Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Martin Midstream Partners Reports Third Quarter 2023 Financial Results and Declares Quarterly Cash Distribution By: Martin Midstream Partners L.P. via Business Wire October 18, 2023 at 16:01 PM EDT Total adjusted leverage of 3.95 times as of September 30, 2023 Reported net loss of $1.1 million and $5.1 million for the three and nine months ended September 30, 2023, respectively, which includes a $5.1 million impact from the loss on extinguishment of debt for the nine months ended September 30, 2023 Reported adjusted EBITDA of $26.2 million and $88.6 million, after giving effect to the May 2023 exit of the butane optimization business, which incurred adjusted EBITDA of zero and negative adjusted EBITDA of $15.1 million, for the three and nine months ended September 30, 2023, respectively Reaffirms 2023 Annual Adjusted EBITDA Guidance of $115.4 million Declares quarterly cash distribution of $0.005 per common unit for the quarter ended September 30, 2023, or $0.020 per common unit annually Martin Midstream Partners L.P. (Nasdaq:MMLP) (“MMLP” or the "Partnership") today announced its financial results for the third quarter of 2023. Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, stated, “The Partnership’s financial results for the third quarter met guidance as both the Specialty Products and Sulfur Services segments outperformed but were offset by the Transportation segment as certain industrial customers experienced challenges that negatively impacted the ground transportation business. Our full year 2023 adjusted EBITDA outlook, which does not include losses related to the butane optimization business, remains unchanged at $115.4 million, confirming the recent operational restructuring of our refinery services business model to deliver stable and sustainable cash flows. Looking to the future, we anticipate increased earnings related to the joint venture with Samsung C&T America and Dongjin USA, even as delays in the construction of semiconductor manufacturing facilities may result in deferred demand for electronic level sulfuric acid. “During the first nine months of 2023, the Partnership, utilizing free cash flow and a significant reduction in working capital due to the exit from the butane optimization business, reduced total debt by $53.6 million. As a result, adjusted leverage was decreased to 3.95 times at September 30, 2023 compared to 4.53 times at December 31, 2022.” THIRD QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT TERMINALLING AND STORAGE (“T&S”) T&S operating income (loss) for the three months ended September 30, 2023 and 2022 was $3.1 million and ($0.1) million, respectively. Adjusted segment EBITDA for T&S was $8.2 million and $6.2 million for the three months ended September 30, 2023 and 2022, respectively, reflecting contractual index-based fee increases combined with reduced operating expenses across our divisions. TRANSPORTATION Transportation operating income for the three months ended September 30, 2023 and 2022 was $6.7 million and $12.1 million, respectively. Adjusted segment EBITDA for Transportation was $9.5 million and $15.1 million for the three months ended September 30, 2023 and 2022, respectively, primarily reflecting increased expenses combined with lower mileage in our land transportation division. SULFUR SERVICES Sulfur Services operating income (loss) for the three months ended September 30, 2023 and 2022 was $2.7 million and ($6.7) million, including a ($3.3) million inventory valuation write down, respectively. Adjusted segment EBITDA for Sulfur Services was $5.4 million and ($4.2) million for the three months ended September 30, 2023 and 2022, respectively, reflecting increased volumes and margins in both our fertilizer and sulfur businesses. SPECIALTY PRODUCTS Specialty Products operating income (loss) for the three months ended September 30, 2023 and 2022 was $6.0 million and ($13.3) million, respectively. Included in the Specialty Products results is an operating loss of $20.0 million for the three months ended September 30, 2022, attributable to the butane optimization business. Adjusted segment EBITDA for Specialty Products was $6.8 million and $6.0 million for the three months ended September 30, 2023 and 2022, respectively. Included in the Specialty Products results is negative adjusted EBITDA of ($1.6) million for the three months ended September 30, 2022, attributable to the butane optimization business. Adjusted Segment EBITDA for Specialty Products after giving effect to the May 2023 exit of the butane optimization business was $6.8 million and $7.6 million for the three months ended September 30, 2023 and 2022, respectively, reflecting reduced NGL margins. UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”) USGA expenses included in operating income for the three months ended September 30, 2023 and 2022 were $3.8 million and $4.3 million, respectively. USGA expenses included in adjusted EBITDA for the three months ended September 30, 2023 and 2022 were $3.8 million and $4.2 million, respectively, reflecting a reduction in employee-related expenses. CAPITALIZATION At September 30, 2023, the Partnership had $462.5 million of total debt outstanding, including $62.5 million drawn on its $175 million revolving credit facility maturing in 2027 and $400 million of senior secured second lien notes due 2028. At September 30, 2023, the Partnership had liquidity of approximately $84.1 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 3.95 times at September 30, 2023, compared to 4.14 times at June 30, 2023, a reduction of 0.19 times. The Partnership was in compliance with all debt covenants as of September 30, 2023. QUARTERLY CASH DISTRIBUTION The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended September 30, 2023. The distribution is payable on November 14, 2023 to common unitholders of record as of the close of business on November 7, 2023. The ex-dividend date for the cash distribution is November 6, 2023. QUALIFIED NOTICE TO NOMINEES Partnership: Martin Midstream Partners L.P. Unit Class: Common CUSIP #: 573331105 RE: Qualified Notice Pursuant to U.S. Treasury Regulation §1.1446-4 Record Date: November 7, 2023 Payable Date: November 14, 2023 Per Unit Amount: $0.005 Section I: This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Section II: The entire amount of the distribution realized per U.S. Treasury Regulation 1.1446(f)-4(c)(2)(iii) is in excess of cumulative net taxable income. RESULTS OF OPERATIONS The Partnership had a net loss for the three months ended September 30, 2023 of $1.1 million, a loss of $0.03 per limited partner unit. The Partnership had a net loss for the three months ended September 30, 2022 of $28.0 million, a loss of $0.71 per limited partner unit. Adjusted EBITDA for the three months ended September 30, 2023 was $26.2 million compared to $18.8 million for the three months ended September 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended September 30, 2023 was $26.2 million compared to $20.4 million for the three months ended September 30, 2022. Net cash provided by (used in) operating activities for the three months ended September 30, 2023 was $7.3 million, compared to ($45.2) million for the three months ended September 30, 2022. Distributable cash flow for the three months ended September 30, 2023 was $5.0 million compared to $(2.0) million for the three months ended September 30, 2022. The Partnership had a net loss for the nine months ended September 30, 2023 of $5.1 million, a loss of $0.13 per limited partner unit. The Partnership had a net loss for the nine months ended September 30, 2022 of $10.0 million, a loss of $0.25 per limited partner unit. Adjusted EBITDA for the nine months ended September 30, 2023 was $73.4 million compared to $97.1 million for the nine months ended September 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the nine months ended September 30, 2023 was $88.6 million compared to $93.6 million for the nine months ended September 30, 2022. Net cash provided by (used in) operating activities for the nine months ended September 30, 2023 was $106.1 million compared to ($16.8) million for the nine months ended September 30, 2022. Distributable cash flow for the nine months ended September 30, 2023 was $24.2 million compared to $36.1 million for the nine months ended September 30, 2022. Revenues for the three months ended September 30, 2023 were $176.7 million compared to $229.3 million for the three months ended September 30, 2022. Revenues for the nine months ended September 30, 2023 were $616.9 million compared to $775.5 million for the nine months ended September 30, 2022. EBITDA, adjusted EBITDA, distributable cash flow and adjusted free cash flow 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, Distributable Cash Flow and Adjusted Free 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 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 2023 to the Partnership's adjusted EBITDA guidance for the third quarter 2023. Investors' Conference Call Date: Thursday, October 19, 2023 Time: 8:00 a.m. CT (please dial in by 7:55 a.m.) Dial In #: (888) 330-2384 Conference ID: 8536096 Replay Dial In # (800) 770-2030 – Conference ID: 8536096 A webcast of the conference call along with the Third Quarter 2023 Earnings Summary will also be available by visiting the Events and Presentations section under Investor Relations on our website at www.MMLP.com. About Martin Midstream Partners MMLP, headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s primary business lines include: (1) terminalling, processing, and storage 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) marketing, distribution, and transportation services for natural gas liquids and blending and packaging services for specialty lubricants and grease. To learn more, visit www.MMLP.com. Follow Martin Midstream Partners L.P. on LinkedIn, Facebook, and X. 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, including (i) the effects of the continued volatility of commodity prices and the related macroeconomic and political environment and (ii) 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 “SEC”). 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 To assist management in assessing our business, we use the following non-GAAP financial measures: earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below), distributable cash flow available to common unitholders (“distributable cash flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("adjusted free cash flow"). Our management uses a variety of financial and operational measurements other than our financial statements prepared in accordance with U.S. GAAP to analyze our performance. 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. EBITDA and adjusted EBITDA. We define adjusted EBITDA as EBITDA before unit-based compensation expenses, gains and losses on the disposition of property, plant and equipment, impairment and other similar non-cash adjustments. Adjusted EBITDA is used as a supplemental performance and liquidity measure by our management and by external users of our financial statements, such as investors, commercial banks, research analysts, and others, to assess: the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis; the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness, and make cash distributions to our unitholders; and our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing methods or capital structure. The GAAP measures most directly comparable to adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities, or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate adjusted EBITDA in the same manner. Adjusted EBITDA does not include interest expense, income tax expense, and depreciation and amortization. Because we have borrowed money to finance our operations, interest expense is a necessary element of our costs and our ability to generate cash available for distribution. Because we have capital assets, depreciation and amortization are also necessary elements of our costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, we believe that it is important to consider net income (loss) and net cash provided by (used in) operating activities as determined under GAAP, as well as adjusted EBITDA, to evaluate our overall performance. Distributable cash flow. We define distributable cash flow as net cash provided by (used in) operating activities less cash received (plus cash paid) for closed commodity derivative positions included in Accumulated Other Comprehensive Income (Loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital expenditures and plant turnaround costs. Distributable cash flow is a significant performance measure used by our management and by external users of our financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay unitholders. Distributable cash flow is also an important financial measure for our unitholders since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not we are generating cash flow at a level that can sustain or support an increase in our 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. Adjusted free cash flow. We define adjusted free cash flow as distributable cash flow less growth capital expenditures and principal payments under finance lease obligations. Adjusted free cash flow is a significant performance measure used by our management and by external users of our financial statements and represents how much cash flow a business generates during a specified time period after accounting for all capital expenditures, including expenditures for growth and maintenance capital projects. We believe that adjusted free cash flow is important to investors, lenders, commercial banks and research analysts since it reflects the amount of cash available for reducing debt, investing in additional capital projects, paying distributions, and similar matters. Our calculation of adjusted free cash flow may or may not be comparable to similarly titled measures used by other entities. The GAAP measure most directly comparable to distributable cash flow and adjusted free cash flow is net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow should not be considered alternatives to, or more meaningful than, net income (loss), operating income (loss), Net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP. Distributable cash flow and adjusted free cash flow have important limitations because they exclude some items that affect net income (loss), operating income (loss), and net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow may not be comparable to similarly titled measures of other companies because other companies may not calculate these non-GAAP metrics in the same manner. To compensate for these limitations, we believe that it is important to consider net cash provided by (used in) operating activities determined under GAAP, as well as distributable cash flow and adjusted free cash flow, to evaluate our overall liquidity. MMLP-F MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED BALANCE SHEETS (Dollars in thousands) September 30, 2023 December 31, 2022 (Unaudited) (Audited) Assets Cash $ 54 $ 45 Accounts and other receivables, less allowance for doubtful accounts of $496 and $496, respectively 60,451 79,641 Inventories 41,699 109,798 Due from affiliates 2,096 8,010 Other current assets 7,647 13,633 Total current assets 111,947 211,127 Property, plant and equipment, at cost 909,946 903,535 Accumulated depreciation (602,834 ) (584,245 ) Property, plant and equipment, net 307,112 319,290 Goodwill 16,671 16,671 Right-of-use assets 58,174 34,963 Deferred income taxes, net 12,064 14,386 Other assets, net 1,933 2,414 Total assets $ 507,901 $ 598,851 Liabilities and Partners’ Capital (Deficit) Current installments of long-term debt and finance lease obligations $ — $ 9 Trade and other accounts payable 43,909 68,198 Product exchange payables 775 32 Due to affiliates 8,143 8,947 Income taxes payable 461 665 Other accrued liabilities 27,687 33,074 Total current liabilities 80,975 110,925 Long-term debt, net 439,824 512,871 Operating lease liabilities 44,108 26,268 Other long-term obligations 7,973 8,232 Total liabilities 572,880 658,296 Commitments and contingencies Partners’ capital (deficit) (64,979 ) (59,445 ) Total liabilities and partners' capital (deficit) $ 507,901 $ 598,851 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per unit amounts) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues: Terminalling and storage * $ 22,202 $ 19,988 $ 64,744 $ 59,808 Transportation * 55,223 58,993 165,696 161,535 Sulfur services 3,358 3,085 10,073 9,253 Product sales: * Specialty products 66,695 121,456 277,836 409,215 Sulfur services 29,219 25,783 98,513 135,691 95,914 147,239 376,349 544,906 Total revenues 176,697 229,305 616,862 775,502 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products * 56,298 126,951 245,863 380,602 Sulfur services * 19,461 25,230 66,932 100,078 Terminalling and storage * 23 6 54 15 75,782 152,187 312,849 480,695 Expenses: Operating expenses * 64,375 66,158 187,857 186,735 Selling, general and administrative * 10,424 10,273 30,043 31,420 Depreciation and amortization 12,223 13,721 37,671 43,007 Total costs and expenses 162,804 242,339 568,420 741,857 Other operating income, net 811 790 1,096 1,050 Operating income (loss) 14,704 (12,244 ) 49,538 34,695 Other income (expense): Interest expense, net (14,994 ) (13,906 ) (45,914 ) (39,181 ) Loss on extinguishment of debt — — (5,121 ) — Other, net 17 (2 ) 50 (4 ) Total other expense (14,977 ) (13,908 ) (50,985 ) (39,185 ) Net loss before taxes (273 ) (26,152 ) (1,447 ) (4,490 ) Income tax expense (788 ) (1,891 ) (3,619 ) (5,469 ) Net loss (1,061 ) (28,043 ) (5,066 ) (9,959 ) Less general partner's interest in net loss 21 561 101 199 Less loss allocable to unvested restricted units 4 90 16 39 Limited partners' interest in net loss $ (1,036 ) $ (27,392 ) $ (4,949 ) $ (9,721 ) Net loss per unit attributable to limited partners - basic $ (0.03 ) $ (0.71 ) $ (0.13 ) $ (0.25 ) Net loss per unit attributable to limited partners - diluted $ (0.03 ) $ (0.71 ) $ (0.13 ) $ (0.25 ) Weighted average limited partner units - basic 38,772,266 38,726,388 38,771,451 38,725,933 Weighted average limited partner units - diluted 38,772,266 38,726,388 38,771,451 38,725,933 *Related Party Transactions Shown Below MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per unit amounts) *Related Party Transactions Included Above Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues:* Terminalling and storage $ 18,542 $ 16,065 $ 54,121 $ 49,685 Transportation 7,426 7,111 20,214 20,862 Product Sales 122 63 8,544 486 Costs and expenses:* Cost of products sold: (excluding depreciation and amortization) Specialty products 9,896 10,196 27,324 30,047 Sulfur services 2,787 2,616 8,139 7,884 Terminalling and storage 23 5 54 14 Expenses: Operating expenses 25,606 23,856 74,491 68,682 Selling, general and administrative 8,477 7,627 23,549 23,933 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Dollars in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net loss $ (1,061 ) $ (28,043 ) $ (5,066 ) $ (9,959 ) Commodity cash flow hedging (gains) reclassified to earnings — (167 ) — (816 ) Comprehensive loss $ (1,061 ) $ (28,210 ) $ (5,066 ) $ (10,775 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT) (Unaudited) (Dollars in thousands) Partners’ Capital (Deficit) Common Limited General Partner Amount Accumulated Other Comprehensive Income (Loss) Units Amount Total Balances - June 30, 2023 38,914,806 $ (65,334 ) $ 1,577 $ — $ (63,757 ) Net loss — (1,040 ) (21 ) — (1,061 ) Cash distributions — (194 ) (4 ) — (198 ) Unit-based compensation — 37 — — 37 Balances - September 30, 2023 38,914,806 (66,531 ) 1,552 — $ (64,979 ) Balances - December 31, 2022 38,850,750 $ (61,110 ) $ 1,665 $ — $ (59,445 ) Net loss — (4,965 ) (101 ) — (5,066 ) Issuance of restricted units 64,056 — — — — Cash distributions — (583 ) (12 ) — (595 ) Unit-based compensation — 127 — — 127 Balances - September 30, 2023 38,914,806 $ (66,531 ) $ 1,552 $ — $ (64,979 ) Partners’ Capital (Deficit) Common Limited General Partner Amount Accumulated Other Comprehensive Income (Loss) �� Units Amount Total Balances - June 30, 2022 38,850,750 $ (33,263 ) $ 2,242 $ 167 $ (30,854 ) Net loss — (27,482 ) (561 ) — (28,043 ) Issuance of restricted units — — — — — Cash distributions — (195 ) (4 ) — (199 ) Unit-based compensation — 46 — — 46 Gain recognized in AOCI on commodity cash flow hedges — — — (167 ) (167 ) Balances - September 30, 2022 38,850,750 $ (60,894 ) $ 1,677 $ — $ (59,217 ) Balances - December 31, 2021 38,802,750 $ (50,741 ) $ 1,888 $ 816 $ (48,037 ) Net income — (9,760 ) (199 ) — (9,959 ) Issuance of restricted units 48,000 — — — — Cash distributions — (583 ) (12 ) — (595 ) Unit-based compensation — 125 — — 125 Excess purchase price over carrying value of acquired assets — 65 — — 65 Gain reclassified from AOCI into income on commodity cash flow hedges — — — (816 ) (816 ) Balances - September 30, 2022 38,850,750 $ (60,894 ) $ 1,677 $ — $ (59,217 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Nine Months Ended September 30, 2023 2022 Cash flows from operating activities: Net loss $ (5,066 ) $ (9,959 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 37,671 43,007 Amortization of deferred debt issuance costs 3,206 2,356 Amortization of debt discount 1,600 — Deferred income tax expense 2,322 3,611 Gain on disposition or sale of property, plant and equipment, net (1,096 ) (1,050 ) Loss on extinguishment of debt 5,121 — Derivative income — (901 ) Net cash paid for commodity derivatives — 85 Non cash unit-based compensation 127 125 Change in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and other receivables 19,190 7,076 Inventories 68,099 (73,518 ) Due from affiliates 5,914 12,016 Other current assets 5,282 (4,824 ) Trade and other accounts payable (24,709 ) 6,053 Product exchange payables 743 (695 ) Due to affiliates (804 ) 11,953 Income taxes payable (204 ) 228 Other accrued liabilities (10,311 ) (13,435 ) Change in other non-current assets and liabilities (1,020 ) 1,116 Net cash provided by (used in) operating activities 106,065 (16,756 ) Cash flows from investing activities: Payments for property, plant and equipment (25,294 ) (21,019 ) Payments for plant turnaround costs (2,367 ) (4,262 ) Proceeds from sale of property, plant and equipment 5,183 2,209 Net cash used in investing activities (22,478 ) (23,072 ) Cash flows from financing activities: Payments of long-term debt (579,197 ) (299,089 ) Payments under finance lease obligations (9 ) (180 ) Proceeds from long-term debt 510,489 341,000 Payment of debt issuance costs (14,266 ) (30 ) Excess purchase price over carrying value of acquired assets — (1,285 ) Cash distributions paid (595 ) (595 ) Net cash provided by (used in) financing activities (83,578 ) 39,821 Net increase (decrease) in cash 9 (7 ) Cash at beginning of period 45 52 Cash at end of period $ 54 $ 45 Non-cash additions to property, plant and equipment $ 2,369 $ 2,240 MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Unaudited) (Dollars and volumes in thousands, except BBL per day) Terminalling and Storage Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 23,973 $ 23,034 $ 939 4 % Cost of products sold 23 6 17 283 % Operating expenses 15,078 16,418 (1,340 ) (8 )% Selling, general and administrative expenses 628 457 171 37 % Depreciation and amortization 5,102 6,200 (1,098 ) (18 )% 3,142 (47 ) 3,189 6,785 % Other operating loss, net (35 ) — (35 ) Operating income (loss) $ 3,107 $ (47 ) $ 3,154 6,711 % Shore-based throughput volumes (gallons) 40,655 14,658 25,997 177 % Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — % Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 71,798 $ 69,027 $ 2,771 4 % Cost of products sold 54 15 39 260 % Operating expenses 43,318 47,372 (4,054 ) (9 )% Selling, general and administrative expenses 1,510 1,491 19 1 % Depreciation and amortization 15,896 20,372 (4,476 ) (22 )% 11,020 (223 ) 11,243 5,042 % Other operating loss, net (359 ) (35 ) (324 ) (926 )% Operating income (loss) $ 10,661 $ (258 ) $ 10,919 4,232 % Shore-based throughput volumes (gallons) 126,438 42,201 84,237 200 % Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500 6,500 — — % Transportation Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 58,541 $ 63,514 $ (4,973 ) (8 )% Operating expenses 46,465 46,499 (34 ) — % Selling, general and administrative expenses 2,571 1,962 609 31 % Depreciation and amortization 3,674 3,598 76 2 % 5,831 11,455 (5,624 ) (49 )% Other operating income, net 846 618 228 37 % Operating income $ 6,677 $ 12,073 $ (5,396 ) (45 )% Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 178,875 $ 176,313 $ 2,562 1 % Operating expenses 136,940 130,229 6,711 5 % Selling, general and administrative expenses 7,101 5,920 1,181 20 % Depreciation and amortization 11,196 10,761 435 4 % $ 23,638 $ 29,403 $ (5,765 ) (20 )% Other operating income, net 1,497 901 596 66 % Operating income $ 25,135 $ 30,304 $ (5,169 ) (17 )% Sulfur Services Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 3,358 $ 3,085 $ 273 9 % Products 29,219 25,783 3,436 13 % Total revenues 32,577 28,868 3,709 13 % Cost of products sold 21,972 27,201 (5,229 ) (19 )% Operating expenses 3,510 3,978 (468 ) (12 )% Selling, general and administrative expenses 1,713 1,509 204 14 % Depreciation and amortization 2,639 2,786 (147 ) (5 )% 2,743 (6,606 ) 9,349 142 % Other operating loss, net — (70 ) 70 100 % Operating income (loss) $ 2,743 $ (6,676 ) $ 9,419 141 % Sulfur (long tons) 155 95 60 63 % Fertilizer (long tons) 58 24 34 142 % Total sulfur services volumes (long tons) 213 119 94 79 % Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 10,073 $ 9,253 $ 820 9 % Products 98,513 135,691 (37,178 ) (27 )% Total revenues 108,586 144,944 (36,358 ) (25 )% Cost of products sold 74,062 105,640 (31,578 ) (30 )% Operating expenses 9,595 11,233 (1,638 ) (15 )% Selling, general and administrative expenses 4,292 4,550 (258 ) (6 )% Depreciation and amortization 8,072 8,377 (305 ) (4 )% 12,565 15,144 (2,579 ) (17 )% Other operating income (loss), net 17 (34 ) 51 150 % Operating income $ 12,582 $ 15,110 $ (2,528 ) (17 )% Sulfur (long tons) 352 327 25 8 % Fertilizer (long tons) 192 170 22 13 % Total sulfur services volumes (long tons) 544 497 47 9 % Specialty Products Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 66,720 $ 121,484 $ (54,764 ) (45 )% Cost of products sold 58,177 131,790 (73,613 ) (56 )% Operating expenses 23 26 (3 ) (12 )% Selling, general and administrative expenses 1,698 2,107 (409 ) (19 )% Depreciation and amortization 808 1,137 (329 ) (29 )% 6,014 (13,576 ) 19,590 144 % Other operating income, net — 242 (242 ) (100 )% Operating income (loss) $ 6,014 $ (13,334 ) $ 19,348 145 % NGL sales volumes (Bbls) 509 1,180 (671 ) (57 )% Other specialty products volumes (Bbls) 106 110 (4 ) (4 )% Total specialty products volumes (Bbls) 615 1,290 (675 ) (52 )% Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 277,895 $ 409,310 $ (131,415 ) (32 )% Cost of products sold 256,898 396,865 (139,967 ) (35 )% Operating expenses 55 98 (43 ) (44 )% Selling, general and administrative expenses 5,287 6,757 (1,470 ) (22 )% Depreciation and amortization 2,507 3,497 (990 ) (28 )% 13,148 2,093 11,055 528 % Other operating income (loss), net (59 ) 218 (277 ) (127 )% Operating income $ 13,089 $ 2,311 $ 10,778 466 % NGL sales volumes (Bbls) 3,027 3,930 (903 ) (23 )% Other specialty products volumes (Bbls) 280 311 (31 ) (10 )% Total specialty products volumes (Bbls) 3,307 4,241 (934 ) (22 )% Unallocated Selling, General and Administrative Expenses Comparative Results of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 Three Months Ended Nine Months Ended September 30, Variance Percent Change September 30, Variance Percent Change 2023 2022 2023 2022 (In thousands) (In thousands) Indirect selling, general and administrative expenses $ 3,837 $ 4,260 $ (423 ) (10 )% $ 11,929 $ 12,772 $ (843 ) (7 )% Non-GAAP Financial Measures The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and nine months ended September 30, 2023 and 2022, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow: Reconciliation of Net Loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net loss $ (1,061 ) $ (28,043 ) $ (5,066 ) $ (9,959 ) Adjustments: Interest expense 14,994 13,906 45,914 39,181 Income tax expense 788 1,891 3,619 5,469 Depreciation and amortization 12,223 13,721 37,671 43,007 EBITDA 26,944 1,475 82,138 77,698 Adjustments: Gain on disposition or sale of property, plant and equipment (811 ) (790 ) (1,096 ) (1,050 ) Loss on extinguishment of debt — — 5,121 — Lower of cost or net realizable value and other non-cash adjustments — 18,084 (12,850 ) 20,326 Unit-based compensation 37 46 127 125 Adjusted EBITDA $ 26,170 $ 18,815 $ 73,440 $ 97,099 Adjustments: Less: net loss associated with butane optimization business — 20,032 2,255 15,280 Plus: lower of cost or net realizable value and other non-cash adjustments — $ (18,457 ) 12,850 (18,826 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business $ 26,170 $ 20,390 $ 88,545 $ 93,553 Reconciliation of Net Cash Provided by (Used in) Operating Activities to Adjusted EBITDA, Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business, Distributable Cash Flow, and Adjusted Free Cash Flow Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net cash provided by (used in) operating activities $ 7,291 $ (45,207 ) $ 106,065 $ (16,756 ) Interest expense 1 13,623 13,118 41,108 36,825 Current income tax expense 333 584 1,297 1,858 Lower of cost or net realizable value and other non-cash adjustments — 18,084 (12,850 ) 20,326 Commodity cash flow hedging gains reclassified to earnings — 167 — 901 Net cash paid for closed commodity derivative positions included in AOCI — — — (85 ) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets (5,983 ) (5,651 ) (98,485 ) 59,250 Trade, accounts and other payables, and other current liabilities 11,155 38,691 35,285 (4,104 ) Other (249 ) (971 ) 1,020 (1,116 ) Adjusted EBITDA 26,170 18,815 73,440 97,099 Adjustments: Less: net loss associated with butane optimization business — 20,032 2,255 15,280 Plus: lower of cost or net realizable value and other non-cash adjustments — (18,457 ) 12,850 (18,826 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business 26,170 20,390 88,545 93,553 Adjustments: Interest expense (14,994 ) (13,906 ) (45,914 ) (39,181 ) Income tax expense (788 ) (1,891 ) (3,619 ) (5,469 ) Deferred income taxes 455 1,307 2,322 3,611 Amortization of debt discount 600 — 1,600 — Amortization of deferred debt issuance costs 771 788 3,206 2,356 Payments for plant turnaround costs (1,706 ) (2,662 ) (2,367 ) (4,262 ) Maintenance capital expenditures (5,516 ) (5,994 ) (19,588 ) (14,548 ) Distributable cash flow 4,992 (1,968 ) 24,185 36,060 Principal payments under finance lease obligations — (61 ) (9 ) (180 ) Expansion capital expenditures (3,444 ) (926 ) (6,126 ) (5,482 ) Adjusted free cash flow $ 1,548 $ (2,955 ) $ 18,050 $ 30,398 1 Net of amortization of debt issuance costs and discount, which are included in interest expense but not included in net cash provided by (used in) operating activities. 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Martin Midstream Partners Reports Third Quarter 2023 Financial Results and Declares Quarterly Cash Distribution By: Martin Midstream Partners L.P. via Business Wire October 18, 2023 at 16:01 PM EDT Total adjusted leverage of 3.95 times as of September 30, 2023 Reported net loss of $1.1 million and $5.1 million for the three and nine months ended September 30, 2023, respectively, which includes a $5.1 million impact from the loss on extinguishment of debt for the nine months ended September 30, 2023 Reported adjusted EBITDA of $26.2 million and $88.6 million, after giving effect to the May 2023 exit of the butane optimization business, which incurred adjusted EBITDA of zero and negative adjusted EBITDA of $15.1 million, for the three and nine months ended September 30, 2023, respectively Reaffirms 2023 Annual Adjusted EBITDA Guidance of $115.4 million Declares quarterly cash distribution of $0.005 per common unit for the quarter ended September 30, 2023, or $0.020 per common unit annually Martin Midstream Partners L.P. (Nasdaq:MMLP) (“MMLP” or the "Partnership") today announced its financial results for the third quarter of 2023. Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, stated, “The Partnership’s financial results for the third quarter met guidance as both the Specialty Products and Sulfur Services segments outperformed but were offset by the Transportation segment as certain industrial customers experienced challenges that negatively impacted the ground transportation business. Our full year 2023 adjusted EBITDA outlook, which does not include losses related to the butane optimization business, remains unchanged at $115.4 million, confirming the recent operational restructuring of our refinery services business model to deliver stable and sustainable cash flows. Looking to the future, we anticipate increased earnings related to the joint venture with Samsung C&T America and Dongjin USA, even as delays in the construction of semiconductor manufacturing facilities may result in deferred demand for electronic level sulfuric acid. “During the first nine months of 2023, the Partnership, utilizing free cash flow and a significant reduction in working capital due to the exit from the butane optimization business, reduced total debt by $53.6 million. As a result, adjusted leverage was decreased to 3.95 times at September 30, 2023 compared to 4.53 times at December 31, 2022.” THIRD QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT TERMINALLING AND STORAGE (“T&S”) T&S operating income (loss) for the three months ended September 30, 2023 and 2022 was $3.1 million and ($0.1) million, respectively. Adjusted segment EBITDA for T&S was $8.2 million and $6.2 million for the three months ended September 30, 2023 and 2022, respectively, reflecting contractual index-based fee increases combined with reduced operating expenses across our divisions. TRANSPORTATION Transportation operating income for the three months ended September 30, 2023 and 2022 was $6.7 million and $12.1 million, respectively. Adjusted segment EBITDA for Transportation was $9.5 million and $15.1 million for the three months ended September 30, 2023 and 2022, respectively, primarily reflecting increased expenses combined with lower mileage in our land transportation division. SULFUR SERVICES Sulfur Services operating income (loss) for the three months ended September 30, 2023 and 2022 was $2.7 million and ($6.7) million, including a ($3.3) million inventory valuation write down, respectively. Adjusted segment EBITDA for Sulfur Services was $5.4 million and ($4.2) million for the three months ended September 30, 2023 and 2022, respectively, reflecting increased volumes and margins in both our fertilizer and sulfur businesses. SPECIALTY PRODUCTS Specialty Products operating income (loss) for the three months ended September 30, 2023 and 2022 was $6.0 million and ($13.3) million, respectively. Included in the Specialty Products results is an operating loss of $20.0 million for the three months ended September 30, 2022, attributable to the butane optimization business. Adjusted segment EBITDA for Specialty Products was $6.8 million and $6.0 million for the three months ended September 30, 2023 and 2022, respectively. Included in the Specialty Products results is negative adjusted EBITDA of ($1.6) million for the three months ended September 30, 2022, attributable to the butane optimization business. Adjusted Segment EBITDA for Specialty Products after giving effect to the May 2023 exit of the butane optimization business was $6.8 million and $7.6 million for the three months ended September 30, 2023 and 2022, respectively, reflecting reduced NGL margins. UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”) USGA expenses included in operating income for the three months ended September 30, 2023 and 2022 were $3.8 million and $4.3 million, respectively. USGA expenses included in adjusted EBITDA for the three months ended September 30, 2023 and 2022 were $3.8 million and $4.2 million, respectively, reflecting a reduction in employee-related expenses. CAPITALIZATION At September 30, 2023, the Partnership had $462.5 million of total debt outstanding, including $62.5 million drawn on its $175 million revolving credit facility maturing in 2027 and $400 million of senior secured second lien notes due 2028. At September 30, 2023, the Partnership had liquidity of approximately $84.1 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 3.95 times at September 30, 2023, compared to 4.14 times at June 30, 2023, a reduction of 0.19 times. The Partnership was in compliance with all debt covenants as of September 30, 2023. QUARTERLY CASH DISTRIBUTION The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended September 30, 2023. The distribution is payable on November 14, 2023 to common unitholders of record as of the close of business on November 7, 2023. The ex-dividend date for the cash distribution is November 6, 2023. QUALIFIED NOTICE TO NOMINEES Partnership: Martin Midstream Partners L.P. Unit Class: Common CUSIP #: 573331105 RE: Qualified Notice Pursuant to U.S. Treasury Regulation §1.1446-4 Record Date: November 7, 2023 Payable Date: November 14, 2023 Per Unit Amount: $0.005 Section I: This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Section II: The entire amount of the distribution realized per U.S. Treasury Regulation 1.1446(f)-4(c)(2)(iii) is in excess of cumulative net taxable income. RESULTS OF OPERATIONS The Partnership had a net loss for the three months ended September 30, 2023 of $1.1 million, a loss of $0.03 per limited partner unit. The Partnership had a net loss for the three months ended September 30, 2022 of $28.0 million, a loss of $0.71 per limited partner unit. Adjusted EBITDA for the three months ended September 30, 2023 was $26.2 million compared to $18.8 million for the three months ended September 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended September 30, 2023 was $26.2 million compared to $20.4 million for the three months ended September 30, 2022. Net cash provided by (used in) operating activities for the three months ended September 30, 2023 was $7.3 million, compared to ($45.2) million for the three months ended September 30, 2022. Distributable cash flow for the three months ended September 30, 2023 was $5.0 million compared to $(2.0) million for the three months ended September 30, 2022. The Partnership had a net loss for the nine months ended September 30, 2023 of $5.1 million, a loss of $0.13 per limited partner unit. The Partnership had a net loss for the nine months ended September 30, 2022 of $10.0 million, a loss of $0.25 per limited partner unit. Adjusted EBITDA for the nine months ended September 30, 2023 was $73.4 million compared to $97.1 million for the nine months ended September 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the nine months ended September 30, 2023 was $88.6 million compared to $93.6 million for the nine months ended September 30, 2022. Net cash provided by (used in) operating activities for the nine months ended September 30, 2023 was $106.1 million compared to ($16.8) million for the nine months ended September 30, 2022. Distributable cash flow for the nine months ended September 30, 2023 was $24.2 million compared to $36.1 million for the nine months ended September 30, 2022. Revenues for the three months ended September 30, 2023 were $176.7 million compared to $229.3 million for the three months ended September 30, 2022. Revenues for the nine months ended September 30, 2023 were $616.9 million compared to $775.5 million for the nine months ended September 30, 2022. EBITDA, adjusted EBITDA, distributable cash flow and adjusted free cash flow 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, Distributable Cash Flow and Adjusted Free 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 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 2023 to the Partnership's adjusted EBITDA guidance for the third quarter 2023. Investors' Conference Call Date: Thursday, October 19, 2023 Time: 8:00 a.m. CT (please dial in by 7:55 a.m.) Dial In #: (888) 330-2384 Conference ID: 8536096 Replay Dial In # (800) 770-2030 – Conference ID: 8536096 A webcast of the conference call along with the Third Quarter 2023 Earnings Summary will also be available by visiting the Events and Presentations section under Investor Relations on our website at www.MMLP.com. About Martin Midstream Partners MMLP, headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s primary business lines include: (1) terminalling, processing, and storage 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) marketing, distribution, and transportation services for natural gas liquids and blending and packaging services for specialty lubricants and grease. To learn more, visit www.MMLP.com. Follow Martin Midstream Partners L.P. on LinkedIn, Facebook, and X. 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, including (i) the effects of the continued volatility of commodity prices and the related macroeconomic and political environment and (ii) 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 “SEC”). 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 To assist management in assessing our business, we use the following non-GAAP financial measures: earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below), distributable cash flow available to common unitholders (“distributable cash flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("adjusted free cash flow"). Our management uses a variety of financial and operational measurements other than our financial statements prepared in accordance with U.S. GAAP to analyze our performance. 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. EBITDA and adjusted EBITDA. We define adjusted EBITDA as EBITDA before unit-based compensation expenses, gains and losses on the disposition of property, plant and equipment, impairment and other similar non-cash adjustments. Adjusted EBITDA is used as a supplemental performance and liquidity measure by our management and by external users of our financial statements, such as investors, commercial banks, research analysts, and others, to assess: the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis; the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness, and make cash distributions to our unitholders; and our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing methods or capital structure. The GAAP measures most directly comparable to adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities, or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate adjusted EBITDA in the same manner. Adjusted EBITDA does not include interest expense, income tax expense, and depreciation and amortization. Because we have borrowed money to finance our operations, interest expense is a necessary element of our costs and our ability to generate cash available for distribution. Because we have capital assets, depreciation and amortization are also necessary elements of our costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, we believe that it is important to consider net income (loss) and net cash provided by (used in) operating activities as determined under GAAP, as well as adjusted EBITDA, to evaluate our overall performance. Distributable cash flow. We define distributable cash flow as net cash provided by (used in) operating activities less cash received (plus cash paid) for closed commodity derivative positions included in Accumulated Other Comprehensive Income (Loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital expenditures and plant turnaround costs. Distributable cash flow is a significant performance measure used by our management and by external users of our financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay unitholders. Distributable cash flow is also an important financial measure for our unitholders since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not we are generating cash flow at a level that can sustain or support an increase in our 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. Adjusted free cash flow. We define adjusted free cash flow as distributable cash flow less growth capital expenditures and principal payments under finance lease obligations. Adjusted free cash flow is a significant performance measure used by our management and by external users of our financial statements and represents how much cash flow a business generates during a specified time period after accounting for all capital expenditures, including expenditures for growth and maintenance capital projects. We believe that adjusted free cash flow is important to investors, lenders, commercial banks and research analysts since it reflects the amount of cash available for reducing debt, investing in additional capital projects, paying distributions, and similar matters. Our calculation of adjusted free cash flow may or may not be comparable to similarly titled measures used by other entities. The GAAP measure most directly comparable to distributable cash flow and adjusted free cash flow is net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow should not be considered alternatives to, or more meaningful than, net income (loss), operating income (loss), Net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP. Distributable cash flow and adjusted free cash flow have important limitations because they exclude some items that affect net income (loss), operating income (loss), and net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow may not be comparable to similarly titled measures of other companies because other companies may not calculate these non-GAAP metrics in the same manner. To compensate for these limitations, we believe that it is important to consider net cash provided by (used in) operating activities determined under GAAP, as well as distributable cash flow and adjusted free cash flow, to evaluate our overall liquidity. MMLP-F MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED BALANCE SHEETS (Dollars in thousands) September 30, 2023 December 31, 2022 (Unaudited) (Audited) Assets Cash $ 54 $ 45 Accounts and other receivables, less allowance for doubtful accounts of $496 and $496, respectively 60,451 79,641 Inventories 41,699 109,798 Due from affiliates 2,096 8,010 Other current assets 7,647 13,633 Total current assets 111,947 211,127 Property, plant and equipment, at cost 909,946 903,535 Accumulated depreciation (602,834 ) (584,245 ) Property, plant and equipment, net 307,112 319,290 Goodwill 16,671 16,671 Right-of-use assets 58,174 34,963 Deferred income taxes, net 12,064 14,386 Other assets, net 1,933 2,414 Total assets $ 507,901 $ 598,851 Liabilities and Partners’ Capital (Deficit) Current installments of long-term debt and finance lease obligations $ — $ 9 Trade and other accounts payable 43,909 68,198 Product exchange payables 775 32 Due to affiliates 8,143 8,947 Income taxes payable 461 665 Other accrued liabilities 27,687 33,074 Total current liabilities 80,975 110,925 Long-term debt, net 439,824 512,871 Operating lease liabilities 44,108 26,268 Other long-term obligations 7,973 8,232 Total liabilities 572,880 658,296 Commitments and contingencies Partners’ capital (deficit) (64,979 ) (59,445 ) Total liabilities and partners' capital (deficit) $ 507,901 $ 598,851 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per unit amounts) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues: Terminalling and storage * $ 22,202 $ 19,988 $ 64,744 $ 59,808 Transportation * 55,223 58,993 165,696 161,535 Sulfur services 3,358 3,085 10,073 9,253 Product sales: * Specialty products 66,695 121,456 277,836 409,215 Sulfur services 29,219 25,783 98,513 135,691 95,914 147,239 376,349 544,906 Total revenues 176,697 229,305 616,862 775,502 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products * 56,298 126,951 245,863 380,602 Sulfur services * 19,461 25,230 66,932 100,078 Terminalling and storage * 23 6 54 15 75,782 152,187 312,849 480,695 Expenses: Operating expenses * 64,375 66,158 187,857 186,735 Selling, general and administrative * 10,424 10,273 30,043 31,420 Depreciation and amortization 12,223 13,721 37,671 43,007 Total costs and expenses 162,804 242,339 568,420 741,857 Other operating income, net 811 790 1,096 1,050 Operating income (loss) 14,704 (12,244 ) 49,538 34,695 Other income (expense): Interest expense, net (14,994 ) (13,906 ) (45,914 ) (39,181 ) Loss on extinguishment of debt — — (5,121 ) — Other, net 17 (2 ) 50 (4 ) Total other expense (14,977 ) (13,908 ) (50,985 ) (39,185 ) Net loss before taxes (273 ) (26,152 ) (1,447 ) (4,490 ) Income tax expense (788 ) (1,891 ) (3,619 ) (5,469 ) Net loss (1,061 ) (28,043 ) (5,066 ) (9,959 ) Less general partner's interest in net loss 21 561 101 199 Less loss allocable to unvested restricted units 4 90 16 39 Limited partners' interest in net loss $ (1,036 ) $ (27,392 ) $ (4,949 ) $ (9,721 ) Net loss per unit attributable to limited partners - basic $ (0.03 ) $ (0.71 ) $ (0.13 ) $ (0.25 ) Net loss per unit attributable to limited partners - diluted $ (0.03 ) $ (0.71 ) $ (0.13 ) $ (0.25 ) Weighted average limited partner units - basic 38,772,266 38,726,388 38,771,451 38,725,933 Weighted average limited partner units - diluted 38,772,266 38,726,388 38,771,451 38,725,933 *Related Party Transactions Shown Below MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per unit amounts) *Related Party Transactions Included Above Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues:* Terminalling and storage $ 18,542 $ 16,065 $ 54,121 $ 49,685 Transportation 7,426 7,111 20,214 20,862 Product Sales 122 63 8,544 486 Costs and expenses:* Cost of products sold: (excluding depreciation and amortization) Specialty products 9,896 10,196 27,324 30,047 Sulfur services 2,787 2,616 8,139 7,884 Terminalling and storage 23 5 54 14 Expenses: Operating expenses 25,606 23,856 74,491 68,682 Selling, general and administrative 8,477 7,627 23,549 23,933 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Dollars in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net loss $ (1,061 ) $ (28,043 ) $ (5,066 ) $ (9,959 ) Commodity cash flow hedging (gains) reclassified to earnings — (167 ) — (816 ) Comprehensive loss $ (1,061 ) $ (28,210 ) $ (5,066 ) $ (10,775 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT) (Unaudited) (Dollars in thousands) Partners’ Capital (Deficit) Common Limited General Partner Amount Accumulated Other Comprehensive Income (Loss) Units Amount Total Balances - June 30, 2023 38,914,806 $ (65,334 ) $ 1,577 $ — $ (63,757 ) Net loss — (1,040 ) (21 ) — (1,061 ) Cash distributions — (194 ) (4 ) — (198 ) Unit-based compensation — 37 — — 37 Balances - September 30, 2023 38,914,806 (66,531 ) 1,552 — $ (64,979 ) Balances - December 31, 2022 38,850,750 $ (61,110 ) $ 1,665 $ — $ (59,445 ) Net loss — (4,965 ) (101 ) — (5,066 ) Issuance of restricted units 64,056 — — — — Cash distributions — (583 ) (12 ) — (595 ) Unit-based compensation — 127 — — 127 Balances - September 30, 2023 38,914,806 $ (66,531 ) $ 1,552 $ — $ (64,979 ) Partners’ Capital (Deficit) Common Limited General Partner Amount Accumulated Other Comprehensive Income (Loss) �� Units Amount Total Balances - June 30, 2022 38,850,750 $ (33,263 ) $ 2,242 $ 167 $ (30,854 ) Net loss — (27,482 ) (561 ) — (28,043 ) Issuance of restricted units — — — — — Cash distributions — (195 ) (4 ) — (199 ) Unit-based compensation — 46 — — 46 Gain recognized in AOCI on commodity cash flow hedges — — — (167 ) (167 ) Balances - September 30, 2022 38,850,750 $ (60,894 ) $ 1,677 $ — $ (59,217 ) Balances - December 31, 2021 38,802,750 $ (50,741 ) $ 1,888 $ 816 $ (48,037 ) Net income — (9,760 ) (199 ) — (9,959 ) Issuance of restricted units 48,000 — — — — Cash distributions — (583 ) (12 ) — (595 ) Unit-based compensation — 125 — — 125 Excess purchase price over carrying value of acquired assets — 65 — — 65 Gain reclassified from AOCI into income on commodity cash flow hedges — — — (816 ) (816 ) Balances - September 30, 2022 38,850,750 $ (60,894 ) $ 1,677 $ — $ (59,217 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Nine Months Ended September 30, 2023 2022 Cash flows from operating activities: Net loss $ (5,066 ) $ (9,959 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 37,671 43,007 Amortization of deferred debt issuance costs 3,206 2,356 Amortization of debt discount 1,600 — Deferred income tax expense 2,322 3,611 Gain on disposition or sale of property, plant and equipment, net (1,096 ) (1,050 ) Loss on extinguishment of debt 5,121 — Derivative income — (901 ) Net cash paid for commodity derivatives — 85 Non cash unit-based compensation 127 125 Change in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and other receivables 19,190 7,076 Inventories 68,099 (73,518 ) Due from affiliates 5,914 12,016 Other current assets 5,282 (4,824 ) Trade and other accounts payable (24,709 ) 6,053 Product exchange payables 743 (695 ) Due to affiliates (804 ) 11,953 Income taxes payable (204 ) 228 Other accrued liabilities (10,311 ) (13,435 ) Change in other non-current assets and liabilities (1,020 ) 1,116 Net cash provided by (used in) operating activities 106,065 (16,756 ) Cash flows from investing activities: Payments for property, plant and equipment (25,294 ) (21,019 ) Payments for plant turnaround costs (2,367 ) (4,262 ) Proceeds from sale of property, plant and equipment 5,183 2,209 Net cash used in investing activities (22,478 ) (23,072 ) Cash flows from financing activities: Payments of long-term debt (579,197 ) (299,089 ) Payments under finance lease obligations (9 ) (180 ) Proceeds from long-term debt 510,489 341,000 Payment of debt issuance costs (14,266 ) (30 ) Excess purchase price over carrying value of acquired assets — (1,285 ) Cash distributions paid (595 ) (595 ) Net cash provided by (used in) financing activities (83,578 ) 39,821 Net increase (decrease) in cash 9 (7 ) Cash at beginning of period 45 52 Cash at end of period $ 54 $ 45 Non-cash additions to property, plant and equipment $ 2,369 $ 2,240 MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Unaudited) (Dollars and volumes in thousands, except BBL per day) Terminalling and Storage Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 23,973 $ 23,034 $ 939 4 % Cost of products sold 23 6 17 283 % Operating expenses 15,078 16,418 (1,340 ) (8 )% Selling, general and administrative expenses 628 457 171 37 % Depreciation and amortization 5,102 6,200 (1,098 ) (18 )% 3,142 (47 ) 3,189 6,785 % Other operating loss, net (35 ) — (35 ) Operating income (loss) $ 3,107 $ (47 ) $ 3,154 6,711 % Shore-based throughput volumes (gallons) 40,655 14,658 25,997 177 % Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — % Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 71,798 $ 69,027 $ 2,771 4 % Cost of products sold 54 15 39 260 % Operating expenses 43,318 47,372 (4,054 ) (9 )% Selling, general and administrative expenses 1,510 1,491 19 1 % Depreciation and amortization 15,896 20,372 (4,476 ) (22 )% 11,020 (223 ) 11,243 5,042 % Other operating loss, net (359 ) (35 ) (324 ) (926 )% Operating income (loss) $ 10,661 $ (258 ) $ 10,919 4,232 % Shore-based throughput volumes (gallons) 126,438 42,201 84,237 200 % Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500 6,500 — — % Transportation Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 58,541 $ 63,514 $ (4,973 ) (8 )% Operating expenses 46,465 46,499 (34 ) — % Selling, general and administrative expenses 2,571 1,962 609 31 % Depreciation and amortization 3,674 3,598 76 2 % 5,831 11,455 (5,624 ) (49 )% Other operating income, net 846 618 228 37 % Operating income $ 6,677 $ 12,073 $ (5,396 ) (45 )% Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 178,875 $ 176,313 $ 2,562 1 % Operating expenses 136,940 130,229 6,711 5 % Selling, general and administrative expenses 7,101 5,920 1,181 20 % Depreciation and amortization 11,196 10,761 435 4 % $ 23,638 $ 29,403 $ (5,765 ) (20 )% Other operating income, net 1,497 901 596 66 % Operating income $ 25,135 $ 30,304 $ (5,169 ) (17 )% Sulfur Services Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 3,358 $ 3,085 $ 273 9 % Products 29,219 25,783 3,436 13 % Total revenues 32,577 28,868 3,709 13 % Cost of products sold 21,972 27,201 (5,229 ) (19 )% Operating expenses 3,510 3,978 (468 ) (12 )% Selling, general and administrative expenses 1,713 1,509 204 14 % Depreciation and amortization 2,639 2,786 (147 ) (5 )% 2,743 (6,606 ) 9,349 142 % Other operating loss, net — (70 ) 70 100 % Operating income (loss) $ 2,743 $ (6,676 ) $ 9,419 141 % Sulfur (long tons) 155 95 60 63 % Fertilizer (long tons) 58 24 34 142 % Total sulfur services volumes (long tons) 213 119 94 79 % Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 10,073 $ 9,253 $ 820 9 % Products 98,513 135,691 (37,178 ) (27 )% Total revenues 108,586 144,944 (36,358 ) (25 )% Cost of products sold 74,062 105,640 (31,578 ) (30 )% Operating expenses 9,595 11,233 (1,638 ) (15 )% Selling, general and administrative expenses 4,292 4,550 (258 ) (6 )% Depreciation and amortization 8,072 8,377 (305 ) (4 )% 12,565 15,144 (2,579 ) (17 )% Other operating income (loss), net 17 (34 ) 51 150 % Operating income $ 12,582 $ 15,110 $ (2,528 ) (17 )% Sulfur (long tons) 352 327 25 8 % Fertilizer (long tons) 192 170 22 13 % Total sulfur services volumes (long tons) 544 497 47 9 % Specialty Products Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 66,720 $ 121,484 $ (54,764 ) (45 )% Cost of products sold 58,177 131,790 (73,613 ) (56 )% Operating expenses 23 26 (3 ) (12 )% Selling, general and administrative expenses 1,698 2,107 (409 ) (19 )% Depreciation and amortization 808 1,137 (329 ) (29 )% 6,014 (13,576 ) 19,590 144 % Other operating income, net — 242 (242 ) (100 )% Operating income (loss) $ 6,014 $ (13,334 ) $ 19,348 145 % NGL sales volumes (Bbls) 509 1,180 (671 ) (57 )% Other specialty products volumes (Bbls) 106 110 (4 ) (4 )% Total specialty products volumes (Bbls) 615 1,290 (675 ) (52 )% Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 277,895 $ 409,310 $ (131,415 ) (32 )% Cost of products sold 256,898 396,865 (139,967 ) (35 )% Operating expenses 55 98 (43 ) (44 )% Selling, general and administrative expenses 5,287 6,757 (1,470 ) (22 )% Depreciation and amortization 2,507 3,497 (990 ) (28 )% 13,148 2,093 11,055 528 % Other operating income (loss), net (59 ) 218 (277 ) (127 )% Operating income $ 13,089 $ 2,311 $ 10,778 466 % NGL sales volumes (Bbls) 3,027 3,930 (903 ) (23 )% Other specialty products volumes (Bbls) 280 311 (31 ) (10 )% Total specialty products volumes (Bbls) 3,307 4,241 (934 ) (22 )% Unallocated Selling, General and Administrative Expenses Comparative Results of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 Three Months Ended Nine Months Ended September 30, Variance Percent Change September 30, Variance Percent Change 2023 2022 2023 2022 (In thousands) (In thousands) Indirect selling, general and administrative expenses $ 3,837 $ 4,260 $ (423 ) (10 )% $ 11,929 $ 12,772 $ (843 ) (7 )% Non-GAAP Financial Measures The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and nine months ended September 30, 2023 and 2022, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow: Reconciliation of Net Loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net loss $ (1,061 ) $ (28,043 ) $ (5,066 ) $ (9,959 ) Adjustments: Interest expense 14,994 13,906 45,914 39,181 Income tax expense 788 1,891 3,619 5,469 Depreciation and amortization 12,223 13,721 37,671 43,007 EBITDA 26,944 1,475 82,138 77,698 Adjustments: Gain on disposition or sale of property, plant and equipment (811 ) (790 ) (1,096 ) (1,050 ) Loss on extinguishment of debt — — 5,121 — Lower of cost or net realizable value and other non-cash adjustments — 18,084 (12,850 ) 20,326 Unit-based compensation 37 46 127 125 Adjusted EBITDA $ 26,170 $ 18,815 $ 73,440 $ 97,099 Adjustments: Less: net loss associated with butane optimization business — 20,032 2,255 15,280 Plus: lower of cost or net realizable value and other non-cash adjustments — $ (18,457 ) 12,850 (18,826 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business $ 26,170 $ 20,390 $ 88,545 $ 93,553 Reconciliation of Net Cash Provided by (Used in) Operating Activities to Adjusted EBITDA, Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business, Distributable Cash Flow, and Adjusted Free Cash Flow Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net cash provided by (used in) operating activities $ 7,291 $ (45,207 ) $ 106,065 $ (16,756 ) Interest expense 1 13,623 13,118 41,108 36,825 Current income tax expense 333 584 1,297 1,858 Lower of cost or net realizable value and other non-cash adjustments — 18,084 (12,850 ) 20,326 Commodity cash flow hedging gains reclassified to earnings — 167 — 901 Net cash paid for closed commodity derivative positions included in AOCI — — — (85 ) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets (5,983 ) (5,651 ) (98,485 ) 59,250 Trade, accounts and other payables, and other current liabilities 11,155 38,691 35,285 (4,104 ) Other (249 ) (971 ) 1,020 (1,116 ) Adjusted EBITDA 26,170 18,815 73,440 97,099 Adjustments: Less: net loss associated with butane optimization business — 20,032 2,255 15,280 Plus: lower of cost or net realizable value and other non-cash adjustments — (18,457 ) 12,850 (18,826 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business 26,170 20,390 88,545 93,553 Adjustments: Interest expense (14,994 ) (13,906 ) (45,914 ) (39,181 ) Income tax expense (788 ) (1,891 ) (3,619 ) (5,469 ) Deferred income taxes 455 1,307 2,322 3,611 Amortization of debt discount 600 — 1,600 — Amortization of deferred debt issuance costs 771 788 3,206 2,356 Payments for plant turnaround costs (1,706 ) (2,662 ) (2,367 ) (4,262 ) Maintenance capital expenditures (5,516 ) (5,994 ) (19,588 ) (14,548 ) Distributable cash flow 4,992 (1,968 ) 24,185 36,060 Principal payments under finance lease obligations — (61 ) (9 ) (180 ) Expansion capital expenditures (3,444 ) (926 ) (6,126 ) (5,482 ) Adjusted free cash flow $ 1,548 $ (2,955 ) $ 18,050 $ 30,398 1 Net of amortization of debt issuance costs and discount, which are included in interest expense but not included in net cash provided by (used in) operating activities. View source version on businesswire.com: https://www.businesswire.com/news/home/20231018892173/en/Contacts Sharon Taylor - Executive Vice President & Chief Financial Officer (877) 256-6644 investor.relations@mmlp.com
Total adjusted leverage of 3.95 times as of September 30, 2023 Reported net loss of $1.1 million and $5.1 million for the three and nine months ended September 30, 2023, respectively, which includes a $5.1 million impact from the loss on extinguishment of debt for the nine months ended September 30, 2023 Reported adjusted EBITDA of $26.2 million and $88.6 million, after giving effect to the May 2023 exit of the butane optimization business, which incurred adjusted EBITDA of zero and negative adjusted EBITDA of $15.1 million, for the three and nine months ended September 30, 2023, respectively Reaffirms 2023 Annual Adjusted EBITDA Guidance of $115.4 million Declares quarterly cash distribution of $0.005 per common unit for the quarter ended September 30, 2023, or $0.020 per common unit annually
Martin Midstream Partners L.P. (Nasdaq:MMLP) (“MMLP” or the "Partnership") today announced its financial results for the third quarter of 2023. Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, stated, “The Partnership’s financial results for the third quarter met guidance as both the Specialty Products and Sulfur Services segments outperformed but were offset by the Transportation segment as certain industrial customers experienced challenges that negatively impacted the ground transportation business. Our full year 2023 adjusted EBITDA outlook, which does not include losses related to the butane optimization business, remains unchanged at $115.4 million, confirming the recent operational restructuring of our refinery services business model to deliver stable and sustainable cash flows. Looking to the future, we anticipate increased earnings related to the joint venture with Samsung C&T America and Dongjin USA, even as delays in the construction of semiconductor manufacturing facilities may result in deferred demand for electronic level sulfuric acid. “During the first nine months of 2023, the Partnership, utilizing free cash flow and a significant reduction in working capital due to the exit from the butane optimization business, reduced total debt by $53.6 million. As a result, adjusted leverage was decreased to 3.95 times at September 30, 2023 compared to 4.53 times at December 31, 2022.” THIRD QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT TERMINALLING AND STORAGE (“T&S”) T&S operating income (loss) for the three months ended September 30, 2023 and 2022 was $3.1 million and ($0.1) million, respectively. Adjusted segment EBITDA for T&S was $8.2 million and $6.2 million for the three months ended September 30, 2023 and 2022, respectively, reflecting contractual index-based fee increases combined with reduced operating expenses across our divisions. TRANSPORTATION Transportation operating income for the three months ended September 30, 2023 and 2022 was $6.7 million and $12.1 million, respectively. Adjusted segment EBITDA for Transportation was $9.5 million and $15.1 million for the three months ended September 30, 2023 and 2022, respectively, primarily reflecting increased expenses combined with lower mileage in our land transportation division. SULFUR SERVICES Sulfur Services operating income (loss) for the three months ended September 30, 2023 and 2022 was $2.7 million and ($6.7) million, including a ($3.3) million inventory valuation write down, respectively. Adjusted segment EBITDA for Sulfur Services was $5.4 million and ($4.2) million for the three months ended September 30, 2023 and 2022, respectively, reflecting increased volumes and margins in both our fertilizer and sulfur businesses. SPECIALTY PRODUCTS Specialty Products operating income (loss) for the three months ended September 30, 2023 and 2022 was $6.0 million and ($13.3) million, respectively. Included in the Specialty Products results is an operating loss of $20.0 million for the three months ended September 30, 2022, attributable to the butane optimization business. Adjusted segment EBITDA for Specialty Products was $6.8 million and $6.0 million for the three months ended September 30, 2023 and 2022, respectively. Included in the Specialty Products results is negative adjusted EBITDA of ($1.6) million for the three months ended September 30, 2022, attributable to the butane optimization business. Adjusted Segment EBITDA for Specialty Products after giving effect to the May 2023 exit of the butane optimization business was $6.8 million and $7.6 million for the three months ended September 30, 2023 and 2022, respectively, reflecting reduced NGL margins. UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”) USGA expenses included in operating income for the three months ended September 30, 2023 and 2022 were $3.8 million and $4.3 million, respectively. USGA expenses included in adjusted EBITDA for the three months ended September 30, 2023 and 2022 were $3.8 million and $4.2 million, respectively, reflecting a reduction in employee-related expenses. CAPITALIZATION At September 30, 2023, the Partnership had $462.5 million of total debt outstanding, including $62.5 million drawn on its $175 million revolving credit facility maturing in 2027 and $400 million of senior secured second lien notes due 2028. At September 30, 2023, the Partnership had liquidity of approximately $84.1 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 3.95 times at September 30, 2023, compared to 4.14 times at June 30, 2023, a reduction of 0.19 times. The Partnership was in compliance with all debt covenants as of September 30, 2023. QUARTERLY CASH DISTRIBUTION The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended September 30, 2023. The distribution is payable on November 14, 2023 to common unitholders of record as of the close of business on November 7, 2023. The ex-dividend date for the cash distribution is November 6, 2023. QUALIFIED NOTICE TO NOMINEES Partnership: Martin Midstream Partners L.P. Unit Class: Common CUSIP #: 573331105 RE: Qualified Notice Pursuant to U.S. Treasury Regulation §1.1446-4 Record Date: November 7, 2023 Payable Date: November 14, 2023 Per Unit Amount: $0.005 Section I: This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Section II: The entire amount of the distribution realized per U.S. Treasury Regulation 1.1446(f)-4(c)(2)(iii) is in excess of cumulative net taxable income. RESULTS OF OPERATIONS The Partnership had a net loss for the three months ended September 30, 2023 of $1.1 million, a loss of $0.03 per limited partner unit. The Partnership had a net loss for the three months ended September 30, 2022 of $28.0 million, a loss of $0.71 per limited partner unit. Adjusted EBITDA for the three months ended September 30, 2023 was $26.2 million compared to $18.8 million for the three months ended September 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended September 30, 2023 was $26.2 million compared to $20.4 million for the three months ended September 30, 2022. Net cash provided by (used in) operating activities for the three months ended September 30, 2023 was $7.3 million, compared to ($45.2) million for the three months ended September 30, 2022. Distributable cash flow for the three months ended September 30, 2023 was $5.0 million compared to $(2.0) million for the three months ended September 30, 2022. The Partnership had a net loss for the nine months ended September 30, 2023 of $5.1 million, a loss of $0.13 per limited partner unit. The Partnership had a net loss for the nine months ended September 30, 2022 of $10.0 million, a loss of $0.25 per limited partner unit. Adjusted EBITDA for the nine months ended September 30, 2023 was $73.4 million compared to $97.1 million for the nine months ended September 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the nine months ended September 30, 2023 was $88.6 million compared to $93.6 million for the nine months ended September 30, 2022. Net cash provided by (used in) operating activities for the nine months ended September 30, 2023 was $106.1 million compared to ($16.8) million for the nine months ended September 30, 2022. Distributable cash flow for the nine months ended September 30, 2023 was $24.2 million compared to $36.1 million for the nine months ended September 30, 2022. Revenues for the three months ended September 30, 2023 were $176.7 million compared to $229.3 million for the three months ended September 30, 2022. Revenues for the nine months ended September 30, 2023 were $616.9 million compared to $775.5 million for the nine months ended September 30, 2022. EBITDA, adjusted EBITDA, distributable cash flow and adjusted free cash flow 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, Distributable Cash Flow and Adjusted Free 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 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 2023 to the Partnership's adjusted EBITDA guidance for the third quarter 2023. Investors' Conference Call Date: Thursday, October 19, 2023 Time: 8:00 a.m. CT (please dial in by 7:55 a.m.) Dial In #: (888) 330-2384 Conference ID: 8536096 Replay Dial In # (800) 770-2030 – Conference ID: 8536096 A webcast of the conference call along with the Third Quarter 2023 Earnings Summary will also be available by visiting the Events and Presentations section under Investor Relations on our website at www.MMLP.com. About Martin Midstream Partners MMLP, headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s primary business lines include: (1) terminalling, processing, and storage 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) marketing, distribution, and transportation services for natural gas liquids and blending and packaging services for specialty lubricants and grease. To learn more, visit www.MMLP.com. Follow Martin Midstream Partners L.P. on LinkedIn, Facebook, and X. 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, including (i) the effects of the continued volatility of commodity prices and the related macroeconomic and political environment and (ii) 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 “SEC”). 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 To assist management in assessing our business, we use the following non-GAAP financial measures: earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below), distributable cash flow available to common unitholders (“distributable cash flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("adjusted free cash flow"). Our management uses a variety of financial and operational measurements other than our financial statements prepared in accordance with U.S. GAAP to analyze our performance. 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. EBITDA and adjusted EBITDA. We define adjusted EBITDA as EBITDA before unit-based compensation expenses, gains and losses on the disposition of property, plant and equipment, impairment and other similar non-cash adjustments. Adjusted EBITDA is used as a supplemental performance and liquidity measure by our management and by external users of our financial statements, such as investors, commercial banks, research analysts, and others, to assess: the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis; the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness, and make cash distributions to our unitholders; and our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing methods or capital structure. The GAAP measures most directly comparable to adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities, or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate adjusted EBITDA in the same manner. Adjusted EBITDA does not include interest expense, income tax expense, and depreciation and amortization. Because we have borrowed money to finance our operations, interest expense is a necessary element of our costs and our ability to generate cash available for distribution. Because we have capital assets, depreciation and amortization are also necessary elements of our costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, we believe that it is important to consider net income (loss) and net cash provided by (used in) operating activities as determined under GAAP, as well as adjusted EBITDA, to evaluate our overall performance. Distributable cash flow. We define distributable cash flow as net cash provided by (used in) operating activities less cash received (plus cash paid) for closed commodity derivative positions included in Accumulated Other Comprehensive Income (Loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital expenditures and plant turnaround costs. Distributable cash flow is a significant performance measure used by our management and by external users of our financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay unitholders. Distributable cash flow is also an important financial measure for our unitholders since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not we are generating cash flow at a level that can sustain or support an increase in our 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. Adjusted free cash flow. We define adjusted free cash flow as distributable cash flow less growth capital expenditures and principal payments under finance lease obligations. Adjusted free cash flow is a significant performance measure used by our management and by external users of our financial statements and represents how much cash flow a business generates during a specified time period after accounting for all capital expenditures, including expenditures for growth and maintenance capital projects. We believe that adjusted free cash flow is important to investors, lenders, commercial banks and research analysts since it reflects the amount of cash available for reducing debt, investing in additional capital projects, paying distributions, and similar matters. Our calculation of adjusted free cash flow may or may not be comparable to similarly titled measures used by other entities. The GAAP measure most directly comparable to distributable cash flow and adjusted free cash flow is net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow should not be considered alternatives to, or more meaningful than, net income (loss), operating income (loss), Net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP. Distributable cash flow and adjusted free cash flow have important limitations because they exclude some items that affect net income (loss), operating income (loss), and net cash provided by (used in) operating activities. Distributable cash flow and adjusted free cash flow may not be comparable to similarly titled measures of other companies because other companies may not calculate these non-GAAP metrics in the same manner. To compensate for these limitations, we believe that it is important to consider net cash provided by (used in) operating activities determined under GAAP, as well as distributable cash flow and adjusted free cash flow, to evaluate our overall liquidity. MMLP-F MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED BALANCE SHEETS (Dollars in thousands) September 30, 2023 December 31, 2022 (Unaudited) (Audited) Assets Cash $ 54 $ 45 Accounts and other receivables, less allowance for doubtful accounts of $496 and $496, respectively 60,451 79,641 Inventories 41,699 109,798 Due from affiliates 2,096 8,010 Other current assets 7,647 13,633 Total current assets 111,947 211,127 Property, plant and equipment, at cost 909,946 903,535 Accumulated depreciation (602,834 ) (584,245 ) Property, plant and equipment, net 307,112 319,290 Goodwill 16,671 16,671 Right-of-use assets 58,174 34,963 Deferred income taxes, net 12,064 14,386 Other assets, net 1,933 2,414 Total assets $ 507,901 $ 598,851 Liabilities and Partners’ Capital (Deficit) Current installments of long-term debt and finance lease obligations $ — $ 9 Trade and other accounts payable 43,909 68,198 Product exchange payables 775 32 Due to affiliates 8,143 8,947 Income taxes payable 461 665 Other accrued liabilities 27,687 33,074 Total current liabilities 80,975 110,925 Long-term debt, net 439,824 512,871 Operating lease liabilities 44,108 26,268 Other long-term obligations 7,973 8,232 Total liabilities 572,880 658,296 Commitments and contingencies Partners’ capital (deficit) (64,979 ) (59,445 ) Total liabilities and partners' capital (deficit) $ 507,901 $ 598,851 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per unit amounts) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues: Terminalling and storage * $ 22,202 $ 19,988 $ 64,744 $ 59,808 Transportation * 55,223 58,993 165,696 161,535 Sulfur services 3,358 3,085 10,073 9,253 Product sales: * Specialty products 66,695 121,456 277,836 409,215 Sulfur services 29,219 25,783 98,513 135,691 95,914 147,239 376,349 544,906 Total revenues 176,697 229,305 616,862 775,502 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products * 56,298 126,951 245,863 380,602 Sulfur services * 19,461 25,230 66,932 100,078 Terminalling and storage * 23 6 54 15 75,782 152,187 312,849 480,695 Expenses: Operating expenses * 64,375 66,158 187,857 186,735 Selling, general and administrative * 10,424 10,273 30,043 31,420 Depreciation and amortization 12,223 13,721 37,671 43,007 Total costs and expenses 162,804 242,339 568,420 741,857 Other operating income, net 811 790 1,096 1,050 Operating income (loss) 14,704 (12,244 ) 49,538 34,695 Other income (expense): Interest expense, net (14,994 ) (13,906 ) (45,914 ) (39,181 ) Loss on extinguishment of debt — — (5,121 ) — Other, net 17 (2 ) 50 (4 ) Total other expense (14,977 ) (13,908 ) (50,985 ) (39,185 ) Net loss before taxes (273 ) (26,152 ) (1,447 ) (4,490 ) Income tax expense (788 ) (1,891 ) (3,619 ) (5,469 ) Net loss (1,061 ) (28,043 ) (5,066 ) (9,959 ) Less general partner's interest in net loss 21 561 101 199 Less loss allocable to unvested restricted units 4 90 16 39 Limited partners' interest in net loss $ (1,036 ) $ (27,392 ) $ (4,949 ) $ (9,721 ) Net loss per unit attributable to limited partners - basic $ (0.03 ) $ (0.71 ) $ (0.13 ) $ (0.25 ) Net loss per unit attributable to limited partners - diluted $ (0.03 ) $ (0.71 ) $ (0.13 ) $ (0.25 ) Weighted average limited partner units - basic 38,772,266 38,726,388 38,771,451 38,725,933 Weighted average limited partner units - diluted 38,772,266 38,726,388 38,771,451 38,725,933 *Related Party Transactions Shown Below MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per unit amounts) *Related Party Transactions Included Above Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues:* Terminalling and storage $ 18,542 $ 16,065 $ 54,121 $ 49,685 Transportation 7,426 7,111 20,214 20,862 Product Sales 122 63 8,544 486 Costs and expenses:* Cost of products sold: (excluding depreciation and amortization) Specialty products 9,896 10,196 27,324 30,047 Sulfur services 2,787 2,616 8,139 7,884 Terminalling and storage 23 5 54 14 Expenses: Operating expenses 25,606 23,856 74,491 68,682 Selling, general and administrative 8,477 7,627 23,549 23,933 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Dollars in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net loss $ (1,061 ) $ (28,043 ) $ (5,066 ) $ (9,959 ) Commodity cash flow hedging (gains) reclassified to earnings — (167 ) — (816 ) Comprehensive loss $ (1,061 ) $ (28,210 ) $ (5,066 ) $ (10,775 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT) (Unaudited) (Dollars in thousands) Partners’ Capital (Deficit) Common Limited General Partner Amount Accumulated Other Comprehensive Income (Loss) Units Amount Total Balances - June 30, 2023 38,914,806 $ (65,334 ) $ 1,577 $ — $ (63,757 ) Net loss — (1,040 ) (21 ) — (1,061 ) Cash distributions — (194 ) (4 ) — (198 ) Unit-based compensation — 37 — — 37 Balances - September 30, 2023 38,914,806 (66,531 ) 1,552 — $ (64,979 ) Balances - December 31, 2022 38,850,750 $ (61,110 ) $ 1,665 $ — $ (59,445 ) Net loss — (4,965 ) (101 ) — (5,066 ) Issuance of restricted units 64,056 — — — — Cash distributions — (583 ) (12 ) — (595 ) Unit-based compensation — 127 — — 127 Balances - September 30, 2023 38,914,806 $ (66,531 ) $ 1,552 $ — $ (64,979 ) Partners’ Capital (Deficit) Common Limited General Partner Amount Accumulated Other Comprehensive Income (Loss) �� Units Amount Total Balances - June 30, 2022 38,850,750 $ (33,263 ) $ 2,242 $ 167 $ (30,854 ) Net loss — (27,482 ) (561 ) — (28,043 ) Issuance of restricted units — — — — — Cash distributions — (195 ) (4 ) — (199 ) Unit-based compensation — 46 — — 46 Gain recognized in AOCI on commodity cash flow hedges — — — (167 ) (167 ) Balances - September 30, 2022 38,850,750 $ (60,894 ) $ 1,677 $ — $ (59,217 ) Balances - December 31, 2021 38,802,750 $ (50,741 ) $ 1,888 $ 816 $ (48,037 ) Net income — (9,760 ) (199 ) — (9,959 ) Issuance of restricted units 48,000 — — — — Cash distributions — (583 ) (12 ) — (595 ) Unit-based compensation — 125 — — 125 Excess purchase price over carrying value of acquired assets — 65 — — 65 Gain reclassified from AOCI into income on commodity cash flow hedges — — — (816 ) (816 ) Balances - September 30, 2022 38,850,750 $ (60,894 ) $ 1,677 $ — $ (59,217 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Nine Months Ended September 30, 2023 2022 Cash flows from operating activities: Net loss $ (5,066 ) $ (9,959 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 37,671 43,007 Amortization of deferred debt issuance costs 3,206 2,356 Amortization of debt discount 1,600 — Deferred income tax expense 2,322 3,611 Gain on disposition or sale of property, plant and equipment, net (1,096 ) (1,050 ) Loss on extinguishment of debt 5,121 — Derivative income — (901 ) Net cash paid for commodity derivatives — 85 Non cash unit-based compensation 127 125 Change in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and other receivables 19,190 7,076 Inventories 68,099 (73,518 ) Due from affiliates 5,914 12,016 Other current assets 5,282 (4,824 ) Trade and other accounts payable (24,709 ) 6,053 Product exchange payables 743 (695 ) Due to affiliates (804 ) 11,953 Income taxes payable (204 ) 228 Other accrued liabilities (10,311 ) (13,435 ) Change in other non-current assets and liabilities (1,020 ) 1,116 Net cash provided by (used in) operating activities 106,065 (16,756 ) Cash flows from investing activities: Payments for property, plant and equipment (25,294 ) (21,019 ) Payments for plant turnaround costs (2,367 ) (4,262 ) Proceeds from sale of property, plant and equipment 5,183 2,209 Net cash used in investing activities (22,478 ) (23,072 ) Cash flows from financing activities: Payments of long-term debt (579,197 ) (299,089 ) Payments under finance lease obligations (9 ) (180 ) Proceeds from long-term debt 510,489 341,000 Payment of debt issuance costs (14,266 ) (30 ) Excess purchase price over carrying value of acquired assets — (1,285 ) Cash distributions paid (595 ) (595 ) Net cash provided by (used in) financing activities (83,578 ) 39,821 Net increase (decrease) in cash 9 (7 ) Cash at beginning of period 45 52 Cash at end of period $ 54 $ 45 Non-cash additions to property, plant and equipment $ 2,369 $ 2,240 MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Unaudited) (Dollars and volumes in thousands, except BBL per day) Terminalling and Storage Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 23,973 $ 23,034 $ 939 4 % Cost of products sold 23 6 17 283 % Operating expenses 15,078 16,418 (1,340 ) (8 )% Selling, general and administrative expenses 628 457 171 37 % Depreciation and amortization 5,102 6,200 (1,098 ) (18 )% 3,142 (47 ) 3,189 6,785 % Other operating loss, net (35 ) — (35 ) Operating income (loss) $ 3,107 $ (47 ) $ 3,154 6,711 % Shore-based throughput volumes (gallons) 40,655 14,658 25,997 177 % Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — % Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 71,798 $ 69,027 $ 2,771 4 % Cost of products sold 54 15 39 260 % Operating expenses 43,318 47,372 (4,054 ) (9 )% Selling, general and administrative expenses 1,510 1,491 19 1 % Depreciation and amortization 15,896 20,372 (4,476 ) (22 )% 11,020 (223 ) 11,243 5,042 % Other operating loss, net (359 ) (35 ) (324 ) (926 )% Operating income (loss) $ 10,661 $ (258 ) $ 10,919 4,232 % Shore-based throughput volumes (gallons) 126,438 42,201 84,237 200 % Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500 6,500 — — % Transportation Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 58,541 $ 63,514 $ (4,973 ) (8 )% Operating expenses 46,465 46,499 (34 ) — % Selling, general and administrative expenses 2,571 1,962 609 31 % Depreciation and amortization 3,674 3,598 76 2 % 5,831 11,455 (5,624 ) (49 )% Other operating income, net 846 618 228 37 % Operating income $ 6,677 $ 12,073 $ (5,396 ) (45 )% Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 178,875 $ 176,313 $ 2,562 1 % Operating expenses 136,940 130,229 6,711 5 % Selling, general and administrative expenses 7,101 5,920 1,181 20 % Depreciation and amortization 11,196 10,761 435 4 % $ 23,638 $ 29,403 $ (5,765 ) (20 )% Other operating income, net 1,497 901 596 66 % Operating income $ 25,135 $ 30,304 $ (5,169 ) (17 )% Sulfur Services Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 3,358 $ 3,085 $ 273 9 % Products 29,219 25,783 3,436 13 % Total revenues 32,577 28,868 3,709 13 % Cost of products sold 21,972 27,201 (5,229 ) (19 )% Operating expenses 3,510 3,978 (468 ) (12 )% Selling, general and administrative expenses 1,713 1,509 204 14 % Depreciation and amortization 2,639 2,786 (147 ) (5 )% 2,743 (6,606 ) 9,349 142 % Other operating loss, net — (70 ) 70 100 % Operating income (loss) $ 2,743 $ (6,676 ) $ 9,419 141 % Sulfur (long tons) 155 95 60 63 % Fertilizer (long tons) 58 24 34 142 % Total sulfur services volumes (long tons) 213 119 94 79 % Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 10,073 $ 9,253 $ 820 9 % Products 98,513 135,691 (37,178 ) (27 )% Total revenues 108,586 144,944 (36,358 ) (25 )% Cost of products sold 74,062 105,640 (31,578 ) (30 )% Operating expenses 9,595 11,233 (1,638 ) (15 )% Selling, general and administrative expenses 4,292 4,550 (258 ) (6 )% Depreciation and amortization 8,072 8,377 (305 ) (4 )% 12,565 15,144 (2,579 ) (17 )% Other operating income (loss), net 17 (34 ) 51 150 % Operating income $ 12,582 $ 15,110 $ (2,528 ) (17 )% Sulfur (long tons) 352 327 25 8 % Fertilizer (long tons) 192 170 22 13 % Total sulfur services volumes (long tons) 544 497 47 9 % Specialty Products Segment Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022 Three Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 66,720 $ 121,484 $ (54,764 ) (45 )% Cost of products sold 58,177 131,790 (73,613 ) (56 )% Operating expenses 23 26 (3 ) (12 )% Selling, general and administrative expenses 1,698 2,107 (409 ) (19 )% Depreciation and amortization 808 1,137 (329 ) (29 )% 6,014 (13,576 ) 19,590 144 % Other operating income, net — 242 (242 ) (100 )% Operating income (loss) $ 6,014 $ (13,334 ) $ 19,348 145 % NGL sales volumes (Bbls) 509 1,180 (671 ) (57 )% Other specialty products volumes (Bbls) 106 110 (4 ) (4 )% Total specialty products volumes (Bbls) 615 1,290 (675 ) (52 )% Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 277,895 $ 409,310 $ (131,415 ) (32 )% Cost of products sold 256,898 396,865 (139,967 ) (35 )% Operating expenses 55 98 (43 ) (44 )% Selling, general and administrative expenses 5,287 6,757 (1,470 ) (22 )% Depreciation and amortization 2,507 3,497 (990 ) (28 )% 13,148 2,093 11,055 528 % Other operating income (loss), net (59 ) 218 (277 ) (127 )% Operating income $ 13,089 $ 2,311 $ 10,778 466 % NGL sales volumes (Bbls) 3,027 3,930 (903 ) (23 )% Other specialty products volumes (Bbls) 280 311 (31 ) (10 )% Total specialty products volumes (Bbls) 3,307 4,241 (934 ) (22 )% Unallocated Selling, General and Administrative Expenses Comparative Results of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 Three Months Ended Nine Months Ended September 30, Variance Percent Change September 30, Variance Percent Change 2023 2022 2023 2022 (In thousands) (In thousands) Indirect selling, general and administrative expenses $ 3,837 $ 4,260 $ (423 ) (10 )% $ 11,929 $ 12,772 $ (843 ) (7 )% Non-GAAP Financial Measures The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and nine months ended September 30, 2023 and 2022, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow: Reconciliation of Net Loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net loss $ (1,061 ) $ (28,043 ) $ (5,066 ) $ (9,959 ) Adjustments: Interest expense 14,994 13,906 45,914 39,181 Income tax expense 788 1,891 3,619 5,469 Depreciation and amortization 12,223 13,721 37,671 43,007 EBITDA 26,944 1,475 82,138 77,698 Adjustments: Gain on disposition or sale of property, plant and equipment (811 ) (790 ) (1,096 ) (1,050 ) Loss on extinguishment of debt — — 5,121 — Lower of cost or net realizable value and other non-cash adjustments — 18,084 (12,850 ) 20,326 Unit-based compensation 37 46 127 125 Adjusted EBITDA $ 26,170 $ 18,815 $ 73,440 $ 97,099 Adjustments: Less: net loss associated with butane optimization business — 20,032 2,255 15,280 Plus: lower of cost or net realizable value and other non-cash adjustments — $ (18,457 ) 12,850 (18,826 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business $ 26,170 $ 20,390 $ 88,545 $ 93,553 Reconciliation of Net Cash Provided by (Used in) Operating Activities to Adjusted EBITDA, Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business, Distributable Cash Flow, and Adjusted Free Cash Flow Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net cash provided by (used in) operating activities $ 7,291 $ (45,207 ) $ 106,065 $ (16,756 ) Interest expense 1 13,623 13,118 41,108 36,825 Current income tax expense 333 584 1,297 1,858 Lower of cost or net realizable value and other non-cash adjustments — 18,084 (12,850 ) 20,326 Commodity cash flow hedging gains reclassified to earnings — 167 — 901 Net cash paid for closed commodity derivative positions included in AOCI — — — (85 ) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets (5,983 ) (5,651 ) (98,485 ) 59,250 Trade, accounts and other payables, and other current liabilities 11,155 38,691 35,285 (4,104 ) Other (249 ) (971 ) 1,020 (1,116 ) Adjusted EBITDA 26,170 18,815 73,440 97,099 Adjustments: Less: net loss associated with butane optimization business — 20,032 2,255 15,280 Plus: lower of cost or net realizable value and other non-cash adjustments — (18,457 ) 12,850 (18,826 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business 26,170 20,390 88,545 93,553 Adjustments: Interest expense (14,994 ) (13,906 ) (45,914 ) (39,181 ) Income tax expense (788 ) (1,891 ) (3,619 ) (5,469 ) Deferred income taxes 455 1,307 2,322 3,611 Amortization of debt discount 600 — 1,600 — Amortization of deferred debt issuance costs 771 788 3,206 2,356 Payments for plant turnaround costs (1,706 ) (2,662 ) (2,367 ) (4,262 ) Maintenance capital expenditures (5,516 ) (5,994 ) (19,588 ) (14,548 ) Distributable cash flow 4,992 (1,968 ) 24,185 36,060 Principal payments under finance lease obligations — (61 ) (9 ) (180 ) Expansion capital expenditures (3,444 ) (926 ) (6,126 ) (5,482 ) Adjusted free cash flow $ 1,548 $ (2,955 ) $ 18,050 $ 30,398 1 Net of amortization of debt issuance costs and discount, which are included in interest expense but not included in net cash provided by (used in) operating activities. 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Sharon Taylor - Executive Vice President & Chief Financial Officer (877) 256-6644 investor.relations@mmlp.com