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Martin Midstream Partners Reports 2016 Third Quarter Financial Results

  • Announced divestiture of Corpus Christi, Texas terminalling assets
  • Distribution declared creates coverage ratio of 1.1 times for the November 2016 distribution
  • Clear path to balance sheet improvement

KILGORE, Texas, Oct. 26, 2016 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq:MMLP) (the "Partnership") announced today its financial results for the quarter ended September 30, 2016.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “As we announced last week, we have outlined a path forward to improve our leverage profile and distribution coverage ratio. We believe the divestiture of our Corpus Christi terminalling assets is a solid first step to lowering our cost of capital and returning to a growth trajectory. We expect the sale to close by year-end and receive net proceeds of approximately $93 million.

"For the third quarter ended September 30, 2016, our seasonally weaker quarter due to our fertilizer and butane businesses, the distribution coverage ratio was 1.10 times based on the quarterly distribution of $0.50 announced last week. Highlighting the third quarter was continued strength in our Cardinal Gas Storage division where interruptible services were again strong and are expected to continue during the fourth quarter. Also, we saw a modestly improved performance in our inland marine transportation segment. Although this is not yet a recovery, utilization of our fleet improved during the third quarter. As anticipated, our maintenance capital expenditures normalized and were lower in the third quarter compared to the levels achieved in the first six months of 2016.

"Looking toward the fourth quarter, we anticipate strong performance in our butane business based on current storage levels and contracted sales back to refineries. On that basis, we should realize significant working capital debt reduction due to butane inventory depletion, further strengthening the Partnership’s leverage ratio. Additionally, for 2017 and 2018, we expect a stronger distribution coverage ratio of at least 1.2 times."

The Partnership had a net loss for the third quarter of 2016 of $0.9 million, a loss of $0.03 per limited partner unit. Net income for the third quarter of 2015 was $3.3 million, which led to a loss of $0.02 per limited partner unit. The Partnership's adjusted EBITDA from continuing operations for the third quarter of 2016 was $33.3 million compared to adjusted EBITDA from continuing operations for the third quarter of 2015 of $41.4 million, a decrease of 20%.

Net income from continuing operations for the nine months ended September 30, 2016 was $13.8 million, or $0.16 per limited partner unit. Net income from continuing operations for the nine months ended September 30, 2015 was $30.3 million, or $0.52 per limited partner unit. Net income for the nine months ended September 30, 2016 was negatively impacted by a non-cash goodwill impairment charge in the Partnership's Marine Transportation segment of $4.1 million, or $0.12 per limited partner unit. The Partnership's adjusted EBITDA from continuing operations for the nine months ended September 30, 2016 was $124.2 million compared to adjusted EBITDA from continuing operations for the nine months ended September 30, 2015 of $136.8 million, a decrease of 9%.

The Partnership's distributable cash flow from continuing operations for the third quarter of 2016 was $19.9 million compared to distributable cash flow from continuing operations for the third quarter of 2015 of $29.1 million, a decrease of 32%.

The Partnership's distributable cash flow from continuing operations for the nine months ended September 30, 2016 was $77.9 million compared to distributable cash flow from continuing operations for the nine months ended September 30, 2015 of $98.1 million, a decrease of 21%.

Revenues for the third quarter of 2016 were $174.5 million compared to $226.0 million for the third quarter of 2015. Revenues for the nine months ended September 30, 2016 were $590.5 million compared to $782.5 million for the nine months ended September 30, 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 nine months ended September 30, 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 September 30, 2015. The Partnership had net income from discontinued operations for the nine months ended September 30, 2015 of $1.2 million, or $0.02 per limited partner unit. Distributable cash flow and adjusted EBITDA from discontinued operations were $1.2 million for the nine months ended September 30, 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 directly comparable GAAP measurement.

Included with this press release are the Partnership's consolidated and condensed financial statements as of and for the three and nine months ended September 30, 2016 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 26, 2016.

An attachment accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/de5152db-7f6f-4f6d-b723-bb6e41d94a33.

Quarterly Cash Distribution

The quarterly cash distribution of $0.50 per common unit, which was announced on October 20, 2016, is payable on November 14, 2016 to common unitholders of record as of the close of business on November 7, 2016. The ex-dividend date for the cash distribution is November 3, 2016. The current distribution level represents total distributions to common unitholders of approximately $18.1 million for the quarter and reflects an annualized distribution rate of $2.00 per unit.

Investors' Conference Call

An investors' conference call to review the third quarter results will be held on Thursday, October 27, 2016, at 8:00 a.m. Central Time. The conference call can be accessed by calling (877) 878-2695. Additionally, an accompanying slide and live webcast will be available by visiting Martin Midstream Partners’ website at www.martinmidstream.com. An audio replay of the conference call will be available by calling (855) 859-2056 from 11:00 a.m. Central Time on October 27, 2016 through 10:59 p.m. Central Time on November 7, 2016. The access code for the conference call and the audio replay is Conference ID No.94610525. The audio replay will also be archived under the Events and Presentations section of the Partnership’s website.

About Martin Midstream Partners

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

Forward-Looking Statements

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

Use of Non-GAAP Financial Information

The Partnership's management uses a variety of financial and operational measurements other than its financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) to analyze its performance. These include: (1) net income before interest expense, income tax expense, and depreciation and amortization (“EBITDA”), (2) adjusted EBITDA and (3) distributable cash flow. The Partnership's management views these measures as important performance measures of core profitability for its operations and the ability to generate and distribute cash flow, and as key components of its internal financial reporting. The Partnership's management believes investors benefit from having access to the same financial measures that management uses.

EBITDA and Adjusted EBITDA. Certain items excluded from EBITDA and adjusted EBITDA are significant components in understanding and assessing an entity's financial performance, such as cost of capital and historical costs of depreciable assets. The Partnership has included information concerning EBITDA and adjusted EBITDA because it provides investors and management with additional information to better understand the following: financial performance of the Partnership's assets without regard to financing methods, capital structure or historical cost basis; the Partnership's operating performance and return on capital as compared to those of other similarly situated entities; and the viability of acquisitions and capital expenditure projects. The Partnership's method of computing adjusted EBITDA may not be the same method used to compute similar measures reported by other entities. The economic substance behind the Partnership's use of adjusted EBITDA is to measure the ability of the Partnership's assets to generate cash sufficient to pay interest costs, support its indebtedness and make distributions to its unitholders.

Distributable Cash Flow. Distributable cash flow is a significant performance measure used by the Partnership's management and by external users of its financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by the Partnership to the cash distributions it expects to pay unitholders. Distributable cash flow is also an important financial measure for the Partnership's unitholders since it serves as an indicator of the Partnership's success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not the Partnership is generating cash flow at a level that can sustain or support an increase in its quarterly distribution rates. Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.

EBITDA, adjusted EBITDA and distributable cash flow should not be considered alternatives to, or more meaningful than, net income, cash flows from operating activities, or any other measure presented in accordance with GAAP. The Partnership's method of computing these measures may not be the same method used to compute similar measures reported by other entities.

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

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


MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
September 30, 2016 December 31, 2015
(Unaudited) (Audited)
Assets
Cash $10 $31
Accounts and other receivables, less allowance for doubtful accounts of $453 and $430, respectively 46,327 74,355
Product exchange receivables 159 1,050
Inventories 107,476 75,870
Due from affiliates 8,194 10,126
Fair value of derivatives 89 675
Other current assets 4,439 5,718
Assets held for sale 73,197
Total current assets 239,891 167,825
Property, plant and equipment, at cost 1,301,233 1,387,814
Accumulated depreciation (411,821) (404,574)
Property, plant and equipment, net 889,412 983,240
Goodwill 17,296 23,802
Investment in WTLPG 129,794 132,292
Note receivable - Martin Energy Trading LLC 15,000 15,000
Other assets, net 48,951 58,314
Total assets $1,340,344 $1,380,473
Liabilities and Partners’ Capital
Trade and other accounts payable $60,462 $81,180
Product exchange payables 10,188 12,732
Due to affiliates 3,879 5,738
Income taxes payable 550 985
Fair value of derivatives 209
Other accrued liabilities 14,804 18,533
Liabilities held for sale 23,400
Total current liabilities 113,492 119,168
Long-term debt, net 913,504 865,003
Fair value of derivatives 206
Other long-term obligations 2,435 2,217
Total liabilities 1,029,431 986,594
Commitments and contingencies (Note 16)
Partners’ capital 310,913 393,879
Total partners’ capital 310,913 393,879
Total liabilities and partners' capital $1,340,344 $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 Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 26, 2016.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and units in thousands, except per unit amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Revenues:
Terminalling and storage * $30,770 $33,578 $93,565 $100,828
Marine transportation * 13,846 18,977 44,531 59,956
Natural gas services* 14,618 17,120 46,118 50,171
Sulfur services 2,700 3,090 8,100 9,270
Product sales: *
Natural gas services 57,378 86,714 207,368 330,803
Sulfur services 26,396 33,213 105,459 128,544
Terminalling and storage 28,829 33,329 85,349 102,901
112,603 153,256 398,176 562,248
Total revenues 174,537 226,021 590,490 782,473
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas services * 50,658 80,709 184,781 307,039
Sulfur services * 21,510 26,144 73,734 95,685
Terminalling and storage * 23,540 28,237 70,306 87,977
95,708 135,090 328,821 490,701
Expenses:
Operating expenses * 39,488 45,310 121,542 138,399
Selling, general and administrative * 8,049 8,666 24,364 26,507
Loss on impairment of goodwill 4,145
Depreciation and amortization 22,129 23,335 66,266 68,737
Total costs and expenses 165,374 212,401 545,138 724,344
Other operating income (loss) 13 (1,586) (1,582) (1,763)
Operating income 9,176 12,034 43,770 56,366
Other income (expense):
Equity in earnings of WTLPG 1,120 2,363 3,602 5,752
Interest expense, net (11,779) (11,994) (34,046) (32,465)
Gain on retirement of senior unsecured notes 728 728
Other, net 730 399 866 757
Total other expense (9,929) (8,504) (29,578) (25,228)
Net income (loss) before taxes (753) 3,530 14,192 31,138
Income tax expense (180) (200) (422) (814)
Income (loss) from continuing operations (933) 3,330 13,770 30,324
Income from discontinued operations, net of income taxes 1,215
Net income (loss) (933) 3,330 13,770 31,539
Less general partner's interest in net (income) loss 18 (3,959) (8,062) (12,310)
Less (income) loss allocable to unvested restricted units 3 (16) (36) (127)
Limited partners' interest in net income (loss) $(912) $(645) $5,672 $19,102

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 26, 2016.

*Related Party Transactions Shown Below

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and units in thousands, except per unit amounts)
*Related Party Transactions Included Above
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Revenues:*
Terminalling and storage $20,649 $15,091 $62,197 $58,626
Marine transportation 4,861 6,552 17,308 19,919
Natural gas services 132 574
Product Sales 723 1,731 2,391 5,079
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Natural gas services 2,946 6,470 10,829 20,198
Sulfur services 3,678 3,387 11,300 10,629
Terminalling and storage 3,766 3,227 11,232 14,261
Expenses:
Operating expenses 17,810 19,290 53,255 58,605
Selling, general and administrative 5,748 5,922 18,091 17,765

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 26, 2016.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and units in thousands, except per unit amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Allocation of net income (loss) attributable to:
Limited partner interest:
Continuing operations $(912) $(645) $5,672 $18,366
Discontinued operations 736
$(912) $(645) $5,672 $19,102
General partner interest:
Continuing operations $(18) $3,959 $8,062 $11,836
Discontinued operations 474
$(18) $3,959 $8,062 $12,310
Net income (loss) per unit attributable to limited partners:
Basic:
Continuing operations $(0.03) $(0.02) $0.16 $0.52
Discontinued operations 0.02
$(0.03) $(0.02) $0.16 $0.54
Weighted average limited partner units - basic 35,346 35,308 35,358 35,309
Diluted:
Continuing operations $(0.03) $(0.02) $0.16 $0.52
Discontinued operations 0.02
$(0.03) $(0.02) $0.16 $0.54
Weighted average limited partner units - diluted 35,346 35,308 35,381 35,369

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 26, 2016.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Unaudited)
(Dollars in thousands)
Partners’ Capital
Common Limited General
Partner
Amount
Units Amount Total
Balances - January 1, 2015 35,365,912 $470,943 $14,728 $485,671
Net income 19,229 12,310 31,539
Issuance of common units, net (330) (330)
Issuance of restricted units 91,950
Forfeiture of restricted units (1,250)
General partner contribution 55 55
Cash distributions (86,420) (13,526) (99,946)
Reimbursement of excess purchase price over carrying value of acquired assets 1,500 1,500
Unit-based compensation 1,080 1,080
Balances - September 30, 2015 35,456,612 $406,002 $13,567 $419,569
Balances - January 1, 2016 35,456,612 $380,845 $13,034 $393,879
Net income 5,708 8,062 13,770
Issuance of common units, net of issuance related costs (28) (28)
Issuance of restricted units 13,800
Forfeiture of restricted units (500)
Cash distributions (86,410) (13,680) (100,090)
Unit-based compensation 712 712
Reimbursement of excess purchase price over carrying value of acquired assets 3,000 3,000
Purchase of treasury units (15,200) (330) (330)
Balances - September 30, 2016 35,454,712 $303,497 $7,416 $310,913

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 26, 2016.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Nine Months Ended
September 30,
2016 2015
Cash flows from operating activities:
Net income $13,770 $31,539
Less: Income from discontinued operations, net of income taxes (1,215)
Net income from continuing operations 13,770 30,324
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 66,266 68,737
Amortization and write-off of deferred debt issuance costs 2,965 4,142
Amortization of premium on notes payable (230) (246)
Loss on sale of property, plant and equipment 1,582 1,751
Loss on impairment of goodwill 4,145
Gain on retirement of senior unsecured notes (728)
Equity in earnings of unconsolidated entities (3,602) (5,752)
Derivative income (1,867) (2,137)
Net cash received for commodity derivatives 1,666
Net cash received for interest rate derivatives 160
Net premiums received on derivatives that settled during the year on interest rate swaption contracts 630 2,495
Unit-based compensation 712 1,080
Cash distributions from WTLPG 6,100 7,800
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables 28,028 69,967
Product exchange receivables 891 909
Inventories (31,606) (3,134)
Due from affiliates 1,932 3,348
Other current assets (4,693) 354
Trade and other accounts payable (15,782) (59,124)
Product exchange payables (2,544) 6,360
Due to affiliates (1,859) (1,935)
Income taxes payable (435) (386)
Other accrued liabilities (3,729) (8,490)
Change in other non-current assets and liabilities (765) (999)
Net cash provided by continuing operating activities 61,735 114,336
Net cash used in discontinued operating activities (1,352)
Net cash provided by operating activities 61,735 112,984
Cash flows from investing activities:
Payments for property, plant and equipment (31,884) (40,123)
Acquisition of intangible assets (2,150)
Payments for plant turnaround costs (1,614) (1,754)
Proceeds from sale of property, plant and equipment 2,174 1,985
Proceeds from involuntary conversion of property, plant and equipment 23,400
Net cash used in continuing investing activities (10,074) (39,892)
Net cash provided by discontinued investing activities 41,250
Net cash provided by (used in) investing activities (10,074) 1,358
Cash flows from financing activities:
Payments of long-term debt (219,700) (224,310)
Proceeds from long-term debt 270,700 209,000
Proceeds from issuance of common units, net of issuance related costs (28) (330)
General partner contribution 55
Purchase of treasury units (330)
Payment of debt issuance costs (5,234) (340)
Reimbursement of excess purchase price over carrying value of acquired assets 3,000 1,500
Cash distributions paid (100,090) (99,946)
Net cash used in financing activities (51,682) (114,371)
Net decrease in cash (21) (29)
Cash at beginning of period 31 42
Cash at end of period $10 $13
Non-cash additions to property, plant and equipment $1,068 $4,389

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

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 26, 2016.

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, 2016 and 2015
Three Months Ended
September 30,
Variance Percent
Change
2016 2015
(In thousands, except BBL per day)
Revenues:
Services $32,114 $35,144 $(3,030) (9)%
Products 28,829 33,329 (4,500) (14)%
Total revenues 60,943 68,473 (7,530) (11)%
Cost of products sold 24,118 28,765 (4,647) (16)%
Operating expenses 18,299 20,268 (1,969) (10)%
Selling, general and administrative expenses 1,439 995 444 45%
Depreciation and amortization 10,828 9,624 1,204 13%
6,259 8,821 (2,562) (29)%
Other operating income 254 2 252 12,600%
Operating income $6,513 $8,823 $(2,310) (26)%
Lubricant sales volumes (gallons) 5,196 5,974 (778) (13)%
Shore-based throughput volumes (gallons) 25,313 36,383 (11,070) (30)%
Smackover refinery throughput volumes (BBL per day) 5,924 6,205 (281) (5)%
Corpus Christi crude terminal (BBL per day) 65,116 148,377 (83,261) (56)%


Comparative Results of Operations for the Nine Months Ended September 30, 2016 and 2015
Nine Months Ended
September 30,
Variance Percent
Change
2016 2015
(In thousands, except BBL per day)
Revenues:
Services $97,663 $104,893 $(7,230) (7)%
Products 85,351 102,901 (17,550) (17)%
Total revenues 183,014 207,794 (24,780) (12)%
Cost of products sold 71,939 90,076 (18,137) (20)%
Operating expenses 54,740 62,947 (8,207) (13)%
Selling, general and administrative expenses 3,546 2,806 740 26%
Depreciation and amortization 30,904 29,030 1,874 6%
21,885 22,935 (1,050) (5)%
Other operating income (loss) 354 (199) 553 (278)%
Operating income $22,239 $22,736 $(497) (2)%
Lubricant sales volumes (gallons) 15,536 18,007 (2,471) (14)%
Shore-based throughput volumes (gallons) 77,059 122,743 (45,684) (37)%
Smackover refinery throughput volumes (BBL per day) 5,644 6,091 (447) (7)%
Corpus Christi crude terminal (BBL per day) 77,394 166,129 (88,735) (53)%


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, 2016 and 2015
Three Months Ended
September 30,
Variance Percent
Change
2016 2015
(In thousands)
Revenues:
Services $14,618 $17,120 $(2,502) (15)%
Products 57,378 86,714 (29,336) (34)%
Total revenues 71,996 103,834 (31,838) (31)%
Cost of products sold 51,353 81,472 (30,119) (37)%
Operating expenses 5,822 6,489 (667) (10)%
Selling, general and administrative expenses 1,309 1,848 (539) (29)%
Depreciation and amortization 7,050 8,522 (1,472) (17)%
6,462 5,503 959 17%
Other operating loss (7) (7)
Operating income $6,455 $5,503 $952 17%
Distributions from unconsolidated entities $1,800 $3,400 $(1,600) (47)%
NGL sales volumes (Bbls) 1,592 3,138 (1,546) (49)%


Comparative Results of Operations for the Nine Months Ended September 30, 2016 and 2015
Nine Months Ended
September 30,
Variance Percent
Change
2016 2015
(In thousands)
Revenues:
Services$46,118 $50,171 $(4,053) (8)%
Products207,368 330,803 (123,435) (37)%
Total revenues253,486 380,974 (127,488) (33)%
Cost of products sold186,934 308,713 (121,779) (39)%
Operating expenses17,479 17,905 (426) (2)%
Selling, general and administrative expenses5,420 6,313 (893) (14)%
Depreciation and amortization21,007 25,297 (4,290) (17)%
22,646 22,746 (100) %
Other operating loss(103) (7) (96) 1,371%
Operating income$22,543 $22,739 $(196) (1)%
Distributions from unconsolidated entities$6,100 $7,800 $(1,700) (22)%
NGL sales volumes (Bbls)6,520 10,227 (3,707) (36)%


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, 2016 and 2015
Three Months Ended
September 30,
Variance Percent
Change
2016 2015
(In thousands)
Revenues:
Services $2,700 $3,090 $(390) (13)%
Products 26,396 33,213 (6,817) (21)%
Total revenues 29,096 36,303 (7,207) (20)%
Cost of products sold 21,601 26,235 (4,634) (18)%
Operating expenses 4,089 3,427 662 19%
Selling, general and administrative expenses 946 934 12 1%
Depreciation and amortization 1,997 2,129 (132) (6)%
463 3,578 (3,115) (87)%
Other operating loss (234) (5) (229) 4,580%
Operating income $229 $3,573 $(3,344) (94)%
Sulfur (long tons) 241 203 38 19%
Fertilizer (long tons) 47 51 (4) (8)%
Total sulfur services volumes (long tons) 288 254 34 13%

Comparative Results of Operations for the Nine Months Ended September 30, 2016 and 2015
Nine Months Ended
September 30,
Variance Percent
Change
2016 2015
(In thousands)
Revenues:
Services $8,100 $9,270 $(1,170) (13)%
Products 105,459 128,544 (23,085) (18)%
Total revenues 113,559 137,814 (24,255) (18)%
Cost of products sold 74,006 95,961 (21,955) (23)%
Operating expenses 10,288 11,697 (1,409) (12)%
Selling, general and administrative expenses 2,834 2,859 (25) (1)%
Depreciation and amortization 5,978 6,360 (382) (6)%
20,453 20,937 (484) (2)%
Other operating loss (266) (5) (261) 5,220%
Operating income $20,187 $20,932 $(745) (4)%
Sulfur (long tons) 579 641 (62) (10)%
Fertilizer (long tons) 217 229 (12) (5)%
Total sulfur services volumes (long tons) 796 870 (74) (9)%

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, 2016 and 2015
Three Months Ended
September 30,
Variance Percent
Change
2016 2015
(In thousands)
Revenues $14,920 $19,522 $(4,602) (24)%
Operating expenses 12,332 15,855 (3,523) (22)%
Selling, general and administrative expenses 149 (59) 208 (353)%
Depreciation and amortization 2,254 3,060 (806) (26)%
185 666 (481) (72)%
Other operating loss (1,583) 1,583 (100)%
Operating income (loss) $185 $(917) $1,102 (120)%


Comparative Results of Operations for the Nine Months Ended September 30, 2016 and 2015
Nine Months Ended
September 30,
Variance Percent
Change
2016 2015
(In thousands)
Revenues $46,854 $62,354 $(15,500) (25)%
Operating expenses 41,400 48,284 (6,884) (14)%
Selling, general and administrative expenses (112) 251 (363) (145)%
Loss on impairment of goodwill 4,145 4,145
Depreciation and amortization 8,377 8,050 327 4%
Operating income $(6,956) $5,769 $(12,725) (221)%
Other operating loss (1,567) (1,552) (15) 1%
Operating income (loss) $(8,523) $4,217 $(12,740) (302)%


Distributions from Unconsolidated Entities
Comparative Results of Operations for the Three Months Ended September 30, 2016 and 2015
Three Months Ended
September 30,
Variance Percent
Change
2016 2015
(In thousands)
Distributions from WTLPG $1,800 $3,400 $(1,600) (47)%

Comparative Results of Operations for the Nine Months Ended September 30, 2016 and 2015
Nine Months Ended
September 30,
Variance Percent
Change
2016 2015
(In thousands)
Distributions from WTLPG $6,100 $7,800 $(1,700) (22)%


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, 2016 and 2015.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
(in thousands)
Net income (loss) $(933) $3,330 $13,770 $31,539
Less: Income from discontinued operations, net of income taxes (1,215)
Income (loss) from continuing operations (933) 3,330 13,770 30,324
Adjustments:
Interest expense 11,779 11,994 34,046 32,465
Income tax expense 180 200 422 814
Depreciation and amortization 22,129 23,335 66,266 68,737
EBITDA 33,155 38,859 114,504 132,340
Adjustments:
Equity in earnings of unconsolidated entities (1,120) (2,363) (3,602) (5,752)
(Gain) loss on sale of property, plant and equipment (13) 1,586 1,582 1,751
Loss on impairment of goodwill 4,145
Unrealized mark-to-market on commodity derivatives (742) 358 795 358
Gain on retirement of senior unsecured notes (728) (728)
Distributions from unconsolidated entities 1,800 3,400 6,100 7,800
Unit-based compensation 226 330 712 1,080
Adjusted EBITDA 33,306 41,442 124,236 136,849
Adjustments:
Interest expense (11,779) (11,994) (34,046) (32,465)
Income tax expense (180) (200) (422) (814)
Amortization of debt premium (77) (82) (230) (246)
Amortization of deferred debt issuance costs 718 2,400 2,965 4,142
Non-cash mark-to-market on interest rate derivatives (206)
Payments for plant turnaround costs (430) (1,614) (1,754)
Maintenance capital expenditures (1,609) (2,438) (12,818) (7,621)
Distributable Cash Flow $19,949 $29,128 $77,865 $98,091

Source:Martin Midstream Partners L.P.