First quarter 2020 Net Income of $8.8 million and adjusted EBITDA of $31.0 million
Quarterly distribution coverage ratio of 7.45xDeclares quarterly cash distribution of $0.0625 per unitUpdates full year 2020 guidance due to uncertainty from the COVID-19 pandemic and destabilized market conditionsKILGORE, Texas, April 22, 2020 (GLOBE NEWSWIRE) — Martin Midstream Partners L.P. (Nasdaq:MMLP) (the “Partnership”) today announced its financial results for the first quarter of 2020.Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “Operationally the Partnership was not immune to the impact of the COVID-19 pandemic and associated dislocation in the energy industry. However, the strategic steps commenced by the Partnership in July 2018 to return to a diversified specialty services midstream business with limited direct upstream exposure, should serve us well during this crisis and its severe economic impact. The Partnership is prioritizing the safety of our operations to protect the health of our employees, while continuing to focus on maintaining our long-term relationships with customers, vendors and stakeholders.“In the first quarter, the Partnership was negatively impacted by lower refinery utilization and emerging demand weakness. The Terminalling and Storage segment beat first quarter guidance though the lubricants division began showing signs of weakening demand as we approached the end of the quarter. In the Sulfur Services segment, a delayed planting season reduced projected fertilizer sales; however, we are optimistic that the Partnership should regain some of this shortfall in the second quarter. This segment was further affected by lower refinery utilization which decreased sulfur volumes resulting in reduced operating fees in our sulfur prilling business. In the Transportation segment, better than expected marine performance was offset by falling refinery customer demand for our trucking services. Finally, the Natural Gas Liquids segment performance was impacted by lower butane margins.“As we look forward, the Partnership is taking steps to further strengthen its financial position, while navigating these uncertain economic times. Specifically we are implementing several cost reduction strategies across our business segments in an attempt to minimize impact of current market conditions on the Partnership’s financial performance. In addition, we have identified and intend to defer until 2021 certain capital expenditures that will have no effect on the safety of our employees and business partners or impact operations.”GUIDANCE UPDATEThe Partnership is withdrawing its 2020 guidance published on January 28, 2020 for lack of visibility around reduced refinery utilization due to lower global demand for refined products as a result of COVID-19. The items below are updated and condensed: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.The Partnership plans to provide detailed 2020 guidance when energy market stabilization occurs and the effects of the continuing impact of the COVID-19 pandemic are clarified.LIQUIDITYAt March 31, 2020, the Partnership had $170 million drawn on its $400 million revolving credit facility, a $31 million reduction from December 31, 2019. During the first quarter of 2020, the Partnership used proceeds of $5.9 million in asset sales to retire at a discount, $9.3 million of its outstanding senior notes, lowering the total outstanding to $364.5 million and generating a one-time gain of $3.5 million. Accordingly, the Partnership’s leverage ratio, as calculated under the revolving credit facility, was 4.7 times on March 31, 2020.The Partnership’s 7.25% senior unsecured notes (the “2021 Notes”) mature on February 15, 2021 and in the event they are not refinanced by August 19, 2020, the revolving credit facility will mature on the same date, August 19, 2020. The Partnership is actively seeking to refinance the 2021 Notes, and although no assurance of success can be given, we announced on April 6, 2020 the engagement of Stephens Inc. as a financial advisor to explore strategic alternatives to strengthen the Partnership’s balance sheet and address near-term maturities.QUARTERLY CASH DISTRIBUTIONThe Partnership has declared a quarterly cash distribution of $0.0625 per unit for the quarter ended March 31, 2020. The distribution is payable on May 15, 2020 to common unitholders of record as of the close of business on May 8, 2020. The ex-dividend date for the cash distribution is May 7, 2020. The Partnership continues to evaluate the distribution as it relates to our long-term capital structure goals.COVID-19 RESPONSEThe Partnership has initiated protocols in response to the COVID-19 pandemic. These protocols include work from home initiatives to protect the health and safety of our employees as well as the communities where we operate, travel restrictions, and training personnel regarding preventative measures when accessing docks, vessels and operating locations. At this time all facilities are operational and monitored closely.RESULTS OF OPERATIONSThe Partnership had net income from continuing operations for the three months ended March 31, 2020 of $8.8 million, or $0.22 per limited partner unit. The Partnership had a net loss from continuing operations for the three months ended March 31, 2019 of $4.8 million, a loss of $0.12 per limited partner unit. Adjusted EBITDA from continuing operations for the three months ended March 31, 2020 was $31.0 million compared to the three months ended March 31, 2019 of $25.6 million. Distributable cash flow from continuing operations for the three months ended March 31, 2020 was $18.3 million compared to the three months ended March 31, 2019 of $4.8 million.The Partnership had no net income from discontinued operations for the three months ended March 31, 2020 compared to $1.1 million, or $0.03 per limited partner unit for the three months ended March 31, 2019. The Partnership had no adjusted EBITDA from discontinued operations for the three months ended March 31, 2020 compared to $5.2 million for the three months ended March 31, 2019. The Partnership had no distributable cash flow from discontinued operations for the three months ended March 31, 2020 compared to $4.8 million for the three months ended March 31, 2019.Revenues for the three months ended March 31, 2020 were $198.9 million compared to the three months ended March 31, 2019 of $240.0 million.Distributable cash flow from continuing operations, distributable cash flow from discontinued operations, EBITDA, adjusted EBITDA from continuing operations, and adjusted EBITDA from discontinued operations 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 from continuing operations, and Distributable Cash Flow” in order to show the components of these non-GAAP financial measures and their reconciliation to the most comparable GAAP measurement.Included with this press release are the Partnership’s consolidated and condensed financial statements as of and for the three months ended March 31, 2020 and certain prior periods. These financial statements should be read in conjunction with the information contained in the Partnership’s Quarterly Report on Form 10-Q, expected to be filed with the Securities and Exchange Commission on or about May 11, 2020.An earnings summary accompanying this announcement is available at http://ml.globenewswire.com/Resource/Download/b459fe86-7d78-4932-b12f-cfb965f5714a.Investors’ Conference CallAn investors conference call to review the first quarter results and to discuss the updated guidance for 2020 will be held on Thursday, April 23, 2020 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 7893507. An archive of the replay will be on Martin Midstream Partners’ website at www.MMLP.com.About Martin Midstream PartnersMartin Midstream Partners L.P. 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 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.Forward-Looking StatementsStatements 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, on an industry-specific basis, and on Martin Midstream Partners’ specific operations and business, (ii) Martin Midstream Partners’ ability to refinance its senior unsecured notes due February 15, 2021 prior to August 19, 2020, (iii) Martin Midstream Partners’ pursuit of strategic alternatives, (iv) the effects of the continued volatility of commodity prices and the related macroeconomic and political environment, and (v) 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 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 InformationThe 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, Adjusted EBITDA from Continuing Operations, and Adjusted EBITDA from Discontinued Operations. Certain items excluded from EBITDA, adjusted EBITDA from continuing operations, and adjusted EBITDA from discontinued operations 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, adjusted EBITDA from continuing operations, and adjusted EBITDA from discontinued operations 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 and Distributable Cash Flow from Discontinued Operations. 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 from continuing operations, adjusted EBITDA from discontinued operations, distributable cash flow, and distributable cash flow from discontinued operations, 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
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q expected to be filed with the Securities and Exchange Commission on or about May 11, 2020.MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q expected to be filed with the Securities and Exchange Commission on or about May 11, 2020.*Related Party Transactions Shown BelowMARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)*Related Party Transactions Included AboveThese financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q expected to be filed with the Securities and Exchange Commission on or about May 11, 2020.MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q expected to be filed with the Securities and Exchange Commission on or about May 11, 2020.MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)
(Dollars in thousands)These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q expected to be filed with the Securities and Exchange Commission on or about May 11, 2020.MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership’s Quarterly Report on Form 10-Q expected to be filed with the Securities and Exchange Commission on or about May 11, 2020.MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)Terminalling and Storage Segment Comparative Results of Operations for the Three Months Ended March 31, 2020 and 2019Transportation Segment Comparative Results of Operations for the Three Months Ended March 31, 2020 and 2019MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)Sulfur Services Segment Comparative Results of Operations for the Three Months Ended March 31, 2020 and 2019 Natural Gas Liquids Segment Comparative Results of Operations for the Three Months Ended March 31, 2020 and 2019Non-GAAP Financial Measures
The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three months ended March 31, 2020 and 2019, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow.Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
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