Document


UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d)
 
of the Securities Exchange Act of 1934
 
Date of report (date of earliest event reported): July 27, 2016
 
MARTIN MIDSTREAM PARTNERS L.P.
(Exact name of Registrant as specified in its charter)
DELAWARE
(State of incorporation
or organization)
 
000-50056
(Commission file number)
 
05-0527861
(I.R.S. employer identification number)
 
 
 
4200 STONE ROAD
 
 
KILGORE, TEXAS
(Address of principal executive offices)
 
75662
(Zip code)
 
Registrant's telephone number, including area code: (903) 983-6200
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 






 Item 2.02 Results of Operations and Financial Condition.

          On July 27, 2016, Martin Midstream Partners L.P. (the “Partnership”) issued a press release reporting its financial results for the quarter ended June 30, 2016.   A copy of the press release is furnished as Exhibit 99.1 to this Current Report and will be published on the Partnership's website at www.martinmidstream.com. In accordance with General Instruction B.2 of Form 8-K, the information set forth herein and in the press release is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 

Item 9.01
 
Financial Statements and Exhibits.
 
(d)      Exhibits
 
          In accordance with General Instruction B.2 of Form 8-K, the information set forth in the attached Exhibit 99.1 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.

Exhibit
Number
 
Description
99.1
 
Press release dated July 27, 2016
99.2
 
Supplemental information - Martin Midstream Partners L.P. Adjusted EBITDA comparison to guidance





   SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 
MARTIN MIDSTREAM PARTNERS L.P.
 
By: Martin Midstream GP LLC,
Its General Partner
 
Date: July 27, 2016
 
By: /s/ Robert D. Bondurant  
 
 
Robert D. Bondurant
 
 
Executive Vice President, Treasurer, Principal Accounting Officer and
Chief Financial Officer 
 
 












































 INDEX TO EXHIBITS

Exhibit
Number
 
Description
99.1
 
Press release dated July 27, 2016
99.2
 
Supplemental information - Martin Midstream Partners L.P. Adjusted EBITDA comparison to guidance


















































Exhibit
EXHIBIT 99.1

MARTIN MIDSTREAM PARTNERS REPORTS
2016 SECOND QUARTER FINANCIAL RESULTS

Maintained distribution of $0.8125
Strong second quarter sulfur services and fertilizer performance
Challenging marine fundamentals continue

KILGORE, Texas, July 27, 2016 (GlobeNewswire) -- Martin Midstream Partners L.P. (Nasdaq: MMLP) (the "Partnership") announced today its financial results for the quarter ended June 30, 2016.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, "The challenging environment we referenced at the end of the first quarter continued into second-quarter 2016 results. The Partnership’s distributable cash flow for the second-quarter 2016 did not meet our internal forecast. Higher than anticipated maintenance capital expenditures of $5.4 million and weak operating results from our Marine Transportation segment resulted in a distribution coverage ratio of 0.76 times. We expect maintenance capital and turnaround expenditures to be significantly lower in the second half of the year, as we have spent approximately $12.4 million of the budgeted $18.9 million through the first six months of 2016.

"Across our businesses, Natural Gas Services segment results were lower than anticipated from a combination of the seasonally weaker refinery grade butane and legacy natural gas liquids businesses. Further, distributions from the West Texas LPG pipeline were weaker than forecast due to the previously announced revision to prior tariffs mandated by the Railroad Commission of Texas and elevated maintenance capital expenditures at the joint venture. This was offset by outperformance in our Cardinal Gas Storage division where interruptible revenue continued to be strong.

"Our Terminalling and Storage segment exceeded planned performance during the second quarter benefiting from a modest recovery in our lubricants platform, including strong performance in our grease business. In addition, our legacy specialty terminals and the Smackover refinery were stronger in the second quarter based on lower operating expenses and lower than anticipated repair and maintenance expenses.

"Within our Sulfur Services segment, as expected, the delayed first-quarter fertilizer application pushed volumes into the second quarter producing enhanced results. Through two quarters, we have achieved our full year cash flow guidance in fertilizer. While we expect usual segment seasonality heading into the third and fourth quarters, overall fertilizer fundamentals continue to be strong.

"In our Marine Transportation segment, we continue to see an abundance of supply of marine equipment in our predominantly Gulf Coast by-product and refined product markets. This translated to lower than anticipated utilization and day rates particularly in our inland business. Further, regulatory dry-docking and repair and maintenance expenses continued into the second quarter. Additionally, we encountered higher than anticipated maintenance capital expenditures associated with our marine assets that are housed within our Sulfur Services segment further decreasing distributable cash flow.

"Looking forward, management is focused on multiple initiatives to improve our leverage profile and distribution coverage ratio both near and long-term. We look forward to providing more details on these initiatives prior to the end of the year.”

As a result of a $4.1 million non-cash goodwill impairment charge in the Partnership's Marine Transportation segment, the Partnership had a net loss for the second quarter of 2016 of $1.2 million, a loss of $0.14 per limited partner unit. Net income for the second quarter of 2015 was $11.0 million, or $0.19 per limited partner unit. The Partnership's adjusted EBITDA from continuing operations for the second quarter of 2016 was $41.6 million compared to adjusted EBITDA from continuing operations for the second quarter of 2015 of $45.0 million, a decrease of 8%.





Net income from continuing operations for the six months ended June 30, 2016 was $14.7 million, or $0.19 per limited partner unit. Net income from continuing operations for the six months ended of 2015 was $27.0 million, or $0.54 per limited partner unit. Net income for the six months ended June 30, 2016 was negatively impacted by a non-cash goodwill impairment charge in the Partnership's Marine Transportation segment of $4.1 million, or $0.12 per limited partner unit. The Partnership's adjusted EBITDA from continuing operations for the six months ended June 30, 2016 was $90.9 million compared to adjusted EBITDA from continuing operations for the six months ended June 30, 2015 of $95.4 million, a decrease of 5%.

The Partnership's distributable cash flow from continuing operations for the second quarter of 2016 was $25.4 million compared to distributable cash flow from continuing operations for the second quarter of 2015 of $31.9 million, a decrease of 20%.

The Partnership's distributable cash flow from continuing operations for the six months ended June 30, 2016 was $57.9 million compared to distributable cash flow from continuing operations for the six months ended June 30, 2015 of $69.0 million, a decrease of 16%.

Revenues for the second quarter of 2016 were $190.3 million compared to $251.1 million for the second quarter of 2015. Revenues for the six months ended June 30, 2016 were $416.0 million compared to $556.5 million for the six months ended June 30, 2015.
    
On February 12, 2015, the Partnership exited the natural gas liquids floating storage and trans-loading businesses as a result of the sale of its six liquefied petroleum gas pressure barges, collectively referred to as the "Floating Storage Assets", for $41.3 million. The Partnership recorded a gain on the disposition of $1.5 million.

The Partnership had no net income, distributable cash flow or adjusted EBITDA from discontinued operations related to the Floating Storage Assets for the three and six months ended June 30, 2016.

The Partnership had no net income, distributable cash flow or adjusted EBITDA from discontinued operations related to the Floating Storage Assets for the three months ended June 30, 2015. The Partnership had net income from discontinued operations for the six months ended June 30, 2015 of $1.2 million, or $0.02 per limited partner unit. Distributable cash flow and adjusted EBITDA from discontinued operations were $1.2 million for the six months ended June 30, 2015.

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 directly comparable GAAP measurement.

Included with this press release are the Partnership's consolidated and condensed financial statements as of and for the three and six months ended June 30, 2016 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 July 27, 2016.

An attachment accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/3876e52d-3b2c-450e-964d-b9a884a37d8b.






Quarterly Cash Distribution
 
The quarterly cash distribution of $0.8125 per common unit, which was announced on July 21, 2016, is payable on August 12, 2016 to common unitholders of record as of the close of business on August 5, 2016. The ex-dividend date for the cash distribution is August 3, 2016. This distribution reflects an annualized distribution rate of $3.25 per unit.

Investors' Conference Call
  
An investors' conference call to review the second quarter results will be held on Thursday, July 28, 2016, at 8:00 a.m. Central Time. The conference call can be accessed by calling (877) 878-2695. Additionally, an accompanying slide and live webcast will be available by visiting Martin Midstream Partners’ website at www.martinmidstream.com. An audio replay of the conference call will be available by calling (855) 859-2056 from 11:00 a.m. Central Time on July 28, 2016 through 10:59 p.m. Central Time on August 8, 2016. The access code for the conference call and the audio replay is Conference ID No. 40605761.  The audio replay will also be archived under the Events and Presentations section of the Partnership’s website.

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) terminalling, storage and packaging services for petroleum products and by-products; (2) natural gas services, including liquids transportation and distribution services and natural gas storage; (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.

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.

Contact: Joe McCreery, IRC, Head of Investor Relations, at (903) 988-6425 and (877) 256-6644.




MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)


 
 
June 30, 2016
 
December 31, 2015
 
(Unaudited)
 
(Audited)
Assets
 
 
 
Cash
$
28

 
$
31

Accounts and other receivables, less allowance for doubtful accounts of $372 and $430, respectively
50,360

 
74,355

Product exchange receivables
118

 
1,050

Inventories
90,636

 
75,870

Due from affiliates
7,972

 
10,126

Fair value of derivatives

 
675

Other current assets
5,129

 
5,718

Total current assets
154,243

 
167,825

 
 
 
 
Property, plant and equipment, at cost
1,391,544

 
1,387,814

Accumulated depreciation
(422,465
)
 
(404,574
)
Property, plant and equipment, net
969,079

 
983,240

 
 
 
 
Goodwill
19,657

 
23,802

Investment in WTLPG
130,474

 
132,292

Note receivable - Martin Energy Trading LLC
15,000

 
15,000

Other assets, net
53,279

 
58,314

Total assets
$
1,341,732

 
$
1,380,473

 
 
 
 
Liabilities and Partners’ Capital
 

 
 

Trade and other accounts payable
$
81,836

 
$
81,180

Product exchange payables
8,809

 
12,732

Due to affiliates
3,859

 
5,738

Income taxes payable
370

 
985

Fair value of derivatives
862

 

Other accrued liabilities
20,663

 
18,533

Total current liabilities
116,399

 
119,168

 
 
 
 
Long-term debt, net
878,891

 
865,003

Fair value of derivatives

 
206

Other long-term obligations
2,551

 
2,217

Total liabilities
997,841

 
986,594

 
 
 
 
Commitments and contingencies (Note 16)


 


Partners’ capital
343,891

 
393,879

Total partners’ capital
343,891

 
393,879

Total liabilities and partners' capital
$
1,341,732

 
$
1,380,473


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 July 27, 2016.




MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and units in thousands, except per unit amounts)

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
Terminalling and storage  *
$
31,090

 
$
33,453

 
$
62,795

 
$
67,250

Marine transportation  *
14,339

 
20,343

 
30,685

 
40,979

Natural gas services*
15,403

 
16,564

 
31,500

 
33,051

Sulfur services
2,700

 
3,090

 
5,400

 
6,180

Product sales: *
 
 
 
 
 
 
 
Natural gas services
58,899

 
97,786

 
149,990

 
244,089

Sulfur services
39,588

 
45,284

 
79,063

 
95,331

Terminalling and storage
28,329

 
34,579

 
56,520

 
69,572

 
126,816

 
177,649

 
285,573

 
408,992

Total revenues
190,348

 
251,099

 
415,953

 
556,452

 
 
 
 
 
 
 
 
Costs and expenses:
 

 
 

 
 

 
 

Cost of products sold: (excluding depreciation and amortization)
 

 
 

 
 

 
 

Natural gas services *
55,579

 
88,623

 
134,123

 
226,330

Sulfur services *
24,700

 
33,518

 
52,224

 
69,541

Terminalling and storage *
22,934

 
29,658

 
46,766

 
59,740

 
103,213

 
151,799

 
233,113

 
355,611

Expenses:
 

 
 

 
 

 
 

Operating expenses  *
40,822

 
47,783

 
82,054

 
93,089

Selling, general and administrative  *
8,144

 
9,035

 
16,315

 
17,841

Loss on impairment of goodwill
4,145

 

 
4,145

 

Depreciation and amortization
22,089

 
22,685

 
44,137

 
45,402

Total costs and expenses
178,413

 
231,302

 
379,764

 
511,943

 
 
 
 
 
 
 
 
Other operating loss
(1,679
)
 
(167
)
 
(1,595
)
 
(177
)
Operating income
10,256

 
19,630

 
34,594

 
44,332

 
 
 
 
 
 
 
 
Other income (expense):
 

 
 

 
 

 
 

Equity in earnings of WTLPG
805

 
1,649

 
2,482

 
3,389

Interest expense, net
(12,155
)
 
(9,925
)
 
(22,267
)
 
(20,471
)
Other, net
74

 
(79
)
 
136

 
358

Total other expense
(11,276
)
 
(8,355
)
 
(19,649
)
 
(16,724
)
 
 
 
 
 
 
 
 
Net income (loss) before taxes
(1,020
)
 
11,275

 
14,945

 
27,608

Income tax expense
(191
)
 
(314
)
 
(242
)
 
(614
)
Income (loss) from continuing operations
(1,211
)
 
10,961

 
14,703

 
26,994

Income from discontinued operations, net of income taxes

 

 

 
1,215

Net income (loss)
(1,211
)
 
10,961

 
14,703

 
28,209

Less general partner's interest in net income
(3,869
)
 
(4,113
)
 
(8,080
)
 
(8,351
)
Less (income) loss allocable to unvested restricted units
4

 
(44
)
 
(39
)
 
(111
)
Limited partners' interest in net income (loss)
$
(5,076
)
 
$
6,804

 
$
6,584

 
$
19,747


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 July 27, 2016.

*Related Party Transactions Shown Below




MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and units in thousands, except per unit amounts)

*Related Party Transactions Included Above

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Revenues:*
 
 
 
 
 
 
 
Terminalling and storage
$
20,590

 
$
23,061

 
$
41,548

 
$
43,535

Marine transportation
6,036

 
6,622

 
12,447

 
13,367

Natural gas services
129

 

 
442

 

Product Sales
968

 
1,759

 
1,668

 
3,348

Costs and expenses:*
 
 
 
 
 
 
 
Cost of products sold: (excluding depreciation and amortization)
 
 
 
 
 
 
 
Natural gas services
4,498

 
6,810

 
7,883

 
13,728

Sulfur services
3,810

 
3,618

 
7,622

 
7,242

Terminalling and storage
4,081

 
5,632

 
7,466

 
11,034

Expenses:
 
 
 
 
 
 
 
Operating expenses
18,088

 
18,915

 
35,445

 
39,315

Selling, general and administrative
6,911

 
5,849

 
12,343

 
11,843


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 July 27, 2016.



MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and units in thousands, except per unit amounts)

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Allocation of net income (loss) attributable to:
 
 
 
 
 
 
 
Limited partner interest:
 
 
 
 
 
 
 
 Continuing operations
$
(5,076
)
 
$
6,804

 
$
6,584

 
$
18,896

 Discontinued operations

 

 

 
851

 
$
(5,076
)
 
$
6,804

 
$
6,584

 
$
19,747

General partner interest:
 
 
 
 
 
 
 
  Continuing operations
$
3,869

 
$
4,113

 
$
8,080

 
$
7,992

  Discontinued operations

 

 

 
359

 
$
3,869

 
$
4,113

 
$
8,080

 
$
8,351

 
 
 
 
 
 
 
 
Net income (loss) per unit attributable to limited partners:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Continuing operations
$
(0.14
)
 
$
0.19

 
$
0.19

 
$
0.54

Discontinued operations

 

 

 
0.02

 
$
(0.14
)
 
$
0.19

 
$
0.19

 
$
0.56

 
 
 
 
 
 
 
 
Weighted average limited partner units - basic
35,346

 
35,308

 
35,366

 
35,316

 
 
 
 
 
 
 
 
Diluted:
 
 
 
 
 
 
 
Continuing operations
$
(0.14
)
 
$
0.19

 
$
0.19

 
$
0.54

Discontinued operations

 

 

 
0.02

 
$
(0.14
)
 
$
0.19

 
$
0.19

 
$
0.56

 
 
 
 
 
 
 
 
Weighted average limited partner units - diluted
35,346

 
35,376

 
35,380

 
35,372


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 July 27, 2016.




MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Unaudited)
(Dollars in thousands)


 
Partners’ Capital
 
 
 
Common Limited
 
General Partner Amount
 
 
 
Units
 
Amount
 
 
Total
Balances - January 1, 2015
35,365,912

 
$
470,943

 
$
14,728

 
$
485,671

Net income

 
19,858

 
8,351

 
28,209

Issuance of common units, net

 
(269
)
 

 
(269
)
Issuance of restricted units
91,950

 

 

 

Forfeiture of restricted units
(1,000
)
 

 

 

General partner contribution

 

 
55

 
55

Cash distributions

 
(57,612
)
 
(8,965
)
 
(66,577
)
Reimbursement of excess purchase price over carrying value of acquired assets

 
750

 

 
750

Unit-based compensation

 
750

 

 
750

Balances - June 30, 2015
35,456,862

 
$
434,420

 
$
14,169

 
$
448,589

 
 
 
 
 
 
 
 
Balances - January 1, 2016
35,456,612

 
$
380,845

 
$
13,034

 
$
393,879

Net income

 
6,623

 
8,080

 
14,703

Issuance of restricted units
13,800

 

 

 

Forfeiture of restricted units
(250
)
 

 

 

Cash distributions

 
(57,603
)
 
(9,119
)
 
(66,722
)
Unit-based compensation

 
486

 

 
486

Reimbursement of excess purchase price over carrying value of acquired assets

 
1,875

 

 
1,875

Purchase of treasury units
(15,200
)
 
(330
)
 

 
(330
)
Balances - June 30, 2016
35,454,962

 
$
331,896

 
$
11,995

 
$
343,891


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 July 27, 2016.
 



MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)


 
Six Months Ended
 
June 30,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net income
$
14,703

 
$
28,209

Less: Income from discontinued operations, net of income taxes

 
(1,215
)
Net income from continuing operations
14,703

 
26,994

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Depreciation and amortization
44,137

 
45,402

Amortization of deferred debt issuance costs
2,247

 
1,742

Amortization of premium on notes payable
(153
)
 
(164
)
Loss (gain) on sale of property, plant and equipment
1,595

 
165

Loss on impairment of goodwill
4,145

 

Equity in earnings of unconsolidated entities
(2,482
)
 
(3,389
)
Derivative income
(1,125
)
 
(1,745
)
Net cash received for commodity derivatives
1,666

 

Net cash received for interest rate derivatives
160

 

Net premiums received on derivatives that settled during the year on interest rate swaption contracts
630

 
1,745

Unit-based compensation
486

 
750

Cash distributions from WTLPG
4,300

 
4,400

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

 
 

Accounts and other receivables
23,995

 
58,689

Product exchange receivables
932

 
2,752

Inventories
(14,766
)
 
12,204

Due from affiliates
2,154

 
3,800

Other current assets
509

 
(711
)
Trade and other accounts payable
(3,429
)
 
(46,283
)
Product exchange payables
(3,923
)
 
2,308

Due to affiliates
(1,879
)
 
(118
)
Income taxes payable
(615
)
 
(438
)
Other accrued liabilities
2,130

 
(959
)
Change in other non-current assets and liabilities
(614
)
 
(1,709
)
Net cash provided by continuing operating activities
74,803

 
105,435

Net cash used in discontinued operating activities

 
(1,351
)
Net cash provided by operating activities
74,803

 
104,084

Cash flows from investing activities:
 

 
 

Payments for property, plant and equipment
(27,844
)
 
(28,027
)
Acquisition of intangible assets
(2,150
)
 

Payments for plant turnaround costs
(1,184
)
 
(1,754
)
Proceeds from sale of property, plant and equipment
655

 
776

Proceeds from involuntary conversion of property, plant and equipment
9,100

 

Net cash used in continuing investing activities
(21,423
)
 
(29,005
)
Net cash provided by discontinued investing activities

 
41,250

Net cash provided by (used in) investing activities
(21,423
)
 
12,245

Cash flows from financing activities:
 

 
 

Payments of long-term debt
(163,700
)
 
(151,000
)
Proceeds from long-term debt
180,700

 
101,000

Proceeds from issuance of common units, net of issuance related costs

 
(269
)
General partner contribution

 
55

Purchase of treasury units
(330
)
 

Payment of debt issuance costs
(5,206
)
 
(306
)
Reimbursement of excess purchase price over carrying value of acquired assets
1,875

 
750

Cash distributions paid
(66,722
)
 
(66,577
)
Net cash used in financing activities
(53,383
)
 
(116,347
)
Net decrease in cash
(3
)
 
(18
)
Cash at beginning of period
31

 
42

Cash at end of period
$
28

 
$
24

Non-cash additions to property, plant and equipment
$
989

 
$
3,767


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 July 27, 2016.



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, 2016 and 2015
 
Three Months Ended June 30,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands, except BBL per day)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
32,392

 
$
34,708

 
$
(2,316
)
 
(7
)%
Products
28,329

 
34,579

 
(6,250
)
 
(18
)%
Total revenues
60,721

 
69,287

 
(8,566
)
 
(12
)%
 
 
 
 
 
 
 
 
Cost of products sold
23,471

 
30,150

 
(6,679
)
 
(22
)%
Operating expenses
17,725

 
22,326

 
(4,601
)
 
(21
)%
Selling, general and administrative expenses
1,007

 
938

 
69

 
7
 %
Depreciation and amortization
10,078

 
9,617

 
461

 
5
 %
 
8,440

 
6,256

 
2,184

 
35
 %
Other operating loss

 
(195
)
 
195

 
(100
)%
Operating income
$
8,440

 
$
6,061

 
$
2,379

 
39
 %
 
 
 
 
 
 
 
 
Lubricant sales volumes (gallons)
5,194

 
5,984

 
(790
)
 
(13
)%
Shore-based throughput volumes (gallons)
26,187

 
43,836

 
(17,649
)
 
(40
)%
Smackover refinery throughput volumes (BBL per day)
6,567

 
6,524

 
43

 
1
 %
Corpus Christi crude terminal (BBL per day)
74,565

 
169,787

 
(95,222
)
 
(56
)%

Comparative Results of Operations for the Six Months Ended June 30, 2016 and 2015
 
Six Months Ended June 30,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands, except BBL per day)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
65,549

 
$
69,749

 
$
(4,200
)
 
(6
)%
Products
56,522

 
69,572

 
(13,050
)
 
(19
)%
Total revenues
122,071

 
139,321

 
(17,250
)
 
(12
)%
 
 
 
 
 
 
 

Cost of products sold
47,821

 
61,311

 
(13,490
)
 
(22
)%
Operating expenses
36,441

 
42,679

 
(6,238
)
 
(15
)%
Selling, general and administrative expenses
2,107

 
1,811

 
296

 
16
 %
Depreciation and amortization
20,076

 
19,406

 
670

 
3
 %
 
15,626

 
14,114

 
1,512

 
11
 %
Other operating income (loss)
100

 
(201
)
 
301

 
(150
)%
Operating income
$
15,726

 
$
13,913

 
$
1,813

 
13
 %
 
 
 
 
 
 
 
 
Lubricant sales volumes (gallons)
10,340

 
12,033

 
(1,693
)
 
(14
)%
Shore-based throughput volumes (gallons)
51,746

 
86,360

 
(34,614
)
 
(40
)%
Smackover refinery throughput volumes (BBL per day)
5,503

 
6,033

 
(530
)
 
(9
)%
Corpus Christi crude terminal (BBL per day)
83,600

 
175,151

 
(91,551
)
 
(52
)%



MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Unaudited)
(Dollars and volumes in thousands, except BBL per day)

Natural Gas Services Segment

Comparative Results of Operations for the Three Months Ended June 30, 2016 and 2015
 
Three Months Ended June 30,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
15,403

 
$
16,564

 
$
(1,161
)
 
(7
)%
Products
58,899

 
97,786

 
(38,887
)
 
(40
)%
Total revenues
74,302

 
114,350

 
(40,048
)
 
(35
)%
 
 
 
 
 
 
 
 
Cost of products sold
56,233

 
89,074

 
(32,841
)
 
(37
)%
Operating expenses
6,138

 
5,727

 
411

 
7
 %
Selling, general and administrative expenses
1,807

 
2,364

 
(557
)
 
(24
)%
Depreciation and amortization
6,983

 
8,373

 
(1,390
)
 
(17
)%
 
3,141

 
8,812

 
(5,671
)
 
(64
)%
Other operating loss
(96
)
 
(3
)
 
(93
)
 
3,100
 %
Operating income
$
3,045

 
$
8,809

 
$
(5,764
)
 
(65
)%
 
 
 
 
 
 
 
 
Distributions from unconsolidated entities
$
1,800

 
$
2,300

 
$
(500
)
 
(22
)%
 
 
 
 
 
 
 
 
NGL sales volumes (Bbls)
1,726

 
3,220

 
(1,494
)
 
(46
)%

Comparative Results of Operations for the Six Months Ended June 30, 2016 and 2015
 
Six Months Ended June 30,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
31,500

 
$
33,051

 
$
(1,551
)
 
(5
)%
Products
149,990

 
244,089

 
(94,099
)
 
(39
)%
Total revenues
181,490

 
277,140

 
(95,650
)
 
(35
)%
 
 
 
 
 
 
 
 
Cost of products sold
135,581

 
227,241

 
(91,660
)
 
(40
)%
Operating expenses
11,657

 
11,416

 
241

 
2
 %
Selling, general and administrative expenses
4,111

 
4,465

 
(354
)
 
(8
)%
Depreciation and amortization
13,957

 
16,775

 
(2,818
)
 
(17
)%
 
16,184

 
17,243

 
(1,059
)
 
(6
)%
Other operating loss
(96
)
 
(7
)
 
(89
)
 
1,271
 %
Operating income
$
16,088

 
$
17,236

 
$
(1,148
)
 
(7
)%
 
 
 
 
 
 
 
 
Distributions from unconsolidated entities
$
4,300

 
$
4,400

 
$
(100
)
 
(2
)%
 
 
 
 
 
 
 
 
NGL sales volumes (Bbls)
4,928

 
7,089

 
(2,161
)
 
(30
)%




MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Unaudited)
(Dollars and volumes in thousands, except BBL per day)

Sulfur Services Segment

Comparative Results of Operations for the Three Months Ended June 30, 2016 and 2015
 
Three Months Ended June 30,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
2,700

 
$
3,090

 
$
(390
)
 
(13
)%
Products
39,588

 
45,284

 
(5,696
)
 
(13
)%
Total revenues
42,288

 
48,374

 
(6,086
)
 
(13
)%
 
 
 
 
 
 
 
 
Cost of products sold
24,790

 
33,613

 
(8,823
)
 
(26
)%
Operating expenses
3,442

 
3,987

 
(545
)
 
(14
)%
Selling, general and administrative expenses
930

 
863

 
67

 
8
 %
Depreciation and amortization
2,011

 
2,105

 
(94
)
 
(4
)%
 
11,115

 
7,806

 
3,309

 
42
 %
Other operating loss
(16
)
 

 
(16
)
 


Operating income
$
11,099

 
$
7,806

 
$
3,293

 
42
 %
 
 
 
 
 
 
 
 
Sulfur (long tons)
181

 
222

 
(41
)
 
(18
)%
Fertilizer (long tons)
87

 
82

 
5

 
6
 %
Total sulfur services volumes (long tons)
268

 
304

 
(36
)
 
(12
)%

Comparative Results of Operations for the Six Months Ended June 30, 2016 and 2015    
 
Six Months Ended June 30,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
5,400

 
$
6,180

 
$
(780
)
 
(13
)%
Products
79,063

 
95,331

 
(16,268
)
 
(17
)%
Total revenues
84,463

 
101,511

 
(17,048
)
 
(17
)%
 
 
 
 
 
 
 
 
Cost of products sold
52,405

 
69,726

 
(17,321
)
 
(25
)%
Operating expenses
6,199

 
8,270

 
(2,071
)
 
(25
)%
Selling, general and administrative expenses
1,888

 
1,925

 
(37
)
 
(2
)%
Depreciation and amortization
3,981

 
4,231

 
(250
)
 
(6
)%
 
19,990

 
17,359

 
2,631

 
15
 %
Other operating loss
(32
)
 

 
(32
)
 


Operating income
$
19,958

 
$
17,359

 
$
2,599

 
15
 %
 
 
 
 
 
 
 
 
Sulfur (long tons)
338

 
438

 
(100
)
 
(23
)%
Fertilizer (long tons)
170

 
178

 
(8
)
 
(4
)%
Total sulfur services volumes (long tons)
508

 
616

 
(108
)
 
(18
)%




MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Unaudited)
(Dollars and volumes in thousands, except BBL per day)

Marine Transportation Segment

Comparative Results of Operations for the Three Months Ended June 30, 2016 and 2015
 
Three Months Ended June 30,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Revenues
$
15,032

 
$
20,886

 
$
(5,854
)
 
(28)%
Operating expenses
14,231

 
16,523

 
(2,292
)
 
(14)%
Selling, general and administrative expenses
158

 
350

 
(192
)
 
(55)%
Loss on impairment of goodwill
4,145

 

 
4,145

 

Depreciation and amortization
3,017

 
2,590

 
427

 
16%
 
(6,519
)
 
1,423

 
(7,942
)
 
(558)%
Other operating income (loss)
(1,567
)
 
31

 
(1,598
)
 
(5,155)%
Operating income (loss)
$
(8,086
)
 
$
1,454

 
$
(9,540
)
 
(656)%
 
Comparative Results of Operations for the Six Months Ended June 30, 2016 and 2015
 
Six Months Ended June 30,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Revenues
$
31,934

 
$
42,832

 
$
(10,898
)
 
(25)%
Operating expenses
29,068

 
32,429

 
(3,361
)
 
(10)%
Selling, general and administrative expenses
(261
)
 
310

 
(571
)
 
(184)%
Loss on impairment of goodwill
4,145

 

 
4,145

 

Depreciation and amortization
6,123

 
4,990

 
1,133

 
23%
  Operating income  
$
(7,141
)
 
$
5,103

 
$
(12,244
)
 
(240)%
Other operating income (loss)
(1,567
)
 
31

 
(1,598
)
 
(5,155)%
Operating income (loss)
$
(8,708
)
 
$
5,134

 
$
(13,842
)
 
(270)%

Distributions from Unconsolidated Entities

Comparative Results of Operations for the Three Months Ended June 30, 2016 and 2015
 
Three Months Ended June 30,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Distributions from WTLPG
$
1,800

 
$
2,300

 
$
(500
)
 
(22)%
    

Comparative Results of Operations for the Six Months Ended June 30, 2016 and 2015
 
Six Months Ended June 30,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Distributions from WTLPG
$
4,300

 
$
4,400

 
$
(100
)
 
(2
)%







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 six months ended June 30, 2016 and 2015.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
 
(in thousands)
Net income (loss)
$
(1,211
)
 
$
10,961

 
$
14,703

 
$
28,209

Less: Income from discontinued operations, net of income taxes

 

 

 
(1,215
)
Income (loss) from continuing operations
(1,211
)
 
10,961

 
14,703

 
26,994

Adjustments:
 
 
 
 
 
 
 
Interest expense
12,155

 
9,925

 
22,267

 
20,471

Income tax expense
191

 
314

 
242

 
614

Depreciation and amortization
22,089

 
22,685

 
44,137

 
45,402

EBITDA
33,224

 
43,885

 
81,349

 
93,481

Adjustments:
 
 
 
 
 
 
 
Equity in earnings of unconsolidated entities
(805
)
 
(1,649
)
 
(2,482
)
 
(3,389
)
(Gain) loss on sale of property, plant and equipment
1,679

 
153

 
1,595

 
165

Loss on impairment of goodwill
4,145

 

 
4,145

 

Unrealized mark-to-market on commodity derivatives
1,327

 

 
1,537

 

Distributions from unconsolidated entities
1,800

 
2,300

 
4,300

 
4,400

Unit-based compensation
264

 
351

 
486

 
750

Adjusted EBITDA
41,634

 
45,040

 
90,930

 
95,407

Adjustments:
 
 
 
 
 
 
 
Interest expense
(12,155
)
 
(9,925
)
 
(22,267
)
 
(20,471
)
Income tax expense
(191
)
 
(314
)
 
(242
)
 
(614
)
Amortization of debt premium
(76
)
 
(82
)
 
(153
)
 
(164
)
Amortization of deferred debt issuance costs
1,532

 
874

 
2,247

 
1,742

Non-cash mark-to-market on interest rate derivatives

 

 
(206
)
 

Payments for plant turnaround costs
(193
)
 
(286
)
 
(1,184
)
 
(1,754
)
Maintenance capital expenditures
(5,165
)
 
(3,424
)
 
(11,209
)
 
(5,183
)
Distributable Cash Flow
$
25,386

 
$
31,883

 
$
57,916

 
$
68,963











a2q16earningsslidefinal8
Terminalling & Storage 2016E Guidance 1H 2016 Guidance 1H 2016 Actual Specialty Terminals - CCCT $12.6 $6.2 $6.6 Shore-Based Terminals $19.7 $10.4 $9.2 Martin Lubricants $12.3 $6.2 $4.6 Smackover Refinery $18.5 $9.3 $10.4 Specialty Terminals - Other $8.9 $2.4 $4.9 Total T&S $72.0 $34.5 $35.7 Natural Gas Services 2016E Guidance 1H 2016 Guidance 1H 2016 Actual Cardinal $38.1 $22.1 $22.0 Butane $23.5 $9.5 $7.0 WTLPG $14.4 $7.2 $4.2 NGLs $4.1 $1.6 $0.6 Propane $4.1 $2.2 $2.2 Total NGS $84.2 $42.6 $36.0 Sulfur Services 2016 E Guidance 1H 2016 Guidance 1H 2016 Actual Fertilizer $18.0 $13.3 $17.4 Molten Sulfur $6.2 $3.2 $3.7 Sulfur Prilling $5.1 $2.2 $2.9 Total Sulfur Services $29.3 $18.7 $24.0 Marine Transportation 2016E Guidance 1H 2016 Guidance 1H 2016 Actual Inland $16.6 $7.4 $3.6 Offshore $2.9 $1.4 $1.6 Marine USG&A $(5.3) ($2.7) ($2.1) Total Marine $14.2 $6.1 $3.1 MMLP 1H 2016 ADJUSTED EBITDA COMPARISON TO GUIDANCE Unallocated SG&A ($7.9) Total Adjusted EBITDA $90.9 Natural Gas Services Terminalling & Storage Sulfur Services Marine Transportation SG&A 1H 2016 Net income (loss) $18.6 $15.7 $20.0 $(8.7) $(8.6) $37.0 Depreciation and amortization $14.0 $20.1 $4.0 $6.1 -- $44.2 (Gain) loss on sale of property, plant and equipment $0.1 $(0.1) -- $1.6 -- $1.6 Loss on impairment of goodwill -- -- -- $4.1 -- $4.1 Unrealized mark-to-market on commodity derivatives $1.5 -- -- -- -- $1.5 Distributions from unconsolidated entities $4.3 -- -- -- -- $4.3 Equity in earnings of unconsolidated entities $(2.5) $(2.5) Unit-based compensation -- -- -- -- $0.5 $0.5 Income tax expense -- -- -- -- $0.2 $0.2 Adjusted EBITDA $36.0 $35.7 $24.0 $3.1 $(7.9) $90.9 $ millions 1H is presented as first six months of 2016 Exhibit 99.2


 
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”), and (2) adjusted EBITDA. 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. EBITDA and adjusted EBITDA 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. USE OF NON-GAAP FINANCIAL INFORMATION