. Certain items excluded from EBITDA, adjusted EBITDA from continuing operations, and adjusted EBITDA from discontinued operations 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, adjusted EBITDA from continuing operations, and adjusted EBITDA from discontinued operations 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 and Distributable Cash Flow from Discontinued Operations. 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 from continuing operations, adjusted EBITDA from discontinued operations, distributable cash flow, and distributable cash flow from discontinued operations, 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.MMLP.com or by contacting:
Sharon Taylor - Head of Investor Relations
(877) 256-6644
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
| September 30, 2020 | December 31, 2019 | ||||||
| (Unaudited) | (Audited) | ||||||
| Assets | |||||||
| Cash | $ | 1,862 | $ | 2,856 | |||
| Accounts and other receivables, less allowance for doubtful accounts of $537 and $532, respectively | 55,461 | 87,254 | |||||
| Product exchange receivables | 212 | — | |||||
| Inventories | 77,724 | 62,540 | |||||
| Due from affiliates | 18,932 | 17,829 | |||||
| Other current assets | 9,587 | 5,833 | |||||
| Assets held for sale | — | 5,052 | |||||
| Total current assets | 163,778 | 181,364 | |||||
| Property, plant and equipment, at cost | 902,965 | 884,728 | |||||
| Accumulated depreciation | (506,645 | ) | (467,531 | ) | |||
| Property, plant and equipment, net | 396,320 | 417,197 | |||||
| Goodwill | 17,705 | 17,705 | |||||
| Right-of-use assets | 23,201 | 23,901 | |||||
| Deferred income taxes, net | 22,220 | 23,422 | |||||
| Other assets, net | 3,116 | 3,567 | |||||
| Total assets | $ | 626,340 | $ | 667,156 | |||
| Liabilities and Partners’ Capital (Deficit) | |||||||
| Current installments of long-term debt and finance lease obligations | $ | 31,979 | $ | 6,758 | |||
| Trade and other accounts payable | 45,326 | 64,802 | |||||
| Product exchange payables | 3,044 | 4,322 | |||||
| Due to affiliates | 467 | 1,470 | |||||
| Income taxes payable | 335 | 472 | |||||
| Fair value of derivatives | 391 | 667 | |||||
| Other accrued liabilities | 23,153 | 28,789 | |||||
| Total current liabilities | 104,695 | 107,280 | |||||
| Long-term debt, net | 541,002 | 569,788 | |||||
| Finance lease obligations | 348 | 717 | |||||
| Operating lease liabilities | 16,005 | 16,656 | |||||
| Other long-term obligations | 8,753 | 8,911 | |||||
| Total liabilities | 670,803 | 703,352 | |||||
| Commitments and contingencies | |||||||
| Partners’ capital (deficit) | (44,463 | ) | (36,196 | ) | |||
| Total partners’ capital (deficit) | (44,463 | ) | (36,196 | ) | |||
| Total liabilities and partners' capital (deficit) | $ | 626,340 | $ | 667,156 | |||
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Revenues: | |||||||||||||||
| Terminalling and storage * | $ | 20,706 | $ | 21,193 | $ | 61,088 | $ | 65,674 | |||||||
| Transportation * | 31,938 | 40,211 | 102,364 | 119,327 | |||||||||||
| Sulfur services | 2,915 | 2,859 | 8,744 | 8,576 | |||||||||||
| Product sales: * | |||||||||||||||
| Natural gas liquids | 52,350 | 60,871 | 164,860 | 234,743 | |||||||||||
| Sulfur services | 18,965 | 20,213 | 74,879 | 81,945 | |||||||||||
| Terminalling and storage | 25,659 | 32,553 | 80,119 | 94,991 | |||||||||||
| 96,974 | 113,637 | 319,858 | 411,679 | ||||||||||||
| Total revenues | 152,533 | 177,900 | 492,054 | 605,256 | |||||||||||
| Costs and expenses: | |||||||||||||||
| Cost of products sold: (excluding depreciation and amortization) | |||||||||||||||
| Natural gas liquids * | 44,908 | 51,736 | 139,036 | 211,472 | |||||||||||
| Sulfur services * | 13,313 | 14,442 | 46,167 | 56,262 | |||||||||||
| Terminalling and storage * | 19,124 | 26,009 | 64,242 | 78,998 | |||||||||||
| 77,345 | 92,187 | 249,445 | 346,732 | ||||||||||||
| Expenses: | |||||||||||||||
| Operating expenses * | 43,105 | 51,071 | 138,589 | 156,499 | |||||||||||
| Selling, general and administrative * | 10,339 | 10,474 | 30,659 | 30,900 | |||||||||||
| Depreciation and amortization | 15,276 | 15,009 | 45,858 | 44,997 | |||||||||||
| Total costs and expenses | 146,065 | 168,741 | 464,551 | 579,128 | |||||||||||
| Other operating income (loss), net | 23 | 16,302 | 2,548 | 13,949 | |||||||||||
| Gain on involuntary conversion of property, plant and equipment | 4,522 | — | 4,522 | — | |||||||||||
| Operating income | 11,013 | 25,461 | 34,573 | 40,077 | |||||||||||
| Other income (expense): | |||||||||||||||
| Interest expense, net | (12,943 | ) | (11,973 | ) | (32,245 | ) | (40,630 | ) | |||||||
| Gain on retirement of senior unsecured notes | — | — | 3,484 | — | |||||||||||
| Loss on exchange of senior unsecured notes | (8,516 | ) | — | (8,516 | ) | — | |||||||||
| Other, net | — | (1 | ) | 7 | 3 | ||||||||||
| Total other expense | (21,459 | ) | (11,974 | ) | (37,270 | ) | (40,627 | ) | |||||||
| Net income (loss) before taxes | (10,446 | ) | 13,487 | (2,697 | ) | (550 | ) | ||||||||
| Income tax expense | (373 | ) | (237 | ) | (1,510 | ) | (1,572 | ) | |||||||
| Income (loss) from continuing operations | (10,819 | ) | 13,250 | (4,207 | ) | (2,122 | ) | ||||||||
| Income from discontinued operations, net of income taxes | — | — | — | (179,466 | ) | ||||||||||
| Net income (loss) | (10,819 | ) | 13,250 | (4,207 | ) | (181,588 | ) | ||||||||
| Less general partner's interest in net (income) loss | 216 | (265 | ) | 84 | 3,632 | ||||||||||
| Less (income) loss allocable to unvested restricted units | 53 | (72 | ) | 8 | (5 | ) | |||||||||
| Limited partners' interest in net income (loss) | $ | (10,550 | ) | $ | 12,913 | $ | (4,115 | ) | $ | (177,961 | ) | ||||
*Related Party Transactions Shown Below
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
*Related Party Transactions Included Above
| Three Months Ended | Nine Months Ended | ||||||||||
| September 30, | September 30, | ||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||
| Revenues:* | |||||||||||
| Terminalling and storage | $ | 15,902 | $ | 17,538 | $ | 47,718 | $ | 53,987 | |||
| Transportation | 5,514 | 6,442 | 16,801 | 17,941 | |||||||
| Product Sales | 69 | 122 | 199 | 829 | |||||||
| Costs and expenses:* | |||||||||||
| Cost of products sold: (excluding depreciation and amortization) | |||||||||||
| Sulfur services | 2,512 | 2,620 | 7,833 | 8,078 | |||||||
| Terminalling and storage | 4,303 | 6,300 | 14,329 | 19,412 | |||||||
| Expenses: | |||||||||||
| Operating expenses | 18,915 | 21,745 | 60,126 | 66,409 | |||||||
| Selling, general and administrative | 8,356 | 8,358 | 24,723 | 24,148 | |||||||
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Allocation of net income (loss) attributable to: | |||||||||||||||
| Limited partner interest: | |||||||||||||||
| Continuing operations | $ | (10,550 | ) | $ | 12,913 | $ | (4,115 | ) | $ | (2,080 | ) | ||||
| Discontinued operations | — | — | — | (175,881 | ) | ||||||||||
| $ | (10,550 | ) | $ | 12,913 | $ | (4,115 | ) | $ | (177,961 | ) | |||||
| General partner interest: | |||||||||||||||
| Continuing operations | $ | (216 | ) | $ | 265 | $ | (84 | ) | $ | (42 | ) | ||||
| Discontinued operations | — | — | — | (3,590 | ) | ||||||||||
| $ | (216 | ) | $ | 265 | $ | (84 | ) | $ | (3,632 | ) | |||||
| Net income (loss) per unit attributable to limited partners: | |||||||||||||||
| Basic: | |||||||||||||||
| Continuing operations | $ | (0.27 | ) | $ | 0.33 | $ | (0.11 | ) | $ | (0.05 | ) | ||||
| Discontinued operations | — | — | — | (4.55 | ) | ||||||||||
| $ | (0.27 | ) | $ | 0.33 | $ | (0.11 | ) | $ | (4.60 | ) | |||||
| Weighted average limited partner units - basic | 38,662 | 38,653 | 38,655 | 38,661 | |||||||||||
| Diluted: | |||||||||||||||
| Continuing operations | $ | (0.27 | ) | $ | 0.33 | $ | (0.11 | ) | $ | (0.05 | ) | ||||
| Discontinued operations | — | — | — | (4.55 | ) | ||||||||||
| $ | (0.27 | ) | $ | 0.33 | $ | (0.11 | ) | $ | (4.60 | ) | |||||
| Weighted average limited partner units - diluted | 38,662 | 38,653 | 38,655 | 38,661 | |||||||||||
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)
(Dollars in thousands)
| Partners’ Capital (Deficit) | |||||||||||||||||||
| Common Limited | |||||||||||||||||||
| Parent Net Investment | Units | Amount | General Partner Amount | Total | |||||||||||||||
| Balances - January 1, 2019 | $ | 23,720 | 39,032,237 | $ | 258,085 | $ | 6,627 | $ | 288,432 | ||||||||||
| Net loss | — | — | (177,956 | ) | (3,632 | ) | (181,588 | ) | |||||||||||
| Issuance of common units, net | — | — | (289 | ) | — | (289 | ) | ||||||||||||
| Issuance of restricted units | — | 16,944 | — | — | — | ||||||||||||||
| Forfeiture of restricted units | — | (154,288 | ) | — | — | — | |||||||||||||
| Cash distributions | — | — | (38,480 | ) | (785 | ) | (39,265 | ) | |||||||||||
| Unit-based compensation | — | — | 1,064 | — | 1,064 | ||||||||||||||
| Purchase of treasury units | — | (31,504 | ) | (392 | ) | — | (392 | ) | |||||||||||
| Excess purchase price over carrying value of acquired assets | — | — | (102,393 | ) | — | (102,393 | ) | ||||||||||||
| Deferred taxes on acquired assets and liabilities | — | — | 24,781 | — | 24,781 | ||||||||||||||
| Contribution to parent | (23,720 | ) | — | — | — | (23,720 | ) | ||||||||||||
| Balances - September 30, 2019 | $ | — | 38,863,389 | $ | (35,580 | ) | $ | 2,210 | $ | (33,370 | ) | ||||||||
| Balances - January 1, 2020 | $ | — | 38,863,389 | $ | (38,342 | ) | $ | 2,146 | $ | (36,196 | ) | ||||||||
| Net income | — | — | (4,123 | ) | (84 | ) | (4,207 | ) | |||||||||||
| Issuance of restricted units | — | 81,000 | — | — | — | ||||||||||||||
| Forfeiture of restricted units | — | (84,134 | ) | — | — | — | |||||||||||||
| Cash distributions | — | — | (5,019 | ) | (102 | ) | (5,121 | ) | |||||||||||
| Unit-based compensation | — | — | 1,070 | — | 1,070 | ||||||||||||||
| Purchase of treasury units | — | (7,748 | ) | (9 | ) | — | (9 | ) | |||||||||||
| Balances - September 30, 2020 | $ | — | 38,852,507 | $ | (46,423 | ) | $ | 1,960 | $ | (44,463 | ) | ||||||||
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
| Nine Months Ended | |||||||
| September 30, | |||||||
| 2020 | 2019 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (4,207 | ) | $ | (181,588 | ) | |
| Less: Loss from discontinued operations, net of income taxes | — | 179,466 | |||||
| Net loss from continuing operations | (4,207 | ) | (2,122 | ) | |||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 45,858 | 44,997 | |||||
| Amortization and write-off of deferred debt issuance costs | 2,674 | 3,558 | |||||
| Amortization of premium on notes payable | (191 | ) | (230 | ) | |||
| Deferred income tax expense | 1,202 | 1,100 | |||||
| (Gain) loss on sale of property, plant and equipment, net | 153 | (13,949 | ) | ||||
| Gain on involuntary conversion of property, plant and equipment | (4,522 | ) | — | ||||
| Non-cash impact related to exchange of senior unsecured notes | (749 | ) | — | ||||
| Gain on retirement of senior unsecured notes | (3,484 | ) | — | ||||
| Derivative (income) loss | (815 | ) | (280 | ) | |||
| Net cash paid for commodity derivatives | 539 | (249 | ) | ||||
| Unit-based compensation | 1,070 | 1,064 | |||||
| Change in current assets and liabilities, excluding effects of acquisitions and dispositions: | |||||||
| Accounts and other receivables | 30,012 | 25,748 | |||||
| Product exchange receivables | (212 | ) | 164 | ||||
| Inventories | (15,184 | ) | (11,707 | ) | |||
| Due from affiliates | (1,103 | ) | 1,150 | ||||
| Other current assets | (6,130 | ) | (2,654 | ) | |||
| Trade and other accounts payable | (17,117 | ) | (10,577 | ) | |||
| Product exchange payables | (1,278 | ) | (7,257 | ) | |||
| Due to affiliates | (1,003 | ) | (1,468 | ) | |||
| Income taxes payable | (137 | ) | 65 | ||||
| Other accrued liabilities | (5,534 | ) | (8,904 | ) | |||
| Change in other non-current assets and liabilities | (692 | ) | (600 | ) | |||
| Net cash provided by continuing operating activities | 19,150 | 17,849 | |||||
| Net cash provided by discontinued operating activities | — | 7,770 | |||||
| Net cash provided by operating activities | 19,150 | 25,619 | |||||
| Cash flows from investing activities: | |||||||
| Payments for property, plant and equipment | (23,705 | ) | (22,797 | ) | |||
| Acquisitions | — | (23,720 | ) | ||||
| Payments for plant turnaround costs | (637 | ) | (5,117 | ) | |||
| Proceeds from involuntary conversion of property, plant and equipment | 7,203 | — | |||||
| Proceeds from sale of property, plant and equipment | 4,392 | 18,303 | |||||
| Net cash used in continuing investing activities | (12,747 | ) | (33,331 | ) | |||
| Net cash provided by discontinued investing activities | — | 209,155 | |||||
| Net cash provided by (used in) investing activities | (12,747 | ) | 175,824 | ||||
| Cash flows from financing activities: | |||||||
| Payments of long-term debt and finance lease obligations | (257,658 | ) | (639,308 | ) | |||
| Proceeds from long-term debt | 259,019 | 586,000 | |||||
| Proceeds from issuance of common units, net of issuance related costs | — | (289 | ) | ||||
| General partner contribution | — | — | |||||
| Purchase of treasury units | (9 | ) | (392 | ) | |||
| Payment of debt issuance costs | (3,628 | ) | (4,294 | ) | |||
| Excess purchase price over carrying value of acquired assets | — | (102,393 | ) | ||||
| Cash distributions paid | (5,121 | ) | (39,265 | ) | |||
| Net cash used in financing activities | (7,397 | ) | (199,941 | ) | |||
| Net increase (decrease) in cash | (994 | ) | 1,502 | ||||
| Cash at beginning of period | 2,856 | 300 | |||||
| Cash at end of period | $ | 1,862 | $ | 1,802 | |||
| Non-cash additions to property, plant and equipment | $ | 1,432 | $ | 1,045 | |||
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
Terminalling and Storage Segment
Comparative Results of Operations for the Three Months Ended September 30, 2020 and 2019
| Three Months Ended September 30, | Variance | Percent Change | ||||||||||||||
| 2020 | 2019 | |||||||||||||||
| (In thousands, except BBL per day) | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Services | $ | 22,512 | $ | 22,806 | $ | (294 | ) | (1 | ) | % | ||||||
| Products | 25,676 | 32,570 | (6,894 | ) | (21 | ) | % | |||||||||
| Total revenues | 48,188 | 55,376 | (7,188 | ) | (13 | ) | % | |||||||||
| Cost of products sold | 20,381 | 27,439 | (7,058 | ) | (26 | ) | % | |||||||||
| Operating expenses | 12,064 | 12,947 | (883 | ) | (7 | ) | % | |||||||||
| Selling, general and administrative expenses | 1,537 | 1,724 | (187 | ) | (11 | ) | % | |||||||||
| Depreciation and amortization | 7,294 | 7,690 | (396 | ) | (5 | ) | % | |||||||||
| 6,912 | 5,576 | 1,336 | 24 | % | ||||||||||||
| Other operating income, net | 1 | — | 1 | |||||||||||||
| Gain on involuntary conversion of property, plant and equipment | 62 | — | 62 | |||||||||||||
| Operating income | $ | 6,975 | $ | 5,576 | $ | 1,399 | 25 | % | ||||||||
| 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, 2020 and 2019
| Nine Months Ended September 30, | Variance | Percent Change | |||||||||||||||
| 2020 | 2019 | ||||||||||||||||
| (In thousands, except BBL per day) | |||||||||||||||||
| Revenues: | |||||||||||||||||
| Services | $ | 66,115 | $ | 70,572 | $ | (4,457 | ) | (6 | ) | % | |||||||
| Products | 80,183 | 95,047 | (14,864 | ) | (16 | ) | % | ||||||||||
| Total revenues | 146,298 | 165,619 | (19,321 | ) | (12 | ) | % | ||||||||||
| Cost of products sold | 68,066 | 83,213 | (15,147 | ) | (18 | ) | % | ||||||||||
| Operating expenses | 37,269 | 39,557 | (2,288 | ) | (6 | ) | % | ||||||||||
| Selling, general and administrative expenses | 4,594 | 4,451 | 143 | 3 | % | ||||||||||||
| Depreciation and amortization | 22,022 | 23,353 | (1,331 | ) | (6 | ) | % | ||||||||||
| 14,347 | 15,045 | (698 | ) | (5 | ) | % | |||||||||||
| Other operating income (loss), net | (3,053 | ) | 17 | (3,070 | ) | (18,059 | ) | % | |||||||||
| Gain on involuntary conversion of property, plant and equipment | 62 | — | 62 | ||||||||||||||
| Operating income | $ | 11,356 | $ | 15,062 | $ | (3,706 | ) | (25 | ) | % | |||||||
| Shore-based throughput volumes (guaranteed minimum) (gallons) | 60,000 | 60,000 | — | — | % | ||||||||||||
| Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) | 6,500 | 6,500 | — | — | % | ||||||||||||
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
Transportation Segment
Comparative Results of Operations for the Three Months Ended September 30, 2020 and 2019
| Three Months Ended September 30, | Variance | Percent Change | ||||||||||||||
| 2020 | 2019 | |||||||||||||||
| (In thousands) | ||||||||||||||||
| Revenues | $ | 35,712 | $ | 44,631 | $ | (8,919 | ) | (20 | ) | % | ||||||
| Operating expenses | 28,144 | 34,281 | (6,137 | ) | (18 | ) | % | |||||||||
| Selling, general and administrative expenses | 2,050 | 2,177 | (127 | ) | (6 | ) | % | |||||||||
| Depreciation and amortization | 4,412 | 3,877 | 535 | 14 | % | |||||||||||
| 1,106 | 4,296 | (3,190 | ) | (74 | ) | % | ||||||||||
| Other operating income, net | 21 | 150 | (129 | ) | (86 | ) | % | |||||||||
| Operating income | $ | 1,127 | $ | 4,446 | $ | (3,319 | ) | (75 | ) | % | ||||||
Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019
| Nine Months Ended September 30, | Variance | Percent Change | ||||||||||||||
| 2020 | 2019 | |||||||||||||||
| (In thousands) | ||||||||||||||||
| Revenues | $ | 116,145 | $ | 137,050 | $ | (20,905 | ) | (15 | ) | % | ||||||
| Operating expenses | 91,637 | 106,058 | (14,421 | ) | (14 | ) | % | |||||||||
| Selling, general and administrative expenses | 6,243 | 6,242 | 1 | — | % | |||||||||||
| Depreciation and amortization | 13,020 | 11,225 | 1,795 | 16 | % | |||||||||||
| $ | 5,245 | $ | 13,525 | $ | (8,280 | ) | (61 | ) | % | |||||||
| Other operating loss, net | (1,174 | ) | (2,235 | ) | 1,061 | 47 | % | |||||||||
| Operating income | $ | 4,071 | $ | 11,290 | $ | (7,219 | ) | (64 | ) | % | ||||||
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
Sulfur Services Segment
Comparative Results of Operations for the Three Months Ended September 30, 2020 and 2019
| Three Months Ended September 30, | Variance | Percent Change | ||||||||||||
| 2020 | 2019 | |||||||||||||
| (In thousands) | ||||||||||||||
| Revenues: | ||||||||||||||
| Services | $ | 2,915 | $ | 2,859 | $ | 56 | 2 | % | ||||||
| Products | 18,965 | 20,213 | (1,248 | ) | (6 | ) | % | |||||||
| Total revenues | 21,880 | 23,072 | (1,192 | ) | (5 | ) | % | |||||||
| Cost of products sold | 14,141 | 15,807 | (1,666 | ) | (11 | ) | % | |||||||
| Operating expenses | 2,501 | 2,883 | (382 | ) | (13 | ) | % | |||||||
| Selling, general and administrative expenses | 1,166 | 1,260 | (94 | ) | (7 | ) | % | |||||||
| Depreciation and amortization | 2,953 | 2,831 | 122 | 4 | % | |||||||||
| 1,119 | 291 | 828 | 285 | % | ||||||||||
| Other operating income (loss), net | 1 | — | 1 | |||||||||||
| Gain on involuntary conversion of property, plant and equipment | 4,460 | — | 4,460 | |||||||||||
| Operating income | $ | 5,580 | $ | 291 | $ | 5,289 | 1,818 | % | ||||||
| Sulfur (long tons) | 154 | 180 | (26 | ) | (14 | ) | % | |||||||
| Fertilizer (long tons) | 44 | 59 | (15 | ) | (25 | ) | % | |||||||
| Total sulfur services volumes (long tons) | 198 | 239 | (41 | ) | (17 | ) | % | |||||||
Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019
| Nine Months Ended September 30, | Variance | Percent Change | ||||||||||||||
| 2020 | 2019 | |||||||||||||||
| (In thousands) | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Services | $ | 8,744 | $ | 8,576 | $ | 168 | 2 | % | ||||||||
| Products | 74,892 | 81,945 | (7,053 | ) | (9 | ) | % | |||||||||
| Total revenues | 83,636 | 90,521 | (6,885 | ) | (8 | ) | % | |||||||||
| Cost of products sold | 49,546 | 61,049 | (11,503 | ) | (19 | ) | % | |||||||||
| Operating expenses | 8,553 | 7,835 | 718 | 9 | % | |||||||||||
| Selling, general and administrative expenses | 3,535 | 3,689 | (154 | ) | (4 | ) | % | |||||||||
| Depreciation and amortization | 8,978 | 8,553 | 425 | 5 | % | |||||||||||
| 13,024 | 9,395 | 3,629 | 39 | % | ||||||||||||
| Other operating income (loss), net | 6,777 | (1 | ) | 6,778 | 677,800 | % | ||||||||||
| Gain on involuntary conversion of property, plant and equipment | 4,460 | — | 4,460 | |||||||||||||
| Operating income | $ | 24,261 | $ | 9,394 | $ | 14,867 | 158 | % | ||||||||
| Sulfur (long tons) | 503 | 471 | 32 | 7 | % | |||||||||||
| Fertilizer (long tons) | 209 | 214 | (5 | ) | (2 | ) | % | |||||||||
| Total sulfur services volumes (long tons) | 712 | 685 | 27 | 4 | % | |||||||||||
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
Natural Gas Liquids Segment
Comparative Results of Operations for the Three Months Ended September 30, 2020 and 2019
| Three Months Ended September 30, | Variance | Percent Change | ||||||||||||
| 2020 | 2019 | |||||||||||||
| (In thousands) | ||||||||||||||
| Products Revenues | $ | 52,350 | $ | 60,871 | $ | (8,521 | ) | (14 | ) | % | ||||
| Cost of products sold | 47,723 | 54,273 | (6,550 | ) | (12 | ) | % | |||||||
| Operating expenses | 1,039 | 1,624 | (585 | ) | (36 | ) | % | |||||||
| Selling, general and administrative expenses | 1,117 | 852 | 265 | 31 | % | |||||||||
| Depreciation and amortization | 617 | 611 | 6 | 1 | % | |||||||||
| 1,854 | 3,511 | (1,657 | ) | (47 | ) | % | ||||||||
| Other operating income, net | — | 16,152 | (16,152 | ) | (100 | ) | % | |||||||
| Operating income | $ | 1,854 | $ | 19,663 | $ | (17,809 | ) | (91 | ) | % | ||||
| NGL sales volumes (Bbls) | 2,572 | 1,905 | 667 | 35 | % | |||||||||
Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019
| Nine Months Ended September 30, | Variance | Percent Change | ||||||||||||||
| 2020 | 2019 | |||||||||||||||
| (In thousands) | ||||||||||||||||
| Products Revenues | $ | 164,865 | $ | 234,743 | $ | (69,878 | ) | (30 | ) | % | ||||||
| Cost of products sold | 148,562 | 222,974 | (74,412 | ) | (33 | ) | % | |||||||||
| Operating expenses | 3,128 | 5,010 | (1,882 | ) | (38 | ) | % | |||||||||
| Selling, general and administrative expenses | 3,194 | 3,049 | 145 | 5 | % | |||||||||||
| Depreciation and amortization | 1,838 | 1,866 | (28 | ) | (2 | ) | % | |||||||||
| 8,143 | 1,844 | 6,299 | 342 | % | ||||||||||||
| Other operating income (loss), net | (2 | ) | 16,168 | (16,170 | ) | (100 | ) | % | ||||||||
| Operating income (loss) | $ | 8,141 | $ | 18,012 | $ | (9,871 | ) | (55 | ) | % | ||||||
| NGL sales volumes (Bbls) | 6,952 | 6,269 | 683 | 11 | % | |||||||||||
Unallocated Selling, General and Administrative Expenses
Comparative Results of Operations for the Three and Nine Months Ended September 30, 2020 and 2019
| Three Months Ended September 30, | Variance | Percent Change | Nine Months Ended September 30, | Variance | Percent Change | ||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||||||||||||||||
| Indirect selling, general and administrative expenses | $ | 4,523 | $ | 4,515 | $ | 8 | — | % | $ | 13,256 | $ | 13,681 | $ | (425 | ) | (3 | ) | % | |||||||||||||
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, 2020 and 2019.
Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||
| Net income (loss) | $ | (10,819 | ) | $ | 13,250 | $ | (4,207 | ) | $ | (181,588 | ) | ||||
| Less: Loss from discontinued operations, net of income taxes | — | — | — | 179,466 | |||||||||||
| Income (loss) from continuing operations | (10,819 | ) | 13,250 | (4,207 | ) | (2,122 | ) | ||||||||
| Adjustments: | |||||||||||||||
| Interest expense, net | 12,943 | 11,973 | 32,245 | 40,630 | |||||||||||
| Income tax expense | 373 | 237 | 1,510 | 1,572 | |||||||||||
| Depreciation and amortization | 15,276 | 15,009 | 45,858 | 44,997 | |||||||||||
| EBITDA from Continuing Operations | 17,773 | 40,469 | 75,406 | 85,077 | |||||||||||
| Adjustments: | |||||||||||||||
| (Gain) loss on sale of property, plant and equipment, net | (22 | ) | (16,302 | ) | 153 | (13,949 | ) | ||||||||
| Gain on involuntary conversion of property, plant and equipment | (4,522 | ) | — | (4,522 | ) | — | |||||||||
| Unrealized mark-to-market on commodity derivatives | 393 | (2,602 | ) | (276 | ) | (529 | ) | ||||||||
| Transaction costs associated with acquisitions | — | — | — | 224 | |||||||||||
| Non-cash insurance related accruals | — | — | 250 | 500 | |||||||||||
| Lower of cost or market adjustments | 35 | 104 | 370 | 407 | |||||||||||
| Loss on exchange of senior unsecured notes | 8,516 | — | 8,516 | — | |||||||||||
| Gain on repurchase of senior unsecured notes | — | — | (3,484 | ) | — | ||||||||||
| Unit-based compensation | 361 | 349 | 1,070 | 1,064 | |||||||||||
| Adjusted EBITDA from Continuing Operations | 22,534 | 22,018 | 77,483 | 72,794 | |||||||||||
| Adjustments: | |||||||||||||||
| Interest expense, net | (12,943 | ) | (11,973 | ) | (32,245 | ) | (40,630 | ) | |||||||
| Income tax expense | (373 | ) | (237 | ) | (1,510 | ) | (1,572 | ) | |||||||
| Amortization of debt premium | (38 | ) | (77 | ) | (191 | ) | (230 | ) | |||||||
| Amortization of deferred debt issuance costs | 1,683 | 1,080 | 2,674 | 3,558 | |||||||||||
| Deferred income tax expense | 184 | 244 | 1,202 | 1,100 | |||||||||||
| Payments for plant turnaround costs | (406 | ) | (375 | ) | (637 | ) | (5,117 | ) | |||||||
| Maintenance capital expenditures | (2,576 | ) | (2,389 | ) | (7,882 | ) | (8,876 | ) | |||||||
| Distributable Cash Flow from Continuing Operations | $ | 8,065 | $ | 8,291 | $ | 38,894 | $ | 21,027 | |||||||
| Loss from discontinued operations, net of income taxes | $ | — | $ | — | $ | — | $ | (179,466 | ) | ||||||
| Adjustments: | |||||||||||||||
| Depreciation and amortization | — | — | — | 8,161 | |||||||||||
| EBITDA from Discontinued Operations | — | — | — | (171,305 | ) | ||||||||||
| Loss on sale of property, plant and equipment, net | — | — | — | 178,781 | |||||||||||
| Non-cash insurance related accruals | — | — | — | 3,213 | |||||||||||
| EBITDA and Adjusted EBITDA from Discontinued Operations | — | — | — | 10,689 | |||||||||||
| Maintenance capital expenditures | — | — | — | (912 | ) | ||||||||||
| Distributable Cash Flow from Discontinued Operations | $ | — | $ | — | $ | — | $ | 9,777 | |||||||
