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Martin Midstream Partners Reports Increased Distributable Cash Flow and Adjusted EBITDA in 2014 Third Quarter Results

  • Distribution increase of $0.02 per unit compared to previous quarter
  • Distributable cash flow increased 45% compared to the 3rd quarter of 2013
  • Adjusted EBITDA increased 25% compared to the 3rd quarter of 2013
  • Earnings adversely affected by one-time non-cash charges

KILGORE, Texas, Oct. 29, 2014 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq:MMLP) (the "Partnership") announced today its financial results for the third quarter ended September 30, 2014.

The Partnership's distributable cash flow for the third quarter of 2014 was $19.3 million compared to distributable cash flow for the third quarter of 2013 of $13.3 million, an increase of 45%. The Partnership's distributable cash flow for the nine months ended September 30, 2014 was $58.9 million compared to distributable cash flow for the nine months ended September 30, 2013 of $62.8 million. The reduction in distributable cash flow over the prior nine month period is due to increased maintenance capital expenditures and turnaround costs of $9.8 million, which were heavily weighted in the first nine months of 2014.

The Partnership's adjusted EBITDA for the third quarter of 2014 was $33.7 million compared to adjusted EBITDA for the third quarter of 2013 of $26.8 million, an increase of 25%. As a result of a $30.1 million non-cash reduction in the carrying value of the Partnership's 42.2% unconsolidated investment in Cardinal Gas Storage Partners LLC ("Cardinal"), the Partnership reported a net loss for the third quarter of 2014 of $26.9 million, or $0.81 per limited partner unit. The reduction of the investment occurred as a result of the Partnership's acquisition of the 57.8% controlling interest in Cardinal on August 29, 2014. The third quarter of 2014 also included a $3.4 million non-cash asset impairment charge related to one offshore tug and barge unit in the Partnership's Marine Transportation segment. These non-cash transactions negatively impacted earnings but had no impact on distributable cash flow. Net income for the third quarter of 2013 was $0.2 million, or $0.01 per limited partner unit.

The Partnership's adjusted EBITDA for the nine months ended September 30, 2014 was $104.4 million compared to adjusted EBITDA for the nine months ended September 30, 2013 of $99.4 million. As a result of the $30.1 million non-cash charge referenced above, the Partnership reported a net loss for the nine months ended September 30, 2014 of $16.1 million, or $0.54 per limited partner unit. Earnings for the nine months ended September 30, 2014 was also negatively impacted by the $3.4 million non-cash asset impairment charge referenced above. These non-cash transactions negatively impacted earnings but had no impact on distributable cash flow. Net income for the nine months ended September 30, 2013 was $25.9 million, or $0.95 per limited partner unit.

Revenues for the third quarter of 2014 were $390.0 million compared to $359.6 million for the third quarter of 2013. Revenues for the nine months ended September 30, 2014 were $1.3 billion compared to revenues of $1.2 billion for the nine months ended September 30, 2013.

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 three and nine months ended September 30, 2014 and certain prior periods. These financial statements should be read in conjunction with the information contained in the Partnership's Quarterly Report on Form 10-Q, to be filed with the Securities and Exchange Commission on October 29, 2014.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of Martin Midstream Partners, said, "We finished the third quarter 2014 with a 0.78 times distribution coverage ratio based on actual distributions paid during the quarter. This performance exceeded our expectations during what we typically see as a seasonally weaker third quarter. During the quarter we completed the acquisition of the controlling interests in Cardinal Gas Storage Partners LLC which we believe will reduce the seasonality in our business by providing stable, fee-based cash flow for many years to come. On a pro forma basis, had MMLP owned Cardinal for the entire three month period, our third quarter distribution would have been 0.89 times inclusive of the additional debt and equity financing costs associated the acquisition.

"Operationally, we benefitted from stronger than anticipated cash flow from our Marine Transportation segment. Expecting a full recovery versus last quarter and having all of our regulatory maintenance behind us, we saw excellent operating conditions, significantly beating our internal forecast.

"Likewise, the NGL businesses housed within our Natural Gas Services segment were stronger than we forecasted this quarter. Additionally, this segment benefitted from both the full quarter contribution of our West Texas LPG pipeline investment and a one month contribution from our recent Cardinal Gas Storage acquisition. Based on the Cardinal acquisition and the forward outlook of the Partnership, we were pleased to announce a distribution increase of $0.02 payable November 14, 2014. This increase to $0.8125 brings our annualized distribution to $3.25 representing our best year over year distribution growth since 2009.

"Finally, I would like to announce certain changes to the Martin Midstream GP LLC Board of Directors. These changes stem from the investment made by Alinda Capital Partners into MMGP Holdings LLC in 2013. Based on our agreement, Alinda now has the right to place an additional independent member on our board. Accordingly, and effective October 29th, Alinda has appointed J.M. "Jim" Collingsworth. Jim brings many years of senior level management in the liquids and midstream energy businesses. Immediately prior to Mr. Collingsworth's appointment, and to graciously accommodate the Alinda agreement, Charles "Hank" Still and Joe N. Averett, Jr. both resigned from their positions as members of the board. Upon the resignation of Hank and Joe, Martin Resource Management ("MRMC") appointed Robert "Bob" D. Bondurant. As many are aware, Bob is the chief financial and accounting officer of both MMLP and MRMC and has over thirty years' experience with affiliated Martin entities. I welcome Jim and Bob and want to thank Hank and Joe for their many years of service and dedication assisting MMLP in its growth."

Quarterly Cash Distribution

The quarterly cash distribution of $0.8125 per common unit, which was announced on October 23, 2014, is payable on November 14, 2014 to common unitholders of record as of the close of business on November 7, 2014. The ex-dividend date for the cash distribution is November 5, 2014. This distribution reflects an annualized distribution rate of $3.25 per unit.

Investors' Conference Call

An investors' conference call to review the third quarter results will be held on Thursday, October 30, 2014, 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 October 30, 2014 through 10:59 p.m. Central Time on November 11, 2014. The access code for the conference call and the audio replay is Conference ID No. 23531470. 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 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 historic 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.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
September 30,
2014
December 31,
2013
(Unaudited) (Audited)
Assets
Cash $ 3,006 $ 16,542
Accounts and other receivables, less allowance for doubtful accounts of $1,608 and $2,492, respectively 132,839 163,855
Product exchange receivables 6,351 2,727
Inventories 120,369 94,902
Due from affiliates 14,581 12,099
Fair value of derivatives 879
Other current assets 10,256 7,353
Assets held for sale 700
Total current assets 288,981 297,478
Property, plant and equipment, at cost 1,359,620 929,183
Accumulated depreciation (334,150) (304,808)
Property, plant and equipment, net 1,025,470 624,375
Goodwill 23,802 23,802
Investment in unconsolidated entities 135,219 128,662
Debt issuance costs, net 13,833 15,659
Note receivable - Martin Energy Trading LLC 15,000
Other assets, net 86,431 7,943
$ 1,588,736 $ 1,097,919
Liabilities and Partners' Capital
Trade and other accounts payable $ 120,037 $ 142,951
Product exchange payables 18,860 9,595
Due to affiliates 11,713 2,596
Income taxes payable 1,002 1,204
Fair value of derivatives 542
Other accrued liabilities 13,041 20,242
Total current liabilities 165,195 176,588
Long-term debt 910,077 658,695
Other long-term obligations 3,174 2,219
Total liabilities 1,078,446 837,502
Commitments and contingencies
Partners' capital 510,290 260,417
$ 1,588,736 $ 1,097,919
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 29, 2014.
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per unit amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
Revenues:
Terminalling and storage * $ 31,880 $ 28,956 $ 97,848 $ 85,267
Marine transportation * 24,282 24,217 69,845 74,694
Natural gas services 5,764 5,764
Sulfur services 3,037 3,001 9,112 9,003
Product sales: *
Natural gas services 230,294 204,296 812,232 650,605
Sulfur services 46,993 39,096 157,706 164,375
Terminalling and storage 47,735 60,050 153,451 167,546
325,022 303,442 1,123,389 982,526
Total revenues 389,985 359,616 1,305,958 1,151,490
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas services * 218,356 196,308 777,676 626,609
Sulfur services * 38,841 33,994 122,009 131,577
Terminalling and storage * 42,239 52,718 137,074 146,806
299,436 283,020 1,036,759 904,992
Expenses:
Operating expenses * 48,391 43,444 140,543 129,839
Selling, general and administrative * 10,302 7,211 27,653 20,624
Depreciation and amortization 16,743 13,698 45,329 37,944
Total costs and expenses 374,872 347,373 1,250,284 1,093,399
Impairment of long-lived assets (3,445) (3,445)
Other operating income 347 401 796
Operating income 12,015 12,243 52,630 58,887
Other income (expense):
Equity in earnings (loss) of unconsolidated entities 2,655 (577) 4,297 (878)
Interest expense, net (11,459) (11,060) (34,351) (31,058)
Debt prepayment premium (7,767)
Reduction in carrying value of investment in Cardinal due to the purchase of the controlling interest (30,102) (30,102)
Other, net 286 (111) 169 (134)
Total other expense (38,620) (11,748) (67,754) (32,070)
Net income (loss) before taxes (26,605) 495 (15,124) 26,817
Income tax expense (300) (303) (954) (910)
Net income (loss) (26,905) 192 (16,078) 25,907
Less general partner's interest in net (income) loss 539 (4) 322 (518)
Less (income) loss allocable to unvested restricted units 62 (1) 33 (67)
Limited partners' interest in net income (loss) $ (26,304) $ 187 $ (15,723) $ 25,322
Net income (loss) per unit attributable to limited partners - basic $ (0.82) $ 0.01 $ (0.54) $ 0.95
Weighted average limited partner units - basic 32,243 26,552 29,271 26,561
Net income (loss) per unit attributable to limited partners - diluted $ (0.82) $ 0.01 $ (0.54) $ 0.95
Weighted average limited partner units - diluted 32,243 26,579 29,271 26,581
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 29, 2014.
*Related Party Transactions Included Above
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per unit amounts)
*Related Party Transactions Shown Below
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
Revenues:
Terminalling and storage $ 19,045 $ 18,044 $ 55,798 $ 52,857
Marine transportation 6,076 5,943 18,340 18,828
Product Sales 883 964 6,484 4,012
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas services 9,908 7,799 29,169 23,391
Sulfur services 4,491 4,539 13,808 13,514
Terminalling and storage 9,174 13,488 25,571 39,638
Expenses:
Operating expenses 21,013 17,902 58,500 53,410
Selling, general and administrative 7,230 4,356 18,103 12,944
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 29, 2014.
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Unaudited)
(Dollars in thousands)
Partners' Capital
Common Limited General Partner
Units Amount Amount Total
Balances - January 1, 2013 26,566,776 $ 349,490 $ 8,472 $ 357,962
Net income 25,389 518 25,907
Issuance of restricted units 63,750
Forfeiture of restricted units (250)
General partner contribution 37 37
Cash distributions (61,902) (1,384) (63,286)
Excess purchase price over carrying value of acquired assets (301) (301)
Unit-based compensation 737 737
Purchase of treasury units (6,000) (250) (250)
Balances - September 30, 2013 26,624,276 $ 313,163 $ 7,643 $ 320,806
Balances - January 1, 2014 26,625,026 $ 254,028 $ 6,389 $ 260,417
Net loss (15,756) (322) (16,078)
Issuance of common units 8,727,673 331,571 331,571
Issuance of restricted units 6,900
Forfeiture of restricted units (3,500)
General partner contribution 6,995 6,995
Cash distributions (66,473) (1,506) (67,979)
Unit-based compensation 589 589
Excess purchase price over carrying value of acquired assets (4,948) (4,948)
Purchase of treasury units (6,400) (277) (277)
Balances - September 30, 2014 35,349,699 $ 498,734 $ 11,556 $ 510,290
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 29, 2014.
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Nine Months Ended
September 30,
2014 2013
Cash flows from operating activities:
Net income (loss) $ (16,078) $ 25,907
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 45,329 37,944
Amortization of deferred debt issuance costs 5,415 2,890
Amortization of debt discount 1,305 230
Amortization of premium on notes payable (164)
Gain on sale of property, plant and equipment (54) (796)
Impairment of long-lived assets 3,445
Equity in (earnings) loss of unconsolidated entities (4,297) 878
Reduction in carrying value of investment in Cardinal due to purchase of the controlling interest 30,102
Non-cash mark-to-market on derivatives 489
Unit-based compensation 589 737
Preferred dividends on MET investment 1,498 1,171
Return on investment 600
Other 7
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables 32,443 43,043
Product exchange receivables (3,624) (219)
Inventories (25,223) (8,362)
Due from affiliates (2,482) (5,188)
Other current assets 1,219 (6,358)
Trade and other accounts payable (29,600) (29,641)
Product exchange payables 9,265 936
Due to affiliates 9,117 (525)
Income taxes payable (202) (440)
Other accrued liabilities (7,214) 8,842
Change in other non-current assets and liabilities 1,123 (210)
Net cash provided by continuing operating activities 53,001 70,846
Net cash used in discontinued operating activities (8,678)
Net cash provided by operating activities 53,001 62,168
Cash flows from investing activities:
Payments for property, plant and equipment (58,522) (68,591)
Acquisitions, less cash acquired (100,046) (73,921)
Payments for plant turnaround costs (4,000)
Proceeds from sale of property, plant and equipment 702 4,719
Proceeds from involuntary conversion of property, plant and equipment 2,475
Investment in unconsolidated entities (134,413)
Return of investments from unconsolidated entities 726 1,551
Contributions to unconsolidated entities (3,386) (30,877)
Net cash used in investing activities (296,464) (167,119)
Cash flows from financing activities:
Payments of long-term debt (1,458,096) (518,000)
Payments of notes payable and capital lease obligations (251)
Proceeds from long-term debt 1,426,250 691,000
Net proceeds from issuance of common units 331,571
General partner contribution 6,995 37
Purchase of treasury units (277) (250)
Payment of debt issuance costs (3,589) (9,115)
Excess purchase price over carrying value of acquired assets (4,948) (301)
Cash distributions paid (67,979) (63,286)
Net cash provided by financing activities 229,927 99,834
Net decrease in cash (13,536) (5,117)
Cash at beginning of period 16,542 5,162
Cash at end of period $ 3,006 $ 45
Non-cash additions to property, plant and equipment $ 4,208 $ —
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 29, 2014.
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Unaudited)
(Dollars and volumes in thousands, except BBL per day)
Terminalling and Storage Segment
Comparative Results of Operations for the Three Months Ended September 30, 2014 and 2013
Three Months Ended
September 30,
2014 2013 Variance Percent
Change
(In thousands, except BBL per day)
Revenues:
Services $ 33,213 $ 30,151 $ 3,062 10%
Products 47,735 60,054 (12,319) (21)%
Total revenues 80,948 90,205 (9,257) (10)%
Cost of products sold 43,193 53,215 (10,022) (19)%
Operating expenses 21,506 19,427 2,079 11%
Selling, general and administrative expenses 786 979 (193) (20)%
Depreciation and amortization 9,512 8,532 980 11%
5,951 8,052 (2,101) (26)%
Other operating income 347 347
Operating income $ 6,298 $ 8,052 $ (1,754) (22)%
Lubricant sales volumes (gallons) 8,193 10,638 (2,445) (23)%
Shore-based throughput volumes (gallons) 64,338 65,516 (1,178) (2)%
Smackover refinery throughput volumes (BBL per day) 7,123 6,878 245 4%
Corpus Christi crude terminal (BBL per day) 173,315 101,921 71,394 70%
Comparative Results of Operations for the Nine Months Ended September 30, 2014 and 2013
Nine Months Ended
September 30,
2014 2013 Variance Percent
Change
(In thousands, except BBL per day)
Revenues:
Services $ 101,711 $ 88,770 $ 12,941 15%
Products 153,451 167,550 (14,099) (8)%
Total revenues 255,162 256,320 (1,158) —%
Cost of products sold 139,028 148,624 (9,596) (6)%
Operating expenses 61,628 54,860 6,768 12%
Selling, general and administrative expenses 2,484 2,422 62 3%
Depreciation and amortization 27,902 22,925 4,977 22%
24,120 27,489 (3,369) (12)%
Other operating income 385 168 217 129%
Operating income $ 24,505 $ 27,657 $ (3,152) (11)%
Lubricant sales volumes (gallons) 26,170 29,885 (3,715) (12)%
Shore-based throughput volumes (gallons) 186,956 207,533 (20,577) (10)%
Smackover refinery throughput volumes (BBL per day) 5,803 6,780 (977) (14)%
Corpus Christi crude terminal (BBL per day) 160,332 105,783 54,549 52%
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Unaudited)
(Dollars and volumes in thousands, except BBL per day)
Natural Gas Services Segment
Comparative Results of Operations for the Three Months Ended September 30, 2014 and 2013
Three Months Ended
September 30,
2014 2013 Variance Percent
Change
(In thousands)
Revenues:
Marine transportation $ — $ 630 $ (630) (100)%
Services 5,764 5,764
Products 230,294 204,296 25,998 13%
Total revenues 236,058 204,926 31,132 15%
Cost of products sold 218,882 196,719 22,163 11%
Operating expenses 4,546 1,863 2,683 144%
Selling, general and administrative expenses 3,507 1,156 2,351 203%
Depreciation and amortization 2,684 598 2,086 349%
Operating income $ 6,439 $ 4,590 $ 1,849 40%
Distributions from unconsolidated entities $ 982 $ 761 $ 221 29%
NGL sales volumes (Bbls) 3,737 3,162 575 18%
Comparative Results of Operations for the Nine Months Ended September 30, 2014 and 2013
Nine Months Ended
September 30,
2014 2013 Variance Percent
Change
(In thousands)
Revenues:
Marine transportation $ 365 $ 2,475 $ (2,110) (85)%
Services 5,764 5,764
Products 812,232 650,605 161,627 25%
Total revenues 818,361 653,080 165,281 25%
Cost of products sold 779,136 627,748 151,388 24%
Operating expenses 8,779 3,834 4,945 129%
Selling, general and administrative expenses 6,684 2,800 3,884 139%
Depreciation and amortization 3,863 1,444 2,419 168%
Operating income $ 19,899 $ 17,254 $ 2,645 15%
Distributions from unconsolidated entities $ 2,323 $ 2,722 $ (399) (15)%
NGL sales volumes (Bbls) 12,734 9,883 2,851 29%
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Unaudited)
(Dollars and volumes in thousands, except BBL per day)
Sulfur Services Segment
Comparative Results of Operations for the Three Months Ended September 30, 2014 and 2013
Three Months Ended
September 30,
2014 2013 Variance Percent
Change
(In thousands)
Revenues:
Services $ 3,037 $ 3,001 $ 36 1%
Products 46,993 39,096 7,897 20%
Total revenues 50,030 42,097 7,933 19%
Cost of products sold 38,932 34,085 4,847 14%
Operating expenses 4,497 4,166 331 8%
Selling, general and administrative expenses 1,166 1,069 97 9%
Depreciation and amortization 2,078 2,024 54 3%
Operating income $ 3,357 $ 753 $ 2,604 346%
Sulfur (long tons) 251.0 211.8 39.2 19%
Fertilizer (long tons) 52.1 44.8 7.3 16%
Total sulfur services volumes (long tons) 303.1 256.6 46.5 18%
Comparative Results of Operations for the Nine Months Ended September 30, 2014 and 2013
Nine Months Ended
September 30,
2014 2013 Variance Percent
Change
(In thousands)
Revenues:
Services $ 9,112 $ 9,003 $ 109 1%
Products 157,706 164,375 (6,669) (4)%
Total revenues 166,818 173,378 (6,560) (4)%
Cost of products sold 122,281 131,849 (9,568) (7)%
Operating expenses 13,283 12,791 492 4%
Selling, general and administrative expenses 3,404 3,132 272 9%
Depreciation and amortization 6,092 5,947 145 2%
Operating income $ 21,758 $ 19,659 $ 2,099 11%
Sulfur (long tons) 645.5 614.9 30.6 5%
Fertilizer (long tons) 233.1 219.8 13.3 6%
Total sulfur services volumes (long tons) 878.6 834.7 43.9 5%
MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Unaudited)
(Dollars and volumes in thousands, except BBL per day)
Marine Transportation Segment
Comparative Results of Operations for the Three Months Ended September 30, 2014 and 2013
Three Months Ended
September 30,
2014 2013 Variance Percent
Change
(In thousands)
Revenues $ 25,859 $ 24,751 $ 1,108 4%
Operating expenses 19,181 19,352 (171) (1)%
Selling, general and administrative expenses 364 228 136 60%
Depreciation and amortization 2,469 2,544 (75) (3)%
3,845 2,627 1,218 46%
Impairment of long-lived assets (3,445) (3,445)
Operating income $ 400 $ 2,627 $ (2,227) (85)%
Comparative Results of Operations for the Nine Months Ended September 30, 2014 and 2013
Nine Months Ended
September 30,
2014 2013 Variance Percent
Change
(In thousands)
Revenues $ 73,255 $ 75,004 $ (1,749) (2)%
Operating expenses 60,805 61,417 (612) (1)%
Selling, general and administrative expenses 867 1,000 (133) (13)%
Depreciation and amortization 7,472 7,628 (156) (2)%
4,111 4,959 (848) (17)%
Impairment of long-lived assets (3,445) (3,445)
Other operating income 16 628 (612) (97)%
Operating income $ 682 $ 5,587 $ (4,905) (88)%

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 nine months ended September 30, 2014 and 2013.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
Net income (loss) $ (26,905) $ 192 $ (16,078) $ 25,907
Adjustments:
Interest expense 11,459 11,060 34,351 31,058
Income tax expense 300 303 954 910
Depreciation and amortization 16,743 13,698 45,329 37,944
EBITDA 1,597 25,253 64,556 95,819
Adjustments:
Equity in (earnings) loss of unconsolidated entities (2,655) 577 (4,297) 878
Gain on sale of property, plant and equipment (54) (796)
Impairment of long-lived assets 3,445 3,445
Reduction in carrying value of investment in Cardinal due to the purchase of the controlling interest 30,102 30,102
Debt prepayment premium 7,767
Distributions from unconsolidated entities 982 761 2,323 2,722
Unit-based compensation 201 257 589 737
Adjusted EBITDA 33,672 26,848 104,431 99,360
Adjustments:
Interest expense (11,459) (11,060) (34,351) (31,058)
Income tax expense (300) (303) (954) (910)
Amortization of debt discount 77 1,305 230
Amortization of debt premium (82) (164)
Amortization of deferred debt issuance costs 827 815 5,415 2,890
Non-cash mark-to-market on derivatives 1,036 489
Payments of installment notes payable and capital lease obligations (91) (251)
Payments for plant turnaround costs (90) (4,000)
Maintenance capital expenditures (4,306) (2,973) (13,260) (7,473)
Distributable Cash Flow $ 19,298 $ 13,313 $ 58,911 $ 62,788

CONTACT: Joe McCreery, Head of Investor Relations (903) 988-6425 and (877) 256-6644

Source:Martin Midstream Partners L.P.