Martin Midstream Partners Reports First Quarter 2022 Financial Results and Declares Quarterly Cash Distribution
Martin Midstream Partners L.P. (Nasdaq:MMLP) ("MMLP" or the "Partnership") today announced its financial results for the first quarter of 2022.
Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership stated, “The Partnership experienced an exceptional quarter benefiting from increased refinery utilization and strong demand for our products and services. For the period, we generated $40.0 million in adjusted EBITDA which exceeded the high end of our first quarter guidance by approximately $10.0 million. During the quarter, we successfully managed supply chain challenges, labor availability and fluctuating commodity prices as the Russian invasion of Ukraine created global market instability. Looking forward, the outlook remains solid for our refinery services business model and as a result we are increasing our 2022 adjusted EBITDA guidance range to $110 - $120 million.
“On March 31 2022, the Partnership’s adjusted leverage ratio was 3.87 times compared to 4.19 times on December 31, 2021. For the past few years we have been focused on reducing leverage to enhance the balance sheet and return value to our unitholders. During that time, we have made significant progress toward our adjusted leverage goal of 3.75 times and believe the Partnership is in an excellent position as we look to improve our capital structure this year.”
FIRST QUARTER 2022 OPERATING RESULTS BY BUSINESS SEGMENT
TERMINALLING AND STORAGE (“T&S”)
T&S Operating Income for the three months ended March 31, 2022 and 2021 was $3.9 million and $3.4 million, respectively.
Adjusted segment EBITDA for T&S was $11.6 million and $10.6 million, for the three months ended March 31, 2022 and 2021, respectively, reflecting strong demand in our lubricant and specialty products divisions.
TRANSPORTATION
Transportation Operating Income for the three months ended March 31, 2022 was $7.0 million compared to an operating loss of $1.3 million for the three months ended March 31, 2021.
Adjusted segment EBITDA for Transportation was $10.5 million and $2.7 million for the three months ended March 31, 2022 and 2021, respectively, reflecting higher land transportation rates and load count counterbalanced by rising labor and operating costs, coupled with increased marine day rates and fleet utilization.
SULFUR SERVICES
Sulfur Services Operating Income for the three months ended March 31, 2022 and 2021 was $12.7 million and $6.4 million, respectively.
Adjusted segment EBITDA for Sulfur Services was $15.3 million and $9.2 million for the three months ended March 31, 2022 and 2021, respectively, reflecting strong demand for agricultural products.
NATURAL GAS LIQUIDS (“NGL”)
NGL Operating Income for the three months ended March 31, 2022 and 2021 was $6.0 million and $11.1 million, respectively.
Adjusted segment EBITDA for NGL was $6.6 million and $12.2 million for the three months ended March 31, 2022 and 2021, respectively, primarily reflecting a decrease in volumes as the first quarter of 2021 benefited from an increased seasonal demand.
UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”)
USGA expenses included in operating income for the three months ended March 31, 2022 and 2021 were $4.2 million and $3.9 million, respectively.
USGA expenses included in adjusted EBITDA for the three months ended March 31, 2022 and 2021 were $4.1 million and $3.7 million, respectively, primarily reflecting an increase in employee related expenses.
CAPITALIZATION
At March 31, 2022, the Partnership had $489 million of total debt outstanding, including $143 million drawn on its $275 million revolving credit facility, $54 million of senior secured 1.5 lien notes due 2024 and $292 million of senior secured second lien notes due 2025. At March 31, 2022, the Partnership had liquidity of approximately $107 million from available capacity under its revolving credit facility, an increase of $14 million from December 31, 2021. The Partnership’s adjusted leverage ratio, as calculated under the revolving credit facility, was 3.9 times and 4.2 times on March 31, 2022 and December 31, 2021, respectively. The Partnership was in compliance with all debt covenants as of March 31, 2022.
QUARTERLY CASH DISTRIBUTION
The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended March 31, 2022. The distribution is payable on May 13, 2022 to common unitholders of record as of the close of business on May 6, 2022. The ex-dividend date for the cash distribution is May 5, 2022.
QUALIFIED NOTICE TO NOMINEES
This release serves as qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b)(4) and (d). Please note that 100 percent of the Partnership's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of the Partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals or corporations, as applicable. Nominees, and not the Partnership, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
RESULTS OF OPERATIONS
The Partnership had net income for the three months ended March 31, 2022 of $11.5 million, or $0.29 per limited partner unit. The Partnership had net income for the three months ended March 31, 2021 of $2.5 million, or $0.06 per limited partner unit. Adjusted EBITDA for the three months ended March 31, 2022 was $40.0 million compared to $30.9 million for the three months ended March 31, 2021. Net cash provided by operating activities for the three months ended March 31, 2022 was $28.4 million, compared to $3.9 million for the three months ended March 31, 2021. Distributable cash flow for the three months ended March 31, 2022 was $20.9 million compared to $12.8 million for the three months ended March 31, 2021.
Revenues for the three months ended March 31, 2022 were $279.2 million compared to $201.0 million for the three months ended March 31, 2021.
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 2022 to the Partnership's adjusted EBITDA for the first quarter 2021.
2022 REVISED FINANCIAL GUIDANCE
The Partnership now expects to generate adjusted EBITDA between $110 million and $120 million for full-year 2022, compared to the original adjusted EBITDA guidance of between $100 million and $110 million. Revised guidance assumptions include a slight contraction in margins in the second half of the year as continued supply chain disruptions and rising inflation impact all segments with margin-based business lines. Offsetting these negative items, we expect demand for our land transportation assets to continue to increase, and anticipate increasing utilization in our inland marine division and the benefit of a full year term contract for our offshore unit.
Distributable cash flow is now expected to be between $37 million and $47 million for full-year 2022, compared to the original distributable cash flow guidance of between $31 million and $41 million. Adjusted free cash flow is now expected to be between $29 million and $39 million, compared to the original adjusted free cash flow guidance of between $23 million and $33 million.
MMLP does not intend at this time to provide financial guidance beyond 2022.
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.
Investors' Conference Call
Date: Thursday, April 21, 2022
Time: 8:00 a.m. CT (please dial in by 7:55 a.m.)
Dial In #: (833) 900-2398
Conference ID: 8536096
Replay Dial In # (800) 770-2030 – Conference ID: 8536096
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
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, 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 financial 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 (including variants of the virus), 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 “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 the Partnership's management in assessing its business, it uses 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"). 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.
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. 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. Adjusted EBITDA is used as a supplemental performance and liquidity measure by the Partnership's management and by external users of its financial statements, such as investors, commercial banks, research analysts, and others, to assess:
the financial performance of the Partnership's assets without regard to financing methods, capital structure, or historical cost basis; the ability of the Partnership's assets to generate cash sufficient to pay interest costs, support its indebtedness, and make cash distributions to its unitholders; and its 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 the Partnership has borrowed money to finance its operations, interest expense is a necessary element of its costs and its ability to generate cash available for distribution. Because the Partnership has capital assets, depreciation and amortization are also necessary elements of its costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, the Partnership believes 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 its overall performance.
Distributable Cash Flow. The Partnership defines 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 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 us 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 its 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. The Partnership defines 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 the Partnership's management and by external users of its 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.
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, the Partnership believes 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 its overall liquidity.
MMLP-F
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31, 2022
December 31, 2021
(Unaudited)
(Audited)
Assets
Cash
$
312
$
52
Accounts and other receivables, less allowance for doubtful accounts of $272 and $311, respectively
84,063
84,199
Inventories
54,278
62,120
Due from affiliates
20,925
14,409
Fair value of derivatives
175
—
Other current assets
10,403
12,908
Total current assets
170,156
173,688
Property, plant and equipment, at cost
903,095
898,770
Accumulated depreciation
(562,485
)
(553,300
)
Property, plant and equipment, net
340,610
345,470
Goodwill
16,823
16,823
Right-of-use assets
25,238
21,861
Deferred income taxes, net
18,900
19,821
Other assets, net
2,381
2,198
Total assets
$
574,108
$
579,861
Liabilities and Partners’ Capital (Deficit)
Current installments of long-term debt and finance lease obligations
$
226
$
280
Trade and other accounts payable
77,276
70,342
Product exchange payables
685
1,406
Due to affiliates
3,400
1,824
Income taxes payable
925
385
Other accrued liabilities
18,719
29,850
Total current liabilities
101,231
104,087
Long-term debt, net
483,151
498,871
Finance lease obligations
3
9
Operating lease liabilities
18,841
15,704
Other long-term obligations
8,861
9,227
Total liabilities
612,087
627,898
Commitments and contingencies
Partners’ capital (deficit)
(37,539
)
(48,853
)
Accumulated other comprehensive income (loss)
(440
)
816
Total partners’ capital (deficit)
(37,979
)
(48,037
)
Total liabilities and partners' capital (deficit)
$
574,108
$
579,861
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per unit amounts)
Three Months Ended
March 31,
2022
2021
Revenues:
Terminalling and storage *
$
19,413
$
18,378
Transportation *
46,710
29,815
Sulfur services
3,084
2,950
Product sales: *
Natural gas liquids
120,563
98,085
Sulfur services
56,039
31,885
Terminalling and storage
33,392
19,861
209,994
149,831
Total revenues
279,201
200,974
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas liquids *
107,098
79,135
Sulfur services *
37,785
21,214
Terminalling and storage *
26,699
14,502
171,582
114,851
Expenses:
Operating expenses *
56,495
44,634
Selling, general and administrative *
11,203
10,609
Depreciation and amortization
14,486
14,434
Total costs and expenses
253,766
184,528
Other operating income (loss), net
14
(760
)
Operating income
25,449
15,686
Other income (expense):
Interest expense, net
(12,429
)
(12,953
)
Other, net
(1
)
—
Total other expense
(12,430
)
(12,953
)
Net income before taxes
13,019
2,733
Income tax expense
(1,541
)
(222
)
Net income
11,478
2,511
Less general partner's interest in net income
(229
)
(50
)
Less income allocable to unvested restricted units
(30
)
(10
)
Limited partners' interest in net income
$
11,219
$
2,451
Net income per unit attributable to limited partners - basic
$
0.29
$
0.06
Net income per unit attributable to limited partners - diluted
$
0.29
$
0.06
Weighted average limited partner units - basic
38,722,246
38,692,609
Weighted average limited partner units - diluted
38,738,843
38,705,641
*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
March 31,
2022
2021
Revenues:*
Terminalling and storage
$
16,204
$
15,306
Transportation
6,288
4,010
Product Sales
321
114
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Sulfur services
2,676
2,535
Terminalling and storage
9,651
4,568
Expenses:
Operating expenses
21,380
18,368
Selling, general and administrative
8,808
8,680
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
2022
2021
Net income
$
11,478
$
2,511
Changes in fair values of commodity cash flow hedges
(440
)
—
Comprehensive income
$
11,038
$
2,511
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 - January 1, 2021
38,851,174
$
(48,776
)
$
1,905
$
—
$
(46,871
)
Net income
—
2,461
50
—
2,511
Issuance of restricted units
42,168
—
—
—
—
Forfeiture of restricted units
(83,436
)
—
—
—
—
Cash distributions
—
(193
)
(4
)
—
(197
)
Unit-based compensation
—
240
—
—
240
Purchase of treasury units
(7,156
)
(17
)
—
—
(17
)
Balances - March 31, 2021
38,802,750
$
(46,285
)
$
1,951
$
—
$
(44,334
)
Balances - January 1, 2022
38,802,750
$
(50,741
)
$
1,888
$
816
$
(48,037
)
Net income
—
11,249
229
—
11,478
Issuance of restricted units
34,200
—
—
—
—
Cash distributions
—
(194
)
(4
)
—
(198
)
Unit-based compensation
—
34
—
—
34
Changes in fair values of commodity cash flow hedges
—
—
—
(1,256
)
(1,256
)
Balances - March 31, 2022
38,836,950
$
(39,652
)
$
2,113
$
(440
)
$
(37,979
)
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
2022
2021
Cash flows from operating activities:
Net income
$
11,478
$
2,511
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
14,486
14,434
Amortization of deferred debt issuance costs
783
755
Deferred income tax expense
921
75
(Gain) loss on sale of property, plant and equipment, net
(14
)
760
Derivative (income) loss
(816
)
1,436
Net cash paid for commodity derivatives
(615
)
(1,655
)
Non cash unit-based compensation
34
240
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables
136
(12,484
)
Inventories
7,842
15,070
Due from affiliates
(6,516
)
(7,406
)
Other current assets
2,434
633
Trade and other accounts payable
8,650
1,984
Product exchange payables
(721
)
(136
)
Due to affiliates
1,576
779
Income taxes payable
540
140
Other accrued liabilities
(11,002
)
(13,370
)
Change in other non-current assets and liabilities
(821
)
88
Net cash provided by operating activities
28,375
3,854
Cash flows from investing activities:
Payments for property, plant and equipment
(10,216
)
(2,514
)
Payments for plant turnaround costs
(1,435
)
(1,674
)
Proceeds from sale of property, plant and equipment
297
3
Net cash used in investing activities
(11,354
)
(4,185
)
Cash flows from financing activities:
Payments of long-term debt
(120,000
)
(87,790
)
Payments under finance lease obligations
(59
)
(2,431
)
Proceeds from long-term debt
103,500
87,000
Purchase of treasury units
—
(17
)
Payment of debt issuance costs
(4
)
(80
)
Cash distributions paid
(198
)
(197
)
Net cash used in financing activities
(16,761
)
(3,515
)
Net increase (decrease) in cash
260
(3,846
)
Cash at beginning of period
52
4,958
Cash at end of period
$
312
$
1,112
Non-cash additions to property, plant and equipment
$
1,514
$
2,855
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 March 31, 2022 and 2021
Three Months Ended
March 31,
Variance
Percent Change
2022
2021
(In thousands, except BBL per day)
Revenues:
Services
$
20,956
$
19,959
$
997
5
%
Products
33,427
19,875
13,552
68
%
Total revenues
54,383
39,834
14,549
37
%
Cost of products sold
27,197
14,941
12,256
82
%
Operating expenses
13,912
12,793
1,119
9
%
Selling, general and administrative expenses
1,711
1,499
212
14
%
Depreciation and amortization
7,606
7,105
501
7
%
3,957
3,496
461
13
%
Other operating loss, net
(43
)
(66
)
23
35
%
Operating income
$
3,914
$
3,430
$
484
14
%
Shore-based throughput volumes (guaranteed minimum) (gallons)
20,000
20,000
—
—
%
Smackover refinery throughput volumes (guaranteed minimum) (BBL per day)
6,500
6,500
—
—
%
Transportation Segment
Comparative Results of Operations for the Three Months Ended March 31, 2022 and 2021
Three Months Ended
March 31,
Variance
Percent Change
2022
2021
(In thousands)
Revenues
$
51,897
$
33,969
$
17,928
53
%
Operating expenses
39,202
29,504
9,698
33
%
Selling, general and administrative expenses
2,170
1,800
370
21
%
Depreciation and amortization
3,573
3,998
(425
)
(11
) %
6,952
(1,333
)
8,285
622
%
Other operating income, net
29
(4
)
33
825
%
Operating income
$
6,981
$
(1,337
)
$
8,318
622
%
Sulfur Services Segment
Comparative Results of Operations for the Three Months Ended March 31, 2022 and 2021
Three Months Ended
March 31,
Variance
Percent Change
2022
2021
(In thousands)
Revenues:
Services
$
3,084
$
2,950
$
134
5
%
Products
56,039
31,885
24,154
76
%
Total revenues
59,123
34,835
24,288
70
%
Cost of products sold
39,258
22,423
16,835
75
%
Operating expenses
3,028
2,009
1,019
51
%
Selling, general and administrative expenses
1,504
1,241
263
21
%
Depreciation and amortization
2,709
2,720
(11
)
—
%
12,624
6,442
6,182
96
%
Other operating income, net
28
—
28
Operating income
$
12,652
$
6,442
$
6,210
96
%
Sulfur (long tons)
114
73
41
56
%
Fertilizer (long tons)
84
95
(11
)
(12
) %
Total sulfur services volumes (long tons)
198
168
30
18
%
Natural Gas Liquids Segment
Comparative Results of Operations for the Three Months Ended March 31, 2022 and 2021
Three Months Ended
March 31,
Variance
Percent Change
2022
2021
(In thousands)
Products revenues
$
120,566
$
98,085
$
22,481
23
%
Cost of products sold
111,156
82,512
28,644
35
%
Operating expenses
1,066
995
71
7
%
Selling, general and administrative expenses
1,722
2,207
(485
)
(22
) %
Depreciation and amortization
598
611
(13
)
(2
) %
6,024
11,760
(5,736
)
(49
) %
Other operating loss, net
—
(690
)
690
100
%
Operating income
$
6,024
$
11,070
$
(5,046
)
(46
) %
NGL sales volumes (Bbls)
1,597
2,145
(548
)
(26
) %
Unallocated Selling, General and Administrative Expenses
Comparative Results of Operations for the Three and Three Months Ended March 31, 2022 and 2021
Three Months Ended
March 31,
Variance
Percent Change
2022
2021
(In thousands)
Indirect selling, general and administrative expenses
$
4,122
$
3,919
$
203
5
%
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 years ended March 31, 2022 and 2021, which represents EBITDA, Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow:
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
Three Months Ended March 31,
2022
2021
(in thousands)
Net income
$
11,478
$
2,511
Adjustments:
Interest expense
12,429
12,953
Income tax expense
1,541
222
Depreciation and amortization
14,486
14,434
EBITDA
39,934
30,120
Adjustments:
(Gain) loss on disposition of property, plant and equipment
(14
)
760
Unrealized mark-to-market on commodity derivatives
—
(219
)
Unit-based compensation
34
240
Adjusted EBITDA
39,954
30,901
Reconciliation of Net Cash provided by Operating Activities to Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow
Three Months Ended March 31,
2022
2021
(in thousands)
Net cash provided by operating activities
$
28,375
$
3,854
Interest expense 1
11,646
12,198
Current income tax expense
620
147
Commodity cash flow hedging gains reclassified to earnings
816
—
Net cash paid for closed commodity derivative positions included in AOCI
615
—
Changes in operating assets and liabilities which (provided) used cash:
Accounts and other receivables, inventories, and other current assets
(3,896
)
4,187
Trade, accounts and other payables, and other current liabilities
957
10,603
Other
821
(88
)
Adjusted EBITDA
39,954
30,901
Adjustments:
Interest expense
(12,429
)
(12,953
)
Income tax expense
(1,541
)
(222
)
Deferred income taxes
921
75
Amortization of deferred debt issuance costs
783
755
Payments for plant turnaround costs
(1,435
)
(1,674
)
Maintenance capital expenditures
(5,399
)
(4,071
)
Distributable Cash Flow
20,854
12,811
Principal payments under finance lease obligations
(59
)
(2,431
)
Expansion capital expenditures
(3,101
)
(830
)
Adjusted Free Cash Flow
$
17,694
$
9,550
1 Net of amortization of debt issuance costs and discount, which are included in interest expense but not included in net cash provided by operating activities.
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