February 15, 2017

Martin Midstream Partners Reports 2016 Fourth Quarter Financial Results And Hondo, Texas Asphalt Terminal Acquisition

  • Record Quarterly Cash Flow and Distribution Coverage Ratio of 1.98 times in Q4 2016
  • Announcement of the Hondo, Texas Asphalt Terminal Acquisition from MRMC
  • Net income of $31.7 million for 2016 compared to $38.4 million for 2015

KILGORE, Texas, Feb. 15, 2017 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq:MMLP) (the "Partnership") announced today its financial results for the year ended December 31, 2016

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, "I am pleased to announce the acquisition of the Hondo, Texas asphalt terminal facility for $27.4 million from Martin Resource Management Corporation ("MRMC").  In addition, the Partnership expects to spend $8.6 million to complete construction.  The terminal will be supported by long-term contractual agreements with MRMC whereby the Partnership expects to receive cash flow of approximately $5.0 million annually.   The acquisition of a newly constructed asset at an accretive multiple of cash flow restores growth at the Partnership.

"During the fourth quarter, the Partnership continued to execute on its stated goals to create balance sheet improvement and strengthen our distribution coverage ratio.  The Partnership made a strategic decision in the second half of the year to divest of the Corpus Christi terminal assets as throughput at the facility continued to decline commensurate with Eagle Ford crude oil production.  In addition to successfully closing the divestiture, we also saw the positive impact of working capital reductions during the quarter in our natural gas liquids businesses.  The net result of those two actions reduced leverage by approximately 0.3 turns on our debt to EBITDA leverage ratio at year end as well as providing additional liquidity.

"For the quarter ended December 31, 2016, our distribution coverage ratio was 1.98 times based on our current quarterly distribution of $0.50.  We generated the highest level of adjusted EBITDA in the Partnership's history based on strong contributions from our Natural Gas Services segment. We performed above expectations in our Cardinal Gas Storage line of business and met forecast in our refinery grade butane division.

"Looking at our segments, the Natural Gas Services segment generated better than expected cash flow from our Cardinal Gas Storage assets.  Cardinal continues to perform exceedingly well, particularly within its interruptible services line of business.  I am especially pleased with Cardinal's performance given the re-contracting requirements at our Arcadia, Louisiana location in mid-year 2016.   I believe the market continues to value the strategic location of our storage assets amidst the changing geographical flow of natural gas.  Additionally, our butane optimization business performed at a high level during the fourth quarter and in calendar 2016.  This performance was anticipated as the Partnership had a strong storage season during the second and third quarters of 2016.  Based on current fundamentals, we anticipate our butane business will continue to be strong during the first quarter of 2017.  The Natural Gas Services segment fell short of full year 2016 cash flow guidance by approximately $5.5 million.  However, giving effect to the previously disclosed West Texas LPG Pipeline tariff reductions and corresponding distribution to the Partnership, the segment actually outperformed our estimates by $1.4 million.

"Within our Terminalling & Storage segment, our Smackover refinery exceeded cash flow forecast in 2016 primarily as a result of increased tolling and reservation fees. Positively, within this segment, we were able to significantly reduce operating expenses within our specialty terminals which offset the decline in revenues we experienced through reduced throughput.  We experienced weaker margins in our lubricants platform throughout most of 2016, partially offset by the strengths in our grease business.  For the year, the Terminalling & Storage segment was below our cash flow guidance by approximately $2.5 million.

"Within our Sulfur Services segment, the Partnership significantly exceeded expectations. This is primarily attributed to strength in our fertilizer business in the second and fourth quarters. Margins were consistently strong as sulfur and raw material costs associated with our products fell throughout the year. Additionally, product demand preferences trended toward our higher margin products again in 2016.  For the year, the Sulfur Services segment exceeded our cash flow guidance by approximately $5.8 million.

"Lastly, our Marine Transportation segment encountered soft market conditions during 2016.  Day rates for our assets continue to be weak even as the Partnership successfully reduced operating and general and administrative expenses during the year.  Additionally, the Partnership has reduced its fleet size by divesting of non-commercially competitive equipment.  This resulted in a non-cash asset impairment of approximately $11.7 million, negatively impacting the Partnership's net income for 2016.  These divestitures are expected to allow the Partnership to benefit from operating expense savings of approximately $1.4 million annually.  For the year, the Marine Transportation segment was below cash flow guidance by approximately $6.1 million.

"De-levering will be a top priority of the Partnership in 2017.  Based on our current annualized distribution run-rate of $2.00, the Partnership is well-positioned to continue generating strong distribution coverage while continuing to improve our balance sheet."

The Partnership had net income for the fourth quarter of 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 had net income for the fourth quarter of 2015 of $6.8 million, or $0.08 per limited partner unit.  For the fourth quarter of 2015, net income was negatively impacted by non-cash impairment charges of $10.6 million.  These non-cash charges impacted earnings but had no impact on distributable cash flow or adjusted EBITDA.  The Partnership's adjusted EBITDA from continuing operations for the fourth quarter of 2016 was $52.3 million compared to adjusted EBITDA from continuing operations for the fourth quarter of 2015 of $51.4 million, an increase of 2%.

Net income from continuing operations 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.

Net income from continuing operations for the year ended December 31, 2015 was $37.2 million, or $0.60 per limited partner unit.  Net income for the year ended December 31, 2015 was negatively impacted by non-cash impairment charges of $10.6 million in our Terminalling and Storage segment related to the discontinuation of certain organic growth projects no longer deemed economically viable.  The Partnership's adjusted EBITDA from continuing operations for the year ended December 31, 2016 was $176.6 million compared to adjusted EBITDA from continuing operations for the year ended December 31, 2015 of $188.3 million, a decrease of 6%.

The Partnership's distributable cash flow from continuing operations for both the fourth quarter of 2016 and 2015 was $35.8 million.

The Partnership's distributable cash flow from continuing operations for the year ended December 31, 2016 was $113.7 million compared to distributable cash flow from continuing operations for the year ended December 31, 2015 of $133.9 million, a decrease of 15%.

Revenues for the fourth quarter of 2016 were $236.9 million compared to $254.4 million for the fourth quarter of 2015.  Revenues for the year ended December 31, 2016 were $827.4 million compared to $1.0 billion for the year ended December 31, 2015.
           
On February 12, 2015, the Partnership exited the natural gas liquids floating storage and trans-loading businesses as a result of the sale of its six liquefied petroleum gas pressure barges, collectively referred to as the "Floating Storage Assets", for $41.3 million.  The Partnership recorded a gain on the disposition of $1.5 million.

The Partnership had no net income, distributable cash flow or adjusted EBITDA from discontinued operations related to the Floating Storage Assets for the three and twelve months ended December 31, 2016.

The Partnership had no net income, distributable cash flow or adjusted EBITDA from discontinued operations related to the Floating Storage Assets for the three months ended December 31, 2015.  The Partnership had net income from discontinued operations for the twelve months ended December 31, 2015 of $1.2 million, or $0.02 per limited partner unit.  Distributable cash flow and adjusted EBITDA from discontinued operations were negative $0.2 million for the year ended December 31, 2015.

Distributable cash flow, EBITDA and adjusted EBITDA are non-GAAP financial measures which are explained in greater detail below under the heading "Use of Non-GAAP Financial Information." The Partnership has also included below a table entitled "Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow" in order to show the components of these non-GAAP financial measures and their reconciliation to the most comparable GAAP measurement.

Included with this press release are the Partnership's consolidated financial statements as of and for the year ended December 31, 2016 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 17, 2017.

An attachment accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/75b5b63e-eaca-4dce-adf1-d056da16cefb.

Investors' Conference Call

An investors' conference call to review the fourth quarter results will be held on Thursday, February 16, 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 February 16, 2017 through 10:59 p.m. Central Time on February 27, 2017.  The access code for the conference call and the audio replay is Conference ID No. 50816933.  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 BALANCE SHEETS
(Dollars in thousands)
 
 December 31,
 2016 2015
Assets   
Cash$15  $31 
Trade and accrued accounts receivable, less allowance for doubtful accounts of $372 and $430 respectively80,508   74,355 
Product exchange receivables207  1,050 
Inventories82,631  75,870 
Due from affiliates11,567  10,126 
Fair value of derivatives  675 
Other current assets3,296  5,718 
Assets held for sale15,779   
Total current assets194,003  167,825 
    
Property, plant and equipment, at cost 1,224,277  1,387,814 
Accumulated depreciation(378,593) (404,574)
Property, plant and equipment, net845,684  983,240 
    
Goodwill17,296  23,802 
Investment in unconsolidated entities129,506  132,292 
Notes receivable - Martin Energy Trading LLC15,000  15,000  
Intangibles and other assets, net44,874  58,314 
 $1,246,363  $1,380,473 
Liabilities and Partners' Capital   
Trade and other accounts payable$70,249  $81,180 
Product exchange payables7,360  12,732 
Due to affiliates8,474   5,738 
Income taxes payable870  985 
Fair value of derivatives3,904   
Other accrued liabilities26,717  18,533 
Total current liabilities117,574  119,168 
    
Long-term debt, net808,107  865,003 
Fair value of derivatives  206 
Other long-term obligations8,676  2,217 
Total liabilities934,357  986,594 
Commitments and contingencies   
Partners' capital312,006   393,879 
 $1,246,363  $1,380,473 
         

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 15, 2017.

 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
 
 Year Ended December 31,
 2016 2015 2014
Revenues:     
Terminalling and storage  *$123,132  $132,945  $130,506 
Marine transportation  *58,290  78,753  91,372 
Natural gas storage services *61,133  64,858  22,991 
Sulfur services10,800  12,270  12,149 
Product sales: *     
Natural gas services330,200  458,302  990,844 
Sulfur services130,258  157,891  203,322 
Terminalling and storage113,578   131,825  190,957 
 574,036  748,018  1,385,123 
Total revenues827,391  1,036,844  1,642,141 
      
Costs and expenses:     
Cost of products sold: (excluding depreciation and amortization)     
Natural gas services *289,516  413,795  948,765 
Sulfur services *87,963  114,766  159,782 
Terminalling and storage *94,175  112,836  172,069 
 471,654  641,397  1,280,616 
Expenses:     
Operating expenses  *158,864  183,466  184,049 
Selling, general and administrative  *34,385  36,788  36,316 
Impairment of long-lived assets 26,953  10,629  3,445 
Impairment of goodwill4,145     
Depreciation and amortization92,132  92,250  68,830 
Total costs and expenses788,133  964,530  1,573,256 
Other operating income (loss), net33,400  (2,161) (1,014)
Operating income72,658  70,153  67,871 
      
Other income (expense):     
Equity in earnings of unconsolidated entities4,714  8,986  5,466 
Debt prepayment premium     (7,767)
Interest expense, net(46,100) (43,292) (42,203)
Gain on retirement of senior unsecured notes  1,242   
Reduction in fair value of investment in Cardinal due to the purchase of the controlling interest    (30,102)
Other, net1,106  1,124  1,505 
Total other income (expense)(40,280) (31,940) (73,101)
Net income (loss) before taxes32,378  38,213  (5,230)
Income tax expense(726) (1,048) (1,137)
Income (loss) from continuing operations31,652  37,165  (6,367)
Income (loss) from discontinued operations, net of income taxes  1,215  (5,338)
Net income (loss)31,652  38,380  (11,705)
Less general partner's interest in net (income) loss(8,419) (16,338) (3,503)
Less (income) loss allocable to unvested restricted units(90 ) (140) 32 
Limited partner's interest in net income (loss)$23,143  $21,902  $(15,176)
             

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 15, 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
 
 Year Ended December 31,
 2016 2015 2014
Revenues:     
Terminalling and storage$82,437  $78,233  $74,467 
Marine transportation21,767  27,724  24,389 
Natural gas services699  878   
Product sales3,034  5,671   7,661 
Costs and expenses:     
Cost of products sold: (excluding depreciation and amortization)     
Natural gas services22,886  25,797  37,703 
Sulfur services15,339   16,579  18,390 
Terminalling and storage13,838  17,718  36,341 
Expenses:     
Operating expenses70,841  77,871  79,577 
Selling, general and administrative25,890  24,968  23,679 

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 15, 2017.

 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
 
 Year Ended December 31,
 2016 2015 2014
Allocation of net income (loss) attributable to:     
Limited partner interest:     
Continuing operations$23,143  $21,208  $(8,255)
Discontinued operations  694  (6,921)
 $23,143  $21,902  $(15,176)
General partner interest:     
Continuing operations$8,419  $15,821  $1,906 
Discontinued operations  517  1,597 
 $8,419  $16,338  $3,503 
      
Net income (loss) per unit attributable to limited partners:     
Basic:     
Continuing operations$0.65  $0.60  $(0.27)
Discontinued operations  0.02  (0.22)
 $0.65  $0.62  $(0.49)
      
Weighted average limited partner units - basic35,347  35,309  30,785 
      
Diluted:     
Continuing operations$0.65  $0.60  $(0.27)
Discontinued operations  0.02  (0.22)
 $0.65  $0.62  $(0.49)
      
Weighted average limited partner units - diluted35,375  35,372  30,785 

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 15, 2017.

 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CAPITAL
(Dollars in thousands)
 
 Partners' Capital  
  Common General
Partner
  
 Units Amount Amount Total
Balances - December 31, 201326,625,026  $254,028  $6,389  $260,417 
        
Net loss   (15,208) 3,503  (11,705)
Issuance of common units, net8,743,386  331,728    331,728 
Issuance of restricted units8,900       
Forfeiture of restricted units(5,000)      
General partner contribution    7,007  7,007 
Cash distributions  (95,197) (2,171) (97,368)
Excess purchase price over carrying value of acquired assets  (4,948)   (4,948)
Unit-based compensation  817    817 
Purchase of treasury units(6,400) (277)   (277)
Balances - December 31, 201435,365,912  470,943  14,728  485,671 
        
Net income  22,042  16,338  38,380 
Issuance of common units, net  (590)   (590)
Issuance of restricted units91,950       
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, 201535,456,612  380,845  13,034   393,879 
        
Net income  23,233  8,419  31,652 
Issuance of common units, net  (29)   (29)
Issuance of restricted units13,800       
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, 201635,452,062  $304,594  $7,412  $312,006 
               

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 15, 2017.

 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
 
 Year Ended December 31,
 2016 2015 2014
Cash flows from operating activities:     
Net income (loss)$31,652  $38,380  $(11,705)
Less:  (Income) loss from discontinued operations  (1,215)  5,338 
Net income (loss) from continuing operations31,652  37,165  (6,367)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:     
Depreciation and amortization92,132  92,250  68,830 
Amortization of deferred debt issue costs3,684  4,859  6,263 
Amortization of discount on notes payable     1,305 
Amortization of premium on notes payable(306) (324) (245)
(Gain) loss on disposition or sale of property, plant, and equipment(33,400) 2,149  1,353 
Gain on retirement of senior unsecured notes  (1,242)  
Impairment of long lived assets26,953  10,629  3,445 
Impairment of goodwill4,145     
Equity in earnings unconsolidated entities(4,714) (8,986) (5,466)
Reduction in fair value of investment in Cardinal due to the purchase of the controlling interest    30,102 
Derivative (income) loss4,133  (3,107) (5,877)
Net cash received for commodity derivatives(550) 143  3 
Net cash received for interest rate derivatives160     
Net premiums received on derivatives that settled during the year on interest rate swaption contracts630  2,495  6,692 
Unit-based compensation904  1,429  817 
Preferred dividends from Martin Energy Trading    1,498 
Return on investment7,500  11,200  2,600  
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:     
Accounts and other receivables(6,153) 59,479  29,025 
Product exchange receivables843  1,996  (319)
Inventories(6,761) 12,799  5,680 
Due from affiliates(1,441) 4,386  (2,413)
Other current assets2,478  891  4,123 
Trade and other accounts payable3,254  (44,153) (26,349)
Product exchange payables(5,372) 2,336  801 
Due to affiliates2,736  866  2,276 
Income taxes payable (115) (189) (30)
Other accrued liabilities686  (2,802 ) 1,084 
Change in other non-current assets and liabilities(12,230) (345) 181 
Net cash provided by continuing operating activities110,848  183,924  119,012 
Net cash used in discontinued operating activities  (1,352) (3,432)
Net cash provided by operating activities110,848  182,572  115,580 
Cash flows from investing activities:     
Payments for property, plant, and equipment(40,455) (65,791) (84,307)
Acquisitions, net of cash acquired(2,150)    (102,696)
Payments for plant turnaround costs(2,061) (1,908) (3,974)
Proceeds from sale of property, plant, and equipment108,505  2,644  1,030 
Proceeds from involuntary conversion of property, plant and equipment    2,475 
Investments in unconsolidated entities    (134,030)
Return of investments from unconsolidated entities    225 
Contributions to unconsolidated entities for operations     (3,386)
Net cash provided by (used in) continuing investing activities63,839  (65,055) (324,663)
Net cash provided by discontinued investing activities  41,250   
Net cash provided by (used in) investing activities63,839  (23,805) (324,663)
Cash flows from financing activities:     
Payments of long-term debt(386,700) (308,836) (1,533,087)
Proceeds from long-term debt331,700  282,000  1,493,250 
Net proceeds from issuance of common units (29) (590) 331,728 
General partner contributions  55  7,007 
Excess purchase price over carrying value of acquired assets    (4,948)
Reimbursement of excess purchase price over carrying value of acquired assets4,125  2,250   
Purchase of treasury units(347)   (277)
Payments of debt issuance costs(5,274) (341) (3,722)
Cash distributions paid(118,178) (133,316) (97,368)
Net cash provided by (used in) financing activities(174,703) (158,778) 192,583 
Net decrease in cash(16) (11) (16,500)
Cash at beginning of year31  42  16,542 
Cash at end of year$15  $31  $42 
      

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 15, 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, 2016 and 2015
 
 Year Ended
December 31,
     Percent
 2016 2015 Variance Change
              
 (In thousands)  
Revenues:       
Services$128,783  $138,614  $(9,831) (7)%
Products113,580  131,826  (18,246)  (14)%
Total revenues242,363  270,440  (28,077) (10)%
        
Cost of products sold96,344  115,460  (19,116) (17)%
Operating expenses71,831  83,917  (12,086) (14)%
Selling, general and administrative expenses4,677  3,804  873  23%
Impairment of long-lived assets15,252  9,305   5,947  64%
Depreciation and amortization45,484  38,731  6,753  17%
 8,775  19,223  (10,448) (54)%
Other operating income (loss), net35,368  (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 (gallons)103,903  157,074  (53,171) (34)%
Smackover refinery throughput volumes (barrels per day)5,641  6,162  (521) (8)%
Corpus Christi crude terminal throughput volumes (barrels per day)66,167  154,381  (88,214) (57)%
            


Comparative Results of Operations for the Twelve Months Ended December 31, 2015 and 2014
 
 Year Ended
December 31,
     Percent
 2015 2014 Variance Change
              
 (In thousands)  
Revenues:       
Services$138,614  $135,697  $2,917  2%
Products131,826  190,957  (59,131) (31)%
Total revenues270,440  326,654   (56,214) (17)%
        
Cost of products sold 115,460  175,246  (59,786) (34)%
Operating expenses83,917  83,504  413  %
Selling, general and administrative expenses3,804  3,565  239  7%
Impairment of long-lived assets9,305    9,305   
Depreciation and amortization38,731  37,622  1,109  3%
 19,223  26,717  (7,494) (28)%
Other operating income (loss), net(473) 290  (763) (263)%
Operating income$18,750  $27,007  $(8,257) (31)%
        
Lubricant sales volumes (gallons)23,045  32,418   (9,373) (29)%
Shore-based throughput volumes (gallons)157,074  253,262  (96,188) (38)%
Smackover refinery throughput volumes (barrels per day)6,162  6,159  3  %
Corpus Christi crude terminal (barrels per day)154,381  164,223  (9,842) (6)%
            

                

MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)
 
Natural Gas Services Segment
 
Comparative Results of Operations for the Twelve Months Ended December 31, 2016 and 2015
 
 Year Ended
December 31,
     Percent 
 2016 2015 Variance Change
              
 (In thousands)  
Revenues:       
Services$61,133  $64,858  $(3,725) (6)%
Products330,200  458,302  (128,102) (28)%
Total revenues391,333  523,160  (131,827) (25)%
        
Cost of products sold292,573  416,404  (123,831) (30)%
Operating expenses23,152  23,979  (827) (3)%
Selling, general and administrative expenses9,035  9,791  (756) (8)%
Depreciation and amortization28,081  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)%
             


Comparative Results of Operations for the Twelve Months Ended December 31, 2015 and 2014
 
 Year Ended
December 31,
     Percent 
 2015  2014 Variance Change
               
 (In thousands)  
Revenues:        
Services$64,858  $22,991  $41,867  182%
Products458,302  990,844  (532,542) (54)%
Total revenues523,160  1,013,835  (490,675) (48)%
        
Cost of products sold416,404  950,742  (534,338) (56)%
Operating expenses23,979  10,797  13,182  122%
Selling, general and administrative expenses9,791  8,596  1,195  14%
Depreciation and amortization34,072  13,090  20,982  160%
 38,914  30,610  8,304  27%
Other operating loss, net(303)   (303)  
Operating income$38,611  $30,610  $8,001  26%
        
Distributions from unconsolidated entities$11,200  $4,323  $6,877  159%
        
NGLs Volumes (barrels)14,340  16,448  (2,108) (13)%
             


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, 2016 and 2015
 
 Year Ended
December 31,
     Percent 
 2016 2015 Variance Change
              
 (In thousands)  
Revenues:       
Services$10,800  $12,270  $(1,470) (12)%
Products130,258  157,891  (27,633) (18)%
Total revenues141,058  170,161  (29,103) (17)%
        
Cost of products sold88,325  115,133  (26,808) (23)%
Operating expenses 13,771  15,279  (1,508) (10)%
Selling, general and administrative expenses3,861  3,805  56  1%
Depreciation and amortization7,995   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)%
            


Comparative Results of Operations for the Twelve Months Ended December 31, 2015 and 2014
 
 Year Ended
December 31,
     Percent 
 2015 2014 Variance Change
              
 (In thousands)  
Revenues:       
Services$12,270  $12,149  $121  1%
Products157,891   203,322  (45,431) (22)%
Total revenues 170,161  215,471  (45,310) (21)%
         
Cost of products sold115,133  160,144  (45,011) (28)%
Operating expenses15,279  17,136  (1,857) (11)%
Selling, general and administrative expenses3,805  4,359  (554) (13)%
Depreciation and amortization8,455  8,176  279  3%
 27,489  25,656  1,833  7%
Other operating loss, net(376)   (376)  
Operating income$27,113  $25,656  $1,457  6%
        
Sulfur (long tons)856.0  848.0  8.0  1%
Fertilizer (long tons) 274.0  306.0  (32.0) (10)%
Sulfur services volumes (long tons)1,130.0  1,154.0  (24.0) (2)%
            


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, 2016 and 2015
 
 Year Ended
December 31,
     Percent 
 2016 2015 Variance Change
              
 (In thousands)  
Revenues$61,233  $81,784  $(20,551) (25)%
Operating expenses53,118   63,412  (10,294) (16)%
Selling, general and administrative expenses18  417  (399) (96)%
Impairment of long lived assets11,701  1,324  10,377  784%
Impairment of goodwill4,145    4,145   
Depreciation and amortization10,572  10,992  (420) (4)%
 (18,321) 5,639  (23,960) (425)%
Other operating loss, net(1,567) (1,009) (558) 55%
Operating income (loss)$(19,888) $4,630  $(24,518) (530)%
               


Comparative Results of Operations for the Twelve Months Ended December 31, 2015 and 2014
 
 Year Ended
December 31,
     Percent 
 2015 2014 Variance Change
              
 (In thousands)  
Revenues$81,784  $97,049  $(15,265) (16)%
Operating expenses63,412  77,964  (14,552) (19)%
Selling, general and administrative expenses417  1,084  (667) (62)%
Impairment of long lived assets1,324  3,445  (2,121) (62)%
Impairment of goodwill       
Depreciation and amortization10,992  9,942  1,050  11 %
 5,639  4,614  1,025  22%
Other operating loss, net(1,009) (1,304) 295  (23)%
Operating income$4,630  $3,310  $1,320  40%
               

Non-GAAP Financial Measures

The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and twelve months ended December 31, 2016 and 2015, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow from continuing operations.

 
Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
    
 Three Months Ended Twelve Months Ended
 December 31, December 31,
   2016   2015   2016   2015 
                
Net income$17,882  $6,841  $31,652  $38,380 
Less:  Income from discontinued operations, net of income taxes      (1,215)
Income from continuing operations17,882  6,841  31,652  37,165 
Adjustments:       
Interest expense12,054  10,827  46,100  43,292 
Income tax expense304  234  726  1,048 
Depreciation and amortization25,866  23,513  92,132  92,250 
EBITDA56,106  41,415  170,610  173,755 
Adjustments:        
Equity in earnings of unconsolidated entities(1,112) (3,234) (4,714 ) (8,986)
(Gain) loss on sale of property, plant and equipment(34,982) 398  (33,400) 2,149 
Gain on retirement of senior unsecured notes  (514)   (1,242 )
Impairment of long lived assets26,953  10,629  26,953  10,629 
Impairment of goodwill    4,145   
Unrealized mark to market on commodity derivatives3,784  (1,033) 4,579  (675)
Reduction in fair value of investment in Cardinal due to purchase of the controlling interest       
Debt prepayment premium       
Distributions from unconsolidated entities1,400  3,400  7,500  11,200 
Unit-based compensation192  349  904  1,429 
Adjusted EBITDA52,341  51,410  176,577  188,259 
Adjustments:       
Interest expense(12,054) (10,827) (46,100) (43,292)
Income tax expense(304) (234) (726) (1,048)
Amortization of deferred debt issuance costs719  717  3,684  4,859 
Amortization of debt discount        
Amortization of debt premium(76) (78) (306) (324)
Non-cash mark to market on interest rate derivatives  206  (206) 206 
Payments for plant turnaround costs(447) (154) (2,061) (1,908)
Maintenance capital expenditures(4,345) (5,281) (17,163) (12,902)
Distributable Cash Flow$35,834  $35,759  $113,699  $133,850 
                

The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for each of the quarters in the year ended December 31, 2015, which represents Distributable Cash Flow from discontinued operations.

 2015
 First
Quarter
 Second
Quarter
 Third
Quarter
 Fourth
Quarter
 YTD
Income from discontinued operations, net of income taxes$1,215  $  $  $  $1,215 
Adjustments:          
Gain on sale of property, plant and equipment(1,462)       (1,462)
Distributable Cash Flow from discontinued operations$(247) $  $  $  $(247)
                    


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