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 31, 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 2.01
 
Completion of Acquisition or Disposition of Assets.

On July 31, 2018, Martin Midstream Partners L.P. (the “Partnership”) completed the previously announced sale of its 20 percent non-operating interest in West Texas LPG Pipeline L.P. ("WTLPG") to ONEOK, Inc. (“ONEOK”). WTLPG owns an approximate 2,300 mile common-carrier pipeline system that primarily transports NGLs from New Mexico and Texas to Mont Belvieu, Texas for fractionation. A wholly-owned subsidiary of ONEOK, Inc. is the operator of the assets. In consideration of the sale of these assets, the Partnership received cash proceeds of $195.0 million at closing, before transaction fees and expenses. Pro forma financial information with respect to the sale of assets is provided as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
    
Item 9.01
 
Financial Statements and Exhibits.

(b)     Pro Forma Financial Information

Unaudited Pro Forma Condensed Consolidated Financial Information. See Exhibit 99.1.
 
(d)      Exhibits
 
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: August 6, 2018
 
By: /s/ Robert D. Bondurant  
 
 
Robert D. Bondurant
 
 
Executive Vice President, Treasurer, Principal Accounting Officer and
Chief Financial Officer 
 
 



Exhibit
EXHIBIT 99.1

MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

On July 31, 2018, Martin Midstream Partners L.P. (the “Partnership”) completed the previously announced sale of its 20 percent non-operating interest in West Texas LPG Pipeline L.P. ("WTLPG") to ONEOK, Inc. (“ONEOK”). WTLPG owns an approximate 2,300 mile common-carrier pipeline system that primarily transports NGLs from New Mexico and Texas to Mont Belvieu, Texas for fractionation. A wholly-owned subsidiary of ONEOK, Inc. is the operator of the assets. In consideration of the sale of these assets, the Partnership received cash proceeds of $195.0 million at closing, before transaction fees and expenses.
    
The following unaudited pro forma condensed consolidated financial information is based upon the historical financial statements of the Partnership, adjusted to reflect the disposition of the investment in WTLPG. Pro forma financial information is presented as of and for the six months ended June 30, 2018 and the years ended December 31, 2017, 2016, and 2015.

The following unaudited pro forma condensed consolidated financial information of the Partnership should be read in conjunction with the related notes and with the historical consolidated financial statements of the Partnership and the related notes included in previous filings with the Securities and Exchange Commission. The unaudited pro forma condensed consolidated balance sheet reflects the disposition of the investment in WTLPG, as if it occurred on June 30, 2018, while the unaudited pro forma condensed consolidated statements of operations give effect to the disposition as if it occurred on January 1, 2015. The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that the Partnership’s management believes are reasonable.

The unaudited pro forma condensed consolidated financial information is presented for informational purposes only and do not purport to be indicative of the actual operating results or financial position that would have occurred if the transaction described above had occurred as presented in such statements. In addition, future results may vary significantly from the results reflected in such statements. For example, this financial information does not reflect any potential earnings from the use of the proceeds from the disposition or reductions of previously allocated corporate costs.




MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of June 30, 2018
(Dollars in thousands)


 
MMLP
 
Adjustments for
 
Pro Forma
 
Historical
 
WTLPG
 
Consolidated
Assets
 
 
 
 
 
 
Cash
$
610

 
$
195,000

A
 
$
610

 
 
 
(195,000
)
C
 
 
Accounts and other receivables, less allowance for doubtful accounts of $405
60,884

 

 
 
60,884

Product exchange receivables
174

 

 
 
174

Inventories
113,100

 

 
 
113,100

Due from affiliates
21,031

 

 
 
21,031

Other current assets
5,368

 

 
 
5,368

Assets held for sale
8,158

 

 
 
8,158

Total current assets
209,325

 

 
 
209,325

 
 
 
 
 
 
 
Property, plant and equipment, at cost
1,273,392

 

 
 
1,273,392

Accumulated depreciation
(450,564
)
 

 
 
(450,564
)
Property, plant and equipment, net
822,828

 

 
 
822,828

 
 
 
 
 
 
 
Goodwill
17,296

 

 
 
17,296

Investment in WTLPG
141,114

 
(141,114
)
B
 

Other assets, net
28,202

 

 
 
28,202

Total assets
$
1,218,765

 
$
(141,114
)
 
 
$
1,077,651

 
 
 
 
 
 
 
Liabilities and Partners’ Capital
 

 
 

 
 
 

Trade and other accounts payable
$
72,945

 
$

 
 
72,945

Product exchange payables
13,015

 

 
 
13,015

Due to affiliates
1,271

 

 
 
1,271

Income taxes payable
400

 

 
 
400

Fair value of derivatives
572

 

 
 
572

Other accrued liabilities
23,093

 

 
 
23,093

Total current liabilities
111,296

 

 
 
111,296

 
 
 
 
 
 
 
Long-term debt, net
831,928

 
(195,000
)
C
 
636,928

Other long-term obligations
10,842

 

 
 
10,842

Total liabilities
954,066

 
(195,000
)
 
 
759,066

 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 


Partners’ capital
264,699

 
53,886

D
 
318,585

Total partners’ capital
264,699

 
53,886

 
 
318,585

Total liabilities and partners' capital
$
1,218,765

 
$
(141,114
)
 
 
$
1,077,651


See accompanying notes to unaudited pro forma condensed consolidated financial information.



MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended June 30, 2018
(Dollars in thousands, except per unit amounts)

 
MMLP
 
Adjustments for
 
Pro Forma
 
Historical
 
WTLPG
 
Consolidated
Revenues:
 
 
 
 
 
 
Terminalling and storage
$
48,154

 
$

 
 
$
48,154

Marine transportation
24,193

 

 
 
24,193

Natural gas services
29,160

 

 
 
29,160

Sulfur services
5,574

 

 
 
5,574

Product sales:
 
 
 
 
 
 
Natural gas services
249,806

 

 
 
249,806

Sulfur services
70,584

 

 
 
70,584

Terminalling and storage
73,304

 

 
 
73,304

 
393,694

 

 
 
393,694

Total revenues
500,775

 

 
 
500,775

 
 
 
 
 
 
 
Costs and expenses:
 

 
 

 
 
 

Cost of products sold: (excluding depreciation and amortization)
 

 
 

 
 
 

Natural gas services
230,599

 

 
 
230,599

Sulfur services
52,635

 

 
 
52,635

Terminalling and storage
66,166

 

 
 
66,166

 
349,400

 

 
 
349,400

Expenses:
 

 
 

 
 
 

Operating expenses
62,964

 

 
 
62,964

Selling, general and administrative
18,240

 
(157
)
E
 
18,083

Depreciation and amortization
40,101

 

 
 
40,101

Total costs and expenses
470,705

 
(157
)
 
 
470,548

 
 
 
 
 
 
 
Other operating loss
(492
)
 

 
 
(492
)
Operating income
29,578

 
157

 
 
29,735

 
 
 
 
 
 
 
Other income (expense):
 

 
 

 
 
 

Equity in earnings of WTLPG
2,726

 
(2,726
)
E
 

Interest expense, net
(26,451
)
 
4,587

F
 
(21,864
)
Total other expense
(23,725
)
 
1,861

 
 
(21,864
)
 
 
 
 
 
 
 
Net income before taxes
5,853

 
2,018

 
 
7,871

Income tax expense
(281
)
 
 
 
 
(281
)
Net income
5,572

 
2,018

 
 
7,590

Less general partner's interest in net income
(111
)
 
(40
)
 
 
(151
)
Less income allocable to unvested restricted units
(2
)
 
(1
)
 
 
(3
)
Limited partners' interest in net income
$
5,459

 
$
1,977

 
 
$
7,436

 
 
 
 
 
 
 
Net income per limited partner unit - basic and diluted
$
0.14

 
 
 
 
$
0.19

Weighted average limited partner units - basic
38,828,845

 
 
 
 
38,828,845

Weighted average limited partner units - diluted
38,834,421

 
 
 
 
38,834,421


See accompanying notes to unaudited pro forma condensed consolidated financial information.



MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2017
(Dollars in thousands, except per unit amounts)


 
MMLP
 
Adjustments for
 
Pro Forma
 
Historical
 
WTLPG
 
Consolidated
Revenues:
 
 
 
 
 
 
Terminalling and storage
$
99,705

 
$

 
 
$
99,705

Marine transportation
48,579

 

 
 
48,579

Natural gas services
58,817

 

 
 
58,817

Sulfur services
10,952

 

 
 
10,952

Product sales:
 
 
 
 
 
 
Natural gas services
473,865

 

 
 
473,865

Sulfur services
123,732

 

 
 
123,732

Terminalling and storage
130,466

 

 
 
130,466

 
728,063

 

 
 
728,063

Total revenues
946,116

 

 
 
946,116

 
 
 
 
 
 
 
Costs and expenses:
 

 
 

 
 
 

Cost of products sold: (excluding depreciation and amortization)
 

 
 

 
 
 

Natural gas services
421,444

 

 
 
421,444

Sulfur services
82,338

 

 
 
82,338

Terminalling and storage
109,798

 

 
 
109,798

 
613,580

 

 
 
613,580

Expenses:
 

 
 

 
 
 

Operating expenses
146,874

 

 
 
146,874

Selling, general and administrative
38,950

 
(186
)
E
 
38,764

Impairment of long lived assets
2,225

 

 
 
2,225

Depreciation and amortization
85,195

 

 
 
85,195

Total costs and expenses
886,824

 
(186
)
 
 
886,638

 
 
 
 
 
 
 
Other operating income
523

 

 
 
523

Operating income
59,815

 
186

 
 
60,001

 
 
 
 
 
 
 
Other income (expense):
 

 
 

 
 
 

Equity in earnings of WTLPG
4,314

 
(4,314
)
E
 

Interest expense, net
(47,743
)
 
7,771

F
 
(39,972
)
Other, net
1,101

 

 
 
1,101

Total other expense
(42,328
)
 
3,457

 
 
(38,871
)
 
 
 
 
 
 
 
Net income before taxes
17,487

 
3,643

 
 
21,130

Income tax expense
(352
)
 

 
 
(352
)
Net income
17,135

 
3,643

 
 
20,778

Less general partner's interest in net income
(343
)
 
(73
)
 
 
(416
)
Less income allocable to unvested restricted units
(42
)
 
(9
)
 
 
(51
)
Limited partners' interest in net income
$
16,750

 
$
3,561

 
 
$
20,311

 
 
 
 
 
 
 
Net income per limited partner unit - basic and diluted
$
0.44

 
 
 
 
$
0.53

Weighted average limited partner units - basic
38,101,583

 
 
 
 
38,101,583

Weighted average limited partner units - diluted
38,164,901

 
 
 
 
38,164,901


See accompanying notes to unaudited pro forma condensed consolidated financial information.




MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2016
(Dollars in thousands, except per unit amounts)

 
MMLP
 
Adjustments for
 
Pro Forma
 
Historical
 
WTLPG
 
Consolidated
Revenues:
 
 
 
 
 
 
Terminalling and storage
$
123,132

 
$

 
 
$
123,132

Marine transportation
58,290

 

 
 
58,290

Natural gas services
61,133

 

 
 
61,133

Sulfur services
10,800

 

 
 
10,800

Product sales:
 
 
 
 
 
 
Natural gas services
330,200

 

 
 
330,200

Sulfur services
130,258

 

 
 
130,258

Terminalling and storage
113,578

 

 
 
113,578

 
574,036

 

 
 
574,036

Total revenues
827,391

 

 
 
827,391

 
 
 
 
 
 
 
Costs and expenses:
 

 
 

 
 
 

Cost of products sold: (excluding depreciation and amortization)
 

 
 

 
 
 

Natural gas services
289,516

 

 
 
289,516

Sulfur services
87,963

 

 
 
87,963

Terminalling and storage
94,175

 

 
 
94,175

 
471,654

 

 
 
471,654

Expenses:
 

 
 

 
 
 

Operating expenses
158,864

 

 
 
158,864

Selling, general and administrative
34,385

 
(65
)
E
 
34,320

Impairment of long lived assets
26,953

 

 
 
26,953

Impairment of goodwill
4,145

 
 
 
 
4,145

Depreciation and amortization
92,132

 

 
 
92,132

Total costs and expenses
788,133

 
(65
)
 
 
788,068

 
 
 
 
 
 
 
Other operating income
33,400

 

 
 
33,400

Operating income
72,658

 
65

 
 
72,723

 
 
 
 
 
 
 
Other income (expense):
 

 
 

 
 
 

Equity in earnings of WTLPG
4,714

 
(4,714
)
E
 

Interest expense, net
(46,100
)
 
6,498

F
 
(39,602
)
Other, net
1,106

 

 
 
1,106

Total other expense
(40,280
)
 
1,784

 
 
(38,496
)
 
 
 
 
 
 
 
Net income before taxes
32,378

 
1,849

 
 
34,227

Income tax expense
(726
)
 

 
 
(726
)
Net income
31,652

 
1,849

 
 
33,501

Less general partner's interest in net income
(8,419
)
 
(37
)
 
 
(8,456
)
Less income allocable to unvested restricted units
(90
)
 
(5
)
 
 
(95
)
Limited partners' interest in net income
$
23,143

 
$
1,807

 
 
$
24,950

 
 
 
 
 
 
 
Net income per limited partner unit - basic and diluted
$
0.65

 
 
 
 
$
0.71

Weighted average limited partner units - basic
35,347,032

 
 
 
 
35,347,032

Weighted average limited partner units - diluted
35,375,263

 
 
 
 
35,375,263


See accompanying notes to unaudited pro forma condensed consolidated financial information.



MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2015
(Dollars in thousands, except per unit amounts)

 
MMLP
 
Adjustments for
 
Pro Forma
 
Historical
 
WTLPG
 
Consolidated
Revenues:
 
 
 
 
 
 
Terminalling and storage
$
132,945

 
$

 
 
$
132,945

Marine transportation
78,753

 

 
 
78,753

Natural gas services
64,858

 

 
 
64,858

Sulfur services
12,270

 

 
 
12,270

Product sales:
 
 
 
 
 
 
Natural gas services
458,302

 

 
 
458,302

Sulfur services
157,891

 

 
 
157,891

Terminalling and storage
131,825

 

 
 
131,825

 
748,018

 

 
 
748,018

Total revenues
1,036,844

 

 
 
1,036,844

 
 
 
 
 
 
 
Costs and expenses:
 

 
 

 
 
 

Cost of products sold: (excluding depreciation and amortization)
 

 
 

 
 
 

Natural gas services
413,795

 

 
 
413,795

Sulfur services
114,766

 

 
 
114,766

Terminalling and storage
112,836

 

 
 
112,836

 
641,397

 

 
 
641,397

Expenses:
 

 
 

 
 
 

Operating expenses
183,466

 

 
 
183,466

Selling, general and administrative
36,788

 
(33
)
E
 
36,755

Impairment of long lived assets
10,629

 

 
 
10,629

Depreciation and amortization
92,250

 

 
 
92,250

Total costs and expenses
964,530

 
(33
)
 
 
964,497

 
 
 
 
 
 
 
Other operating loss
(2,161
)
 

 
 
(2,161
)
Operating income
70,153

 
33

 
 
70,186

 
 
 
 
 
 
 
Other income (expense):
 

 
 

 
 
 

Equity in earnings of WTLPG
8,986

 
(8,986
)
E
 

Interest expense, net
(43,292
)
 
5,723

F
 
(37,569
)
Gain on retirement of senior unsecured notes
1,242

 
 
 
 
1,242

Other, net
1,124

 

 
 
1,124

Total other expense
(31,940
)
 
(3,263
)
 
 
(35,203
)
 
 
 
 
 
 
 
Net income before taxes
38,213

 
(3,230
)
 
 
34,983

Income tax expense
(1,048
)
 

 
 
(1,048
)
Income (loss) from continuing operations
37,165

 
(3,230
)
 
 
33,935

Income from discontinued operations, net of income taxes
1,215

 

 
 
1,215

Net income (loss)
38,380

 
(3,230
)
 
 
35,150

Less general partner's interest in net (income) loss
(16,338
)
 
65

 
 
(16,273
)
Less (income) loss allocable to unvested restricted units
(140
)
 
12

 
 
(128
)
Limited partners' interest in net income (loss)
$
21,902

 
$
(3,153
)
 
 
$
18,749

 
 
 
 
 
 
 
Net income per limited partner unit - basic and diluted
$
0.62

 
 
 
 
$
0.53

Weighted average limited partner units - basic
35,308,649

 
 
 
 
35,308,649

Weighted average limited partner units - diluted
35,371,529

 
 
 
 
35,371,529


See accompanying notes to unaudited pro forma condensed consolidated financial information.



MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)


(A)
To reflect the Partnership's cash proceeds of $195,000.

(B)
To reflect the disposition of the Investment in WTLPG as set forth in the asset purchase agreement.

(C)
To reflect the application of the Partnership's net cash proceeds from the disposition of the investment in WTLPG to reduce outstanding borrowings under the revolving credit facility.

(D)
To reflect the impact on equity at the time of disposition of approximately $53,886 from the disposition of the Investment in WTLPG.
Net proceeds
$
195,000

Less:
 
Carrying value of assets sold
141,114

Impact on equity
$
53,886


(E)
To reflect the removal of the operating results of the Investment in WTLPG as if the transaction occurred on January 1, 2015.

(F)
To reflect the reduction in interest expense due to repayment of borrowings under the revolving credit facility using the net cash proceeds from the disposition of the Investment in WTLPG. The reduction in interest expense was calculated using a weighted average interest rate applicable during the period being presented.



Exhibit


Exhibit 99.2
Martin Midstream Partners L.P. Completes the Previously Announced
Divestiture of the West Texas LPG Pipeline Interest

Martin Midstream Partners L.P. (NASDAQ:MMLP) (the “Partnership”) announces the completion of the divestiture of its 20 percent non-operating partnership interests in the West Texas LPG Pipeline Limited Partnership (“WTLPG”) to ONEOK, Inc. The net proceeds of approximately $193.7 million will be used to reduce outstanding borrowings under the Partnership’s revolving credit facility.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, "The WTLPG divestiture is reflective of our commitment to improving the Partnership’s balance sheet and reducing our leverage ratio to below 4.50 times. On a pro-forma basis this sale represents more than a full turn of leverage improvement, or 4.36 times compared to actual leverage of 5.46 times at June 30, 2018. Furthermore, due to our reduced financial leverage Moody’s Investor Services recently revised the Partnership’s rating outlook favorably from stable to positive, while affirming the corporate credit rating of (B2) and senior unsecured debt rating of (Caa1).

We believe that with the benefits from this sale, the Partnership is now in a position to take advantage of viable growth opportunities including potential drop-downs from our general partner which could drive our distribution coverage ratio to a target of greater than 1.2 times.”

About Martin Midstream Partners (NASDAQ:MMLP)

The Partnership is a publicly traded limited partnership with a diverse set of operations focused primarily in the United States Gulf Coast region. The Partnership's primary business segments include: (1) natural gas services, including liquids transportation and distribution services and natural gas storage; (2) terminalling, storage and packaging services for petroleum products and by-products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) marine transportation services for petroleum products and by-products.

Forward-Looking Statements

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

Additional information concerning the Partnership is available on the Partnership's website at www.martinmidstream.com or by contacting:

Sharon Taylor - Head of Investor Relations
(877) 256-6644