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 Second Quarter 2023 Financial Results and Declares Quarterly Cash Distribution By: Martin Midstream Partners L.P. via Business Wire July 19, 2023 at 16:01 PM EDT Reported net income of $1.1 million for the three months ended June 30, 2023, and a net loss of $4.0 million, which includes a $5.1 million impact from the loss on extinguishment of debt, for the six months ended June 30, 2023 Reported adjusted EBITDA of $31.8 million and $62.4 million, after giving effect to the May 2023 exit of the butane optimization business, which incurred negative adjusted EBITDA of $6.3 million and $15.1 million, for the three and six months ended June 30, 2023, respectively Total adjusted leverage of 4.14 times as of June 30, 2023, compared to 4.25 times as of March 31, 2023 Reaffirms 2023 Annual Adjusted EBITDA Guidance of $115.4 million Declares quarterly cash distribution of $0.005 per common unit for the quarter ended June 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 second quarter of 2023. Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, stated, “The Partnership continued to benefit from our diversified business model in the second quarter as strength in our Transportation segment offset challenges in our Sulfur and Specialty Products segments which both have exposure to a currently difficult agricultural market. As of May 1st, 2023, we sold all remaining butane inventory completing our exit from the butane optimization business. This allowed us to further reduce debt by $39.5 million from $500.0 million at March 31, 2023 to $460.5 million at June 30, 2023. While we will utilize our NGL underground storage facility under a fee-based butane logistics model, going forward we have removed the volatility in our Specialty Products segment earnings related to the butane optimization business, which had negative adjusted EBITDA of $15.1 million for the six months ended June 30, 2023. “Considering our ongoing operations, which does not include losses associated with the butane optimization business, the second quarter adjusted EBITDA of $31.8 million, was in line with our forecast and reaffirms our guidance of $115.4 million in adjusted EBITDA for the year 2023.” SECOND QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT TERMINALLING AND STORAGE (“T&S”) T&S operating income (loss) for the three months ended June 30, 2023 and 2022 was $4.4 million and ($0.1) million, respectively. Adjusted segment EBITDA for T&S was $9.6 million and $7.1 million for the three months ended June 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 June 30, 2023 and 2022 was $9.0 million and $11.2 million, respectively. Adjusted segment EBITDA for Transportation was $12.1 million and $14.6 million for the three months ended June 30, 2023 and 2022, respectively, reflecting higher marine day rates, offset by increased expenses in our land transportation division. SULFUR SERVICES Sulfur Services operating income for the three months ended June 30, 2023 and 2022 was $5.3 million and $9.1 million, respectively. Adjusted segment EBITDA for Sulfur Services was $8.0 million and $13.9 million for the three months ended June 30, 2023 and 2022, respectively, reflecting reduced demand in our fertilizer business in part due to a delay in the planting season related to weather conditions, leading to higher inventories and declining prices. SPECIALTY PRODUCTS Specialty Products operating income for the three months ended June 30, 2023 and 2022 was $2.5 million and $5.6 million, respectively. Included in the Specialty Products results is an operating loss of $2.6 million and $0.9 million, for the three months ended June 30, 2023 and 2022, respectively, attributable to the butane optimization business. Adjusted segment EBITDA for Specialty Products was $(0.4) million and $7.1 million for the three months ended June 30, 2023 and 2022, respectively, primarily reflecting decreased NGL margins combined with lower demand in our lubricants packaging business. Included in the Specialty Products results is negative adjusted EBITDA of ($6.3) million and ($0.6) million for the three months ended June 30, 2023 and 2022, respectively, 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 $5.9 million and $7.7 million for the three months ended June 30, 2023 and 2022, respectively. UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”) USGA expenses included in operating income for the three months ended June 30, 2023 and 2022 were $3.9 million and $4.4 million, respectively. USGA expenses included in adjusted EBITDA for the three months ended June 30, 2023 and 2022 were $3.9 million and $4.3 million, respectively. CAPITALIZATION At June 30, 2023, the Partnership had $460.5 million of total debt outstanding, including $60.5 million drawn on its $175 million revolving credit facility maturing in 2027 and $400 million of senior secured second lien notes due 2028. At June 30, 2023, the Partnership had liquidity of approximately $56.3 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 4.14 times at June 30, 2023, compared to 4.25 times at March 31, 2023, a reduction of 0.11 times. The Partnership was in compliance with all debt covenants as of June 30, 2023. QUARTERLY CASH DISTRIBUTION The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended June 30, 2023. The distribution is payable on August 14, 2023 to common unitholders of record as of the close of business on August 7, 2023. The ex-dividend date for the cash distribution is August 4, 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: August 7, 2023 Payable Date: August 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 net income for the three months ended June 30, 2023 of $1.1 million, or $0.03 per limited partner unit. The Partnership had net income for the three months ended June 30, 2022 of $6.6 million, or $0.17 per limited partner unit. Adjusted EBITDA for the three months ended June 30, 2023 was $25.5 million compared to $38.3 million for the three months ended June 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended June 30, 2023 was $31.8 million compared to $38.9 million for the three months ended June 30, 2022. Net cash provided by (used in) operating activities for the three months ended June 30, 2023 was $49.5 million, compared to ($2.5) million for the three months ended June 30, 2022. Distributable cash flow for the three months ended June 30, 2023 was $9.7 million compared to $22.9 million for the three months ended June 30, 2022. The Partnership had a net loss for the six months ended June 30, 2023 of $4.0 million, a loss of $0.10 per limited partner unit. The Partnership had net income for the six months ended June 30, 2022 of $18.1 million, or $0.46 per limited partner unit. Adjusted EBITDA for the six months ended June 30, 2023 was $47.3 million compared to $78.3 million for the six months ended June 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the six months ended June 30, 2023 was $62.4 million compared to $73.2 million for the six months ended June 30, 2022. Net cash provided by operating activities for the six months ended June 30, 2023 was $98.8 million compared to $28.5 million for the six months ended June 30, 2022. Distributable cash flow for the six months ended June 30, 2023 was $19.2 million compared to $38.0 million for the six months ended June 30, 2022. Revenues for the three months ended June 30, 2023 were $195.6 million compared to $267.0 million for the three months ended June 30, 2022. Revenues for the six months ended June 30, 2023 were $440.2 million compared to $546.2 million for the six months ended June 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 second quarter 2023 to the Partnership's adjusted EBITDA guidance for the second quarter 2023. Investors' Conference Call Date: Thursday, July 20, 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 Second 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 Twitter. 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) June 30, 2023 December 31, 2022 (Unaudited) (Audited) Assets Cash $ 57 $ 45 Accounts and other receivables, less allowance for doubtful accounts of $496 and $496, respectively 57,022 79,641 Inventories 50,865 109,798 Due from affiliates 2,356 8,010 Other current assets 6,926 13,633 Total current assets 117,226 211,127 Property, plant and equipment, at cost 902,605 903,535 Accumulated depreciation (593,324 ) (584,245 ) Property, plant and equipment, net 309,281 319,290 Goodwill 16,671 16,671 Right-of-use assets 45,221 34,963 Deferred income taxes, net 12,519 14,386 Other assets, net 1,899 2,414 Total assets $ 502,817 $ 598,851 Liabilities and Partners’ Capital (Deficit) Current installments of long-term debt and finance lease obligations $ — $ 9 Trade and other accounts payable 48,469 68,198 Product exchange payables 310 32 Due to affiliates 2,306 8,947 Income taxes payable 450 665 Other accrued liabilities 37,249 33,074 Total current liabilities 88,784 110,925 Long-term debt, net 436,481 512,871 Operating lease liabilities 33,827 26,268 Other long-term obligations 7,482 8,232 Total liabilities 566,574 658,296 Commitments and contingencies Partners’ capital (deficit) (63,757 ) (59,445 ) Total partners’ capital (deficit) (63,757 ) (59,445 ) Total liabilities and partners' capital (deficit) $ 502,817 $ 598,851 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per unit amounts) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues: Terminalling and storage * $ 21,684 $ 20,423 $ 42,542 $ 39,820 Transportation * 54,750 55,832 110,473 102,542 Sulfur services 3,357 3,084 6,715 6,168 Product sales: * Specialty products 78,872 133,788 211,141 287,759 Sulfur services 36,973 53,869 69,294 109,908 115,845 187,657 280,435 397,667 Total revenues 195,636 266,996 440,165 546,197 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products * 71,570 119,859 189,565 253,651 Sulfur services * 25,654 37,063 47,471 74,848 Terminalling and storage * 25 4 31 9 97,249 156,926 237,067 328,508 Expenses: Operating expenses * 60,737 64,082 123,482 120,577 Selling, general and administrative * 8,447 9,944 19,619 21,147 Depreciation and amortization 12,547 14,800 25,448 29,286 Total costs and expenses 178,980 245,752 405,616 499,518 Other operating income (loss), net 673 246 285 260 Operating income (loss) 17,329 21,490 34,834 46,939 Other income (expense): Interest expense, net (15,263 ) (12,846 ) (30,920 ) (25,275 ) Loss on extinguishment of debt — — (5,121 ) — Other, net 11 (1 ) 33 (2 ) Total other expense (15,252 ) (12,847 ) (36,008 ) (25,277 ) Net income (loss) before taxes 2,077 8,643 (1,174 ) 21,662 Income tax expense (996 ) (2,037 ) (2,831 ) (3,578 ) Net income (loss) 1,081 6,606 (4,005 ) 18,084 Less general partner's interest in net (income) loss (22 ) (132 ) 80 (362 ) Less (income) loss allocable to unvested restricted units (4 ) (21 ) 12 (51 ) Limited partners' interest in net income (loss) $ 1,055 $ 6,453 $ (3,913 ) $ 17,671 Net income (loss) per unit attributable to limited partners - basic $ 0.03 $ 0.17 $ (0.10 ) $ 0.46 Net income (loss) per unit attributable to limited partners - diluted $ 0.03 $ 0.17 $ (0.10 ) $ 0.46 Weighted average limited partner units - basic 38,772,266 38,729,118 38,771,037 38,725,701 Weighted average limited partner units - diluted 38,777,600 38,750,153 38,771,037 38,753,197 *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 Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues:* Terminalling and storage $ 18,077 $ 17,416 $ 35,579 $ 33,620 Transportation 7,277 7,463 12,788 13,751 Product Sales 7,497 96 8,422 423 Costs and expenses:* Cost of products sold: (excluding depreciation and amortization) Specialty products 5,829 10,205 15,339 19,851 Sulfur services 2,644 2,592 5,352 5,268 Terminalling and storage 25 4 31 9 Expenses: Operating expenses 25,058 23,447 48,885 44,826 Selling, general and administrative 6,556 7,498 15,072 16,306 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income (loss) $ 1,081 $ 6,606 $ (4,005 ) $ 18,084 Changes in fair values of commodity cash flow hedges — 167 — 167 Commodity cash flow hedging (gains) losses reclassified to earnings — 440 — (816 ) Comprehensive income (loss) $ 1,081 $ 7,213 $ (4,005 ) $ 17,435 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 - March 31, 2023 38,914,806 $ (66,236 ) $ 1,559 $ — $ (64,677 ) Net income — 1,059 22 — 1,081 Cash distributions — (195 ) (4 ) — (199 ) Unit-based compensation — 38 — — 38 Balances - June 30, 2023 38,914,806 (65,334 ) 1,577 — $ (63,757 ) Balances - December 31, 2022 38,850,750 $ (61,110 ) $ 1,665 $ — $ (59,445 ) Net loss — (3,925 ) (80 ) — (4,005 ) Issuance of restricted units 64,056 — — — — Cash distributions — (389 ) (8 ) — (397 ) Unit-based compensation — 90 — — 90 Balances - June 30, 2023 38,914,806 $ (65,334 ) $ 1,577 $ — $ (63,757 ) Partners’ Capital (Deficit) Common Limited General Partner Amount Accumulated Other Comprehensive Income (Loss) Units Amount Total Balances - March 31, 2022 38,836,950 $ (39,652 ) $ 2,113 $ (440 ) $ (37,979 ) Net income — 6,473 133 — 6,606 Issuance of restricted units 13,800 — — — — Cash distributions — (194 ) (4 ) — (198 ) Unit-based compensation — 45 — — 45 Excess purchase price over carrying value of acquired assets — 65 — — 65 Loss reclassified from AOCI into income on commodity cash flow hedges — — — 440 440 Gain recognized in AOCI on commodity cash flow hedges — — — 167 167 Balances - June 30, 2022 38,850,750 $ (33,263 ) $ 2,242 $ 167 $ (30,854 ) Balances - December 31, 2021 38,802,750 $ (50,741 ) $ 1,888 $ 816 $ (48,037 ) Net income — 17,722 362 — 18,084 Issuance of restricted units 48,000 — — — — Cash distributions — (388 ) (8 ) — (396 ) Unit-based compensation — 79 — — 79 Excess purchase price over carrying value of acquired assets — 65 — — 65 Gain reclassified from AOCI into income on commodity cash flow hedges — — — (816 ) (816 ) Gain recognized in AOCI on commodity cash flow hedges — — — 167 167 Balances - June 30, 2022 38,850,750 $ (33,263 ) $ 2,242 $ 167 $ (30,854 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Six Months Ended June 30, 2023 2022 Cash flows from operating activities: Net income (loss) $ (4,005 ) $ 18,084 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 25,448 29,286 Amortization of deferred debt issuance costs 2,435 1,568 Amortization of debt discount 1,000 — Deferred income tax expense 1,867 2,304 Gain on sale of property, plant and equipment, net (285 ) (260 ) Loss on extinguishment of debt 5,121 — Derivative income — (734 ) Net cash paid for commodity derivatives — 85 Non cash unit-based compensation 90 79 Change in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and other receivables 22,619 10,714 Inventories 58,933 (55,725 ) Due from affiliates 5,654 (2,149 ) Other current assets 5,296 (17,741 ) Trade and other accounts payable (19,459 ) 37,688 Product exchange payables 278 (869 ) Due to affiliates (6,641 ) 7,940 Income taxes payable (215 ) 368 Other accrued liabilities 1,907 (2,332 ) Change in other non-current assets and liabilities (1,269 ) 145 Net cash provided by operating activities 98,774 28,451 Cash flows from investing activities: Payments for property, plant and equipment (17,024 ) (14,634 ) Payments for plant turnaround costs (661 ) (1,600 ) Proceeds from sale of property, plant and equipment 4,275 689 Net cash used in investing activities (13,410 ) (15,545 ) Cash flows from financing activities: Payments of long-term debt (519,197 ) (217,589 ) Payments under finance lease obligations (9 ) (119 ) Proceeds from long-term debt 448,489 206,500 Payment of debt issuance costs (14,238 ) (26 ) Excess purchase price over carrying value of acquired assets — (1,285 ) Cash distributions paid (397 ) (396 ) Net cash used in financing activities (85,352 ) (12,915 ) Net increase (decrease) in cash 12 (9 ) Cash at beginning of period 45 52 Cash at end of period $ 57 $ 43 Non-cash additions to property, plant and equipment $ 1,679 $ 1,705 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 June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 23,906 $ 23,622 $ 284 1 % Cost of products sold 25 4 21 525 % Operating expenses 13,932 16,014 (2,082 ) (13 )% Selling, general and administrative expenses 333 539 (206 ) (38 )% Depreciation and amortization 5,195 7,172 (1,977 ) (28 )% 4,421 (107 ) 4,528 4,232 % Other operating income, net 25 8 17 213 % Operating income (loss) $ 4,446 $ (99 ) $ 4,545 4,591 % Shore-based throughput volumes (gallons) 42,434 14,100 28,334 201 % Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — % Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 47,825 $ 45,993 $ 1,832 4 % Cost of products sold 31 9 22 244 % Operating expenses 28,240 30,954 (2,714 ) (9 )% Selling, general and administrative expenses 882 1,034 (152 ) (15 )% Depreciation and amortization 10,794 14,172 (3,378 ) (24 )% 7,878 (176 ) 8,054 4,576 % Other operating loss, net (324 ) (35 ) (289 ) (826 )% Operating income (loss) $ 7,554 $ (211 ) $ 7,765 3,680 % Shore-based throughput volumes (gallons) 85,783 27,543 58,240 211 % Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500 6,500 — — % Transportation Segment Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 58,395 $ 60,902 $ (2,507 ) (4 )% Operating expenses 44,285 44,528 (243 ) (1 )% Selling, general and administrative expenses 1,981 1,789 192 11 % Depreciation and amortization 3,760 3,590 170 5 % 8,369 10,995 (2,626 ) (24 )% Other operating income, net 647 254 393 155 % Operating income $ 9,016 $ 11,249 $ (2,233 ) (20 )% Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 120,334 $ 112,799 $ 7,535 7 % Operating expenses 90,475 83,730 6,745 8 % Selling, general and administrative expenses 4,530 3,958 572 14 % Depreciation and amortization 7,522 7,163 359 5 % $ 17,807 $ 17,948 $ (141 ) (1 )% Other operating income, net 651 283 368 130 % Operating income $ 18,458 $ 18,231 $ 227 1 % Sulfur Services Segment Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 3,357 $ 3,084 $ 273 9 % Products 36,973 53,869 (16,896 ) (31 )% Total revenues 40,330 56,953 (16,623 ) (29 )% Cost of products sold 28,141 39,181 (11,040 ) (28 )% Operating expenses 3,186 4,227 (1,041 ) (25 )% Selling, general and administrative expenses 962 1,537 (575 ) (37 )% Depreciation and amortization 2,756 2,882 (126 ) (4 )% 5,285 9,126 (3,841 ) (42 )% Other operating income, net 1 8 (7 ) (88 )% Operating income $ 5,286 $ 9,134 $ (3,848 ) (42 )% Sulfur (long tons) 123 118 5 4 % Fertilizer (long tons) 73 62 11 18 % Total sulfur services volumes (long tons) 196 180 16 9 % Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 6,715 $ 6,168 $ 547 9 % Products 69,294 109,908 (40,614 ) (37 )% Total revenues 76,009 116,076 (40,067 ) (35 )% Cost of products sold 52,090 78,439 (26,349 ) (34 )% Operating expenses 6,085 7,255 (1,170 ) (16 )% Selling, general and administrative expenses 2,579 3,041 (462 ) (15 )% Depreciation and amortization 5,433 5,591 (158 ) (3 )% 9,822 21,750 (11,928 ) (55 )% Other operating income, net 17 36 (19 ) (53 )% Operating income $ 9,839 $ 21,786 $ (11,947 ) (55 )% Sulfur (long tons) 197 232 (35 ) (15 )% Fertilizer (long tons) 134 146 (12 ) (8 )% Total sulfur services volumes (long tons) 331 378 (47 ) (12 )% Specialty Products Segment Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 78,898 $ 133,818 $ (54,920 ) (41 )% Cost of products sold 74,270 125,296 (51,026 ) (41 )% Operating expenses 18 34 (16 ) (47 )% Selling, general and administrative expenses 1,299 1,712 (413 ) (24 )% Depreciation and amortization 836 1,156 (320 ) (28 )% 2,475 5,620 (3,145 ) (56 )% Other operating loss, net — (24 ) 24 100 % Operating income $ 2,475 $ 5,596 $ (3,121 ) (56 )% NGL sales volumes (Bbls) 827 1,153 (326 ) (28 )% Other specialty products volumes (Bbls) 90 103 (13 ) (13 )% Total specialty products volumes (Bbls) 917 1,256 (339 ) (27 )% Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 211,175 $ 287,827 $ (76,652 ) (27 )% Cost of products sold 198,721 265,076 (66,355 ) (25 )% Operating expenses 32 72 (40 ) (56 )% Selling, general and administrative expenses 3,589 4,650 (1,061 ) (23 )% Depreciation and amortization 1,699 2,360 (661 ) (28 )% 7,134 15,669 (8,535 ) (54 )% Other operating loss, net (59 ) (24 ) (35 ) (146 )% Operating income $ 7,075 $ 15,645 $ (8,570 ) (55 )% NGL sales volumes (Bbls) 2,518 2,750 (232 ) (8 )% Other specialty products volumes (Bbls) 174 201 (27 ) (13 )% Total specialty products volumes (Bbls) 2,692 2,951 (259 ) (9 )% Unallocated Selling, General and Administrative Expenses Comparative Results of Operations for the Three and Six Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change Six Months Ended June 30, Variance Percent Change 2023 2022 2023 2022 (In thousands) (In thousands) Indirect selling, general and administrative expenses $ 3,894 $ 4,390 $ (496 ) (11 )% $ 8,092 $ 8,512 $ (420 ) (5 )% 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 six months ended June 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 Income (Loss) to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net income (loss) $ 1,081 $ 6,606 $ (4,005 ) $ 18,084 Adjustments: Interest expense 15,263 12,846 30,920 25,275 Income tax expense 996 2,037 2,831 3,578 Depreciation and amortization 12,547 14,800 25,448 29,286 EBITDA 29,887 36,289 55,194 76,223 Adjustments: Gain on disposition of property, plant and equipment (673 ) (246 ) (285 ) (260 ) Loss on extinguishment of debt — — 5,121 — Lower of cost or net realizable value and other non-cash adjustments (3,717 ) 2,242 (12,850 ) 2,242 Unit-based compensation 38 45 90 79 Adjusted EBITDA $ 25,535 $ 38,330 $ 47,270 $ 78,284 Adjustments: Less: net (income) loss associated with butane optimization business 2,564 942 2,255 (4,752 ) Plus: lower of cost or net realizable value and other non-cash adjustments 3,717 $ (369 ) 12,850 (369 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business $ 31,816 $ 38,903 $ 62,375 $ 73,163 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net cash provided by (used in) operating activities $ 49,510 $ (2,494 ) $ 98,774 $ 28,451 Interest expense 1 13,903 12,061 27,485 23,707 Current income tax expense 306 654 964 1,274 Lower of cost or market and other non-cash adjustments (3,717 ) 2,242 (12,850 ) 2,242 Commodity cash flow hedging gains reclassified to earnings — (82 ) — 734 Net cash paid for closed commodity derivative positions included in AOCI — (700 ) — (85 ) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets (43,135 ) 68,797 (91,517 ) 64,901 Trade, accounts and other payables, and other current liabilities 7,171 (41,182 ) 23,145 (42,795 ) Other 1,497 (966 ) 1,269 (145 ) Adjusted EBITDA 25,535 38,330 47,270 78,284 Adjustments: Less: net (income) loss associated with butane optimization business 2,564 942 2,255 (4,752 ) Plus: lower of cost or net realizable value and other non-cash adjustments 3,717 (369 ) 12,850 (369 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business 31,816 38,903 62,375 73,163 Adjustments: Interest expense (15,263 ) (12,846 ) (30,920 ) (25,275 ) Income tax expense (996 ) (2,037 ) (2,831 ) (3,578 ) Deferred income taxes 690 1,383 1,867 2,304 Amortization of debt discount 600 — 1,000 — Amortization of deferred debt issuance costs 760 785 2,435 1,568 Payments for plant turnaround costs (432 ) (165 ) (661 ) (1,600 ) Maintenance capital expenditures (7,438 ) (3,155 ) (14,072 ) (8,554 ) Distributable cash flow 9,737 22,868 19,193 38,028 Principal payments under finance lease obligations (3 ) (60 ) (9 ) (119 ) Expansion capital expenditures (1,925 ) (1,455 ) (2,682 ) (4,556 ) Adjusted free cash flow $ 7,809 $ 21,353 $ 16,502 $ 33,353 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 Second Quarter 2023 Financial Results and Declares Quarterly Cash Distribution By: Martin Midstream Partners L.P. via Business Wire July 19, 2023 at 16:01 PM EDT Reported net income of $1.1 million for the three months ended June 30, 2023, and a net loss of $4.0 million, which includes a $5.1 million impact from the loss on extinguishment of debt, for the six months ended June 30, 2023 Reported adjusted EBITDA of $31.8 million and $62.4 million, after giving effect to the May 2023 exit of the butane optimization business, which incurred negative adjusted EBITDA of $6.3 million and $15.1 million, for the three and six months ended June 30, 2023, respectively Total adjusted leverage of 4.14 times as of June 30, 2023, compared to 4.25 times as of March 31, 2023 Reaffirms 2023 Annual Adjusted EBITDA Guidance of $115.4 million Declares quarterly cash distribution of $0.005 per common unit for the quarter ended June 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 second quarter of 2023. Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, stated, “The Partnership continued to benefit from our diversified business model in the second quarter as strength in our Transportation segment offset challenges in our Sulfur and Specialty Products segments which both have exposure to a currently difficult agricultural market. As of May 1st, 2023, we sold all remaining butane inventory completing our exit from the butane optimization business. This allowed us to further reduce debt by $39.5 million from $500.0 million at March 31, 2023 to $460.5 million at June 30, 2023. While we will utilize our NGL underground storage facility under a fee-based butane logistics model, going forward we have removed the volatility in our Specialty Products segment earnings related to the butane optimization business, which had negative adjusted EBITDA of $15.1 million for the six months ended June 30, 2023. “Considering our ongoing operations, which does not include losses associated with the butane optimization business, the second quarter adjusted EBITDA of $31.8 million, was in line with our forecast and reaffirms our guidance of $115.4 million in adjusted EBITDA for the year 2023.” SECOND QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT TERMINALLING AND STORAGE (“T&S”) T&S operating income (loss) for the three months ended June 30, 2023 and 2022 was $4.4 million and ($0.1) million, respectively. Adjusted segment EBITDA for T&S was $9.6 million and $7.1 million for the three months ended June 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 June 30, 2023 and 2022 was $9.0 million and $11.2 million, respectively. Adjusted segment EBITDA for Transportation was $12.1 million and $14.6 million for the three months ended June 30, 2023 and 2022, respectively, reflecting higher marine day rates, offset by increased expenses in our land transportation division. SULFUR SERVICES Sulfur Services operating income for the three months ended June 30, 2023 and 2022 was $5.3 million and $9.1 million, respectively. Adjusted segment EBITDA for Sulfur Services was $8.0 million and $13.9 million for the three months ended June 30, 2023 and 2022, respectively, reflecting reduced demand in our fertilizer business in part due to a delay in the planting season related to weather conditions, leading to higher inventories and declining prices. SPECIALTY PRODUCTS Specialty Products operating income for the three months ended June 30, 2023 and 2022 was $2.5 million and $5.6 million, respectively. Included in the Specialty Products results is an operating loss of $2.6 million and $0.9 million, for the three months ended June 30, 2023 and 2022, respectively, attributable to the butane optimization business. Adjusted segment EBITDA for Specialty Products was $(0.4) million and $7.1 million for the three months ended June 30, 2023 and 2022, respectively, primarily reflecting decreased NGL margins combined with lower demand in our lubricants packaging business. Included in the Specialty Products results is negative adjusted EBITDA of ($6.3) million and ($0.6) million for the three months ended June 30, 2023 and 2022, respectively, 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 $5.9 million and $7.7 million for the three months ended June 30, 2023 and 2022, respectively. UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”) USGA expenses included in operating income for the three months ended June 30, 2023 and 2022 were $3.9 million and $4.4 million, respectively. USGA expenses included in adjusted EBITDA for the three months ended June 30, 2023 and 2022 were $3.9 million and $4.3 million, respectively. CAPITALIZATION At June 30, 2023, the Partnership had $460.5 million of total debt outstanding, including $60.5 million drawn on its $175 million revolving credit facility maturing in 2027 and $400 million of senior secured second lien notes due 2028. At June 30, 2023, the Partnership had liquidity of approximately $56.3 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 4.14 times at June 30, 2023, compared to 4.25 times at March 31, 2023, a reduction of 0.11 times. The Partnership was in compliance with all debt covenants as of June 30, 2023. QUARTERLY CASH DISTRIBUTION The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended June 30, 2023. The distribution is payable on August 14, 2023 to common unitholders of record as of the close of business on August 7, 2023. The ex-dividend date for the cash distribution is August 4, 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: August 7, 2023 Payable Date: August 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 net income for the three months ended June 30, 2023 of $1.1 million, or $0.03 per limited partner unit. The Partnership had net income for the three months ended June 30, 2022 of $6.6 million, or $0.17 per limited partner unit. Adjusted EBITDA for the three months ended June 30, 2023 was $25.5 million compared to $38.3 million for the three months ended June 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended June 30, 2023 was $31.8 million compared to $38.9 million for the three months ended June 30, 2022. Net cash provided by (used in) operating activities for the three months ended June 30, 2023 was $49.5 million, compared to ($2.5) million for the three months ended June 30, 2022. Distributable cash flow for the three months ended June 30, 2023 was $9.7 million compared to $22.9 million for the three months ended June 30, 2022. The Partnership had a net loss for the six months ended June 30, 2023 of $4.0 million, a loss of $0.10 per limited partner unit. The Partnership had net income for the six months ended June 30, 2022 of $18.1 million, or $0.46 per limited partner unit. Adjusted EBITDA for the six months ended June 30, 2023 was $47.3 million compared to $78.3 million for the six months ended June 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the six months ended June 30, 2023 was $62.4 million compared to $73.2 million for the six months ended June 30, 2022. Net cash provided by operating activities for the six months ended June 30, 2023 was $98.8 million compared to $28.5 million for the six months ended June 30, 2022. Distributable cash flow for the six months ended June 30, 2023 was $19.2 million compared to $38.0 million for the six months ended June 30, 2022. Revenues for the three months ended June 30, 2023 were $195.6 million compared to $267.0 million for the three months ended June 30, 2022. Revenues for the six months ended June 30, 2023 were $440.2 million compared to $546.2 million for the six months ended June 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 second quarter 2023 to the Partnership's adjusted EBITDA guidance for the second quarter 2023. Investors' Conference Call Date: Thursday, July 20, 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 Second 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 Twitter. 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) June 30, 2023 December 31, 2022 (Unaudited) (Audited) Assets Cash $ 57 $ 45 Accounts and other receivables, less allowance for doubtful accounts of $496 and $496, respectively 57,022 79,641 Inventories 50,865 109,798 Due from affiliates 2,356 8,010 Other current assets 6,926 13,633 Total current assets 117,226 211,127 Property, plant and equipment, at cost 902,605 903,535 Accumulated depreciation (593,324 ) (584,245 ) Property, plant and equipment, net 309,281 319,290 Goodwill 16,671 16,671 Right-of-use assets 45,221 34,963 Deferred income taxes, net 12,519 14,386 Other assets, net 1,899 2,414 Total assets $ 502,817 $ 598,851 Liabilities and Partners’ Capital (Deficit) Current installments of long-term debt and finance lease obligations $ — $ 9 Trade and other accounts payable 48,469 68,198 Product exchange payables 310 32 Due to affiliates 2,306 8,947 Income taxes payable 450 665 Other accrued liabilities 37,249 33,074 Total current liabilities 88,784 110,925 Long-term debt, net 436,481 512,871 Operating lease liabilities 33,827 26,268 Other long-term obligations 7,482 8,232 Total liabilities 566,574 658,296 Commitments and contingencies Partners’ capital (deficit) (63,757 ) (59,445 ) Total partners’ capital (deficit) (63,757 ) (59,445 ) Total liabilities and partners' capital (deficit) $ 502,817 $ 598,851 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per unit amounts) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues: Terminalling and storage * $ 21,684 $ 20,423 $ 42,542 $ 39,820 Transportation * 54,750 55,832 110,473 102,542 Sulfur services 3,357 3,084 6,715 6,168 Product sales: * Specialty products 78,872 133,788 211,141 287,759 Sulfur services 36,973 53,869 69,294 109,908 115,845 187,657 280,435 397,667 Total revenues 195,636 266,996 440,165 546,197 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products * 71,570 119,859 189,565 253,651 Sulfur services * 25,654 37,063 47,471 74,848 Terminalling and storage * 25 4 31 9 97,249 156,926 237,067 328,508 Expenses: Operating expenses * 60,737 64,082 123,482 120,577 Selling, general and administrative * 8,447 9,944 19,619 21,147 Depreciation and amortization 12,547 14,800 25,448 29,286 Total costs and expenses 178,980 245,752 405,616 499,518 Other operating income (loss), net 673 246 285 260 Operating income (loss) 17,329 21,490 34,834 46,939 Other income (expense): Interest expense, net (15,263 ) (12,846 ) (30,920 ) (25,275 ) Loss on extinguishment of debt — — (5,121 ) — Other, net 11 (1 ) 33 (2 ) Total other expense (15,252 ) (12,847 ) (36,008 ) (25,277 ) Net income (loss) before taxes 2,077 8,643 (1,174 ) 21,662 Income tax expense (996 ) (2,037 ) (2,831 ) (3,578 ) Net income (loss) 1,081 6,606 (4,005 ) 18,084 Less general partner's interest in net (income) loss (22 ) (132 ) 80 (362 ) Less (income) loss allocable to unvested restricted units (4 ) (21 ) 12 (51 ) Limited partners' interest in net income (loss) $ 1,055 $ 6,453 $ (3,913 ) $ 17,671 Net income (loss) per unit attributable to limited partners - basic $ 0.03 $ 0.17 $ (0.10 ) $ 0.46 Net income (loss) per unit attributable to limited partners - diluted $ 0.03 $ 0.17 $ (0.10 ) $ 0.46 Weighted average limited partner units - basic 38,772,266 38,729,118 38,771,037 38,725,701 Weighted average limited partner units - diluted 38,777,600 38,750,153 38,771,037 38,753,197 *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 Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues:* Terminalling and storage $ 18,077 $ 17,416 $ 35,579 $ 33,620 Transportation 7,277 7,463 12,788 13,751 Product Sales 7,497 96 8,422 423 Costs and expenses:* Cost of products sold: (excluding depreciation and amortization) Specialty products 5,829 10,205 15,339 19,851 Sulfur services 2,644 2,592 5,352 5,268 Terminalling and storage 25 4 31 9 Expenses: Operating expenses 25,058 23,447 48,885 44,826 Selling, general and administrative 6,556 7,498 15,072 16,306 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income (loss) $ 1,081 $ 6,606 $ (4,005 ) $ 18,084 Changes in fair values of commodity cash flow hedges — 167 — 167 Commodity cash flow hedging (gains) losses reclassified to earnings — 440 — (816 ) Comprehensive income (loss) $ 1,081 $ 7,213 $ (4,005 ) $ 17,435 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 - March 31, 2023 38,914,806 $ (66,236 ) $ 1,559 $ — $ (64,677 ) Net income — 1,059 22 — 1,081 Cash distributions — (195 ) (4 ) — (199 ) Unit-based compensation — 38 — — 38 Balances - June 30, 2023 38,914,806 (65,334 ) 1,577 — $ (63,757 ) Balances - December 31, 2022 38,850,750 $ (61,110 ) $ 1,665 $ — $ (59,445 ) Net loss — (3,925 ) (80 ) — (4,005 ) Issuance of restricted units 64,056 — — — — Cash distributions — (389 ) (8 ) — (397 ) Unit-based compensation — 90 — — 90 Balances - June 30, 2023 38,914,806 $ (65,334 ) $ 1,577 $ — $ (63,757 ) Partners’ Capital (Deficit) Common Limited General Partner Amount Accumulated Other Comprehensive Income (Loss) Units Amount Total Balances - March 31, 2022 38,836,950 $ (39,652 ) $ 2,113 $ (440 ) $ (37,979 ) Net income — 6,473 133 — 6,606 Issuance of restricted units 13,800 — — — — Cash distributions — (194 ) (4 ) — (198 ) Unit-based compensation — 45 — — 45 Excess purchase price over carrying value of acquired assets — 65 — — 65 Loss reclassified from AOCI into income on commodity cash flow hedges — — — 440 440 Gain recognized in AOCI on commodity cash flow hedges — — — 167 167 Balances - June 30, 2022 38,850,750 $ (33,263 ) $ 2,242 $ 167 $ (30,854 ) Balances - December 31, 2021 38,802,750 $ (50,741 ) $ 1,888 $ 816 $ (48,037 ) Net income — 17,722 362 — 18,084 Issuance of restricted units 48,000 — — — — Cash distributions — (388 ) (8 ) — (396 ) Unit-based compensation — 79 — — 79 Excess purchase price over carrying value of acquired assets — 65 — — 65 Gain reclassified from AOCI into income on commodity cash flow hedges — — — (816 ) (816 ) Gain recognized in AOCI on commodity cash flow hedges — — — 167 167 Balances - June 30, 2022 38,850,750 $ (33,263 ) $ 2,242 $ 167 $ (30,854 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Six Months Ended June 30, 2023 2022 Cash flows from operating activities: Net income (loss) $ (4,005 ) $ 18,084 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 25,448 29,286 Amortization of deferred debt issuance costs 2,435 1,568 Amortization of debt discount 1,000 — Deferred income tax expense 1,867 2,304 Gain on sale of property, plant and equipment, net (285 ) (260 ) Loss on extinguishment of debt 5,121 — Derivative income — (734 ) Net cash paid for commodity derivatives — 85 Non cash unit-based compensation 90 79 Change in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and other receivables 22,619 10,714 Inventories 58,933 (55,725 ) Due from affiliates 5,654 (2,149 ) Other current assets 5,296 (17,741 ) Trade and other accounts payable (19,459 ) 37,688 Product exchange payables 278 (869 ) Due to affiliates (6,641 ) 7,940 Income taxes payable (215 ) 368 Other accrued liabilities 1,907 (2,332 ) Change in other non-current assets and liabilities (1,269 ) 145 Net cash provided by operating activities 98,774 28,451 Cash flows from investing activities: Payments for property, plant and equipment (17,024 ) (14,634 ) Payments for plant turnaround costs (661 ) (1,600 ) Proceeds from sale of property, plant and equipment 4,275 689 Net cash used in investing activities (13,410 ) (15,545 ) Cash flows from financing activities: Payments of long-term debt (519,197 ) (217,589 ) Payments under finance lease obligations (9 ) (119 ) Proceeds from long-term debt 448,489 206,500 Payment of debt issuance costs (14,238 ) (26 ) Excess purchase price over carrying value of acquired assets — (1,285 ) Cash distributions paid (397 ) (396 ) Net cash used in financing activities (85,352 ) (12,915 ) Net increase (decrease) in cash 12 (9 ) Cash at beginning of period 45 52 Cash at end of period $ 57 $ 43 Non-cash additions to property, plant and equipment $ 1,679 $ 1,705 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 June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 23,906 $ 23,622 $ 284 1 % Cost of products sold 25 4 21 525 % Operating expenses 13,932 16,014 (2,082 ) (13 )% Selling, general and administrative expenses 333 539 (206 ) (38 )% Depreciation and amortization 5,195 7,172 (1,977 ) (28 )% 4,421 (107 ) 4,528 4,232 % Other operating income, net 25 8 17 213 % Operating income (loss) $ 4,446 $ (99 ) $ 4,545 4,591 % Shore-based throughput volumes (gallons) 42,434 14,100 28,334 201 % Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — % Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 47,825 $ 45,993 $ 1,832 4 % Cost of products sold 31 9 22 244 % Operating expenses 28,240 30,954 (2,714 ) (9 )% Selling, general and administrative expenses 882 1,034 (152 ) (15 )% Depreciation and amortization 10,794 14,172 (3,378 ) (24 )% 7,878 (176 ) 8,054 4,576 % Other operating loss, net (324 ) (35 ) (289 ) (826 )% Operating income (loss) $ 7,554 $ (211 ) $ 7,765 3,680 % Shore-based throughput volumes (gallons) 85,783 27,543 58,240 211 % Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500 6,500 — — % Transportation Segment Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 58,395 $ 60,902 $ (2,507 ) (4 )% Operating expenses 44,285 44,528 (243 ) (1 )% Selling, general and administrative expenses 1,981 1,789 192 11 % Depreciation and amortization 3,760 3,590 170 5 % 8,369 10,995 (2,626 ) (24 )% Other operating income, net 647 254 393 155 % Operating income $ 9,016 $ 11,249 $ (2,233 ) (20 )% Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 120,334 $ 112,799 $ 7,535 7 % Operating expenses 90,475 83,730 6,745 8 % Selling, general and administrative expenses 4,530 3,958 572 14 % Depreciation and amortization 7,522 7,163 359 5 % $ 17,807 $ 17,948 $ (141 ) (1 )% Other operating income, net 651 283 368 130 % Operating income $ 18,458 $ 18,231 $ 227 1 % Sulfur Services Segment Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 3,357 $ 3,084 $ 273 9 % Products 36,973 53,869 (16,896 ) (31 )% Total revenues 40,330 56,953 (16,623 ) (29 )% Cost of products sold 28,141 39,181 (11,040 ) (28 )% Operating expenses 3,186 4,227 (1,041 ) (25 )% Selling, general and administrative expenses 962 1,537 (575 ) (37 )% Depreciation and amortization 2,756 2,882 (126 ) (4 )% 5,285 9,126 (3,841 ) (42 )% Other operating income, net 1 8 (7 ) (88 )% Operating income $ 5,286 $ 9,134 $ (3,848 ) (42 )% Sulfur (long tons) 123 118 5 4 % Fertilizer (long tons) 73 62 11 18 % Total sulfur services volumes (long tons) 196 180 16 9 % Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 6,715 $ 6,168 $ 547 9 % Products 69,294 109,908 (40,614 ) (37 )% Total revenues 76,009 116,076 (40,067 ) (35 )% Cost of products sold 52,090 78,439 (26,349 ) (34 )% Operating expenses 6,085 7,255 (1,170 ) (16 )% Selling, general and administrative expenses 2,579 3,041 (462 ) (15 )% Depreciation and amortization 5,433 5,591 (158 ) (3 )% 9,822 21,750 (11,928 ) (55 )% Other operating income, net 17 36 (19 ) (53 )% Operating income $ 9,839 $ 21,786 $ (11,947 ) (55 )% Sulfur (long tons) 197 232 (35 ) (15 )% Fertilizer (long tons) 134 146 (12 ) (8 )% Total sulfur services volumes (long tons) 331 378 (47 ) (12 )% Specialty Products Segment Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 78,898 $ 133,818 $ (54,920 ) (41 )% Cost of products sold 74,270 125,296 (51,026 ) (41 )% Operating expenses 18 34 (16 ) (47 )% Selling, general and administrative expenses 1,299 1,712 (413 ) (24 )% Depreciation and amortization 836 1,156 (320 ) (28 )% 2,475 5,620 (3,145 ) (56 )% Other operating loss, net — (24 ) 24 100 % Operating income $ 2,475 $ 5,596 $ (3,121 ) (56 )% NGL sales volumes (Bbls) 827 1,153 (326 ) (28 )% Other specialty products volumes (Bbls) 90 103 (13 ) (13 )% Total specialty products volumes (Bbls) 917 1,256 (339 ) (27 )% Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 211,175 $ 287,827 $ (76,652 ) (27 )% Cost of products sold 198,721 265,076 (66,355 ) (25 )% Operating expenses 32 72 (40 ) (56 )% Selling, general and administrative expenses 3,589 4,650 (1,061 ) (23 )% Depreciation and amortization 1,699 2,360 (661 ) (28 )% 7,134 15,669 (8,535 ) (54 )% Other operating loss, net (59 ) (24 ) (35 ) (146 )% Operating income $ 7,075 $ 15,645 $ (8,570 ) (55 )% NGL sales volumes (Bbls) 2,518 2,750 (232 ) (8 )% Other specialty products volumes (Bbls) 174 201 (27 ) (13 )% Total specialty products volumes (Bbls) 2,692 2,951 (259 ) (9 )% Unallocated Selling, General and Administrative Expenses Comparative Results of Operations for the Three and Six Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change Six Months Ended June 30, Variance Percent Change 2023 2022 2023 2022 (In thousands) (In thousands) Indirect selling, general and administrative expenses $ 3,894 $ 4,390 $ (496 ) (11 )% $ 8,092 $ 8,512 $ (420 ) (5 )% 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 six months ended June 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 Income (Loss) to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net income (loss) $ 1,081 $ 6,606 $ (4,005 ) $ 18,084 Adjustments: Interest expense 15,263 12,846 30,920 25,275 Income tax expense 996 2,037 2,831 3,578 Depreciation and amortization 12,547 14,800 25,448 29,286 EBITDA 29,887 36,289 55,194 76,223 Adjustments: Gain on disposition of property, plant and equipment (673 ) (246 ) (285 ) (260 ) Loss on extinguishment of debt — — 5,121 — Lower of cost or net realizable value and other non-cash adjustments (3,717 ) 2,242 (12,850 ) 2,242 Unit-based compensation 38 45 90 79 Adjusted EBITDA $ 25,535 $ 38,330 $ 47,270 $ 78,284 Adjustments: Less: net (income) loss associated with butane optimization business 2,564 942 2,255 (4,752 ) Plus: lower of cost or net realizable value and other non-cash adjustments 3,717 $ (369 ) 12,850 (369 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business $ 31,816 $ 38,903 $ 62,375 $ 73,163 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net cash provided by (used in) operating activities $ 49,510 $ (2,494 ) $ 98,774 $ 28,451 Interest expense 1 13,903 12,061 27,485 23,707 Current income tax expense 306 654 964 1,274 Lower of cost or market and other non-cash adjustments (3,717 ) 2,242 (12,850 ) 2,242 Commodity cash flow hedging gains reclassified to earnings — (82 ) — 734 Net cash paid for closed commodity derivative positions included in AOCI — (700 ) — (85 ) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets (43,135 ) 68,797 (91,517 ) 64,901 Trade, accounts and other payables, and other current liabilities 7,171 (41,182 ) 23,145 (42,795 ) Other 1,497 (966 ) 1,269 (145 ) Adjusted EBITDA 25,535 38,330 47,270 78,284 Adjustments: Less: net (income) loss associated with butane optimization business 2,564 942 2,255 (4,752 ) Plus: lower of cost or net realizable value and other non-cash adjustments 3,717 (369 ) 12,850 (369 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business 31,816 38,903 62,375 73,163 Adjustments: Interest expense (15,263 ) (12,846 ) (30,920 ) (25,275 ) Income tax expense (996 ) (2,037 ) (2,831 ) (3,578 ) Deferred income taxes 690 1,383 1,867 2,304 Amortization of debt discount 600 — 1,000 — Amortization of deferred debt issuance costs 760 785 2,435 1,568 Payments for plant turnaround costs (432 ) (165 ) (661 ) (1,600 ) Maintenance capital expenditures (7,438 ) (3,155 ) (14,072 ) (8,554 ) Distributable cash flow 9,737 22,868 19,193 38,028 Principal payments under finance lease obligations (3 ) (60 ) (9 ) (119 ) Expansion capital expenditures (1,925 ) (1,455 ) (2,682 ) (4,556 ) Adjusted free cash flow $ 7,809 $ 21,353 $ 16,502 $ 33,353 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/20230719813949/en/Contacts Sharon Taylor - Executive Vice President & Chief Financial Officer (877) 256-6644 investor.relations@mmlp.com
Reported net income of $1.1 million for the three months ended June 30, 2023, and a net loss of $4.0 million, which includes a $5.1 million impact from the loss on extinguishment of debt, for the six months ended June 30, 2023 Reported adjusted EBITDA of $31.8 million and $62.4 million, after giving effect to the May 2023 exit of the butane optimization business, which incurred negative adjusted EBITDA of $6.3 million and $15.1 million, for the three and six months ended June 30, 2023, respectively Total adjusted leverage of 4.14 times as of June 30, 2023, compared to 4.25 times as of March 31, 2023 Reaffirms 2023 Annual Adjusted EBITDA Guidance of $115.4 million Declares quarterly cash distribution of $0.005 per common unit for the quarter ended June 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 second quarter of 2023. Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, stated, “The Partnership continued to benefit from our diversified business model in the second quarter as strength in our Transportation segment offset challenges in our Sulfur and Specialty Products segments which both have exposure to a currently difficult agricultural market. As of May 1st, 2023, we sold all remaining butane inventory completing our exit from the butane optimization business. This allowed us to further reduce debt by $39.5 million from $500.0 million at March 31, 2023 to $460.5 million at June 30, 2023. While we will utilize our NGL underground storage facility under a fee-based butane logistics model, going forward we have removed the volatility in our Specialty Products segment earnings related to the butane optimization business, which had negative adjusted EBITDA of $15.1 million for the six months ended June 30, 2023. “Considering our ongoing operations, which does not include losses associated with the butane optimization business, the second quarter adjusted EBITDA of $31.8 million, was in line with our forecast and reaffirms our guidance of $115.4 million in adjusted EBITDA for the year 2023.” SECOND QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT TERMINALLING AND STORAGE (“T&S”) T&S operating income (loss) for the three months ended June 30, 2023 and 2022 was $4.4 million and ($0.1) million, respectively. Adjusted segment EBITDA for T&S was $9.6 million and $7.1 million for the three months ended June 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 June 30, 2023 and 2022 was $9.0 million and $11.2 million, respectively. Adjusted segment EBITDA for Transportation was $12.1 million and $14.6 million for the three months ended June 30, 2023 and 2022, respectively, reflecting higher marine day rates, offset by increased expenses in our land transportation division. SULFUR SERVICES Sulfur Services operating income for the three months ended June 30, 2023 and 2022 was $5.3 million and $9.1 million, respectively. Adjusted segment EBITDA for Sulfur Services was $8.0 million and $13.9 million for the three months ended June 30, 2023 and 2022, respectively, reflecting reduced demand in our fertilizer business in part due to a delay in the planting season related to weather conditions, leading to higher inventories and declining prices. SPECIALTY PRODUCTS Specialty Products operating income for the three months ended June 30, 2023 and 2022 was $2.5 million and $5.6 million, respectively. Included in the Specialty Products results is an operating loss of $2.6 million and $0.9 million, for the three months ended June 30, 2023 and 2022, respectively, attributable to the butane optimization business. Adjusted segment EBITDA for Specialty Products was $(0.4) million and $7.1 million for the three months ended June 30, 2023 and 2022, respectively, primarily reflecting decreased NGL margins combined with lower demand in our lubricants packaging business. Included in the Specialty Products results is negative adjusted EBITDA of ($6.3) million and ($0.6) million for the three months ended June 30, 2023 and 2022, respectively, 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 $5.9 million and $7.7 million for the three months ended June 30, 2023 and 2022, respectively. UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (“USGA”) USGA expenses included in operating income for the three months ended June 30, 2023 and 2022 were $3.9 million and $4.4 million, respectively. USGA expenses included in adjusted EBITDA for the three months ended June 30, 2023 and 2022 were $3.9 million and $4.3 million, respectively. CAPITALIZATION At June 30, 2023, the Partnership had $460.5 million of total debt outstanding, including $60.5 million drawn on its $175 million revolving credit facility maturing in 2027 and $400 million of senior secured second lien notes due 2028. At June 30, 2023, the Partnership had liquidity of approximately $56.3 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 4.14 times at June 30, 2023, compared to 4.25 times at March 31, 2023, a reduction of 0.11 times. The Partnership was in compliance with all debt covenants as of June 30, 2023. QUARTERLY CASH DISTRIBUTION The Partnership has declared a quarterly cash distribution of $0.005 per unit for the quarter ended June 30, 2023. The distribution is payable on August 14, 2023 to common unitholders of record as of the close of business on August 7, 2023. The ex-dividend date for the cash distribution is August 4, 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: August 7, 2023 Payable Date: August 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 net income for the three months ended June 30, 2023 of $1.1 million, or $0.03 per limited partner unit. The Partnership had net income for the three months ended June 30, 2022 of $6.6 million, or $0.17 per limited partner unit. Adjusted EBITDA for the three months ended June 30, 2023 was $25.5 million compared to $38.3 million for the three months ended June 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended June 30, 2023 was $31.8 million compared to $38.9 million for the three months ended June 30, 2022. Net cash provided by (used in) operating activities for the three months ended June 30, 2023 was $49.5 million, compared to ($2.5) million for the three months ended June 30, 2022. Distributable cash flow for the three months ended June 30, 2023 was $9.7 million compared to $22.9 million for the three months ended June 30, 2022. The Partnership had a net loss for the six months ended June 30, 2023 of $4.0 million, a loss of $0.10 per limited partner unit. The Partnership had net income for the six months ended June 30, 2022 of $18.1 million, or $0.46 per limited partner unit. Adjusted EBITDA for the six months ended June 30, 2023 was $47.3 million compared to $78.3 million for the six months ended June 30, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the six months ended June 30, 2023 was $62.4 million compared to $73.2 million for the six months ended June 30, 2022. Net cash provided by operating activities for the six months ended June 30, 2023 was $98.8 million compared to $28.5 million for the six months ended June 30, 2022. Distributable cash flow for the six months ended June 30, 2023 was $19.2 million compared to $38.0 million for the six months ended June 30, 2022. Revenues for the three months ended June 30, 2023 were $195.6 million compared to $267.0 million for the three months ended June 30, 2022. Revenues for the six months ended June 30, 2023 were $440.2 million compared to $546.2 million for the six months ended June 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 second quarter 2023 to the Partnership's adjusted EBITDA guidance for the second quarter 2023. Investors' Conference Call Date: Thursday, July 20, 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 Second 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 Twitter. 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) June 30, 2023 December 31, 2022 (Unaudited) (Audited) Assets Cash $ 57 $ 45 Accounts and other receivables, less allowance for doubtful accounts of $496 and $496, respectively 57,022 79,641 Inventories 50,865 109,798 Due from affiliates 2,356 8,010 Other current assets 6,926 13,633 Total current assets 117,226 211,127 Property, plant and equipment, at cost 902,605 903,535 Accumulated depreciation (593,324 ) (584,245 ) Property, plant and equipment, net 309,281 319,290 Goodwill 16,671 16,671 Right-of-use assets 45,221 34,963 Deferred income taxes, net 12,519 14,386 Other assets, net 1,899 2,414 Total assets $ 502,817 $ 598,851 Liabilities and Partners’ Capital (Deficit) Current installments of long-term debt and finance lease obligations $ — $ 9 Trade and other accounts payable 48,469 68,198 Product exchange payables 310 32 Due to affiliates 2,306 8,947 Income taxes payable 450 665 Other accrued liabilities 37,249 33,074 Total current liabilities 88,784 110,925 Long-term debt, net 436,481 512,871 Operating lease liabilities 33,827 26,268 Other long-term obligations 7,482 8,232 Total liabilities 566,574 658,296 Commitments and contingencies Partners’ capital (deficit) (63,757 ) (59,445 ) Total partners’ capital (deficit) (63,757 ) (59,445 ) Total liabilities and partners' capital (deficit) $ 502,817 $ 598,851 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per unit amounts) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues: Terminalling and storage * $ 21,684 $ 20,423 $ 42,542 $ 39,820 Transportation * 54,750 55,832 110,473 102,542 Sulfur services 3,357 3,084 6,715 6,168 Product sales: * Specialty products 78,872 133,788 211,141 287,759 Sulfur services 36,973 53,869 69,294 109,908 115,845 187,657 280,435 397,667 Total revenues 195,636 266,996 440,165 546,197 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products * 71,570 119,859 189,565 253,651 Sulfur services * 25,654 37,063 47,471 74,848 Terminalling and storage * 25 4 31 9 97,249 156,926 237,067 328,508 Expenses: Operating expenses * 60,737 64,082 123,482 120,577 Selling, general and administrative * 8,447 9,944 19,619 21,147 Depreciation and amortization 12,547 14,800 25,448 29,286 Total costs and expenses 178,980 245,752 405,616 499,518 Other operating income (loss), net 673 246 285 260 Operating income (loss) 17,329 21,490 34,834 46,939 Other income (expense): Interest expense, net (15,263 ) (12,846 ) (30,920 ) (25,275 ) Loss on extinguishment of debt — — (5,121 ) — Other, net 11 (1 ) 33 (2 ) Total other expense (15,252 ) (12,847 ) (36,008 ) (25,277 ) Net income (loss) before taxes 2,077 8,643 (1,174 ) 21,662 Income tax expense (996 ) (2,037 ) (2,831 ) (3,578 ) Net income (loss) 1,081 6,606 (4,005 ) 18,084 Less general partner's interest in net (income) loss (22 ) (132 ) 80 (362 ) Less (income) loss allocable to unvested restricted units (4 ) (21 ) 12 (51 ) Limited partners' interest in net income (loss) $ 1,055 $ 6,453 $ (3,913 ) $ 17,671 Net income (loss) per unit attributable to limited partners - basic $ 0.03 $ 0.17 $ (0.10 ) $ 0.46 Net income (loss) per unit attributable to limited partners - diluted $ 0.03 $ 0.17 $ (0.10 ) $ 0.46 Weighted average limited partner units - basic 38,772,266 38,729,118 38,771,037 38,725,701 Weighted average limited partner units - diluted 38,777,600 38,750,153 38,771,037 38,753,197 *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 Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues:* Terminalling and storage $ 18,077 $ 17,416 $ 35,579 $ 33,620 Transportation 7,277 7,463 12,788 13,751 Product Sales 7,497 96 8,422 423 Costs and expenses:* Cost of products sold: (excluding depreciation and amortization) Specialty products 5,829 10,205 15,339 19,851 Sulfur services 2,644 2,592 5,352 5,268 Terminalling and storage 25 4 31 9 Expenses: Operating expenses 25,058 23,447 48,885 44,826 Selling, general and administrative 6,556 7,498 15,072 16,306 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income (loss) $ 1,081 $ 6,606 $ (4,005 ) $ 18,084 Changes in fair values of commodity cash flow hedges — 167 — 167 Commodity cash flow hedging (gains) losses reclassified to earnings — 440 — (816 ) Comprehensive income (loss) $ 1,081 $ 7,213 $ (4,005 ) $ 17,435 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 - March 31, 2023 38,914,806 $ (66,236 ) $ 1,559 $ — $ (64,677 ) Net income — 1,059 22 — 1,081 Cash distributions — (195 ) (4 ) — (199 ) Unit-based compensation — 38 — — 38 Balances - June 30, 2023 38,914,806 (65,334 ) 1,577 — $ (63,757 ) Balances - December 31, 2022 38,850,750 $ (61,110 ) $ 1,665 $ — $ (59,445 ) Net loss — (3,925 ) (80 ) — (4,005 ) Issuance of restricted units 64,056 — — — — Cash distributions — (389 ) (8 ) — (397 ) Unit-based compensation — 90 — — 90 Balances - June 30, 2023 38,914,806 $ (65,334 ) $ 1,577 $ — $ (63,757 ) Partners’ Capital (Deficit) Common Limited General Partner Amount Accumulated Other Comprehensive Income (Loss) Units Amount Total Balances - March 31, 2022 38,836,950 $ (39,652 ) $ 2,113 $ (440 ) $ (37,979 ) Net income — 6,473 133 — 6,606 Issuance of restricted units 13,800 — — — — Cash distributions — (194 ) (4 ) — (198 ) Unit-based compensation — 45 — — 45 Excess purchase price over carrying value of acquired assets — 65 — — 65 Loss reclassified from AOCI into income on commodity cash flow hedges — — — 440 440 Gain recognized in AOCI on commodity cash flow hedges — — — 167 167 Balances - June 30, 2022 38,850,750 $ (33,263 ) $ 2,242 $ 167 $ (30,854 ) Balances - December 31, 2021 38,802,750 $ (50,741 ) $ 1,888 $ 816 $ (48,037 ) Net income — 17,722 362 — 18,084 Issuance of restricted units 48,000 — — — — Cash distributions — (388 ) (8 ) — (396 ) Unit-based compensation — 79 — — 79 Excess purchase price over carrying value of acquired assets — 65 — — 65 Gain reclassified from AOCI into income on commodity cash flow hedges — — — (816 ) (816 ) Gain recognized in AOCI on commodity cash flow hedges — — — 167 167 Balances - June 30, 2022 38,850,750 $ (33,263 ) $ 2,242 $ 167 $ (30,854 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Six Months Ended June 30, 2023 2022 Cash flows from operating activities: Net income (loss) $ (4,005 ) $ 18,084 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 25,448 29,286 Amortization of deferred debt issuance costs 2,435 1,568 Amortization of debt discount 1,000 — Deferred income tax expense 1,867 2,304 Gain on sale of property, plant and equipment, net (285 ) (260 ) Loss on extinguishment of debt 5,121 — Derivative income — (734 ) Net cash paid for commodity derivatives — 85 Non cash unit-based compensation 90 79 Change in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and other receivables 22,619 10,714 Inventories 58,933 (55,725 ) Due from affiliates 5,654 (2,149 ) Other current assets 5,296 (17,741 ) Trade and other accounts payable (19,459 ) 37,688 Product exchange payables 278 (869 ) Due to affiliates (6,641 ) 7,940 Income taxes payable (215 ) 368 Other accrued liabilities 1,907 (2,332 ) Change in other non-current assets and liabilities (1,269 ) 145 Net cash provided by operating activities 98,774 28,451 Cash flows from investing activities: Payments for property, plant and equipment (17,024 ) (14,634 ) Payments for plant turnaround costs (661 ) (1,600 ) Proceeds from sale of property, plant and equipment 4,275 689 Net cash used in investing activities (13,410 ) (15,545 ) Cash flows from financing activities: Payments of long-term debt (519,197 ) (217,589 ) Payments under finance lease obligations (9 ) (119 ) Proceeds from long-term debt 448,489 206,500 Payment of debt issuance costs (14,238 ) (26 ) Excess purchase price over carrying value of acquired assets — (1,285 ) Cash distributions paid (397 ) (396 ) Net cash used in financing activities (85,352 ) (12,915 ) Net increase (decrease) in cash 12 (9 ) Cash at beginning of period 45 52 Cash at end of period $ 57 $ 43 Non-cash additions to property, plant and equipment $ 1,679 $ 1,705 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 June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 23,906 $ 23,622 $ 284 1 % Cost of products sold 25 4 21 525 % Operating expenses 13,932 16,014 (2,082 ) (13 )% Selling, general and administrative expenses 333 539 (206 ) (38 )% Depreciation and amortization 5,195 7,172 (1,977 ) (28 )% 4,421 (107 ) 4,528 4,232 % Other operating income, net 25 8 17 213 % Operating income (loss) $ 4,446 $ (99 ) $ 4,545 4,591 % Shore-based throughput volumes (gallons) 42,434 14,100 28,334 201 % Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — % Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands, except BBL per day) Revenues $ 47,825 $ 45,993 $ 1,832 4 % Cost of products sold 31 9 22 244 % Operating expenses 28,240 30,954 (2,714 ) (9 )% Selling, general and administrative expenses 882 1,034 (152 ) (15 )% Depreciation and amortization 10,794 14,172 (3,378 ) (24 )% 7,878 (176 ) 8,054 4,576 % Other operating loss, net (324 ) (35 ) (289 ) (826 )% Operating income (loss) $ 7,554 $ (211 ) $ 7,765 3,680 % Shore-based throughput volumes (gallons) 85,783 27,543 58,240 211 % Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500 6,500 — — % Transportation Segment Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 58,395 $ 60,902 $ (2,507 ) (4 )% Operating expenses 44,285 44,528 (243 ) (1 )% Selling, general and administrative expenses 1,981 1,789 192 11 % Depreciation and amortization 3,760 3,590 170 5 % 8,369 10,995 (2,626 ) (24 )% Other operating income, net 647 254 393 155 % Operating income $ 9,016 $ 11,249 $ (2,233 ) (20 )% Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues $ 120,334 $ 112,799 $ 7,535 7 % Operating expenses 90,475 83,730 6,745 8 % Selling, general and administrative expenses 4,530 3,958 572 14 % Depreciation and amortization 7,522 7,163 359 5 % $ 17,807 $ 17,948 $ (141 ) (1 )% Other operating income, net 651 283 368 130 % Operating income $ 18,458 $ 18,231 $ 227 1 % Sulfur Services Segment Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 3,357 $ 3,084 $ 273 9 % Products 36,973 53,869 (16,896 ) (31 )% Total revenues 40,330 56,953 (16,623 ) (29 )% Cost of products sold 28,141 39,181 (11,040 ) (28 )% Operating expenses 3,186 4,227 (1,041 ) (25 )% Selling, general and administrative expenses 962 1,537 (575 ) (37 )% Depreciation and amortization 2,756 2,882 (126 ) (4 )% 5,285 9,126 (3,841 ) (42 )% Other operating income, net 1 8 (7 ) (88 )% Operating income $ 5,286 $ 9,134 $ (3,848 ) (42 )% Sulfur (long tons) 123 118 5 4 % Fertilizer (long tons) 73 62 11 18 % Total sulfur services volumes (long tons) 196 180 16 9 % Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 6,715 $ 6,168 $ 547 9 % Products 69,294 109,908 (40,614 ) (37 )% Total revenues 76,009 116,076 (40,067 ) (35 )% Cost of products sold 52,090 78,439 (26,349 ) (34 )% Operating expenses 6,085 7,255 (1,170 ) (16 )% Selling, general and administrative expenses 2,579 3,041 (462 ) (15 )% Depreciation and amortization 5,433 5,591 (158 ) (3 )% 9,822 21,750 (11,928 ) (55 )% Other operating income, net 17 36 (19 ) (53 )% Operating income $ 9,839 $ 21,786 $ (11,947 ) (55 )% Sulfur (long tons) 197 232 (35 ) (15 )% Fertilizer (long tons) 134 146 (12 ) (8 )% Total sulfur services volumes (long tons) 331 378 (47 ) (12 )% Specialty Products Segment Comparative Results of Operations for the Three Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 78,898 $ 133,818 $ (54,920 ) (41 )% Cost of products sold 74,270 125,296 (51,026 ) (41 )% Operating expenses 18 34 (16 ) (47 )% Selling, general and administrative expenses 1,299 1,712 (413 ) (24 )% Depreciation and amortization 836 1,156 (320 ) (28 )% 2,475 5,620 (3,145 ) (56 )% Other operating loss, net — (24 ) 24 100 % Operating income $ 2,475 $ 5,596 $ (3,121 ) (56 )% NGL sales volumes (Bbls) 827 1,153 (326 ) (28 )% Other specialty products volumes (Bbls) 90 103 (13 ) (13 )% Total specialty products volumes (Bbls) 917 1,256 (339 ) (27 )% Comparative Results of Operations for the Six Months Ended June 30, 2023 and 2022 Six Months Ended June 30, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 211,175 $ 287,827 $ (76,652 ) (27 )% Cost of products sold 198,721 265,076 (66,355 ) (25 )% Operating expenses 32 72 (40 ) (56 )% Selling, general and administrative expenses 3,589 4,650 (1,061 ) (23 )% Depreciation and amortization 1,699 2,360 (661 ) (28 )% 7,134 15,669 (8,535 ) (54 )% Other operating loss, net (59 ) (24 ) (35 ) (146 )% Operating income $ 7,075 $ 15,645 $ (8,570 ) (55 )% NGL sales volumes (Bbls) 2,518 2,750 (232 ) (8 )% Other specialty products volumes (Bbls) 174 201 (27 ) (13 )% Total specialty products volumes (Bbls) 2,692 2,951 (259 ) (9 )% Unallocated Selling, General and Administrative Expenses Comparative Results of Operations for the Three and Six Months Ended June 30, 2023 and 2022 Three Months Ended June 30, Variance Percent Change Six Months Ended June 30, Variance Percent Change 2023 2022 2023 2022 (In thousands) (In thousands) Indirect selling, general and administrative expenses $ 3,894 $ 4,390 $ (496 ) (11 )% $ 8,092 $ 8,512 $ (420 ) (5 )% 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 six months ended June 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 Income (Loss) to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net income (loss) $ 1,081 $ 6,606 $ (4,005 ) $ 18,084 Adjustments: Interest expense 15,263 12,846 30,920 25,275 Income tax expense 996 2,037 2,831 3,578 Depreciation and amortization 12,547 14,800 25,448 29,286 EBITDA 29,887 36,289 55,194 76,223 Adjustments: Gain on disposition of property, plant and equipment (673 ) (246 ) (285 ) (260 ) Loss on extinguishment of debt — — 5,121 — Lower of cost or net realizable value and other non-cash adjustments (3,717 ) 2,242 (12,850 ) 2,242 Unit-based compensation 38 45 90 79 Adjusted EBITDA $ 25,535 $ 38,330 $ 47,270 $ 78,284 Adjustments: Less: net (income) loss associated with butane optimization business 2,564 942 2,255 (4,752 ) Plus: lower of cost or net realizable value and other non-cash adjustments 3,717 $ (369 ) 12,850 (369 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business $ 31,816 $ 38,903 $ 62,375 $ 73,163 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net cash provided by (used in) operating activities $ 49,510 $ (2,494 ) $ 98,774 $ 28,451 Interest expense 1 13,903 12,061 27,485 23,707 Current income tax expense 306 654 964 1,274 Lower of cost or market and other non-cash adjustments (3,717 ) 2,242 (12,850 ) 2,242 Commodity cash flow hedging gains reclassified to earnings — (82 ) — 734 Net cash paid for closed commodity derivative positions included in AOCI — (700 ) — (85 ) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets (43,135 ) 68,797 (91,517 ) 64,901 Trade, accounts and other payables, and other current liabilities 7,171 (41,182 ) 23,145 (42,795 ) Other 1,497 (966 ) 1,269 (145 ) Adjusted EBITDA 25,535 38,330 47,270 78,284 Adjustments: Less: net (income) loss associated with butane optimization business 2,564 942 2,255 (4,752 ) Plus: lower of cost or net realizable value and other non-cash adjustments 3,717 (369 ) 12,850 (369 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business 31,816 38,903 62,375 73,163 Adjustments: Interest expense (15,263 ) (12,846 ) (30,920 ) (25,275 ) Income tax expense (996 ) (2,037 ) (2,831 ) (3,578 ) Deferred income taxes 690 1,383 1,867 2,304 Amortization of debt discount 600 — 1,000 — Amortization of deferred debt issuance costs 760 785 2,435 1,568 Payments for plant turnaround costs (432 ) (165 ) (661 ) (1,600 ) Maintenance capital expenditures (7,438 ) (3,155 ) (14,072 ) (8,554 ) Distributable cash flow 9,737 22,868 19,193 38,028 Principal payments under finance lease obligations (3 ) (60 ) (9 ) (119 ) Expansion capital expenditures (1,925 ) (1,455 ) (2,682 ) (4,556 ) Adjusted free cash flow $ 7,809 $ 21,353 $ 16,502 $ 33,353 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