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Martin Midstream Partners Reports 2017 Third Quarter Financial Results

  • Hurricane Harvey Impact Estimated at $6.0 Million
  • Quarterly Distribution Coverage Ratio Meets Internal Forecast
  • Year to Date Distribution Coverage Ratio of 1.04x and Trailing Twelve Months Coverage Ratio of 1.27x

KILGORE, Texas, Oct. 25, 2017 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq:MMLP) (the "Partnership") announced today its financial results for the quarter ended September 30, 2017.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “For the third quarter ended September 30, 2017, the Partnership generated a distribution coverage ratio of 0.51 times, matching our internal forecast. Annually, the third quarter is our weakest, coinciding with seasonal troughs in the fertilizer and butane businesses. Although cash flow from operations was below our guidance levels, so too was maintenance capital expenditures offsetting the impact to distributable cash flow thus, meeting our estimate.

“Highlighting the third quarter was continued strength in our Cardinal Gas Storage division where interruptible services remained stronger than forecasted. Also, within the Natural Gas Services segment early season butane sales were above our expectations. This was offset by lower throughput revenue within our Specialty Terminals division and weaker asset utilization in our Marine Transportation segment.

“During the third quarter, maintenance capital spending was lower than anticipated at approximately $5.2 million. Accordingly, we are reducing our full year maintenance capital expenditure guidance to approximately $20 million. Some scheduled fourth quarter maintenance capital expenditures will likely be preceded in priority by Hurricane Harvey related repairs and maintenance. Generally speaking, the Partnership was fortunate to have weathered the impact of storm damage from Hurricane Harvey with only modest disruption. Of the utmost importance was the safety of our employees and their families and we were very fortunate on that front. Pertaining to the financial impact and condition of our assets, we estimate the storm will have an approximate $6.0 million negative impact to our business. This estimate includes total expenses to repair damaged assets affecting cash flow in the third quarter, fourth quarter and first quarter 2018 of $1.0 million, $3.5 million, and $0.4 million, respectively, in addition to the impact of business interruption of approximately $1.1 million in the third quarter 2017. Because we incurred storm damage at multiple locations, we will not be filing an insurance claim associated with these interruptions and repair expenditures. In essence, each location’s damage was in an amount below the deductible for that specific location.

“As expected during the third quarter, our debt level rose based on working capital increases of approximately $45 million in our Natural Gas Services segment primarily attributed to our butane inventory build. Based on current market conditions, we anticipate a strong butane sales season during the fourth quarter 2017 and first quarter 2018. Looking ahead, we should realize significant working capital debt reduction due to butane inventory depletion, reducing the Partnership’s leverage over the next two quarters.”

The Partnership had a net loss for the third quarter 2017 of $16.3 million, a loss of $0.42 per limited partner unit. This loss includes the effects of estimated hurricane repair costs of $4.9 million and the expense associated with the upward revision of asset retirement obligations of $5.5 million. The Partnership had a net loss for the third quarter 2016 of $0.9 million, a loss of $0.03 per limited partner unit. The Partnership's adjusted EBITDA for the third quarter 2017 was $27.1 million compared to adjusted EBITDA from for the third quarter 2016 of $33.3 million.

The Partnership had a net loss for the nine months ended September 30, 2017 of $1.7 million, a loss of $0.04 per limited partner unit. The Partnership had net income for the nine months ended September 30, 2016 of $13.8 million, or $0.16 per limited partner unit. The Partnership's adjusted EBITDA for the nine months ended September 30, 2017 was $106.9 million compared to adjusted EBITDA for the nine months ended September 30, 2016 of $124.2 million.

The Partnership's distributable cash flow for the third quarter 2017 was $9.9 million compared to distributable cash flow for the third quarter 2016 of $19.9 million.

The Partnership's distributable cash flow for the nine months ended September 30, 2017 was $59.8 million compared to distributable cash flow for the nine months ended September 30, 2016 of $77.9 million.

Revenues for the third quarter 2017 were $193.1 million compared to the third quarter 2016 of $174.5 million. Revenues for the nine months ended September 30, 2017 were $640.4 million compared to the nine months ended September 30, 2016 of $590.5 million.

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 and condensed financial statements as of and for the three and nine months ended September 30, 2017 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 25, 2017.

An attachment accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/0ff92a73-c811-4f59-8574-a85c689ef18c.

Investors' Conference Call

An investors’ conference call to review the third quarter results will be held on Thursday, October 26, 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 October 26, 2017 through 10:59 p.m. Central Time on November 6, 2017. The access code for the conference call and the audio replay is Conference ID No. 98725323. 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 AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
September 30, 2017 December 31, 2016
(Unaudited) (Audited)
Assets
Cash $15 $15
Accounts and other receivables, less allowance for doubtful accounts of $319 and $372, respectively 64,127 80,508
Product exchange receivables 34 207
Inventories 130,618 82,631
Due from affiliates 13,484 11,567
Fair value of derivatives 133
Other current assets 3,703 3,296
Assets held for sale 13,764 15,779
Total current assets 225,878 194,003
Property, plant and equipment, at cost 1,248,093 1,224,277
Accumulated depreciation (408,426) (378,593)
Property, plant and equipment, net 839,667 845,684
Goodwill 17,296 17,296
Investment in WTLPG 127,998 129,506
Note receivable - affiliate 15,000
Other assets, net 37,211 44,874
Total assets $1,248,050 $1,246,363
Liabilities and Partners’ Capital
Trade and other accounts payable $72,019 $70,249
Product exchange payables 9,270 7,360
Due to affiliates 3,305 8,474
Income taxes payable 450 870
Fair value of derivatives 3,904
Other accrued liabilities 25,710 26,717
Total current liabilities 110,754 117,574
Long-term debt, net 829,991 808,107
Other long-term obligations 8,425 8,676
Total liabilities 949,170 934,357
Commitments and contingencies (Note 17)
Partners’ capital 298,880 312,006
Total partners’ capital 298,880 312,006
Total liabilities and partners' capital $1,248,050 $1,246,363

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on October 25, 2017.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Revenues:
Terminalling and storage * $25,752 $30,770 $75,105 $93,565
Marine transportation * 11,407 13,846 36,661 44,531
Natural gas services* 14,253 14,618 43,756 46,118
Sulfur services 2,850 2,700 8,550 8,100
Product sales: *
Natural gas services 83,831 57,378 284,154 207,368
Sulfur services 24,174 26,396 95,728 105,459
Terminalling and storage 30,861 28,829 96,421 85,349
138,866 112,603 476,303 398,176
Total revenues 193,128 174,537 640,375 590,490
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas services * 77,368 50,658 255,745 184,781
Sulfur services * 19,716 21,510 65,406 73,734
Terminalling and storage * 25,852 23,540 80,312 70,306
122,936 95,708 401,463 328,821
Expenses:
Operating expenses * 45,072 39,488 114,564 121,542
Selling, general and administrative * 9,131 8,049 27,961 24,364
Loss on impairment of goodwill 4,145
Depreciation and amortization 20,286 22,129 65,948 66,266
Total costs and expenses 197,425 165,374 609,936 545,138
Other operating income (loss) (187) 13 (327) (1,582)
Operating income (loss) (4,484) 9,176 30,112 43,770
Other income (expense):
Equity in earnings of WTLPG 789 1,120 2,547 3,602
Interest expense, net (12,538) (11,779) (34,677) (34,046)
Other, net 55 730 605 866
Total other expense (11,694) (9,929) (31,525) (29,578)
Net income (loss) before taxes (16,178) (753) (1,413) 14,192
Income tax expense (108) (180) (301) (422)
Net income (loss) (16,286) (933) (1,714) 13,770
Less general partner's interest in net income (loss) 325 18 34 (8,062)
Less (income) loss allocable to unvested restricted units 38 3 (36)
Limited partners' interest in net income (loss) $(15,923) $(912) $(1,680) $5,672
Net income (loss) per unit attributable to limited partners - basic $(0.42) $(0.03) $(0.04) $0.16
Net income (loss) per unit attributable to limited partners - diluted $(0.42) $(0.03) $(0.04) $0.16
Weighted average limited partner units - basic 38,357 35,346 38,016 35,358
Weighted average limited partner units - diluted 38,357 35,346 38,016 35,381

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 25, 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
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Revenues:*
Terminalling and storage $21,910 $20,649 $61,945 $62,197
Marine transportation 4,098 4,861 12,610 17,308
Natural gas services 4 132 122 574
Product Sales 828 723 2,982 2,391
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Natural gas services 3,033 2,946 14,836 10,829
Sulfur services 3,555 3,678 10,997 11,300
Terminalling and storage 4,817 3,766 14,003 11,232
Expenses:
Operating expenses 15,858 17,810 48,686 53,255
Selling, general and administrative 6,495 5,748 20,563 18,091

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 25, 2017.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Dollars in thousands)
Partners’ Capital
Common Limited General
Partner
Amount
Units Amount Total
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 (28) (28)
Issuance of restricted units 13,800
Forfeiture of restricted units (500)
Cash distributions (86,410) (13,680) (100,090)
Reimbursement of excess purchase price over carrying value of acquired assets 3,000 3,000
Unit-based compensation 712 712
Purchase of treasury units (15,200) (330) (330)
Balances - September 30, 2016 35,454,712 $303,497 $7,416 $310,913
Balances - January 1, 2017 35,452,062 $304,594 $7,412 $312,006
Net loss (1,680) (34) (1,714)
Issuance of common units, net of issuance related costs 2,990,000 51,061 51,061
Issuance of restricted units 12,000
Forfeiture of restricted units (5,750)
General partner contribution 1,098 1,098
Cash distributions (56,177) (1,146) (57,323)
Unit-based compensation 518 518
Excess purchase price over carrying value of acquired assets (7,887) (7,887)
Reimbursement of excess purchase price over carrying value of acquired assets 1,125 1,125
Purchase of treasury units (200) (4) (4)
Balances - September 30, 2017 38,448,112 $291,550 $7,330 $298,880

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 25, 2017.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine Months Ended
September 30,
2017 2016
Cash flows from operating activities:
Net income (loss) $(1,714) $13,770
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 65,948 66,266
Amortization of deferred debt issuance costs 2,170 2,965
Amortization of premium on notes payable (230) (230)
Loss on sale of property, plant and equipment 327 1,582
Loss on impairment of goodwill 4,145
Equity in earnings of WTLPG (2,547) (3,602)
Derivative (income) loss 2,392 (1,867)
Net cash (paid) received for commodity derivatives (6,429) 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
Unit-based compensation 518 712
Cash distributions from WTLPG 4,200 6,100
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables 16,381 28,028
Product exchange receivables 173 891
Inventories (48,022) (31,606)
Due from affiliates (1,917) 1,932
Other current assets (411) (4,693)
Trade and other accounts payable 2,222 (15,782)
Product exchange payables 1,910 (2,544)
Due to affiliates (5,169) (1,859)
Income taxes payable (420) (435)
Other accrued liabilities (3,766) (3,729)
Change in other non-current assets and liabilities 1,941 (765)
Net cash provided by operating activities 27,557 61,735
Cash flows from investing activities:
Payments for property, plant and equipment (30,014) (31,884)
Acquisitions (19,533)
Acquisition of intangible assets (2,150)
Payments for plant turnaround costs (1,583) (1,614)
Proceeds from sale of property, plant and equipment 1,604 2,174
Proceeds from involuntary conversion of property, plant and equipment 23,400
Proceeds from repayment of Note receivable - affiliate 15,000
Contributions to WTLPG (145)
Other (900)
Net cash used in investing activities (35,571) (10,074)
Cash flows from financing activities:
Payments of long-term debt (242,000) (219,700)
Proceeds from long-term debt 262,000 270,700
Proceeds from issuance of common units, net of issuance related costs 51,061 (28)
General partner contribution 1,098
Purchase of treasury units (4) (330)
Payment of debt issuance costs (56) (5,234)
Excess purchase price over carrying value of acquired assets (7,887)
Reimbursement of excess purchase price over carrying value of acquired assets 1,125 3,000
Cash distributions paid (57,323) (100,090)
Net cash provided by (used in) financing activities 8,014 (51,682)
Net increase (decrease) in cash (21)
Cash at beginning of period 15 31
Cash at end of period $15 $10
Non-cash additions to property, plant and equipment $1,367 $1,068

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 25, 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 Three Months Ended September 30, 2017 and 2016
Three Months Ended
September 30,
Variance Percent
Change
2017 2016
(In thousands, except BBL per day)
Revenues:
Services $26,944 $32,114 $(5,170) (16)%
Products 30,861 28,829 2,032 7%
Total revenues 57,805 60,943 (3,138) (5)%
Cost of products sold 26,451 24,118 2,333 10%
Operating expenses 25,762 18,299 7,463 41%
Selling, general and administrative expenses 1,668 1,439 229 16%
Depreciation and amortization 10,192 10,828 (636) (6)%
(6,268) 6,259 (12,527) (200)%
Other operating income (loss) (187) 254 (441) (174)%
Operating income (loss) $(6,455) $6,513 $(12,968) (199)%
Lubricant sales volumes (gallons) 5,217 5,196 21 %
Shore-based throughput volumes (guaranteed minimum) (gallons) 41,666 50,000 (8,334) (17)%
Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 %
Corpus Christi crude terminal (BBL per day) 65,116 (65,116) (100)%


Comparative Results of Operations for the Nine Months Ended September 30, 2017 and 2016
Nine Months Ended
September 30,
Variance Percent
Change
2017 2016
(In thousands, except BBL per day)
Revenues:
Services $79,523 $97,663 $(18,140) (19)%
Products 96,421 85,351 11,070 13%
Total revenues 175,944 183,014 (7,070) (4)%
Cost of products sold 82,053 71,939 10,114 14%
Operating expenses 56,488 54,740 1,748 3%
Selling, general and administrative expenses 4,437 3,546 891 25%
Depreciation and amortization 35,996 30,904 5,092 16%
(3,030) 21,885 (24,915) (114)%
Other operating income (loss) (190) 354 (544) (154)%
Operating income (loss) $(3,220) $22,239 $(25,459) (114)%
Lubricant sales volumes (gallons) 15,912 15,536 376 2%
Shore-based throughput volumes (guaranteed minimum) (gallons) 124,998 150,000 (25,002) (17)%
Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500 6,500 %
Corpus Christi crude terminal (BBL per day) 77,394 (77,394) (100)%


Natural Gas Services Segment
Comparative Results of Operations for the Three Months Ended September 30, 2017 and 2016
Three Months Ended
September 30,
Variance Percent
Change
2017 2016
(In thousands)
Revenues:
Services $14,253 $14,618 $(365) (2)%
Products 84,057 57,378 26,679 46%
Total revenues 98,310 71,996 26,314 37%
Cost of products sold 78,138 51,353 26,785 52%
Operating expenses 5,528 5,822 (294) (5)%
Selling, general and administrative expenses 1,889 1,309 580 44%
Depreciation and amortization 6,274 7,050 (776) (11)%
6,481 6,462 19 %
Other operating income (loss) 2 (7) 9 (129)%
Operating income $6,483 $6,455 $28 %
Distributions from WTLPG $1,700 $1,800 $(100) (6)%
NGL sales volumes (Bbls) 1,943 1,592 351 22%


Comparative Results of Operations for the Nine Months Ended September 30, 2017 and 2016
Nine Months Ended
September 30,
Variance Percent
Change
2017 2016
(In thousands)
Revenues:
Services $43,756 $46,118 $(2,362) (5)%
Products 284,380 207,368 77,012 37%
Total revenues 328,136 253,486 74,650 29%
Cost of products sold 258,444 186,934 71,510 38%
Operating expenses 16,753 17,479 (726) (4)%
Selling, general and administrative expenses 7,055 5,420 1,635 30%
Depreciation and amortization 18,640 21,007 (2,367) (11)%
27,244 22,646 4,598 20%
Other operating income (loss) 7 (103) 110 (107)%
Operating income $27,251 $22,543 $4,708 21%
Distributions from WTLPG $4,200 $6,100 $(1,900) (31)%
NGL sales volumes (Bbls) 6,547 6,520 27 %


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 Three Months Ended September 30, 2017 and 2016
Three Months Ended
September 30,
Variance Percent
Change
2017 2016
(In thousands)
Revenues:
Services $2,850 $2,700 $150 6%
Products 24,174 26,396 (2,222) (8)%
Total revenues 27,024 29,096 (2,072) (7)%
Cost of products sold 19,807 21,601 (1,794) (8)%
Operating expenses 3,557 4,089 (532) (13)%
Selling, general and administrative expenses 1,071 946 125 13%
Depreciation and amortization 2,020 1,997 23 1%
569 463 106 23%
Other operating loss (2) (234) 232 (99)%
Operating income $567 $229 $338 148%
Sulfur (long tons) 198 241 (43) (18)%
Fertilizer (long tons) 52 47 5 11%
Total sulfur services volumes (long tons) 250 288 (38) (13)%


Comparative Results of Operations for the Nine Months Ended September 30, 2017 and 2016
Nine Months Ended
September 30,
Variance Percent
Change
2017 2016
(In thousands)
Revenues:
Services $8,550 $8,100 $450 6%
Products 95,728 105,459 (9,731) (9)%
Total revenues 104,278 113,559 (9,281) (8)%
Cost of products sold 65,678 74,006 (8,328) (11)%
Operating expenses 10,221 10,288 (67) (1)%
Selling, general and administrative expenses 3,099 2,834 265 9%
Depreciation and amortization 6,083 5,978 105 2%
19,197 20,453 (1,256) (6)%
Other operating loss (24) (266) 242 (91)%
Operating income $19,173 $20,187 $(1,014) (5)%
Sulfur (long tons) 607 579 28 5%
Fertilizer (long tons) 217 217 %
Total sulfur services volumes (long tons) 824 796 28 4%


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 Three Months Ended September 30, 2017 and 2016
Three Months Ended
September 30,
Variance Percent
Change
2017 2016
(In thousands)
Revenues $12,400 $14,920 $(2,520) (17)%
Operating expenses 11,176 12,332 (1,156) (9)%
Selling, general and administrative expenses 112 149 (37) (25)%
Depreciation and amortization 1,800 2,254 (454) (20)%
Operating income (loss) $(688) $185 $(873) (472)%


Comparative Results of Operations for the Nine Months Ended September 30, 2017 and 2016
Nine Months Ended
September 30,
Variance Percent
Change
2017 2016
(In thousands)
Revenues $38,958 $46,854 $(7,896) (17)%
Operating expenses 33,331 41,400 (8,069) (19)%
Selling, general and administrative expenses 287 (112) 399 (356)%
Loss on impairment of goodwill 4,145 (4,145) (100)%
Depreciation and amortization 5,229 8,377 (3,148) (38)%
$111 $(6,956) $7,067 (102)%
Other operating loss (120) (1,567) 1,447 (92)%
Operating loss $(9) $(8,523) $8,514 (100)%

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, 2017 and 2016, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(in thousands)
Net income (loss)$(16,286) $(933) $(1,714) $13,770
Adjustments:
Interest expense, net12,538 11,779 34,677 34,046
Income tax expense108 180 301 422
Depreciation and amortization20,286 22,129 65,948 66,266
EBITDA16,646 33,155 99,212 114,504
Adjustments:
Equity in earnings of WTLPG(789) (1,120) (2,547) (3,602)
(Gain) loss on sale of property, plant and equipment187 (13) 327 1,582
Loss on impairment of goodwill 4,145
Unrealized mark-to-market on commodity derivatives (742) (4,037) 795
Hurricane damage repair accrual3,725 3,725
Asset retirement obligation revision5,547 5,547
Distributions from WTLPG1,700 1,800 4,200 6,100
Unit-based compensation113 226 518 712
Adjusted EBITDA27,129 33,306 106,945 124,236
Adjustments:
Interest expense, net(12,538) (11,779) (34,677) (34,046)
Income tax expense(108) (180) (301) (422)
Amortization of debt premium(77) (77) (230) (230)
Amortization of deferred debt issuance costs725 718 2,170 2,965
Non-cash mark-to-market on interest rate derivatives (206)
Payments for plant turnaround costs8 (430) (1,583) (1,614)
Maintenance capital expenditures(5,208) (1,609) (12,494) (12,818)
Distributable Cash Flow$9,931 $19,949 $59,830 $77,865

Source:Martin Midstream Partners L.P.

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