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): April 26, 2017
 
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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. o







Item 2.02
 
Results of Operations and Financial Condition.
 
          On April 26, 2017, Martin Midstream Partners L.P. (the “Partnership”) issued a press release reporting its financial results for the quarter ended March 31, 2017.   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 and Exhibit 99.2 are 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 April 26, 2017
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: April 26, 2017
 
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 April 26, 2017
 
99.2
 
 
Supplemental information - Martin Midstream Partners L.P. Adjusted EBITDA comparison to guidance













































Exhibit


EXHIBIT 99.1

MARTIN MIDSTREAM PARTNERS REPORTS
2017 FIRST QUARTER FINANCIAL RESULTS

Net Income of $13.6 million
Quarterly Distribution Coverage Ratio of 1.68 times
Balance Sheet Improvement & De-levering. Leverage at 4.42x as of March 31, 2017

KILGORE, Texas, April 26, 2017 (GlobeNewswire) -- Martin Midstream Partners L.P. (Nasdaq: MMLP) (the "Partnership") announced today its financial results for the quarter ended March 31, 2017.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “We continue to execute on our stated path of improved distribution coverage and balance sheet leverage; and we delivered strong first quarter 2017 results, including net income of $13.6 million. We followed up our highest distribution coverage quarter ever at the end of 2016 with another strong cash flow and distribution coverage quarter. Based on actual distributions paid during the quarter, we generated a 1.68 times coverage ratio.

“I’m pleased with our performance as Adjusted EBITDA for the quarter ended March 31, 2017 was $46.8 million, approximately 5% ahead of our guidance level as shown on our first quarter earnings slide. Looking across our business segments, Sulfur Services was our strongest performer compared to guidance, beating our estimate by approximately 30%. Fertilizer exceeded expectations on both volume and margin benefiting from favorable market and weather conditions. Also, Marine Transportation outperformed versus plan due to improved efficiency and reduced operating costs. Our Natural Gas Services segment performed below expectation as a result of warmer weather adversely impacting our wholesale propane business. Also, we experienced reduced distributions from our West Texas LPG pipeline joint-venture as a result of lower system throughput in the quarter and the continued rollback of the posted tariff rates by the Railroad Commission of Texas during the ongoing rate proceeding.
“Looking at our balance sheet, I’m pleased with the continued trend toward lower leverage. For the first quarter our bank compliant total leverage ratio which includes certain pro forma adjustments and the positive impact of debt reduction from the follow-on equity offering completed in February, was 4.42 times. This is the Partnership’s lowest leverage since the second quarter of 2013 and represents an improvement of approximately 0.50 times from our year end 2016 level. This debt reduction coincides with cash flow generation and reduced working capital levels primarily concentrated in our Natural Gas Services segment.
Finally, during the quarter we successfully executed the drop down acquisition of the Hondo, Texas asphalt terminal currently under construction from MRMC. Upon completion, which is expected mid-year, the total investment will be $36.0 million and we expect to generate approximately $5.0 million of cash flow on an annual basis. We funded the entire acquisition with proceeds from the follow-on equity offering completed in February.”

The Partnership had net income for the first quarter of 2017 of $13.6 million, or $0.36 per limited partner unit. The Partnership had net income for the first quarter of 2016 of $15.9 million, or $0.33 per limited partner unit. The Partnership's adjusted EBITDA for the first quarter of 2017 was $46.8 million compared to adjusted EBITDA from for the first quarter of 2016 of $49.3 million.

The Partnership's distributable cash flow for the first quarter of 2017 was $30.3 million compared to distributable cash flow for the first quarter of 2016 of $32.5 million.

Revenues for the first quarter of 2017 were $253.3 million compared to the first quarter of 2016 of $225.6 million.

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 months ended March 31, 2017 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 April 26, 2017.

An attachment accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/f388b630-6c52-43fa-a1a9-43909c676d22.

Investors' Conference Call

An investors’ conference call to review the first quarter results will be held on Thursday, April 27, 2017, 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 April 27, 2017 through 10:59 p.m. Central Time on May 8, 2017. The access code for the conference call and the audio replay is Conference ID No. 5945983. The audio replay of the conference call will also be archived 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) 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 or by contacting:

Joe McCreery, IRC - Vice President - Finance & Head of Investor Relations
(903) 988-6425







MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSE BALANCE SHEETS
(Dollars in thousands)
 
March 31, 2017
 
December 31, 2016
 
(Unaudited)
 
(Audited)
Assets
 
 
 
Cash
$
39

 
$
15

Accounts and other receivables, less allowance for doubtful accounts of $239 and $372, respectively
61,398

 
80,508

Product exchange receivables
297

 
207

Inventories
62,051

 
82,631

Due from affiliates
12,044

 
11,567

Fair value of derivatives
97

 

Other current assets
3,930

 
3,296

Assets held for sale
14,264

 
15,779

Total current assets
154,120

 
194,003

 
 
 
 
Property, plant and equipment, at cost
1,251,496

 
1,224,277

Accumulated depreciation
(400,139
)
 
(378,593
)
Property, plant and equipment, net
851,357

 
845,684

 
 
 
 
Goodwill
17,296

 
17,296

Investment in WTLPG
129,211

 
129,506

Note receivable - affiliate
15,000

 
15,000

Other assets, net
42,176

 
44,874

Total assets
$
1,209,160

 
$
1,246,363

 
 
 
 
Liabilities and Partners’ Capital
 

 
 

Trade and other accounts payable
$
69,132

 
$
70,249

Product exchange payables
7,260

 
7,360

Due to affiliates
3,288

 
8,474

Income taxes payable
1,050

 
870

Fair value of derivatives
164

 
3,904

Other accrued liabilities
18,322

 
26,717

Total current liabilities
99,216

 
117,574

 
 
 
 
Long-term debt, net
750,735

 
808,107

Other long-term obligations
5,997

 
8,676

Total liabilities
855,948

 
934,357

 
 
 
 
Commitments and contingencies (Note 17)


 


Partners’ capital
353,212

 
312,006

Total partners’ capital
353,212

 
312,006

Total liabilities and partners' capital
$
1,209,160

 
$
1,246,363


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 April 26, 2017.






MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
 
Three Months Ended
 
March 31,
 
2017
 
2016
Revenues:
 
 
 
Terminalling and storage  *
$
24,658

 
$
31,705

Marine transportation  *
12,821

 
16,346

Natural gas services*
14,665

 
16,097

Sulfur services
2,850

 
2,700

Product sales: *
 
 
 
Natural gas services
126,657

 
91,091

Sulfur services
39,527

 
39,475

Terminalling and storage
32,147

 
28,191

 
198,331

 
158,757

Total revenues
253,325

 
225,605

 
 
 
 
Costs and expenses:
 

 
 

Cost of products sold: (excluding depreciation and amortization)
 

 
 

Natural gas services *
108,179

 
78,544

Sulfur services *
24,483

 
27,524

Terminalling and storage *
26,446

 
23,832

 
159,108

 
129,900

Expenses:
 

 
 

Operating expenses  *
35,057

 
41,232

Selling, general and administrative  *
9,921

 
8,171

Depreciation and amortization
25,336

 
22,048

Total costs and expenses
229,422

 
201,351

 
 
 
 
Other operating income (loss)
(155
)
 
84

Operating income
23,748

 
24,338

 
 
 
 
Other income (expense):
 

 
 

Equity in earnings of WTLPG
905

 
1,677

Interest expense, net
(10,920
)
 
(10,112
)
Other, net
30

 
62

Total other expense
(9,985
)
 
(8,373
)
 
 
 
 
Net income before taxes
13,763

 
15,965

Income tax expense
(180
)
 
(51
)
Net income
13,583

 
15,914

Less general partner's interest in net income
(272
)
 
(4,211
)
Less income allocable to unvested restricted units
(35
)
 
(43
)
Limited partners' interest in net income
$
13,276

 
$
11,660

 
 
 
 
Net income per unit attributable to limited partners - basic
$
0.36

 
$
0.33

Net income per unit attributable to limited partners - diluted
$
0.36

 
$
0.33

Weighted average limited partner units - basic
37,321

 
35,354

Weighted average limited partner units - diluted
37,367

 
35,366


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 April 26, 2017.

*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
 
March 31,
 
2017
 
2016
Revenues:*
 
 
 
Terminalling and storage
$
19,704

 
$
20,958

Marine transportation
4,325

 
6,411

Natural gas services
112

 
313

Product Sales
1,430

 
700

Costs and expenses:*
 
 
 
Cost of products sold: (excluding depreciation and amortization)
 
 
 
Natural gas services
8,894

 
3,385

Sulfur services
3,675

 
3,812

Terminalling and storage
5,067

 
3,385

Expenses:
 
 
 
Operating expenses
16,376

 
17,357

Selling, general and administrative
7,568

 
5,432


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 April 26, 2017.






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, 2016
35,456,612

 
$
380,845

 
$
13,034

 
$
393,879

Net income

 
11,703

 
4,211

 
15,914

Issuance of restricted units
13,800

 

 

 

Forfeiture of restricted units
(250
)
 

 

 

Cash distributions

 
(28,795
)
 
(4,560
)
 
(33,355
)
Reimbursement of excess purchase price over carrying value of acquired assets

 
750

 

 
750

Unit-based compensation

 
222

 

 
222

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

 
(330
)
Balances - March 31, 2016
35,454,962

 
$
364,395

 
$
12,685

 
$
377,080

 
 
 
 
 
 
 
 
Balances - January 1, 2017
35,452,062

 
$
304,594

 
$
7,412

 
$
312,006

Net income

 
13,311

 
272

 
13,583

Issuance of common units, net of issuance related costs
2,990,000

 
51,188

 

 
51,188

Issuance of restricted units
12,000

 

 

 

Forfeiture of restricted units
(1,500
)
 

 

 

General partner contribution

 

 
1,098

 
1,098

Cash distributions

 
(17,725
)
 
(362
)
 
(18,087
)
Unit-based compensation

 
186

 

 
186

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 - March 31, 2017
38,452,562

 
$
344,792

 
$
8,420

 
$
353,212


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 April 26, 2017.






MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
 
Three Months Ended
 
March 31,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net income
$
13,583

 
$
15,914

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

 
 

Depreciation and amortization
25,336

 
22,048

Amortization of deferred debt issuance costs
721

 
715

Amortization of premium on notes payable
(77
)
 
(77
)
(Gain) loss on sale of property, plant and equipment
155

 
(84
)
Equity in earnings of unconsolidated entities
(905
)
 
(1,677
)
Derivative (income) loss
2,495

 
(2,001
)
Net cash (paid) received for commodity derivatives
(6,332
)
 
1,215

Net cash received for interest rate derivatives

 
160

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

 
630

Unit-based compensation
186

 
222

Cash distributions from WTLPG
1,200

 
2,500

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

 
 

Accounts and other receivables
19,110

 
15,136

Product exchange receivables
(90
)
 
49

Inventories
20,580

 
17,966

Due from affiliates
(477
)
 
(1,432
)
Other current assets
(491
)
 
1,142

Trade and other accounts payable
(2,560
)
 
(13,078
)
Product exchange payables
(100
)
 
(2,811
)
Due to affiliates
(5,186
)
 
(2,640
)
Income taxes payable
180

 
51

Other accrued liabilities
(11,083
)
 
(8,223
)
Change in other non-current assets and liabilities
281

 
(419
)
Net cash provided by operating activities
56,526

 
45,306

 
 
 
 
Cash flows from investing activities:
 

 
 

Payments for property, plant and equipment
(6,477
)
 
(17,298
)
Acquisitions
(19,533
)
 

Acquisition of intangible assets

 
(2,150
)
Payments for plant turnaround costs
(1,394
)
 
(991
)
Proceeds from sale of property, plant and equipment
1,481

 
113

Net cash used in investing activities
(25,923
)
 
(20,326
)
 
 
 
 
Cash flows from financing activities:
 

 
 

Payments of long-term debt
(133,000
)
 
(86,200
)
Proceeds from long-term debt
75,000

 
94,200

Proceeds from issuance of common units, net of issuance related costs
51,188

 

General partner contribution
1,098

 

Purchase of treasury units

 
(330
)
Payment of debt issuance costs
(16
)
 
(30
)
Excess purchase price over carrying value of acquired assets
(7,887
)
 

Reimbursement of excess purchase price over carrying value of acquired assets
1,125

 
750

Cash distributions paid
(18,087
)
 
(33,355
)
Net cash used in financing activities
(30,579
)
 
(24,965
)
 
 
 
 
Net increase (decrease) in cash
24

 
15

Cash at beginning of period
15

 
31

Cash at end of period
$
39

 
$
46

Non-cash additions to property, plant and equipment
$
3,262

 
$
3,292


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 April 26, 2017.






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

Terminalling and Storage Segment

Comparative Results of Operations for the Three Months Ended March 31, 2017 and 2016
 
Three Months Ended March 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands, except BBL per day)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
26,431

 
$
33,157

 
$
(6,726
)
 
(20
)%
Products
32,147

 
28,193

 
3,954

 
14
 %
Total revenues
58,578

 
61,350

 
(2,772
)
 
(5
)%
 
 
 
 
 
 
 

Cost of products sold
27,011

 
24,350

 
2,661

 
11
 %
Operating expenses
15,645

 
18,716

 
(3,071
)
 
(16
)%
Selling, general and administrative expenses
1,325

 
1,100

 
225

 
20
 %
Depreciation and amortization
15,477

 
9,998

 
5,479

 
55
 %
 
(880
)
 
7,186

 
(8,066
)
 
(112
)%
Other operating income (loss)
(13
)
 
100

 
(113
)
 
(113
)%
Operating income (loss)
$
(893
)
 
$
7,286

 
$
(8,179
)
 
(112
)%
 
 
 
 
 
 
 
 
Lubricant sales volumes (gallons)
5,334

 
5,146

 
188

 
4
 %
Shore-based throughput volumes (guaranteed minimum) (gallons)
41,667

 
50,000

 
(8,333
)
 
(17
)%
Smackover refinery throughput volumes (guaranteed minimum) (BBL per day)
6,500

 
6,500

 

 
 %
Corpus Christi crude terminal (BBL per day)

 
92,635

 
(92,635
)
 
(100
)%


Natural Gas Services Segment

Comparative Results of Operations for the Three Months Ended March 31, 2017 and 2016
 
Three Months Ended March 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
14,665

 
$
16,097

 
$
(1,432
)
 
(9
)%
Products
126,657

 
91,091

 
35,566

 
39
 %
Total revenues
141,322

 
107,188

 
34,134

 
32
 %
 
 
 
 
 
 
 
 
Cost of products sold
109,303

 
79,348

 
29,955

 
38
 %
Operating expenses
5,658

 
5,519

 
139

 
3
 %
Selling, general and administrative expenses
3,051

 
2,304

 
747

 
32
 %
Depreciation and amortization
6,161

 
6,974

 
(813
)
 
(12
)%
Operating income
$
17,149

 
$
13,043

 
$
4,106

 
31
 %
 
 
 
 
 
 
 
 
Distributions from unconsolidated entities
$
1,200

 
$
2,500

 
$
(1,300
)
 
(52
)%
 
 
 
 
 
 
 
 
NGL sales volumes (Bbls)
2,810

 
3,202

 
(392
)
 
(12
)%








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 March 31, 2017 and 2016    
 
Three Months Ended March 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
2,850

 
$
2,700

 
$
150

 
6
 %
Products
39,527

 
39,475

 
52

 
 %
Total revenues
42,377

 
42,175

 
202

 
 %
 
 
 
 
 
 
 
 
Cost of products sold
24,574

 
27,615

 
(3,041
)
 
(11
)%
Operating expenses
3,247

 
2,757

 
490

 
18
 %
Selling, general and administrative expenses
1,021

 
958

 
63

 
7
 %
Depreciation and amortization
2,033

 
1,970

 
63

 
3
 %
 
11,502

 
8,875

 
2,627

 
30
 %
Other operating loss
(22
)
 
(16
)
 
(6
)
 
38
 %
Operating income
$
11,480

 
$
8,859

 
$
2,621

 
30
 %
 
 
 
 
 
 
 
 
Sulfur (long tons)
217

 
157

 
60

 
38
 %
Fertilizer (long tons)
94

 
83

 
11

 
13
 %
Total sulfur services volumes (long tons)
311

 
240

 
71

 
30
 %


Marine Transportation Segment

Comparative Results of Operations for the Three Months Ended March 31, 2017 and 2016
 
Three Months Ended March 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues
$
13,414

 
$
16,902

 
$
(3,488
)
 
(21)%
Operating expenses
11,093

 
14,837

 
(3,744
)
 
(25)%
Selling, general and administrative expenses
104

 
(419
)
 
523

 
(125)%
Depreciation and amortization
1,665

 
3,106

 
(1,441
)
 
(46)%
 
552

 
(622
)
 
1,174

 
(189)%
Other operating loss
(120
)
 

 
(120
)
 

Operating income (loss)
$
432

 
$
(622
)
 
$
1,054

 
(169)%









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 months ended March 31, 2017 and 2016, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
 
Three Months Ended
 
March 31,
 
2017
 
2016
 
(in thousands)
Net income
$
13,583

 
$
15,914

Adjustments:
 
 
 
Interest expense
10,920

 
10,112

Income tax expense
180

 
51

Depreciation and amortization
25,336

 
22,048

EBITDA
50,019

 
48,125

Adjustments:
 
 
 
Equity in earnings of unconsolidated entities
(905
)
 
(1,677
)
(Gain) loss on sale of property, plant and equipment
155

 
(84
)
Unrealized mark-to-market on commodity derivatives
(3,837
)
 
210

Distributions from unconsolidated entities
1,200

 
2,500

Unit-based compensation
186

 
222

Adjusted EBITDA
46,818

 
49,296

Adjustments:
 
 
 
Interest expense
(10,920
)
 
(10,112
)
Income tax expense
(180
)
 
(51
)
Amortization of debt premium
(77
)
 
(77
)
Amortization of deferred debt issuance costs
721

 
715

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

 
(206
)
Payments for plant turnaround costs
(1,394
)
 
(991
)
Maintenance capital expenditures
(4,668
)
 
(6,044
)
Distributable Cash Flow
$
30,300

 
$
32,530




a1q17earningssummary
MMLP 1Q 2017 ADJUSTED EBITDA COMPARISON TO GUIDANCE Unallocated SG&A $(15.6) $(3.9) $(4.2) Total Adjusted EBITDA $157.4 $44.6 $46.8 Natural Gas Services Terminalling & Storage Sulfur Services Marine Transportatio n SG&A Interest Expense YTD 1Q17 Actual Net income (loss) $18.1 $(0.9) $11.5 $0.4 $(4.6) $(10.9) $13.6 Interest Expense Add-back -- -- -- -- -- $10.9 $10.9 Depreciation & amortization $6.1 $15.5 $2.0 $1.7 -- -- $25.3 (Gain) loss on sale of property, plant & equipment -- -- -- $0.1 -- -- $0.1 Unrealized mark-to-market on commodity derivatives $(3.8) -- -- -- -- -- $(3.8) Distributions from unconsolidated entities $1.2 -- -- -- -- -- $1.2 Equity in earnings of unconsolidated entities $(0.9) -- -- -- -- -- $(0.9) Unit-based compensation -- -- -- -- $0.2 -- $0.2 Income tax expense -- -- -- -- $0.2 -- $0.2 Adjusted EBITDA $20.7 $14.6 $13.5 $2.2 $(4.2) $0.0 $46.8 Terminalling & Storage 2017E Guidance YTD 1Q Guidance YTD 1Q17 Actual Shore-Based Terminals $15.7 $3.7 $4.3 Martin Lubricants $9.4 $2.3 $2.8 Smackover Refinery $20.7 $5.2 $5.4 Specialty Terminals $13.3 $2.6 $2.1 Total T&S $59.1 $13.8 $14.6 Natural Gas Services 2017E Guidance YTD 1Q Guidance YTD 1Q17 Actual Cardinal $36.3 $9.0 $9.7 Butane $26.1 $9.6 $9.0 WTLPG $8.8 $1.8 $1.2 NGLs $2.5 $0.5 $0.4 Propane $3.2 $1.8 $0.4 Total NGS $76.9 $22.7 $20.7 Sulfur Services 2017E Guidance YTD 1Q Guidance YTD 1Q17 Actual Fertilizer $15.8 $6.9 $9.7 Molten Sulfur $6.6 $1.6 $1.9 Sulfur Prilling $7.4 $1.9 $1.9 Total Sulfur Services $29.8 $10.4 $13.5 Marine Transportation 2017E Guidance YTD 1Q Guidance YTD 1Q17 Actual Inland $9.6 $2.3 $2.5 Offshore $2.4 $0.5 $0.8 Marine USG&A $(4.8) $(1.2) $(1.1) Total Marine $7.2 $1.6 $2.2 $ millions Exhibit 99.2


 
MMLP FULL YEAR 2017E ADJUSTED EBITDA GUIDANCE $ millions Natural Gas Services 1Q17E 2Q17E 3Q17E 4Q17E 2017E Cardinal $9.0 $9.2 $8.7 $9.4 $36.3 Butane $9.6 $0.5 $0.7 $15.3 $26.1 WTLPG $1.8 $1.5 $2.6 $2.9 $8.8 NGLs $0.5 $0.6 $0.6 $0.8 $2.5 Propane $1.8 $0.0 $0.1 $1.3 $3.2 Total NGS $22.7 $11.8 $12.7 $29.7 $76.9 Natural Gas Services Terminalling & Storage(1) Sulfur Services Marine Transportation SG&A Interest Expense 2017E Net income (loss) $47.5 $9.8 $21.5 $(1.2) $(17.1) $(45.6) $14.9 Interest expense add back -- -- -- -- -- $45.6 $45.6 Depreciation and amortization $28.0 $49.3 $8.3 $8.4 -- -- $94.0 Distributions from unconsolidated entities $8.8 -- -- -- -- -- $8.8 Equity in earnings of unconsolidated entities $(7.4) -- -- -- -- -- $(7.4) Unit-based compensation -- -- -- -- $0.9 -- $0.9 Income tax expense -- -- -- -- $0.6 -- $0.6 Adjusted EBITDA $76.9 $59.1 $29.8 $7.2 $(15.6) $0.0 $157.4 Terminalling & Storage (1) 1Q17E 2Q17E 3Q17E(1) 4Q17E(1) 2017E Shore-Based Terminals $3.7 $4.0 $4.0 $4.0 $15.7 Martin Lubricants $2.3 $2.5 $2.5 $2.1 $9.4 Smackover Refinery $5.2 $5.3 $5.0 $5.2 $20.7 Specialty Terminals $2.6 $2.5 $4.1 $4.1 $13.3 Total T&S $13.8 $14.3 $15.6 $15.4 $59.1 Sulfur Services 1Q17E 2Q17E 3Q17E 4Q17E 2017E Fertilizer $6.9 $6.9 $0.4 $1.6 $15.8 Molten Sulfur $1.6 $1.6 $1.7 $1.7 $6.6 Sulfur Prilling $1.9 $1.8 $1.9 $1.8 $7.4 Total Sulfur Services $10.4 $10.3 $4.0 $5.1 $29.8 Marine Transportation 1Q17E 2Q17E 3Q17E 4Q17E 2017E Inland $2.3 $2.4 $2.4 $2.5 $9.6 Offshore $0.5 $0.6 $0.7 $0.6 $2.4 Marine USG&A $(1.2) $(1.2) $(1.2) $(1.2) $(4.8) Total Marine $1.6 $1.8 $1.9 $1.9 $7.2 Unallocated SG&A $(3.9) $(3.9) $(3.9) $(3.9) $(15.6) Total Adjusted EBITDA $44.6 $34.3 $30.3 $48.2 $157.4 (1) These figures include the incremental adjusted EBITDA associated with the Partnership’s February 22, 2017 acquisition of certain asphalt terminalling assets located in Hondo, Texas.


 
Natural Gas Services Terminalling & Storage Sulfur Services Marine Transportation SG&A Interest Expense 2Q2017E Net income (loss) $4.6 $2.9 $8.3 $(0.2) $(4.3) $(11.0) $0.3 Interest expense add back -- -- -- -- -- $11.0 $11.0 Depreciation and amortization $7.0 $11.4 $2.0 $2.0 -- -- $22.4 Distributions from unconsolidated entities $1.5 -- -- -- -- -- $1.5 Equity in earnings of unconsolidated entities $(1.3) -- -- -- -- -- $(1.3) Unit-based compensation -- -- -- -- $0.2 -- $0.2 Income tax expense -- -- -- -- $0.2 -- $0.2 Adjusted EBITDA $11.8 $14.3 $10.3 $1.8 $(3.9) $0.0 $34.3 Natural Gas Services Terminalling & Storage(1) Sulfur Services Marine Transportation SG&A Interest Expense 3Q2017E Net income (loss) $5.4 $4.1 $1.8 $(0.1) $(4.3) $(11.7) $(4.8) Interest expense add back -- -- -- -- -- $11.7 $11.7 Depreciation and amortization $7.1 $11.5 $2.2 $2.0 -- -- $22.8 Distributions from unconsolidated entities $2.6 -- -- -- -- -- $2.6 Equity in earnings of unconsolidated entities $(2.4) -- -- -- -- -- $(2.4) Unit-based compensation -- -- -- -- $0.2 -- $0.2 Income tax expense -- -- -- -- $0.2 -- $0.2 Adjusted EBITDA $12.7 $15.6 $4.0 $1.9 $(3.9) $0.0 $30.3 Natural Gas Services Terminalling & Storage(1) Sulfur Services Marine Transportation SG&A Interest Expense 4Q2017E Net income (loss) $22.1 $5.2 $3.0 $(0.2) $(4.3) $(11.8) $14.0 Interest expense add back -- -- -- -- -- $11.8 $11.8 Depreciation and amortization $7.1 $10.2 $2.1 $2.1 -- -- $21.5 Distributions from unconsolidated entities $2.9 -- -- -- -- -- $2.9 Equity in earnings of unconsolidated entities $(2.4) -- -- -- -- -- $(2.4) Unit-based compensation -- -- -- -- $0.2 -- $0.2 Income tax expense -- -- -- -- $0.2 -- $0.2 Adjusted EBITDA $29.7 $15.4 $5.1 $1.9 $(3.9) $0.0 $48.2 MMLP 2Q 2017E ADJUSTED EBITDA GUIDANCE MMLP 3Q 2017E ADJUSTED EBITDA GUIDANCE MMLP 4Q 2017E ADJUSTED EBITDA GUIDANCE $ millions (1) These figures include the incremental adjusted EBITDA associated with the Partnership’s February 22, 2017 acquisition of certain asphalt terminalling assets located in Hondo, Texas.


 
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