Martin Midstream Partners Reports Second Quarter 2023 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 second quarter of 2023.
Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, stated, “The Partnership continued to benefit from our diversified business model in the second quarter as strength in our Transportation segment offset challenges in our Sulfur and Specialty Products segments which both have exposure to a currently difficult agricultural market. As of May 1st, 2023, we sold all remaining butane inventory completing our exit from the butane optimization business. This allowed us to further reduce debt by $39.5 million from $500.0 million at March 31, 2023 to $460.5 million at June 30, 2023. While we will utilize our NGL underground storage facility under a fee-based butane logistics model, going forward we have removed the volatility in our Specialty Products segment earnings related to the butane optimization business, which had negative adjusted EBITDA of $15.1 million for the six months ended June 30, 2023.
“Considering our ongoing operations, which does not include losses associated with the butane optimization business, the second quarter adjusted EBITDA of $31.8 million, was in line with our forecast and reaffirms our guidance of $115.4 million in adjusted EBITDA for the year 2023.”
SECOND QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT
TERMINALLING AND STORAGE (“T”)
T operating income (loss) for the three months ended June 30, 2023 and 2022 was $4.4 million and ($0.1) million, respectively.
Adjusted segment EBITDA for T was $9.6 million and $7.1 million for the three months ended June 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 June 30, 2023 and 2022 was $9.0 million and $11.2 million, respectively.
Adjusted segment EBITDA for Transportation was $12.1 million and $14.6 million for the three months ended June 30, 2023 and 2022, respectively, reflecting higher marine day rates, offset by increased expenses in our land transportation division.
SULFUR SERVICES
Sulfur Services operating income for the three months ended June 30, 2023 and 2022 was $5.3 million and $9.1 million, respectively.
Adjusted segment EBITDA for Sulfur Services was $8.0 million and $13.9 million for the three months ended June 30, 2023 and 2022, respectively, reflecting reduced demand in our fertilizer business in part due to a delay in the planting season related to weather conditions, leading to higher inventories and declining prices.
SPECIALTY PRODUCTS
Specialty Products operating income for the three months ended June 30, 2023 and 2022 was $2.5 million and $5.6 million, respectively. Included in the Specialty Products results is an operating loss of $2.6 million and $0.9 million, for the three months ended June 30, 2023 and 2022, respectively, attributable to the butane optimization business.
Adjusted segment EBITDA for Specialty Products was $(0.4) million and $7.1 million for the three months ended June 30, 2023 and 2022, respectively, primarily reflecting decreased NGL margins combined with lower demand in our lubricants packaging business. Included in the Specialty Products results is negative adjusted EBITDA of ($6.3) million and ($0.6) million for the three months ended June 30, 2023 and 2022, respectively, 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 $5.9 million and $7.7 million for the three months ended June 30, 2023 and 2022, respectively.
UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”)
USGA expenses included in operating income for the three months ended June 30, 2023 and 2022 were $3.9 million and $4.4 million, respectively.
USGA expenses included in adjusted EBITDA for the three months ended June 30, 2023 and 2022 were $3.9 million and $4.3 million, respectively.
CAPITALIZATION
At June 30, 2023, the Partnership had $460.5 million of total debt outstanding, including $60.5 million drawn on its $175 million revolving credit facility maturing in 2027 and $400 million of senior secured second lien notes due 2028. At June 30, 2023, the Partnership had liquidity of approximately $56.3 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 4.14 times at June 30, 2023, compared to 4.25 times at March 31, 2023, a reduction of 0.11 times. The Partnership was in compliance with all debt covenants as of June 30, 2023.
QUARTERLY CASH DISTRIBUTION
The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended June 30, 2023. The distribution is payable on August 14, 2023 to common unitholders of record as of the close of business on August 7, 2023. The ex-dividend date for the cash distribution is August 4, 2023.
QUALIFIED NOTICE TO NOMINEES
Martin Midstream Partners L.P.
Unit Class:
Common
CUSIP #:
573331105
RE:
Qualified Notice Pursuant to U.S. Treasury Regulation §1.1446-4
Record Date:
August 7, 2023
Payable Date:
August 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 net income for the three months ended June 30, 2023 of $1.1 million, or $0.03 per limited partner unit. The Partnership had net income for the three months ended June 30, 2022 of $6.6 million, or $0.17 per limited partner unit. Adjusted EBITDA for the three months ended June 30, 2023 was $25.5 million compared to $38.3 million for the three months ended June 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended June 30, 2023 was $31.8 million compared to $38.9 million for the three months ended June 30, 2022. Net cash provided by (used in) operating activities for the three months ended June 30, 2023 was $49.5 million, compared to ($2.5) million for the three months ended June 30, 2022. Distributable cash flow for the three months ended June 30, 2023 was $9.7 million compared to $22.9 million for the three months ended June 30, 2022.
The Partnership had a net loss for the six months ended June 30, 2023 of $4.0 million, a loss of $0.10 per limited partner unit. The Partnership had net income for the six months ended June 30, 2022 of $18.1 million, or $0.46 per limited partner unit. Adjusted EBITDA for the six months ended June 30, 2023 was $47.3 million compared to $78.3 million for the six months ended June 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the six months ended June 30, 2023 was $62.4 million compared to $73.2 million for the six months ended June 30, 2022. Net cash provided by operating activities for the six months ended June 30, 2023 was $98.8 million compared to $28.5 million for the six months ended June 30, 2022. Distributable cash flow for the six months ended June 30, 2023 was $19.2 million compared to $38.0 million for the six months ended June 30, 2022.
Revenues for the three months ended June 30, 2023 were $195.6 million compared to $267.0 million for the three months ended June 30, 2022. Revenues for the six months ended June 30, 2023 were $440.2 million compared to $546.2 million for the six months ended June 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 second quarter 2023 to the Partnership's adjusted EBITDA guidance for the second quarter 2023.
Investors' Conference Call
Date: Thursday, July 20, 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 Second 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 Twitter.
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)
June 30, 2023
December 31,
2022
(Unaudited)
(Audited)
Assets
Cash
$
57
$
45
Accounts and other receivables, less allowance for doubtful accounts of $496 and $496, respectively
57,022
79,641
Inventories
50,865
109,798
Due from affiliates
2,356
8,010
Other current assets
6,926
13,633
Total current assets
117,226
211,127
Property, plant and equipment, at cost
902,605
903,535
Accumulated depreciation
(593,324
)
(584,245
)
Property, plant and equipment, net
309,281
319,290
16,671
16,671
Right-of-use assets
45,221
34,963
Deferred income taxes, net
12,519
14,386
Other assets, net
1,899
2,414
Total assets
$
502,817
$
598,851
Liabilities and Partners’ Capital (Deficit)
Current installments of long-term debt and finance lease obligations
$
—
$
9
Trade and other accounts payable
48,469
68,198
Product exchange payables
310
32
Due to affiliates
2,306
8,947
Income taxes payable
450
665
Other accrued liabilities
37,249
33,074
Total current liabilities
88,784
110,925
Long-term debt, net
436,481
512,871
Operating lease liabilities
33,827
26,268
Other long-term obligations
7,482
8,232
Total liabilities
566,574
658,296
Commitments and contingencies
Partners’ capital (deficit)
(63,757
)
(59,445
)
Total partners’ capital (deficit)
(63,757
)
(59,445
)
Total liabilities and partners' capital (deficit)
$
502,817
$
598,851
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,
2023
2022
2023
2022
Revenues:
Terminalling and storage *
$
21,684
$
20,423
$
42,542
$
39,820
Transportation *
54,750
55,832
110,473
102,542
Sulfur services
3,357
3,084
6,715
6,168
Product sales: *
Specialty products
78,872
133,788
211,141
287,759
Sulfur services
36,973
53,869
69,294
109,908
115,845
187,657
280,435
397,667
Total revenues
195,636
266,996
440,165
546,197
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Specialty products *
71,570
119,859
189,565
253,651
Sulfur services *
25,654
37,063
47,471
74,848
Terminalling and storage *
25
4
31
9
97,249
156,926
237,067
328,508
Expenses:
Operating expenses *
60,737
64,082
123,482
120,577
Selling, general and administrative *
8,447
9,944
19,619
21,147
Depreciation and amortization
12,547
14,800
25,448
29,286
Total costs and expenses
178,980
245,752
405,616
499,518
Other operating income (loss), net
673
246
285
260
Operating income (loss)
17,329
21,490
34,834
46,939
Other income (expense):
Interest expense, net
(15,263
)
(12,846
)
(30,920
)
(25,275
)
Loss on extinguishment of debt
—
—
(5,121
)
—
Other, net
11
(1
)
33
(2
)
Total other expense
(15,252
)
(12,847
)
(36,008
)
(25,277
)
Net income (loss) before taxes
2,077
8,643
(1,174
)
21,662
Income tax expense
(996
)
(2,037
)
(2,831
)
(3,578
)
Net income (loss)
1,081
6,606
(4,005
)
18,084
Less general partner's interest in net (income) loss
(22
)
(132
)
80
(362
)
Less (income) loss allocable to unvested restricted units
(4
)
(21
)
12
(51
)
Limited partners' interest in net income (loss)
$
1,055
$
6,453
$
(3,913
)
$
17,671
Net income (loss) per unit attributable to limited partners - basic
$
0.03
$
0.17
$
(0.10
)
$
0.46
Net income (loss) per unit attributable to limited partners - diluted
$
0.03
$
0.17
$
(0.10
)
$
0.46
Weighted average limited partner units - basic
38,772,266
38,729,118
38,771,037
38,725,701
Weighted average limited partner units - diluted
38,777,600
38,750,153
38,771,037
38,753,197
*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,
2023
2022
2023
2022
Revenues:*
Terminalling and storage
$
18,077
$
17,416
$
35,579
$
33,620
Transportation
7,277
7,463
12,788
13,751
Product Sales
7,497
96
8,422
423
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Specialty products
5,829
10,205
15,339
19,851
Sulfur services
2,644
2,592
5,352
5,268
Terminalling and storage
25
4
31
9
Expenses:
Operating expenses
25,058
23,447
48,885
44,826
Selling, general and administrative
6,556
7,498
15,072
16,306
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,
2023
2022
2023
2022
Net income (loss)
$
1,081
$
6,606
$
(4,005
)
$
18,084
Changes in fair values of commodity cash flow hedges
—
167
—
167
Commodity cash flow hedging (gains) losses reclassified to earnings
—
440
—
(816
)
Comprehensive income (loss)
$
1,081
$
7,213
$
(4,005
)
$
17,435
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 - March 31, 2023
38,914,806
$
(66,236
)
$
1,559
$
—
$
(64,677
)
Net income
—
1,059
22
—
1,081
Cash distributions
—
(195
)
(4
)
—
(199
)
Unit-based compensation
—
38
—
—
38
Balances - June 30, 2023
38,914,806
(65,334
)
1,577
—
$
(63,757
)
Balances - December 31, 2022
38,850,750
$
(61,110
)
$
1,665
$
—
$
(59,445
)
Net loss
—
(3,925
)
(80
)
—
(4,005
)
Issuance of restricted units
64,056
—
—
—
—
Cash distributions
—
(389
)
(8
)
—
(397
)
Unit-based compensation
—
90
—
—
90
Balances - June 30, 2023
38,914,806
$
(65,334
)
$
1,577
$
—
$
(63,757
)
Partners’ Capital (Deficit)
Common Limited
General
Partner
Amount
Accumulated
Other
Comprehensive
Income (Loss)
Units
Amount
Total
Balances - March 31, 2022
38,836,950
$
(39,652
)
$
2,113
$
(440
)
$
(37,979
)
Net income
—
6,473
133
—
6,606
Issuance of restricted units
13,800
—
—
—
—
Cash distributions
—
(194
)
(4
)
—
(198
)
Unit-based compensation
—
45
—
—
45
Excess purchase price over carrying value of acquired assets
—
65
—
—
65
Loss reclassified from AOCI into income on commodity cash flow hedges
—
—
—
440
440
Gain recognized in AOCI on commodity cash flow hedges
—
—
—
167
167
Balances - June 30, 2022
38,850,750
$
(33,263
)
$
2,242
$
167
$
(30,854
)
Balances - December 31, 2021
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
Excess purchase price over carrying value of acquired assets
—
65
—
—
65
Gain reclassified from AOCI into income on commodity cash flow hedges
—
—
—
(816
)
(816
)
Gain recognized in AOCI on commodity cash flow hedges
—
—
—
167
167
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,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
(4,005
)
$
18,084
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
25,448
29,286
Amortization of deferred debt issuance costs
2,435
1,568
Amortization of debt discount
1,000
—
Deferred income tax expense
1,867
2,304
Gain on sale of property, plant and equipment, net
(285
)
(260
)
Loss on extinguishment of debt
5,121
—
—
(734
)
Net cash paid for commodity derivatives
—
85
Non cash unit-based compensation
90
79
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables
22,619
10,714
Inventories
58,933
(55,725
)
Due from affiliates
5,654
(2,149
)
Other current assets
5,296
(17,741
)
Trade and other accounts payable
(19,459
)
37,688
Product exchange payables
278
(869
)
Due to affiliates
(6,641
)
7,940
Income taxes payable
(215
)
368
Other accrued liabilities
1,907
(2,332
)
Change in other non-current assets and liabilities
(1,269
)
145
Net cash provided by operating activities
98,774
28,451
Cash flows from investing activities:
Payments for property, plant and equipment
(17,024
)
(14,634
)
Payments for plant turnaround costs
(661
)
(1,600
)
Proceeds from sale of property, plant and equipment
4,275
689
Net cash used in investing activities
(13,410
)
(15,545
)
Cash flows from financing activities:
Payments of long-term debt
(519,197
)
(217,589
)
Payments under finance lease obligations
(9
)
(119
)
Proceeds from long-term debt
448,489
206,500
Payment of debt issuance costs
(14,238
)
(26
)
Excess purchase price over carrying value of acquired assets
—
(1,285
)
Cash distributions paid
(397
)
(396
)
Net cash used in financing activities
(85,352
)
(12,915
)
Net increase (decrease) in cash
12
(9
)
Cash at beginning of period
45
52
Cash at end of period
$
57
$
43
Non-cash additions to property, plant and equipment
$
1,679
$
1,705
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, 2023 and 2022
Three Months Ended
June 30,
Percent
Change
2023
2022
(In thousands, except BBL per day)
Revenues
$
23,906
$
23,622
$
284
1
%
Cost of products sold
25
4
21
525
%
Operating expenses
13,932
16,014
(2,082
)
(13
)%
Selling, general and administrative expenses
333
539
(206
)
(38
)%
Depreciation and amortization
5,195
7,172
(1,977
)
(28
)%
4,421
(107
)
4,528
4,232
%
Other operating income, net
25
8
17
213
%
Operating income (loss)
$
4,446
$
(99
)
$
4,545
4,591
%
Shore-based throughput volumes (gallons)
42,434
14,100
28,334
201
%
Smackover refinery throughput volumes (guaranteed minimum BBL per day)
6,500
6,500
—
—
%
Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022
Six Months Ended
June 30,
Percent
Change
2023
2022
(In thousands, except BBL per day)
Revenues
$
47,825
$
45,993
$
1,832
4
%
Cost of products sold
31
9
22
244
%
Operating expenses
28,240
30,954
(2,714
)
(9
)%
Selling, general and administrative expenses
882
1,034
(152
)
(15
)%
Depreciation and amortization
10,794
14,172
(3,378
)
(24
)%
7,878
(176
)
8,054
4,576
%
Other operating loss, net
(324
)
(35
)
(289
)
(826
)%
Operating income (loss)
$
7,554
$
(211
)
$
7,765
3,680
%
Shore-based throughput volumes (gallons)
85,783
27,543
58,240
211
%
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, 2023 and 2022
Three Months Ended
June 30,
Percent
Change
2023
2022
(In thousands)
Revenues
$
58,395
$
60,902
$
(2,507
)
(4
)%
Operating expenses
44,285
44,528
(243
)
(1
)%
Selling, general and administrative expenses
1,981
1,789
192
11
%
Depreciation and amortization
3,760
3,590
170
5
%
8,369
10,995
(2,626
)
(24
)%
Other operating income, net
647
254
393
155
%
Operating income
$
9,016
$
11,249
$
(2,233
)
(20
)%
Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022
Six Months Ended
June 30,
Percent
Change
2023
2022
(In thousands)
Revenues
$
120,334
$
112,799
$
7,535
7
%
Operating expenses
90,475
83,730
6,745
8
%
Selling, general and administrative expenses
4,530
3,958
572
14
%
Depreciation and amortization
7,522
7,163
359
5
%
$
17,807
$
17,948
$
(141
)
(1
)%
Other operating income, net
651
283
368
130
%
Operating income
$
18,458
$
18,231
$
227
1
%
Sulfur Services Segment
Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022
Three Months Ended
June 30,
Percent
Change
2023
2022
(In thousands)
Revenues:
Services
$
3,357
$
3,084
$
273
9
%
Products
36,973
53,869
(16,896
)
(31
)%
Total revenues
40,330
56,953
(16,623
)
(29
)%
Cost of products sold
28,141
39,181
(11,040
)
(28
)%
Operating expenses
3,186
4,227
(1,041
)
(25
)%
Selling, general and administrative expenses
962
1,537
(575
)
(37
)%
Depreciation and amortization
2,756
2,882
(126
)
(4
)%
5,285
9,126
(3,841
)
(42
)%
Other operating income, net
1
8
(7
)
(88
)%
Operating income
$
5,286
$
9,134
$
(3,848
)
(42
)%
Sulfur (long tons)
123
118
5
4
%
Fertilizer (long tons)
73
62
11
18
%
Total sulfur services volumes (long tons)
196
180
16
9
%
Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022
Six Months Ended
June 30,
Percent
Change
2023
2022
(In thousands)
Revenues:
Services
$
6,715
$
6,168
$
547
9
%
Products
69,294
109,908
(40,614
)
(37
)%
Total revenues
76,009
116,076
(40,067
)
(35
)%
Cost of products sold
52,090
78,439
(26,349
)
(34
)%
Operating expenses
6,085
7,255
(1,170
)
(16
)%
Selling, general and administrative expenses
2,579
3,041
(462
)
(15
)%
Depreciation and amortization
5,433
5,591
(158
)
(3
)%
9,822
21,750
(11,928
)
(55
)%
Other operating income, net
17
36
(19
)
(53
)%
Operating income
$
9,839
$
21,786
$
(11,947
)
(55
)%
Sulfur (long tons)
197
232
(35
)
(15
)%
Fertilizer (long tons)
134
146
(12
)
(8
)%
Total sulfur services volumes (long tons)
331
378
(47
)
(12
)%
Specialty Products Segment
Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022
Three Months Ended
June 30,
Percent
Change
2023
2022
(In thousands)
Products revenues
$
78,898
$
133,818
$
(54,920
)
(41
)%
Cost of products sold
74,270
125,296
(51,026
)
(41
)%
Operating expenses
18
34
(16
)
(47
)%
Selling, general and administrative expenses
1,299
1,712
(413
)
(24
)%
Depreciation and amortization
836
1,156
(320
)
(28
)%
2,475
5,620
(3,145
)
(56
)%
Other operating loss, net
—
(24
)
24
100
%
Operating income
$
2,475
$
5,596
$
(3,121
)
(56
)%
NGL sales volumes (Bbls)
827
1,153
(326
)
(28
)%
Other specialty products volumes (Bbls)
90
103
(13
)
(13
)%
Total specialty products volumes (Bbls)
917
1,256
(339
)
(27
)%
Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022
Six Months Ended
June 30,
Percent
Change
2023
2022
(In thousands)
Products revenues
$
211,175
$
287,827
$
(76,652
)
(27
)%
Cost of products sold
198,721
265,076
(66,355
)
(25
)%
Operating expenses
32
72
(40
)
(56
)%
Selling, general and administrative expenses
3,589
4,650
(1,061
)
(23
)%
Depreciation and amortization
1,699
2,360
(661
)
(28
)%
7,134
15,669
(8,535
)
(54
)%
Other operating loss, net
(59
)
(24
)
(35
)
(146
)%
Operating income
$
7,075
$
15,645
$
(8,570
)
(55
)%
NGL sales volumes (Bbls)
2,518
2,750
(232
)
(8
)%
Other specialty products volumes (Bbls)
174
201
(27
)
(13
)%
Total specialty products volumes (Bbls)
2,692
2,951
(259
)
(9
)%
Unallocated Selling, General and Administrative Expenses
Comparative Results of Operations for the Three and Six Months Ended June 30, 2023 and 2022
Three Months Ended
June 30,
Percent
Change
Six Months Ended
June 30,
Percent
Change
2023
2022
2023
2022
(In thousands)
(In thousands)
Indirect selling, general and administrative expenses
$
3,894
$
4,390
$
(496
)
(11
)%
$
8,092
$
8,512
$
(420
)
(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 three and six months ended June 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 Income (Loss) to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business
Three Months Ended June 30,
Six Months Ended June 30,
2023
2022
2023
2022
(in thousands)
(in thousands)
Net income (loss)
$
1,081
$
6,606
$
(4,005
)
$
18,084
Adjustments:
Interest expense
15,263
12,846
30,920
25,275
Income tax expense
996
2,037
2,831
3,578
Depreciation and amortization
12,547
14,800
25,448
29,286
EBITDA
29,887
36,289
55,194
76,223
Adjustments:
Gain on disposition of property, plant and equipment
(673
)
(246
)
(285
)
(260
)
Loss on extinguishment of debt
—
—
5,121
—
Lower of cost or net realizable value and other non-cash adjustments
(3,717
)
2,242
(12,850
)
2,242
Unit-based compensation
38
45
90
79
Adjusted EBITDA
$
25,535
$
38,330
$
47,270
$
78,284
Adjustments:
Less: net (income) loss associated with butane optimization business
2,564
942
2,255
(4,752
)
Plus: lower of cost or net realizable value and other non-cash adjustments
3,717
$
(369
)
12,850
(369
)
Adjusted EBITDA after giving effect to the exit of the butane optimization business
$
31,816
$
38,903
$
62,375
$
73,163
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 June 30,
Six Months Ended June 30,
2023
2022
2023
2022
(in thousands)
(in thousands)
Net cash provided by (used in) operating activities
$
49,510
$
(2,494
)
$
98,774
$
28,451
Interest expense 1
13,903
12,061
27,485
23,707
Current income tax expense
306
654
964
1,274
Lower of cost or market and other non-cash adjustments
(3,717
)
2,242
(12,850
)
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
(43,135
)
68,797
(91,517
)
64,901
Trade, accounts and other payables, and other current liabilities
7,171
(41,182
)
23,145
(42,795
)
Other
1,497
(966
)
1,269
(145
)
Adjusted EBITDA
25,535
38,330
47,270
78,284
Adjustments:
Less: net (income) loss associated with butane optimization business
2,564
942
2,255
(4,752
)
Plus: lower of cost or net realizable value and other non-cash adjustments
3,717
(369
)
12,850
(369
)
Adjusted EBITDA after giving effect to the exit of the butane optimization business
31,816
38,903
62,375
73,163
Adjustments:
Interest expense
(15,263
)
(12,846
)
(30,920
)
(25,275
)
Income tax expense
(996
)
(2,037
)
(2,831
)
(3,578
)
Deferred income taxes
690
1,383
1,867
2,304
Amortization of debt discount
600
—
1,000
—
Amortization of deferred debt issuance costs
760
785
2,435
1,568
Payments for plant turnaround costs
(432
)
(165
)
(661
)
(1,600
)
Maintenance capital expenditures
(7,438
)
(3,155
)
(14,072
)
(8,554
)
Distributable cash flow
9,737
22,868
19,193
38,028
Principal payments under finance lease obligations
(3
)
(60
)
(9
)
(119
)
Expansion capital expenditures
(1,925
)
(1,455
)
(2,682
)
(4,556
)
Adjusted free cash flow
$
7,809
$
21,353
$
16,502
$
33,353
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.
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