Home / Top News / Martin Midstream Partners Reports Third Quarter 2020 Financial Results and Declares Quarterly Cash Distribution

Martin Midstream Partners Reports Third Quarter 2020 Financial Results and Declares Quarterly Cash Distribution

  • Financial performance exceeds expectations in challenging environment
  • Reported net loss of $10.8 million and $4.2 million for the three and nine months ended September 30, 2020, respectively, which were negatively impacted by an $8.5 million charge related to the exchange of our senior notes
  • Reported adjusted EBITDA of $22.5 million and $77.5 million for the three and nine months ended September 30, 2020, respectively
  • Generated distributable cash flow of $8.1 million and $38.9 million for the three and nine months ended September 30, 2020, respectively
  • Successfully completed exchange offer and cash tender offer of senior notes
  • Affirms guidance range for adjusted EBITDA and capital expenditures

KILGORE, Texas, Oct. 21, 2020 (GLOBE NEWSWIRE) — Martin Midstream Partners L.P. (Nasdaq:MMLP) (the “Partnership”) today announced its financial results for the third quarter of 2020.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership said, “The Partnership delivered strong results in the third quarter even with the continuing impact on demand related to COVID-19 coupled with hurricanes in the Gulf Coast region effecting refinery operations.  The diversity of our business model and customer base has proven resilient in these difficult and changing macro-economic times.  Although the third quarter is typically our weakest, due to the cyclical nature of our businesses, we had year over year EBITDA growth in three of our four business segments.  Our team continues to make every effort to provide our employees and customers with a safe and healthy operating environment.”

THIRD QUARTER 2020 OPERATING RESULTS BY BUSINESS SEGMENT

TERMINALLING AND STORAGE (“T&S”)

T&S Operating Income for the three months ended September 30, 2020 and 2019 was $7.0 million and $5.6 million, respectively.

Adjusted segment EBITDA for T&S was $14.2 million and $13.3 million for the three months ended September 30, 2020 and 2019, respectively, reflecting improved margins on packaged lubricants products from lower production cost and operating efficiencies, reduced operating expenses from lower repairs and maintenance and labor cost at our Specialty Terminals, offset by reduced grease volumes related to lower demand in the oil field and construction industries due to COVID-19, expired capital recovery fees at the Smackover Refinery and decreased fees related to a crude pipeline gathering rate adjustment.

TRANSPORTATION

Transportation Operating Income for the three months ended September 30, 2020 and 2019 was $1.1 million and $4.4 million, respectively.

Adjusted segment EBITDA for Transportation was $5.5 million and $8.2 million for the three months ended September 30, 2020 and 2019, respectively, reflecting lower marine utilization and reduced day rates along with lower land transportation load count related to demand destruction and lower refinery utilization as a result of COVID-19 and gulf coast hurricanes experienced during the three months ended September 30, 2020. 

SULFUR SERVICES

Sulfur Services Operating Income for the three months ended September 30, 2020 and 2019 was $5.6 million and $0.3 million, respectively.

Adjusted segment EBITDA for Sulfur Services was $4.2 million and $3.1 million for the three months ended September 30, 2020 and 2019, respectively, reflecting resumed operations of the Neches Priller offset by reduced fertilizer volumes from extended fertilizer plant turnaround time and reduced fertilizer demand as a result of COVID-19.

NATURAL GAS LIQUIDS (“NGL”)

NGL Operating Income for the three months ended September 30, 2020 and 2019 was $1.8 million and $19.7 million, respectively.

Adjusted segment EBITDA from continuing operations for NGL was $2.8 million and $1.6 million for the three months ended September 30, 2020 and 2019, respectively, primarily reflecting an increase in volumes in 2020 from increased seasonal demand within the butane optimization business.

UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”)

USGA expenses included in operating income were $4.5 million for both the three months ended September 30, 2020 and 2019.

USGA expenses included in adjusted EBITDA were $4.2 million for both the three months ended September 30, 2020 and 2019.

2020 FINANCIAL GUIDANCE UPDATE

The majority of our refinery services are focused on the Gulf Coast Region whose states have reopened their economies. However, the impact on refinery utilization related to the demand reduction from COVID-19 and recent gulf coast hurricanes experienced during the quarter remains unclear.  The Partnership believes that our performance through the first nine months coupled with expectations for the coming quarter will allow our annualized Adjusted EBITDA, Expansion Capital Expenditures and Maintenance Capital Expenditures to fall within the previously provided range below:

MMLP 2020 Guidance   $ millions
Adjusted EBITDA   $95 – 107
Expansion Capital Expenditures   $10 – 13
Maintenance Capital Expenditures   $14 – 16

The Partnership has not provided comparable GAAP financial information on a forward-looking basis because it would require the Partnership to create estimated ranges on a GAAP basis, which would entail unreasonable effort as the adjustments required to reconcile forward-looking non-GAAP measures cannot be predicted with a reasonable degree of certainty but may include, among others, costs related to debt amendments and unusual charges, expenses and gains.  Some or all of those adjustments could be significant.

LIQUIDITY

At September 30, 2020, the Partnership had $205 million drawn on its $300 million revolving credit facility, a $24 million increase from June 30, 2020.  The majority of the increase was attributable to the NGL inventory working capital sub-limit which increased $20 million quarter over quarter.   As previously announced, on August 12, 2020, the Partnership successfully completed an exchange offer and cash tender offer (together the “Offers”) for its senior unsecured notes due February 2021.  As a result of the Offers, the Partnership has the following outstanding senior notes: senior unsecured notes due 2021 of $28.8 million, senior secured notes of $53.8 million due 2024 and senior secured notes of $291.9 million due 2025, for a total of senior notes outstanding of $374.5 million.  Accordingly, the Partnership’s leverage ratio, as calculated under the revolving credit facility, was 4.9 times on September 30, 2020 compared to 4.8 times on June 30, 2020.  The Partnership is in compliance with all debt covenants as of September 30, 2020.

QUARTERLY CASH DISTRIBUTION

The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended September 30, 2020.  The distribution is payable on November 13, 2020 to common unitholders of record as of the close of business on November 6, 2020.  The ex-dividend date for the cash distribution is November 5, 2020.

COVID-19 RESPONSE

The Partnership initiated protocols in response to the COVID-19 pandemic which include work from home initiatives to protect the health and safety of our employees as well as the communities where we operate, travel restrictions, and training personnel regarding preventative measures when accessing docks, vessels and operating locations.  At this time all facilities are operational and monitored closely.

RESULTS OF OPERATIONS

The Partnership had a net loss from continuing operations for the three months ended September 30, 2020 of $10.8 million, a loss of $0.27 per limited partner unit.  The Partnership had net income from continuing operations for the three months ended September 30, 2019 of $13.3 million, or $0.33 per limited partner unit.  Adjusted EBITDA from continuing operations for the three months ended September 30, 2020 was $22.5 million compared to the three months ended September 30, 2019 of $22.0 million.  Distributable cash flow from continuing operations for the three months ended September 30, 2020 was $8.1 million compared to the three months ended September 30, 2019 of $8.3 million. 

The Partnership had no net income, adjusted EBITDA or distributable cash flow from discontinued operations for the three months ended September 30, 2020 or 2019.   The Partnership had no adjusted EBITDA from discontinued operations for the three months ended September 30, 2020 or 2019. 

The Partnership had a net loss from continuing operations for the nine months ended September 30, 2020 of $4.2 million, a loss of $0.11 per limited partner unit.  The Partnership had a net loss from continuing operations for the nine months ended September 30, 2019 of $2.2 million, a loss of $0.05 per limited partner unit.  Adjusted EBITDA from continuing operations for the nine months ended September 30, 2020 was $77.5 million compared to the nine months ended September 30, 2019 of $72.8 million.  Distributable cash flow from continuing operations for the nine months ended September 30, 2020 was $38.9 million compared to the nine months ended September 30, 2019 of $21.0 million. 

The Partnership had no net income from discontinued operations for the nine months ended September 30, 2020 compared to a loss of $179.5 million, or $4.55 per limited partner unit for the nine months ended September 30, 2019.   The Partnership had no adjusted EBITDA from discontinued operations for the nine months ended September 30, 2020 compared to $10.7 million for the nine months ended September 30, 2019.  The Partnership had no distributable cash flow from discontinued operations for the nine months ended September 30, 2020 compared to $9.8 million for the nine months ended September 30, 2019. 

Revenues for the three months ended September 30, 2020 were $152.5 million compared to the three months ended September 30, 2019 of $177.9 million.  Revenues for the nine months ended September 30, 2020 were $492.1 million compared to the nine months ended September 30, 2019 of $605.3 million.

Distributable cash flow from continuing operations, distributable cash flow from discontinued operations, EBITDA, adjusted EBITDA from continuing operations, and adjusted EBITDA from discontinued operations 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 from continuing operations, 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.

An attachment accompanying this announcement and included in the Current Report on Form 8-K to which this announcement is included, contains a comparison of the Partnership’s Adjusted EBITDA for the third quarter 2020 to the Partnership’s Adjusted EBITDA for the third quarter 2019 and is available at http://ml.globenewswire.com/Resource/Download/02a3d060-d2b7-4fa2-932c-da0c46109eff.

Investors’ Conference Call

An investors conference call to review the third quarter results will be held on Thursday, October 22, 2020 at 8:00 a.m. Central Time. The live conference call will be available by calling (877) 878-2695. For a limited time, an audio replay of the conference call will be available by calling (855) 859-2056. The conference ID is 9123705. An archive of the replay will be on Martin Midstream Partners’ website at www.MMLP.com.

About Martin Midstream Partners

Martin Midstream Partners L.P. 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 lines include: (1) terminalling, processing, storage, and packaging services for petroleum products and by-products; (2) land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) natural gas liquids marketing, distribution and transportation services.

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 or operational estimates rely on a number of assumptions concerning future events and are subject to a number of uncertainties, including (i) the current and potential impacts of the COVID-19 pandemic generally, on an industry-specific basis, and on the Partnership’s specific operations and business, (ii) the effects of the continued volatility of commodity prices and the related macroeconomic and political environment, and (iii) other factors, many of which are outside its 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 except where required to do so by law.

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, Adjusted EBITDA from Continuing Operations, and Adjusted EBITDA from Discontinued Operations.  Certain items excluded from EBITDA, adjusted EBITDA from continuing operations, and adjusted EBITDA from discontinued operations 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, adjusted EBITDA from continuing operations, and adjusted EBITDA from discontinued operations 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 and Distributable Cash Flow from Discontinued Operations.  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 from continuing operations, adjusted EBITDA from discontinued operations, distributable cash flow, and distributable cash flow from discontinued operations, 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.MMLP.com or by contacting:

Sharon Taylor – Head of Investor Relations
(877) 256-6644

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)

  September 30,
2020
  December 31,
2019
  (Unaudited)   (Audited)
Assets      
Cash $ 1,862     $ 2,856  
Accounts and other receivables, less allowance for doubtful accounts of $537 and $532, respectively 55,461     87,254  
Product exchange receivables 212      
Inventories 77,724     62,540  
Due from affiliates 18,932     17,829  
Other current assets 9,587     5,833  
Assets held for sale     5,052  
Total current assets 163,778     181,364  
       
Property, plant and equipment, at cost 902,965     884,728  
Accumulated depreciation (506,645 )   (467,531 )
Property, plant and equipment, net 396,320     417,197  
       
Goodwill 17,705     17,705  
Right-of-use assets 23,201     23,901  
Deferred income taxes, net 22,220     23,422  
Other assets, net 3,116     3,567  
Total assets $ 626,340     $ 667,156  
       
Liabilities and Partners’ Capital (Deficit)      
Current installments of long-term debt and finance lease obligations $ 31,979     $ 6,758  
Trade and other accounts payable 45,326     64,802  
Product exchange payables 3,044     4,322  
Due to affiliates 467     1,470  
Income taxes payable 335     472  
Fair value of derivatives 391     667  
Other accrued liabilities 23,153     28,789  
Total current liabilities 104,695     107,280  
       
Long-term debt, net 541,002     569,788  
Finance lease obligations 348     717  
Operating lease liabilities 16,005     16,656  
Other long-term obligations 8,753     8,911  
Total liabilities 670,803     703,352  
       
Commitments and contingencies      
Partners’ capital (deficit) (44,463 )   (36,196 )
Total partners’ capital (deficit) (44,463 )   (36,196 )
Total liabilities and partners’ capital (deficit) $ 626,340     $ 667,156  

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,
  2020   2019   2020   2019
Revenues:              
Terminalling and storage  * $ 20,706     $ 21,193     $ 61,088     $ 65,674  
Transportation  * 31,938     40,211     102,364     119,327  
Sulfur services 2,915     2,859     8,744     8,576  
Product sales: *              
Natural gas liquids 52,350     60,871     164,860     234,743  
Sulfur services 18,965     20,213     74,879     81,945  
Terminalling and storage 25,659     32,553     80,119     94,991  
  96,974     113,637     319,858     411,679  
Total revenues 152,533     177,900     492,054     605,256  
               
Costs and expenses:              
Cost of products sold: (excluding depreciation and amortization)              
Natural gas liquids * 44,908     51,736     139,036     211,472  
Sulfur services * 13,313     14,442     46,167     56,262  
Terminalling and storage * 19,124     26,009     64,242     78,998  
  77,345     92,187     249,445     346,732  
Expenses:              
Operating expenses  * 43,105     51,071     138,589     156,499  
Selling, general and administrative  * 10,339     10,474     30,659     30,900  
Depreciation and amortization 15,276     15,009     45,858     44,997  
Total costs and expenses 146,065     168,741     464,551     579,128  
               
Other operating income (loss), net 23     16,302     2,548     13,949  
Gain on involuntary conversion of property, plant and equipment 4,522         4,522      
Operating income 11,013     25,461     34,573     40,077  
               
Other income (expense):              
Interest expense, net (12,943 )   (11,973 )   (32,245 )   (40,630 )
Gain on retirement of senior unsecured notes         3,484      
Loss on exchange of senior unsecured notes (8,516 )       (8,516 )    
Other, net     (1 )   7     3  
Total other expense (21,459 )   (11,974 )   (37,270 )   (40,627 )
               
Net income (loss) before taxes (10,446 )   13,487     (2,697 )   (550 )
Income tax expense (373 )   (237 )   (1,510 )   (1,572 )
Income (loss) from continuing operations (10,819 )   13,250     (4,207 )   (2,122 )
Income from discontinued operations, net of income taxes             (179,466 )
Net income (loss) (10,819 )   13,250     (4,207 )   (181,588 )
Less general partner’s interest in net (income) loss 216     (265 )   84     3,632  
Less (income) loss allocable to unvested restricted units 53     (72 )   8     (5 )
Limited partners’ interest in net income (loss) $ (10,550 )   $ 12,913     $ (4,115 )   $ (177,961 )

*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,
  2020   2019   2020   2019
Revenues:*              
Terminalling and storage $ 15,902   $ 17,538   $ 47,718   $ 53,987
Transportation 5,514   6,442   16,801   17,941
Product Sales 69   122   199   829
Costs and expenses:*              
Cost of products sold: (excluding depreciation and amortization)              
Sulfur services 2,512   2,620   7,833   8,078
Terminalling and storage 4,303   6,300   14,329   19,412
Expenses:              
Operating expenses 18,915   21,745   60,126   66,409
Selling, general and administrative 8,356   8,358   24,723   24,148

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)

  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2020   2019   2020   2019
Allocation of net income (loss) attributable to:              
Limited partner interest:              
Continuing operations $ (10,550 )   $ 12,913     $ (4,115 )   $ (2,080 )
Discontinued operations             (175,881 )
  $ (10,550 )   $ 12,913     $ (4,115 )   $ (177,961 )
General partner interest:              
Continuing operations $ (216 )   $ 265     $ (84 )   $ (42 )
Discontinued operations             (3,590 )
  $ (216 )   $ 265     $ (84 )   $ (3,632 )
               
Net income (loss) per unit attributable to limited partners:              
Basic:              
Continuing operations $ (0.27 )   $ 0.33     $ (0.11 )   $ (0.05 )
Discontinued operations             (4.55 )
  $ (0.27 )   $ 0.33     $ (0.11 )   $ (4.60 )
Weighted average limited partner units – basic 38,662     38,653     38,655     38,661  
Diluted:              
Continuing operations $ (0.27 )   $ 0.33     $ (0.11 )   $ (0.05 )
Discontinued operations             (4.55 )
  $ (0.27 )   $ 0.33     $ (0.11 )   $ (4.60 )
Weighted average limited partner units – diluted 38,662     38,653     38,655     38,661  

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)
(Dollars in thousands)

      Partners’ Capital (Deficit)    
      Common Limited
         
  Parent Net
 Investment  
  Units
  Amount
    General
Partner
Amount
      Total  
Balances – January 1, 2019 $ 23,720     39,032,237     $ 258,085     $ 6,627     $ 288,432    
Net loss         (177,956 )   (3,632 )   (181,588 )  
Issuance of common units, net         (289 )       (289 )  
Issuance of restricted units     16,944                
Forfeiture of restricted units     (154,288 )              
Cash distributions         (38,480 )   (785 )   (39,265 )  
Unit-based compensation         1,064         1,064    
Purchase of treasury units     (31,504 )   (392 )       (392 )  
Excess purchase price over carrying value of acquired assets         (102,393 )       (102,393 )  
Deferred taxes on acquired assets and liabilities         24,781         24,781    
Contribution to parent (23,720 )               (23,720 )  
Balances – September 30, 2019 $     38,863,389     $ (35,580 )   $ 2,210     $ (33,370 )  
                         
Balances – January 1, 2020 $     38,863,389     $ (38,342 )   $ 2,146     $ (36,196 )  
Net income         (4,123 )   (84 )   (4,207 )  
Issuance of restricted units     81,000                
Forfeiture of restricted units     (84,134 )              
Cash distributions         (5,019 )   (102 )   (5,121 )  
Unit-based compensation         1,070         1,070    
Purchase of treasury units     (7,748 )   (9 )       (9 )  
Balances – September 30, 2020 $     38,852,507     $ (46,423 )   $ 1,960     $ (44,463 )  

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

  Nine Months Ended
  September 30,
  2020   2019
Cash flows from operating activities:      
Net loss $ (4,207 )   $ (181,588 )
Less:  Loss from discontinued operations, net of income taxes     179,466  
Net loss from continuing operations (4,207 )   (2,122 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization 45,858     44,997  
Amortization and write-off of deferred debt issuance costs 2,674     3,558  
Amortization of premium on notes payable (191 )   (230 )
Deferred income tax expense 1,202     1,100  
(Gain) loss on sale of property, plant and equipment, net 153     (13,949 )
Gain on involuntary conversion of property, plant and equipment (4,522 )    
Non-cash impact related to exchange of senior unsecured notes (749 )    
Gain on retirement of senior unsecured notes (3,484 )    
Derivative (income) loss (815 )   (280 )
Net cash paid for commodity derivatives 539     (249 )
Unit-based compensation 1,070     1,064  
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:      
Accounts and other receivables 30,012     25,748  
Product exchange receivables (212 )   164  
Inventories (15,184 )   (11,707 )
Due from affiliates (1,103 )   1,150  
Other current assets (6,130 )   (2,654 )
Trade and other accounts payable (17,117 )   (10,577 )
Product exchange payables (1,278 )   (7,257 )
Due to affiliates (1,003 )   (1,468 )
Income taxes payable (137 )   65  
Other accrued liabilities (5,534 )   (8,904 )
Change in other non-current assets and liabilities (692 )   (600 )
Net cash provided by continuing operating activities 19,150     17,849  
Net cash provided by discontinued operating activities     7,770  
Net cash provided by operating activities 19,150     25,619  
       
Cash flows from investing activities:      
Payments for property, plant and equipment (23,705 )   (22,797 )
Acquisitions     (23,720 )
Payments for plant turnaround costs (637 )   (5,117 )
Proceeds from involuntary conversion of property, plant and equipment 7,203      
Proceeds from sale of property, plant and equipment 4,392     18,303  
Net cash used in continuing investing activities (12,747 )   (33,331 )
Net cash provided by discontinued investing activities     209,155  
Net cash provided by (used in) investing activities (12,747 )   175,824  
Cash flows from financing activities:      
Payments of long-term debt and finance lease obligations (257,658 )   (639,308 )
Proceeds from long-term debt 259,019     586,000  
Proceeds from issuance of common units, net of issuance related costs     (289 )
General partner contribution      
Purchase of treasury units (9 )   (392 )
Payment of debt issuance costs (3,628 )   (4,294 )
Excess purchase price over carrying value of acquired assets     (102,393 )
Cash distributions paid (5,121 )   (39,265 )
Net cash used in financing activities (7,397 )   (199,941 )
Net increase (decrease) in cash (994 )   1,502  
Cash at beginning of period 2,856     300  
Cash at end of period $ 1,862     $ 1,802  
Non-cash additions to property, plant and equipment $ 1,432     $ 1,045  

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, 2020 and 2019

  Three Months Ended
September 30,
  Variance
    Percent
Change

  2020   2019                  
           
  (In thousands, except BBL per day)
         
Revenues:                                
Services $ 22,512     $ 22,806     $ (294 )     (1 ) %
Products 25,676     32,570     (6,894 )     (21 ) %
Total revenues 48,188     55,376     (7,188 )     (13 ) %
                   
Cost of products sold 20,381     27,439     (7,058 )     (26 ) %
Operating expenses 12,064     12,947     (883 )     (7 ) %
Selling, general and administrative expenses 1,537     1,724     (187 )     (11 ) %
Depreciation and amortization 7,294     7,690     (396 )     (5 ) %
  6,912     5,576     1,336       24   %
Other operating income, net 1         1            
Gain on involuntary conversion of property, plant and equipment 62         62            
Operating income $ 6,975     $ 5,576     $ 1,399       25   %
                         
Shore-based throughput volumes (guaranteed minimum) (gallons) 20,000     20,000             %
Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500     6,500             %

   Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019

  Nine Months Ended
September 30,
  Variance   Percent
Change
  2020   2019    
           
  (In thousands, except BBL per day)    
Revenues:              
Services $ 66,115       $ 70,572     $ (4,457 )     (6 ) %
Products 80,183       95,047     (14,864 )     (16 ) %
Total revenues 146,298       165,619     (19,321 )     (12 ) %
               
Cost of products sold 68,066       83,213     (15,147 )     (18 ) %
Operating expenses 37,269       39,557     (2,288 )     (6 ) %
Selling, general and administrative expenses 4,594       4,451     143       3   %
Depreciation and amortization 22,022       23,353     (1,331 )     (6 ) %
  14,347       15,045     (698 )     (5 ) %
Other operating income (loss), net (3,053 )     17     (3,070 )     (18,059 ) %
Gain on involuntary conversion of property, plant and equipment 62           62        
Operating income $ 11,356       $ 15,062     $ (3,706 )     (25 ) %
               
Shore-based throughput volumes (guaranteed minimum) (gallons) 60,000       60,000             %
Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500       6,500             %

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

Transportation Segment

   Comparative Results of Operations for the Three Months Ended September 30, 2020 and 2019

  Three Months Ended
September 30,
  Variance   Percent
Change
  2020   2019    
           
  (In thousands)    
Revenues $ 35,712     $ 44,631     $ (8,919 )     (20 ) %
Operating expenses 28,144     34,281     (6,137 )     (18 ) %
Selling, general and administrative expenses 2,050     2,177     (127 )     (6 ) %
Depreciation and amortization 4,412     3,877     535       14   %
  1,106     4,296     (3,190 )     (74 ) %
Other operating income, net 21     150     (129 )     (86 ) %
Operating income $ 1,127     $ 4,446     $ (3,319 )     (75 ) %

   Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019

  Nine Months Ended
September 30,
  Variance   Percent
Change
  2020   2019    
           
  (In thousands)    
Revenues $ 116,145     $ 137,050     $ (20,905 )     (15 ) %
Operating expenses 91,637     106,058     (14,421 )     (14 ) %
Selling, general and administrative expenses 6,243     6,242     1         %
Depreciation and amortization 13,020     11,225     1,795       16   %
  $ 5,245     $ 13,525     $ (8,280 )     (61 ) %
Other operating loss, net (1,174 )   (2,235 )   1,061       47   %
Operating income $ 4,071     $ 11,290     $ (7,219 )     (64 ) %

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, 2020 and 2019

  Three Months Ended
September 30,
  Variance   Percent
Change
  2020   2019    
           
  (In thousands)    
Revenues:              
Services $ 2,915   $ 2,859   $ 56       2   %
Products 18,965   20,213   (1,248 )     (6 ) %
Total revenues 21,880   23,072   (1,192 )     (5 ) %
               
Cost of products sold 14,141   15,807   (1,666 )     (11 ) %
Operating expenses 2,501   2,883   (382 )     (13 ) %
Selling, general and administrative expenses 1,166   1,260   (94 )     (7 ) %
Depreciation and amortization 2,953   2,831   122       4   %
  1,119   291   828       285   %
Other operating income (loss), net 1     1        
Gain on involuntary conversion of property, plant and equipment 4,460     4,460        
Operating income $ 5,580   $ 291   $ 5,289       1,818   %
                     
Sulfur (long tons) 154   180   (26 )     (14 ) %
Fertilizer (long tons) 44   59   (15 )     (25 ) %
Total sulfur services volumes (long tons) 198   239   (41 )     (17 ) %

   Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019    

  Nine Months Ended
September 30,
  Variance   Percent
Change
  2020   2019    
           
           
  (In thousands)    
Revenues:              
Services $ 8,744     $ 8,576     $ 168       2   %
Products 74,892     81,945     (7,053 )     (9 ) %
Total revenues 83,636     90,521     (6,885 )     (8 ) %
               
Cost of products sold 49,546     61,049     (11,503 )     (19 ) %
Operating expenses 8,553     7,835     718       9   %
Selling, general and administrative expenses 3,535     3,689     (154 )     (4 ) %
Depreciation and amortization 8,978     8,553     425       5   %
  13,024     9,395     3,629       39   %
Other operating income (loss), net 6,777     (1 )   6,778       677,800   %
Gain on involuntary conversion of property, plant and equipment 4,460         4,460        
Operating income $ 24,261     $ 9,394     $ 14,867       158   %
               
Sulfur (long tons) 503     471     32       7   %
Fertilizer (long tons) 209     214     (5 )     (2 ) %
Total sulfur services volumes (long tons) 712     685     27       4   %

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

Natural Gas Liquids Segment

   Comparative Results of Operations for the Three Months Ended September 30, 2020 and 2019

  Three Months Ended
September 30,
  Variance   Percent
Change
  2020   2019    
           
  (In thousands)    
Products Revenues $ 52,350   $ 60,871   $ (8,521 )     (14 ) %
Cost of products sold 47,723   54,273   (6,550 )     (12 ) %
Operating expenses 1,039   1,624   (585 )     (36 ) %
Selling, general and administrative expenses 1,117   852   265       31   %
Depreciation and amortization 617   611   6       1   %
  1,854   3,511   (1,657 )     (47 ) %
Other operating income, net   16,152   (16,152 )     (100 ) %
Operating income $ 1,854   $ 19,663   $ (17,809 )     (91 ) %
               
NGL sales volumes (Bbls) 2,572   1,905   667       35   %

   Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019

  Nine Months Ended
September 30,
  Variance   Percent
Change
  2020   2019    
           
  (In thousands)    
Products Revenues $ 164,865     $ 234,743     $ (69,878 )     (30 ) %
Cost of products sold 148,562     222,974     (74,412 )     (33 ) %
Operating expenses 3,128     5,010     (1,882 )     (38 ) %
Selling, general and administrative expenses 3,194     3,049     145       5   %
Depreciation and amortization 1,838     1,866     (28 )     (2 ) %
  8,143     1,844     6,299       342   %
Other operating income (loss), net (2 )   16,168     (16,170 )     (100 ) %
Operating income (loss) $ 8,141     $ 18,012     $ (9,871 )     (55 ) %
               
NGL sales volumes (Bbls) 6,952     6,269     683       11    %

Unallocated Selling, General and Administrative Expenses

   Comparative Results of Operations for the Three and Nine Months Ended September 30, 2020 and 2019

  Three Months Ended
September 30,
  Variance   Percent
Change
  Nine Months Ended
September 30,
  Variance   Percent
Change
  2020   2019       2020   2019    
                       
  (In thousands)       (In thousands)    
Indirect selling, general and administrative expenses $ 4,523     $ 4,515     $ 8     —  %   $ 13,256      $ 13,681      $ (425 )     (3 ) %

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, 2020 and 2019.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow

  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2020   2019   2020   2019
               
  (in thousands)   (in thousands)
Net income (loss) $ (10,819 )   $ 13,250     $ (4,207 )   $ (181,588 )
Less:  Loss from discontinued operations, net of income taxes             179,466  
Income (loss) from continuing operations (10,819 )   13,250     (4,207 )   (2,122 )
Adjustments:              
Interest expense, net 12,943     11,973     32,245     40,630  
Income tax expense 373     237     1,510     1,572  
Depreciation and amortization 15,276     15,009     45,858     44,997  
EBITDA from Continuing Operations 17,773     40,469     75,406     85,077  
Adjustments:              
(Gain) loss on sale of property, plant and equipment, net (22 )   (16,302 )   153     (13,949 )
Gain on involuntary conversion of property, plant and equipment (4,522 )       (4,522 )    
Unrealized mark-to-market on commodity derivatives 393     (2,602 )   (276 )   (529 )
Transaction costs associated with acquisitions             224  
Non-cash insurance related accruals         250     500  
Lower of cost or market adjustments 35     104     370     407  
Loss on exchange of senior unsecured notes 8,516         8,516      
Gain on repurchase of senior unsecured notes         (3,484 )    
Unit-based compensation 361     349     1,070     1,064  
Adjusted EBITDA from Continuing Operations 22,534     22,018     77,483     72,794  
Adjustments:              
Interest expense, net (12,943 )   (11,973 )   (32,245 )   (40,630 )
Income tax expense (373 )   (237 )   (1,510 )   (1,572 )
Amortization of debt premium (38 )   (77 )   (191 )   (230 )
Amortization of deferred debt issuance costs 1,683     1,080     2,674     3,558  
Deferred income tax expense 184     244     1,202     1,100  
Payments for plant turnaround costs (406 )   (375 )   (637 )   (5,117 )
Maintenance capital expenditures (2,576 )   (2,389 )   (7,882 )   (8,876 )
Distributable Cash Flow from Continuing Operations $ 8,065     $ 8,291     $ 38,894     $ 21,027  
               
Loss from discontinued operations, net of income taxes $     $     $     $ (179,466 )
Adjustments:              
Depreciation and amortization             8,161  
EBITDA from Discontinued Operations             (171,305 )
Loss on sale of property, plant and equipment, net             178,781  
Non-cash insurance related accruals             3,213  
EBITDA and Adjusted EBITDA from Discontinued Operations             10,689  
Maintenance capital expenditures             (912 )
Distributable Cash Flow from Discontinued Operations $     $     $     $ 9,777