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Martin Midstream Partners Reports Second Quarter 2022 Financial Results, Increases Annual Guidance and Declares Quarterly Cash Distribution

  • Announces increased 2022 financial guidance
  • Reported net income of $6.6 million and $18.1 million for the three and six months ended June 30, 2022, respectively
  • Reported adjusted EBITDA of $38.3 million and $78.3 million for the three and six months ended June 30, 2022, respectively
  • Declares quarterly distribution of $0.005, or $0.02 per unit annually

Martin Midstream Partners L.P. (Nasdaq:MMLP) ("MMLP" or the "Partnership") today announced its financial results for the second quarter of 2022.

Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership stated, “The Partnership experienced another outstanding quarter with elevated demand for our land transportation assets, and robust margins in our lubricants and fertilizer businesses. Overall, each of our four business segments performed above expectations beating the high range of guidance for the quarter by $13 million. We now expect the current refinery utilization levels to remain strong through year end which will bring continued solid demand for our diversified products and services. Based on this expectation, we are raising our 2022 adjusted EBITDA guidance range to $126 - $135 million.

“The current operating environment for our business segments has provided the opportunity for consistent leverage reduction as year over year we have reduced outstanding debt and improved financial results. As a result, on June 30, 2022, the Partnership’s adjusted leverage ratio was 3.46 times compared to 3.87 times at March 31, 2022. While that is an important milestone, our current guidance indicates that the Partnership will exit 2022 with approximately the same adjusted leverage ratio announced today, as higher commodity prices continue to increase our working capital needs specifically within the natural gas liquids segment. Our focus will remain on conservative capital management to meet the goal of a sustained leverage ratio below 3.75 times.”

SECOND QUARTER 2022 OPERATING RESULTS BY BUSINESS SEGMENT

TERMINALLING AND STORAGE (“T&S”)

T&S Operating Income for the three months ended June 30, 2022 and 2021 was $5.2 million and $3.7 million, respectively.

Adjusted segment EBITDA for T&S was $12.9 million and $10.6 million, for the three months ended June 30, 2022 and 2021, respectively, reflecting continued strength in our lubricant and specialty products divisions.

TRANSPORTATION

Transportation Operating Income for the three months ended June 30, 2022 and 2021 was $11.3 million and $0.7 million, respectively.

Adjusted segment EBITDA for Transportation was $14.6 million and $5.0 million for the three months ended June 30, 2022 and 2021, respectively, reflecting increased demand for land transportation services coupled with improving marine fleet utilization and higher day rates.

SULFUR SERVICES

Sulfur Services Operating Income for the three months ended June 30, 2022 and 2021 was $9.1 million and $6.3 million, respectively.

Adjusted segment EBITDA for Sulfur Services was $13.9 million and $8.9 million for the three months ended June 30, 2022 and 2021, respectively, reflecting sustained demand for fertilizer products.

NATURAL GAS LIQUIDS (“NGL”)

NGL Operating Income for the three months ended June 30, 2022 and 2021 was $0.3 million and $0.7 million, respectively.

Adjusted segment EBITDA for NGL was $1.3 million and $1.7 million for the three months ended June 30, 2022 and 2021, respectively, primarily reflecting a seasonal decrease in NGL sales volumes.

UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”)

USGA expenses included in operating income for the three months ended June 30, 2022 and 2021 were $4.4 million and $3.8 million, respectively.

USGA expenses included in adjusted EBITDA for the three months ended June 30, 2022 and 2021 were $4.3 million and $3.7 million, respectively, primarily reflecting an increase in employee related expenses.

CAPITALIZATION

At June 30, 2022, the Partnership had $494 million of total debt outstanding, including $149 million drawn on its $275 million revolving credit facility, $54 million of senior secured 1.5 lien notes due 2024 and $291 million of senior secured second lien notes due 2025. At June 30, 2022, the Partnership had liquidity of approximately $87 million from available capacity under its revolving credit facility. The Partnership’s adjusted leverage ratio, as calculated under the revolving credit facility, was 3.46 times and 3.87 times on June 30, 2022 and March 31, 2022, respectively. The Partnership was in compliance with all debt covenants as of June 30, 2022.

QUARTERLY CASH DISTRIBUTION

The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended June 30, 2022. The distribution is payable on August 12, 2022 to common unitholders of record as of the close of business on August 5, 2022. The ex-dividend date for the cash distribution is August 4, 2022.

QUALIFIED NOTICE TO NOMINEES

This release serves as qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b)(4) and (d). Please note that 100 percent of the Partnership's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of the Partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals or corporations, as applicable. Nominees, and not the Partnership, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

RESULTS OF OPERATIONS

The Partnership had net income for the three months ended June 30, 2022 of $6.6 million, or $0.17 per limited partner unit. The Partnership had a net loss for the three months ended June 30, 2021 of $6.6 million, a loss of $0.17 per limited partner unit. Adjusted EBITDA for the three months ended June 30, 2022 was $38.3 million compared to $22.5 million for the three months ended June 30, 2021. Net cash provided by (used in) operating activities for the three months ended June 30, 2022 was ($2.5) million, compared to $2.2 million for the three months ended June 30, 2021. Distributable cash flow for the three months ended June 30, 2022 was $22.3 million compared to $7.3 million for the three months ended June 30, 2021.

Revenues for the three months ended June 30, 2022 were $267.0 million compared to $184.3 million for the three months ended June 30, 2021.

The Partnership had net income for the six months ended June 30, 2022 of $18.1 million, or $0.46 per limited partner unit. The Partnership had a net loss for the six months ended June 30, 2021 of $4.1 million, a loss of $0.10 per limited partner unit. Adjusted EBITDA for the six months ended June 30, 2022 was $78.3 million compared to $53.4 million for the six months ended June 30, 2021. Net cash provided by operating activities for the six months ended June 30, 2022 was $28.5 million, compared to $6.1 million for the six months ended June 30, 2021. Distributable cash flow for the six months ended June 30, 2022 was $38.5 million compared to $15.6 million for the six months ended June 30, 2021.

Revenues for the six months ended June 30, 2022 were $546.2 million compared to $385.3 million for the six months ended June 30, 2021.

EBITDA, adjusted EBITDA, distributable cash flow and adjusted free cash flow are non-GAAP financial measures which are explained in greater detail below under the heading "Use of Non-GAAP Financial Information." The Partnership has also included below a table entitled "Reconciliation of EBITDA, Adjusted EBITDA, Distributable Cash Flow and Adjusted Free Cash Flow" in order to show the components of these non-GAAP financial measures and their reconciliation to the most comparable GAAP measurement.

An attachment included in the Current Report on Form 8-K to which this announcement is included, contains a comparison of the Partnership’s adjusted EBITDA for the second quarter 2022 to the Partnership's adjusted EBITDA for the second quarter 2021.

2022 REVISED FINANCIAL GUIDANCE

The Partnership now expects to generate adjusted EBITDA between $126 million and $135 million for full-year 2022, compared to the previously revised adjusted EBITDA guidance of between $110 million and $120 million. This increased guidance reflects our expectation that current refinery utilization levels will remain consistent through year-end 2022 which will bring continued solid demand for our diversified products and services.

Distributable cash flow is now expected to be between $53 million and $62 million for full-year 2022, compared to the revised distributable cash flow guidance of between $37 million and $47 million. Adjusted free cash flow is now expected to be between $44 million and $53 million, compared to the revised adjusted free cash flow guidance of between $29 million and $39 million.

MMLP does not intend at this time to provide financial guidance beyond 2022.

The Partnership has not provided comparable GAAP financial information on a forward-looking basis because it would require the Partnership to create estimated ranges on a GAAP basis, which would entail unreasonable effort as the adjustments required to reconcile forward-looking non-GAAP measures cannot be predicted with a reasonable degree of certainty but may include, among others, costs related to debt amendments and unusual charges, expenses and gains. Some or all of those adjustments could be significant.

Investors' Conference Call

Date: Thursday, July 21, 2022

Time: 8:00 a.m. CT (please dial in by 7:55 a.m.)

Dial In #: (888) 330-2384

Conference ID: 8536096

Replay Dial In # (800) 770-2030 – Conference ID: 8536096

A webcast of the conference call along with the Second Quarter 2022 Earnings Summary and Revised Guidance Presentation will also be available by visiting the Events and Presentations section under Investor Relations on our website at www.MMLP.com.

About Martin Midstream Partners

MMLP, headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s primary business lines include: (1) terminalling, processing, storage, and packaging services for petroleum products and by-products; (2) land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) natural gas liquids marketing, distribution, and transportation services. To learn more, visit www.MMLP.com. Follow Martin Midstream Partners L.P. on LinkedIn and Facebook.

Forward-Looking Statements

Statements about the Partnership’s outlook and all other statements in this release other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all references to financial estimates rely on a number of assumptions concerning future events and are subject to a number of uncertainties, including (i) the current and potential impacts of the COVID-19 pandemic generally (including variants of the virus), on an industry-specific basis, and on the Partnership’s specific operations and business, (ii) the effects of the continued volatility of commodity prices and the related macroeconomic and political environment, and (iii) other factors, many of which are outside its control, which could cause actual results to differ materially from such statements. While the Partnership believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in anticipating or predicting certain important factors. A discussion of these factors, including risks and uncertainties, is set forth in the Partnership’s annual and quarterly reports filed from time to time with the Securities and Exchange Commission (the “SEC”). The Partnership disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events, or otherwise except where required to do so by law.

Use of Non-GAAP Financial Information

To assist the Partnership's management in assessing its business, it uses the following non-GAAP financial measures: earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below) distributable cash flow available to common unitholders (“distributable cash flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("adjusted free cash flow"). The Partnership's management uses a variety of financial and operational measurements other than its financial statements prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") to analyze its performance.

Certain items excluded from EBITDA and adjusted EBITDA are significant components in understanding and assessing an entity's financial performance, such as cost of capital and historical costs of depreciable assets.

EBITDA and Adjusted EBITDA. The Partnership defines adjusted EBITDA as EBITDA before unit-based compensation expenses, gains and losses on the disposition of property, plant and equipment, impairment and other similar non-cash adjustments. Adjusted EBITDA is used as a supplemental performance and liquidity measure by the Partnership's management and by external users of its financial statements, such as investors, commercial banks, research analysts, and others, to assess:

  • the financial performance of the Partnership's assets without regard to financing methods, capital structure, or historical cost basis;
  • the ability of the Partnership's assets to generate cash sufficient to pay interest costs, support its indebtedness, and make cash distributions to its unitholders; and
  • its operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing methods or capital structure.

The GAAP measures most directly comparable to adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities, or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate adjusted EBITDA in the same manner.

Adjusted EBITDA does not include interest expense, income tax expense, and depreciation and amortization. Because the Partnership has borrowed money to finance its operations, interest expense is a necessary element of its costs and its ability to generate cash available for distribution. Because the Partnership has capital assets, depreciation and amortization are also necessary elements of its costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, the Partnership believes that it is important to consider net income (loss) and net cash provided by (used in) operating activities as determined under GAAP, as well as adjusted EBITDA, to evaluate its overall performance.

Distributable Cash Flow. The Partnership defines distributable cash flow as net cash provided by (used in) operating activities less cash received (plus cash paid) for closed commodity derivative positions included in accumulated other comprehensive income (loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital expenditures and plant turnaround costs. Distributable cash flow is a significant performance measure used by the Partnership's management and by external users of its financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions it expects to pay unitholders. Distributable cash flow is also an important financial measure for the Partnership's unitholders since it serves as an indicator of its success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not the Partnership is generating cash flow at a level that can sustain or support an increase in its quarterly distribution rates. Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.

Adjusted Free Cash Flow. The Partnership defines adjusted free cash flow as distributable cash flow less growth capital expenditures and principal payments under finance lease obligations. Adjusted free cash flow is a significant performance measure used by the Partnership's management and by external users of its financial statements and represents how much cash flow a business generates during a specified time period after accounting for all capital expenditures, including expenditures for growth and maintenance capital projects. The Partnership believes that adjusted free cash flow is important to investors, lenders, commercial banks and research analysts since it reflects the amount of cash available for reducing debt, investing in additional capital projects, paying distributions, and similar matters. The Partnership's calculation of adjusted free cash flow may or may not be comparable to similarly titled measures used by other entities.

The GAAP measure most directly comparable to distributable cash flow and adjusted free cash flow is net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow should not be considered alternatives to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP. Distributable cash flow and adjusted free cash flow have important limitations because they exclude some items that affect net income (loss), operating income (loss), and net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow may not be comparable to similarly titled measures of other companies because other companies may not calculate these non-GAAP metrics in the same manner. To compensate for these limitations, the Partnership believes that it is important to consider net cash provided by (used in) operating activities determined under GAAP, as well as distributable cash flow and adjusted free cash flow, to evaluate its overall liquidity.

MMLP-F

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED BALANCE SHEETS

(Dollars in thousands)

 

 

June 30, 2022

 

December 31, 2021

 

(Unaudited)

 

(Audited)

Assets

 

 

 

Cash

$

43

 

 

$

52

 

Accounts and other receivables, less allowance for doubtful accounts of $559 and $311, respectively

 

73,485

 

 

 

84,199

 

Inventories

 

117,845

 

 

 

62,120

 

Due from affiliates

 

16,558

 

 

 

14,409

 

Other current assets

 

29,554

 

 

 

12,908

 

Total current assets

 

237,485

 

 

 

173,688

 

 

 

 

 

Property, plant and equipment, at cost

 

898,379

 

 

 

898,770

 

Accumulated depreciation

 

(566,799

)

 

 

(553,300

)

Property, plant and equipment, net

 

331,580

 

 

 

345,470

 

 

 

 

 

Goodwill

 

16,823

 

 

 

16,823

 

Right-of-use assets

 

30,249

 

 

 

21,861

 

Deferred income taxes, net

 

17,517

 

 

 

19,821

 

Other assets, net

 

2,507

 

 

 

2,198

 

Total assets

$

636,161

 

 

$

579,861

 

 

 

 

 

Liabilities and Partners’ Capital (Deficit)

 

 

 

Current installments of long-term debt and finance lease obligations

$

169

 

 

$

280

 

Trade and other accounts payable

 

105,156

 

 

 

70,342

 

Product exchange payables

 

537

 

 

 

1,406

 

Due to affiliates

 

9,764

 

 

 

1,824

 

Income taxes payable

 

753

 

 

 

385

 

Other accrued liabilities

 

31,513

 

 

 

29,850

 

Total current liabilities

 

147,892

 

 

 

104,087

 

 

 

 

 

Long-term debt, net

 

489,325

 

 

 

498,871

 

Finance lease obligations

 

 

 

 

9

 

Operating lease liabilities

 

22,455

 

 

 

15,704

 

Other long-term obligations

 

7,343

 

 

 

9,227

 

Total liabilities

 

667,015

 

 

 

627,898

 

 

 

 

 

Commitments and contingencies

 

 

 

Partners’ capital (deficit)

 

(31,021

)

 

 

(48,853

)

Accumulated other comprehensive income (loss)

 

167

 

 

 

816

 

Total partners’ capital (deficit)

 

(30,854

)

 

 

(48,037

)

Total liabilities and partners' capital (deficit)

$

636,161

 

 

$

579,861

 

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per unit amounts)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2022

 

2021

 

2022

 

2021

Revenues:

 

 

 

 

 

 

 

Terminalling and storage *

$

20,439

 

 

$

18,702

 

 

$

39,852

 

 

$

37,080

 

Transportation *

 

55,832

 

 

 

34,926

 

 

 

102,542

 

 

 

64,741

 

Sulfur services

 

3,084

 

 

 

2,949

 

 

 

6,168

 

 

 

5,899

 

Product sales: *

 

 

 

 

 

 

 

Natural gas liquids

 

97,580

 

 

 

67,232

 

 

 

218,143

 

 

 

165,317

 

Sulfur services

 

53,869

 

 

 

35,337

 

 

 

109,908

 

 

 

67,222

 

Terminalling and storage

 

36,192

 

 

 

25,147

 

 

 

69,584

 

 

 

45,008

 

 

 

187,641

 

 

 

127,716

 

 

 

397,635

 

 

 

277,547

 

Total revenues

 

266,996

 

 

 

184,293

 

 

 

546,197

 

 

 

385,267

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of products sold: (excluding depreciation and amortization)

 

 

 

 

 

 

 

Natural gas liquids *

 

91,584

 

 

 

61,590

 

 

 

198,682

 

 

 

140,725

 

Sulfur services *

 

37,063

 

 

 

24,177

 

 

 

74,848

 

 

 

45,391

 

Terminalling and storage *

 

28,279

 

 

 

20,226

 

 

 

54,978

 

 

 

34,728

 

 

 

156,926

 

 

 

105,993

 

 

 

328,508

 

 

 

220,844

 

Expenses:

 

 

 

 

 

 

 

Operating expenses *

 

64,082

 

 

 

47,313

 

 

 

120,577

 

 

 

91,947

 

Selling, general and administrative *

 

9,944

 

 

 

8,960

 

 

 

21,147

 

 

 

19,569

 

Depreciation and amortization

 

14,800

 

 

 

14,483

 

 

 

29,286

 

 

 

28,917

 

Total costs and expenses

 

245,752

 

 

 

176,749

 

 

 

499,518

 

 

 

361,277

 

 

 

 

 

 

 

 

 

Other operating income (loss), net

 

246

 

 

 

89

 

 

 

260

 

 

 

(671

)

Operating income

 

21,490

 

 

 

7,633

 

 

 

46,939

 

 

 

23,319

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense, net

 

(12,846

)

 

 

(13,309

)

 

 

(25,275

)

 

 

(26,262

)

Other, net

 

(1

)

 

 

(1

)

 

 

(2

)

 

 

(1

)

Total other expense

 

(12,847

)

 

 

(13,310

)

 

 

(25,277

)

 

 

(26,263

)

 

 

 

 

 

 

 

 

Net income before taxes

 

8,643

 

 

 

(5,677

)

 

 

21,662

 

 

 

(2,944

)

Income tax expense

 

(2,037

)

 

 

(935

)

 

 

(3,578

)

 

 

(1,157

)

Net income

 

6,606

 

 

 

(6,612

)

 

 

18,084

 

 

 

(4,101

)

Less general partner's interest in net income

 

(132

)

 

 

132

 

 

 

(362

)

 

 

82

 

Less income allocable to unvested restricted units

 

(21

)

 

 

20

 

 

 

(51

)

 

 

10

 

Limited partners' interest in net income

$

6,453

 

 

$

(6,460

)

 

$

17,671

 

 

$

(4,009

)

 

 

 

 

 

 

 

 

Net income per unit attributable to limited partners - basic

$

0.17

 

 

$

(0.17

)

 

$

0.46

 

 

$

(0.10

)

Net income per unit attributable to limited partners - diluted

$

0.17

 

 

$

(0.17

)

 

$

0.46

 

 

$

(0.10

)

Weighted average limited partner units - basic

 

38,729,118

 

 

 

38,687,874

 

 

 

38,725,701

 

 

 

38,690,228

 

Weighted average limited partner units - diluted

 

38,750,153

 

 

 

38,687,874

 

 

 

38,753,197

 

 

 

38,690,228

 

*Related Party Transactions Shown Below

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per unit amounts)

 

*Related Party Transactions Included Above

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2022

 

2021

 

2022

 

2021

Revenues:*

 

 

 

 

 

 

 

Terminalling and storage

$

17,416

 

$

15,569

 

$

33,620

 

$

30,875

Transportation

 

7,463

 

 

4,889

 

 

13,751

 

 

8,899

Product Sales

 

95

 

 

71

 

 

416

 

 

185

Costs and expenses:*

 

 

 

 

 

 

 

Cost of products sold: (excluding depreciation and amortization)

 

 

 

 

 

 

 

Sulfur services

 

2,592

 

 

2,403

 

 

5,268

 

 

4,938

Terminalling and storage

 

10,209

 

 

7,036

 

 

19,860

 

 

11,604

Expenses:

 

 

 

 

 

 

 

Operating expenses

 

23,446

 

 

19,590

 

 

44,826

 

 

37,958

Selling, general and administrative

 

7,498

 

 

7,285

 

 

16,306

 

 

15,965

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in thousands)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

Net income

$

6,606

 

$

(6,612

)

 

$

18,084

 

 

$

(4,101

)

Changes in fair values of commodity cash flow hedges

 

167

 

 

 

 

 

167

 

 

 

 

Commodity cash flow hedging (gains) losses reclassified to earnings

 

440

 

 

 

 

 

(816

)

 

 

 

Comprehensive income

$

7,213

 

$

(6,612

)

 

$

17,435

 

 

$

(4,101

)

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)

(Unaudited)

(Dollars in thousands)

 
 

 

Partners’ Capital (Deficit)

 

 

 

Common Limited

 

General

Partner

Amount

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

 

Units

 

Amount

 

 

 

Total

Balances - January 1, 2021

38,851,174

 

 

$

(48,776

)

 

$

1,905

 

 

$

 

 

$

(46,871

)

Net income

 

 

 

(4,019

)

 

 

(82

)

 

 

 

 

 

(4,101

)

Issuance of restricted units

42,168

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of restricted units

(83,436

)

 

 

 

 

 

 

 

 

 

 

 

 

Cash distributions

 

 

 

(388

)

 

 

(8

)

 

 

 

 

 

(396

)

Unit-based compensation

 

 

 

288

 

 

 

 

 

 

 

 

 

288

 

Purchase of treasury units

(7,156

)

 

 

(17

)

 

 

 

 

 

 

 

 

(17

)

Balances - June 30, 2021

38,802,750

 

 

$

(52,912

)

 

$

1,815

 

 

$

 

 

$

(51,097

)

 

 

 

 

 

 

 

 

 

 

Balances - January 1, 2022

38,802,750

 

 

$

(50,741

)

 

$

1,888

 

 

$

816

 

 

$

(48,037

)

Net income

 

 

 

17,722

 

 

 

362

 

 

 

 

 

 

18,084

 

Issuance of restricted units

48,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash distributions

 

 

 

(388

)

 

 

(8

)

 

 

 

 

 

(396

)

Unit-based compensation

 

 

 

79

 

 

 

 

 

 

 

 

 

79

 

Gain reclassified from AOCI into income on commodity cash flow hedges

 

 

 

 

 

 

 

 

 

(816

)

 

 

(816

)

Gain recognized in AOCI on commodity cash flow hedges

 

 

 

 

 

 

 

 

 

167

 

 

 

167

 

Excess purchase price over carrying value of acquired assets

 

 

 

65

 

 

 

 

 

 

 

 

 

65

 

Balances - June 30, 2022

38,850,750

 

 

$

(33,263

)

 

$

2,242

 

 

$

167

 

 

$

(30,854

)

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

 

 

Six Months Ended

 

June 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net income (loss)

$

18,084

 

 

$

(4,101

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

29,286

 

 

 

28,917

 

Amortization of deferred debt issuance costs

 

1,568

 

 

 

1,521

 

Deferred income tax expense

 

2,304

 

 

 

758

 

(Gain) loss on sale of property, plant and equipment, net

 

(260

)

 

 

671

 

Derivative (income) loss

 

(734

)

 

 

884

 

Net cash paid for commodity derivatives

 

85

 

 

 

(679

)

Non cash unit-based compensation

 

79

 

 

 

288

 

Change in current assets and liabilities, excluding effects of acquisitions and dispositions:

 

 

 

Accounts and other receivables

 

10,714

 

 

 

(2,303

)

Inventories

 

(55,725

)

 

 

(17,572

)

Due from affiliates

 

(2,149

)

 

 

(5,812

)

Other current assets

 

(17,741

)

 

 

1,435

 

Trade and other accounts payable

 

37,688

 

 

 

3,335

 

Product exchange payables

 

(869

)

 

 

327

 

Due to affiliates

 

7,940

 

 

 

1,504

 

Income taxes payable

 

368

 

 

 

(248

)

Other accrued liabilities

 

(2,332

)

 

 

(3,053

)

Change in other non-current assets and liabilities

 

145

 

 

 

213

 

Net cash provided by operating activities

 

28,451

 

 

 

6,085

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Payments for property, plant and equipment

 

(14,634

)

 

 

(8,200

)

Payments for plant turnaround costs

 

(1,600

)

 

 

(1,694

)

Proceeds from sale of property, plant and equipment

 

689

 

 

 

133

 

Net cash used in investing activities

 

(15,545

)

 

 

(9,761

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Payments of long-term debt

 

(217,589

)

 

 

(144,790

)

Payments under finance lease obligations

 

(119

)

 

 

(2,591

)

Proceeds from long-term debt

 

206,500

 

 

 

147,500

 

Purchase of treasury units

 

 

 

 

(17

)

Payment of debt issuance costs

 

(26

)

 

 

(307

)

Excess purchase price over carrying value of acquired assets

 

(1,285

)

 

 

 

Cash distributions paid

 

(396

)

 

 

(396

)

Net cash used in financing activities

 

(12,915

)

 

 

(601

)

 

 

 

 

Net increase (decrease) in cash

 

(9

)

 

 

(4,277

)

Cash at beginning of period

 

52

 

 

 

4,958

 

Cash at end of period

$

43

 

 

$

681

 

Non-cash additions to property, plant and equipment

$

1,705

 

 

$

2,855

 

MARTIN MIDSTREAM PARTNERS L.P.

SEGMENT OPERATING INCOME

(Unaudited)

(Dollars and volumes in thousands, except BBL per day)

 

Terminalling and Storage Segment

 

Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021

 

 

Three Months Ended

June 30,

 

Variance

 

Percent

Change

 

2022

 

2021

 

 

 

(In thousands, except BBL per day)

 

 

Revenues:

 

 

 

 

 

 

 

Services

$

22,190

 

$

20,358

 

$

1,832

 

 

9

%

Products

 

36,220

 

 

25,166

 

 

11,054

 

 

44

%

Total revenues

 

58,410

 

 

45,524

 

 

12,886

 

 

28

%

 

 

 

 

 

 

 

 

Cost of products sold

 

28,955

 

 

20,759

 

 

8,196

 

 

39

%

Operating expenses

 

14,925

 

 

12,664

 

 

2,261

 

 

18

%

Selling, general and administrative expenses

 

1,654

 

 

1,468

 

 

186

 

 

13

%

Depreciation and amortization

 

7,731

 

 

6,996

 

 

735

 

 

11

%

 

 

5,145

 

 

3,637

 

 

1,508

 

 

41

%

Other operating income, net

 

8

 

 

61

 

 

(53

)

 

(87

) %

Operating income

$

5,153

 

$

3,698

 

$

1,455

 

 

39

%

 

 

 

 

 

 

 

 

Shore-based throughput volumes (guaranteed minimum) (gallons)

 

20,000

 

 

20,000

 

 

 

 

%

Smackover refinery throughput volumes (guaranteed minimum BBL per day)

 

6,500

 

 

6,500

 

 

 

 

%

Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021

 

 

Six Months Ended

June 30,

 

Variance

 

Percent

Change

 

2022

 

2021

 

 

 

(In thousands, except BBL per day)

 

 

Revenues:

 

 

 

 

 

 

 

Services

$

43,146

 

 

$

40,317

 

 

$

2,829

 

 

7

%

Products

 

69,647

 

 

 

45,041

 

 

 

24,606

 

 

55

%

Total revenues

 

112,793

 

 

 

85,358

 

 

 

27,435

 

 

32

%

 

 

 

 

 

 

 

 

Cost of products sold

 

56,152

 

 

 

35,700

 

 

 

20,452

 

 

57

%

Operating expenses

 

28,837

 

 

 

25,457

 

 

 

3,380

 

 

13

%

Selling, general and administrative expenses

 

3,365

 

 

 

2,967

 

 

 

398

 

 

13

%

Depreciation and amortization

 

15,337

 

 

 

14,101

 

 

 

1,236

 

 

9

%

 

 

9,102

 

 

 

7,133

 

 

 

1,969

 

 

28

%

Other operating loss, net

 

(35

)

 

 

(5

)

 

 

(30

)

 

(600

) %

Operating income

$

9,067

 

 

$

7,128

 

 

$

1,939

 

 

27

%

 

 

 

 

 

 

 

 

Shore-based throughput volumes (guaranteed minimum) (gallons)

 

40,000

 

 

 

40,000

 

 

 

 

 

%

Smackover refinery throughput volumes (guaranteed minimum) (BBL per day)

 

6,500

 

 

 

6,500

 

 

 

 

 

%

Transportation Segment

 

Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021

 

 

Three Months Ended

June 30,

 

Variance

 

Percent

Change

 

2022

 

2021

 

 

 

(In thousands)

 

 

Revenues

$

60,902

 

$

38,349

 

$

22,553

 

 

59

%

Operating expenses

 

44,528

 

 

31,485

 

 

13,043

 

 

41

%

Selling, general and administrative expenses

 

1,788

 

 

1,858

 

 

(70

)

 

(4

) %

Depreciation and amortization

 

3,590

 

 

4,331

 

 

(741

)

 

(17

) %

 

 

10,996

 

 

675

 

 

10,321

 

 

1,529

%

Other operating income, net

 

254

 

 

21

 

 

233

 

 

1,110

%

Operating income

$

11,250

 

$

696

 

$

10,554

 

 

1,516

%

Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021

 

 

Six Months Ended

June 30,

 

Variance

 

Percent

Change

 

2022

 

2021

 

 

 

(In thousands)

 

 

Revenues

$

112,799

 

$

72,318

 

 

$

40,481

 

 

56

%

Operating expenses

 

83,730

 

 

60,989

 

 

 

22,741

 

 

37

%

Selling, general and administrative expenses

 

3,958

 

 

3,658

 

 

 

300

 

 

8

%

Depreciation and amortization

 

7,163

 

 

8,329

 

 

 

(1,166

)

 

(14

) %

 

$

17,948

 

$

(658

)

 

$

18,606

 

 

2,828

%

Other operating income (loss), net

 

283

 

 

17

 

 

 

266

 

 

1,565

%

Operating income

$

18,231

 

$

(641

)

 

$

18,872

 

 

2,944

%

Sulfur Services Segment

 

Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021

 

 

Three Months Ended

June 30,

 

Variance

 

Percent

Change

 

2022

 

2021

 

 

 

(In thousands)

 

 

Revenues:

 

 

 

 

 

 

 

Services

$

3,084

 

$

2,949

 

$

135

 

 

5

%

Products

 

53,869

 

 

35,337

 

 

18,532

 

 

52

%

Total revenues

 

56,953

 

 

38,286

 

 

18,667

 

 

49

%

 

 

 

 

 

 

 

 

Cost of products sold

 

39,181

 

 

25,397

 

 

13,784

 

 

54

%

Operating expenses

 

4,227

 

 

2,804

 

 

1,423

 

 

51

%

Selling, general and administrative expenses

 

1,537

 

 

1,215

 

 

322

 

 

27

%

Depreciation and amortization

 

2,882

 

 

2,568

 

 

314

 

 

12

%

 

 

9,126

 

 

6,302

 

 

2,824

 

 

45

%

Other operating income, net

 

8

 

 

6

 

 

2

 

 

33

%

Operating income

$

9,134

 

$

6,308

 

$

2,826

 

 

45

%

 

 

 

 

 

 

 

 

Sulfur (long tons)

 

118

 

 

146

 

 

(28

)

 

(19

) %

Fertilizer (long tons)

 

62

 

 

84

 

 

(22

)

 

(26

) %

Total sulfur services volumes (long tons)

 

180

 

 

230

 

 

(50

)

 

(22

) %

Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021

 

 

Six Months Ended

June 30,

 

Variance

 

Percent

Change

 

2022

 

2021

 

 

 

(In thousands)

 

 

Revenues:

 

 

 

 

 

 

 

Services

$

6,168

 

$

5,899

 

$

269

 

 

5

%

Products

 

109,908

 

 

67,222

 

 

42,686

 

 

64

%

Total revenues

 

116,076

 

 

73,121

 

 

42,955

 

 

59

%

 

 

 

 

 

 

 

 

Cost of products sold

 

78,439

 

 

47,820

 

 

30,619

 

 

64

%

Operating expenses

 

7,255

 

 

4,813

 

 

2,442

 

 

51

%

Selling, general and administrative expenses

 

3,041

 

 

2,456

 

 

585

 

 

24

%

Depreciation and amortization

 

5,591

 

 

5,288

 

 

303

 

 

6

%

 

 

21,750

 

 

12,744

 

 

9,006

 

 

71

%

Other operating income, net

 

36

 

 

6

 

 

30

 

 

500

%

Operating income

$

21,786

 

$

12,750

 

$

9,036

 

 

71

%

 

 

 

 

 

 

 

 

Sulfur (long tons)

 

232

 

 

219

 

 

13

 

 

6

%

Fertilizer (long tons)

 

146

 

 

179

 

 

(33

)

 

(18

) %

Total sulfur services volumes (long tons)

 

378

 

 

398

 

 

(20

)

 

(5

) %

Natural Gas Liquids Segment

 

Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021

 

 

Three Months Ended

June 30,

 

Variance

 

Percent

Change

 

2022

 

2021

 

 

 

(In thousands)

 

 

Products revenues

$

97,580

 

 

$

67,232

 

$

30,348

 

 

45

%

Cost of products sold

 

94,898

 

 

 

64,176

 

 

30,722

 

 

48

%

Operating expenses

 

1,121

 

 

 

1,061

 

 

60

 

 

6

%

Selling, general and administrative expenses

 

597

 

 

 

697

 

 

(100

)

 

(14

) %

Depreciation and amortization

 

597

 

 

 

588

 

 

9

 

 

2

%

 

 

367

 

 

 

710

 

 

(343

)

 

(48

) %

Other operating income (loss), net

 

(24

)

 

 

1

 

 

(25

)

 

(2,500

) %

Operating income

$

343

 

 

$

711

 

$

(368

)

 

(52

) %

 

 

 

 

 

 

 

 

NGL sales volumes (Bbls)

 

1,153

 

 

 

1,259

 

 

(106

)

 

(8

) %

Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021

 

 

Six Months Ended

June 30,

 

Variance

 

Percent

Change

 

2022

 

2021

 

 

 

(In thousands)

 

 

Products revenues

$

218,146

 

 

$

165,317

 

 

$

52,829

 

 

32

%

Cost of products sold

 

206,054

 

 

 

146,688

 

 

 

59,366

 

 

40

%

Operating expenses

 

2,187

 

 

 

2,056

 

 

 

131

 

 

6

%

Selling, general and administrative expenses

 

2,319

 

 

 

2,904

 

 

 

(585

)

 

(20

) %

Depreciation and amortization

 

1,195

 

 

 

1,199

 

 

 

(4

)

 

%

 

 

6,391

 

 

 

12,470

 

 

 

(6,079

)

 

(49

) %

Other operating loss, net

 

(24

)

 

 

(689

)

 

 

665

 

 

97

%

Operating income

$

6,367

 

 

$

11,781

 

 

$

(5,414

)

 

(46

) %

 

 

 

 

 

 

 

 

NGL sales volumes (Bbls)

 

2,750

 

 

 

3,404

 

 

 

(654

)

 

(19

) %

Unallocated Selling, General and Administrative Expenses

 

Comparative Results of Operations for the Three and Six Months Ended June 30, 2022 and 2021

 

 

Three Months Ended

June 30,

 

Variance

 

Percent

Change

 

Six Months Ended

June 30,

 

Variance

 

Percent

Change

 

2022

 

2021

 

 

 

2022

 

2021

 

 

 

(In thousands)

 

 

 

(In thousands)

 

 

Indirect selling, general and administrative expenses

$

4,390

 

$

3,780

 

$

610

 

16

%

 

$

8,512

 

$

7,699

 

$

813

 

11

%

Non-GAAP Financial Measures

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and six months ended June 30, 2022 and 2021, which represents EBITDA, Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow:

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2022

 

2021

 

2022

 

2021

 

(in thousands)

 

(in thousands)

Net income

6,606

 

 

(6,612

)

 

18,084

 

 

(4,101

)

Adjustments:

 

 

 

 

 

 

 

Interest expense

12,846

 

 

13,309

 

 

25,275

 

 

26,262

 

Income tax expense

2,037

 

 

935

 

 

3,578

 

 

1,157

 

Depreciation and amortization

14,800

 

 

14,483

 

 

29,286

 

 

28,917

 

EBITDA

36,289

 

 

22,115

 

 

76,223

 

 

52,235

 

Adjustments:

 

 

 

 

 

 

 

(Gain) loss on disposition of property, plant and equipment

(246

)

 

(89

)

 

(260

)

 

671

 

Unrealized mark-to-market on commodity derivatives

 

 

424

 

 

 

 

205

 

Lower of cost or market and other non-cash adjustments

2,242

 

 

 

 

2,242

 

 

 

Unit-based compensation

45

 

 

48

 

 

79

 

 

288

 

Adjusted EBITDA

38,330

 

 

22,498

 

 

78,284

 

 

53,399

 

Reconciliation of Net Cash provided by Operating Activities to Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

 

(in thousands)

 

(in thousands)

Net cash provided by operating activities

$

(2,494

)

 

$

2,231

 

 

$

28,451

 

 

$

6,085

 

Interest expense 1

 

12,061

 

 

 

12,543

 

 

 

23,707

 

 

 

24,741

 

Current income tax expense

 

654

 

 

 

252

 

 

 

1,274

 

 

 

399

 

Lower of cost or market and other non-cash adjustments

 

2,242

 

 

 

 

 

 

2,242

 

 

 

 

Commodity cash flow hedging gains reclassified to earnings

 

(82

)

 

 

 

 

 

734

 

 

 

 

Net cash paid for closed commodity derivative positions included in AOCI

 

(700

)

 

 

 

 

 

(85

)

 

 

 

Changes in operating assets and liabilities which (provided) used cash:

 

 

 

 

 

 

 

Accounts and other receivables, inventories, and other current assets

 

68,797

 

 

 

20,065

 

 

 

64,901

 

 

 

24,252

 

Trade, accounts and other payables, and other current liabilities

 

(41,182

)

 

 

(12,468

)

 

 

(42,795

)

 

 

(1,865

)

Other

 

(966

)

 

 

(125

)

 

 

(145

)

 

 

(213

)

Adjusted EBITDA

 

38,330

 

 

 

22,498

 

 

 

78,284

 

 

 

53,399

 

Adjustments:

 

 

 

 

 

 

 

Interest expense

 

(12,846

)

 

 

(13,309

)

 

 

(25,275

)

 

 

(26,262

)

Income tax expense

 

(2,037

)

 

 

(935

)

 

 

(3,578

)

 

 

(1,157

)

Deferred income taxes

 

1,383

 

 

 

683

 

 

 

2,304

 

 

 

758

 

Amortization of deferred debt issuance costs

 

785

 

 

 

766

 

 

 

1,568

 

 

 

1,521

 

Payments for plant turnaround costs

 

(165

)

 

 

(20

)

 

 

(1,600

)

 

 

(1,694

)

Maintenance capital expenditures

 

(3,155

)

 

 

(2,370

)

 

 

(8,554

)

 

 

(6,441

)

Distributable Cash Flow

 

22,295

 

 

 

7,313

 

 

 

43,149

 

 

 

20,124

 

Principal payments under finance lease obligations

 

(60

)

 

 

(160

)

 

 

(119

)

 

 

(2,591

)

Expansion capital expenditures

 

(1,455

)

 

 

(1,147

)

 

 

(4,556

)

 

 

(1,977

)

Adjusted Free Cash Flow

$

20,780

 

 

$

6,006

 

 

$

38,474

 

 

$

15,556

 

1 Net of amortization of debt issuance costs and discount, which are included in interest expense but not included in net cash provided by operating activities.

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