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Martin Midstream Partners Reports 2017 Fourth Quarter Financial Results

  • Strong Fourth Quarter Distribution Coverage Ratio of 1.59x, Full Year Coverage of 1.18x
  • Net income of $17.1 million for 2017
  • Detailed 2018 Cash Flow Guidance to be Released on February 21st

KILGORE, Texas, Feb. 14, 2018 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq:MMLP) (the "Partnership") announced today its financial results for the fourth quarter and year ended December 31, 2017.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “During the fourth quarter, the Partnership generated strong cash flow with adjusted EBITDA of $49.3 million which exceeded our guidance level. Based on this solid performance, distributable cash flow was $31.2 million with a 1.59 times distribution coverage ratio for the quarter. For the full year 2017, the Partnership's adjusted EBITDA and distributable cash flow were approximately $156.2 and $91.1 million, respectively. When compared to full year guidance, we fell modestly short of cash flow expectations by $1.2 million, however, we exceeded distributable cash flow expectations by $0.8 million and generated a solid distribution coverage of 1.18 times. As is typical in our business cycle, we often follow the third quarter, our seasonally weakest, with our strongest cash flowing quarter. Accordingly, during the fourth quarter, we saw the positive seasonal impacts of our fertilizer and butane businesses fully restored.

“As expected, based on price performance and a strong storage season last summer, we realized robust performance from our Natural Gas Services segment. Specifically, our butane optimization business exceeded expectations during the quarter. Also within the segment, we experienced better than anticipated interruptible services revenue from our Cardinal Gas Storage division. For the full year 2017, our Natural Gas Services segment trailed guidance by $0.7 million, or 0.7%. Generally speaking, we met our cash flow target within the segment as our slight miss to guidance was primarily due to the continued delay with the WTLPG pipeline tariff challenge process currently in front of the Texas Railroad Commission. Last year our expected cash flow included a resolution to this matter by the end of the third quarter. As this did not occur, our cash flow attributed to distributions from WTLPG were below planned levels.

“Our Terminalling and Storage segment missed fourth quarter and full year guidance estimates primarily attributed to repair expenses and lost revenue from Hurricane Harvey. During the fourth quarter, the Partnership incurred hurricane related costs totaling $2.8 million, of which $2.4 million related to the Terminalling and Storage segment. For the full year 2017, the Terminalling and Storage segment missed cash flow guidance by approximately $4.3 million, or 7.3%, again the majority of this variance to guidance was attributed to the negative impact of Hurricane Harvey during the third and fourth quarters. Looking ahead, we expect a full recovery of cash flow in our specialty and legacy terminalling divisions and the full year benefit of our Hondo asphalt terminal in 2018.

“Our Sulfur Services segment posted a strong fourth quarter. We exceeded cash flow guidance by $3.6 million, or approximately 70.6%. This is primarily attributed to stronger than forecasted fertilizer margins as product volume sold matched our expectation during the quarter. Additionally, within the segment, we experienced strong demand for our prilling services as the export pricing alternative was greater than domestic prices. For the full year 2017, the Sulfur Services segment exceeded cash flow guidance by approximately $4.2 million, or 14.1%.

“Marine Transportation modestly outperformed our guidance expectations for both the fourth quarter and full year 2017. During the quarter we benefitted from a continued reduction in operating expenses. For the full year 2017, we cut operating expenses by approximately $8.4 million reflective of the reduction in our fleet by 13 assets over the last two years. Based on this commitment to cost reduction, we exceed 2017 full year cash flow guidance by approximately $0.3 million, or 4.5%.

“As 2017 finished with a strong distribution coverage, we remain comfortable with the current annualized distribution run-rate of $2.00 per unit. We look forward to February 21 when we will deliver our full year detailed 2018 cash flow guidance.”

The Partnership had net income for the fourth quarter 2017 of $18.8 million, or $0.47 per limited partner unit. The Partnership had net income for the fourth quarter 2016 of $17.9 million, or $0.49 per limited partner unit. For the fourth quarter of 2016, net income was positively impacted by the gain on disposition of the Partnership's terminalling assets located in Corpus Christi, Texas of $37.3 million and negatively impacted by non-cash impairment charges of $27.0 million. Of these non-cash impairment charges, $15.3 million occurred in our Terminalling and Storage segment and was related to the discontinuation of certain organic growth projects no longer deemed economically viable. Additionally, our Marine Transportation segment experienced an $11.7 million non-cash charge related to the planned disposal of certain inland and offshore non-core transportation assets. The Partnership's adjusted EBITDA for the fourth quarter 2017 was $49.3 million compared to adjusted EBITDA for the fourth quarter 2016 of $52.3 million.

Net income for the year ended December 31, 2017 was $17.1 million, or $0.44 per limited partner unit. Net income for the year ended December 31, 2016 was $31.7 million, or $0.65 per limited partner unit. Net income for the year ended December 31, 2016 was positively impacted by the gain on disposition of the Partnership's terminalling assets located in Corpus Christi, Texas of $37.3 million and negatively impacted by non-cash impairment charges of $31.1 million. Of these non-cash impairment charges, $15.3 million occurred in our Terminalling and Storage segment and was related to the discontinuation of certain organic growth projects no longer deemed economically viable. Additionally, our Marine Transportation segment experienced an $11.7 million non-cash charge related to the planned disposal of certain inland and offshore non-core transportation assets and a $4.1 million non-cash goodwill impairment charge. The Partnership's adjusted EBITDA for the year ended December 31, 2017 was $156.2 million compared to adjusted EBITDA for the year ended December 31, 2016 of $176.6 million.

The Partnership's distributable cash flow for the fourth quarter of 2017 was $31.2 million compared to distributable cash flow for the fourth quarter of 2016 of $35.8 million.

The Partnership's distributable cash flow for the year ended December 31, 2017 was $91.1 million compared to distributable cash flow for the year ended December 31, 2016 of $113.7 million.

Revenues for the fourth quarter of 2017 were $305.7 million compared to $236.9 million for the fourth quarter of 2016. Revenues for the year ended December 31, 2017 were $946.1 million compared to $827.4 million for the year ended December 31, 2016.

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

Included with this press release are the Partnership's consolidated financial statements as of and for the year ended December 31, 2017 and certain prior periods. These financial statements should be read in conjunction with the information contained in the Partnership's Annual Report on Form 10-K, to be filed with the SEC on February 16, 2018.

An attachment accompanying this announcement is available at http://resource.globenewswire.com/Resource/Download/8b25966a-2220-4b67-b6ad-a8a5eabca95f.

Investors' Conference Call

An investors’ conference call to review the fourth quarter results will be held on Thursday, February 15, 2018, at 8:00 a.m. Central Time. The conference call can be accessed by calling (877) 878-2695. An audio replay of the conference call will be available by calling (855) 859-2056 from 11:00 a.m. Central Time on February 15, 2018 through 10:59 p.m. Central Time on February 26, 2018. The access code for the conference call and the audio replay is Conference ID No. 7799099. 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) natural gas services, including liquids transportation and distribution services and natural gas storage; (2) terminalling, storage and packaging services for petroleum products and by-products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) marine transportation services for petroleum products and by-products.

Forward-Looking Statements

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

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
(877) 256-6644

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
December 31,
2017 2016
Assets
Cash$27 $15
Trade and accrued accounts receivable, less allowance for doubtful accounts of $314 and $372 respectively107,242 80,508
Product exchange receivables29 207
Inventories97,252 82,631
Due from affiliates23,668 11,567
Other current assets4,866 3,296
Assets held for sale9,579 15,779
Total current assets242,663 194,003
Property, plant and equipment, at cost1,253,065 1,224,277
Accumulated depreciation(421,137) (378,593)
Property, plant and equipment, net831,928 845,684
Goodwill17,296 17,296
Investment in unconsolidated entities128,810 129,506
Notes receivable - Martin Energy Trading LLC 15,000
Intangibles and other assets, net32,801 44,874
$1,253,498 $1,246,363
Liabilities and Partners’ Capital
Trade and other accounts payable$92,567 $70,249
Product exchange payables11,751 7,360
Due to affiliates3,168 8,474
Income taxes payable510 870
Fair value of derivatives72 3,904
Other accrued liabilities26,340 26,717
Total current liabilities134,408 117,574
Long-term debt, net812,632 808,107
Other long-term obligations8,217 8,676
Total liabilities955,257 934,357
Commitments and contingencies
Partners’ capital298,241 312,006
Total partners’ capital298,241 312,006
$1,253,498 $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 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2018.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
Year Ended December 31,
2017 2016 2015
Revenues:
Terminalling and storage *$99,705 $123,132 $132,945
Marine transportation *48,579 58,290 78,753
Natural gas storage services *58,817 61,133 64,858
Sulfur services10,952 10,800 12,270
Product sales: *
Natural gas services473,865 330,200 458,302
Sulfur services123,732 130,258 157,891
Terminalling and storage130,466 113,578 131,825
728,063 574,036 748,018
Total revenues946,116 827,391 1,036,844
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas services *421,444 289,516 413,795
Sulfur services *82,338 87,963 114,766
Terminalling and storage *109,798 94,175 112,836
613,580 471,654 641,397
Expenses:
Operating expenses *146,874 158,864 183,466
Selling, general and administrative *38,950 34,385 36,788
Impairment of long-lived assets2,225 26,953 10,629
Impairment of goodwill 4,145
Depreciation and amortization85,195 92,132 92,250
Total costs and expenses886,824 788,133 964,530
Other operating income (loss), net523 33,400 (2,161)
Operating income59,815 72,658 70,153
Other income (expense):
Equity in earnings of unconsolidated entities4,314 4,714 8,986
Interest expense, net(47,743) (46,100) (43,292)
Gain on retirement of senior unsecured notes 1,242
Other, net1,101 1,106 1,124
Total other income (expense)(42,328) (40,280) (31,940)
Net income before taxes17,487 32,378 38,213
Income tax expense(352) (726) (1,048)
Income from continuing operations17,135 31,652 37,165
Income from discontinued operations, net of income taxes 1,215
Net income17,135 31,652 38,380
Less general partner's interest in net income(343) (8,419) (16,338)
Less income allocable to unvested restricted units(42) (90) (140)
Limited partner's interest in net income$16,750 $23,143 $21,902

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2018.

*Related Party Transactions Shown Below

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
*Related Party Transactions Included Above
Year Ended December 31,
2017 2016 2015
Revenues:
Terminalling and storage$82,205 $82,437 $78,233
Marine transportation16,801 21,767 27,724
Natural gas services122 699 878
Product sales3,578 3,034 5,671
Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Natural gas services18,946 22,886 25,797
Sulfur services15,564 15,339 16,579
Terminalling and storage17,612 13,838 17,718
Expenses:
Operating expenses64,344 70,841 77,871
Selling, general and administrative29,416 25,890 24,968

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2018.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
Year Ended December 31,
2017 2016 2015
Allocation of net income attributable to:
Limited partner interest:
Continuing operations$16,750 $23,143 $21,208
Discontinued operations 694
$16,750 $23,143 $21,902
General partner interest:
Continuing operations$343 $8,419 $15,821
Discontinued operations 517
$343 $8,419 $16,338
Net income per unit attributable to limited partners:
Basic:
Continuing operations$0.44 $0.65 $0.60
Discontinued operations 0.02
$0.44 $0.65 $0.62
Weighted average limited partner units - basic38,102 35,347 35,309
Diluted:
Continuing operations$0.44 $0.65 $0.60
Discontinued operations 0.02
$0.44 $0.65 $0.62
Weighted average limited partner units - diluted38,165 35,375 35,372

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2018.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Dollars in thousands)
Partners’ Capital
Common General
Partner
Units Amount Amount Total
Balances – December 31, 201435,365,912 $470,943 $14,728 $485,671
Net income 22,042 16,338 38,380
Issuance of common units, net (590) (590)
Issuance of restricted units91,950
Forfeiture of restricted units(1,250)
General partner contribution 55 55
Cash distributions (115,229) (18,087) (133,316)
Reimbursement of excess purchase price over carrying value of acquired assets 2,250 2,250
Unit-based compensation 1,429 1,429
Balances – December 31, 201535,456,612 380,845 13,034 393,879
Net income 23,233 8,419 31,652
Issuance of common units, net (29) (29)
Issuance of restricted units13,800
Forfeiture of restricted units(2,250)
Cash distributions (104,137) (14,041) (118,178)
Reimbursement of excess purchase price over carrying value of acquired assets 4,125 4,125
Unit-based compensation 904 904
Purchase of treasury units(16,100) (347) (347)
Balances – December 31, 201635,452,062 304,594 7,412 312,006
Net income 16,792 343 17,135
Issuance of common units, net2,990,000 51,056 51,056
Issuance of restricted units12,000
Forfeiture of restricted units(9,250)
General partner contribution 1,098 1,098
Cash distributions (75,399) (1,539) (76,938)
Reimbursement of excess purchase price over carrying value of acquired assets 1,125 1,125
Excess purchase price over carrying value of acquired assets (7,887) (7,887)
Unit-based compensation 650 650
Purchase of treasury units(200) (4) (4)
Balances – December 31, 201738,444,612 $290,927 $7,314 $298,241

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2017.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Year Ended December 31,
2017 2016 2015
Cash flows from operating activities:
Net income$17,135 $31,652 $38,380
Less: Income from discontinued operations (1,215)
Net income from continuing operations17,135 31,652 37,165
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization85,195 92,132 92,250
Amortization of deferred debt issue costs2,897 3,684 4,859
Amortization of premium on notes payable(306) (306) (324)
(Gain) loss on disposition or sale of property, plant, and equipment(523) (33,400) 2,149
Gain on retirement of senior unsecured notes (1,242)
Impairment of long lived assets2,225 26,953 10,629
Impairment of goodwill 4,145
Equity in earnings unconsolidated entities(4,314) (4,714) (8,986)
Derivative (income) loss1,304 4,133 (3,107)
Net cash (paid) received for commodity derivatives(5,136) (550) 143
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 compensation650 904 1,429
Return on investment5,400 7,500 11,200
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables(26,739) (6,153) 59,479
Product exchange receivables178 843 1,996
Inventories(14,656) (6,761) 12,799
Due from affiliates(12,096) (1,441) 4,386
Other current assets(1,699) 2,478 891
Trade and other accounts payable20,037 3,254 (44,153)
Product exchange payables4,391 (5,372) 2,336
Due to affiliates(5,306) 2,736 866
Income taxes payable(360) (115) (189)
Other accrued liabilities(3,187) 686 (2,802)
Change in other non-current assets and liabilities2,416 (12,230) (345)
Net cash provided by continuing operating activities67,506 110,848 183,924
Net cash used in discontinued operating activities (1,352)
Net cash provided by operating activities67,506 110,848 182,572
Cash flows from investing activities:
Payments for property, plant, and equipment(39,749) (40,455) (65,791)
Acquisitions, net of cash acquired(19,533) (2,150)
Payments for plant turnaround costs(1,583) (2,061) (1,908)
Proceeds from sale of property, plant, and equipment8,377 108,505 2,644
Proceeds from repayment of Note receivable - affiliate 15,000
Contributions to unconsolidated entities for operations(390)
Net cash provided by (used in) continuing investing activities(37,878) 63,839 (65,055)
Net cash provided by discontinued investing activities 41,250
Net cash provided by (used in) investing activities(37,878) 63,839 (23,805)
Cash flows from financing activities:
Payments of long-term debt(339,000) (386,700) (308,836)
Proceeds from long-term debt341,000 331,700 282,000
Net proceeds from issuance of common units51,056 (29) (590)
General partner contributions1,098 55
Excess purchase price over carrying value of acquired assets(7,887)
Reimbursement of excess purchase price over carrying value of acquired assets1,125 4,125 2,250
Purchase of treasury units(4) (347)
Payments of debt issuance costs(66) (5,274) (341)
Cash distributions paid(76,938) (118,178) (133,316)
Net cash used in financing activities(29,616) (174,703) (158,778)
Net increase (decrease) in cash12 (16) (11)
Cash at beginning of year15 31 42
Cash at end of year$27 $15 $31

These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on February 16, 2017.


MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)

Terminalling and Storage Segment

Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016

Year Ended
December 31,
2017 2016 Variance Percent
Change
(In thousands)
Revenues:
Services$105,703 $128,783 $(23,080) (18)%
Products130,466 113,580 16,886 15%
Total revenues236,169 242,363 (6,194) (3)%
Cost of products sold112,135 96,344 15,791 16%
Operating expenses69,888 71,831 (1,943) (3)%
Selling, general and administrative expenses5,832 4,677 1,155 25%
Impairment of long-lived assets600 15,252 (14,652) (96)%
Depreciation and amortization45,160 45,484 (324) (1)%
2,554 8,775 (6,221) (71)%
Other operating income, net751 35,368 (34,617) (98)%
Operating income$3,305 $44,143 $(40,838) (93)%
Lubricant sales volumes (gallons)21,897 17,995 3,902 22%
Shore-based throughput volumes (guaranteed minimum) (gallons)144,998 200,000 (55,002) (28)%
Smackover refinery throughput volumes (guaranteed minimum BBL per day)6,500 6,500 %
Corpus Christi crude terminal throughput volumes (barrels per day) 66,167 (66,167) (100)%

Comparative Results of Operations for the Twelve Months Ended December 31, 2016 and 2015

Year Ended
December 31,
2016 2015 Variance Percent
Change
(In thousands)
Revenues:
Services$128,783 $138,614 $(9,831) (7)%
Products113,580 131,826 (18,246) (14)%
Total revenues242,363 270,440 (28,077) (10)%
Cost of products sold96,344 115,460 (19,116) (17)%
Operating expenses71,831 83,917 (12,086) (14)%
Selling, general and administrative expenses4,677 3,804 873 23%
Impairment of long-lived assets15,252 9,305 5,947 64%
Depreciation and amortization45,484 38,731 6,753 17%
8,775 19,223 (10,448) (54)%
Other operating income (loss), net35,368 (473) 35,841 (7,577)%
Operating income$44,143 $18,750 $25,393 135%
Lubricant sales volumes (gallons)17,995 23,045 (5,050) (22)%
Shore-based throughput volumes (guaranteed minimum) (gallons)200,000 275,000 (75,000) (27)%
Smackover refinery throughput volumes (guaranteed minimum BBL per day)6,500 6,500 %
Corpus Christi crude terminal (barrels per day)66,167 154,381 (88,214) (57)%

Natural Gas Services Segment

Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016

Year Ended
December 31,
2017 2016 Variance Percent
Change
(In thousands)
Revenues:
Services$58,817 $61,133 $(2,316) (4)%
Products474,091 330,200 143,891 44%
Total revenues532,908 391,333 141,575 36%
Cost of products sold425,073 292,573 132,500 45%
Operating expenses22,347 23,152 (805) (3)%
Selling, general and administrative expenses11,292 9,035 2,257 25%
Depreciation and amortization24,916 28,081 (3,165) (11)%
49,280 38,492 10,788 28%
Other operating loss, net(89) (110) 21 (19)%
Operating income$49,191 $38,382 $10,809 28%
Distributions from unconsolidated entities$5,400 $7,500 $(2,100) (28)%
NGLs Volumes (barrels)10,487 9,532 955 10%

Comparative Results of Operations for the Twelve Months Ended December 31, 2016 and 2015

Year Ended
December 31,
2016 2015 Variance Percent
Change
(In thousands)
Revenues:
Services$61,133 $64,858 $(3,725) (6)%
Products330,200 458,302 (128,102) (28)%
Total revenues391,333 523,160 (131,827) (25)%
Cost of products sold292,573 416,404 (123,831) (30)%
Operating expenses23,152 23,979 (827) (3)%
Selling, general and administrative expenses9,035 9,791 (756) (8)%
Depreciation and amortization28,081 34,072 (5,991) (18)%
38,492 38,914 (422) (1)%
Other operating loss, net(110) (303) 193 (64)%
Operating income$38,382 $38,611 $(229) (1)%
Distributions from unconsolidated entities$7,500 $11,200 $(3,700) (33)%
NGLs Volumes (barrels)9,532 14,340 (4,808) (34)%

MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)

Sulfur Services Segment

Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016

Year Ended
December 31,
2017 2016 Variance Percent
Change
(In thousands)
Revenues:
Services$10,952 $10,800 $152 1%
Products123,732 130,258 (6,526) (5)%
Total revenues134,684 141,058 (6,374) (5)%
Cost of products sold82,760 88,325 (5,565) (6)%
Operating expenses13,783 13,771 12 %
Selling, general and administrative expenses4,136 3,861 275 7%
Depreciation and amortization8,117 7,995 122 2%
25,888 27,106 (1,218) (4)%
Other operating loss, net(26) (291) 265 (91)%
Operating income$25,862 $26,815 $(953) (4)%
Sulfur (long tons)807.0 797.0 10.0 1%
Fertilizer (long tons)276.0 262.0 14.0 5%
Sulfur services volumes (long tons)1,083.0 1,059.0 24.0 2%

Comparative Results of Operations for the Twelve Months Ended December 31, 2016 and 2015

Year Ended
December 31,
2016 2015 Variance Percent
Change
(In thousands)
Revenues:
Services$10,800 $12,270 $(1,470) (12)%
Products130,258 157,891 (27,633) (18)%
Total revenues141,058 170,161 (29,103) (17)%
Cost of products sold88,325 115,133 (26,808) (23)%
Operating expenses13,771 15,279 (1,508) (10)%
Selling, general and administrative expenses3,861 3,805 56 1%
Depreciation and amortization7,995 8,455 (460) (5)%
27,106 27,489 (383) (1)%
Other operating loss, net(291) (376) 85 (23)%
Operating income$26,815 $27,113 $(298) (1)%
Sulfur (long tons)797.0 856.0 (59.0) (7)%
Fertilizer (long tons)262.0 274.0 (12.0) (4)%
Sulfur services volumes (long tons)1,059.0 1,130.0 (71.0) (6)%

MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
(Dollars and volumes in thousands, except BBL per day)

Marine Transportation Segment

Comparative Results of Operations for the Twelve Months Ended December 31, 2017 and 2016

Year Ended
December 31,
2017 2016 Variance Percent
Change
(In thousands)
Revenues$51,915 $61,233 $(9,318) (15)%
Operating expenses44,028 53,118 (9,090) (17)%
Selling, general and administrative expenses358 18 340 1,889%
Impairment of long-lived assets1,625 11,701 (10,076) (86)%
Impairment of goodwill 4,145 (4,145) (100)%
Depreciation and amortization7,002 10,572 (3,570) (34)%
(1,098) (18,321) 17,223 (94)%
Other operating loss, net(113) (1,567) 1,454 (93)%
Operating loss$(1,211) $(19,888) $18,677 (94)%

Comparative Results of Operations for the Twelve Months Ended December 31, 2016 and 2015

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


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 quarter and years ended December 31, 2017 and 2016, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow

Three Months Ended Twelve Months Ended
December 31, December 31,
2017 2016 2017 2016
Net income18,849 17,882 17,135 31,652
Adjustments:
Interest expense13,066 12,054 47,743 46,100
Income tax expense51 304 352 726
Depreciation and amortization19,247 25,866 85,195 92,132
EBITDA51,213 56,106 150,425 170,610
Adjustments:
Equity in earnings of unconsolidated entities(1,767) (1,112) (4,314) (4,714)
Gain on sale of property, plant and equipment(850) (34,982) (523) (33,400)
Impairment of long-lived assets2,225 26,953 2,225 26,953
Impairment of goodwill 4,145
Unrealized mark-to-market on commodity derivatives205 3,784 (3,832) 4,579
Hurricane damage repair accrual(3,068) 657
Asset retirement obligation revision 5,547
Distributions from unconsolidated entities1,200 1,400 5,400 7,500
Unit-based compensation132 192 650 904
Adjusted EBITDA49,290 52,341 156,235 176,577
Adjustments:
Interest expense(13,066) (12,054) (47,743) (46,100)
Income tax expense(51) (304) (352) (726)
Amortization of deferred debt issuance costs727 719 2,897 3,684
Amortization of debt premium(76) (76) (306) (306)
Non-cash mark-to-market on interest rate derivatives (206)
Payments for plant turnaround costs (447) (1,583) (2,061)
Maintenance capital expenditures(5,586) (4,345) (18,080) (17,163)
Distributable Cash Flow$31,238 $35,834 $91,068 $113,699


Source:Martin Midstream Partners L.P.

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