EX-99.1 2 exhibit991earningspressrel.htm EXHIBIT 99.1 Exhibit


EXHIBIT 99.1

MARTIN MIDSTREAM PARTNERS REPORTS
2018 FOURTH QUARTER FINANCIAL RESULTS

•
Net income of $44.1 million for 2018
•
Adjusted Leverage Ratio 4.61x at December 31, 2018
•
Financial Guidance for 2019

KILGORE, Texas, February 13, 2019 (GLOBE NEWSWIRE) - Martin Midstream Partners L.P. (Nasdaq:MMLP) (the “Partnership”) announced today its financial results for the three months and year ended December 31, 2018.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “Looking back at 2018, the Partnership deployed two strategic initiatives undertaken specifically to strengthen its balance sheet, reduce leverage and improve its distribution coverage ratio. In the second quarter, we announced the first initiative - the sale of our partnership interest in the West Texas LPG Pipeline Limited Partnership (“WTLPG”). The transaction closed on July 31, 2018 and the net proceeds of approximately $193.7 million were used to reduce outstanding borrowings under the revolving credit facility, lowering our adjusted leverage ratio from 5.46 times to 4.61 times at June 30, 2018 and December 31, 2018, respectively. We announced the second initiative in conjunction with our third quarter earnings release and on January 1, 2019, we closed the acquisition of Martin Transport, Inc. (“MTI”) for $135.0 million. MTI is expected to contribute approximately $23.6 million and $14.7 million of EBITDA and distributable cash flow, respectively, to the Partnership in 2019, contributing to an estimated distribution coverage of 1.1 times at December 31, 2019.

“With these strategic initiatives in position, we entered the fourth quarter of 2018 with optimism, as historically this quarter has been strong for our Natural Gas Services segment. During this quarter, our butane optimization business begins its cyclical upswing as demand for butane increases with refineries entering the winter gasoline-blending season. Though fundamentals remained constant in this cycle, we did not envision nor did we foresee the unprecedented, in terms of speed, drop in commodity prices that occurred from mid-October through December. Although our carrying cost of refinery grade butane inventory at the end of the third quarter was well positioned, this dramatic pricing collapse in the fourth quarter resulted in a $13.5 million shortfall when compared to revised guidance for the butane optimization business. This shortfall was slightly offset by modest outperformance in the remaining Natural Gas Services businesses, resulting in an overall shortfall of $12.7 million for the year compared to revised guidance.

“In our Terminalling and Storage segment results were slightly below revised fourth quarter and full year guidance estimates, primarily attributable to lower throughput volumes at our shore-based terminals, reduced lube margins, and unscheduled repairs and maintenance in our specialty terminals. For the full year 2018, the Terminalling and Storage segment missed revised guidance by approximately $1.2 million.

“Our Sulfur Services segment was also slightly below fourth quarter revised guidance as the fertilizer business experienced reduced sales volumes due to weather conditions in South Texas, which were slightly offset by an increase in sulfur storage and transportation volumes. For the full year 2018, the Sulfur Services segment shortfall to revised guidance was approximately $0.7 million.

“The Marine Transportation segment finished slightly above revised guidance expectations for both fourth quarter and full year 2018. During the quarter, we benefitted from improved day rates and strong fleet utilization, which resulted in the Marine Transportation segment exceeding 2018 revised full year guidance by approximately $0.5 million.

“In total, the Partnership generated a Net Loss and Adjusted EBITDA of $0.9 million and $26.9 million, respectively, for the fourth quarter and Net Income and Adjusted EBITDA of $44.1 million and $126.9 million (which includes distributions from WTLPG of $3.2 million), respectively, for full year 2018. Based on th




is performance, the Partnership’s distributable cash flow was approximately $9.4 million for the quarter and approximately $54.3 million for full year 2018, resulting in a distribution coverage ratio of 0.69 times, well below our targeted distribution coverage ratio of 1.25 times or greater.

“As we enter 2019, management remains committed to initiating strategies that reduce leverage and increase our distribution coverage ratio. The Partnership expects to generate annual distributable cash flow of $85.6 million in 2019, resulting in a distribution coverage ratio of approximately 1.1 times, as stated earlier. We estimate Net Income and Adjusted EBITDA to be $43.6 million and $159.5 million, respectively, for 2019, with the strongest quarters, due to the cyclical nature of our fertilizer and butane optimization businesses, being the first and fourth. Management’s expectation is that the majority of the Partnership estimated adjusted EBITDA will be generated by fee-based services, with margin activities contributing approximately 38% of the total adjusted EBITDA estimate. We are forecasting maintenance capital expenditures for 2019 to be between $20.0 million and $23.0 million, which includes a turnaround at the refinery of approximately $3.5 million.

“To conclude, Martin Midstream Partners remains a well-built company with strategically located assets integrated throughout the refinery services value chain. Although 2018 proved to be a difficult year due to the speed of the commodity price collapse in the fourth quarter, the strategic positioning that occurred during the last half of 2018 will strengthen the company in 2019 and forward. Further, we are actively pursuing strategic initiatives that will significantly reduce our leverage and narrow our focus to operating assets that serve the refinery services industry.”

The Partnership had a net loss from continuing operations for the fourth quarter 2018 of $0.9 million, a loss of $0.04 per limited partner unit. The Partnership had net income from continuing operations for the fourth quarter 2017 of $17.1 million, or $0.47 per limited partner unit. The Partnership's adjusted EBITDA from continuing operations for the fourth quarter 2018 was $26.9 million compared to adjusted EBITDA from continuing operations for the fourth quarter 2017 of $48.1 million.

The Partnership had a net loss from continuing operations for the year ended December 31, 2018 of $7.6 million, a loss of $0.19 per limited partner unit. Net income from continuing operations for the year ended December 31, 2017 was $13.0 million, or $0.33 per limited partner unit. The Partnership's adjusted EBITDA from continuing operations for the year ended December 31, 2018 was $123.7 million compared to adjusted EBITDA for the year ended December 31, 2017 of $151.0 million.

The Partnership's distributable cash flow from continuing operations for the fourth quarter of 2018 was $9.4 million compared to distributable cash flow from continuing operations for the fourth quarter of 2017 of $30.1 million.

The Partnership's distributable cash flow from continuing operations for the year ended December 31, 2018 was $51.0 million compared to distributable cash flow from continuing operations for the year ended December 31, 2017 of $85.9 million.

Revenues for the fourth quarter of 2018 were $252.8 million compared to $305.7 million for the fourth quarter of 2017. Revenues for the year ended December 31, 2018 were $972.7 million compared to $946.1 million for the year ended December 31, 2017.

As discussed above, on July 31, 2018, the Partnership divested of its 20 percent non-operating interest in WTLPG. The Partnership recorded a gain on the disposition of $48.6 million. The Partnership has presented the results of operations and cash flows relating to its investment in WTLPG as discontinued operations for the years ended December 31, 2018 and 2017.

The Partnership had net income from discontinued operations for the three months ended December 31, 2018 of $0.0 million, or $0.00 per limited partner unit. The Partnership had net income from discontinued operations for the three months ended December 31, 2017 of $1.7 million, or $0.04 per limited partner unit.





The Partnership had net income from discontinued operations for the year ended December 31, 2018 of $51.7 million, or $1.30 per limited partner unit. The Partnership had net income from discontinued operations for the year ended December 31, 2017 of $4.1 million, or $0.11 per limited partner unit.

Distributable cash flow and adjusted EBITDA from discontinued operations were $0.0 million for the three months ended December 31, 2018. Distributable cash flow and adjusted EBITDA from discontinued operations were $1.2 million for the three months ended December 31, 2017.

Distributable cash flow and adjusted EBITDA from discontinued operations were $3.3 million for the year ended December 31, 2018. Distributable cash flow and adjusted EBITDA from discontinued operations were $5.2 million for the year ended December 31, 2017.

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 financial statements as of and for the year ended December 31, 2018 and certain prior periods. These financial statements should be read in conjunction with the information contained in the Partnership's Annual Report on Form 10-K, to be filed with the SEC on February 19, 2019.

An attachment accompanying this announcement is included as an exhibit to this Form 8-K as Exhibit 99.2.

2019 Guidance

The Partnership will discuss 2019 guidance during the investors’ conference call scheduled for Thursday, February 14, 2019 at 8:00 a.m. Details of the conference call are below. A presentation to accompany this discussion is included as an exhibit to this Form 8-K as Exhibit 99.3.

Investors' Conference Call

An investors conference call to review the fourth quarter results and 2019 guidance will be held on Thursday, February 14, 2019 at 8:00 a.m. Central Time. The live conference call will be available by calling (877) 878-2695.  For a limited time, an audio replay of the conference call will be available by calling (855) 859-2056. The conference ID is 4780178. An archive of the replay will be on Martin Midstream Partners’ website at www.MMLP.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) natural gas services, including liquids transportation and distribution services and natural gas storage; (2) terminalling, storage and packaging services for petroleum products and by-products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) land and 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.MMLP.com or by contacting:

Sharon Taylor - Head of Investor Relations
(877) 256-6644
ir@mmlp.com





MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
December 31,
 
2018
 
2017
Assets
 
 
 
Cash
$
237

 
$
27

Trade and accrued accounts receivable, less allowance for doubtful accounts of $291 and $314, respectively
79,031

 
107,242

Product exchange receivables
166

 
29

Inventories (Note 7)
85,068

 
97,252

Due from affiliates
18,609

 
23,668

Fair value of derivatives (Note 13)
4

 
—

Other current assets
5,275

 
4,866

Assets held for sale (Note 5)
5,652

 
9,579

Total current assets
194,042

 
242,663

 
 
 
 
Property, plant and equipment, at cost
1,264,730

 
1,253,065

Accumulated depreciation
(466,381
)
 
(421,137
)
Property, plant and equipment, net (Note 8)
798,349

 
831,928

 
 
 
 
Goodwill (Note 9)
17,296

 
17,296

Investment in WTLPG (Note 11)
—

 
128,810

Intangibles and other assets, net (Note 15)
23,711

 
32,801

 
$
1,033,398

 
$
1,253,498

Liabilities and Partners’ Capital
 
 
 
Trade and other accounts payable
$
63,157

 
$
92,567

Product exchange payables
13,237

 
11,751

Due to affiliates
2,459

 
3,168

Income taxes payable
445

 
510

Fair value of derivatives (Note 13)
—

 
72

Other accrued liabilities (Note 15)
22,215

 
26,340

Total current liabilities
101,513

 
134,408

 
 
 
 
Long-term debt, net (Note 16)
656,459

 
812,632

Other long-term obligations
10,714

 
8,217

Total liabilities
768,686

 
955,257

Commitments and contingencies (Note 22)


 


Partners’ capital (Note 17)
264,712

 
298,241

Total partners’ capital
264,712

 
298,241

 
$
1,033,398

 
$
1,253,498


These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.





MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
 
Year Ended December 31,
 
2018
 
2017
 
2016
Revenues:
 
 
 
 
 
Terminalling and storage *
$
96,287

 
$
99,705

 
$
123,132

Marine transportation *
50,370

 
48,579

 
58,290

Natural gas storage services *
52,109

 
58,817

 
61,133

Sulfur services
11,148

 
10,952

 
10,800

Product sales: *
 
 
 
 
 
Natural gas services
496,026

 
473,865

 
330,200

Sulfur services
121,388

 
123,732

 
130,258

Terminalling and storage
145,327

 
130,466

 
113,578

 
762,741

 
728,063

 
574,036

Total revenues
972,655

 
946,116

 
827,391

 
 
 
 
 
 
Costs and expenses:
 
 
 
 
 
Cost of products sold: (excluding depreciation and amortization)
 
 
 
 
 
Natural gas services *
463,939

 
421,444

 
289,516

Sulfur services *
90,418

 
82,338

 
87,963

Terminalling and storage *
130,253

 
116,495

 
100,714

 
684,610

 
620,277

 
478,193

Expenses:
 
 
 
 
 
Operating expenses *
128,337

 
140,177

 
152,325

Selling, general and administrative *
37,677

 
38,764

 
34,320

Impairment of long-lived assets
—

 
2,225

 
26,953

Impairment of goodwill
—

 
—

 
4,145

Depreciation and amortization
76,866

 
85,195

 
92,132

Total costs and expenses
927,490

 
886,638

 
788,068

Other operating income (loss), net
(379
)
 
523

 
33,400

Operating income
44,786

 
60,001

 
72,723

 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
Interest expense, net
(52,037
)
 
(47,743
)
 
(46,100
)
Other, net
25

 
1,101

 
1,106

Total other income (expense)
(52,012
)
 
(46,642
)
 
(44,994
)
Net income before taxes
(7,226
)
 
13,359

 
27,729

Income tax expense
(369
)
 
(352
)
 
(726
)
Income from continuing operations
(7,595
)
 
13,007

 
27,003

Income from discontinued operations, net of income taxes
51,700

 
4,128

 
4,649

Net income
44,105

 
17,135

 
31,652

Less general partner's interest in net income
(882
)
 
(343
)
 
(8,419
)
Less income allocable to unvested restricted units
(28
)
 
(42
)
 
(90
)
Limited partner's interest in net income
$
43,195

 
$
16,750

 
$
23,143


These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.

*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
 
Year Ended December 31,
 
2018
 
2017
 
2016
Revenues:
 
 
 
 
 
Terminalling and storage
$
79,219

 
$
82,205

 
$
82,437

Marine transportation
15,442

 
16,801

 
21,767

Natural gas services
—

 
122

 
699

Product sales
1,407

 
3,578

 
3,034

Costs and expenses:
 

 
 

 
 

Cost of products sold: (excluding depreciation and amortization)
 

 
 

 
 

Natural gas services
14,816

 
18,946

 
22,886

Sulfur services
17,418

 
15,564

 
15,339

          Terminalling and storage
28,304

 
17,612

 
13,838

Expenses:
 

 
 

 
 

Operating expenses
55,528

 
64,344

 
70,841

Selling, general and administrative
28,246

 
29,416

 
25,890


These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.





MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
 
Year Ended December 31,
 
2018
 
2017
 
2016
Allocation of net income attributable to:
 
 
 
 
 
Limited partner interest:
 
 
 
 
 
 Continuing operations
$
(7,438
)
 
$
12,715

 
$
19,744

 Discontinued operations
50,633

 
4,035

 
3,399

 
$
43,195

 
$
16,750

 
$
23,143

General partner interest:
 
 
 
 
 
  Continuing operations
$
(152
)
 
$
260

 
$
7,182

  Discontinued operations
1,034

 
83

 
1,237

 
$
882

 
$
343

 
$
8,419

 
 
 
 
 
 
Net income per unit attributable to limited partners:
 
 
 
 
 
Basic:
 
 
 
 
 
Continuing operations
$
(0.19
)
 
$
0.33

 
$
0.55

Discontinued operations
1.30

 
0.11

 
0.10

 
$
1.11

 
$
0.44

 
$
0.65

 
 
 
 
 
 
Weighted average limited partner units - basic
38,907

 
38,102

 
35,347

 
 
 
 
 
 
Diluted:
 
 
 
 
 
Continuing operations
$
(0.19
)
 
$
0.33

 
$
0.55

Discontinued operations
1.30

 
0.11

 
0.10

 
$
1.11

 
$
0.44

 
$
0.65

 
 
 
 
 
 
Weighted average limited partner units - diluted
38,923

 
38,165

 
35,375


These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.





MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CAPITAL
(Dollars in thousands)

 
Partners’ Capital
 
 
 
Common
 
General Partner
 
 
 
Units
 
Amount
 
Amount
 
Total
Balances – December 31, 2015
35,456,612

 
$
380,845

 
$
13,034

 
$
393,879

 
 
 
 
 
 
 
 
Net income
—

 
23,233

 
8,419

 
31,652

Issuance of common units, net
—

 
(29
)
 
—

 
(29
)
Issuance of restricted units
13,800

 
—

 
—

 
—

Forfeiture of restricted units
(2,250
)
 
—

 
—

 
—

Cash distributions
—

 
(104,137
)
 
(14,041
)
 
(118,178
)
Reimbursement of excess purchase price over carrying value of acquired assets
—

 
4,125

 
—

 
4,125

Unit-based compensation
—

 
904

 
—

 
904

Purchase of treasury units
(16,100
)
 
(347
)
 
—

 
(347
)
Balances – December 31, 2016
35,452,062

 
304,594

 
7,412

 
312,006

 
 
 
 
 
 
 
 
Net income
—

 
16,792

 
343

 
17,135

Issuance of common units, net
2,990,000

 
51,056

 
—

 
51,056

Issuance of restricted units
12,000

 
—

 
—

 
—

Forfeiture of restricted units
(9,250
)
 
—

 
—

 
—

General partner contribution
—

 
—

 
1,098

 
1,098

Cash distributions
—

 
(75,399
)
 
(1,539
)
 
(76,938
)
Reimbursement of excess purchase price over carrying value of acquired assets
—

 
1,125

 
—

 
1,125

Excess purchase price over carrying value of acquired assets
—

 
(7,887
)
 
—

 
(7,887
)
Unit-based compensation
—

 
650

 
—

 
650

Purchase of treasury units
(200
)
 
(4
)
 
—

 
(4
)
Balances – December 31, 2017
38,444,612

 
290,927

 
7,314

 
298,241

 
 
 
 
 
 
 
 
Net income
—

 
43,223

 
882

 
44,105

Issuance of common units, net
—

 
(118
)
 
—

 
(118
)
Issuance of time-based restricted units
315,500

 
—

 
—

 
—

Issuance of performance-based restricted units
317,925

 
—

 
—

 
—

Forfeiture of restricted units
(27,000
)
 
—

 
—

 
—

Cash distributions
—

 
(76,872
)
 
(1,569
)
 
(78,441
)
Excess purchase price over carrying value of acquired assets
—

 
(26
)
 
—

 
(26
)
Unit-based compensation
—

 
1,224

 
—

 
1,224

Purchase of treasury units
(18,800
)
 
(273
)
 
—

 
(273
)
Balances – December 31, 2018
39,032,237

 
$
258,085

 
$
6,627

 
$
264,712


These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.





MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
 
Year Ended December 31,
 
2018
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
 
Net income
$
44,105

 
$
17,135

 
$
31,652

Less: Income from discontinued operations
(51,700
)
 
(4,128
)
 
(4,649
)
Net income (loss) from continuing operations
(7,595
)
 
13,007

 
27,003

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
76,866

 
85,195

 
92,132

Amortization and write-off of deferred debt issue costs
3,445

 
2,897

 
3,684

Amortization of premium on notes payable
(306
)
 
(306
)
 
(306
)
(Gain) loss on disposition or sale of property, plant, and equipment
379

 
(523
)
 
(33,400
)
Impairment of long lived assets
—

 
2,225

 
26,953

Impairment of goodwill
—

 
—

 
4,145

Derivative (income) loss
(14,024
)
 
1,304

 
4,133

Net cash (paid) received for commodity derivatives
13,948

 
(5,136
)
 
(550
)
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
1,224

 
650

 
904

Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
 
 
 
 
 
Accounts and other receivables
28,440

 
(26,739
)
 
(6,153
)
Product exchange receivables
(137
)
 
178

 
843

Inventories
11,844

 
(14,656
)
 
(6,761
)
Due from affiliates
5,059

 
(12,096
)
 
(1,441
)
Other current assets
1,178

 
(1,699
)
 
2,478

Trade and other accounts payable
(27,478
)
 
20,037

 
3,254

Product exchange payables
1,486

 
4,391

 
(5,372
)
Due to affiliates
(709
)
 
(5,306
)
 
2,736

Income taxes payable
(65
)
 
(360
)
 
(115
)
Other accrued liabilities
(6,415
)
 
(3,187
)
 
686

Change in other non-current assets and liabilities
332

 
2,416

 
(12,230
)
Net cash provided by continuing operating activities
87,472

 
62,292

 
103,413

Net cash provided by discontinued operating activities
3,254

 
5,214

 
7,435

Net cash provided by operating activities
90,726

 
67,506

 
110,848

Cash flows from investing activities:
 
 
 
 
 
Payments for property, plant, and equipment
(37,090
)
 
(39,749
)
 
(40,455
)
Acquisitions, net of cash acquired
—

 
(19,533
)
 
(2,150
)
Payments for plant turnaround costs
(1,893
)
 
(1,583
)
 
(2,061
)
Proceeds from sale of property, plant, and equipment
9,381

 
8,377

 
108,505

Proceeds from repayment of Note receivable - affiliate
—

 
15,000

 
—

Net cash provided by (used in) continuing investing activities
(29,602
)
 
(37,488
)
 
63,839

Net cash provided by (used in) discontinued investing activities
177,256

 
(390
)
 
—

Net cash provided by (used in) investing activities
147,654

 
(37,878
)
 
63,839

Cash flows from financing activities:
 
 
 
 
 
Payments of long-term debt
(557,000
)
 
(339,000
)
 
(386,700
)
Proceeds from long-term debt
399,000

 
341,000

 
331,700

Net proceeds from issuance of common units
(118
)
 
51,056

 
(29
)
General partner contributions
—

 
1,098

 
—

Excess purchase price over carrying value of acquired assets
(26
)
 
(7,887
)
 
—

Reimbursement of excess purchase price over carrying value of acquired assets
—

 
1,125

 
4,125

Purchase of treasury units
(273
)
 
(4
)
 
(347
)
Payments of debt issuance costs
(1,312
)
 
(66
)
 
(5,274
)
Cash distributions paid
(78,441
)
 
(76,938
)
 
(118,178
)
Net cash used in financing activities
(238,170
)
 
(29,616
)
 
(174,703
)
 
 
 
 
 
 
Net increase (decrease) in cash
210

 
12

 
(16
)
Cash at beginning of year
27

 
15

 
31

Cash at end of year
$
237

 
$
27

 
$
15

 
 
 
 
 
 

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 19, 2019.





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 Twelve Months Ended December 31, 2018 and 2017
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2018
 
2017
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
102,514

 
$
105,703

 
$
(3,189
)
 
(3)%
Products
145,326

 
130,466

 
14,860

 
11%
Total revenues
247,840

 
236,169

 
11,671

 
5%
 
 
 
 
 
 
 
 
Cost of products sold
132,384

 
118,832

 
13,552

 
11%
Operating expenses
54,129

 
63,191

 
(9,062
)
 
(14)%
Selling, general and administrative expenses
5,327

 
5,832

 
(505
)
 
(9)%
Impairment of long-lived assets
—

 
600

 
(600
)
 
(100)%
Depreciation and amortization
39,508

 
45,160

 
(5,652
)
 
(13)%
 
16,492

 
2,554

 
13,938

 
546%
Other operating income, net
1,328

 
751

 
577

 
77%
Operating income
$
17,820

 
$
3,305

 
$
14,515

 
439%
 
 
 
 
 
 
 
 
Lubricant sales volumes (gallons)
24,016

 
21,897

 
2,119

 
10%
Shore-based throughput volumes (guaranteed minimum) (gallons)
80,000

 
144,998

 
(64,998
)
 
(45)%
Smackover refinery throughput volumes (guaranteed minimum BBL per day)
6,500

 
6,500

 
—

 
—%

Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
105,703

 
$
128,783

 
$
(23,080
)
 
(18)%
Products
130,466

 
113,580

 
16,886

 
15%
Total revenues
236,169

 
242,363

 
(6,194
)
 
(3)%
 
 
 
 
 
 
 
 
Cost of products sold
118,832

 
102,883

 
15,949

 
16%
Operating expenses
63,191

 
65,292

 
(2,101
)
 
(3)%
Selling, general and administrative expenses
5,832

 
4,677

 
1,155

 
25%
Impairment of long-lived assets
600

 
15,252

 
(14,652
)
 
(96)%
Depreciation and amortization
45,160

 
45,484

 
(324
)
 
(1)%
 
2,554

 
8,775

 
(6,221
)
 
(71)%
Other operating income, net
751

 
35,368

 
(34,617
)
 
(98)%
Operating income
$
3,305

 
$
44,143

 
$
(40,838
)
 
(93)%
 
 
 
 
 
 
 
 
Lubricant sales volumes (gallons)
21,897

 
17,995

 
3,902

 
22%
Shore-based throughput volumes (guaranteed minimum) (gallons)
144,998

 
200,000

 
(55,002
)
 
(28)%
Smackover refinery throughput volumes (guaranteed minimum BBL per day)
6,500

 
6,500

 
—

 
—%
Corpus Christi crude terminal (barrels per day)
—

 
66,167

 
(66,167
)
 
(100)%








Natural Gas Services Segment

Comparative Results of Operations for the Twelve Months Ended December 31, 2018 and 2017
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2018
 
2017
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
52,109

 
$
58,817

 
$
(6,708
)
 
(11)%
Products
496,026

 
474,091

 
21,935

 
5%
Total revenues
548,135

 
532,908

 
15,227

 
3%
 
 
 
 
 
 
 

Cost of products sold
467,571

 
425,073

 
42,498

 
10%
Operating expenses
24,065

 
22,347

 
1,718

 
8%
Selling, general and administrative expenses
9,063

 
11,106

 
(2,043
)
 
(18)%
Depreciation and amortization
21,283

 
24,916

 
(3,633
)
 
(15)%
 
26,153

 
49,466

 
(23,313
)
 
(47)%
Other operating loss, net
(1,215
)
 
(89
)
 
(1,126
)
 
(1,265)%
Operating income
$
24,938

 
$
49,377

 
$
(24,439
)
 
(49)%
 
 
 
 
 
 
 
 
NGLs Volumes (barrels)
10,223

 
10,487

 
(264
)
 
(3)%

Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
58,817

 
$
61,133

 
$
(2,316
)
 
(4)%
Products
474,091

 
330,200

 
143,891

 
44%
Total revenues
532,908

 
391,333

 
141,575

 
36%
 
 
 
 
 
 
 
 
Cost of products sold
425,073

 
292,573

 
132,500

 
45%
Operating expenses
22,347

 
23,152

 
(805
)
 
(3)%
Selling, general and administrative expenses
11,106

 
8,970

 
2,136

 
24%
Depreciation and amortization
24,916

 
28,081

 
(3,165
)
 
(11)%
 
49,466

 
38,557

 
10,909

 
28%
Other operating loss, net
(89
)
 
(110
)
 
21

 
19%
Operating income
$
49,377

 
$
38,447

 
$
10,930

 
28%
 
 
 
 
 
 
 
 
NGLs Volumes (barrels)
10,487

 
9,532

 
955

 
10%











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 Twelve Months Ended December 31, 2018 and 2017  
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2018
 
2017
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
11,148

 
$
10,952

 
$
196

 
2%
Products
121,388

 
123,732

 
(2,344
)
 
(2)%
Total revenues
132,536

 
134,684

 
(2,148
)
 
(2)%
 
 
 
 
 
 
 
 
Cost of products sold
90,780

 
82,760

 
8,020

 
10%
Operating expenses
11,618

 
13,783

 
(2,165
)
 
(16)%
Selling, general and administrative expenses
4,326

 
4,136

 
190

 
5%
Depreciation and amortization
8,485

 
8,117

 
368

 
5%
 
17,327

 
25,888

 
(8,561
)
 
(33)%
Other operating loss, net
(111
)
 
(26
)
 
(85
)
 
(327)%
Operating income
$
17,216

 
$
25,862

 
$
(8,646
)
 
(33)%
 
 
 
 
 
 
 
 
Sulfur (long tons)
688.0

 
807.0

 
(119.0
)
 
(15)%
Fertilizer (long tons)
277.0

 
276.0

 
1.0

 
—%
Sulfur services volumes (long tons)
965.0

 
1,083.0

 
(118.0
)
 
(11)%

Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
10,952

 
$
10,800

 
$
152

 
1%
Products
123,732

 
130,258

 
(6,526
)
 
(5)%
Total revenues
134,684

 
141,058

 
(6,374
)
 
(5)%
 
 
 
 
 
 
 

Cost of products sold
82,760

 
88,325

 
(5,565
)
 
(6)%
Operating expenses
13,783

 
13,771

 
12

 
—%
Selling, general and administrative expenses
4,136

 
3,861

 
275

 
7%
Depreciation and amortization
8,117

 
7,995

 
122

 
2%
 
25,888

 
27,106

 
(1,218
)
 
(4)%
Other operating loss, net
(26
)
 
(291
)
 
265

 
91%
Operating income
$
25,862

 
$
26,815

 
$
(953
)
 
(4)%
 
 
 
 
 
 
 
 
Sulfur (long tons)
807.0

 
797.0

 
10.0

 
1%
Fertilizer (long tons)
276.0

 
262.0

 
14.0

 
5%
Sulfur services volumes (long tons)
1,083.0

 
1,059.0

 
24.0

 
2%







MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)

Marine Transportation Segment

Comparative Results of Operations for the Twelve Months Ended December 31, 2018 and 2017
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2018
 
2017
 
 
 
(In thousands)
 
 
Revenues
$
52,830

 
$
51,915

 
$
915

 
2%
Operating expenses
41,086

 
44,028

 
(2,942
)
 
(7)%
Selling, general and administrative expenses
1,060

 
358

 
702

 
196%
Impairment of long-lived assets
—

 
1,625

 
(1,625
)
 
(100)%
Depreciation and amortization
7,590

 
7,002

 
588

 
8%
 
3,094

 
(1,098
)
 
4,192

 
382%
Other operating loss, net
(381
)
 
(113
)
 
(268
)
 
(237)%
Operating income (loss)
$
2,713

 
$
(1,211
)
 
$
3,924

 
324%

Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues
$
51,915

 
$
61,233

 
$
(9,318
)
 
(15)%
Operating expenses
44,028

 
53,118

 
(9,090
)
 
(17)%
Selling, general and administrative expenses
358

 
18

 
340

 
1,889%
Impairment of long lived assets
1,625

 
11,701

 
(10,076
)
 
(86)%
Impairment of goodwill
—

 
4,145

 
(4,145
)
 
(100)%
Depreciation and amortization
7,002

 
10,572

 
(3,570
)
 
(34)%
 
(1,098
)
 
(18,321
)
 
17,223

 
94%
Other operating loss, net
(113
)
 
(1,567
)
 
1,454

 
93%
Operating loss
$
(1,211
)
 
$
(19,888
)
 
$
18,677

 
94%






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 quarter and years ended December 31, 2018 and 2017, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
 
Three Months Ended
 
Twelve Months Ended
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Net income
$
(913
)
 
$
18,849

 
$
44,105

 
$
17,135

Less: Income from discontinued operations, net of income taxes
—

 
(1,726
)
 
(51,700
)
 
(4,128
)
Income (loss) from continuing operations
(913
)
 
17,123

 
(7,595
)
 
13,007

Adjustments:
 
 
 
 
 
 
 
Interest expense
12,446

 
13,066

 
52,037

 
47,743

Income tax expense
(3
)
 
51

 
369

 
352

Depreciation and amortization
18,024

 
19,247

 
76,866

 
85,195

EBITDA
29,554

 
49,487

 
121,677

 
146,297

Adjustments:
 
 
 
 
 
 
 
(Gain) loss on sale of property, plant and equipment
(497
)
 
(850
)
 
379

 
(523
)
Impairment of long-lived assets
—

 
2,225

 
—

 
2,225

Unrealized mark-to-market on commodity derivatives
(2,972
)
 
205

 
(76
)
 
(3,832
)
Hurricane damage repair accrual
—

 
(3,068
)
 
—

 
657

Asset retirement obligation revision
—

 
—

 
—

 
5,547

Unit-based compensation
352

 
132

 
1,224

 
650

Transaction costs associated with acquisitions
465

 
—

 
465

 
—

Adjusted EBITDA
26,902

 
48,131

 
123,669

 
151,021

Adjustments:
 
 
 
 
 
 
 
Interest expense
(12,446
)
 
(13,066
)
 
(52,037
)
 
(47,743
)
Income tax expense
3

 
(51
)
 
(369
)
 
(352
)
Amortization of deferred debt issuance costs
882

 
727

 
3,445

 
2,897

Amortization of debt premium
(76
)
 
(76
)
 
(306
)
 
(306
)
Non-cash mark-to-market on interest rate derivatives
—

 
—

 
—

 
—

Payments for plant turnaround costs
(1,014
)
 
—

 
(1,893
)
 
(1,583
)
Maintenance capital expenditures
(4,886
)
 
(5,586
)
 
(21,505
)
 
(18,080
)
Distributable Cash Flow
$
9,365

 
$
30,079

 
$
51,004

 
$
85,854

 
 
 
 
 
 
 
 
Income from discontinued operations
$
—

 
$
1,726

 
$
51,700

 
$
4,128

Adjustments:
 
 
 
 
 
 
 
Equity in earnings
—

 
(1,767
)
 
(3,382
)
 
(4,314
)
Distributions from unconsolidated entities
—

 
1,200

 
3,500

 
5,400

Gain from disposition of Investment in WTLPG
—

 
—

 
(48,564
)
 
—

Adjusted EBITDA and Distributable Cash Flow from Discontinued Operations
$
—

 
$
1,159

 
$
3,254

 
$
5,214