Martin Midstream Partners Reports Third Quarter 2023 Financial Results and Declares Quarterly Cash Distribution

Rhea-AI Summary

Martin Midstream Partners L.P. announces financial results for Q3 2023

Positive

• Reported adjusted EBITDA of $26.2 million and $88.6 million for the three and nine months ended September 30, 2023, respectively
• Reaffirms 2023 Annual Adjusted EBITDA Guidance of $115.4 million
• Declared quarterly cash distribution of $0.005 per common unit for the quarter ended September 30, 2023
• Reduced total debt by $53.6 million in the first nine months of 2023
• Leverage ratio decreased to 3.95 times at September 30, 2023, compared to 4.53 times at December 31, 2022

Negative

• Reported net loss of $1.1 million and $5.1 million for the three and nine months ended September 30, 2023, respectively
• Certain industrial customers experienced challenges that negatively impacted the ground transportation business

• Total adjusted leverage of 3.95 times as of September 30, 2023

• Reported net loss of $1.1 million and $5.1 million for the three and nine months ended September 30, 2023, respectively, which includes a $5.1 million impact from the loss on extinguishment of debt for the nine months ended September 30, 2023

• Reported adjusted EBITDA of $26.2 million and $88.6 million, after giving effect to the May 2023 exit of the butane optimization business, which incurred adjusted EBITDA of zero and negative adjusted EBITDA of $15.1 million, for the three and nine months ended September 30, 2023, respectively

• Reaffirms 2023 Annual Adjusted EBITDA Guidance of $115.4 million

• Declares quarterly cash distribution of $0.005 per common unit for the quarter ended September 30, 2023, or $0.020 per common unit annually

KILGORE, Texas--(BUSINESS WIRE)-- Martin Midstream Partners L.P. (Nasdaq:MMLP) (“MMLP” or the "Partnership") today announced its financial results for the third quarter of 2023.

Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, stated, “The Partnership’s financial results for the third quarter met guidance as both the Specialty Products and Sulfur Services segments outperformed but were offset by the Transportation segment as certain industrial customers experienced challenges that negatively impacted the ground transportation business. Our full year 2023 adjusted EBITDA outlook, which does not include losses related to the butane optimization business, remains unchanged at $115.4 million, confirming the recent operational restructuring of our refinery services business model to deliver stable and sustainable cash flows. Looking to the future, we anticipate increased earnings related to the joint venture with Samsung C&T America and Dongjin USA, even as delays in the construction of semiconductor manufacturing facilities may result in deferred demand for electronic level sulfuric acid.

“During the first nine months of 2023, the Partnership, utilizing free cash flow and a significant reduction in working capital due to the exit from the butane optimization business, reduced total debt by $53.6 million. As a result, adjusted leverage was decreased to 3.95 times at September 30, 2023 compared to 4.53 times at December 31, 2022.”

THIRD QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT

TERMINALLING AND STORAGE (“T&S”)

T&S operating income (loss) for the three months ended September 30, 2023 and 2022 was $3.1 million and ($0.1) million, respectively.

Adjusted segment EBITDA for T&S was $8.2 million and $6.2 million for the three months ended September 30, 2023 and 2022, respectively, reflecting contractual index-based fee increases combined with reduced operating expenses across our divisions.

TRANSPORTATION

Transportation operating income for the three months ended September 30, 2023 and 2022 was $6.7 million and $12.1 million, respectively.

Adjusted segment EBITDA for Transportation was $9.5 million and $15.1 million for the three months ended September 30, 2023 and 2022, respectively, primarily reflecting increased expenses combined with lower mileage in our land transportation division.

SULFUR SERVICES

Sulfur Services operating income (loss) for the three months ended September 30, 2023 and 2022 was $2.7 million and ($6.7) million, including a ($3.3) million inventory valuation write down, respectively.

Adjusted segment EBITDA for Sulfur Services was $5.4 million and ($4.2) million for the three months ended September 30, 2023 and 2022, respectively, reflecting increased volumes and margins in both our fertilizer and sulfur businesses.

SPECIALTY PRODUCTS

Specialty Products operating income (loss) for the three months ended September 30, 2023 and 2022 was $6.0 million and ($13.3) million, respectively. Included in the Specialty Products results is an operating loss of $20.0 million for the three months ended September 30, 2022, attributable to the butane optimization business.

Adjusted segment EBITDA for Specialty Products was $6.8 million and $6.0 million for the three months ended September 30, 2023 and 2022, respectively. Included in the Specialty Products results is negative adjusted EBITDA of ($1.6) million for the three months ended September 30, 2022, attributable to the butane optimization business. Adjusted Segment EBITDA for Specialty Products after giving effect to the May 2023 exit of the butane optimization business was $6.8 million and $7.6 million for the three months ended September 30, 2023 and 2022, respectively, reflecting reduced NGL margins.

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

USGA expenses included in operating income for the three months ended September 30, 2023 and 2022 were $3.8 million and $4.3 million, respectively.

USGA expenses included in adjusted EBITDA for the three months ended September 30, 2023 and 2022 were $3.8 million and $4.2 million, respectively, reflecting a reduction in employee-related expenses.

CAPITALIZATION

At September 30, 2023, the Partnership had $462.5 million of total debt outstanding, including $62.5 million drawn on its $175 million revolving credit facility maturing in 2027 and $400 million of senior secured second lien notes due 2028. At September 30, 2023, the Partnership had liquidity of approximately $84.1 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 3.95 times at September 30, 2023, compared to 4.14 times at June 30, 2023, a reduction of 0.19 times. The Partnership was in compliance with all debt covenants as of September 30, 2023.

QUARTERLY CASH DISTRIBUTION

The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended September 30, 2023. The distribution is payable on November 14, 2023 to common unitholders of record as of the close of business on November 7, 2023. The ex-dividend date for the cash distribution is November 6, 2023.

QUALIFIED NOTICE TO NOMINEES

Partnership:		Martin Midstream Partners L.P.
Unit Class:		Common
CUSIP #:		573331105
RE:		Qualified Notice Pursuant to U.S. Treasury Regulation §1.1446-4
Record Date:		November 7, 2023
Payable Date:		November 14, 2023
Per Unit Amount:		$0.005

Section I: This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

Section II: The entire amount of the distribution realized per U.S. Treasury Regulation 1.1446(f)-4(c)(2)(iii) is in excess of cumulative net taxable income.

RESULTS OF OPERATIONS

The Partnership had a net loss for the three months ended September 30, 2023 of $1.1 million, a loss of $0.03 per limited partner unit. The Partnership had a net loss for the three months ended September 30, 2022 of $28.0 million, a loss of $0.71 per limited partner unit. Adjusted EBITDA for the three months ended September 30, 2023 was $26.2 million compared to $18.8 million for the three months ended September 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended September 30, 2023 was $26.2 million compared to $20.4 million for the three months ended September 30, 2022. Net cash provided by (used in) operating activities for the three months ended September 30, 2023 was $7.3 million, compared to ($45.2) million for the three months ended September 30, 2022. Distributable cash flow for the three months ended September 30, 2023 was $5.0 million compared to $(2.0) million for the three months ended September 30, 2022.

The Partnership had a net loss for the nine months ended September 30, 2023 of $5.1 million, a loss of $0.13 per limited partner unit. The Partnership had a net loss for the nine months ended September 30, 2022 of $10.0 million, a loss of $0.25 per limited partner unit. Adjusted EBITDA for the nine months ended September 30, 2023 was $73.4 million compared to $97.1 million for the nine months ended September 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the nine months ended September 30, 2023 was $88.6 million compared to $93.6 million for the nine months ended September 30, 2022. Net cash provided by (used in) operating activities for the nine months ended September 30, 2023 was $106.1 million compared to ($16.8) million for the nine months ended September 30, 2022. Distributable cash flow for the nine months ended September 30, 2023 was $24.2 million compared to $36.1 million for the nine months ended September 30, 2022.

Revenues for the three months ended September 30, 2023 were $176.7 million compared to $229.3 million for the three months ended September 30, 2022. Revenues for the nine months ended September 30, 2023 were $616.9 million compared to $775.5 million for the nine months ended September 30, 2022.

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 third quarter 2023 to the Partnership's adjusted EBITDA guidance for the third quarter 2023.

Investors' Conference Call

Date: Thursday, October 19, 2023
Time: 8:00 a.m. CT (please dial in by 7:55 a.m.)
Dial In #: (888) 330-2384
Conference ID: 8536096
Replay Dial In # (800) 770-2030 – Conference ID: 8536096

A webcast of the conference call along with the Third Quarter 2023 Earnings Summary 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

MMLP, headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s primary business lines include: (1) terminalling, processing, and storage 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) marketing, distribution, and transportation services for natural gas liquids and blending and packaging services for specialty lubricants and grease. To learn more, visit www.MMLP.com. Follow Martin Midstream Partners L.P. on LinkedIn, Facebook, and X.

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, including (i) the effects of the continued volatility of commodity prices and the related macroeconomic and political environment and (ii) 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 “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 except where required to do so by law.

Use of Non-GAAP Financial Information

To assist management in assessing our business, we use the following non-GAAP financial measures: earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below), distributable cash flow available to common unitholders (“distributable cash flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("adjusted free cash flow"). Our management uses a variety of financial and operational measurements other than our financial statements prepared in accordance with U.S. GAAP to analyze our performance.

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.

EBITDA and adjusted EBITDA. We define 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. Adjusted EBITDA is used as a supplemental performance and liquidity measure by our management and by external users of our financial statements, such as investors, commercial banks, research analysts, and others, to assess:

• the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis;

• the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness, and make cash distributions to our unitholders; and

• our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing methods or capital structure.

The GAAP measures most directly comparable to adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities, or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate adjusted EBITDA in the same manner.

Adjusted EBITDA does not include interest expense, income tax expense, and depreciation and amortization. Because we have borrowed money to finance our operations, interest expense is a necessary element of our costs and our ability to generate cash available for distribution. Because we have capital assets, depreciation and amortization are also necessary elements of our costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, we believe that it is important to consider net income (loss) and net cash provided by (used in) operating activities as determined under GAAP, as well as adjusted EBITDA, to evaluate our overall performance.

Distributable cash flow. We define distributable cash flow as net cash provided by (used in) operating activities less cash received (plus cash paid) for closed commodity derivative positions included in Accumulated Other Comprehensive Income (Loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital expenditures and plant turnaround costs. Distributable cash flow is a significant performance measure used by our management and by external users of our financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay unitholders. Distributable cash flow is also an important financial measure for our unitholders since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not we are generating cash flow at a level that can sustain or support an increase in our 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. We define adjusted free cash flow 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 our 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. We believe 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. Our calculation of adjusted free cash flow may or may not be comparable to similarly titled measures used by other entities.

The GAAP measure most directly comparable to distributable cash flow and adjusted free cash flow is net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow should not be considered alternatives to, or more meaningful than, net income (loss), operating income (loss), Net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP. Distributable cash flow and adjusted free cash flow have important limitations because they exclude some items that affect net income (loss), operating income (loss), and net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow may not be comparable to similarly titled measures of other companies because other companies may not calculate these non-GAAP metrics in the same manner. To compensate for these limitations, we believe that it is important to consider net cash provided by (used in) operating activities determined under GAAP, as well as distributable cash flow and adjusted free cash flow, to evaluate our overall liquidity.

MMLP-F

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
		September 30, 2023				December 31, 2022
		(Unaudited)				(Audited)
Assets
Cash		$	54			$	45
Accounts and other receivables, less allowance for doubtful accounts of $496 and $496, respectively			60,451				79,641
Inventories			41,699				109,798
Due from affiliates			2,096				8,010
Other current assets			7,647				13,633
Total current assets			111,947				211,127
Property, plant and equipment, at cost			909,946				903,535
Accumulated depreciation			(602,834	)			(584,245	)
Property, plant and equipment, net			307,112				319,290
Goodwill			16,671				16,671
Right-of-use assets			58,174				34,963
Deferred income taxes, net			12,064				14,386
Other assets, net			1,933				2,414
Total assets		$	507,901			$	598,851
Liabilities and Partners’ Capital (Deficit)
Current installments of long-term debt and finance lease obligations		$	—			$	9
Trade and other accounts payable			43,909				68,198
Product exchange payables			775				32
Due to affiliates			8,143				8,947
Income taxes payable			461				665
Other accrued liabilities			27,687				33,074
Total current liabilities			80,975				110,925
Long-term debt, net			439,824				512,871
Operating lease liabilities			44,108				26,268
Other long-term obligations			7,973				8,232
Total liabilities			572,880				658,296
Commitments and contingencies
Partners’ capital (deficit)			(64,979	)			(59,445	)
Total liabilities and partners' capital (deficit)		$	507,901			$	598,851

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per unit amounts)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
			2023				2022				2023				2022
Revenues:
Terminalling and storage *		$	22,202			$	19,988			$	64,744			$	59,808
Transportation *			55,223				58,993				165,696				161,535
Sulfur services			3,358				3,085				10,073				9,253
Product sales: *
Specialty products			66,695				121,456				277,836				409,215
Sulfur services			29,219				25,783				98,513				135,691
			95,914				147,239				376,349				544,906
Total revenues			176,697				229,305				616,862				775,502
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Specialty products *			56,298				126,951				245,863				380,602
Sulfur services *			19,461				25,230				66,932				100,078
Terminalling and storage *			23				6				54				15
			75,782				152,187				312,849				480,695
Expenses:
Operating expenses *			64,375				66,158				187,857				186,735
Selling, general and administrative *			10,424				10,273				30,043				31,420
Depreciation and amortization			12,223				13,721				37,671				43,007
Total costs and expenses			162,804				242,339				568,420				741,857
Other operating income, net			811				790				1,096				1,050
Operating income (loss)			14,704				(12,244	)			49,538				34,695
Other income (expense):
Interest expense, net			(14,994	)			(13,906	)			(45,914	)			(39,181	)
Loss on extinguishment of debt			—				—				(5,121	)			—
Other, net			17				(2	)			50				(4	)
Total other expense			(14,977	)			(13,908	)			(50,985	)			(39,185	)
Net loss before taxes			(273	)			(26,152	)			(1,447	)			(4,490	)
Income tax expense			(788	)			(1,891	)			(3,619	)			(5,469	)
Net loss			(1,061	)			(28,043	)			(5,066	)			(9,959	)
Less general partner's interest in net loss			21				561				101				199
Less loss allocable to unvested restricted units			4				90				16				39
Limited partners' interest in net loss		$	(1,036	)		$	(27,392	)		$	(4,949	)		$	(9,721	)
Net loss per unit attributable to limited partners - basic		$	(0.03	)		$	(0.71	)		$	(0.13	)		$	(0.25	)
Net loss per unit attributable to limited partners - diluted		$	(0.03	)		$	(0.71	)		$	(0.13	)		$	(0.25	)
Weighted average limited partner units - basic			38,772,266				38,726,388				38,771,451				38,725,933
Weighted average limited partner units - diluted			38,772,266				38,726,388				38,771,451				38,725,933
*Related Party Transactions Shown Below

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per unit amounts)
*Related Party Transactions Included Above
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2023			2022			2023			2022
Revenues:*
Terminalling and storage		$	18,542		$	16,065		$	54,121		$	49,685
Transportation			7,426			7,111			20,214			20,862
Product Sales			122			63			8,544			486
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Specialty products			9,896			10,196			27,324			30,047
Sulfur services			2,787			2,616			8,139			7,884
Terminalling and storage			23			5			54			14
Expenses:
Operating expenses			25,606			23,856			74,491			68,682
Selling, general and administrative			8,477			7,627			23,549			23,933

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Dollars in thousands)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2023				2022				2023				2022
Net loss		$	(1,061	)		$	(28,043	)		$	(5,066	)		$	(9,959	)
Commodity cash flow hedging (gains) reclassified to earnings			—				(167	)			—				(816	)
Comprehensive loss		$	(1,061	)		$	(28,210	)		$	(5,066	)		$	(10,775	)

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)
(Unaudited)
(Dollars in thousands)
		Partners’ Capital (Deficit)
		Common Limited						General Partner Amount				Accumulated Other Comprehensive Income (Loss)
		Units		Amount												Total
Balances - June 30, 2023		38,914,806		$	(65,334	)		$	1,577			$	—			$	(63,757	)
Net loss		—			(1,040	)			(21	)			—				(1,061	)
Cash distributions		—			(194	)			(4	)			—				(198	)
Unit-based compensation		—			37				—				—				37
Balances - September 30, 2023		38,914,806			(66,531	)			1,552				—			$	(64,979	)
Balances - December 31, 2022		38,850,750		$	(61,110	)		$	1,665			$	—			$	(59,445	)
Net loss		—			(4,965	)			(101	)			—				(5,066	)
Issuance of restricted units		64,056			—				—				—				—
Cash distributions		—			(583	)			(12	)			—				(595	)
Unit-based compensation		—			127				—				—				127
Balances - September 30, 2023		38,914,806		$	(66,531	)		$	1,552			$	—			$	(64,979	)
		Partners’ Capital (Deficit)
		Common Limited						General Partner Amount				Accumulated Other Comprehensive Income (Loss)
		Units		Amount												Total
Balances - June 30, 2022		38,850,750		$	(33,263	)		$	2,242			$	167			$	(30,854	)
Net loss		—			(27,482	)			(561	)			—				(28,043	)
Issuance of restricted units		—			—				—				—				—
Cash distributions		—			(195	)			(4	)			—				(199	)
Unit-based compensation		—			46				—				—				46
Gain recognized in AOCI on commodity cash flow hedges		—			—				—				(167	)			(167	)
Balances - September 30, 2022		38,850,750		$	(60,894	)		$	1,677			$	—			$	(59,217	)
Balances - December 31, 2021		38,802,750		$	(50,741	)		$	1,888			$	816			$	(48,037	)
Net income		—			(9,760	)			(199	)			—				(9,959	)
Issuance of restricted units		48,000			—				—				—				—
Cash distributions		—			(583	)			(12	)			—				(595	)
Unit-based compensation		—			125				—				—				125
Excess purchase price over carrying value of acquired assets		—			65				—				—				65
Gain reclassified from AOCI into income on commodity cash flow hedges		—			—				—				(816	)			(816	)
Balances - September 30, 2022		38,850,750		$	(60,894	)		$	1,677			$	—			$	(59,217	)

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
		Nine Months Ended
		September 30,
			2023				2022
Cash flows from operating activities:
Net loss		$	(5,066	)		$	(9,959	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			37,671				43,007
Amortization of deferred debt issuance costs			3,206				2,356
Amortization of debt discount			1,600				—
Deferred income tax expense			2,322				3,611
Gain on disposition or sale of property, plant and equipment, net			(1,096	)			(1,050	)
Loss on extinguishment of debt			5,121				—
Derivative income			—				(901	)
Net cash paid for commodity derivatives			—				85
Non cash unit-based compensation			127				125
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables			19,190				7,076
Inventories			68,099				(73,518	)
Due from affiliates			5,914				12,016
Other current assets			5,282				(4,824	)
Trade and other accounts payable			(24,709	)			6,053
Product exchange payables			743				(695	)
Due to affiliates			(804	)			11,953
Income taxes payable			(204	)			228
Other accrued liabilities			(10,311	)			(13,435	)
Change in other non-current assets and liabilities			(1,020	)			1,116
Net cash provided by (used in) operating activities			106,065				(16,756	)
Cash flows from investing activities:
Payments for property, plant and equipment			(25,294	)			(21,019	)
Payments for plant turnaround costs			(2,367	)			(4,262	)
Proceeds from sale of property, plant and equipment			5,183				2,209
Net cash used in investing activities			(22,478	)			(23,072	)
Cash flows from financing activities:
Payments of long-term debt			(579,197	)			(299,089	)
Payments under finance lease obligations			(9	)			(180	)
Proceeds from long-term debt			510,489				341,000
Payment of debt issuance costs			(14,266	)			(30	)
Excess purchase price over carrying value of acquired assets			—				(1,285	)
Cash distributions paid			(595	)			(595	)
Net cash provided by (used in) financing activities			(83,578	)			39,821
Net increase (decrease) in cash			9				(7	)
Cash at beginning of period			45				52
Cash at end of period		$	54			$	45
Non-cash additions to property, plant and equipment		$	2,369			$	2,240

MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Unaudited)
(Dollars and volumes in thousands, except BBL per day)
Terminalling and Storage Segment
Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022
		Three Months Ended September 30,								Variance				Percent Change
		2023				2022
		(In thousands, except BBL per day)
Revenues		$	23,973			$	23,034			$	939			4	%
Cost of products sold			23				6				17			283	%
Operating expenses			15,078				16,418				(1,340	)		(8	)%
Selling, general and administrative expenses			628				457				171			37	%
Depreciation and amortization			5,102				6,200				(1,098	)		(18	)%
			3,142				(47	)			3,189			6,785	%
Other operating loss, net			(35	)			—				(35	)
Operating income (loss)		$	3,107			$	(47	)		$	3,154			6,711	%
Shore-based throughput volumes (gallons)			40,655				14,658				25,997			177	%
Smackover refinery throughput volumes (guaranteed minimum BBL per day)			6,500				6,500				—			—	%

Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022
		Nine Months Ended September 30,								Variance				Percent Change
		2023				2022
		(In thousands, except BBL per day)
Revenues		$	71,798			$	69,027			$	2,771			4	%
Cost of products sold			54				15				39			260	%
Operating expenses			43,318				47,372				(4,054	)		(9	)%
Selling, general and administrative expenses			1,510				1,491				19			1	%
Depreciation and amortization			15,896				20,372				(4,476	)		(22	)%
			11,020				(223	)			11,243			5,042	%
Other operating loss, net			(359	)			(35	)			(324	)		(926	)%
Operating income (loss)		$	10,661			$	(258	)		$	10,919			4,232	%
Shore-based throughput volumes (gallons)			126,438				42,201				84,237			200	%
Smackover refinery throughput volumes (guaranteed minimum) (BBL per day)			6,500				6,500				—			—	%

Transportation Segment
Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022
		Three Months Ended September 30,						Variance				Percent Change
		2023			2022
		(In thousands)
Revenues		$	58,541		$	63,514		$	(4,973	)		(8	)%
Operating expenses			46,465			46,499			(34	)		—	%
Selling, general and administrative expenses			2,571			1,962			609			31	%
Depreciation and amortization			3,674			3,598			76			2	%
			5,831			11,455			(5,624	)		(49	)%
Other operating income, net			846			618			228			37	%
Operating income		$	6,677		$	12,073		$	(5,396	)		(45	)%

Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022
		Nine Months Ended September 30,						Variance				Percent Change
		2023			2022
		(In thousands)
Revenues		$	178,875		$	176,313		$	2,562			1	%
Operating expenses			136,940			130,229			6,711			5	%
Selling, general and administrative expenses			7,101			5,920			1,181			20	%
Depreciation and amortization			11,196			10,761			435			4	%
		$	23,638		$	29,403		$	(5,765	)		(20	)%
Other operating income, net			1,497			901			596			66	%
Operating income		$	25,135		$	30,304		$	(5,169	)		(17	)%

Sulfur Services Segment
Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022
		Three Months Ended September 30,							Variance				Percent Change
		2023			2022
		(In thousands)
Revenues:
Services		$	3,358		$	3,085			$	273			9	%
Products			29,219			25,783				3,436			13	%
Total revenues			32,577			28,868				3,709			13	%
Cost of products sold			21,972			27,201				(5,229	)		(19	)%
Operating expenses			3,510			3,978				(468	)		(12	)%
Selling, general and administrative expenses			1,713			1,509				204			14	%
Depreciation and amortization			2,639			2,786				(147	)		(5	)%
			2,743			(6,606	)			9,349			142	%
Other operating loss, net			—			(70	)			70			100	%
Operating income (loss)		$	2,743		$	(6,676	)		$	9,419			141	%
Sulfur (long tons)			155			95				60			63	%
Fertilizer (long tons)			58			24				34			142	%
Total sulfur services volumes (long tons)			213			119				94			79	%

Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022
		Nine Months Ended September 30,							Variance				Percent Change
		2023			2022
		(In thousands)
Revenues:
Services		$	10,073		$	9,253			$	820			9	%
Products			98,513			135,691				(37,178	)		(27	)%
Total revenues			108,586			144,944				(36,358	)		(25	)%
Cost of products sold			74,062			105,640				(31,578	)		(30	)%
Operating expenses			9,595			11,233				(1,638	)		(15	)%
Selling, general and administrative expenses			4,292			4,550				(258	)		(6	)%
Depreciation and amortization			8,072			8,377				(305	)		(4	)%
			12,565			15,144				(2,579	)		(17	)%
Other operating income (loss), net			17			(34	)			51			150	%
Operating income		$	12,582		$	15,110			$	(2,528	)		(17	)%
Sulfur (long tons)			352			327				25			8	%
Fertilizer (long tons)			192			170				22			13	%
Total sulfur services volumes (long tons)			544			497				47			9	%

Specialty Products Segment
Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022
		Three Months Ended September 30,							Variance				Percent Change
		2023			2022
		(In thousands)
Products revenues		$	66,720		$	121,484			$	(54,764	)		(45	)%
Cost of products sold			58,177			131,790				(73,613	)		(56	)%
Operating expenses			23			26				(3	)		(12	)%
Selling, general and administrative expenses			1,698			2,107				(409	)		(19	)%
Depreciation and amortization			808			1,137				(329	)		(29	)%
			6,014			(13,576	)			19,590			144	%
Other operating income, net			—			242				(242	)		(100	)%
Operating income (loss)		$	6,014		$	(13,334	)		$	19,348			145	%
NGL sales volumes (Bbls)			509			1,180				(671	)		(57	)%
Other specialty products volumes (Bbls)			106			110				(4	)		(4	)%
Total specialty products volumes (Bbls)			615			1,290				(675	)		(52	)%

Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022
		Nine Months Ended September 30,							Variance				Percent Change
		2023				2022
		(In thousands)
Products revenues		$	277,895			$	409,310		$	(131,415	)		(32	)%
Cost of products sold			256,898				396,865			(139,967	)		(35	)%
Operating expenses			55				98			(43	)		(44	)%
Selling, general and administrative expenses			5,287				6,757			(1,470	)		(22	)%
Depreciation and amortization			2,507				3,497			(990	)		(28	)%
			13,148				2,093			11,055			528	%
Other operating income (loss), net			(59	)			218			(277	)		(127	)%
Operating income		$	13,089			$	2,311		$	10,778			466	%
NGL sales volumes (Bbls)			3,027				3,930			(903	)		(23	)%
Other specialty products volumes (Bbls)			280				311			(31	)		(10	)%
Total specialty products volumes (Bbls)			3,307				4,241			(934	)		(22	)%

Unallocated Selling, General and Administrative Expenses
Comparative Results of Operations for the Three and Nine Months Ended September 30, 2023 and 2022
		Three Months Ended													Nine Months Ended
		September 30,						Variance				Percent Change			September 30,						Variance				Percent Change
		2023			2022										2023			2022
		(In thousands)													(In thousands)
Indirect selling, general and administrative expenses		$	3,837		$	4,260		$	(423	)		(10	)%		$	11,929		$	12,772		$	(843	)		(7	)%

Non-GAAP Financial Measures

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and nine months ended September 30, 2023 and 2022, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow:

Reconciliation of Net Loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2023				2022				2023				2022
		(in thousands)								(in thousands)
Net loss		$	(1,061	)		$	(28,043	)		$	(5,066	)		$	(9,959	)
Adjustments:
Interest expense			14,994				13,906				45,914				39,181
Income tax expense			788				1,891				3,619				5,469
Depreciation and amortization			12,223				13,721				37,671				43,007
EBITDA			26,944				1,475				82,138				77,698
Adjustments:
Gain on disposition or sale of property, plant and equipment			(811	)			(790	)			(1,096	)			(1,050	)
Loss on extinguishment of debt			—				—				5,121				—
Lower of cost or net realizable value and other non-cash adjustments			—				18,084				(12,850	)			20,326
Unit-based compensation			37				46				127				125
Adjusted EBITDA		$	26,170			$	18,815			$	73,440			$	97,099
Adjustments:
Less: net loss associated with butane optimization business			—				20,032				2,255				15,280
Plus: lower of cost or net realizable value and other non-cash adjustments			—			$	(18,457	)			12,850				(18,826	)
Adjusted EBITDA after giving effect to the exit of the butane optimization business		$	26,170			$	20,390			$	88,545			$	93,553

Reconciliation of Net Cash Provided by (Used in) Operating Activities to Adjusted EBITDA, Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business, Distributable Cash Flow, and Adjusted Free Cash Flow
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2023				2022				2023				2022
		(in thousands)								(in thousands)
Net cash provided by (used in) operating activities		$	7,291			$	(45,207	)		$	106,065			$	(16,756	)
Interest expense 1			13,623				13,118				41,108				36,825
Current income tax expense			333				584				1,297				1,858
Lower of cost or net realizable value and other non-cash adjustments			—				18,084				(12,850	)			20,326
Commodity cash flow hedging gains reclassified to earnings			—				167				—				901
Net cash paid for closed commodity derivative positions included in AOCI			—				—				—				(85	)
Changes in operating assets and liabilities which (provided) used cash:
Accounts and other receivables, inventories, and other current assets			(5,983	)			(5,651	)			(98,485	)			59,250
Trade, accounts and other payables, and other current liabilities			11,155				38,691				35,285				(4,104	)
Other			(249	)			(971	)			1,020				(1,116	)
Adjusted EBITDA			26,170				18,815				73,440				97,099
Adjustments:
Less: net loss associated with butane optimization business			—				20,032				2,255				15,280
Plus: lower of cost or net realizable value and other non-cash adjustments			—				(18,457	)			12,850				(18,826	)
Adjusted EBITDA after giving effect to the exit of the butane optimization business			26,170				20,390				88,545				93,553
Adjustments:
Interest expense			(14,994	)			(13,906	)			(45,914	)			(39,181	)
Income tax expense			(788	)			(1,891	)			(3,619	)			(5,469	)
Deferred income taxes			455				1,307				2,322				3,611
Amortization of debt discount			600				—				1,600				—
Amortization of deferred debt issuance costs			771				788				3,206				2,356
Payments for plant turnaround costs			(1,706	)			(2,662	)			(2,367	)			(4,262	)
Maintenance capital expenditures			(5,516	)			(5,994	)			(19,588	)			(14,548	)
Distributable cash flow			4,992				(1,968	)			24,185				36,060
Principal payments under finance lease obligations			—				(61	)			(9	)			(180	)
Expansion capital expenditures			(3,444	)			(926	)			(6,126	)			(5,482	)
Adjusted free cash flow		$	1,548			$	(2,955	)		$	18,050			$	30,398
1 Net of amortization of debt issuance costs and discount, which are included in interest expense but not included in net cash provided by (used in) operating activities.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231018892173/en/

Sharon Taylor - Executive Vice President & Chief Financial Officer

(877) 256-6644

investor.relations@mmlp.com

Source: Martin Midstream Partners L.P.

FAQ

What is the adjusted EBITDA for the three and nine months ended September 30, 2023?

The adjusted EBITDA for the three and nine months ended September 30, 2023, was $26.2 million and $88.6 million, respectively.

What is the 2023 Annual Adjusted EBITDA Guidance?

The 2023 Annual Adjusted EBITDA Guidance is $115.4 million.

What is the quarterly cash distribution for the quarter ended September 30, 2023?

The quarterly cash distribution for the quarter ended September 30, 2023, is $0.005 per common unit.

How much total debt was reduced in the first nine months of 2023?

Total debt was reduced by $53.6 million in the first nine months of 2023.

What is the leverage ratio at September 30, 2023?

The leverage ratio at September 30, 2023, is 3.95 times.