• Net Income of $13.6 million
  • Quarterly Distribution Coverage Ratio of 1.68 times
  • Balance Sheet Improvement & De-levering.  Leverage at 4.42x as of March 31, 2017

KILGORE, Texas, April 26, 2017 (GLOBE NEWSWIRE) — Martin Midstream Partners L.P. (Nasdaq:MMLP) (the “Partnership”) announced today its financial results for the quarter ended March 31, 2017.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “We continue to execute on our stated path of improved distribution coverage and balance sheet leverage; and we delivered strong first quarter 2017 results, including net income of $13.6 million.  We followed up our highest distribution coverage quarter ever at the end of 2016 with another strong cash flow and distribution coverage quarter.  Based on actual distributions paid during the quarter, we generated a 1.68 times coverage ratio.

“I’m pleased with our performance as Adjusted EBITDA for the quarter ended March 31, 2017 was $46.8 million, approximately 5% ahead of our guidance level as shown on our first quarter earnings slide.  Looking across our business segments, Sulfur Services was our strongest performer compared to guidance, beating our estimate by approximately 30%.  Fertilizer exceeded expectations on both volume and margin benefiting from favorable market and weather conditions.  Also, Marine Transportation outperformed versus plan due to improved efficiency and reduced operating costs.  Our Natural Gas Services segment performed below expectation as a result of warmer weather adversely impacting our wholesale propane business.  Also, we experienced reduced distributions from our West Texas LPG pipeline joint-venture as a result of lower system throughput in the quarter and the continued rollback of the posted tariff rates by the Railroad Commission of Texas during the ongoing rate proceeding.

“Looking at our balance sheet, I’m pleased with the continued trend toward lower leverage.  For the first quarter our bank compliant total leverage ratio which includes certain pro forma adjustments and the positive impact of debt reduction from the follow-on equity offering completed in February, was 4.42 times.  This is the Partnership’s lowest leverage since the second quarter of 2013 and represents an improvement of approximately 0.50 times from our year end 2016 level.  This debt reduction coincides with cash flow generation and reduced working capital levels primarily concentrated in our Natural Gas Services segment.

Finally, during the quarter we successfully executed the drop down acquisition of the Hondo, Texas asphalt terminal currently under construction from MRMC.  Upon completion, which is expected mid-year, the total investment will be $36.0 million and we expect to generate approximately $5.0 million of cash flow on an annual basis.  We funded the entire acquisition with proceeds from the follow-on equity offering completed in February.”

The Partnership had net income for the first quarter of 2017 of $13.6 million, or $0.36 per limited partner unit.  The Partnership had net income for the first quarter of 2016 of $15.9 million, or $0.33 per limited partner unit.  The Partnership’s adjusted EBITDA for the first quarter of 2017 was $46.8 million compared to adjusted EBITDA from for the first quarter of 2016 of $49.3 million.

The Partnership’s distributable cash flow for the first quarter of 2017 was $30.3 million compared to distributable cash flow for the first quarter of 2016 of $32.5 million.

Revenues for the first quarter of 2017 were $253.3 million compared to the first quarter of 2016 of $225.6 million.

Distributable cash flow, EBITDA and adjusted EBITDA 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, and Distributable Cash Flow” in order to show the components of these non-GAAP financial measures and their reconciliation to the most comparable GAAP measurement.

Included with this press release are the Partnership’s consolidated and condensed financial statements as of and for the three months ended March 31, 2017 and certain prior periods.  These financial statements should be read in conjunction with the information contained in the Partnership’s Quarterly Report on Form 10-Q, to be filed with the Securities and Exchange Commission on April 26, 2017.

An attachment accompanying this announcement is available at 
http://www.globenewswire.com/NewsRoom/AttachmentNg/f388b630-6c52-43fa-a1a9-43909c676d22 .

Investors’ Conference Call

An investors’ conference call to review the first quarter results will be held on Thursday, April 27, 2017, at 8:00 a.m. Central Time.  The conference call can be accessed by calling (877) 878-2695.  An audio replay of the conference call will be available by calling (855) 859-2056 from 11:00 a.m. Central Time on April 27, 2017 through 10:59 p.m. Central Time on May 8, 2017.  The access code for the conference call and the audio replay is Conference ID No. 5945983.  The audio replay of the conference call will also be archived on Martin Midstream Partners’ website at www.martinmidstream.com.

About Martin Midstream Partners
           
The Partnership is a publicly traded limited partnership with a diverse set of operations focused primarily in the United States Gulf Coast region. The Partnership’s primary business segments include: (1) terminalling, storage and packaging services for petroleum products and by-products; (2) natural gas services, including liquids transportation and distribution services and natural gas storage; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) marine transportation services for petroleum products and by-products.

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 and other factors, many of which are outside the Partnership’s control, which could cause actual results to differ materially from such statements.  While the Partnership believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in anticipating or predicting certain important factors.  A discussion of these factors, including risks and uncertainties, is set forth in the Partnership’s annual and quarterly reports filed from time to time with the Securities and Exchange Commission.  The Partnership disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financial Information

The Partnership’s management uses a variety of financial and operational measurements other than its financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) to analyze its performance. These include: (1) net income before interest expense, income tax expense, and depreciation and amortization (“EBITDA”), (2) adjusted EBITDA and (3) distributable cash flow.  The Partnership’s management views these measures as important performance measures of core profitability for its operations and the ability to generate and distribute cash flow, and as key components of its internal financial reporting. The Partnership’s management believes investors benefit from having access to the same financial measures that management uses.

EBITDA and Adjusted EBITDA.  Certain items excluded from EBITDA and adjusted EBITDA are significant components in understanding and assessing an entity’s financial performance, such as cost of capital and historical costs of depreciable assets. The Partnership has included information concerning EBITDA and adjusted EBITDA because it provides investors and management with additional information to better understand the following: financial performance of the Partnership’s assets without regard to financing methods, capital structure or historical cost basis; the Partnership’s operating performance and return on capital as compared to those of other similarly situated entities; and the viability of acquisitions and capital expenditure projects.  The Partnership’s method of computing adjusted EBITDA may not be the same method used to compute similar measures reported by other entities. The economic substance behind the Partnership’s use of adjusted EBITDA is to measure the ability of the Partnership’s assets to generate cash sufficient to pay interest costs, support its indebtedness and make distributions to its unitholders.

Distributable Cash Flow.  Distributable cash flow is a significant performance measure used by the Partnership’s management and by external users of its financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by the Partnership to the cash distributions it expects to pay unitholders.  Distributable cash flow is also an important financial measure for the Partnership’s unitholders since it serves as an indicator of the Partnership’s success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not the Partnership is generating cash flow at a level that can sustain or support an increase in its quarterly distribution rates.  Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit’s yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.

EBITDA, adjusted EBITDA and distributable cash flow should not be considered alternatives to, or more meaningful than, net income, cash flows from operating activities, or any other measure presented in accordance with GAAP. The Partnership’s method of computing these measures may not be the same method used to compute similar measures reported by other entities.

Additional information concerning the Partnership is available on the Partnership’s website at www.martinmidstream.com or by contacting:

Joe McCreery, IRC – Vice President – Finance & Head of Investor Relations
(903) 988-6425

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSE BALANCE SHEETS
(Dollars in thousands)
         
    March 31,
2017
  December 31,
2016
    (Unaudited)   (Audited)
Assets        
Cash   $ 39     $ 15  
Accounts and other receivables, less allowance for doubtful accounts of $239 and $372, respectively   61,398     80,508  
Product exchange receivables   297     207  
Inventories   62,051     82,631  
Due from affiliates   12,044     11,567  
Fair value of derivatives   97      
Other current assets   3,930     3,296  
Assets held for sale   14,264     15,779  
Total current assets   154,120     194,003  
         
Property, plant and equipment, at cost   1,251,496     1,224,277  
Accumulated depreciation   (400,139 )   (378,593 )
Property, plant and equipment, net   851,357     845,684  
         
Goodwill   17,296     17,296  
Investment in WTLPG   129,211     129,506  
Note receivable – affiliate   15,000     15,000  
Other assets, net   42,176     44,874  
Total assets   $ 1,209,160     $ 1,246,363  
         
Liabilities and Partners’ Capital        
Trade and other accounts payable   $ 69,132     $ 70,249  
Product exchange payables   7,260     7,360  
Due to affiliates   3,288     8,474  
Income taxes payable   1,050     870  
Fair value of derivatives   164     3,904  
Other accrued liabilities   18,322     26,717  
Total current liabilities   99,216     117,574  
         
Long-term debt, net   750,735     808,107  
Other long-term obligations   5,997     8,676  
Total liabilities   855,948     934,357  
         
Commitments and contingencies (Note 17)        
Partners’ capital   353,212     312,006  
Total partners’ capital   353,212     312,006  
Total liabilities and partners’ capital   $ 1,209,160     $ 1,246,363  
                 

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on April 26, 2017.

 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
     
    Three Months Ended
    March 31,
    2017   2016
Revenues:        
Terminalling and storage *   $ 24,658     $ 31,705  
Marine transportation *   12,821     16,346  
Natural gas services*   14,665     16,097  
Sulfur services   2,850     2,700  
Product sales: *        
Natural gas services   126,657     91,091  
Sulfur services   39,527     39,475  
Terminalling and storage   32,147     28,191  
    198,331     158,757  
Total revenues   253,325     225,605  
         
Costs and expenses:        
Cost of products sold: (excluding depreciation and amortization)        
Natural gas services *   108,179     78,544  
Sulfur services *   24,483     27,524  
Terminalling and storage *   26,446     23,832  
    159,108     129,900  
Expenses:        
Operating expenses *   35,057     41,232  
Selling, general and administrative *   9,921     8,171  
Depreciation and amortization   25,336     22,048  
Total costs and expenses   229,422     201,351  
         
Other operating income (loss)   (155 )   84  
Operating income   23,748     24,338  
         
Other income (expense):        
Equity in earnings of WTLPG   905     1,677  
Interest expense, net   (10,920 )   (10,112 )
Other, net   30     62  
Total other expense   (9,985 )   (8,373 )
         
Net income before taxes   13,763     15,965  
Income tax expense   (180 )   (51 )
Net income   13,583     15,914  
Less general partner’s interest in net income   (272 )   (4,211 )
Less income allocable to unvested restricted units   (35 )   (43 )
Limited partners’ interest in net income   $ 13,276     $ 11,660  
         
Net income per unit attributable to limited partners – basic   $ 0.36     $ 0.33  
Net income per unit attributable to limited partners – diluted   $ 0.36     $ 0.33  
Weighted average limited partner units – basic   37,321     35,354  
Weighted average limited partner units – diluted   37,367     35,366  

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on April 26, 2017.

*Related Party Transactions Shown Below

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
 
*Related Party Transactions Included Above
     
    Three Months Ended
    March 31,
    2017   2016
Revenues:*        
Terminalling and storage   $ 19,704     $ 20,958  
Marine transportation   4,325     6,411  
Natural gas services   112     313  
Product Sales   1,430     700  
Costs and expenses:*        
Cost of products sold: (excluding depreciation and amortization)        
Natural gas services   8,894     3,385  
Sulfur services   3,675     3,812  
Terminalling and storage   5,067     3,385  
Expenses:        
Operating expenses   16,376     17,357  
Selling, general and administrative   7,568     5,432  

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on April 26, 2017.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Dollars in thousands)
 
    Partners’ Capital    
    Common Limited   General
Partner
Amount
   
    Units   Amount     Total
Balances – January 1, 2016   35,456,612     $ 380,845     $ 13,034     $ 393,879  
Net income       11,703     4,211     15,914  
Issuance of restricted units   13,800              
Forfeiture of restricted units   (250 )            
Cash distributions       (28,795 )   (4,560 )   (33,355 )
Reimbursement of excess purchase price over carrying value of acquired assets       750         750  
Unit-based compensation       222         222  
Purchase of treasury units   (15,200 )   (330 )       (330 )
Balances – March 31, 2016   35,454,962     $ 364,395     $ 12,685     $ 377,080  
                 
Balances – January 1, 2017   35,452,062     $ 304,594     $ 7,412     $ 312,006  
Net income       13,311     272     13,583  
Issuance of common units, net of issuance related costs   2,990,000     51,188         51,188  
Issuance of restricted units   12,000              
Forfeiture of restricted units   (1,500 )            
General partner contribution           1,098     1,098  
Cash distributions       (17,725 )   (362 )   (18,087 )
Unit-based compensation       186         186  
Excess purchase price over carrying value of acquired assets       (7,887 )       (7,887 )
Reimbursement of excess purchase price over carrying value of acquired assets       1,125         1,125  
Balances – March 31, 2017   38,452,562     $ 344,792     $ 8,420     $ 353,212  

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on April 26, 2017.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
     
    Three Months Ended
    March 31,
    2017   2016
Cash flows from operating activities:        
Net income   $ 13,583     $ 15,914  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization   25,336     22,048  
Amortization of deferred debt issuance costs   721     715  
Amortization of premium on notes payable   (77 )   (77 )
(Gain) loss on sale of property, plant and equipment   155     (84 )
Equity in earnings of unconsolidated entities   (905 )   (1,677 )
Derivative (income) loss   2,495     (2,001 )
Net cash (paid) received for commodity derivatives   (6,332 )   1,215  
Net cash received for interest rate derivatives       160  
Net premiums received on derivatives that settled during the year on interest rate swaption contracts       630  
Unit-based compensation   186     222  
Cash distributions from WTLPG   1,200     2,500  
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:        
Accounts and other receivables   19,110     15,136  
Product exchange receivables   (90 )   49  
Inventories   20,580     17,966  
Due from affiliates   (477 )   (1,432 )
Other current assets   (491 )   1,142  
Trade and other accounts payable   (2,560 )   (13,078 )
Product exchange payables   (100 )   (2,811 )
Due to affiliates   (5,186 )   (2,640 )
Income taxes payable   180     51  
Other accrued liabilities   (11,083 )   (8,223 )
Change in other non-current assets and liabilities   281     (419 )
Net cash provided by operating activities   56,526     45,306  
         
Cash flows from investing activities:        
Payments for property, plant and equipment   (6,477 )   (17,298 )
Acquisitions   (19,533 )    
Acquisition of intangible assets       (2,150 )
Payments for plant turnaround costs   (1,394 )   (991 )
Proceeds from sale of property, plant and equipment   1,481     113  
Net cash used in investing activities   (25,923 )   (20,326 )
         
Cash flows from financing activities:        
Payments of long-term debt   (133,000 )   (86,200 )
Proceeds from long-term debt   75,000     94,200  
Proceeds from issuance of common units, net of issuance related costs   51,188      
General partner contribution   1,098      
Purchase of treasury units       (330 )
Payment of debt issuance costs   (16 )   (30 )
Excess purchase price over carrying value of acquired assets   (7,887 )    
Reimbursement of excess purchase price over carrying value of acquired assets   1,125     750  
Cash distributions paid   (18,087 )   (33,355 )
Net cash used in financing activities   (30,579 )   (24,965 )
         
Net increase (decrease) in cash   24     15  
Cash at beginning of period   15     31  
Cash at end of period   $ 39     $ 46  
Non-cash additions to property, plant and equipment   $ 3,262     $ 3,292  

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on April 26, 2017.

MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
 
Terminalling and Storage Segment
 
Comparative Results of Operations for the Three Months Ended March 31, 2017 and 2016
           
  Three Months Ended
March 31,
  Variance   Percent
Change

  2017   2016    
                             
  (In thousands, except BBL per day)    
Revenues:              
Services $ 26,431     $ 33,157     $ (6,726 )   (20 )%
Products 32,147     28,193     3,954     14 %
Total revenues 58,578     61,350     (2,772 )   (5 )%
               
Cost of products sold 27,011     24,350     2,661     11 %
Operating expenses 15,645     18,716     (3,071 )   (16 )%
Selling, general and administrative expenses 1,325     1,100     225     20 %
Depreciation and amortization 15,477     9,998     5,479     55 %
  (880 )   7,186     (8,066 )   (112 )%
Other operating income (loss) (13 )   100     (113 )   (113 )%
Operating income (loss) $ (893 )   $ 7,286     $ (8,179 )   (112 )%
               
Lubricant sales volumes (gallons) 5,334     5,146     188     4 %
Shore-based throughput volumes (guaranteed minimum) (gallons) 41,667     50,000     (8,333 )   (17 )%
Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500     6,500         %
Corpus Christi crude terminal (BBL per day)     92,635     (92,635 )   (100 )%
                       

Natural Gas Services Segment
           
Comparative Results of Operations for the Three Months Ended March 31, 2017 and 2016
           
  Three Months Ended
March 31,
  Variance   Percent
Change

  2017   2016    
                             
  (In thousands)    
Revenues:              
Services $ 14,665     $ 16,097     $ (1,432 )   (9 )%
Products 126,657     91,091     35,566     39 %
Total revenues 141,322     107,188     34,134     32 %
               
Cost of products sold 109,303     79,348     29,955     38 %
Operating expenses 5,658     5,519     139     3 %
Selling, general and administrative expenses 3,051     2,304     747     32 %
Depreciation and amortization 6,161     6,974     (813 )   (12 )%
Operating income $ 17,149     $ 13,043     $ 4,106     31 %
               
Distributions from unconsolidated entities $ 1,200     $ 2,500     $ (1,300 )   (52 )%
               
NGL sales volumes (Bbls) 2,810     3,202     (392 )   (12 )%
                       

MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
           
Sulfur Services Segment          
           
Comparative Results of Operations for the Three Months Ended March 31, 2017 and 2016
           
  Three Months Ended
March 31,
  Variance   Percent
Change

  2017   2016    
                             
  (In thousands)    
Revenues:              
Services $ 2,850     $ 2,700     $ 150     6 %
Products 39,527     39,475     52     %
Total revenues 42,377     42,175     202     %
               
Cost of products sold 24,574     27,615     (3,041 )   (11 )%
Operating expenses 3,247     2,757     490     18 %
Selling, general and administrative expenses 1,021     958     63     7 %
Depreciation and amortization 2,033     1,970     63     3 %
  11,502     8,875     2,627     30 %
Other operating loss (22 )   (16 )   (6 )   38 %
Operating income $ 11,480     $ 8,859     $ 2,621     30 %
               
Sulfur (long tons) 217     157     60     38 %
Fertilizer (long tons) 94     83     11     13 %
Total sulfur services volumes (long tons) 311     240     71     30 %
                       

Marine Transportation Segment          
           
Comparative Results of Operations for the Three Months Ended March 31, 2017 and 2016
           
  Three Months Ended
March 31,
  Variance   Percent
Change

  2017   2016    
                             
  (In thousands)        
Revenues $ 13,414     $ 16,902     $ (3,488 )   (21 )%
Operating expenses 11,093     14,837     (3,744 )   (25 )%
Selling, general and administrative expenses 104     (419 )   523     (125 )%
Depreciation and amortization 1,665     3,106     (1,441 )   (46 )%
  552     (622 )   1,174     (189 )%
Other operating loss (120 )       (120 )    
Operating income (loss) $ 432     $ (622 )   $ 1,054     (169 )%
                             

Non-GAAP Financial Measures

The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three months ended March 31, 2017 and 2016, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
   
  Three Months Ended
  March 31,
  2017   2016
               
  (in thousands)
Net income $ 13,583     $ 15,914  
Adjustments:      
Interest expense 10,920     10,112  
Income tax expense 180     51  
Depreciation and amortization 25,336     22,048  
EBITDA 50,019     48,125  
Adjustments:      
Equity in earnings of unconsolidated entities (905 )   (1,677 )
(Gain) loss on sale of property, plant and equipment 155     (84 )
Unrealized mark-to-market on commodity derivatives (3,837 )   210  
Distributions from unconsolidated entities 1,200     2,500  
Unit-based compensation 186     222  
Adjusted EBITDA 46,818     49,296  
Adjustments:      
Interest expense (10,920 )   (10,112 )
Income tax expense (180 )   (51 )
Amortization of debt premium (77 )   (77 )
Amortization of deferred debt issuance costs 721     715  
Non-cash mark-to-market on interest rate derivatives     (206 )
Payments for plant turnaround costs (1,394 )   (991 )
Maintenance capital expenditures (4,668 )   (6,044 )
Distributable Cash Flow $ 30,300     $ 32,530