Martin Midstream Partners(MMLP) - 2024 Q1 - Quarterly Results

First Quarter 2024 Financial Results Financial Highlights Martin Midstream Partners L.P. achieved a $3.3 million net income in Q1 2024, reversing a $5.1 million loss from Q1 2023, with Adjusted EBITDA at $30.4 million and leverage at 3.81x Q1 2024 Key Financial Metrics | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income (Loss) | $3.3 million | ($5.1 million) | | Adjusted EBITDA | $30.4 million | $21.7 million | | Total Adjusted Leverage | 3.81x | N/A | | Quarterly Cash Distribution | $0.005/unit | N/A | Management Commentary CEO Bob Bondurant reported $30.4 million Adjusted EBITDA, noting strong transportation demand offset by weaker fertilizer/lubricant margins and reduced sulfur receipts from refinery turnarounds - Strong performance in the transportation segment was counteracted by lower margins in fertilizer/lubricants and reduced sulfur receipts from refinery turnarounds[13] - Capital expenditures for the quarter were elevated, with $6.2 million in growth capex (including $4.8 million for the DSM Semichem JV) and $11.2 million in maintenance capex (including $5.3 million in refinery turnaround costs)[13] - The higher capital spending contributed to a slight increase in adjusted leverage from 3.75x at year-end 2023 to 3.81x at the end of Q1 2024[13] Capitalization and Credit Metrics Total debt outstanding increased to $450.0 million as of March 31, 2024, with leverage at 3.81x, and $101.4 million in available liquidity maintained Debt and Credit Metrics (as of March 31, 2024) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Debt Outstanding | $450.0 million | $442.5 million | | Available Liquidity | $101.4 million | $109.0 million | | Total Adjusted Leverage Ratio | 3.81x | 3.75x | | Senior Leverage Ratio | 0.42x | 0.36x | | Interest Coverage Ratio | 2.21x | 2.19x | Quarterly Cash Distribution A quarterly cash distribution of $0.005 per unit was declared for Q1 2024, payable on May 15, 2024 - A cash distribution of $0.005 per unit was declared for Q1 2024[26] - The release serves as a qualified notice, indicating that 100% of distributions to non-U.S. investors should be treated as effectively connected with a U.S. trade or business and are subject to federal income tax withholding[27] Consolidated Financial Statements (Unaudited) Consolidated and Condensed Balance Sheets Total assets increased to $512.1 million as of March 31, 2024, with liabilities stable at $573.6 million, and partners' capital deficit improving to $61.5 million Balance Sheet Summary (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $115,984 | $114,313 | | Property, plant and equipment, net | $306,542 | $305,793 | | Total assets | $512,077 | $509,375 | | Total current liabilities | $93,022 | $100,564 | | Long-term debt, net | $430,024 | $421,173 | | Total liabilities | $573,573 | $573,999 | | Partners' capital (deficit) | ($61,496) | ($64,624) | Consolidated and Condensed Statements of Operations Net income reached $3.3 million in Q1 2024, improving from a $5.1 million loss in Q1 2023, despite a 26% revenue decrease, supported by stable operating income Statement of Operations Summary (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total revenues | $180,830 | $244,529 | | Total costs and expenses | $163,143 | $226,636 | | Operating income | $17,895 | $17,505 | | Interest expense, net | ($13,842) | ($15,657) | | Loss on extinguishment of debt | $0 | ($5,121) | | Net income (loss) | $3,273 | ($5,086) | | Net income (loss) per unit - diluted | $0.08 | ($0.13) | Consolidated and Condensed Statements of Capital (Deficit) Partners' capital deficit improved to $61.5 million by March 31, 2024, from $64.6 million at year-end 2023, driven by $3.3 million net income Reconciliation of Partners' Capital (Deficit) for Q1 2024 (in thousands) | Description | Amount | | :--- | :--- | | Balance - December 31, 2023 | ($64,624) | | Net income | $3,273 | | Cash distributions | ($199) | | Unit-based compensation & other | $54 | | Balance - March 31, 2024 | ($61,496) | Consolidated and Condensed Statements of Cash Flows Net cash from operating activities decreased to $10.1 million in Q1 2024, while investing activities used $17.4 million, and financing activities provided $7.3 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,109 | $49,264 | | Net cash used in investing activities | ($17,395) | ($4,218) | | Net cash provided by (used in) financing activities | $7,286 | ($45,034) | | Net increase (decrease) in cash | $0 | $12 | Segment Operating Performance Terminalling and Storage Segment The Terminalling and Storage segment's operating income increased 18% to $3.7 million in Q1 2024, driven by a 6% rise in throughput volumes Terminalling and Storage Operating Results (in thousands) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $24,285 | $23,919 | +2% | | Operating Expenses | $15,035 | $14,308 | +5% | | Operating Income | $3,657 | $3,108 | +18% | - Shore-based throughput volumes increased by 6% to 45,769 thousand gallons[9] Transportation Segment Operating income for the Transportation segment increased 4% to $9.8 million in Q1 2024, benefiting from lower SG&A and reduced depreciation despite flat revenues Transportation Operating Results (in thousands) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $62,042 | $61,939 | 0% | | Operating Expenses | $46,641 | $46,190 | +1% | | Operating Income | $9,831 | $9,442 | +4% | - Performance was driven by increased transportation rates in the marine division and higher mileage in the land division[16] Sulfur Services Segment The Sulfur Services segment's operating income declined 19% to $3.7 million in Q1 2024, despite a 22% increase in volumes, due to a 6% revenue drop Sulfur Services Operating Results (in thousands) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $33,681 | $35,679 | -6% | | Cost of products sold | $22,771 | $23,949 | -5% | | Operating Income | $3,685 | $4,553 | -19% | - Total sulfur services volumes grew 22% year-over-year, led by a 24% increase in sulfur tons and a 20% increase in fertilizer tons[47] - Adjusted EBITDA for the segment decreased due to lower margins in molten sulfur and decreased sulfur prilling fees resulting from Gulf Coast refinery turnarounds[17] Specialty Products Segment Operating income for the Specialty Products segment remained nearly flat at $4.6 million in Q1 2024, despite a 50% revenue plunge driven by a 60% decrease in total sales volumes Specialty Products Operating Results (in thousands) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Products Revenues | $66,346 | $132,277 | -50% | | Cost of products sold | $59,644 | $124,451 | -52% | | Operating Income | $4,558 | $4,600 | -1% | - Total specialty products volumes fell 60% to 702 thousand barrels, with NGL sales volumes dropping 63%[48] Unallocated Selling, General and Administrative Expenses Unallocated indirect SG&A expenses decreased 9% to $3.8 million in Q1 2024, reflecting reduced employee-related expenses and professional fees Unallocated SG&A (in thousands) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Indirect SG&A | $3,836 | $4,198 | -9% | - The decrease was attributed to reduced employee-related expenses and professional fees[18] Non-GAAP Financial Measures Reconciliation of Net Income (Loss) to Adjusted EBITDA The company reconciles Net Income (Loss) to Adjusted EBITDA, with Q1 2024 net income of $3.3 million adjusting to $30.4 million Adjusted EBITDA Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income (loss) | $3,273 | ($5,086) | | Interest expense | $13,842 | $15,657 | | Income tax expense | $796 | $1,835 | | Depreciation and amortization | $12,649 | $12,901 | | EBITDA | $30,560 | $25,307 | | (Gain) loss on disposition of assets | ($208) | $388 | | Loss on extinguishment of debt | $0 | ($5,121) | | Lower of cost or net realizable value adj. | $0 | ($9,133) | | Unit-based compensation | $54 | $52 | | Adjusted EBITDA | $30,406 | $21,735 | Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA and Distributable Cash Flow The company reconciles Net Cash Provided by Operating Activities to Adjusted EBITDA and Distributable Cash Flow (DCF), with Q1 2024 net operating cash flow of $10.1 million reconciling to $30.4 million Adjusted EBITDA and $5.6 million DCF Reconciliation to DCF (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,109 | $49,264 | | Adjustments to reach Adjusted EBITDA | $20,297 | ($27,529) | | Adjusted EBITDA | $30,406 | $21,735 | | Adjustments to reach DCF | ($24,760) | ($12,275) | | Distributable cash flow | $5,646 | $9,460 | Definitions of Non-GAAP Measures The company uses non-GAAP measures like EBITDA, Adjusted EBITDA, DCF, and Adjusted Free Cash Flow to assess business performance and evaluate cash generation for distributions and debt service - Adjusted EBITDA is defined as EBITDA before unit-based compensation, gains/losses on asset dispositions, impairment, and similar non-cash adjustments. It is used to assess financial performance and the ability of assets to generate cash[31][39] - Distributable Cash Flow (DCF) is defined as net cash from operations adjusted for certain items, less maintenance capital expenditures and plant turnaround costs. It is a key measure for investors to assess the sustainability of cash distributions[41] - Adjusted Free Cash Flow is defined as DCF less growth capital expenditures and principal payments on finance leases. It represents cash available for debt reduction, further investment, or distributions[42]