Martin Midstream Partners Reports First Quarter 2021 Financial Results and Declares Quarterly Cash Distribution

Rhea-AI Summary

Martin Midstream Partners L.P. (Nasdaq:MMLP) reported its Q1 2021 financial results, exceeding earnings forecasts by $3.7 million despite challenges from winter storm Uri. Key highlights include:

• Net income of $2.5 million, or $0.06 per unit, down from $8.8 million year-over-year.
• Revenue increased to $200.9 million compared to $198.9 million in Q1 2020.
• Adjusted EBITDA remained stable at $30.9 million, while distributable cash flow fell to $12.8 million.
• Quarterly cash distribution of $0.005 per unit declared, payable on May 14, 2021.

Positive

• Exceeded earnings forecast by $3.7 million in Q1 2021.
• Revenue increased to $200.9 million, up from $198.9 million in Q1 2020.
• NGL segment operating income increased to $11.1 million, up from $5.2 million in Q1 2020.

Negative

• Net income decreased to $2.5 million from $8.8 million year-over-year.
• Distributable cash flow fell to $12.8 million, down from $18.3 million in Q1 2020.
• Transportation segment reported an operating loss of $1.3 million, down from a profit of $2.4 million in Q1 2020.

Martin Midstream Partners L.P. (Nasdaq:MMLP) (the "Partnership") today announced its financial results for the first quarter of 2021.

“For the first quarter of 2021, the Partnership exceeded our internal earnings forecast by $3.7 million despite headwinds from the February winter storm that plunged Texas and surrounding areas into a deep freeze,” stated Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership. “The majority of the impact from winter storm Uri was centered around our transportation and sulfur services segments as refineries ran at reduced rates or halted operations entirely. Our Smackover Refinery was down approximately nine days due to the storm, during which time we began preparations for the previously scheduled turnaround in March. This allowed us to minimize the amount of downtime at the refinery which was back in operation by March 9th. In the NGL segment, butane and propane margins were strong as customary seasonal demand returned.

“At this time the refineries we service have restored operations and utilization has climbed back to 86% of Gulf Coast capacity. The COVID-19 pandemic continues to impact demand but appears to be lessening as vaccinations become more widespread and the economy improves as a result. The Partnership remains focused on our leverage reduction goals and optimizing our assets to maximize free cash flow generation.”

FIRST QUARTER 2021 OPERATING RESULTS BY BUSINESS SEGMENT

TERMINALLING AND STORAGE (“T&S”)

T&S Operating Income for the three months ended March 31, 2021 and 2020 was $3.4 million and $1.0 million, respectively.

Adjusted segment EBITDA for T&S was $10.6 million and $11.5 million for the three months ended March 31, 2021 and 2020, respectively, reflecting the sale of Mega Lubricants in December of 2020 and expired capital recovery fees at the Smackover Refinery offset by improved margins on packaged lubricants products from lower production costs and operating efficiencies.

TRANSPORTATION

Transportation had an operating loss of $1.3 million for the three months ended March 31, 2021 and operating income of $2.4 million for the three months ended March 31, 2020.

Adjusted segment EBITDA for Transportation was $2.7 million and $7.9 million for the three months ended March 31, 2021 and 2020, 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 the impact from winter storm Uri in February of 2021.

SULFUR SERVICES

Sulfur Services Operating Income for the three months ended March 31, 2021 and 2020 was $6.4 million and $11.3 million, respectively.

Adjusted segment EBITDA for Sulfur Services was $9.2 million and $10.1 million for the three months ended March 31, 2021 and 2020, respectively, reflecting increased fertilizer demand compared to the first quarter of 2020 offset by lower refinery utilization volumes during the first quarter of 2021 as a result of COVID-19 and the impact from winter storm Uri. The first quarter of 2020 also benefited from business interruption insurance proceeds received of $2.7 million as a result of storm damage to the Neches shiploader.

NATURAL GAS LIQUIDS (“NGL”)

NGL Operating Income for the three months ended March 31, 2021 and 2020 was $11.1 million and $5.2 million, respectively.

Adjusted segment EBITDA for NGL was $12.2 million and $5.5 million for the three months ended March 31, 2021 and 2020, respectively, primarily reflecting increased margins within the butane optimization and propane businesses.

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

USGA expenses included in operating income for the three months ended March 31, 2021 and 2020 were $3.9 million and $4.4 million, respectively.

USGA expenses included in adjusted EBITDA for the three months ended March 31, 2021 and 2020 were $3.7 million and $4.0 million, respectively, primarily reflecting a reduction in overhead allocated from Martin Resource Management.

LIQUIDITY

At March 31, 2021, the Partnership had $176 million drawn on its $300 million revolving credit facility, a $28.0 million increase from December 31, 2020. The increase was attributable to the redemption of the $28.8 million of senior unsecured notes that matured in February 2021. After the redemption, the Partnership has the following outstanding senior notes: 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 $345.7 million. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 5.4 times on both March 31, 2021 and December 31, 2020. The Partnership is in compliance with all debt covenants as of March 31, 2021.

QUARTERLY CASH DISTRIBUTION

The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended March 31, 2021. The distribution is payable on May 14, 2021 to common unitholders of record as of the close of business on May 7, 2021. The ex-dividend date for the cash distribution is May 6, 2021.

COVID-19 RESPONSE

The Partnership continues to evaluate protocols in response to the COVID-19 pandemic. Where possible, employee work from home initiatives remain and travel restrictions have been lifted. Employees are encouraged to continue to exercise safety measures to protect the welfare of each other and the communities they serve.

RESULTS OF OPERATIONS

The Partnership had net income for the three months ended March 31, 2021 of $2.5 million, or $0.06 per limited partner unit. The Partnership had net income for the three months ended March 31, 2020 of $8.8 million, or $0.22 per limited partner unit. Adjusted EBITDA for the three months ended March 31, 2021 was $30.9 million compared to the three months ended March 31, 2020 of $31.0 million. Distributable cash flow for the three months ended March 31, 2021 was $12.8 million compared to the three months ended March 31, 2020 of $18.3 million.

Revenues for the three months ended March 31, 2021 were $200.9 million compared to the three months ended March 31, 2020 of $198.9 million.

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 first quarter 2021 to the Partnership's Adjusted EBITDA for the first quarter 2020.

Investors' Conference Call

Date: Thursday, April 22, 2021
Time: 8:00 a.m. CT (please dial in by 7:55 a.m.)
Dial In #: (833) 900-2251
Conference ID: 3387961

Replay Dial In # (800) 585-8367 – Conference ID: 3387961

A webcast of the conference call 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

Martin Midstream Partners L.P., headquartered in Kilgore, Texas, 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. 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 guidance or to financial or operational estimates or projections 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 (3) distributable cash flow and (4) adjusted free 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. 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. 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. 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 unitholders.

Distributable Cash Flow. The Partnership defines Distributable Cash Flow as Adjusted EBITDA less cash paid for interest, cash paid for income taxes, 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 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.

Adjusted Free Cash Flow. Adjusted free cash flow is defined 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 our 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.

EBITDA, adjusted EBITDA, distributable cash flow, and adjusted free 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.

MMLP-F

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
	March 31, 2021				December 31, 2020
	(Unaudited)				(Audited)
Assets
Cash	$	1,112			$	4,958
Accounts and other receivables, less allowance for doubtful accounts of $248 and $261, respectively	65,232				52,748
Inventories	38,716				54,122
Due from affiliates	22,213				14,807
Fair value of derivatives	12				—
Other current assets	8,294				8,991
Total current assets	135,579				135,626
Property, plant and equipment, at cost	889,210				889,108
Accumulated depreciation	(518,143)				(509,237)
Property, plant and equipment, net	371,067				379,871
Goodwill	16,823				16,823
Right-of-use assets	21,250				22,260
Deferred income taxes, net	22,178				22,253
Other assets, net	3,314				2,805
Total assets	$	570,211			$	579,638
Liabilities and Partners’ Capital (Deficit)
Current installments of long-term debt and finance lease obligations	$	335			$	31,497
Trade and other accounts payable	56,271				51,900
Product exchange payables	237				373
Due to affiliates	1,214				435
Income taxes payable	696				556
Fair value of derivatives	—				207
Other accrued liabilities	19,485				34,407
Total current liabilities	78,238				119,375
Long-term debt, net	513,272				484,597
Finance lease obligations	230				289
Operating lease liabilities	14,264				15,181
Other long-term obligations	8,541				7,067
Total liabilities	614,545				626,509
Commitments and contingencies
Partners’ capital (deficit)	(44,334)				(46,871)
Total partners’ capital (deficit)	(44,334)				(46,871)
Total liabilities and partners' capital (deficit)	$	570,211			$	579,638

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
	Three Months Ended
	March 31,
	2021				2020
Revenues:
Terminalling and storage *	$	18,378			$	20,474
Transportation *	29,815				38,941
Sulfur services	2,950				2,915
Product sales: *
Natural gas liquids	98,085				82,211
Sulfur services	31,885				25,408
Terminalling and storage	19,861				28,934
	149,831				136,553
Total revenues	200,974				198,883
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas liquids *	79,135				69,835
Sulfur services *	21,214				15,295
Terminalling and storage *	14,502				23,680
	114,851				108,810
Expenses:
Operating expenses *	44,634				51,282
Selling, general and administrative *	10,609				10,462
Depreciation and amortization	14,434				15,239
Total costs and expenses	184,528				185,793
Other operating income (loss), net	(760)				2,510
Operating income	15,686				15,600
Other income (expense):
Interest expense, net	(12,953)				(9,925)
Gain on retirement of senior unsecured notes	—				3,484
Other, net	—				3
Total other expense	(12,953)				(6,438)
Net income before taxes	2,733				9,162
Income tax expense	(222)				(347)
Net income	2,511				8,815
Less general partner's interest in net (income)	(50)				(176)
Less (income) allocable to unvested restricted units	(10)				(55)
Limited partners' interest in net income (loss)	$	2,451			$	8,584
Net income per unit attributable to limited partners - basic	$	0.06			$	0.22
Net income per unit attributable to limited partners - diluted	$	0.06			$	0.22
Weighted average limited partner units - basic	38,692,609				38,640,862
Weighted average limited partner units - diluted	38,705,641				38,644,467
*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
	March 31,
	2021				2020
Revenues:*
Terminalling and storage	$	15,306			$	15,874
Transportation	4,010				5,894
Product Sales	114				92
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Sulfur services	2,535				2,767
Terminalling and storage	4,568				5,777
Expenses:
Operating expenses	18,368				21,771
Selling, general and administrative	8,680				8,312

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)
(Dollars in thousands)
	Partners’ Capital (Deficit)
	Common Limited							General Partner Amount
	Units			Amount								Total
Balances - January 1, 2020	38,863,389			$	(38,342)			$	2,146			$	(36,196)
Net income	—

FAQ

What were Martin Midstream Partners' financial results for Q1 2021?

In Q1 2021, Martin Midstream Partners reported a net income of $2.5 million and revenue of $200.9 million.

How much is the quarterly cash distribution for MMLP in Q1 2021?

The quarterly cash distribution for Q1 2021 is $0.005 per unit.

What challenges did MMLP face in Q1 2021?

MMLP faced challenges from winter storm Uri, affecting transportation and sulfur services.

What is the adjusted EBITDA for Martin Midstream Partners in Q1 2021?

The adjusted EBITDA for Q1 2021 was $30.9 million.

When is the investors' conference call for MMLP?

The investors' conference call is scheduled for April 22, 2021, at 8:00 a.m. CT.