Martin Midstream Partners Reports 2018 Third Quarter Financial Results
October 24, 2018 - 4:01 PM EDT
close
Martin Midstream Partners Reports 2018 Third Quarter Financial Results
Third Quarter Net Income of $39.4 Million including $48.6 Million Gain from Sale of Interest in WTLPG
Agreement to Acquire Martin Transport, Inc. for $135.0 Million Plus a Potential $10.0 Million Earn-Out
Acquisition is Expected to Strengthen Distribution Coverage Ratio
Management Reiterates Support for Current Distribution Level
KILGORE, Texas, Oct. 24, 2018 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq: MMLP) (the "Partnership") announced today its financial results for the quarter ended September 30, 2018.
Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “I am excited to announce the Partnership has reached an agreement with Martin Resource Management Corporation (“MRMC”) to acquire Martin Transport, Inc. (“MTI”) for $135.0 million plus a potential additional $10.0 million earn-out based on a performance threshold. The price reflects an EBITDA multiple between 5.7 times and 6.0 times based on MTI's forecasted 2019 net income of $9.3 million and EBITDA of $23.6 million. This acquisition will be funded from the Partnership’s revolving credit facility allowing it to redeploy much of the $193.7 million in net proceeds received when we sold our interest in the West Texas LPG Pipeline Limited Partnership (“WTLPG”) on July 31, 2018. Despite redeploying capital of only 70% of the net proceeds received for the WTLPG interest, the acquisition is estimated to generate roughly $16.0 million of additional incremental EBITDA in 2019 over the average historical cash flows received from WTLPG.
“MTI transports petroleum products, liquid petroleum gas, chemicals, sulfur and other products, as well as owns twenty-three terminals located throughout the Gulf Coast and Midwest. MRMC has owned and operated MTI or its predecessor for over 40 years and is integral to MMLP’s routine movements of sulfur and NGL’s. Based on operational estimates and current transportation market conditions, this acquisition from our general partner will provide strategic long-term growth for the Partnership.
“In the first twelve months of operation, the acquisition is expected to contribute approximately $23.6 million and $14.7 million of EBITDA and distributable cash flow, respectively, to the Partnership. This will drive our estimated distribution coverage ratio to approximately 1.20 times by year-end 2019, which forms the basis for management's continued support of the current distribution level. Further, due to continued rising line haul rates combined with MTI’s available truck capacity, we estimate, net income, EBITDA and distributable cash flow attributable to MTI to grow to approximately $17.0 million, $33.2 million and $20.9 million, respectively, for the year of 2022. In addition, this drop down will provide stability in our quarterly cash flows to offset the seasonal nature of our fertilizer and butane businesses. We expect this transaction to close in January of 2019.
“For the twelve months ended September 30, 2018 our proforma distribution coverage ratio was 1.04 times when taking into effect the WTLPG sale. Historically the third quarter is our weakest due to seasonal timing in the fertilizer and natural gas liquids businesses which is reflected in our guidance. Further, for the third quarter of 2018 our distributable cash flow fell short of guidance due to compressed margins from rising fertilizer raw materials costs and the sale of WTLPG, slightly offset by lower than forecasted maintenance capital expenditures coupled with continued outperformance in our Marine Transportation segment due to improved day rates and fleet utilization.
“As expected during the third quarter, our debt level rose due to the seasonal butane inventory build in our Natural Gas Services segment. Anticipating this annual occurrence, the Partnership amended its revolving credit facility in February of 2018 to include an inventory financing sublimit tranche related to eligible inventory volumes that are under sales or swap contracts when calculating consolidated funded debt. Accordingly, the Partnership’s calculated leverage ratio of 4.29 times includes a $74.0 million reduction of consolidated funded debt under this provision. Further, the applicable interest rate under our credit facility is reduced twenty-five basis points due to obtaining a leverage ratio under 4.50 times.
“Looking ahead to the fourth quarter, our butane optimization business will begin capturing cash flows from forward sales, the marine transportation division looks to continue improved performance relative to guidance, and the beginning of seasonal demand for fertilizer products should all provide cash flow strength. Added together with anticipated lower than forecasted maintenance capital expenditures, our distribution coverage ratio will rebound, as it historically does, in the fourth quarter. However, due to market weakness that has affected fertilizer margins throughout 2018, at this time we are lowering our estimate to approximately 0.90 times at year end 2018.”
The Partnership had a net loss from continuing operations for the third quarter 2018 of $9.7 million, a loss of $0.24 per limited partner unit. The Partnership had a net loss from continuing operations for the third quarter 2017 of $17.0 million, a loss of $0.44 per limited partner unit. The Partnership's adjusted EBITDA from continuing operations for the third quarter 2018 was $25.4 million compared to adjusted EBITDA from continuing operations for the third quarter 2017 of $25.5 million.
The Partnership had a net loss from continuing operations for the nine months ended September 30, 2018 of $6.7 million, a loss of $0.17 per limited partner unit. The Partnership had a net loss from continuing operations for the nine months ended September 30, 2017 of $4.1 million, a loss of $0.10 per limited partner unit. The Partnership's adjusted EBITDA from continuing operations for the nine months ended September 30, 2018 was $96.8 million compared to adjusted EBITDA from continuing operations for the nine months ended September 30, 2017 of $102.9 million.
The Partnership's distributable cash flow from continuing operations for the third quarter 2018 was $6.9 million compared to distributable cash flow from continuing operations for the third quarter 2017 of $8.3 million.
The Partnership's distributable cash flow from continuing operations for the nine months ended September 30, 2018 was $41.6 million compared to distributable cash flow from continuing operations for the nine months ended September 30, 2017 of $55.8 million.
Revenues for the third quarter 2018 were $219.0 million compared to the third quarter 2017 of $193.1 million. Revenues for the nine months ended September 30, 2018 were $719.8 million compared to the nine months ended September 30, 2017 of $640.4 million.
On July 31, 2018, the Partnership divested of its 20 percent non-operating interest in West Texas LPG Pipeline L.P. ("WTLPG") for net proceeds of $193.7 million after fees and expenses. The Partnership recorded a gain on the disposition of $48.6 million. The Partnership has presented the results of operations and cash flows relating to its investment in WTLPG as discontinued operations for the three and nine months ended September 30, 2018 and 2017.
The Partnership had net income from discontinued operations for the three months ended September 30, 2018 of $49.1 million, or $1.24 per limited partner unit. The Partnership had net income from discontinued operations for the three months ended September 30, 2017 of $0.7 million, or $0.02 per limited partner unit.
The Partnership had net income from discontinued operations for the nine months ended September 30, 2018 of $51.7 million, or $1.30 per limited partner unit. The Partnership had net income from discontinued operations for the nine months ended September 30, 2017 of $2.4 million, or $0.06 per limited partner unit.
Distributable cash flow and adjusted EBITDA from discontinued operations were $0.4 million for the three months ended September 30, 2018. Distributable cash flow and adjusted EBITDA from discontinued operations were $1.7 million for the three months ended September 30, 2017.
Distributable cash flow and adjusted EBITDA from discontinued operations were $3.3 million for the nine months ended September 30, 2018. Distributable cash flow and adjusted EBITDA from discontinued operations were $4.1 million for the nine months ended September 30, 2017.
Distributable cash flow, EBITDA and adjusted EBITDA are non-GAAP financial measures which are explained in greater detail below under the heading "Use of Non-GAAP Financial Information." The Partnership has also included below a table entitled "Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow" in order to show the components of these non-GAAP financial measures and their reconciliation to the most comparable GAAP measurement.
Included with this press release are the Partnership's consolidated and condensed financial statements as of and for the three and nine months ended September 30, 2018 and certain prior periods. These financial statements should be read in conjunction with the information contained in the Partnership's Quarterly Report on Form 10-Q, to be filed with the Securities and Exchange Commission on October 24, 2018.
MTI was incorporated in 1988 to transport petroleum products, liquid petroleum gas, molten sulfur, sulfuric acid, paper mill liquids, chemical, dry bulk and various other bulk liquid commodities. As of the end of September 2018, MTI owned 561 trucks, 1,307 Trailers and 23 terminals across the Southeast and Midwest. An attachment further describing the acquisition is available at http://resource.globenewswire.com/Resource/Download/d78d14b7-e9d2-4ee8-8316-3afe93d80e02.
As a member of the Responsible Care Partnership Program, MTI is dedicated to the safe operations of its transportation fleet and providing quality service to its customers.
Advisors
The following advisors served in their respective roles for the transaction: Stephens Inc. provided a fairness opinion to the Conflicts Committee of the Partnership's General Partner ("Conflicts Committee") and to the Board of Directors of MRMC. Houlihan Lokey Capital, Inc. provided a fairness opinion to the Board of Directors of the the Partnership's General Partner. Clark Hill Strasburger acted as legal counsel to MRMC. Munsch Hardt Kopf & Harr, P.C., acted as legal counsel to the Conflicts Committee and Locke Lord LLP acted as legal counsel to the Partnership
Investors' Conference Call
A conference call to review the third quarter results will be held on Thursday, October 25, 2018 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 2995789. An archive of the replay will be on Martin Midstream Partners’ website at www.martinmidstream.com.
About Martin Midstream Partners
The Partnership is a publicly traded limited partnership with a diverse set of operations focused primarily in the United States Gulf Coast region. The Partnership's primary business segments include: (1) natural gas services, including liquids transportation and distribution services and natural gas storage; (2) terminalling, storage and packaging services for petroleum products and by-products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) marine transportation services for petroleum products and by-products.
Forward-Looking Statements
Statements about the Partnership's outlook and all other statements in this release other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all references to financial estimates rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the Partnership's control, which could cause actual results to differ materially from such statements. While the Partnership believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in anticipating or predicting certain important factors. A discussion of these factors, including risks and uncertainties, is set forth in the Partnership's annual and quarterly reports filed from time to time with the Securities and Exchange Commission. The Partnership disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events, or otherwise except where required to do so by law.
Use of Non-GAAP Financial Information
The Partnership's management uses a variety of financial and operational measurements other than its financial statements prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") to analyze its performance. These include: (1) net income before interest expense, income tax expense, and depreciation and amortization ("EBITDA"), (2) adjusted EBITDA and (3) distributable cash flow. The Partnership's management views these measures as important performance measures of core profitability for its operations and the ability to generate and distribute cash flow, and as key components of its internal financial reporting. The Partnership's management believes investors benefit from having access to the same financial measures that management uses.
EBITDA and Adjusted EBITDA. Certain items excluded from EBITDA and adjusted EBITDA are significant components in understanding and assessing an entity's financial performance, such as cost of capital and historical costs of depreciable assets. The Partnership has included information concerning EBITDA and adjusted EBITDA because it provides investors and management with additional information to better understand the following: financial performance of the Partnership's assets without regard to financing methods, capital structure or historical cost basis; the Partnership's operating performance and return on capital as compared to those of other similarly situated entities; and the viability of acquisitions and capital expenditure projects. The Partnership's method of computing adjusted EBITDA may not be the same method used to compute similar measures reported by other entities. The economic substance behind the Partnership's use of adjusted EBITDA is to measure the ability of the Partnership's assets to generate cash sufficient to pay interest costs, support its indebtedness and make distributions to its unitholders.
Distributable Cash Flow. Distributable cash flow is a significant performance measure used by the Partnership's management and by external users of its financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by the Partnership to the cash distributions it expects to pay unitholders. Distributable cash flow is also an important financial measure for the Partnership's unitholders since it serves as an indicator of the Partnership's success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not the Partnership is generating cash flow at a level that can sustain or support an increase in its quarterly distribution rates. Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.
EBITDA, adjusted EBITDA and distributable cash flow should not be considered alternatives to, or more meaningful than, net income, cash flows from operating activities, or any other measure presented in accordance with GAAP. The Partnership's method of computing these measures may not be the same method used to compute similar measures reported by other entities.
Additional information concerning the Partnership is available on the Partnership's website at www.martinmidstream.com or by contacting:
Sharon Taylor - Head of Investor Relations (877) 256-6644
MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED BALANCE SHEETS (Dollars in thousands)
September 30, 2018
December 31, 2017
(Unaudited)
(Audited)
Assets
Cash
$
3,186
$
27
Accounts and other receivables, less allowance for doubtful accounts of $347 and $314, respectively
72,280
107,242
Product exchange receivables
185
29
Inventories (Note 6)
134,059
97,252
Due from affiliates
22,933
23,668
Other current assets
4,921
4,866
Assets held for sale (Note 4)
6,152
9,579
Total current assets
243,716
242,663
Property, plant and equipment, at cost
1,279,365
1,253,065
Accumulated depreciation
(465,079
)
(421,137
)
Property, plant and equipment, net
814,286
831,928
Goodwill
17,296
17,296
Investment in WTLPG (Note 7)
—
128,810
Other assets, net (Note 9)
25,751
32,801
Total assets
$
1,101,049
$
1,253,498
Liabilities and Partners’ Capital
Trade and other accounts payable
$
71,176
$
92,567
Product exchange payables
9,647
11,751
Due to affiliates
3,651
3,168
Income taxes payable
448
510
Fair value of derivatives (Note 10)
2,968
72
Other accrued liabilities (Note 9)
18,876
26,340
Total current liabilities
106,766
134,408
Long-term debt, net (Note 8)
698,680
812,632
Other long-term obligations
10,718
8,217
Total liabilities
816,164
955,257
Commitments and contingencies (Note 15)
Partners’ capital (Note 11)
284,885
298,241
Total partners’ capital
284,885
298,241
Total liabilities and partners' capital
$
1,101,049
$
1,253,498
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 24, 2018.
MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2018
2017
2018
2017
Revenues:
Terminalling and storage *
$
24,354
$
25,752
$
72,508
$
75,105
Marine transportation *
12,727
11,407
36,920
36,661
Natural gas services*
11,232
14,253
40,392
43,756
Sulfur services
2,787
2,850
8,361
8,550
Product sales: *
Natural gas services
101,919
83,831
351,725
284,154
Sulfur services
27,981
24,174
98,565
95,728
Terminalling and storage
38,047
30,861
111,351
96,421
167,947
138,866
561,641
476,303
Total revenues
219,047
193,128
719,822
640,375
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas services *
99,346
77,368
329,945
255,745
Sulfur services *
21,363
19,716
73,998
65,406
Terminalling and storage *
33,801
27,372
99,967
85,398
154,510
124,456
503,910
406,549
Expenses:
Operating expenses *
32,628
43,552
95,592
109,478
Selling, general and administrative *
9,257
9,085
27,339
27,816
Depreciation and amortization
18,741
20,286
58,842
65,948
Total costs and expenses
215,136
197,379
685,683
609,791
Other operating loss
(384
)
(187
)
(876
)
(327
)
Operating income (loss)
3,527
(4,438
)
33,263
30,257
Other income (expense):
Interest expense, net
(13,140
)
(12,538
)
(39,591
)
(34,677
)
Other, net
18
55
18
605
Total other expense
(13,122
)
(12,483
)
(39,573
)
(34,072
)
Net loss before taxes
(9,595
)
(16,921
)
(6,310
)
(3,815
)
Income tax expense
(91
)
(108
)
(372
)
(301
)
Loss from continuing operations
(9,686
)
(17,029
)
(6,682
)
(4,116
)
Income from discontinued operations, net of income taxes
49,132
743
51,700
2,402
Net income (loss)
39,446
(16,286
)
45,018
(1,714
)
Less general partner's interest in net (income) loss
(789
)
325
(900
)
34
Less (income) loss allocable to unvested restricted units
(27
)
38
(29
)
—
Limited partners' interest in net income (loss)
$
38,630
$
(15,923
)
$
44,089
$
(1,680
)
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 24, 2018.
*Related Party Transactions Shown Below
MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit amounts)
*Related Party Transactions Included Above
Three Months Ended
Nine Months Ended
September 30,
September 30,
2018
2017
2018
2017
Revenues:*
Terminalling and storage
$
19,619
$
21,910
$
60,151
$
61,945
Marine transportation
4,009
4,098
11,727
12,610
Natural gas services
—
4
—
122
Product Sales
180
828
1,248
2,982
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Natural gas services
2,856
3,033
10,273
14,836
Sulfur services
4,337
3,555
13,208
10,997
Terminalling and storage
7,392
4,817
21,959
14,003
Expenses:
Operating expenses
14,051
15,858
41,774
48,686
Selling, general and administrative
6,834
6,495
21,053
20,563
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 24, 2018.
MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2018
2017
2018
2017
Allocation of net income (loss) attributable to:
Limited partner interest:
Continuing operations
$
(9,486
)
$
(16,649
)
$
(6,544
)
$
(4,034
)
Discontinued operations
48,116
726
50,633
2,354
$
38,630
$
(15,923
)
$
44,089
$
(1,680
)
General partner interest:
Continuing operations
$
(193
)
$
(340
)
$
(134
)
$
(82
)
Discontinued operations
982
15
1,034
48
$
789
$
(325
)
$
900
$
(34
)
Net income (loss) per unit attributable to limited partners:
Basic:
Continuing operations
$
(0.24
)
$
(0.44
)
$
(0.17
)
$
(0.10
)
Discontinued operations
1.24
0.02
1.30
0.06
$
1.00
$
(0.42
)
$
1.13
$
(0.04
)
Weighted average limited partner units - basic
38,712
38,357
38,877
38,016
Diluted:
Continuing operations
$
(0.24
)
$
(0.44
)
$
(0.17
)
$
(0.10
)
Discontinued operations
1.24
0.02
1.30
0.06
$
1.00
$
(0.42
)
$
1.13
$
(0.04
)
Weighted average limited partner units - diluted
38,738
38,357
38,889
38,016
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 24, 2018.
MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (Dollars in thousands)
Partners’ Capital
Common Limited
General Partner Amount
Units
Amount
Total
Balances - January 1, 2017
35,452,062
$
304,594
$
7,412
$
312,006
Net income
—
(1,680
)
(34
)
(1,714
)
Issuance of common units, net
2,990,000
51,061
—
51,061
Issuance of restricted units
12,000
—
—
—
Forfeiture of restricted units
(5,750
)
—
—
—
General partner contribution
—
—
1,098
1,098
Cash distributions
—
(56,177
)
(1,146
)
(57,323
)
Unit-based compensation
—
518
—
518
Purchase of treasury units
(200
)
(4
)
—
(4
)
Excess purchase price over carrying value of acquired assets
—
(7,887
)
—
(7,887
)
Reimbursement of excess purchase price over carrying value of acquired assets
—
1,125
—
1,125
Balances - September 30, 2017
38,448,112
$
291,550
$
7,330
$
298,880
Balances - January 1, 2018
38,444,612
$
290,927
$
7,314
$
298,241
Net income
—
44,118
900
45,018
Issuance of common units, net of issuance related costs
—
(118
)
—
(118
)
Issuance of restricted units
633,425
—
—
—
Forfeiture of restricted units
(23,000
)
—
—
—
Cash distributions
—
(57,653
)
(1,176
)
(58,829
)
Unit-based compensation
—
872
—
872
Excess purchase price over carrying value of acquired assets
—
(26
)
—
(26
)
Purchase of treasury units
(18,800
)
(273
)
—
(273
)
Balances - September 30, 2018
39,036,237
$
277,847
$
7,038
$
284,885
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 24, 2018.
MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Nine Months Ended
September 30,
2018
2017
Cash flows from operating activities:
Net income (loss)
$
45,018
$
(1,714
)
Less: Income from discontinued operations, net of income taxes
(51,700
)
(2,402
)
Net loss from continuing operations
(6,682
)
(4,116
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
58,842
65,948
Amortization of deferred debt issuance costs
2,563
2,170
Amortization of premium on notes payable
(230
)
(230
)
Loss on sale of property, plant and equipment
876
327
Derivative loss
198
2,392
Net cash received (paid) for commodity derivatives
2,698
(6,429
)
Unit-based compensation
872
518
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables
35,191
16,381
Product exchange receivables
(156
)
173
Inventories
(37,147
)
(48,022
)
Due from affiliates
735
(1,917
)
Other current assets
556
(411
)
Trade and other accounts payable
(18,230
)
2,222
Product exchange payables
(2,104
)
1,910
Due to affiliates
483
(5,169
)
Income taxes payable
(62
)
(420
)
Other accrued liabilities
(9,726
)
(3,766
)
Change in other non-current assets and liabilities
610
1,941
Net cash provided by continuing operating activities
29,287
23,502
Net cash provided by discontinued operating activities
3,254
4,055
Net cash provided by operating activities
32,541
27,557
Cash flows from investing activities:
Payments for property, plant and equipment
(31,497
)
(30,014
)
Acquisitions
—
(19,533
)
Payments for plant turnaround costs
(879
)
(1,583
)
Proceeds from sale of property, plant and equipment
1,269
1,604
Proceeds from repayment of Note receivable - affiliate
—
15,000
Other
—
(900
)
Net cash used in continuing investing activities
(31,107
)
(35,426
)
Net cash provided by (used in) discontinuing investing activities
177,256
(145
)
Net cash provided by (used in) investing activities
146,149
(35,571
)
Cash flows from financing activities:
Payments of long-term debt
(460,000
)
(242,000
)
Proceeds from long-term debt
345,000
262,000
Proceeds from issuance of common units, net of issuance related costs
(118
)
51,061
General partner contribution
—
1,098
Purchase of treasury units
(273
)
(4
)
Payment of debt issuance costs
(1,285
)
(56
)
Excess purchase price over carrying value of acquired assets
(26
)
(7,887
)
Reimbursement of excess purchase price over carrying value of acquired assets
—
1,125
Cash distributions paid
(58,829
)
(57,323
)
Net cash (used in) provided by financing activities
(175,531
)
8,014
Net increase in cash
3,159
—
Cash at beginning of period
27
15
Cash at end of period
$
3,186
$
15
Non-cash additions to property, plant and equipment
$
938
$
1,367
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 24, 2018.
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 September 30, 2018 and 2017
Smackover refinery throughput volumes (guaranteed minimum) (BBL per day)
6,500
6,500
—
—
%
MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Dollars and volumes in thousands, except BBL per day)
Natural Gas Services Segment
Comparative Results of Operations for the Three Months Ended September 30, 2018 and 2017
Three Months Ended September 30,
Variance
Percent Change
2018
2017
(In thousands)
Revenues:
Services
$
11,232
$
14,253
$
(3,021
)
(21
)%
Products
101,919
84,057
17,862
21
%
Total revenues
113,151
98,310
14,841
15
%
Cost of products sold
100,298
78,138
22,160
28
%
Operating expenses
6,162
5,528
634
11
%
Selling, general and administrative expenses
2,038
1,843
195
11
%
Depreciation and amortization
5,316
6,274
(958
)
(15
)%
(663
)
6,527
(7,190
)
(110
)%
Other operating income
—
2
(2
)
(100
)%
Operating income (loss)
$
(663
)
$
6,529
$
(7,192
)
(110
)%
NGL sales volumes (Bbls)
1,774
1,943
(169
)
(9
)%
Comparative Results of Operations for the Nine Months Ended September 30, 2018 and 2017
Nine Months Ended September 30,
Variance
Percent Change
2018
2017
(In thousands)
Revenues:
Services
$
40,392
$
43,756
$
(3,364
)
(8
)%
Products
351,725
284,380
67,345
24
%
Total revenues
392,117
328,136
63,981
19
%
Cost of products sold
332,440
258,444
73,996
29
%
Operating expenses
17,837
16,753
1,084
6
%
Selling, general and administrative expenses
6,709
6,910
(201
)
(3
)%
Depreciation and amortization
15,921
18,640
(2,719
)
(15
)%
19,210
27,389
(8,179
)
(30
)%
Other operating income (loss)
(120
)
7
(127
)
(1,814
)%
Operating income
$
19,090
$
27,396
$
(8,306
)
(30
)%
NGL sales volumes (Bbls)
6,958
6,547
411
6
%
MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Dollars and volumes in thousands, except BBL per day)
Sulfur Services Segment
Comparative Results of Operations for the Three Months Ended September 30, 2018 and 2017
Three Months Ended September 30,
Variance
Percent Change
2018
2017
(In thousands)
Revenues:
Services
$
2,787
$
2,850
$
(63
)
(2
)%
Products
27,981
24,174
3,807
16
%
Total revenues
30,768
27,024
3,744
14
%
Cost of products sold
21,454
19,807
1,647
8
%
Operating expenses
2,960
3,557
(597
)
(17
)%
Selling, general and administrative expenses
1,149
1,071
78
7
%
Depreciation and amortization
2,113
2,020
93
5
%
3,092
569
2,523
443
%
Other operating loss
—
(2
)
2
100
%
Operating income
$
3,092
$
567
$
2,525
445
%
Sulfur (long tons)
166
198
(32
)
(16
)%
Fertilizer (long tons)
50
52
(2
)
(4
)%
Total sulfur services volumes (long tons)
216
250
(34
)
(14
)%
Comparative Results of Operations for the Nine Months Ended September 30, 2018 and 2017
Nine Months Ended September 30,
Variance
Percent Change
2018
2017
(In thousands)
Revenues:
Services
$
8,361
$
8,550
$
(189
)
(2
)%
Products
98,565
95,728
2,837
3
%
Total revenues
106,926
104,278
2,648
3
%
Cost of products sold
74,270
65,678
8,592
13
%
Operating expenses
8,801
10,221
(1,420
)
(14
)%
Selling, general and administrative expenses
3,230
3,099
131
4
%
Depreciation and amortization
6,263
6,083
180
3
%
14,362
19,197
(4,835
)
(25
)%
Other operating income (loss)
14
(24
)
38
158
%
Operating income
$
14,376
$
19,173
$
(4,797
)
(25
)%
Sulfur (long tons)
520
607
(87
)
(14
)%
Fertilizer (long tons)
231
217
14
6
%
Total sulfur services volumes (long tons)
751
824
(73
)
(9
)%
MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Dollars and volumes in thousands, except BBL per day)
Marine Transportation Segment
Comparative Results of Operations for the Three Months Ended September 30, 2018 and 2017
Three Months Ended September 30,
Variance
Percent Change
2018
2017
(In thousands)
Revenues
$
13,570
$
12,400
$
1,170
9
%
Operating expenses
10,418
11,176
(758
)
(7
)%
Selling, general and administrative expenses
378
112
266
238
%
Depreciation and amortization
2,001
1,800
201
11
%
773
(688
)
1,461
212
%
Other operating loss
(23
)
—
(23
)
Operating income (loss)
$
750
$
(688
)
$
1,438
209
%
Comparative Results of Operations for the Nine Months Ended September 30, 2018 and 2017
Nine Months Ended September 30,
Variance
Percent Change
2018
2017
(In thousands)
Revenues
$
38,766
$
38,958
$
(192
)
—
%
Operating expenses
30,696
33,331
(2,635
)
(8
)%
Selling, general and administrative expenses
541
287
254
89
%
Depreciation and amortization
5,498
5,229
269
5
%
$
2,031
$
111
$
1,920
1,730
%
Other operating loss
(373
)
(120
)
(253
)
(211
)%
Operating income (loss)
$
1,658
$
(9
)
$
1,667
18,522
%
Non-GAAP Financial Measures
The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and nine months ended September 30, 2018 and 2017, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow.
Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
Three Months Ended
Nine Months Ended
September 30,
September 30,
2018
2017
2018
2017
(in thousands)
Net income (loss)
$
39,446
$
(16,286
)
$
45,018
$
(1,714
)
Less: Income from discontinued operations, net of income taxes
(49,132
)
(743
)
(51,700
)
(2,402
)
Loss from continuing operations
(9,686
)
(17,029
)
(6,682
)
(4,116
)
Adjustments:
Interest expense, net
13,140
12,538
39,591
34,677
Income tax expense
91
108
372
301
Depreciation and amortization
18,741
20,286
58,842
65,948
EBITDA
22,286
15,903
92,123
96,810
Adjustments:
(Gain) loss on sale of property, plant and equipment
384
187
876
327
Unrealized mark-to-market on commodity derivatives
