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Press release from GlobeNewswire (a Nasdaq OMX company)

Martin Midstream Partners Reports 2012 First Quarter Financial Results

Wednesday, May 02, 2012

Martin Midstream Partners Reports 2012 First Quarter Financial Results13:00 EDT Wednesday, May 02, 2012KILGORE, Texas, May 2, 2012 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq:MMLP) announced today its financial results for the first quarter ended March 31, 2012. Martin Midstream Partners L.P. ("the Partnership") reported net income for the first quarter of 2012 of $10.5 million, or $0.40 per limited partner unit. This compared to net income for the first quarter of 2011 of $7.3 million, or $0.31 per limited partner unit. Revenues for the first quarter of 2012 were $338.3 million compared to $283.0 million for the first quarter of 2011. For the quarter ended March 31, 2012, net income was not impacted by non-cash derivative losses. For the first quarter of 2011, net income was impacted negatively by $0.5 million, or $0.02 per limited partner unit, in non-cash derivatives net losses from certain commodity and interest rate hedges that are subject to mark-to-market accounting. The Partnership's distributable cash flow for the first quarter of 2012 was $22.8 million. Distributable cash flow is a non-GAAP financial measure which is explained in greater detail below under "Use of Non-GAAP Financial Information." The Partnership has also included below a table entitled "Distributable Cash Flow" in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measurement. Included with this press release are the Partnership's consolidated financial statements as of and for the quarter ended March 31, 2012 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, filed with the Securities and Exchange Commission on May 7, 2012. Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of Martin Midstream Partners, said, "We are pleased with the Partnership's first quarter financial performance. For the quarter we earned distributable cash flow of approximately $22.8 million and a strong distribution coverage ratio of 1.17 times. The Partnership benefitted from stronger than expected performance in our Sulfur Services Segment as our fertilizer and molten sulfur divisions continued their positive momentum and strong margin levels we saw in the fourth quarter last year. Operationally, our fertilizer production units are running at very high levels of utilization that coincides with strong customer demand for our product offerings. Collectively, Terminalling and Storage, Natural Gas Service and Marine Transportation were all slightly below management's expectations for the quarter. However, we continue to be optimistic regarding the throughput level at our marine shore based assets as incremental deep-water offshore drilling seems imminent. Additionally, our marine assets are seeing day-rate improvement and high utilization across both in the inland and offshore divisions. Looking forward to the second quarter, we expect continued strong performance in our Sulfur Services Segment fertilizer division. In addition, the Partnership will benefit from additional assets coming on line in our Terminalling and Storage Segment." Investors' Conference Call An investor's conference call to review the first quarter results will be held on Thursday, May 3, 2012, at 8:00 a.m. Central Time. The conference call can be accessed by calling (877) 878-2695. An audio replay of the conference call will be available by calling (855) 859-2056 from 11:00 a.m. Central Time on May 3, 2012 through 10:59 p.m. Central Time on May 10, 2012. The access codes for the conference call and the audio replay are as follows: Conference ID No. 75247296. www.martinmidstream.com. About Martin Midstream Partners Martin Midstream Partners 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: terminalling and storage services for petroleum products and by-products; natural gas gathering, processing and NGL distribution; sulfur and sulfur-based products processing, manufacturing, and distribution; and marine transportation services for petroleum products and by-products. Forward-Looking Statements Statements about Martin Midstream Partners' 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 its control, which could cause actual results to differ materially from such statements. While MMLP 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. Martin Midstream Partners disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events, or otherwise. Use of Non-GAAP Financial Information The Partnership reports its financial results in accordance with United States generally accepted accounting principles (GAAP). However, from time to time, the Partnership uses certain non-GAAP financial measures such as distributable cash flow because the Partnership's management believes that this measure may provide users of this financial information with meaningful comparisons between current results and prior reported results and a meaningful measure of Partnership's cash available to pay distributions. Distributable cash flow should not be considered an alternative to cash flow from operating activities or any other measure of financial performance in accordance with GAAP. Distributable cash flow is not intended to represent cash flows for the period, nor is it presented as an alternative to income from continuing operations. Furthermore, it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. This information may constitute non-GAAP financial measures within the meaning of Regulation G adopted by the Securities and Exchange Commission. Accordingly, the Partnership has presented herein, and will present in other information it publishes that contains this non-GAAP financial measure, a reconciliation of this measure to the most directly comparable GAAP financial measure. The Partnership has included below a table entitled "Distributable Cash Flow" in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measure. The Partnership calculates distributable cash flow as follows: net income (as reported in statements of operations), plus depreciation and amortization, amortization of debt discount and amortization of deferred debt issue costs (as reported in statements of cash flows), less deferred taxes (as reported in statements of cash flows), less gain on sale of property, plant and equipment, less payments of notes payable and capital lease obligations expenditures (as described below), plus distribution equivalents from unconsolidated entities (as described below), less invested cash in unconsolidated entities (as described below), less equity in earnings of unconsolidated entities (as reported in statements of operations), plus non-cash mark-to-market on derivatives (as reported in statements of cash flows), less payments for plant turnaround costs (as reported in statements of cash flows), less maintenance capital expenditures (as reported under the caption "Liquidity and Capital Resources" in the Partnership's Quarterly Report on Form 10-Q filed with the SEC on May 7, 2012), plus unit-based compensation (as reported in statements of changes in capital). The Partnership's payments of notes payable and capital lease obligations is calculated as payments of notes payable and capital lease obligations (as reported in the statement of cash flows), less the early extinguishment of notes payable of $6.3 million. The Partnership's distribution equivalents from unconsolidated entities is calculated as distributions from unconsolidated entities (as reported in statements of cash flows), plus return of investments from unconsolidated entities (as reported in statements of cash flows), plus distributions in-kind from unconsolidated entities (as reported in statements of cash flows). For the quarter ended March 31, 2012, the Partnership's distributions from unconsolidated entities, return of investments from unconsolidated entities and distributions in-kind from equity investments were $0.0 million, $1.2 million and $3.1 million, respectively. The Partnership's invested cash in unconsolidated entities is calculated as distributions from (contributions to) unconsolidated entities for operations (as reported in statements of cash flows), plus expansion capital expenditures in unconsolidated entities (as reported under the caption "Liquidity and Capital Resources" in the Partnership's Annual Report on Form 10-K filed with the SEC on March 5, 2012). For the quarter ended March 31, 2012, the Partnership's distributions from (contributions to) unconsolidated entities for operations and expansion capital expenditures in unconsolidated entities were ($8.4) million and $9.4 million, respectively. Additional information concerning the Partnership is available on the Partnership's website at www.martinmidstream.com, or Joe McCreery, Vice President - Finance and Head of Investor Relations, Martin Midstream Partners L.P. Phone (903) 812-7989 joe.mccreery@martinmlp.com  MARTIN MIDSTREAM PARTNERS L.P.CONSOLIDATED AND CONDENSED BALANCE SHEETS(Dollars in thousands)    March 31, 2012(Unaudited)December 31, 2011 (Audited)Assets   Cash $ 8,782 $ 266 Accounts and other receivables, less allowance for doubtful accounts of $2,979 and $3,021, respectively 112,137 126,461 Product exchange receivables 9,213 17,646 Inventories 81,487 78,163 Due from affiliates 9,923 5,968 Fair value of derivatives 675 622 Other current assets  2,001  1,978 Total current assets  224,218  231,104       Property, plant and equipment, at cost 740,978 711,052 Accumulated depreciation (244,023)  (233,710) Property, plant and equipment, net  496,955  477,342       Goodwill 37,268 37,268 Investment in unconsolidated entities 177,428 170,497 Deferred debt costs 12,640 13,330 Fair value of derivatives 41 — Other assets, net  19,115  19,568   $967,665 $949,109Liabilities and Partners' Capital     Current installments of long-term debt and capital lease obligations $ 198 $ 1,261 Trade and other accounts payable  96,107 125,970 Product exchange payables 30,583 37,313 Due to affiliates 14,167 18,485 Income taxes payable 1,156 893 Fair value of derivatives 530 362 Other accrued liabilities  12,131   11,022 Total current liabilities 154,872 195,306       Long-term debt and capital leases, less current maturities 433,684 458,941 Deferred income taxes 7,487 7,657 Other long-term obligations  1,601  1,589  Total liabilities  597,644  663,493       Partners' capital 369,459 284,990 Accumulated other comprehensive income  562  626 Total partners' capital  370,021  285,616 Commitments and contingencies       $967,665 $949,109 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 filed with the Securities and Exchange Commission on May 7, 2017.  MARTIN MIDSTREAM PARTNERS L.P.CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS(Unaudited)(Dollars in thousands, except per unit amounts)   Three Months EndedMarch 31,  20122011 Revenues:   Terminalling and storage *    $ 20,186  $ 18,123 Marine transportation *   20,862 19,399 Sulfur services    2,926 2,850 Product sales: *     Natural gas services 201,013 167,211 Sulfur services 71,626 56,908 Terminalling and storage  21,673  18,545    294,312  242,664 Total revenues  338,286  283,036       Costs and expenses:     Cost of products sold: (excluding depreciation and amortization)     Natural gas services *     193,180  158,204 Sulfur services * 54,960 44,442 Terminalling and storage  20,020  16,560    268,160  219,206 Expenses:     Operating expenses *  38,170  34,349 Selling, general and administrative *  5,689  5,028 Depreciation and amortization    11,095  10,942 Total costs and expenses  323,114  269,525 Other operating income  4  — Operating income  15,176  13,511       Other income (expense):     Equity in earnings of unconsolidated entities 2,847 2,376 Interest expense (7,207) (8,402) Debt prepayment premium (251) — Other, net  61  60 Total other income (expense)  (4,550)  (5,966)       Net income before taxes 10,626 7,545 Income tax benefit (expense)    (97)  (223) Net income $ 10,529 $  7,322       General partner's interest in net income $ 1,450 $ 1,229 Limited partners' interest in net income $ 9,079 $ 5,816     Net income per limited partner unit – basic and diluted   $ 0.40    $ 0.31       Weighted average limited partner units - basic 22,576,404 18,760,861 Weighted average limited partner units - diluted 22,579,908 18,761,611 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 filed with the Securities and Exchange Commission on May 7, 2012. *Related Party Transactions Included Above Revenues:   Terminalling and storage  $ 15,274  $ 12,938 Marine transportation  4,857  6,565 Product Sales  4,290  5,399 Costs and expenses:     Cost of products sold: (excluding depreciation and amortization)     Natural gas services  25,345  23,205 Sulfur services 4,431 4,152 Expenses:     Operating expenses  14,091  12,042 Selling, general and administrative  3,678  3,031    MARTIN MIDSTREAM PARTNERS L.P.CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL(Unaudited)(Dollars in thousands)  Partners' Capital      Common   Subordinated General PartnerAccumulated Other ComprehensiveIncome  UnitsAmountUnitsAmountAmount(Loss)Total                 Balances – January 1, 2011 17,707,832 $ 250,785  889,444 $ 17,721 $ 4,881 $ 1,419 $ 274,806                 Net income  — 6,093 — — 1,229 — 7,322                 Recognition of beneficial conversion feature — (277) — 277 — — —                 Follow-on public offering 1,874,500 70,330 — — — — 70,330                 General partner contribution — — — — 1,505 — 1,505                 Cash distributions  —  (13,458) —  —  (1,416) — (14,874)                 Excess purchase price over carrying value of acquired assets  —  (19,685) —  —  — — (19,685)                 Unit-based compensation  9,100 36 —  — — — 36                 Purchase of treasury units ( 9,100) (347) — — — — (347)                 Adjustment in fair value of derivatives  —  —  —  —  —  (1,323)    (1,323)                 Balances – March 31, 2011 19,582,332 $293,477 889,444 $ 17,998 $6,199 $ 96 $ 317,770                                 Balances – January 1, 2012 20,471,776 $279,562   — $ — $5,428 $ 626 $ 285,616                 Net income  — 9,079 —   1,450 — 10,529                 Follow-on public offering 2,645,000 91,377 — — — — 91,377                 General partner contribution — — — — 1,951 — 1,951                 Cash distributions  —  (17,626) —  —  (1,818) — (19,444)                 Unit-based compensation   56 —  — — — 56                 Adjustment in fair value of derivatives  —  —  —  —  —    (64)    (64)                 Balances – March 31, 2012 23,116,776 $362,448  — $    — $7,011 $ 562 $ 370,021 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 filed with the Securities and Exchange Commission on May 7, 2012.  MARTIN MIDSTREAM PARTNERS L.P.CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS(Unaudited)(Dollars in thousands)   Three Months EndedMarch 31,  20122011 Cash flows from operating activities:     Net income $10,529 $ 7,322 Adjustments to reconcile net income to net cash provided by operating activities:     Depreciation and amortization 11,095 10,942 Amortization of deferred debt issuance costs 690 1,140 Amortization of debt discount 87 88 Deferred taxes (170) (3) Gain on sale of property, plant and equipment (4) — Equity in earnings of unconsolidated entities (2,847) (2,376) Distributions in-kind from equity investments 3,090 3,948 Non-cash mark-to-market on derivatives 10 456 Other 56 36 Change in current assets and liabilities, excluding effects of acquisitions and dispositions:     Accounts and other receivables 14,324 577 Product exchange receivables 8,433 3,845 Inventories (3,324) 2,320 Due from affiliates (3,955) (2,792) Other current assets (23) (461) Trade and other accounts payable (29,863) (2,333) Product exchange payables (6,730) (2,649) Due to affiliates (4,318) 4,314 Income taxes payable 263 226 Other accrued liabilities 1,109 3,299 Change in other non-current assets and liabilities  53  155 Net cash provided by (used in) operating activities  (1,495)  28,054       Cash flows from investing activities:     Payments for property, plant and equipment (30,082) (14,875) Acquisitions — (16,815) Payments for plant turnaround costs (305) (1,995) Proceeds from sale of property, plant and equipment 95 — Return of investments from unconsolidated entities  1,232 60 Distributions from (contributions to) unconsolidated entities for operations.  (8,406)  (3,651) Net cash used in investing activities  (37,466)  (37,276)       Cash flows from financing activities:     Payments of long-term debt (146,000) (101,500) Payments of notes payable and capital lease obligations (6,407) (268) Proceeds from long-term debt 126,000 73,500 Net proceeds from follow on offering 91,377 70,330 Treasury units purchased — (347) General partner contribution 1,951 1,505 Excess purchase price over carrying value of acquired assets — (19,685) Cash distributions paid  (19,444)  (14,874) Net cash provided by financing activities  47,477  8,661 Net increase (decrease) in cash 8,516 (561) Cash at beginning of period  266  11,380 Cash at end of period $ 8,782 $ 10,819 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 filed with the Securities and Exchange Commission on May 7, 2012.  MARTIN MIDSTREAM PARTNERS L.P.SEGMENT OPERATING INCOMEUnaudited Terminalling and Storage SegmentThree Months Ended March 31,  20122011  (In thousands) Revenues:    Services $ 21,361 $ 19,102  Products  21,673  18,544  Total revenues 43,034 37,646       Cost of products sold 20,540 17,490 Operating expenses 14,045 12,315 Selling, general and administrative expenses 10 84 Depreciation and amortization  4,723  4,540     3,716  3,217 Other operating income  20  --  Operating income $ 3,736 $ 3,217      Natural Gas Services SegmentThree Months Ended March 31,  20122011  (In thousands) Revenues:   NGLs $194,280 $155,300 Natural gas 5,041 10,016 Non-cash mark-to-market adjustment of commodity derivatives (10) 177 Gain on cash settlements of commodity derivatives 73 — Other operating fees  1,629  1,718 Total revenues 201,013 167,211       Cost of products sold:     NGLs 188,422 148,689 Natural gas  5,135  9,720 Total cost of products sold 193,557 158,409       Operating expenses 2,110 2,110 Selling, general and administrative expenses 1,882 1,851 Depreciation and amortization  1,538  1,515    1,926  3,326  Other operating income  9   —  Operating income $ 1,935 $ 3,326       NGLs Volumes (Bbls) 3,077 2,485 Natural Gas Volumes (Mmbtu) 2,143 2,620       Waskom:     Plant Inlet Volumes (Mmcf/d)  262  272 Frac Volumes (Bbls/d) 10,899 8,049  MARTIN MIDSTREAM PARTNERS L.P.SEGMENT OPERATING INCOMEUnaudited Sulfur Services SegmentThree Months Ended March 31,  20122011  (In thousands) Revenues:   Services $ 2,926 $ 2,850 Products  71,626  56,908 Total revenues 74,552 59,758       Cost of products sold 55,051 44,532 Operating expenses  4,193  4,691 Selling, general and administrative expenses 955 886 Depreciation and amortization  1,793  1,622   12,560 8,027 Other operating income (loss)   (25)  — Operating income $12,535 $ 8,027       Sulfur (long tons) 308.2 375.3 Fertilizer (long tons)  93.9  77.6 Sulfur Services Volumes (long tons)  402.1   452.9           Marine Transportation SegmentThree Months Ended March 31,  20122011  (In thousands)       Revenues $ 21,567 $ 21,439 Operating expenses 18,714 17,026 Selling, general and administrative expenses 424 389 Depreciation and amortization  3,041  3,265    (612)  759 Other operating income  --     --    Operating income $ (612) $ 759    MARTIN MIDSTREAM PARTNERS L.P.DISTRIBUTABLE CASH FLOWUnaudited Non-GAAP Financial Measure(Dollars in thousands)   Three Months EndedMarch 31, 2012     Net income $ 10,529     Adjustments to reconcile net income to distributable cash flow:   Depreciation and amortization 11,095 Amortization of debt discount 87 Amortization of deferred debt issuance costs 690 Deferred taxes (170) Gain on sale of property, plant and equipment (4) Payments of notes payable and capital lease obligations (130) Distribution equivalents from unconsolidated entities1  4,322 Invested cash in unconsolidated entities2 1,018 Equity in earnings of unconsolidated entities   (2,847) Non-cash mark-to-market on derivatives 10 Payments for plant turnaround costs (305) Maintenance capital expenditures (1,531) Unit-based compensation  56 Distributable cash flow $ 22,820    1 Distribution equivalents from unconsolidated entities    Distributions from unconsolidated entities $ —  Return of investments from unconsolidated entities 1,232  Distributions in-kind from equity investments  3,090  Distributions equivalents from unconsolidated entities $ 4,322        2 Invested cash in unconsolidated entities:   Distributions from (contributions to) unconsolidated entities for operations $ (8,406) Expansion capital expenditures in unconsolidated entities  9,424 Invested cash in unconsolidated entities   $ 1,018