- Total leverage of 4.25 times as of March 31, 2023, compared to
4.53 times as of December 31, 2022
- Reported net loss of $5.1 million for the first quarter of
2023, which includes a $5.1 million impact from loss on
extinguishment of debt
- First quarter adjusted EBITDA of $30.6 million after giving
effect to the exit of the butane optimization business, which
incurred net losses of $8.8 million for the quarter
- Declares quarterly cash dividend of $0.005 per common unit
Martin Midstream Partners L.P. (Nasdaq:MMLP) (“MMLP” or the
"Partnership") today announced its financial results for the first
quarter of 2023.
Bob Bondurant, President and Chief Executive Officer of Martin
Midstream GP LLC, the general partner of the Partnership, stated,
“I’m pleased with our first quarter as adjusted EBITDA of
approximately $31 million, after giving effect to the exit of the
butane optimization business, was in line with guidance, even as we
experienced headwinds in the agriculture market that impacted our
fertilizer and lubricants businesses. However, robust demand for
our Transportation services, both marine and land, offset those
challenges, speaking to the strength of our diversified business
model.
“During the quarter we continued our focus on debt reduction
resulting in both lower outstanding debt and a lower leverage
ratio. Borrowings under our revolving credit facility were reduced
$16 million resulting in total debt at March 31, 2023 of $500
million compared to $516 million at December 31, 2022. As we plan
to exit the butane optimization business at the conclusion of the
selling season during the second quarter, we anticipate additional
butane liquidation proceeds of approximately $20 million which are
earmarked for further debt reduction.”
FIRST QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT
TERMINALLING AND STORAGE (“T&S”)
T&S operating income (loss) for the three months ended March
31, 2023 and 2022 was $3.1 million and ($0.1) million,
respectively.
Adjusted segment EBITDA for T&S was $9.1 million and $6.9
million for the three months ended March 31, 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 March
31, 2023 and 2022 was $9.4 million and $7.0 million,
respectively.
Adjusted segment EBITDA for Transportation was $13.2 million and
$10.5 million for the three months ended March 31, 2023 and 2022,
respectively, reflecting continued robust demand for land
transportation services coupled with improving marine fleet
utilization and higher day rates.
SULFUR SERVICES
Sulfur Services operating income for the three months ended
March 31, 2023 and 2022 was $4.6 million and $12.7 million,
respectively.
Adjusted segment EBITDA for Sulfur Services was $7.2 million and
$15.1 million for the three months ended March 31, 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
March 31, 2023 and 2022 was $4.6 million and $10.0 million,
respectively. Included in the Specialty Products results is
operating income of $0.3 million and $5.7 million, for the three
months ended March 31, 2023 and 2022, respectively, attributable to
the butane optimization business.
Adjusted segment EBITDA for Specialty Products was $(3.6)
million and $11.3 million for the three months ended March 31, 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 adjusted EBITDA of
$(8.8) million and $5.7 million for the three months ended March
31, 2023 and 2022, respectively, attributable to the butane
optimization business. Adjusted Segment EBITDA for Specialty
Products after giving effect to the exit of the butane optimization
business was $5.2 million and $5.6 million for the three months
ended March 31, 2023 and 2022, respectively.
UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
(“USGA”)
USGA expenses included in operating income for the three months
ended March 31, 2023 and 2022 were $4.2 million and $4.1 million,
respectively.
USGA expenses included in adjusted EBITDA for the three months
ended March 31, 2023 and 2022 were $4.1 million and $4.1 million,
respectively.
CAPITALIZATION
At March 31, 2023, the Partnership had $500 million of total
debt outstanding, including $100 million drawn on its $200 million
revolving credit facility and $400 million of senior secured second
lien notes due 2028. At March 31, 2023, the Partnership had
liquidity of approximately $40 million from available capacity
under its revolving credit facility. The Partnership’s leverage
ratio, as calculated under the revolving credit facility, was 4.25
times at March 31, 2023. At the end of fourth quarter 2022, we
announced adjusted leverage of 4.27 times, which included a debt
sub-limit carve out of $29.7 million. In order to compare December
31, 2022 to March 31, 2023, the December ratio is adjusted to
exclude the $29.7 million debt sub-limit carve out, bringing the
leverage ratio at December 31, 2023 to 4.53 times compared to 4.25
times at March 31, 2023, a reduction of 0.28 times. The Partnership
was in compliance with all debt covenants as of March 31, 2023.
On February 8, 2023, the Partnership completed the sale of $400
million in aggregate principal amount of 11.500% senior secured
second lien notes due 2028. The Partnership used the net proceeds
of that offering to repurchase, through a tender offer and then
redemption, all of the Partnership’s 1.5 lien notes due 2024 and
second lien notes due 2025.
QUARTERLY CASH DISTRIBUTION
The Partnership has declared a quarterly cash distribution of
$0.005 per unit for the quarter ended March 31, 2023. The
distribution is payable on May 15, 2023 to common unitholders of
record as of the close of business on May 8, 2023. The ex-dividend
date for the cash distribution is May 5, 2023.
QUALIFIED NOTICE TO NOMINEES
Partnership:
Martin Midstream Partners
L.P.
Unit Class:
Common
CUSIP #:
573331105
RE:
Qualified Notice Pursuant to U.S.
Treasury Regulation §1.1446-4
Record Date:
May 8, 2023
Payable Date:
May 15, 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 a net loss for the three months ended March
31, 2023 of $5.1 million, a loss of $0.13 per limited partner unit.
The Partnership had net income for the three months ended March 31,
2022 of $11.5 million, or $0.29 per limited partner unit. Adjusted
EBITDA for the three months ended March 31, 2023 was $21.7 million
compared to $40.0 million for the three months ended March 31,
2022. Adjusted EBITDA after giving effect to the exit of the butane
optimization business for the three months ended March 31, 2023 was
$30.6 million compared to $34.3 million for the three months ended
March 31, 2022. Net cash provided by operating activities for the
three months ended March 31, 2023 was $49.3 million, compared to
$28.4 million for the three months ended March 31, 2022.
Distributable cash flow for the three months ended March 31, 2023
was $9.5 million compared to $15.2 million for the three months
ended March 31, 2022.
Revenues for the three months ended March 31, 2023 were $244.5
million compared to $279.2 million for the three months ended March
31, 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 first quarter 2023 to the
Partnership's adjusted EBITDA guidance for the first quarter
2023.
Investors' Conference Call
Date: Thursday, April 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 First 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) specialty products, including natural gas
liquids, marketing, distribution, packaging, and transportation
services. 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)
March 31, 2023
December 31, 2022
(Unaudited)
(Audited)
Assets
Cash
$
57
$
45
Accounts and other receivables, less
allowance for doubtful accounts of $496 and $496, respectively
73,063
79,641
Inventories
76,617
109,798
Due from affiliates
3,982
8,010
Other current assets
8,153
13,633
Total current assets
161,872
211,127
Property, plant and equipment, at cost
897,140
903,535
Accumulated depreciation
(585,860
)
(584,245
)
Property, plant and equipment, net
311,280
319,290
Goodwill
16,671
16,671
Right-of-use assets
37,560
34,963
Deferred income taxes, net
13,209
14,386
Other assets, net
2,283
2,414
Total assets
$
542,875
$
598,851
Liabilities and Partners’
Capital (Deficit)
Current installments of long-term debt and
finance lease obligations
$
3
$
9
Trade and other accounts payable
66,047
68,198
Product exchange payables
136
32
Due to affiliates
6,271
8,947
Income taxes payable
1,097
665
Other accrued liabilities
22,110
33,074
Total current liabilities
95,664
110,925
Long-term debt, net
475,237
512,871
Operating lease liabilities
27,801
26,268
Other long-term obligations
8,850
8,232
Total liabilities
607,552
658,296
Commitments and contingencies
Partners’ capital (deficit)
(64,677
)
(59,445
)
Total partners’ capital (deficit)
(64,677
)
(59,445
)
Total liabilities and partners' capital
(deficit)
$
542,875
$
598,851
MARTIN MIDSTREAM PARTNERS
L.P.
CONSOLIDATED AND CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except
per unit amounts)
Three Months Ended
March 31,
2023
2022
Revenues:
Terminalling and storage *
$
20,858
$
19,397
Transportation *
55,723
46,710
Sulfur services
3,358
3,084
Product sales: *
Specialty products
132,269
153,971
Sulfur services
32,321
56,039
164,590
210,010
Total revenues
244,529
279,201
Costs and expenses:
Cost of products sold: (excluding
depreciation and amortization)
Specialty products *
117,995
133,792
Sulfur services *
21,817
37,785
Terminalling and storage *
6
5
139,818
171,582
Expenses:
Operating expenses *
62,745
56,495
Selling, general and administrative *
11,172
11,203
Depreciation and amortization
12,901
14,486
Total costs and expenses
226,636
253,766
Other operating income (loss), net
(388
)
14
Operating income (loss)
17,505
25,449
Other income (expense):
Interest expense, net
(15,657
)
(12,429
)
Loss on extinguishment of debt
(5,121
)
—
Other, net
22
(1
)
Total other expense
(20,756
)
(12,430
)
Net income (loss) before taxes
(3,251
)
13,019
Income tax expense
(1,835
)
(1,541
)
Net income (loss)
(5,086
)
11,478
Less general partner's interest in net
(income) loss
102
(229
)
Less (income) loss allocable to unvested
restricted units
16
(30
)
Limited partners' interest in net income
(loss)
$
(4,968
)
$
11,219
Net income (loss) per unit attributable to
limited partners - basic
$
(0.13
)
$
0.29
Net income (loss) per unit attributable to
limited partners - diluted
$
(0.13
)
$
0.29
Weighted average limited partner units -
basic
38,769,794
38,722,246
Weighted average limited partner units -
diluted
38,769,794
38,738,843
*Related Party Transactions Shown
Below
MARTIN MIDSTREAM PARTNERS
L.P.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Dollars in thousands, except
per unit amounts)
*Related Party Transactions Included
Above
Three Months Ended
March 31,
2023
2022
Revenues:*
Terminalling and storage
$
17,502
$
16,204
Transportation
5,511
6,288
Product Sales
925
321
Costs and expenses:*
Cost of products sold: (excluding
depreciation and amortization)
Specialty products
9,510
9,646
Sulfur services
2,708
2,676
Terminalling and storage
6
5
Expenses:
Operating expenses
23,827
21,380
Selling, general and administrative
8,516
8,808
MARTIN MIDSTREAM PARTNERS
L.P.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
2023
2022
Net income (loss)
$
(5,086
)
$
11,478
Changes in fair values of commodity cash
flow hedges
—
(440
)
Comprehensive income (loss)
$
(5,086
)
$
11,038
MARTIN MIDSTREAM PARTNERS
L.P.
CONSOLIDATED AND CONDENSED
STATEMENTS OF CAPITAL (DEFICIT)
(Unaudited)
(Dollars in thousands)
Partners’ Capital
(Deficit)
Common Limited
General Partner Amount
Accumulated Other
Comprehensive Income (Loss)
Units
Amount
Total
Balances - January 1, 2022
38,802,750
$
(50,741
)
$
1,888
$
816
$
(48,037
)
Net income
—
11,249
229
—
11,478
Issuance of restricted units
34,200
—
—
—
—
Cash distributions
—
(194
)
(4
)
—
(198
)
Unit-based compensation
—
34
—
—
34
Gain reclassified from AOCI into income on
commodity cash flow hedges
—
—
—
(816
)
(816
)
Loss recognized in AOCI on commodity cash
flow hedges
—
—
—
(440
)
(440
)
Balances - March 31, 2022
38,836,950
$
(39,652
)
$
2,113
$
(440
)
$
(37,979
)
Balances - January 1, 2023
38,850,750
$
(61,110
)
$
1,665
$
—
$
(59,445
)
Net loss
—
(4,984
)
(102
)
—
(5,086
)
Issuance of restricted units
64,056
—
—
—
—
Cash distributions
—
(194
)
(4
)
—
(198
)
Unit-based compensation
—
52
—
—
52
Balances - March 31, 2023
38,914,806
$
(66,236
)
$
1,559
$
—
$
(64,677
)
MARTIN MIDSTREAM PARTNERS
L.P.
CONSOLIDATED AND CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
(5,086
)
$
11,478
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
12,901
14,486
Amortization of deferred debt issuance
costs
1,675
783
Amortization of debt discount
400
—
Deferred income tax expense
1,177
921
(Gain) loss on sale of property, plant and
equipment, net
388
(14
)
Loss on extinguishment of debt
5,121
—
Derivative income
—
(816
)
Net cash paid for commodity
derivatives
—
(615
)
Non cash unit-based compensation
52
34
Change in current assets and liabilities,
excluding effects of acquisitions and dispositions:
Accounts and other receivables
6,578
136
Inventories
33,181
7,842
Due from affiliates
4,028
(6,516
)
Other current assets
4,595
2,434
Trade and other accounts payable
(2,016
)
8,650
Product exchange payables
104
(721
)
Due to affiliates
(2,676
)
1,576
Income taxes payable
432
540
Other accrued liabilities
(11,818
)
(11,002
)
Change in other non-current assets and
liabilities
228
(821
)
Net cash provided by operating
activities
49,264
28,375
Cash flows from investing activities:
Payments for property, plant and
equipment
(7,527
)
(10,216
)
Payments for plant turnaround costs
(229
)
(1,435
)
Proceeds from sale of property, plant and
equipment
3,538
297
Net cash used in investing activities
(4,218
)
(11,354
)
Cash flows from financing activities:
Payments of long-term debt
(462,698
)
(120,000
)
Payments under finance lease
obligations
(6
)
(59
)
Proceeds from long-term debt
431,490
103,500
Payment of debt issuance costs
(13,622
)
(4
)
Cash distributions paid
(198
)
(198
)
Net cash used in financing activities
(45,034
)
(16,761
)
Net increase in cash
12
260
Cash at beginning of period
45
52
Cash at end of period
$
57
$
312
Non-cash additions to property, plant and
equipment
$
1,813
$
1,514
MARTIN MIDSTREAM PARTNERS
L.P.
SEGMENT OPERATING
INCOME
(Unaudited)
(Dollars and volumes in
thousands, except BBL per day)
Terminalling and Storage
Segment
Comparative Results of Operations for
the Three Months Ended March 31, 2023 and 2022
Three Months Ended March
31,
Variance
Percent Change
2023
2022
(In thousands, except BBL per
day)
Revenues
$
23,919
$
22,371
$
1,548
7
%
Cost of products sold
6
5
1
20
%
Operating expenses
14,308
14,940
(632
)
(4
) %
Selling, general and administrative
expenses
549
495
54
11
%
Depreciation and amortization
5,599
7,000
(1,401
)
(20
) %
3,457
(69
)
3,526
5,110
%
Other operating loss, net
(349
)
(43
)
(306
)
(712
) %
Operating income (loss)
$
3,108
$
(112
)
$
3,220
2,875
%
Shore-based throughput volumes
(gallons)
43,349
13,634
29,715
218
%
Smackover refinery throughput volumes
(guaranteed minimum) (BBL per day)
6,500
6,500
—
—
%
Transportation Segment
Comparative Results of Operations for
the Three Months Ended March 31, 2023 and 2022
Three Months Ended March
31,
Variance
Percent Change
2023
2022
(In thousands)
Revenues
$
61,939
$
51,897
$
10,042
19
%
Operating expenses
46,190
39,202
6,988
18
%
Selling, general and administrative
expenses
2,549
2,169
380
18
%
Depreciation and amortization
3,762
3,573
189
5
%
$
9,438
$
6,953
$
2,485
36
%
Other operating income, net
4
29
(25
)
(86
) %
Operating income
$
9,442
$
6,982
$
2,460
35
%
Sulfur Services Segment
Comparative Results of Operations for
the Three Months Ended March 31, 2023 and 2022
Three Months Ended March
31,
Variance
Percent Change
2023
2022
(In thousands)
Revenues:
Services
$
3,358
$
3,084
$
274
9
%
Products
32,321
56,039
(23,718
)
(42
) %
Total revenues
35,679
59,123
(23,444
)
(40
) %
Cost of products sold
23,949
39,258
(15,309
)
(39
) %
Operating expenses
2,899
3,028
(129
)
(4
) %
Selling, general and administrative
expenses
1,617
1,504
113
8
%
Depreciation and amortization
2,677
2,709
(32
)
(1
) %
4,537
12,624
(8,087
)
(64
) %
Other operating income, net
16
28
(12
)
(43
) %
Operating income
$
4,553
$
12,652
$
(8,099
)
(64
) %
Sulfur (long tons)
74
114
(40
)
(35
) %
Fertilizer (long tons)
61
84
(23
)
(27
) %
Total sulfur services volumes (long
tons)
135
198
(63
)
(32
) %
Specialty Products Segment
Comparative Results of Operations for
the Three Months Ended March 31, 2023 and 2022
Three Months Ended March
31,
Variance
Percent Change
2023
2022
(In thousands)
Products revenues
$
132,277
$
154,009
$
(21,732
)
(14
) %
Cost of products sold
124,451
139,780
(15,329
)
(11
) %
Operating expenses
14
38
(24
)
(63
) %
Selling, general and administrative
expenses
2,290
2,938
(648
)
(22
) %
Depreciation and amortization
863
1,204
(341
)
(28
) %
4,659
10,049
(5,390
)
(54
) %
Other operating loss, net
(59
)
—
(59
)
Operating income
$
4,600
$
10,049
$
(5,449
)
(54
) %
NGL sales volumes (Bbls)
1,691
1,597
94
6
%
Other specialty products volumes
(Bbls)
84
98
(14
)
(14
) %
Total specialty products volumes
(Bbls)
1,775
1,695
80
5
%
Unallocated Selling, General and
Administrative Expenses
Comparative Results of Operations for
the Three Months Ended March 31, 2023 and 2022
Three Months Ended March
31,
Variance
Percent Change
2023
2022
(In thousands)
Indirect selling, general and
administrative expenses
$
4,198
$
4,122
$
76
2
%
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 months ended March 31, 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 March
31,
2023
2022
(in thousands)
Net income (loss)
$
(5,086
)
$
11,478
Adjustments:
Interest expense
15,657
12,429
Income tax expense
1,835
1,541
Depreciation and amortization
12,901
14,486
EBITDA
25,307
39,934
Adjustments:
(Gain) loss on disposition of property,
plant and equipment
388
(14
)
Loss on extinguishment of debt
5,121
—
Lower of cost or market and other non-cash
adjustments
(9,133
)
—
Unit-based compensation
52
34
Adjusted EBITDA
$
21,735
$
39,954
Adjustments:
Less: net income associated with butane
optimization business
(305
)
(5,694
)
Plus: lower of cost or market and other
non-cash adjustments
$
9,133
$
—
Adjusted EBITDA after giving effect to
the exit of the butane optimization business
$
30,563
$
34,260
Reconciliation of Net Cash
Provided by 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 March
31,
2023
2022
(in thousands)
Net cash provided by operating
activities
$
49,264
$
28,375
Interest expense 1
13,582
11,646
Current income tax expense
658
620
Lower of cost or market and other non-cash
adjustments
(9,133
)
—
Commodity cash flow hedging gains
reclassified to earnings
—
816
Net cash paid for closed commodity
derivative positions included in AOCI
—
615
Changes in operating assets and
liabilities which (provided) used cash:
Accounts and other receivables,
inventories, and other current assets
(48,382
)
(3,896
)
Trade, accounts and other payables, and
other current liabilities
15,974
957
Other
(228
)
821
Adjusted EBITDA
21,735
39,954
Adjustments:
Less: net income loss associated with
butane optimization business
(305
)
(5,694
)
Plus: lower of cost or market and other
non-cash adjustments
9,133
—
Adjusted EBITDA after giving effect to
the exit of the butane optimization business
30,563
34,260
Adjustments:
Interest expense
(15,657
)
(12,429
)
Income tax expense
(1,835
)
(1,541
)
Deferred income taxes
1,177
921
Amortization of debt discount
400
—
Amortization of deferred debt issuance
costs
1,675
783
Payments for plant turnaround costs
(229
)
(1,435
)
Maintenance capital expenditures
(6,634
)
(5,399
)
Distributable cash flow
9,460
15,160
Principal payments under finance lease
obligations
(6
)
(59
)
Expansion capital expenditures
(757
)
(3,101
)
Adjusted free cash flow
$
8,697
$
12,000
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230419005833/en/
Sharon Taylor - Executive Vice President & Chief Financial
Officer (877) 256-6644 investor.relations@mmlp.com
Martin Midstream Partners (NASDAQ:MMLP)
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