MARTIN MIDSTREAM PARTNERS L.P. - FORM 8-K - EX-99.1 CHARTER - PRESS RELEASE - May 8, 2012

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EXHIBIT 99.1
MARTIN MIDSTREAM PARTNERS REPORTS
 2012 FIRST QUARTER FINANCIAL RESULTS

KILGORE, Texas, May 2, 2012 (GlobeNewswire) -- Martin Midstream Partners L.P. (Nasdaq: MMLP) announced today its financial results for the first quarter ended March 31, 2012.

Martin Midstream Partners L.P. (“the Partnership”) reported net income for the first quarter of 2012 of $10.5 million, or $0.40 per limited partner unit.  This compared to net income for the first quarter of 2011 of $7.3 million, or $0.31 per limited partner unit.  Revenues for the first quarter of 2012 were $338.3 million compared to $283.0 million for the first quarter of 2011.

For the quarter ended March 31, 2012, net income was not impacted by non-cash derivative losses. For the first quarter of 2011, net income was impacted negatively by $0.5 million, or $0.02 per limited partner unit, in non-cash derivatives net losses from certain commodity and interest rate hedges that are subject to mark-to-market accounting.

The Partnership’s distributable cash flow for the first quarter of 2012 was $22.8 million. Distributable cash flow is a non-GAAP financial measure which is explained in greater detail below under “Use of Non-GAAP Financial Information.” The Partnership has also included below a table entitled “Distributable Cash Flow” in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measurement.

Included with this press release are the Partnership’s consolidated financial statements as of and for the quarter ended March 31, 2012 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, filed with the Securities and Exchange Commission on May 7, 2012.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of Martin Midstream Partners, said, “We are pleased with the Partnership’s first quarter financial performance.  For the quarter we earned distributable cash flow of approximately $22.8 million and a strong distribution coverage ratio of 1.17 times.  The Partnership benefitted from stronger than expected performance in our Sulfur Services Segment as our fertilizer and molten sulfur divisions continued their positive momentum and strong margin levels we saw in the fourth quarter last year.  Operationally, our fertilizer production units are running at very high levels of utilization that coincides with strong customer demand for our product offerings.

Collectively, Terminalling and Storage, Natural Gas Service and Marine Transportation were all slightly below management’s expectations for the quarter.  However, we continue to be optimistic regarding the throughput level at our marine shore based assets as incremental deep-water offshore drilling seems imminent.  Additionally, our marine assets are seeing day-rate improvement and high utilization across both in the inland and offshore divisions.

Looking forward to the second quarter, we expect continued strong performance in our Sulfur Services Segment fertilizer division.  In addition, the Partnership will benefit from additional assets coming on line in our Terminalling and Storage Segment.”

Investors’ Conference Call

An investor’s conference call to review the first quarter results will be held on Thursday, May 3, 2012, 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 May 3, 2012 through 10:59 p.m. Central Time on May 10, 2012.  The access codes for the conference call and the audio replay are as follows:  Conference ID No. 75247296. www.martinmidstream.com.

About Martin Midstream Partners

Martin Midstream Partners 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: terminalling and storage services for petroleum products and by-products; natural gas gathering, processing and NGL distribution; sulfur and sulfur-based products processing, manufacturing, and distribution; and marine transportation services for petroleum products and by-products.

Forward-Looking Statements

Statements about Martin Midstream Partners’ 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 its control, which could cause actual results to differ materially from such statements.  While MMLP 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.  Martin Midstream Partners 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 reports its financial results in accordance with United States generally accepted accounting principles (GAAP).  However, from time to time, the Partnership uses certain non-GAAP financial measures such as distributable cash flow because the Partnership’s management believes that this measure may provide users of this financial information with meaningful comparisons between current results and prior reported results and a meaningful measure of Partnership’s cash available to pay distributions.  Distributable cash flow should not be considered an alternative to cash flow from operating activities or any other measure of financial performance in accordance with GAAP.  Distributable cash flow is not intended to represent cash flows for the period, nor is it presented as an alternative to income from continuing operations. Furthermore, it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. This information may constitute non-GAAP financial measures within the meaning of Regulation G adopted by the Securities and Exchange Commission. Accordingly, the Partnership has presented herein, and will present in other information it publishes that contains this non-GAAP financial measure, a reconciliation of this measure to the most directly comparable GAAP financial measure.
 
 
The Partnership has included below a table entitled “Distributable Cash Flow” in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measure. The Partnership calculates distributable cash flow as follows: net income (as reported in statements of operations), plus depreciation and amortization, amortization of debt discount and amortization of deferred debt issue costs (as reported in statements of cash flows), less deferred taxes (as reported in statements of cash flows), less gain on sale of property, plant and equipment, less payments of notes payable and capital lease obligations expenditures (as described below), plus distribution equivalents from unconsolidated entities (as described below), less invested cash in unconsolidated entities (as described below), less equity in earnings of unconsolidated entities (as reported in statements of operations), plus non-cash mark-to-market on derivatives (as reported in statements of cash flows), less payments for plant turnaround costs (as reported in statements of cash flows), less maintenance capital expenditures (as reported under the caption “Liquidity and Capital Resources” in the Partnership’s Quarterly Report on Form 10-Q filed with the SEC on May 7, 2012), plus unit-based compensation (as reported in statements of changes in capital).
 
 
The Partnership’s payments of notes payable and capital lease obligations is calculated as payments of notes payable and capital lease obligations (as reported in the statement of cash flows), less the early extinguishment of notes payable of $6.3 million.
 
 
The Partnership’s distribution equivalents from unconsolidated entities is calculated as distributions from unconsolidated entities (as reported in statements of cash flows), plus return of investments from unconsolidated entities (as reported in statements of cash flows), plus distributions in-kind from unconsolidated entities (as reported in statements of cash flows).  For the quarter ended March 31, 2012, the Partnership’s distributions from unconsolidated entities, return of investments from unconsolidated entities and distributions in-kind from equity investments were $0.0 million, $1.2 million and $3.1 million, respectively.
 
 
The Partnership’s invested cash in unconsolidated entities is calculated as distributions from (contributions to) unconsolidated entities for operations (as reported in statements of cash flows), plus expansion capital expenditures in unconsolidated entities (as reported under the caption “Liquidity and Capital Resources” in the Partnership’s Annual Report on Form 10-K filed with the SEC on March 5, 2012).  For the quarter ended March 31, 2012, the Partnership’s distributions from (contributions to) unconsolidated entities for operations and expansion capital expenditures in unconsolidated entities were ($8.4) million and $9.4 million, respectively.
 
Additional information concerning the Partnership is available on the Partnership’s website at www.martinmidstream.com, or

Joe McCreery,
Vice President - Finance and Head of Investor Relations,
Martin Midstream Partners L.P.
Phone (903) 812-7989
joe.mccreery@martinmlp.com
 

 

 
 
 

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

     
March 31,
 2012
(Unaudited)
December 31,
2011
 (Audited)
  
 
Assets
          
Cash
   $ 8,782     $ 266  
Accounts and other receivables, less allowance for doubtful accounts of $2,979 and $3,021, respectively
     112,137       126,461  
Product exchange receivables
     9,213       17,646  
Inventories
     81,487       78,163  
Due from affiliates
     9,923       5,968  
Fair value of derivatives
     675       622  
Other current assets
     2,001       1,978  
Total current assets
     224,218       231,104  
                   
Property, plant and equipment, at cost
     740,978       711,052  
Accumulated depreciation                                                                                              
     (244,023 )     (233,710 )
Property, plant and equipment, net
     496,955       477,342  
                   
Goodwill
     37,268       37,268  
Investment in unconsolidated entities
     177,428       170,497  
Deferred debt costs
     12,640       13,330  
Fair value of derivatives
     41       —  
Other assets, net
     19,115       19,568  
    $ 967,665     $ 949,109  
Liabilities and Partners’ Capital
                  
Current installments of long-term debt and capital lease obligations
   $ 198     $ 1,261  
Trade and other accounts payable
     96,107       125,970  
Product exchange payables
     30,583       37,313  
Due to affiliates
     14,167       18,485  
Income taxes payable
     1,156       893  
Fair value of derivatives
     530       362  
Other accrued liabilities
     12,131        11,022  
Total current liabilities
     154,872       195,306  
                   
Long-term debt and capital leases, less current maturities
     433,684       458,941  
Deferred income taxes
     7,487       7,657  
Other long-term obligations
     1,601       1,589  
Total liabilities
     597,644       663,493  
                   
Partners’ capital
     369,459       284,990  
Accumulated other comprehensive income
     562       626  
Total partners’ capital
     370,021       285,616  
Commitments and contingencies
                  
    $ 967,665     $ 949,109  

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 filed with the Securities and Exchange Commission on May 7, 2012.

 
 
 



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


   
Three Months Ended
March 31,
  
   
2012
    
2011
  
Revenues:
            
Terminalling and storage  *
   $ 20,186     $ 18,123  
Marine transportation  *
     20,862       19,399  
Sulfur services
     2,926       2,850  
Product sales: *
                
Natural gas services
     201,013       167,211  
Sulfur services
     71,626       56,908  
Terminalling and storage
     21,673       18,545  
      294,312       242,664  
Total revenues
     338,286       283,036  
                 
Costs and expenses:
                
Cost of products sold: (excluding depreciation and amortization)
                
Natural gas services *
     193,180       158,204  
Sulfur services *
     54,960       44,442  
Terminalling and storage
     20,020       16,560  
      268,160       219,206  
Expenses:
                
Operating expenses  *
     38,170       34,349  
Selling, general and administrative  *
     5,689       5,028  
Depreciation and amortization
     11,095       10,942  
Total costs and expenses
     323,114       269,525  
Other operating income
     4       —  
Operating income
     15,176       13,511  
                 
Other income (expense):
                
Equity in earnings of unconsolidated entities
     2,847       2,376  
Interest expense
     (7,207 )     (8,402 )
Debt prepayment premium
     (251 )     —  
Other, net
     61       60  
Total other income (expense)
     (4,550 )     (5,966 )
                 
Net income before taxes
     10,626       7,545  
Income tax benefit (expense)
     (97 )     (223 )
Net income
   $ 10,529     $ 7,322  
                 
General partner’s interest in net income
   $ 1,450     $ 1,229  
Limited partners’ interest in net income
   $ 9,079     $ 5,816  
                 
Net income per limited partner unit – basic and diluted
   $ 0.40     $ 0.31  
                 
Weighted average limited partner units - basic
     22,576,404       18,760,861  
Weighted average limited partner units - diluted
     22,579,908       18,761,611  

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 filed with the Securities and Exchange Commission on May 7, 2012.


*Related Party Transactions Included Above
Revenues:
            
Terminalling and storage
   $ 15,274     $ 12,938  
Marine transportation
     4,857       6,565  
Product Sales
     4,290       5,399  
Costs and expenses:
                
Cost of products sold: (excluding depreciation and amortization)
                
Natural gas services
     25,345       23,205  
Sulfur services
     4,431       4,152  
Expenses:
                
Operating expenses
     14,091       12,042  
Selling, general and administrative
     3,678       3,031  





MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Unaudited)
(Dollars in thousands)
   
Partners’ Capital
      
     
Common
 
Subordinated
 
General Partner
  
Accumulated Other Comprehensive
Income
      
   
Units
      Amount
Units
  
Amount
  
Amount
  
(Loss)
  
Total
  
                                               
 Balances – January 1, 2011       17,707,832       $250,785     889,444     $17,721     $4,881     $1,419     $274,806  
                                               
Net income                                               
     —       6,093     —     —     1,229     —     7,322  
                                               
Recognition of beneficial conversion feature
     —       (277 )   —     277     —     —     —  
                                               
Follow-on public offering                                               
     1,874,500       70,330     —     —     —     —     70,330  
                                               
General partner contribution                                               
     —       —     —     —     1,505     —     1,505  
                                               
Cash distributions                                               
     —       (13,458 )   —     —     (1,416 )   —     (14,874 )
                                               
Excess purchase price over carrying value of acquired assets
     —       (19,685 )   —     —     —     —     (19,685 )
                                               
Unit-based compensation                                               
     9,100       36     —     —     —     —     36  
                                               
Purchase of treasury units                                               
     ( 9,100 )     (347 )   —     —     —     —     (347 )
                                               
Adjustment in fair value of derivatives
     —       —     —     —     —     (1,323 )   (1,323 )
                                               
Balances – March 31, 2011                                               
     19,582,332     $ 293,477     889,444   $ 17,998   $ 6,199   $ 96   $ 317,770  
                                               
Balances – January 1, 2012                                               
     20,471,776     $ 279,562     —   $ —   $ 5,428   $ 626   $ 285,616  
                                               
Net income                                               
     —       9,079     —           1,450     —     10,529  
                                               
Follow-on public offering                                               
     2,645,000       91,377     —     —     —     —     91,377  
                                               
General partner contribution                                               
     —       —     —     —     1,951     —     1,951  
                                               
Cash distributions                                               
     —       (17,626 )   —     —     (1,818 )   —     (19,444 )
                                               
Unit-based compensation                                               
             56     —     —     —     —     56  
                                               
Adjustment in fair value of derivatives
     —       —     —     —     —     (64 )   (64 )
                                               
Balances – March 31, 2012                                               
     23,116,776     $ 362,448     —   $ —   $ 7,011   $ 562   $ 370,021  
                                               
 
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 filed with the Securities and Exchange Commission on May 7, 2012.
  

 
 
 

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
   
Three Months Ended
March 31,
  
   
2012
    
2011
  
Cash flows from operating activities:
            
Net income
   $ 10,529     $ 7,322  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     11,095       10,942  
Amortization of deferred debt issuance costs
     690       1,140  
Amortization of debt discount
     87       88  
Deferred taxes
     (170 )     (3 )
Gain on sale of property, plant and equipment
     (4 )     —  
Equity in earnings of unconsolidated entities
     (2,847 )     (2,376 )
Distributions in-kind from equity investments
     3,090       3,948  
Non-cash mark-to-market on derivatives
     10       456  
Other
     56       36  
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
                
Accounts and other receivables                                                                                            
     14,324       577  
Product exchange receivables                                                                                            
     8,433       3,845  
Inventories                                                                                            
     (3,324 )     2,320  
Due from affiliates                                                                                            
     (3,955 )     (2,792 )
Other current assets                                                                                            
     (23 )     (461 )
Trade and other accounts payable                                                                                            
     (29,863 )     (2,333 )
Product exchange payables                                                                                            
     (6,730 )     (2,649 )
Due to affiliates                                                                                            
     (4,318 )     4,314  
Income taxes payable                                                                                            
     263       226  
      Other accrued liabilities
     1,109       3,299  
Change in other non-current assets and liabilities
     53       155  
Net cash provided by (used in) operating activities
     (1,495 )     28,054  
Cash flows from investing activities:
                
Payments for property, plant and equipment
     (30,082 )     (14,875 )
Acquisitions
     —       (16,815 )
Payments for plant turnaround costs
     (305 )     (1,995 )
Proceeds from sale of property, plant and equipment
     95       —  
Return of investments from unconsolidated entities
     1,232       60  
Distributions from (contributions to) unconsolidated entities for operations
     (8,406 )     (3,651 )
Net cash used in investing activities
     (37,466 )     (37,276 )
Cash flows from financing activities:
                
Payments of long-term debt
     (146,000 )     (101,500 )
Payments of notes payable and capital lease obligations
     (6,407 )     (268 )
Proceeds from long-term debt
     126,000       73,500  
Net proceeds from follow on offering
     91,377       70,330  
       Treasury units purchased
     —       (347 )
       General partner contribution
     1,951       1,505  
       Excess purchase price over carrying value of acquired assets
     —       (19,685 )
Cash distributions paid
     (19,444 )     (14,874 )
Net cash provided by financing activities
     47,477       8,661  
Net increase (decrease) in cash
     8,516       (561 )
Cash at beginning of period
     266       11,380  
Cash at end of period
   $ 8,782     $ 10,819  

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 filed with the Securities and Exchange Commission on May 7, 2012.


 
 
 

MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
Unaudited



Terminalling and Storage Segment
    
Three Months Ended
March 31,
 
     2012     2011  
   
(In thousands)
Revenues:
          
     Services                                                                                                                
   $ 21,361     $ 19,102  
     Products                                                                                                                
     21,673       18,544  
          Total revenues                                                                                                                
     43,034       37,646  
                 
Cost of products sold                                                                                                                
     20,540       17,490  
Operating expenses                                                                                                                
     14,045       12,315  
Selling, general and administrative expenses                                                                                                                
     10       84  
Depreciation and amortization                                                                                                                
     4,723       4,540  
      3,716       3,217  
Other operating income                                                                                                                
     20       -  
Operating income                                                                                                          
   $ 3,736     $ 3,217  
                 



Natural Gas Services Segment
  
Three Months Ended
March 31,
  
   
2012
    
2011
  
Revenues:
  
(In thousands)
  
     NGLs                                                                                                                 
   $ 194,280     $ 155,300  
     Natural gas                                                                                                                 
     5,041       10,016  
     Non-cash mark-to-market adjustment of commodity derivatives
     (10 )     177  
     Gain on cash settlements of commodity derivatives                                                                                                             
     73       —  
     Other operating fees                                                                                                      
     1,629       1,718  
           Total revenues 
     201,013       167,211  
                 
Cost of products sold:
                
     NGLs                                                                                                                 
     188,422       148,689  
     Natural gas                                                                                                                 
     5,135       9,720  
           Total cost of products sold                                                                                                                 
     193,557       158,409  
                 
Operating expenses                                                                                                                
     2,110       2,110  
Selling, general and administrative expenses                                                                                                                
     1,882       1,851  
Depreciation and amortization                                                                                                                
     1,538       1,515  
      1,926       3,326  
Other operating income                                                                                                                
     9        —  
Operating income                                                                                                             
   $ 1,935     $ 3,326  
                 
NGLs Volumes (Bbls)                                                                                                                
     3,077       2,485  
Natural Gas Volumes (Mmbtu)                                                                                                                
     2,143       2,620  

Waskom:
            
Plant Inlet Volumes (Mmcf/d)                                                                                                                
     262       272  
Frac Volumes (Bbls/d)                                                                                                                
     10,899       8,049  

 
 
 

MARTIN MIDSTREAM PARTNERS L.P.
SEGMENT OPERATING INCOME
Unaudited



Sulfur Services Segment
  
Three Months Ended
March 31,
  
   
2012
    
2011
  
Revenues:
  
(In thousands)
  
     Services                                                                                                                
   $ 2,926     $ 2,850  
     Products                                                                                                                
     71,626       56,908  
          Total revenues                                                                                                                
     74,552       59,758  
                 
Cost of products sold                                                                                                                
     55,051       44,532  
Operating expenses                                                                                                                
     4,193       4,691  
Selling, general and administrative expenses                                                                                                                
     955       886  
Depreciation and amortization                                                                                                                
     1,793       1,622  
      12,560       8,027  
Other operating income (loss)                                                                                                                
      (25 )     —  
Operating income                                                                                                                
   $ 12,535     $ 8,027  
                 
Sulfur (long tons)                                                                                                                
     308.2       375.3  
Fertilizer (long tons)                                                                                                                
     93.9       77.6  
Sulfur Services Volumes (long tons)                                                                                                                
     402.1       452.9  
                 



Marine Transportation Segment
  
Three Months Ended
March 31,
  
   
2012
    
2011
  
   
(In thousands)
  
Revenues                                                                                                                
   $ 21,567     $ 21,439  
Operating expenses                                                                                                                
     18,714       17,026  
Selling, general and administrative expenses                                                                                                                
     424       389  
Depreciation and amortization                                                                                                                
     3,041       3,265  
      (612 )     759  
Other operating income                                                                                                                
     -        -   
Operating income                                                                                                          
   $ (612 )   $ 759  


 
 
 


MARTIN MIDSTREAM PARTNERS L.P.
DISTRIBUTABLE CASH FLOW
Unaudited Non-GAAP Financial Measure
(Dollars in thousands)
   
Three Months Ended
March 31, 2012
  
       
Net income
   $ 10,529  
         
Adjustments to reconcile net income to distributable cash flow:
        
Depreciation and amortization
     11,095  
Amortization of debt discount
     87  
Amortization of deferred debt issuance costs
     690  
Deferred taxes
     (170 )
Gain on sale of property, plant and equipment
     (4 )
Payments of notes payable and capital lease obligations
     (130 )
Distribution equivalents from unconsolidated entities1
     4,322  
Invested cash in unconsolidated entities2
     1,018  
Equity in earnings of unconsolidated entities 
     (2,847 )
Non-cash mark-to-market on derivatives 
     10  
Payments for plant turnaround costs
     (305 )
Maintenance capital expenditures
     (1,531 )
Unit-based compensation
     56  
     Distributable cash flow
   $ 22,820  

       
1  Distribution equivalents from unconsolidated entities:
Distributions from unconsolidated entities 
   $ —  
   Return of investments from unconsolidated entities
     1,232  
   Distributions in-kind from equity investments 
     3,090  
           Distributions equivalents from unconsolidated entities
   $ 4,322  
         
         
   2  Invested cash in unconsolidated entities:
        
      Distributions from (contributions to) unconsolidated entities for operations
   $ (8,406 )
      Expansion capital expenditures in unconsolidated entities
     9,424  
          Invested cash in unconsolidated entities 
   $ 1,018  
         





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MARTIN MIDSTREAM PARTNERS L.P. Reports