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): February 14, 2018
 
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 February 14, 2018, Martin Midstream Partners L.P. (the “Partnership”) issued a press release reporting its financial results for the quarter and year ended December 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
 
99.2
 

























 





 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: February 14, 2018
 
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 February 14, 2018
 
99.2
 
 
Supplemental information - Martin Midstream Partners L.P. Adjusted EBITDA comparison to guidance













































Exhibit


EXHIBIT 99.1

MARTIN MIDSTREAM PARTNERS REPORTS
2017 FOURTH QUARTER FINANCIAL RESULTS

Strong Fourth Quarter Distribution Coverage Ratio of 1.59x, Full Year Coverage of 1.18x
Net income of $17.1 million for 2017
Detailed 2018 Cash Flow Guidance to be Released on February 21st

KILGORE, Texas, February 14, 2018 (GLOBE NEWSWIRE) - Martin Midstream Partners L.P. (Nasdaq:MMLP) (the "Partnership") announced today its financial results for the fourth quarter and year ended December 31, 2017.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “During the fourth quarter, the Partnership generated strong cash flow with adjusted EBITDA of $49.3 million which exceeded our guidance level. Based on this solid performance, distributable cash flow was $31.2 million with a 1.59 times distribution coverage ratio for the quarter. For the full year 2017, the Partnership's adjusted EBITDA and distributable cash flow were approximately $156.2 and $91.1 million, respectively. When compared to full year guidance, we fell modestly short of cash flow expectations by $1.2 million, however, we exceeded distributable cash flow expectations by $0.8 million and generated a solid distribution coverage of 1.18 times. As is typical in our business cycle, we often follow the third quarter, our seasonally weakest, with our strongest cash flowing quarter. Accordingly, during the fourth quarter, we saw the positive seasonal impacts of our fertilizer and butane businesses fully restored.

“As expected, based on price performance and a strong storage season last summer, we realized robust performance from our Natural Gas Services segment. Specifically, our butane optimization business exceeded expectations during the quarter. Also within the segment, we experienced better than anticipated interruptible services revenue from our Cardinal Gas Storage division. For the full year 2017, our Natural Gas Services segment trailed guidance by $0.7 million, or 0.7%. Generally speaking, we met our cash flow target within the segment as our slight miss to guidance was primarily due to the continued delay with the WTLPG pipeline tariff challenge process currently in front of the Texas Railroad Commission. Last year our expected cash flow included a resolution to this matter by the end of the third quarter. As this did not occur, our cash flow attributed to distributions from WTLPG were below planned levels.

“Our Terminalling and Storage segment missed fourth quarter and full year guidance estimates primarily attributed to repair expenses and lost revenue from Hurricane Harvey. During the fourth quarter, the Partnership incurred hurricane related costs totaling $2.8 million, of which $2.4 million related to the Terminalling and Storage segment. For the full year 2017, the Terminalling and Storage segment missed cash flow guidance by approximately $4.3 million, or 7.3%, again the majority of this variance to guidance was attributed to the negative impact of Hurricane Harvey during the third and fourth quarters. Looking ahead, we expect a full recovery of cash flow in our specialty and legacy terminalling divisions and the full year benefit of our Hondo asphalt terminal in 2018.

“Our Sulfur Services segment posted a strong fourth quarter. We exceeded cash flow guidance by $3.6 million, or approximately 70.6%. This is primarily attributed to stronger than forecasted fertilizer margins as product volume sold matched our expectation during the quarter. Additionally, within the segment, we experienced strong demand for our prilling services as the export pricing alternative was greater than domestic prices. For the full year 2017, the Sulfur Services segment exceeded cash flow guidance by approximately $4.2 million, or 14.1%.

“Marine Transportation modestly outperformed our guidance expectations for both the fourth quarter and full year 2017. During the quarter we benefitted from a continued reduction in operating expenses. For the full year 2017, we cut operating expenses by approximately $8.4 million reflective of the reduction in our fleet by 13 assets over the last two years. Based on this commitment to cost reduction, we exceed 2017 full year cash flow guidance by approximately $0.3 million, or 4.5%.






“As 2017 finished with a strong distribution coverage, we remain comfortable with the current annualized distribution run-rate of $2.00 per unit. We look forward to February 21 when we will deliver our full year detailed 2018 cash flow guidance.”

The Partnership had net income for the fourth quarter 2017 of $18.8 million, or $0.47 per limited partner unit. The Partnership had net income for the fourth quarter 2016 of $17.9 million, or $0.49 per limited partner unit. For the fourth quarter of 2016, net income was positively impacted by the gain on disposition of the Partnership's terminalling assets located in Corpus Christi, Texas of $37.3 million and negatively impacted by non-cash impairment charges of $27.0 million. Of these non-cash impairment charges, $15.3 million occurred in our Terminalling and Storage segment and was related to the discontinuation of certain organic growth projects no longer deemed economically viable. Additionally, our Marine Transportation segment experienced an $11.7 million non-cash charge related to the planned disposal of certain inland and offshore non-core transportation assets. The Partnership's adjusted EBITDA for the fourth quarter 2017 was $49.3 million compared to adjusted EBITDA for the fourth quarter 2016 of $52.3 million.

Net income for the year ended December 31, 2017 was $17.1 million, or $0.44 per limited partner unit. Net income for the year ended December 31, 2016 was $31.7 million, or $0.65 per limited partner unit. Net income for the year ended December 31, 2016 was positively impacted by the gain on disposition of the Partnership's terminalling assets located in Corpus Christi, Texas of $37.3 million and negatively impacted by non-cash impairment charges of $31.1 million. Of these non-cash impairment charges, $15.3 million occurred in our Terminalling and Storage segment and was related to the discontinuation of certain organic growth projects no longer deemed economically viable. Additionally, our Marine Transportation segment experienced an $11.7 million non-cash charge related to the planned disposal of certain inland and offshore non-core transportation assets and a $4.1 million non-cash goodwill impairment charge. The Partnership's adjusted EBITDA for the year ended December 31, 2017 was $156.2 million compared to adjusted EBITDA for the year ended December 31, 2016 of $176.6 million.

The Partnership's distributable cash flow for the fourth quarter of 2017 was $31.2 million compared to distributable cash flow for the fourth quarter of 2016 of $35.8 million.

The Partnership's distributable cash flow for the year ended December 31, 2017 was $91.1 million compared to distributable cash flow for the year ended December 31, 2016 of $113.7 million.

Revenues for the fourth quarter of 2017 were $305.7 million compared to $236.9 million for the fourth quarter of 2016. Revenues for the year ended December 31, 2017 were $946.1 million compared to $827.4 million for the year ended December 31, 2016.

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 financial statements as of and for the year ended December 31, 2017 and certain prior periods. These financial statements should be read in conjunction with the information contained in the Partnership's Annual Report on Form 10-K, to be filed with the SEC on February 16, 2018.

An attachment accompanying this announcement is included as an exhibit to this Form 8-K as Exhibit 99.2.






Investors' Conference Call

An investors’ conference call to review the fourth quarter results will be held on Thursday, February 15, 2018, 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 February 15, 2018 through 10:59 p.m. Central Time on February 26, 2018. The access code for the conference call and the audio replay is Conference ID No. 7799099. 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) natural gas services, including liquids transportation and distribution services and natural gas storage; (2) terminalling, storage and packaging services for petroleum products and by-products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) marine transportation services for petroleum products and by-products.

Forward-Looking Statements
 
Statements about the Partnership's outlook and all other statements in this release other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all references to financial estimates rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the Partnership's control, which could cause actual results to differ materially from such statements. While the Partnership believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in anticipating or predicting certain important factors. A discussion of these factors, including risks and uncertainties, is set forth in the Partnership's annual and quarterly reports filed from time to time with the Securities and Exchange Commission. The Partnership disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events, or otherwise.

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
(877) 256-6644







MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
 
December 31,
 
2017
 
2016
Assets
 
 
 
Cash
$
27

 
$
15

Trade and accrued accounts receivable, less allowance for doubtful accounts of $314 and $372 respectively
107,242

 
80,508

Product exchange receivables
29

 
207

Inventories
97,252

 
82,631

Due from affiliates
23,668

 
11,567

Other current assets
4,866

 
3,296

Assets held for sale
9,579

 
15,779

Total current assets
242,663

 
194,003

 
 
 
 
Property, plant and equipment, at cost
1,253,065

 
1,224,277

Accumulated depreciation
(421,137
)
 
(378,593
)
Property, plant and equipment, net
831,928

 
845,684

 
 
 
 
Goodwill
17,296

 
17,296

Investment in unconsolidated entities
128,810

 
129,506

Notes receivable - Martin Energy Trading LLC

 
15,000

Intangibles and other assets, net
32,801

 
44,874

 
$
1,253,498

 
$
1,246,363

Liabilities and Partners’ Capital
 
 
 
Trade and other accounts payable
$
92,567

 
$
70,249

Product exchange payables
11,751

 
7,360

Due to affiliates
3,168

 
8,474

Income taxes payable
510

 
870

Fair value of derivatives
72

 
3,904

Other accrued liabilities
26,340

 
26,717

Total current liabilities
134,408

 
117,574

 
 
 
 
Long-term debt, net
812,632

 
808,107

Other long-term obligations
8,217

 
8,676

Total liabilities
955,257

 
934,357

Commitments and contingencies


 


Partners’ capital
298,241

 
312,006

Total partners’ capital
298,241

 
312,006

 
$
1,253,498

 
$
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 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2018.






MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
 
Year Ended December 31,
 
2017
 
2016
 
2015
Revenues:
 
 
 
 
 
Terminalling and storage *
$
99,705

 
$
123,132

 
$
132,945

Marine transportation *
48,579

 
58,290

 
78,753

Natural gas storage services *
58,817

 
61,133

 
64,858

Sulfur services
10,952

 
10,800

 
12,270

Product sales: *
 
 
 
 
 
Natural gas services
473,865

 
330,200

 
458,302

Sulfur services
123,732

 
130,258

 
157,891

Terminalling and storage
130,466

 
113,578

 
131,825

 
728,063

 
574,036

 
748,018

Total revenues
946,116

 
827,391

 
1,036,844

 
 
 
 
 
 
Costs and expenses:
 
 
 
 
 
Cost of products sold: (excluding depreciation and amortization)
 
 
 
 
 
Natural gas services *
421,444

 
289,516

 
413,795

Sulfur services *
82,338

 
87,963

 
114,766

Terminalling and storage *
109,798

 
94,175

 
112,836

 
613,580

 
471,654

 
641,397

Expenses:
 
 
 
 
 
Operating expenses *
146,874

 
158,864

 
183,466

Selling, general and administrative *
38,950

 
34,385

 
36,788

Impairment of long-lived assets
2,225

 
26,953

 
10,629

Impairment of goodwill

 
4,145

 

Depreciation and amortization
85,195

 
92,132

 
92,250

Total costs and expenses
886,824

 
788,133

 
964,530

Other operating income (loss), net
523

 
33,400

 
(2,161
)
Operating income
59,815

 
72,658

 
70,153

 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
Equity in earnings of unconsolidated entities
4,314

 
4,714

 
8,986

Interest expense, net
(47,743
)
 
(46,100
)
 
(43,292
)
Gain on retirement of senior unsecured notes

 

 
1,242

Other, net
1,101

 
1,106

 
1,124

Total other income (expense)
(42,328
)
 
(40,280
)
 
(31,940
)
Net income before taxes
17,487

 
32,378

 
38,213

Income tax expense
(352
)
 
(726
)
 
(1,048
)
Income from continuing operations
17,135

 
31,652

 
37,165

Income from discontinued operations, net of income taxes

 

 
1,215

Net income
17,135

 
31,652

 
38,380

Less general partner's interest in net income
(343
)
 
(8,419
)
 
(16,338
)
Less income allocable to unvested restricted units
(42
)
 
(90
)
 
(140
)
Limited partner's interest in net income
$
16,750

 
$
23,143

 
$
21,902


These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2018.

*Related Party Transactions Shown Below





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

*Related Party Transactions Included Above
 
Year Ended December 31,
 
2017
 
2016
 
2015
Revenues:
 
 
 
 
 
Terminalling and storage
$
82,205

 
$
82,437

 
$
78,233

Marine transportation
16,801

 
21,767

 
27,724

Natural gas services
122

 
699

 
878

Product sales
3,578

 
3,034

 
5,671

Costs and expenses:
 

 
 

 
 

Cost of products sold: (excluding depreciation and amortization)
 

 
 

 
 

Natural gas services
18,946

 
22,886

 
25,797

Sulfur services
15,564

 
15,339

 
16,579

          Terminalling and storage
17,612

 
13,838

 
17,718

Expenses:
 

 
 

 
 

Operating expenses
64,344

 
70,841

 
77,871

Selling, general and administrative
29,416

 
25,890

 
24,968


These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2018.






MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
 
Year Ended December 31,
 
2017
 
2016
 
2015
Allocation of net income attributable to:
 
 
 
 
 
Limited partner interest:
 
 
 
 
 
 Continuing operations
$
16,750

 
$
23,143

 
$
21,208

 Discontinued operations

 

 
694

 
$
16,750

 
$
23,143

 
$
21,902

General partner interest:
 
 
 
 
 
  Continuing operations
$
343

 
$
8,419

 
$
15,821

  Discontinued operations

 

 
517

 
$
343

 
$
8,419

 
$
16,338

 
 
 
 
 
 
Net income per unit attributable to limited partners:
 
 
 
 
 
Basic:
 
 
 
 
 
Continuing operations
$
0.44

 
$
0.65

 
$
0.60

Discontinued operations

 

 
0.02

 
$
0.44

 
$
0.65

 
$
0.62

 
 
 
 
 
 
Weighted average limited partner units - basic
38,102

 
35,347

 
35,309

 
 
 
 
 
 
Diluted:
 
 
 
 
 
Continuing operations
$
0.44

 
$
0.65

 
$
0.60

Discontinued operations

 

 
0.02

 
$
0.44

 
$
0.65

 
$
0.62

 
 
 
 
 
 
Weighted average limited partner units - diluted
38,165

 
35,375

 
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 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2018.






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

 
Partners’ Capital
 
 
 
Common
 
General Partner
 
 
 
Units
 
Amount
 
Amount
 
Total
Balances – December 31, 2014
35,365,912

 
$
470,943

 
$
14,728

 
$
485,671

 
 
 
 
 
 
 
 
Net income

 
22,042

 
16,338

 
38,380

Issuance of common units, net

 
(590
)
 

 
(590
)
Issuance of restricted units
91,950

 

 

 

Forfeiture of restricted units
(1,250
)
 

 

 

General partner contribution

 

 
55

 
55

Cash distributions

 
(115,229
)
 
(18,087
)
 
(133,316
)
Reimbursement of excess purchase price over carrying value of acquired assets

 
2,250

 

 
2,250

Unit-based compensation

 
1,429

 

 
1,429

Balances – December 31, 2015
35,456,612

 
380,845

 
13,034

 
393,879

 
 
 
 
 
 
 
 
Net income

 
23,233

 
8,419

 
31,652

Issuance of common units, net

 
(29
)
 

 
(29
)
Issuance of restricted units
13,800

 

 

 

Forfeiture of restricted units
(2,250
)
 

 

 

Cash distributions

 
(104,137
)
 
(14,041
)
 
(118,178
)
Reimbursement of excess purchase price over carrying value of acquired assets

 
4,125

 

 
4,125

Unit-based compensation

 
904

 

 
904

Purchase of treasury units
(16,100
)
 
(347
)
 

 
(347
)
Balances – December 31, 2016
35,452,062

 
304,594

 
7,412

 
312,006

 
 
 
 
 
 
 
 
Net income

 
16,792

 
343

 
17,135

Issuance of common units, net
2,990,000

 
51,056

 

 
51,056

Issuance of restricted units
12,000

 

 

 

Forfeiture of restricted units
(9,250
)
 

 

 

General partner contribution

 

 
1,098

 
1,098

Cash distributions

 
(75,399
)
 
(1,539
)
 
(76,938
)
Reimbursement of excess purchase price over carrying value of acquired assets

 
1,125

 

 
1,125

Excess purchase price over carrying value of acquired assets

 
(7,887
)
 

 
(7,887
)
Unit-based compensation

 
650

 

 
650

Purchase of treasury units
(200
)
 
(4
)
 

 
(4
)
Balances – December 31, 2017
38,444,612

 
$
290,927

 
$
7,314

 
$
298,241


These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2017.






MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
 
Year Ended December 31,
 
2017
 
2016
 
2015
Cash flows from operating activities:
 
 
 
 
 
Net income
$
17,135

 
$
31,652

 
$
38,380

Less: Income from discontinued operations

 

 
(1,215
)
Net income from continuing operations
17,135

 
31,652

 
37,165

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
85,195

 
92,132

 
92,250

Amortization of deferred debt issue costs
2,897

 
3,684

 
4,859

Amortization of premium on notes payable
(306
)
 
(306
)
 
(324
)
(Gain) loss on disposition or sale of property, plant, and equipment
(523
)
 
(33,400
)
 
2,149

Gain on retirement of senior unsecured notes

 

 
(1,242
)
Impairment of long lived assets
2,225

 
26,953

 
10,629

Impairment of goodwill

 
4,145

 

Equity in earnings unconsolidated entities
(4,314
)
 
(4,714
)
 
(8,986
)
Derivative (income) loss
1,304

 
4,133

 
(3,107
)
Net cash (paid) received for commodity derivatives
(5,136
)
 
(550
)
 
143

Net cash received for interest rate derivatives

 
160

 

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

 
630

 
2,495

Unit-based compensation
650

 
904

 
1,429

Return on investment
5,400

 
7,500

 
11,200

Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
 
 
 
 
 
Accounts and other receivables
(26,739
)
 
(6,153
)
 
59,479

Product exchange receivables
178

 
843

 
1,996

Inventories
(14,656
)
 
(6,761
)
 
12,799

Due from affiliates
(12,096
)
 
(1,441
)
 
4,386

Other current assets
(1,699
)
 
2,478

 
891

Trade and other accounts payable
20,037

 
3,254

 
(44,153
)
Product exchange payables
4,391

 
(5,372
)
 
2,336

Due to affiliates
(5,306
)
 
2,736

 
866

Income taxes payable
(360
)
 
(115
)
 
(189
)
Other accrued liabilities
(3,187
)
 
686

 
(2,802
)
Change in other non-current assets and liabilities
2,416

 
(12,230
)
 
(345
)
Net cash provided by continuing operating activities
67,506

 
110,848

 
183,924

Net cash used in discontinued operating activities

 

 
(1,352
)
Net cash provided by operating activities
67,506

 
110,848

 
182,572

Cash flows from investing activities:
 
 
 
 
 
Payments for property, plant, and equipment
(39,749
)
 
(40,455
)
 
(65,791
)
Acquisitions, net of cash acquired
(19,533
)
 
(2,150
)
 

Payments for plant turnaround costs
(1,583
)
 
(2,061
)
 
(1,908
)
Proceeds from sale of property, plant, and equipment
8,377

 
108,505

 
2,644

Proceeds from repayment of Note receivable - affiliate

15,000

 

 

Contributions to unconsolidated entities for operations
(390
)
 

 

Net cash provided by (used in) continuing investing activities
(37,878
)
 
63,839

 
(65,055
)
Net cash provided by discontinued investing activities

 

 
41,250

Net cash provided by (used in) investing activities
(37,878
)
 
63,839

 
(23,805
)
Cash flows from financing activities:
 
 
 
 
 
Payments of long-term debt
(339,000
)
 
(386,700
)
 
(308,836
)
Proceeds from long-term debt
341,000

 
331,700

 
282,000

Net proceeds from issuance of common units
51,056

 
(29
)
 
(590
)
General partner contributions
1,098

 

 
55

Excess purchase price over carrying value of acquired assets
(7,887
)
 

 

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

 
4,125

 
2,250

Purchase of treasury units
(4
)
 
(347
)
 

Payments of debt issuance costs
(66
)
 
(5,274
)
 
(341
)
Cash distributions paid
(76,938
)
 
(118,178
)
 
(133,316
)
Net cash used in financing activities
(29,616
)
 
(174,703
)
 
(158,778
)
 
 
 
 
 
 
Net increase (decrease) in cash
12

 
(16
)
 
(11
)
Cash at beginning of year
15

 
31

 
42

Cash at end of year
$
27

 
$
15

 
$
31

 
 
 
 
 
 

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 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 Twelve Months Ended December 31, 2017 and 2016
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
105,703

 
$
128,783

 
$
(23,080
)
 
(18)%
Products
130,466

 
113,580

 
16,886

 
15%
Total revenues
236,169

 
242,363

 
(6,194
)
 
(3)%
 
 
 
 
 
 
 
 
Cost of products sold
112,135

 
96,344

 
15,791

 
16%
Operating expenses
69,888

 
71,831

 
(1,943
)
 
(3)%
Selling, general and administrative expenses
5,832

 
4,677

 
1,155

 
25%
Impairment of long-lived assets
600

 
15,252

 
(14,652
)
 
(96)%
Depreciation and amortization
45,160

 
45,484

 
(324
)
 
(1)%
 
2,554

 
8,775

 
(6,221
)
 
(71)%
Other operating income, net
751

 
35,368

 
(34,617
)
 
(98)%
Operating income
$
3,305

 
$
44,143

 
$
(40,838
)
 
(93)%
 
 
 
 
 
 
 
 
Lubricant sales volumes (gallons)
21,897

 
17,995

 
3,902

 
22%
Shore-based throughput volumes (guaranteed minimum) (gallons)
144,998

 
200,000

 
(55,002
)
 
(28)%
Smackover refinery throughput volumes (guaranteed minimum BBL per day)
6,500

 
6,500

 

 
—%
Corpus Christi crude terminal throughput volumes (barrels per day)

 
66,167

 
(66,167
)
 
(100)%

Comparative Results of Operations for the Twelve Months Ended December 31, 2016 and 2015
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
128,783

 
$
138,614

 
$
(9,831
)
 
(7)%
Products
113,580

 
131,826

 
(18,246
)
 
(14)%
Total revenues
242,363

 
270,440

 
(28,077
)
 
(10)%
 
 
 
 
 
 
 
 
Cost of products sold
96,344

 
115,460

 
(19,116
)
 
(17)%
Operating expenses
71,831

 
83,917

 
(12,086
)
 
(14)%
Selling, general and administrative expenses
4,677

 
3,804

 
873

 
23%
Impairment of long-lived assets
15,252

 
9,305

 
5,947

 
64%
Depreciation and amortization
45,484

 
38,731

 
6,753

 
17%
 
8,775

 
19,223

 
(10,448
)
 
(54)%
Other operating income (loss), net
35,368

 
(473
)
 
35,841

 
(7,577)%
Operating income
$
44,143

 
$
18,750

 
$
25,393

 
135%
 
 
 
 
 
 
 
 
Lubricant sales volumes (gallons)
17,995

 
23,045

 
(5,050
)
 
(22)%
Shore-based throughput volumes (guaranteed minimum) (gallons)
200,000

 
275,000

 
(75,000
)
 
(27)%
Smackover refinery throughput volumes (guaranteed minimum BBL per day)
6,500

 
6,500

 

 
—%
Corpus Christi crude terminal (barrels per day)
66,167

 
154,381

 
(88,214
)
 
(57)%









Natural Gas Services Segment

Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
58,817

 
$
61,133

 
$
(2,316
)
 
(4)%
Products
474,091

 
330,200

 
143,891

 
44%
Total revenues
532,908

 
391,333

 
141,575

 
36%
 
 
 
 
 
 
 

Cost of products sold
425,073

 
292,573

 
132,500

 
45%
Operating expenses
22,347

 
23,152

 
(805
)
 
(3)%
Selling, general and administrative expenses
11,292

 
9,035

 
2,257

 
25%
Depreciation and amortization
24,916

 
28,081

 
(3,165
)
 
(11)%
 
49,280

 
38,492

 
10,788

 
28%
Other operating loss, net
(89
)
 
(110
)
 
21

 
(19)%
Operating income
$
49,191

 
$
38,382

 
$
10,809

 
28%
 
 
 
 
 
 
 
 
Distributions from unconsolidated entities
$
5,400

 
$
7,500

 
$
(2,100
)
 
(28)%
 
 
 
 
 
 
 
 
NGLs Volumes (barrels)
10,487

 
9,532

 
955

 
10%

Comparative Results of Operations for the Twelve Months Ended December 31, 2016 and 2015
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
61,133

 
$
64,858

 
$
(3,725
)
 
(6)%
Products
330,200

 
458,302

 
(128,102
)
 
(28)%
Total revenues
391,333

 
523,160

 
(131,827
)
 
(25)%
 
 
 
 
 
 
 

Cost of products sold
292,573

 
416,404

 
(123,831
)
 
(30)%
Operating expenses
23,152

 
23,979

 
(827
)
 
(3)%
Selling, general and administrative expenses
9,035

 
9,791

 
(756
)
 
(8)%
Depreciation and amortization
28,081

 
34,072

 
(5,991
)
 
(18)%
 
38,492

 
38,914

 
(422
)
 
(1)%
Other operating loss, net
(110
)
 
(303
)
 
193

 
(64)%
Operating income
$
38,382

 
$
38,611

 
$
(229
)
 
(1)%
 
 
 
 
 
 
 
 
Distributions from unconsolidated entities
$
7,500

 
$
11,200

 
$
(3,700
)
 
(33)%
 
 
 
 
 
 
 
 
NGLs Volumes (barrels)
9,532

 
14,340

 
(4,808
)
 
(34)%











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 Twelve Months Ended December 31, 2017 and 2016  
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
10,952

 
$
10,800

 
$
152

 
1%
Products
123,732

 
130,258

 
(6,526
)
 
(5)%
Total revenues
134,684

 
141,058

 
(6,374
)
 
(5)%
 
 
 
 
 
 
 

Cost of products sold
82,760

 
88,325

 
(5,565
)
 
(6)%
Operating expenses
13,783

 
13,771

 
12

 
—%
Selling, general and administrative expenses
4,136

 
3,861

 
275

 
7%
Depreciation and amortization
8,117

 
7,995

 
122

 
2%
 
25,888

 
27,106

 
(1,218
)
 
(4)%
Other operating loss, net
(26
)
 
(291
)
 
265

 
(91)%
Operating income
$
25,862

 
$
26,815

 
$
(953
)
 
(4)%
 
 
 
 
 
 
 
 
Sulfur (long tons)
807.0

 
797.0

 
10.0

 
1%
Fertilizer (long tons)
276.0

 
262.0

 
14.0

 
5%
Sulfur services volumes (long tons)
1,083.0

 
1,059.0

 
24.0

 
2%

Comparative Results of Operations for the Twelve Months Ended December 31, 2016 and 2015
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
10,800

 
$
12,270

 
$
(1,470
)
 
(12)%
Products
130,258

 
157,891

 
(27,633
)
 
(18)%
Total revenues
141,058

 
170,161

 
(29,103
)
 
(17)%
 
 
 
 
 
 
 

Cost of products sold
88,325

 
115,133

 
(26,808
)
 
(23)%
Operating expenses
13,771

 
15,279

 
(1,508
)
 
(10)%
Selling, general and administrative expenses
3,861

 
3,805

 
56

 
1%
Depreciation and amortization
7,995

 
8,455

 
(460
)
 
(5)%
 
27,106

 
27,489

 
(383
)
 
(1)%
Other operating loss, net
(291
)
 
(376
)
 
85

 
(23)%
Operating income
$
26,815

 
$
27,113

 
$
(298
)
 
(1)%
 
 
 
 
 
 
 
 
Sulfur (long tons)
797.0

 
856.0

 
(59.0
)
 
(7)%
Fertilizer (long tons)
262.0

 
274.0

 
(12.0
)
 
(4)%
Sulfur services volumes (long tons)
1,059.0

 
1,130.0

 
(71.0
)
 
(6)%







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

Marine Transportation Segment

Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2017
 
2016
 
 
 
(In thousands)
 
 
Revenues
$
51,915

 
$
61,233

 
$
(9,318
)
 
(15)%
Operating expenses
44,028

 
53,118

 
(9,090
)
 
(17)%
Selling, general and administrative expenses
358

 
18

 
340

 
1,889%
Impairment of long-lived assets
1,625

 
11,701

 
(10,076
)
 
(86)%
Impairment of goodwill

 
4,145

 
(4,145
)
 
(100)%
Depreciation and amortization
7,002

 
10,572

 
(3,570
)
 
(34)%
 
(1,098
)
 
(18,321
)
 
17,223

 
(94)%
Other operating loss, net
(113
)
 
(1,567
)
 
1,454

 
(93)%
Operating loss
$
(1,211
)
 
$
(19,888
)
 
$
18,677

 
(94)%

Comparative Results of Operations for the Twelve Months Ended December 31, 2016 and 2015
 
Year Ended December 31,
 
Variance
 
Percent Change
 
2016
 
2015
 
 
 
(In thousands)
 
 
Revenues
$
61,233

 
$
81,784

 
$
(20,551
)
 
(25)%
Operating expenses
53,118

 
63,412

 
(10,294
)
 
(16)%
Selling, general and administrative expenses
18

 
417

 
(399
)
 
(96)%
Impairment of long lived assets
11,701

 
1,324

 
10,377

 
784%
Impairment of goodwill
4,145

 

 
4,145

 

Depreciation and amortization
10,572

 
10,992

 
(420
)
 
(4)%
 
(18,321
)
 
5,639

 
(23,960
)
 
(425)%
Other operating loss, net
(1,567
)
 
(1,009
)
 
(558
)
 
55%
Operating income (loss)
$
(19,888
)
 
$
4,630

 
$
(24,518
)
 
(530)%






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 quarter and years ended December 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
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Net income
18,849

 
17,882

 
17,135

 
31,652

Adjustments:
 
 
 
 
 
 
 
Interest expense
13,066

 
12,054

 
47,743

 
46,100

Income tax expense
51

 
304

 
352

 
726

Depreciation and amortization
19,247

 
25,866

 
85,195

 
92,132

EBITDA
51,213

 
56,106

 
150,425

 
170,610

Adjustments:
 
 
 
 
 
 
 
Equity in earnings of unconsolidated entities
(1,767
)
 
(1,112
)
 
(4,314
)
 
(4,714
)
Gain on sale of property, plant and equipment
(850
)
 
(34,982
)
 
(523
)
 
(33,400
)
Impairment of long-lived assets
2,225

 
26,953

 
2,225

 
26,953

Impairment of goodwill

 

 

 
4,145

Unrealized mark-to-market on commodity derivatives
205

 
3,784

 
(3,832
)
 
4,579

Hurricane damage repair accrual
(3,068
)
 

 
657

 

Asset retirement obligation revision

 

 
5,547

 

Distributions from unconsolidated entities
1,200

 
1,400

 
5,400

 
7,500

Unit-based compensation
132

 
192

 
650

 
904

Adjusted EBITDA
49,290

 
52,341

 
156,235

 
176,577

Adjustments:
 
 
 
 
 
 
 
Interest expense
(13,066
)
 
(12,054
)
 
(47,743
)
 
(46,100
)
Income tax expense
(51
)
 
(304
)
 
(352
)
 
(726
)
Amortization of deferred debt issuance costs
727

 
719

 
2,897

 
3,684

Amortization of debt premium
(76
)
 
(76
)
 
(306
)
 
(306
)
Non-cash mark-to-market on interest rate derivatives

 

 

 
(206
)
Payments for plant turnaround costs

 
(447
)
 
(1,583
)
 
(2,061
)
Maintenance capital expenditures
(5,586
)
 
(4,345
)
 
(18,080
)
 
(17,163
)
Distributable Cash Flow
$
31,238

 
$
35,834

 
$
91,068

 
$
113,699







exhibit9924q2017earnings
MMLP 4Q 2017 ADJUSTED EBITDA COMPARISON TO GUIDANCE Unallocated SG&A $(15.6) $(3.9) $(3.6) Total Adjusted EBITDA $157.4 $48.2 $49.3 Natural Gas Services Terminalling & Storage Sulfur Services Marine Transportatio n SG&A Interest Expense 4Q17 Actual Net income (loss) $23.7 $6.5 $6.7 $(1.2) $(3.8) $(13.1) $18.8 Interest Expense Add-back -- -- -- -- -- $13.1 $13.1 Depreciation & amortization $6.3 $9.2 $2.0 $1.8 -- -- $19.3 (Gain) loss on sale of property, plant & equipment $0.1 $(1.0) -- -- -- -- $(0.9) Impairment on long lived assets -- $0.6 -- $1.6 -- -- $2.2 Hurricane damage repair accrual -- $(3.0) -- -- -- -- $(3.0) Unrealized mark-to-market on commodity derivatives $0.2 -- -- -- -- -- $0.2 Distributions from unconsolidated entities $1.2 -- -- -- -- -- $1.2 Equity in earnings of unconsolidated entities $(1.8) -- -- -- -- -- $(1.8) Unit-based compensation -- -- -- -- $0.2 -- $0.2 Income tax expense -- -- -- -- -- -- $0.0 Adjusted EBITDA $29.7 $12.3 $8.7 $2.2 $(3.6) $0.0 $49.3 Terminalling & Storage 2017E Guidance 4Q17(1) Guidance 4Q17(1) Actual Shore-Based Terminals $15.7 $4.0 $3.4 Martin Lubricants $9.4 $2.1 $1.6 Smackover Refinery $20.7 $5.2 $5.4 Specialty Terminals $13.3 $4.1 $1.9 Total T&S $59.1 $15.4 $12.3 Natural Gas Services 2017E Guidance 4Q17 Guidance 4Q17 Actual Cardinal $36.3 $9.4 $10.0 Butane $26.1 $15.3 $16.9 WTLPG $8.8 $2.9 $1.1 NGLs $2.5 $0.8 $(0.0) Propane $3.2 $1.3 $1.7 Total NGS $76.9 $29.7 $29.7 Sulfur Services 2017E Guidance 4Q17 Guidance 4Q17 Actual Fertilizer $15.8 $1.6 $4.2 Molten Sulfur $6.6 $1.7 $2.0 Sulfur Prilling $7.4 $1.8 $2.5 Total Sulfur Services $29.8 $5.1 $8.7 Marine Transportation 2017E Guidance 4Q17 Guidance 4Q17 Actual Inland $9.6 $2.5 $2.3 Offshore $2.4 $0.6 $1.0 Marine USG&A $(4.8) $(1.2) $(1.1) Total Marine $7.2 $1.9 $2.2 (1) These figures include the incremental adjusted EBITDA associated with the thru-put from the Partnership’s acquisition of certain asphalt terminalling assets located in Hondo, Texas commencing July 1, 2017. $ 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 thru-put from the Partnership’s acquisition of certain asphalt terminalling assets located in Hondo, Texas commencing July 1, 2017.


 
Natural Gas Services Terminalling & Storage Sulfur Services Marine Transportation SG&A Interest Expense YTD 2017 Net income (loss) $53.5 $3.3 $25.9 $(1.2) $(16.6) $(47.8) $17.1 Interest expense add back -- -- -- -- -- $47.8 $47.8 Depreciation and amortization $24.9 $45.2 $8.1 $7.0 -- -- $85.2 (Gain) loss on sale of property, plant and equipment $0.1 $(0.8) -- $0.1 -- -- $(0.6) Impairment of long lived assets -- $0.6 -- $1.6 -- -- $2.2 Hurricane damage repair accrual -- $0.7 -- -- -- -- $0.7 Asset retirement obligation revision -- $5.5 -- -- -- -- $5.5 Unrealized mark-to-market on commodity derivatives $(3.8) -- -- -- -- -- $(3.8) Distributions from unconsolidated entities $5.4 -- -- -- -- -- $5.4 Equity in earnings of unconsolidated entities $(4.3) -- -- -- -- -- $(4.3) Unit-based compensation -- -- -- -- $0.7 -- $0.7 Income tax expense -- -- -- -- $0.3 -- $0.3 Adjusted EBITDA $75.8 $54.5 $34.0 $7.5 $(15.6) $0.0 $156.2 MMLP YTD 2017 ADJUSTED EBITDA $ millions Natural Gas Services 1Q17 2Q17 3Q17 4Q17 2017 Cardinal $9.7 $10.1 $9.6 $10.0 $39.4 Butane $9.0 $(1.2) $3.4 $16.9 $28.1 WTLPG $1.2 $1.3 $1.7 $1.1 $5.3 NGLs $0.4 $0.6 $(0.1) $(0.0) $0.9 Propane $0.4 $0.1 $(0.1) $1.7 $2.1 Total NGS $20.7 $10.9 $14.5 $29.7 $75.8 Terminalling & Storage 1Q17 2Q17 3Q17(1) 4Q17(1) 2017 Shore-Based Terminals $4.3 $3.8 $3.0 $3.4 $14.5 Martin Lubricants $2.8 $2.7 $2.3 $1.6 $9.4 Smackover Refinery $5.4 $5.3 $5.3 $5.4 $21.4 Specialty Terminals $2.1 $2.6 $2.6 $1.9 $9.2 Total T&S $14.6 $14.4 $13.2 $12.3 $54.5 Sulfur Services 1Q17 2Q17 3Q17 4Q17 2017 Fertilizer $9.7 $5.9 $(0.2) $4.2 $19.6 Molten Sulfur $1.9 $1.7 $1.3 $2.0 $6.9 Sulfur Prilling $1.9 $1.6 $1.5 $2.5 $7.5 Total Sulfur Services $13.5 $9.2 $2.6 $8.7 $34.0 Marine Transportation 1Q17 2Q17 3Q17 4Q17 2017 Inland $2.5 $2.4 $2.0 $2.3 $9.2 Offshore $0.8 $0.7 $0.4 $1.0 $2.9 Marine USG&A $(1.1) $(1.1) $(1.3) $(1.1) $(4.6) Total Marine $2.2 $2.0 $1.1 $2.2 $7.5 Unallocated SG&A $(4.2) $(3.5) $(4.3) $(3.6) $(15.6) Total Adjusted EBITDA $46.8 $33.0 $27.1 $49.3 $156.2 (1) These figures include the incremental adjusted EBITDA associated with the thru-put from the Partnership’s acquisition of certain asphalt terminalling assets located in Hondo, Texas commencing July 1, 2017


 
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