Martin Midstream Partners Reports Second Quarter 2022 Financial Results, Increases Annual Guidance and Declares Quarterly Cash Distribution
Martin Midstream Partners L.P. (Nasdaq:MMLP) ("MMLP" or the "Partnership") today announced its financial results for the second 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 another outstanding quarter with elevated demand for our land transportation assets, and robust margins in our lubricants and fertilizer businesses. Overall, each of our four business segments performed above expectations beating the high range of guidance for the quarter by $13 million. We now expect the current refinery utilization levels to remain strong through year end which will bring continued solid demand for our diversified products and services. Based on this expectation, we are raising our 2022 adjusted EBITDA guidance range to $126 - $135 million.
“The current operating environment for our business segments has provided the opportunity for consistent leverage reduction as year over year we have reduced outstanding debt and improved financial results. As a result, on June 30, 2022, the Partnership’s adjusted leverage ratio was 3.46 times compared to 3.87 times at March 31, 2022. While that is an important milestone, our current guidance indicates that the Partnership will exit 2022 with approximately the same adjusted leverage ratio announced today, as higher commodity prices continue to increase our working capital needs specifically within the natural gas liquids segment. Our focus will remain on conservative capital management to meet the goal of a sustained leverage ratio below 3.75 times.”
SECOND QUARTER 2022 OPERATING RESULTS BY BUSINESS SEGMENT
TERMINALLING AND STORAGE (“T&S”)
T&S Operating Income for the three months ended June 30, 2022 and 2021 was $5.2 million and $3.7 million, respectively.
Adjusted segment EBITDA for T&S was $12.9 million and $10.6 million, for the three months ended June 30, 2022 and 2021, respectively, reflecting continued strength in our lubricant and specialty products divisions.
TRANSPORTATION
Transportation Operating Income for the three months ended June 30, 2022 and 2021 was $11.3 million and $0.7 million, respectively.
Adjusted segment EBITDA for Transportation was $14.6 million and $5.0 million for the three months ended June 30, 2022 and 2021, respectively, reflecting increased demand for land transportation services coupled with improving marine fleet utilization and higher day rates.
SULFUR SERVICES
Sulfur Services Operating Income for the three months ended June 30, 2022 and 2021 was $9.1 million and $6.3 million, respectively.
Adjusted segment EBITDA for Sulfur Services was $13.9 million and $8.9 million for the three months ended June 30, 2022 and 2021, respectively, reflecting sustained demand for fertilizer products.
NATURAL GAS LIQUIDS (“NGL”)
NGL Operating Income for the three months ended June 30, 2022 and 2021 was $0.3 million and $0.7 million, respectively.
Adjusted segment EBITDA for NGL was $1.3 million and $1.7 million for the three months ended June 30, 2022 and 2021, respectively, primarily reflecting a seasonal decrease in NGL sales volumes.
UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”)
USGA expenses included in operating income for the three months ended June 30, 2022 and 2021 were $4.4 million and $3.8 million, respectively.
USGA expenses included in adjusted EBITDA for the three months ended June 30, 2022 and 2021 were $4.3 million and $3.7 million, respectively, primarily reflecting an increase in employee related expenses.
CAPITALIZATION
At June 30, 2022, the Partnership had $494 million of total debt outstanding, including $149 million drawn on its $275 million revolving credit facility, $54 million of senior secured 1.5 lien notes due 2024 and $291 million of senior secured second lien notes due 2025. At June 30, 2022, the Partnership had liquidity of approximately $87 million from available capacity under its revolving credit facility. The Partnership’s adjusted leverage ratio, as calculated under the revolving credit facility, was 3.46 times and 3.87 times on June 30, 2022 and March 31, 2022, respectively. The Partnership was in compliance with all debt covenants as of June 30, 2022.
QUARTERLY CASH DISTRIBUTION
The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended June 30, 2022. The distribution is payable on August 12, 2022 to common unitholders of record as of the close of business on August 5, 2022. The ex-dividend date for the cash distribution is August 4, 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 June 30, 2022 of $6.6 million, or $0.17 per limited partner unit. The Partnership had a net loss for the three months ended June 30, 2021 of $6.6 million, a loss of $0.17 per limited partner unit. Adjusted EBITDA for the three months ended June 30, 2022 was $38.3 million compared to $22.5 million for the three months ended June 30, 2021. Net cash provided by (used in) operating activities for the three months ended June 30, 2022 was ($2.5) million, compared to $2.2 million for the three months ended June 30, 2021. Distributable cash flow for the three months ended June 30, 2022 was $22.3 million compared to $7.3 million for the three months ended June 30, 2021.
Revenues for the three months ended June 30, 2022 were $267.0 million compared to $184.3 million for the three months ended June 30, 2021.
The Partnership had net income for the six months ended June 30, 2022 of $18.1 million, or $0.46 per limited partner unit. The Partnership had a net loss for the six months ended June 30, 2021 of $4.1 million, a loss of $0.10 per limited partner unit. Adjusted EBITDA for the six months ended June 30, 2022 was $78.3 million compared to $53.4 million for the six months ended June 30, 2021. Net cash provided by operating activities for the six months ended June 30, 2022 was $28.5 million, compared to $6.1 million for the six months ended June 30, 2021. Distributable cash flow for the six months ended June 30, 2022 was $38.5 million compared to $15.6 million for the six months ended June 30, 2021.
Revenues for the six months ended June 30, 2022 were $546.2 million compared to $385.3 million for the six months ended June 30, 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 second quarter 2022 to the Partnership's adjusted EBITDA for the second quarter 2021.
2022 REVISED FINANCIAL GUIDANCE
The Partnership now expects to generate adjusted EBITDA between $126 million and $135 million for full-year 2022, compared to the previously revised adjusted EBITDA guidance of between $110 million and $120 million. This increased guidance reflects our expectation that current refinery utilization levels will remain consistent through year-end 2022 which will bring continued solid demand for our diversified products and services.
Distributable cash flow is now expected to be between $53 million and $62 million for full-year 2022, compared to the revised distributable cash flow guidance of between $37 million and $47 million. Adjusted free cash flow is now expected to be between $44 million and $53 million, compared to the revised adjusted free cash flow guidance of between $29 million and $39 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, July 21, 2022
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 Second Quarter 2022 Earnings Summary and Revised Guidance Presentation 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)
June 30, 2022
December 31, 2021
(Unaudited)
(Audited)
Assets
Cash
$
43
$
52
Accounts and other receivables, less allowance for doubtful accounts of $559 and $311, respectively
73,485
84,199
Inventories
117,845
62,120
Due from affiliates
16,558
14,409
Other current assets
29,554
12,908
Total current assets
237,485
173,688
Property, plant and equipment, at cost
898,379
898,770
Accumulated depreciation
(566,799
)
(553,300
)
Property, plant and equipment, net
331,580
345,470
Goodwill
16,823
16,823
Right-of-use assets
30,249
21,861
Deferred income taxes, net
17,517
19,821
Other assets, net
2,507
2,198
Total assets
$
636,161
$
579,861
Liabilities and Partners’ Capital (Deficit)
Current installments of long-term debt and finance lease obligations
$
169
$
280
Trade and other accounts payable
105,156
70,342
Product exchange payables
537
1,406
Due to affiliates
9,764
1,824
Income taxes payable
753
385
Other accrued liabilities
31,513
29,850
Total current liabilities
147,892
104,087
Long-term debt, net
489,325
498,871
Finance lease obligations
—
9
Operating lease liabilities
22,455
15,704
Other long-term obligations
7,343
9,227
Total liabilities
667,015
627,898
Commitments and contingencies
Partners’ capital (deficit)
(31,021
)
(48,853
)
Accumulated other comprehensive income (loss)
167
816
Total partners’ capital (deficit)
(30,854
)
(48,037
)
Total liabilities and partners' capital (deficit)
$
636,161
$
579,861
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per unit amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Revenues:
Terminalling and storage *
$
20,439
$
18,702
$
39,852
$
37,080
Transportation *
55,832
34,926
102,542
64,741
Sulfur services
3,084
2,949
6,168
5,899
Product sales: *
Natural gas liquids
97,580
67,232
218,143
165,317
Sulfur services
53,869
35,337
109,908
67,222
Terminalling and storage
36,192
25,147
69,584
45,008
187,641
127,716
397,635
277,547
Total revenues
266,996
184,293
546,197
385,267
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas liquids *
91,584
61,590
198,682
140,725
Sulfur services *
37,063
24,177
74,848
45,391
Terminalling and storage *
28,279
20,226
54,978
34,728
156,926
105,993
328,508
220,844
Expenses:
Operating expenses *
64,082
47,313
120,577
91,947
Selling, general and administrative *
9,944
8,960
21,147
19,569
Depreciation and amortization
14,800
14,483
29,286
28,917
Total costs and expenses
245,752
176,749
499,518
361,277
Other operating income (loss), net
246
89
260
(671
)
Operating income
21,490
7,633
46,939
23,319
Other income (expense):
Interest expense, net
(12,846
)
(13,309
)
(25,275
)
(26,262
)
Other, net
(1
)
(1
)
(2
)
(1
)
Total other expense
(12,847
)
(13,310
)
(25,277
)
(26,263
)
Net income before taxes
8,643
(5,677
)
21,662
(2,944
)
Income tax expense
(2,037
)
(935
)
(3,578
)
(1,157
)
Net income
6,606
(6,612
)
18,084
(4,101
)
Less general partner's interest in net income
(132
)
132
(362
)
82
Less income allocable to unvested restricted units
(21
)
20
(51
)
10
Limited partners' interest in net income
$
6,453
$
(6,460
)
$
17,671
$
(4,009
)
Net income per unit attributable to limited partners - basic
$
0.17
$
(0.17
)
$
0.46
$
(0.10
)
Net income per unit attributable to limited partners - diluted
$
0.17
$
(0.17
)
$
0.46
$
(0.10
)
Weighted average limited partner units - basic
38,729,118
38,687,874
38,725,701
38,690,228
Weighted average limited partner units - diluted
38,750,153
38,687,874
38,753,197
38,690,228
*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
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Revenues:*
Terminalling and storage
$
17,416
$
15,569
$
33,620
$
30,875
Transportation
7,463
4,889
13,751
8,899
Product Sales
95
71
416
185
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Sulfur services
2,592
2,403
5,268
4,938
Terminalling and storage
10,209
7,036
19,860
11,604
Expenses:
Operating expenses
23,446
19,590
44,826
37,958
Selling, general and administrative
7,498
7,285
16,306
15,965
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Dollars in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Net income
$
6,606
$
(6,612
)
$
18,084
$
(4,101
)
Changes in fair values of commodity cash flow hedges
167
—
167
—
Commodity cash flow hedging (gains) losses reclassified to earnings
440
—
(816
)
—
Comprehensive income
$
7,213
$
(6,612
)
$
17,435
$
(4,101
)
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
—
(4,019
)
(82
)
—
(4,101
)
Issuance of restricted units
42,168
—
—
—
—
Forfeiture of restricted units
(83,436
)
—
—
—
—
Cash distributions
—
(388
)
(8
)
—
(396
)
Unit-based compensation
—
288
—
—
288
Purchase of treasury units
(7,156
)
(17
)
—
—
(17
)
Balances - June 30, 2021
38,802,750
$
(52,912
)
$
1,815
$
—
$
(51,097
)
Balances - January 1, 2022
38,802,750
$
(50,741
)
$
1,888
$
816
$
(48,037
)
Net income
—
17,722
362
—
18,084
Issuance of restricted units
48,000
—
—
—
—
Cash distributions
—
(388
)
(8
)
—
(396
)
Unit-based compensation
—
79
—
—
79
Gain reclassified from AOCI into income on commodity cash flow hedges
—
—
—
(816
)
(816
)
Gain recognized in AOCI on commodity cash flow hedges
—
—
—
167
167
Excess purchase price over carrying value of acquired assets
—
65
—
—
65
Balances - June 30, 2022
38,850,750
$
(33,263
)
$
2,242
$
167
$
(30,854
)
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months Ended
June 30,
2022
2021
Cash flows from operating activities:
Net income (loss)
$
18,084
$
(4,101
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
29,286
28,917
Amortization of deferred debt issuance costs
1,568
1,521
Deferred income tax expense
2,304
758
(Gain) loss on sale of property, plant and equipment, net
(260
)
671
Derivative (income) loss
(734
)
884
Net cash paid for commodity derivatives
85
(679
)
Non cash unit-based compensation
79
288
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables
10,714
(2,303
)
Inventories
(55,725
)
(17,572
)
Due from affiliates
(2,149
)
(5,812
)
Other current assets
(17,741
)
1,435
Trade and other accounts payable
37,688
3,335
Product exchange payables
(869
)
327
Due to affiliates
7,940
1,504
Income taxes payable
368
(248
)
Other accrued liabilities
(2,332
)
(3,053
)
Change in other non-current assets and liabilities
145
213
Net cash provided by operating activities
28,451
6,085
Cash flows from investing activities:
Payments for property, plant and equipment
(14,634
)
(8,200
)
Payments for plant turnaround costs
(1,600
)
(1,694
)
Proceeds from sale of property, plant and equipment
689
133
Net cash used in investing activities
(15,545
)
(9,761
)
Cash flows from financing activities:
Payments of long-term debt
(217,589
)
(144,790
)
Payments under finance lease obligations
(119
)
(2,591
)
Proceeds from long-term debt
206,500
147,500
Purchase of treasury units
—
(17
)
Payment of debt issuance costs
(26
)
(307
)
Excess purchase price over carrying value of acquired assets
(1,285
)
—
Cash distributions paid
(396
)
(396
)
Net cash used in financing activities
(12,915
)
(601
)
Net increase (decrease) in cash
(9
)
(4,277
)
Cash at beginning of period
52
4,958
Cash at end of period
$
43
$
681
Non-cash additions to property, plant and equipment
$
1,705
$
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 June 30, 2022 and 2021
Three Months Ended
June 30,
Variance
Percent
Change
2022
2021
(In thousands, except BBL per day)
Revenues:
Services
$
22,190
$
20,358
$
1,832
9
%
Products
36,220
25,166
11,054
44
%
Total revenues
58,410
45,524
12,886
28
%
Cost of products sold
28,955
20,759
8,196
39
%
Operating expenses
14,925
12,664
2,261
18
%
Selling, general and administrative expenses
1,654
1,468
186
13
%
Depreciation and amortization
7,731
6,996
735
11
%
5,145
3,637
1,508
41
%
Other operating income, net
8
61
(53
)
(87
) %
Operating income
$
5,153
$
3,698
$
1,455
39
%
Shore-based throughput volumes (guaranteed minimum) (gallons)
20,000
20,000
—
—
%
Smackover refinery throughput volumes (guaranteed minimum BBL per day)
6,500
6,500
—
—
%
Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021
Six Months Ended
June 30,
Variance
Percent
Change
2022
2021
(In thousands, except BBL per day)
Revenues:
Services
$
43,146
$
40,317
$
2,829
7
%
Products
69,647
45,041
24,606
55
%
Total revenues
112,793
85,358
27,435
32
%
Cost of products sold
56,152
35,700
20,452
57
%
Operating expenses
28,837
25,457
3,380
13
%
Selling, general and administrative expenses
3,365
2,967
398
13
%
Depreciation and amortization
15,337
14,101
1,236
9
%
9,102
7,133
1,969
28
%
Other operating loss, net
(35
)
(5
)
(30
)
(600
) %
Operating income
$
9,067
$
7,128
$
1,939
27
%
Shore-based throughput volumes (guaranteed minimum) (gallons)
40,000
40,000
—
—
%
Smackover refinery throughput volumes (guaranteed minimum) (BBL per day)
6,500
6,500
—
—
%
Transportation Segment
Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021
Three Months Ended
June 30,
Variance
Percent
Change
2022
2021
(In thousands)
Revenues
$
60,902
$
38,349
$
22,553
59
%
Operating expenses
44,528
31,485
13,043
41
%
Selling, general and administrative expenses
1,788
1,858
(70
)
(4
) %
Depreciation and amortization
3,590
4,331
(741
)
(17
) %
10,996
675
10,321
1,529
%
Other operating income, net
254
21
233
1,110
%
Operating income
$
11,250
$
696
$
10,554
1,516
%
Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021
Six Months Ended
June 30,
Variance
Percent
Change
2022
2021
(In thousands)
Revenues
$
112,799
$
72,318
$
40,481
56
%
Operating expenses
83,730
60,989
22,741
37
%
Selling, general and administrative expenses
3,958
3,658
300
8
%
Depreciation and amortization
7,163
8,329
(1,166
)
(14
) %
$
17,948
$
(658
)
$
18,606
2,828
%
Other operating income (loss), net
283
17
266
1,565
%
Operating income
$
18,231
$
(641
)
$
18,872
2,944
%
Sulfur Services Segment
Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021
Three Months Ended
June 30,
Variance
Percent
Change
2022
2021
(In thousands)
Revenues:
Services
$
3,084
$
2,949
$
135
5
%
Products
53,869
35,337
18,532
52
%
Total revenues
56,953
38,286
18,667
49
%
Cost of products sold
39,181
25,397
13,784
54
%
Operating expenses
4,227
2,804
1,423
51
%
Selling, general and administrative expenses
1,537
1,215
322
27
%
Depreciation and amortization
2,882
2,568
314
12
%
9,126
6,302
2,824
45
%
Other operating income, net
8
6
2
33
%
Operating income
$
9,134
$
6,308
$
2,826
45
%
Sulfur (long tons)
118
146
(28
)
(19
) %
Fertilizer (long tons)
62
84
(22
)
(26
) %
Total sulfur services volumes (long tons)
180
230
(50
)
(22
) %
Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021
Six Months Ended
June 30,
Variance
Percent
Change
2022
2021
(In thousands)
Revenues:
Services
$
6,168
$
5,899
$
269
5
%
Products
109,908
67,222
42,686
64
%
Total revenues
116,076
73,121
42,955
59
%
Cost of products sold
78,439
47,820
30,619
64
%
Operating expenses
7,255
4,813
2,442
51
%
Selling, general and administrative expenses
3,041
2,456
585
24
%
Depreciation and amortization
5,591
5,288
303
6
%
21,750
12,744
9,006
71
%
Other operating income, net
36
6
30
500
%
Operating income
$
21,786
$
12,750
$
9,036
71
%
Sulfur (long tons)
232
219
13
6
%
Fertilizer (long tons)
146
179
(33
)
(18
) %
Total sulfur services volumes (long tons)
378
398
(20
)
(5
) %
Natural Gas Liquids Segment
Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021
Three Months Ended
June 30,
Variance
Percent
Change
2022
2021
(In thousands)
Products revenues
$
97,580
$
67,232
$
30,348
45
%
Cost of products sold
94,898
64,176
30,722
48
%
Operating expenses
1,121
1,061
60
6
%
Selling, general and administrative expenses
597
697
(100
)
(14
) %
Depreciation and amortization
597
588
9
2
%
367
710
(343
)
(48
) %
Other operating income (loss), net
(24
)
1
(25
)
(2,500
) %
Operating income
$
343
$
711
$
(368
)
(52
) %
NGL sales volumes (Bbls)
1,153
1,259
(106
)
(8
) %
Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021
Six Months Ended
June 30,
Variance
Percent
Change
2022
2021
(In thousands)
Products revenues
$
218,146
$
165,317
$
52,829
32
%
Cost of products sold
206,054
146,688
59,366
40
%
Operating expenses
2,187
2,056
131
6
%
Selling, general and administrative expenses
2,319
2,904
(585
)
(20
) %
Depreciation and amortization
1,195
1,199
(4
)
—
%
6,391
12,470
(6,079
)
(49
) %
Other operating loss, net
(24
)
(689
)
665
97
%
Operating income
$
6,367
$
11,781
$
(5,414
)
(46
) %
NGL sales volumes (Bbls)
2,750
3,404
(654
)
(19
) %
Unallocated Selling, General and Administrative Expenses
Comparative Results of Operations for the Three and Six Months Ended June 30, 2022 and 2021
Three Months Ended
June 30,
Variance
Percent
Change
Six Months Ended
June 30,
Variance
Percent
Change
2022
2021
2022
2021
(In thousands)
(In thousands)
Indirect selling, general and administrative expenses
$
4,390
$
3,780
$
610
16
%
$
8,512
$
7,699
$
813
11
%
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 six months ended June 30, 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
June 30,
Six Months Ended
June 30,
2022
2021
2022
2021
(in thousands)
(in thousands)
Net income
6,606
(6,612
)
18,084
(4,101
)
Adjustments:
Interest expense
12,846
13,309
25,275
26,262
Income tax expense
2,037
935
3,578
1,157
Depreciation and amortization
14,800
14,483
29,286
28,917
EBITDA
36,289
22,115
76,223
52,235
Adjustments:
(Gain) loss on disposition of property, plant and equipment
(246
)
(89
)
(260
)
671
Unrealized mark-to-market on commodity derivatives
—
424
—
205
Lower of cost or market and other non-cash adjustments
2,242
—
2,242
—
Unit-based compensation
45
48
79
288
Adjusted EBITDA
38,330
22,498
78,284
53,399
Reconciliation of Net Cash provided by Operating Activities to Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
(in thousands)
(in thousands)
Net cash provided by operating activities
$
(2,494
)
$
2,231
$
28,451
$
6,085
Interest expense 1
12,061
12,543
23,707
24,741
Current income tax expense
654
252
1,274
399
Lower of cost or market and other non-cash adjustments
2,242
—
2,242
—
Commodity cash flow hedging gains reclassified to earnings
(82
)
—
734
—
Net cash paid for closed commodity derivative positions included in AOCI
(700
)
—
(85
)
—
Changes in operating assets and liabilities which (provided) used cash:
Accounts and other receivables, inventories, and other current assets
68,797
20,065
64,901
24,252
Trade, accounts and other payables, and other current liabilities
(41,182
)
(12,468
)
(42,795
)
(1,865
)
Other
(966
)
(125
)
(145
)
(213
)
Adjusted EBITDA
38,330
22,498
78,284
53,399
Adjustments:
Interest expense
(12,846
)
(13,309
)
(25,275
)
(26,262
)
Income tax expense
(2,037
)
(935
)
(3,578
)
(1,157
)
Deferred income taxes
1,383
683
2,304
758
Amortization of deferred debt issuance costs
785
766
1,568
1,521
Payments for plant turnaround costs
(165
)
(20
)
(1,600
)
(1,694
)
Maintenance capital expenditures
(3,155
)
(2,370
)
(8,554
)
(6,441
)
Distributable Cash Flow
22,295
7,313
43,149
20,124
Principal payments under finance lease obligations
(60
)
(160
)
(119
)
(2,591
)
Expansion capital expenditures
(1,455
)
(1,147
)
(4,556
)
(1,977
)
Adjusted Free Cash Flow
$
20,780
$
6,006
$
38,474
$
15,556
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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