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 Fourth Quarter and Full Year 2023 Financial Results and Releases 2024 Guidance By: Martin Midstream Partners L.P. via Business Wire February 14, 2024 at 16:01 PM EST Total adjusted leverage of 3.75 times as of December 31, 2023 Reported net income of $0.5 million for the fourth quarter and net loss of $4.5 million, which includes a $5.1 million impact from the loss on extinguishment of debt, for the year ended December 31, 2023 Reported adjusted EBITDA of $29.2 million and $117.7 million, after giving effect to the May 2023 exit of the butane optimization business, which incurred adjusted EBITDA of zero and negative adjusted EBITDA of $15.1 million, for the fourth quarter and year ended December 31, 2023, respectively Releases 2024 adjusted EBITDA Guidance of $116.1 million, growth capital expenditures of $17.4 million, and maintenance capital expenditures of $32.0 million Martin Midstream Partners L.P. (Nasdaq:MMLP) (“MMLP” or the “Partnership”) today announced its financial results for the three months and year ended December 31, 2023. “Fiscal year 2023 was significant for the Partnership as we focused on debt reduction and stability in our earnings by concentrating on our diversified refinery services assets and exiting the butane optimization business,” said Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership. “We exceeded our full year adjusted EBITDA guidance by $2.5 million, excluding losses related to the exit of our butane optimization business, and met our long-term goal of adjusted leverage at or below 3.75 times. The Partnership had a strong fourth quarter, as each of our four operating segments either met or exceeded guidance, even as we experienced headwinds in the lubricants business and downtime in our marine transportation business due to accelerated regulatory inspections, demonstrating the value of our diversified business model.” “In the fourth quarter, we reduced debt by $20.0 million, bringing 2023 full year debt reduction to $73.5 million, resulting in leverage of 3.75 times at December 31, 2023 compared to 4.53 times at December 31, 2022. While we have reached our stated adjusted leverage goal of 3.75 times, timing of our future cash flows and capital expenditures may result in a nominal short-term increase in the ratio. As such the Partnership intends to continue to concentrate on debt reduction to maintain our adjusted leverage at or below 3.75 times on a sustainable basis.” “During 2023, we started construction on an oleum tower located within our Plainview, Texas sulfuric acid plant. The expansion will provide feedstock to our joint venture, DSM Semichem LLC, to produce electronic level sulfuric acid used for applications in the semiconductor industry. We anticipate the project to be complete in the first half of 2024 with a capital spend of $10.4 million this year, which along with our $6.5 million of cash contribution to the joint venture, makes up the majority of our anticipated growth capital expenditures for the year. We anticipate this project will begin returning cash flows to the Partnership by the fourth quarter of 2024.” FOURTH QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT TERMINALLING AND STORAGE ("T&S") T&S operating income was $3.9 million and $1.4 million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for T&S was $9.0 million and $7.3 million for the three months ended December 31, 2023 and 2022, respectively, reflecting contractual index-based fee increases combined with reduced operating expenses across our divisions. TRANSPORTATION Transportation operating income was $8.6 million and $11.1 million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for Transportation was $12.0 million and $14.7 million for the three months ended December 31, 2023 and 2022, respectively, primarily reflecting slightly higher mileage in our land transportation division, offset by downtime associated with regulatory maintenance in our marine transportation division, and increased expenses across both divisions. SULFUR SERVICES Sulfur Services operating income was $4.8 million and $9.1 million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for Sulfur Services was $7.4 million and $5.7 million for the three months ended December 31, 2023 and 2022, respectively, primarily reflecting increased fertilizer sales volume and increased operating fees associated with higher prilled sulfur volume. SPECIALTY PRODUCTS Specialty Products operating income (loss) was $4.0 million and $(0.9) million for the three months ended December 31, 2023 and 2022, respectively. Butane optimization operating income (loss) was $0.0 million and $(4.7) million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for Specialty Products was $4.9 million and $(5.8) million for the three months ended December 31, 2023 and 2022, respectively. Included in the Specialty Products results is adjusted EBITDA of $0.0 million and $(10.7) million for the three months ended December 31, 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 $4.9 million and $4.9 million for the three months ended December 31, 2023 and 2022, respectively, reflecting improved volumes and margins in our grease business offset by higher product costs in our lubricants business. UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE ("USGA") USGA expenses included in operating income were $4.1 million for each of the three months ended December 31, 2023 and 2022, respectively. USGA expenses included in adjusted EBITDA were $4.1 million for each of the three months ended December 31, 2023 and 2022, respectively. CAPITALIZATION At December 31, 2023, the Partnership had $442.5 million of total debt outstanding, including $42.5 million drawn on its $175.0 million revolving credit facility maturing in 2027 and $400.0 million of senior secured second lien notes due 2028. At December 31, 2023, the Partnership had liquidity of approximately $109.0 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 3.75 times at December 31, 2023, compared to 3.95 times at September 30, 2023, a reduction of 0.20 times. The Partnership was in compliance with all debt covenants as of December 31, 2023. RESULTS OF OPERATIONS The Partnership had net income of $0.5 million, or $0.01 per limited partner unit, for the three months ended December 31, 2023. The Partnership had a net loss of $0.4 million, a loss of $0.01 per limited partner unit, for the three months ended December 31, 2022. Adjusted EBITDA was $29.2 million for the three months ended December 31, 2023 compared to $17.8 million for the three months ended December 31, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended December 31, 2023 was $29.2 million compared to $17.8 million for the three months ended December 31, 2022. Net cash provided by operating activities was $31.4 million for the three months ended December 31, 2023 compared to $32.9 million for the three months ended December 31, 2022. Distributable cash flow was $8.5 million for the three months ended December 31, 2023 compared to $9.0 million for the three months ended December 31, 2022. The Partnership had a net loss of $4.5 million, a loss of $0.11 per limited partner unit, for the year ended December 31, 2023. The Partnership had a net loss of $10.3 million, a loss of $0.26 per limited partner unit, for the year ended December 31, 2022. Adjusted EBITDA for the year ended December 31, 2023 was $102.6 million compared to $114.9 million for the year ended December 31, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the year ended December 31, 2023 was $117.7 million compared to $122.0 million for the year ended December 31, 2022. Net cash provided by operating activities was $137.5 million for the year ended December 31, 2023 compared to $16.1 million for the year ended December 31, 2022. Distributable cash flow was $32.8 million for the year ended December 31, 2023 compared to $45.1 million for the year ended December 31, 2022. Revenues were $181.1 million for the three months ended December 31, 2023 compared to $243.4 million for the three months ended December 31, 2022. Revenues associated with our butane optimization business were $0.0 million for the three months ended December 31, 2023 and $55.9 million for the three months ended December 31, 2022. Revenues were $798.0 million for the year ended December 31, 2023 compared to $1.019 billion for the year ended December 31, 2022. Revenues associated with our butane optimization business were $70.5 million for the year ended December 31, 2023 and $172.8 million for the year ended December 31, 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 fourth quarter 2023 to the Partnership's adjusted EBITDA guidance for the fourth quarter 2023. 2024 FINANCIAL GUIDANCE The Partnership expects full year 2024 Adjusted EBITDA of approximately $116.1 million, growth capital expenditures of approximately $17.4 million, with $16.9 million dedicated to the DSM Semichem joint venture, and maintenance capital expenditures of $32.0 million. More detailed 2024 Financial Guidance is provided as an attachment included in the Current Report on Form 8-K to which this press release is included. MMLP does not intend at this time to provide financial guidance beyond 2024. The Partnership has not provided comparable GAAP financial information on a forward-looking basis because it would require the Partnership to create estimated ranges on a GAAP basis, which would entail unreasonable effort as the adjustments required to reconcile forward-looking non-GAAP measures cannot be predicted with a reasonable degree of certainty but may include, among others, costs related to debt amendments and unusual charges, expenses and gains. Some or all of those adjustments could be significant. 2023 K-1 TAX PACKAGES The timing of the availability of MMLP’s K-1 tax packages for 2023 is dependent upon whether and/or when recently proposed legislation (H.R. 7024), which includes proposed changes in tax law which would be applied retroactively to the 2023 tax year, is enacted. As currently written, certain provisions in H.R. 7024 would lower MMLP’s taxable income for 2023 compared to existing tax law. Barring any changes in tax law, MMLP’s K-1 tax packages, including all information to fiduciaries for common units owned in tax exempt accounts, could be made available online through our website at www.MMLP.com on or before February 29, 2024 and the mailing of the tax packages would be completed by March 8, 2024. Should deliberations over the passage of H.R. 7024 impact this timeline, we will issue a press release to update our investors on the timing of the availability of the K-1 tax packages. INVESTORS CONFERENCE CALL Date: Thursday, February 15, 2024 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 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 Martin Midstream Partners LP, headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s primary business lines include: (1) terminalling, processing, and storage services for petroleum products and by-products; (2) land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) marketing, distribution, and transportation services for natural gas liquids and blending and packaging services for specialty lubricants and grease. To learn more, visit www.MMLP.com. Follow Martin Midstream Partners L.P. on LinkedIn, Facebook, and X (formerly known as 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 and adjusted free 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. 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 BALANCE SHEETS (Dollars in thousands) December 31, 2023 2022 Assets Cash $ 54 $ 45 Trade and accrued accounts receivable, less allowance for doubtful accounts of $530 and $496, respectively 53,293 79,641 Inventories 43,822 109,798 Due from affiliates 7,924 8,010 Other current assets 9,220 13,633 Total current assets 114,313 211,127 Property, plant and equipment, at cost 918,786 903,535 Accumulated depreciation (612,993 ) (584,245 ) Property, plant and equipment, net 305,793 319,290 Goodwill 16,671 16,671 Right-of-use assets 60,359 34,963 Deferred income taxes, net 10,200 14,386 Intangibles and other assets, net 2,039 2,414 $ 509,375 $ 598,851 Liabilities and Partners’ Capital (Deficit) Current portion of long term debt and finance lease obligations $ — $ 9 Trade and other accounts payable 51,653 68,198 Product exchange payables 426 32 Due to affiliates 6,334 8,947 Income taxes payable 652 665 Other accrued liabilities 41,499 33,074 Total current liabilities 100,564 110,925 Long-term debt, net 421,173 512,871 Operating lease liabilities 45,684 26,268 Other long-term obligations 6,578 8,232 Total liabilities 573,999 658,296 Commitments and contingencies Partners’ capital (deficit) (64,624 ) (59,445 ) Total partners’ capital (deficit) (64,624 ) (59,445 ) $ 509,375 $ 598,851 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit amounts) Year Ended December 31, 2023 2022 2021 Revenues: Terminalling and storage * $ 86,514 $ 80,193 $ 75,223 Transportation * 223,677 219,008 144,314 Sulfur services 13,430 12,337 11,799 Product sales: * Specialty products 346,777 540,513 517,852 Sulfur services 127,565 166,827 133,243 474,342 707,340 651,095 Total revenues 797,963 1,018,878 882,431 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products * 305,903 503,225 443,896 Sulfur services * 83,702 120,062 89,134 Terminalling and storage * 75 19 68 389,680 623,306 533,098 Expenses: Operating expenses * 252,211 251,886 193,952 Selling, general and administrative * 40,826 41,812 41,012 Depreciation and amortization 49,895 56,280 56,751 Total costs and expenses 732,612 973,284 824,813 Other operating income (loss), net 1,373 5,669 (534 ) Gain on involuntary conversion of property, plant and equipment — — 196 Operating income 66,724 51,263 57,280 Other income (expense): Interest expense, net (60,290 ) (53,665 ) (54,107 ) Loss on extinguishment of debt (5,121 ) — — Other, net 56 (5 ) (4 ) Total other income (expense) (65,355 ) (53,670 ) (54,111 ) Net income (loss) before taxes 1,369 (2,407 ) 3,169 Income tax expense (5,918 ) (7,927 ) (3,380 ) Net loss (4,549 ) (10,334 ) (211 ) Less general partner's interest in net loss 91 207 4 Less loss allocable to unvested restricted units 14 40 — Limited partners' interest in net loss $ (4,444 ) $ (10,087 ) $ (207 ) Net loss per unit attributable to limited partners - basic and diluted $ (0.11 ) $ (0.26 ) $ (0.01 ) Weighted average limited partner units - basic and diluted 38,771,657 38,726,048 38,689,041 *Related Party Transactions Shown Below MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit amounts) *Related Party Transactions Included Above Year Ended December 31, 2023 2022 2021 Revenues: Terminalling and storage $ 72,138 $ 66,867 $ 62,677 Transportation 29,276 28,393 20,046 Product sales 8,767 554 479 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products 35,930 39,356 27,856 Sulfur services 11,182 10,717 9,980 Terminalling and storage 75 19 10 Expenses: Operating expenses 100,851 93,630 78,607 Selling, general and administrative 32,021 31,758 32,924 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Dollars in thousands Year Ended December 31, 2023 2022 2021 Net loss $ (4,549 ) $ (10,334 ) $ (211 ) Changes in fair values of commodity cash flow hedges $ — $ (816 ) $ 816 Comprehensive income (loss) $ (4,549 ) $ (11,150 ) $ 605 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF CAPITAL (Dollars in thousands) Partners’ Capital (Deficit) Common General Partner Amount Accumulated Other Comprehensive Income Units Amount Total Balances – December 31, 2020 38,851,174 $ (48,776 ) $ 1,905 $ — (46,871 ) Net loss — (207 ) (4 ) — (211 ) Issuance of time-based restricted units 42,168 — — — — General partner contribution — — 3 — 3 Cash distributions — (775 ) (16 ) — (791 ) Changes in fair values of commodity cash flow hedges — — — 816 816 Excess carrying value of the assets over the purchase price paid by Martin Resource Management — (1,350 ) — — (1,350 ) Unit-based compensation — 384 — — 384 Purchase of treasury units (7,156 ) (17 ) — — (17 ) Balances – December 31, 2021 38,802,750 (50,741 ) 1,888 816 (48,037 ) Net loss — (10,127 ) (207 ) — (10,334 ) Issuance of time-based restricted units 48,000 — — — — Cash distributions — (777 ) (16 ) — (793 ) Changes in fair values of commodity cash flow hedges — — — (816 ) (816 ) Excess purchase price over carrying value of acquired assets — 374 — — 374 Unit-based compensation — 161 — — 161 Balances – December 31, 2022 38,850,750 (61,110 ) 1,665 — (59,445 ) Net loss — (4,458 ) (91 ) — (4,549 ) Issuance of time-based restricted units 64,056 — — — — Cash distributions — (777 ) (16 ) — (793 ) Unit-based compensation — 163 — — 163 Balances – December 31, 2023 38,914,806 $ (66,182 ) $ 1,558 $ — $ (64,624 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net loss $ (4,549 ) $ (10,334 ) $ (211 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 49,895 56,280 56,751 Amortization and write-off of deferred debt issue costs 3,978 3,152 3,367 Amortization of discount on notes payable 2,200 — — Deferred income tax expense 4,186 5,744 2,432 (Gain) loss on disposition or sale of property, plant, and equipment (1,373 ) (5,669 ) 534 Gain on involuntary conversion of property, plant and equipment — — (196 ) Loss on extinguishment of debt 5,121 — — Derivative (income) loss — (901 ) 5,593 Net cash received (paid) for commodity derivatives — 85 (4,984 ) Unit-based compensation 163 161 384 Change in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and other receivables 26,348 4,579 (31,448 ) Inventories 65,976 (47,678 ) (8,334 ) Due from affiliates 86 6,399 398 Other current assets 4,739 (1,479 ) (3,552 ) Trade and other accounts payable (17,539 ) 486 14,331 Product exchange payables 394 (1,374 ) 1,033 Due to affiliates (2,613 ) 7,123 1,389 Income taxes payable (13 ) 280 (171 ) Other accrued liabilities 2,880 (2,087 ) (2,236 ) Change in other non-current assets and liabilities (2,411 ) 1,381 649 Net cash provided by operating activities 137,468 16,148 35,729 Cash flows from investing activities: Payments for property, plant, and equipment (34,317 ) (27,237 ) (16,059 ) Payments for plant turnaround costs (4,825 ) (5,176 ) (4,109 ) Proceeds from sale of property, plant, and equipment 5,482 7,769 643 Proceeds from involuntary conversion of property, plant and equipment — — 284 Net cash used in investing activities (33,660 ) (24,644 ) (19,241 ) Cash flows from financing activities: Payments of long-term debt (632,197 ) (393,740 ) (333,790 ) Payments under finance lease obligations (9 ) (279 ) (2,707 ) Proceeds from long-term debt 543,489 404,650 316,500 General partner contributions — — 3 Excess purchase price over carrying value of acquired assets — (1,285 ) — Purchase of treasury units — — (17 ) Payments of debt issuance costs (14,289 ) (64 ) (592 ) Cash distributions paid (793 ) (793 ) (791 ) Net cash provided by (used in) financing activities (103,799 ) 8,489 (21,394 ) Net increase (decrease) in cash 9 (7 ) (4,906 ) Cash at beginning of year 45 52 4,958 Cash at end of year $ 54 $ 45 $ 52 MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Dollars and volumes in thousands, except BBL per day) Terminalling and Storage Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Revenues $ 95,459 $ 92,612 $ 2,847 3 % Cost of products sold 75 19 56 295 % Operating expenses 57,393 63,177 (5,784 ) (9 )% Selling, general and administrative expenses 2,070 1,967 103 5 % Depreciation and amortization 21,030 26,094 (5,064 ) (19 )% 14,891 1,355 13,536 999 % Other operating loss, net (359 ) (166 ) (193 ) (116 )% Operating income $ 14,532 $ 1,189 $ 13,343 1,122 % Shore-based throughput volumes (gallons) 162,363 85,017 77,346 91 % Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — % Transportation Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Revenues $ 240,926 $ 239,275 $ 1,651 1 % Operating expenses 184,334 176,198 8,136 5 % Selling, general and administrative expenses 9,787 8,215 1,572 19 % Depreciation and amortization 14,879 14,567 312 2 % 31,926 40,295 (8,369 ) (21 )% Other operating income, net 1,775 1,062 713 67 % Operating income $ 33,701 $ 41,357 $ (7,656 ) (19 )% MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Dollars and volumes in thousands, except BBL per day) Sulfur Services Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 Variance Percent Change (In thousands) Revenues: Services $ 13,430 $ 12,337 $ 1,093 9 % Products 127,565 166,827 (39,262 ) (24 )% Total revenues 140,995 179,164 (38,169 ) (21 )% Cost of products sold 93,842 127,018 (33,176 ) (26 )% Operating expenses 13,143 15,335 (2,192 ) (14 )% Selling, general and administrative expenses 5,925 6,081 (156 ) (3 )% Depreciation and amortization 10,690 11,099 (409 ) (4 )% 17,395 19,631 (2,236 ) (11 )% Other operating income, net 17 4,555 (4,538 ) (100 )% Operating income $ 17,412 $ 24,186 $ (6,774 ) (28 )% Sulfur (long tons) 478.0 452.0 26.0 6 % Fertilizer (long tons) 254.0 211.0 43.0 20 % Sulfur services volumes (long tons) 732.0 663.0 69.0 10 % Specialty Products Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 Variance Percent Change (In thousands) Products revenues $ 346,863 $ 540,636 (193,773 ) (36 )% Cost of products sold 319,200 526,043 (206,843 ) (39 )% Operating expenses 78 118 (40 ) (34 )% Selling, general and administrative expenses 7,120 8,728 (1,608 ) (18 )% Depreciation and amortization 3,296 4,520 (1,224 ) (27 )% 17,169 1,227 15,942 1,299 % Other operating income (loss), net (60 ) 218 (278 ) (128 )% Operating income $ 17,109 $ 1,445 $ 15,664 1,084 % NGL sales volumes (Bbls) 3,681 5,791 (2,110 ) (36 )% Other specialty products volumes (Bbls) 367 391 (24 ) (6 Total specialty products volumes (Bbls) 4,048 6,182 (2,134 ) (35 )% Non-GAAP Financial Measures The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the quarter and years ended December 31, 2023 and 2022, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow: Reconciliation of Net Loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 (in thousands) Net income (loss) $ 517 $ (375 ) $ (4,549 ) $ (10,334 ) Adjustments: Interest expense 14,376 14,484 60,290 53,665 Income tax expense 2,299 2,458 5,918 7,927 Depreciation and amortization 12,224 13,273 49,895 56,280 EBITDA 29,416 29,840 111,554 107,538 Adjustments: Gain on disposition of property, plant and equipment (277 ) (4,619 ) (1,373 ) (5,669 ) Loss on extinguishment of debt — — 5,121 — Lower of cost or net realizable value and other non-cash adjustments — (7,476 ) (12,850 ) 12,850 Unit-based compensation 36 36 163 161 Adjusted EBITDA 29,175 17,781 102,615 114,880 Adjustments: Plus: net loss associated with butane optimization business — 4,736 2,256 20,015 Plus: lower of cost or net realizable value and other non-cash adjustments — 5,976 12,850 (12,850 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business $ 29,175 $ 28,493 $ 117,721 122,045 Reconciliation of Net Cash Provided by 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 December 31, Year Ended December 31, 2023 2022 2023 2022 (in thousands) (in thousands) Net cash provided by operating activities $ 31,403 $ 32,904 $ 137,468 $ 16,148 Interest expense 1 13,004 13,688 54,112 50,513 Current income tax expense 435 325 1,732 2,183 Lower of cost or net realizable value and other non-cash adjustments — (7,476 ) (12,850 ) 12,850 Commodity cash flow hedging gains reclassified to earnings — — — 901 Net cash received for closed commodity derivative positions included in AOCI — — — (85 ) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets 1,336 (21,071 ) (97,149 ) 38,179 Trade, accounts and other payables, and other current liabilities (18,394 ) (324 ) 16,891 (4,428 ) Other 1,391 (265 ) 2,411 (1,381 ) Adjusted EBITDA 29,175 17,781 102,615 114,880 Plus: net loss associated with butane optimization business — 4,735 2,256 20,015 Plus: lower of cost or net realizable value and other non-cash adjustments — 5,976 12,850 (12,850 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business 29,175 28,492 117,721 122,045 Adjustments: Interest expense (14,376 ) (14,484 ) (60,290 ) (53,665 ) Income tax expense (2,299 ) (2,458 ) (5,918 ) (7,927 ) Deferred income taxes 1,864 2,133 4,186 5,744 Amortization of deferred debt issuance costs 772 796 3,978 3,152 Amortization of discount on notes payable 600 — 2,200 — Payments for plant turnaround costs (2,458 ) (914 ) (4,825 ) (5,176 ) Maintenance capital expenditures (4,689 ) (4,526 ) (24,277 ) (19,074 ) Distributable Cash Flow 8,589 9,039 32,775 45,099 Principal payments under finance lease obligations — (99 ) (9 ) (279 ) Expansion capital expenditures (4,908 ) (1,401 ) (11,034 ) (6,883 ) Adjusted Free Cash Flow $ 3,681 $ 7,539 $ 21,732 37,937 (1) Net of amortization of debt issuance costs and discount and premium, which are included in interest expense but not included in net cash provided by operating activities. 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Martin Midstream Partners Reports Fourth Quarter and Full Year 2023 Financial Results and Releases 2024 Guidance By: Martin Midstream Partners L.P. via Business Wire February 14, 2024 at 16:01 PM EST Total adjusted leverage of 3.75 times as of December 31, 2023 Reported net income of $0.5 million for the fourth quarter and net loss of $4.5 million, which includes a $5.1 million impact from the loss on extinguishment of debt, for the year ended December 31, 2023 Reported adjusted EBITDA of $29.2 million and $117.7 million, after giving effect to the May 2023 exit of the butane optimization business, which incurred adjusted EBITDA of zero and negative adjusted EBITDA of $15.1 million, for the fourth quarter and year ended December 31, 2023, respectively Releases 2024 adjusted EBITDA Guidance of $116.1 million, growth capital expenditures of $17.4 million, and maintenance capital expenditures of $32.0 million Martin Midstream Partners L.P. (Nasdaq:MMLP) (“MMLP” or the “Partnership”) today announced its financial results for the three months and year ended December 31, 2023. “Fiscal year 2023 was significant for the Partnership as we focused on debt reduction and stability in our earnings by concentrating on our diversified refinery services assets and exiting the butane optimization business,” said Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership. “We exceeded our full year adjusted EBITDA guidance by $2.5 million, excluding losses related to the exit of our butane optimization business, and met our long-term goal of adjusted leverage at or below 3.75 times. The Partnership had a strong fourth quarter, as each of our four operating segments either met or exceeded guidance, even as we experienced headwinds in the lubricants business and downtime in our marine transportation business due to accelerated regulatory inspections, demonstrating the value of our diversified business model.” “In the fourth quarter, we reduced debt by $20.0 million, bringing 2023 full year debt reduction to $73.5 million, resulting in leverage of 3.75 times at December 31, 2023 compared to 4.53 times at December 31, 2022. While we have reached our stated adjusted leverage goal of 3.75 times, timing of our future cash flows and capital expenditures may result in a nominal short-term increase in the ratio. As such the Partnership intends to continue to concentrate on debt reduction to maintain our adjusted leverage at or below 3.75 times on a sustainable basis.” “During 2023, we started construction on an oleum tower located within our Plainview, Texas sulfuric acid plant. The expansion will provide feedstock to our joint venture, DSM Semichem LLC, to produce electronic level sulfuric acid used for applications in the semiconductor industry. We anticipate the project to be complete in the first half of 2024 with a capital spend of $10.4 million this year, which along with our $6.5 million of cash contribution to the joint venture, makes up the majority of our anticipated growth capital expenditures for the year. We anticipate this project will begin returning cash flows to the Partnership by the fourth quarter of 2024.” FOURTH QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT TERMINALLING AND STORAGE ("T&S") T&S operating income was $3.9 million and $1.4 million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for T&S was $9.0 million and $7.3 million for the three months ended December 31, 2023 and 2022, respectively, reflecting contractual index-based fee increases combined with reduced operating expenses across our divisions. TRANSPORTATION Transportation operating income was $8.6 million and $11.1 million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for Transportation was $12.0 million and $14.7 million for the three months ended December 31, 2023 and 2022, respectively, primarily reflecting slightly higher mileage in our land transportation division, offset by downtime associated with regulatory maintenance in our marine transportation division, and increased expenses across both divisions. SULFUR SERVICES Sulfur Services operating income was $4.8 million and $9.1 million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for Sulfur Services was $7.4 million and $5.7 million for the three months ended December 31, 2023 and 2022, respectively, primarily reflecting increased fertilizer sales volume and increased operating fees associated with higher prilled sulfur volume. SPECIALTY PRODUCTS Specialty Products operating income (loss) was $4.0 million and $(0.9) million for the three months ended December 31, 2023 and 2022, respectively. Butane optimization operating income (loss) was $0.0 million and $(4.7) million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for Specialty Products was $4.9 million and $(5.8) million for the three months ended December 31, 2023 and 2022, respectively. Included in the Specialty Products results is adjusted EBITDA of $0.0 million and $(10.7) million for the three months ended December 31, 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 $4.9 million and $4.9 million for the three months ended December 31, 2023 and 2022, respectively, reflecting improved volumes and margins in our grease business offset by higher product costs in our lubricants business. UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE ("USGA") USGA expenses included in operating income were $4.1 million for each of the three months ended December 31, 2023 and 2022, respectively. USGA expenses included in adjusted EBITDA were $4.1 million for each of the three months ended December 31, 2023 and 2022, respectively. CAPITALIZATION At December 31, 2023, the Partnership had $442.5 million of total debt outstanding, including $42.5 million drawn on its $175.0 million revolving credit facility maturing in 2027 and $400.0 million of senior secured second lien notes due 2028. At December 31, 2023, the Partnership had liquidity of approximately $109.0 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 3.75 times at December 31, 2023, compared to 3.95 times at September 30, 2023, a reduction of 0.20 times. The Partnership was in compliance with all debt covenants as of December 31, 2023. RESULTS OF OPERATIONS The Partnership had net income of $0.5 million, or $0.01 per limited partner unit, for the three months ended December 31, 2023. The Partnership had a net loss of $0.4 million, a loss of $0.01 per limited partner unit, for the three months ended December 31, 2022. Adjusted EBITDA was $29.2 million for the three months ended December 31, 2023 compared to $17.8 million for the three months ended December 31, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended December 31, 2023 was $29.2 million compared to $17.8 million for the three months ended December 31, 2022. Net cash provided by operating activities was $31.4 million for the three months ended December 31, 2023 compared to $32.9 million for the three months ended December 31, 2022. Distributable cash flow was $8.5 million for the three months ended December 31, 2023 compared to $9.0 million for the three months ended December 31, 2022. The Partnership had a net loss of $4.5 million, a loss of $0.11 per limited partner unit, for the year ended December 31, 2023. The Partnership had a net loss of $10.3 million, a loss of $0.26 per limited partner unit, for the year ended December 31, 2022. Adjusted EBITDA for the year ended December 31, 2023 was $102.6 million compared to $114.9 million for the year ended December 31, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the year ended December 31, 2023 was $117.7 million compared to $122.0 million for the year ended December 31, 2022. Net cash provided by operating activities was $137.5 million for the year ended December 31, 2023 compared to $16.1 million for the year ended December 31, 2022. Distributable cash flow was $32.8 million for the year ended December 31, 2023 compared to $45.1 million for the year ended December 31, 2022. Revenues were $181.1 million for the three months ended December 31, 2023 compared to $243.4 million for the three months ended December 31, 2022. Revenues associated with our butane optimization business were $0.0 million for the three months ended December 31, 2023 and $55.9 million for the three months ended December 31, 2022. Revenues were $798.0 million for the year ended December 31, 2023 compared to $1.019 billion for the year ended December 31, 2022. Revenues associated with our butane optimization business were $70.5 million for the year ended December 31, 2023 and $172.8 million for the year ended December 31, 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 fourth quarter 2023 to the Partnership's adjusted EBITDA guidance for the fourth quarter 2023. 2024 FINANCIAL GUIDANCE The Partnership expects full year 2024 Adjusted EBITDA of approximately $116.1 million, growth capital expenditures of approximately $17.4 million, with $16.9 million dedicated to the DSM Semichem joint venture, and maintenance capital expenditures of $32.0 million. More detailed 2024 Financial Guidance is provided as an attachment included in the Current Report on Form 8-K to which this press release is included. MMLP does not intend at this time to provide financial guidance beyond 2024. The Partnership has not provided comparable GAAP financial information on a forward-looking basis because it would require the Partnership to create estimated ranges on a GAAP basis, which would entail unreasonable effort as the adjustments required to reconcile forward-looking non-GAAP measures cannot be predicted with a reasonable degree of certainty but may include, among others, costs related to debt amendments and unusual charges, expenses and gains. Some or all of those adjustments could be significant. 2023 K-1 TAX PACKAGES The timing of the availability of MMLP’s K-1 tax packages for 2023 is dependent upon whether and/or when recently proposed legislation (H.R. 7024), which includes proposed changes in tax law which would be applied retroactively to the 2023 tax year, is enacted. As currently written, certain provisions in H.R. 7024 would lower MMLP’s taxable income for 2023 compared to existing tax law. Barring any changes in tax law, MMLP’s K-1 tax packages, including all information to fiduciaries for common units owned in tax exempt accounts, could be made available online through our website at www.MMLP.com on or before February 29, 2024 and the mailing of the tax packages would be completed by March 8, 2024. Should deliberations over the passage of H.R. 7024 impact this timeline, we will issue a press release to update our investors on the timing of the availability of the K-1 tax packages. INVESTORS CONFERENCE CALL Date: Thursday, February 15, 2024 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 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 Martin Midstream Partners LP, headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s primary business lines include: (1) terminalling, processing, and storage services for petroleum products and by-products; (2) land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) marketing, distribution, and transportation services for natural gas liquids and blending and packaging services for specialty lubricants and grease. To learn more, visit www.MMLP.com. Follow Martin Midstream Partners L.P. on LinkedIn, Facebook, and X (formerly known as 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 and adjusted free 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. 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 BALANCE SHEETS (Dollars in thousands) December 31, 2023 2022 Assets Cash $ 54 $ 45 Trade and accrued accounts receivable, less allowance for doubtful accounts of $530 and $496, respectively 53,293 79,641 Inventories 43,822 109,798 Due from affiliates 7,924 8,010 Other current assets 9,220 13,633 Total current assets 114,313 211,127 Property, plant and equipment, at cost 918,786 903,535 Accumulated depreciation (612,993 ) (584,245 ) Property, plant and equipment, net 305,793 319,290 Goodwill 16,671 16,671 Right-of-use assets 60,359 34,963 Deferred income taxes, net 10,200 14,386 Intangibles and other assets, net 2,039 2,414 $ 509,375 $ 598,851 Liabilities and Partners’ Capital (Deficit) Current portion of long term debt and finance lease obligations $ — $ 9 Trade and other accounts payable 51,653 68,198 Product exchange payables 426 32 Due to affiliates 6,334 8,947 Income taxes payable 652 665 Other accrued liabilities 41,499 33,074 Total current liabilities 100,564 110,925 Long-term debt, net 421,173 512,871 Operating lease liabilities 45,684 26,268 Other long-term obligations 6,578 8,232 Total liabilities 573,999 658,296 Commitments and contingencies Partners’ capital (deficit) (64,624 ) (59,445 ) Total partners’ capital (deficit) (64,624 ) (59,445 ) $ 509,375 $ 598,851 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit amounts) Year Ended December 31, 2023 2022 2021 Revenues: Terminalling and storage * $ 86,514 $ 80,193 $ 75,223 Transportation * 223,677 219,008 144,314 Sulfur services 13,430 12,337 11,799 Product sales: * Specialty products 346,777 540,513 517,852 Sulfur services 127,565 166,827 133,243 474,342 707,340 651,095 Total revenues 797,963 1,018,878 882,431 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products * 305,903 503,225 443,896 Sulfur services * 83,702 120,062 89,134 Terminalling and storage * 75 19 68 389,680 623,306 533,098 Expenses: Operating expenses * 252,211 251,886 193,952 Selling, general and administrative * 40,826 41,812 41,012 Depreciation and amortization 49,895 56,280 56,751 Total costs and expenses 732,612 973,284 824,813 Other operating income (loss), net 1,373 5,669 (534 ) Gain on involuntary conversion of property, plant and equipment — — 196 Operating income 66,724 51,263 57,280 Other income (expense): Interest expense, net (60,290 ) (53,665 ) (54,107 ) Loss on extinguishment of debt (5,121 ) — — Other, net 56 (5 ) (4 ) Total other income (expense) (65,355 ) (53,670 ) (54,111 ) Net income (loss) before taxes 1,369 (2,407 ) 3,169 Income tax expense (5,918 ) (7,927 ) (3,380 ) Net loss (4,549 ) (10,334 ) (211 ) Less general partner's interest in net loss 91 207 4 Less loss allocable to unvested restricted units 14 40 — Limited partners' interest in net loss $ (4,444 ) $ (10,087 ) $ (207 ) Net loss per unit attributable to limited partners - basic and diluted $ (0.11 ) $ (0.26 ) $ (0.01 ) Weighted average limited partner units - basic and diluted 38,771,657 38,726,048 38,689,041 *Related Party Transactions Shown Below MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit amounts) *Related Party Transactions Included Above Year Ended December 31, 2023 2022 2021 Revenues: Terminalling and storage $ 72,138 $ 66,867 $ 62,677 Transportation 29,276 28,393 20,046 Product sales 8,767 554 479 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products 35,930 39,356 27,856 Sulfur services 11,182 10,717 9,980 Terminalling and storage 75 19 10 Expenses: Operating expenses 100,851 93,630 78,607 Selling, general and administrative 32,021 31,758 32,924 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Dollars in thousands Year Ended December 31, 2023 2022 2021 Net loss $ (4,549 ) $ (10,334 ) $ (211 ) Changes in fair values of commodity cash flow hedges $ — $ (816 ) $ 816 Comprehensive income (loss) $ (4,549 ) $ (11,150 ) $ 605 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF CAPITAL (Dollars in thousands) Partners’ Capital (Deficit) Common General Partner Amount Accumulated Other Comprehensive Income Units Amount Total Balances – December 31, 2020 38,851,174 $ (48,776 ) $ 1,905 $ — (46,871 ) Net loss — (207 ) (4 ) — (211 ) Issuance of time-based restricted units 42,168 — — — — General partner contribution — — 3 — 3 Cash distributions — (775 ) (16 ) — (791 ) Changes in fair values of commodity cash flow hedges — — — 816 816 Excess carrying value of the assets over the purchase price paid by Martin Resource Management — (1,350 ) — — (1,350 ) Unit-based compensation — 384 — — 384 Purchase of treasury units (7,156 ) (17 ) — — (17 ) Balances – December 31, 2021 38,802,750 (50,741 ) 1,888 816 (48,037 ) Net loss — (10,127 ) (207 ) — (10,334 ) Issuance of time-based restricted units 48,000 — — — — Cash distributions — (777 ) (16 ) — (793 ) Changes in fair values of commodity cash flow hedges — — — (816 ) (816 ) Excess purchase price over carrying value of acquired assets — 374 — — 374 Unit-based compensation — 161 — — 161 Balances – December 31, 2022 38,850,750 (61,110 ) 1,665 — (59,445 ) Net loss — (4,458 ) (91 ) — (4,549 ) Issuance of time-based restricted units 64,056 — — — — Cash distributions — (777 ) (16 ) — (793 ) Unit-based compensation — 163 — — 163 Balances – December 31, 2023 38,914,806 $ (66,182 ) $ 1,558 $ — $ (64,624 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net loss $ (4,549 ) $ (10,334 ) $ (211 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 49,895 56,280 56,751 Amortization and write-off of deferred debt issue costs 3,978 3,152 3,367 Amortization of discount on notes payable 2,200 — — Deferred income tax expense 4,186 5,744 2,432 (Gain) loss on disposition or sale of property, plant, and equipment (1,373 ) (5,669 ) 534 Gain on involuntary conversion of property, plant and equipment — — (196 ) Loss on extinguishment of debt 5,121 — — Derivative (income) loss — (901 ) 5,593 Net cash received (paid) for commodity derivatives — 85 (4,984 ) Unit-based compensation 163 161 384 Change in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and other receivables 26,348 4,579 (31,448 ) Inventories 65,976 (47,678 ) (8,334 ) Due from affiliates 86 6,399 398 Other current assets 4,739 (1,479 ) (3,552 ) Trade and other accounts payable (17,539 ) 486 14,331 Product exchange payables 394 (1,374 ) 1,033 Due to affiliates (2,613 ) 7,123 1,389 Income taxes payable (13 ) 280 (171 ) Other accrued liabilities 2,880 (2,087 ) (2,236 ) Change in other non-current assets and liabilities (2,411 ) 1,381 649 Net cash provided by operating activities 137,468 16,148 35,729 Cash flows from investing activities: Payments for property, plant, and equipment (34,317 ) (27,237 ) (16,059 ) Payments for plant turnaround costs (4,825 ) (5,176 ) (4,109 ) Proceeds from sale of property, plant, and equipment 5,482 7,769 643 Proceeds from involuntary conversion of property, plant and equipment — — 284 Net cash used in investing activities (33,660 ) (24,644 ) (19,241 ) Cash flows from financing activities: Payments of long-term debt (632,197 ) (393,740 ) (333,790 ) Payments under finance lease obligations (9 ) (279 ) (2,707 ) Proceeds from long-term debt 543,489 404,650 316,500 General partner contributions — — 3 Excess purchase price over carrying value of acquired assets — (1,285 ) — Purchase of treasury units — — (17 ) Payments of debt issuance costs (14,289 ) (64 ) (592 ) Cash distributions paid (793 ) (793 ) (791 ) Net cash provided by (used in) financing activities (103,799 ) 8,489 (21,394 ) Net increase (decrease) in cash 9 (7 ) (4,906 ) Cash at beginning of year 45 52 4,958 Cash at end of year $ 54 $ 45 $ 52 MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Dollars and volumes in thousands, except BBL per day) Terminalling and Storage Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Revenues $ 95,459 $ 92,612 $ 2,847 3 % Cost of products sold 75 19 56 295 % Operating expenses 57,393 63,177 (5,784 ) (9 )% Selling, general and administrative expenses 2,070 1,967 103 5 % Depreciation and amortization 21,030 26,094 (5,064 ) (19 )% 14,891 1,355 13,536 999 % Other operating loss, net (359 ) (166 ) (193 ) (116 )% Operating income $ 14,532 $ 1,189 $ 13,343 1,122 % Shore-based throughput volumes (gallons) 162,363 85,017 77,346 91 % Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — % Transportation Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Revenues $ 240,926 $ 239,275 $ 1,651 1 % Operating expenses 184,334 176,198 8,136 5 % Selling, general and administrative expenses 9,787 8,215 1,572 19 % Depreciation and amortization 14,879 14,567 312 2 % 31,926 40,295 (8,369 ) (21 )% Other operating income, net 1,775 1,062 713 67 % Operating income $ 33,701 $ 41,357 $ (7,656 ) (19 )% MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Dollars and volumes in thousands, except BBL per day) Sulfur Services Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 Variance Percent Change (In thousands) Revenues: Services $ 13,430 $ 12,337 $ 1,093 9 % Products 127,565 166,827 (39,262 ) (24 )% Total revenues 140,995 179,164 (38,169 ) (21 )% Cost of products sold 93,842 127,018 (33,176 ) (26 )% Operating expenses 13,143 15,335 (2,192 ) (14 )% Selling, general and administrative expenses 5,925 6,081 (156 ) (3 )% Depreciation and amortization 10,690 11,099 (409 ) (4 )% 17,395 19,631 (2,236 ) (11 )% Other operating income, net 17 4,555 (4,538 ) (100 )% Operating income $ 17,412 $ 24,186 $ (6,774 ) (28 )% Sulfur (long tons) 478.0 452.0 26.0 6 % Fertilizer (long tons) 254.0 211.0 43.0 20 % Sulfur services volumes (long tons) 732.0 663.0 69.0 10 % Specialty Products Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 Variance Percent Change (In thousands) Products revenues $ 346,863 $ 540,636 (193,773 ) (36 )% Cost of products sold 319,200 526,043 (206,843 ) (39 )% Operating expenses 78 118 (40 ) (34 )% Selling, general and administrative expenses 7,120 8,728 (1,608 ) (18 )% Depreciation and amortization 3,296 4,520 (1,224 ) (27 )% 17,169 1,227 15,942 1,299 % Other operating income (loss), net (60 ) 218 (278 ) (128 )% Operating income $ 17,109 $ 1,445 $ 15,664 1,084 % NGL sales volumes (Bbls) 3,681 5,791 (2,110 ) (36 )% Other specialty products volumes (Bbls) 367 391 (24 ) (6 Total specialty products volumes (Bbls) 4,048 6,182 (2,134 ) (35 )% Non-GAAP Financial Measures The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the quarter and years ended December 31, 2023 and 2022, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow: Reconciliation of Net Loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 (in thousands) Net income (loss) $ 517 $ (375 ) $ (4,549 ) $ (10,334 ) Adjustments: Interest expense 14,376 14,484 60,290 53,665 Income tax expense 2,299 2,458 5,918 7,927 Depreciation and amortization 12,224 13,273 49,895 56,280 EBITDA 29,416 29,840 111,554 107,538 Adjustments: Gain on disposition of property, plant and equipment (277 ) (4,619 ) (1,373 ) (5,669 ) Loss on extinguishment of debt — — 5,121 — Lower of cost or net realizable value and other non-cash adjustments — (7,476 ) (12,850 ) 12,850 Unit-based compensation 36 36 163 161 Adjusted EBITDA 29,175 17,781 102,615 114,880 Adjustments: Plus: net loss associated with butane optimization business — 4,736 2,256 20,015 Plus: lower of cost or net realizable value and other non-cash adjustments — 5,976 12,850 (12,850 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business $ 29,175 $ 28,493 $ 117,721 122,045 Reconciliation of Net Cash Provided by 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 December 31, Year Ended December 31, 2023 2022 2023 2022 (in thousands) (in thousands) Net cash provided by operating activities $ 31,403 $ 32,904 $ 137,468 $ 16,148 Interest expense 1 13,004 13,688 54,112 50,513 Current income tax expense 435 325 1,732 2,183 Lower of cost or net realizable value and other non-cash adjustments — (7,476 ) (12,850 ) 12,850 Commodity cash flow hedging gains reclassified to earnings — — — 901 Net cash received for closed commodity derivative positions included in AOCI — — — (85 ) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets 1,336 (21,071 ) (97,149 ) 38,179 Trade, accounts and other payables, and other current liabilities (18,394 ) (324 ) 16,891 (4,428 ) Other 1,391 (265 ) 2,411 (1,381 ) Adjusted EBITDA 29,175 17,781 102,615 114,880 Plus: net loss associated with butane optimization business — 4,735 2,256 20,015 Plus: lower of cost or net realizable value and other non-cash adjustments — 5,976 12,850 (12,850 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business 29,175 28,492 117,721 122,045 Adjustments: Interest expense (14,376 ) (14,484 ) (60,290 ) (53,665 ) Income tax expense (2,299 ) (2,458 ) (5,918 ) (7,927 ) Deferred income taxes 1,864 2,133 4,186 5,744 Amortization of deferred debt issuance costs 772 796 3,978 3,152 Amortization of discount on notes payable 600 — 2,200 — Payments for plant turnaround costs (2,458 ) (914 ) (4,825 ) (5,176 ) Maintenance capital expenditures (4,689 ) (4,526 ) (24,277 ) (19,074 ) Distributable Cash Flow 8,589 9,039 32,775 45,099 Principal payments under finance lease obligations — (99 ) (9 ) (279 ) Expansion capital expenditures (4,908 ) (1,401 ) (11,034 ) (6,883 ) Adjusted Free Cash Flow $ 3,681 $ 7,539 $ 21,732 37,937 (1) Net of amortization of debt issuance costs and discount and premium, which are included in interest expense but not included in net cash provided by operating activities. View source version on businesswire.com: https://www.businesswire.com/news/home/20240214462592/en/Contacts Sharon Taylor - Executive Vice President & Chief Financial Officer (877) 256-6644 ir@martinmlp.com
Total adjusted leverage of 3.75 times as of December 31, 2023 Reported net income of $0.5 million for the fourth quarter and net loss of $4.5 million, which includes a $5.1 million impact from the loss on extinguishment of debt, for the year ended December 31, 2023 Reported adjusted EBITDA of $29.2 million and $117.7 million, after giving effect to the May 2023 exit of the butane optimization business, which incurred adjusted EBITDA of zero and negative adjusted EBITDA of $15.1 million, for the fourth quarter and year ended December 31, 2023, respectively Releases 2024 adjusted EBITDA Guidance of $116.1 million, growth capital expenditures of $17.4 million, and maintenance capital expenditures of $32.0 million
Martin Midstream Partners L.P. (Nasdaq:MMLP) (“MMLP” or the “Partnership”) today announced its financial results for the three months and year ended December 31, 2023. “Fiscal year 2023 was significant for the Partnership as we focused on debt reduction and stability in our earnings by concentrating on our diversified refinery services assets and exiting the butane optimization business,” said Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership. “We exceeded our full year adjusted EBITDA guidance by $2.5 million, excluding losses related to the exit of our butane optimization business, and met our long-term goal of adjusted leverage at or below 3.75 times. The Partnership had a strong fourth quarter, as each of our four operating segments either met or exceeded guidance, even as we experienced headwinds in the lubricants business and downtime in our marine transportation business due to accelerated regulatory inspections, demonstrating the value of our diversified business model.” “In the fourth quarter, we reduced debt by $20.0 million, bringing 2023 full year debt reduction to $73.5 million, resulting in leverage of 3.75 times at December 31, 2023 compared to 4.53 times at December 31, 2022. While we have reached our stated adjusted leverage goal of 3.75 times, timing of our future cash flows and capital expenditures may result in a nominal short-term increase in the ratio. As such the Partnership intends to continue to concentrate on debt reduction to maintain our adjusted leverage at or below 3.75 times on a sustainable basis.” “During 2023, we started construction on an oleum tower located within our Plainview, Texas sulfuric acid plant. The expansion will provide feedstock to our joint venture, DSM Semichem LLC, to produce electronic level sulfuric acid used for applications in the semiconductor industry. We anticipate the project to be complete in the first half of 2024 with a capital spend of $10.4 million this year, which along with our $6.5 million of cash contribution to the joint venture, makes up the majority of our anticipated growth capital expenditures for the year. We anticipate this project will begin returning cash flows to the Partnership by the fourth quarter of 2024.” FOURTH QUARTER 2023 OPERATING RESULTS BY BUSINESS SEGMENT TERMINALLING AND STORAGE ("T&S") T&S operating income was $3.9 million and $1.4 million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for T&S was $9.0 million and $7.3 million for the three months ended December 31, 2023 and 2022, respectively, reflecting contractual index-based fee increases combined with reduced operating expenses across our divisions. TRANSPORTATION Transportation operating income was $8.6 million and $11.1 million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for Transportation was $12.0 million and $14.7 million for the three months ended December 31, 2023 and 2022, respectively, primarily reflecting slightly higher mileage in our land transportation division, offset by downtime associated with regulatory maintenance in our marine transportation division, and increased expenses across both divisions. SULFUR SERVICES Sulfur Services operating income was $4.8 million and $9.1 million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for Sulfur Services was $7.4 million and $5.7 million for the three months ended December 31, 2023 and 2022, respectively, primarily reflecting increased fertilizer sales volume and increased operating fees associated with higher prilled sulfur volume. SPECIALTY PRODUCTS Specialty Products operating income (loss) was $4.0 million and $(0.9) million for the three months ended December 31, 2023 and 2022, respectively. Butane optimization operating income (loss) was $0.0 million and $(4.7) million for the three months ended December 31, 2023 and 2022, respectively. Adjusted segment EBITDA for Specialty Products was $4.9 million and $(5.8) million for the three months ended December 31, 2023 and 2022, respectively. Included in the Specialty Products results is adjusted EBITDA of $0.0 million and $(10.7) million for the three months ended December 31, 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 $4.9 million and $4.9 million for the three months ended December 31, 2023 and 2022, respectively, reflecting improved volumes and margins in our grease business offset by higher product costs in our lubricants business. UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE ("USGA") USGA expenses included in operating income were $4.1 million for each of the three months ended December 31, 2023 and 2022, respectively. USGA expenses included in adjusted EBITDA were $4.1 million for each of the three months ended December 31, 2023 and 2022, respectively. CAPITALIZATION At December 31, 2023, the Partnership had $442.5 million of total debt outstanding, including $42.5 million drawn on its $175.0 million revolving credit facility maturing in 2027 and $400.0 million of senior secured second lien notes due 2028. At December 31, 2023, the Partnership had liquidity of approximately $109.0 million from available capacity under its revolving credit facility. The Partnership’s leverage ratio, as calculated under the revolving credit facility, was 3.75 times at December 31, 2023, compared to 3.95 times at September 30, 2023, a reduction of 0.20 times. The Partnership was in compliance with all debt covenants as of December 31, 2023. RESULTS OF OPERATIONS The Partnership had net income of $0.5 million, or $0.01 per limited partner unit, for the three months ended December 31, 2023. The Partnership had a net loss of $0.4 million, a loss of $0.01 per limited partner unit, for the three months ended December 31, 2022. Adjusted EBITDA was $29.2 million for the three months ended December 31, 2023 compared to $17.8 million for the three months ended December 31, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the three months ended December 31, 2023 was $29.2 million compared to $17.8 million for the three months ended December 31, 2022. Net cash provided by operating activities was $31.4 million for the three months ended December 31, 2023 compared to $32.9 million for the three months ended December 31, 2022. Distributable cash flow was $8.5 million for the three months ended December 31, 2023 compared to $9.0 million for the three months ended December 31, 2022. The Partnership had a net loss of $4.5 million, a loss of $0.11 per limited partner unit, for the year ended December 31, 2023. The Partnership had a net loss of $10.3 million, a loss of $0.26 per limited partner unit, for the year ended December 31, 2022. Adjusted EBITDA for the year ended December 31, 2023 was $102.6 million compared to $114.9 million for the year ended December 31, 2022. Adjusted EBITDA after giving effect to the May 2023 exit of the butane optimization business for the year ended December 31, 2023 was $117.7 million compared to $122.0 million for the year ended December 31, 2022. Net cash provided by operating activities was $137.5 million for the year ended December 31, 2023 compared to $16.1 million for the year ended December 31, 2022. Distributable cash flow was $32.8 million for the year ended December 31, 2023 compared to $45.1 million for the year ended December 31, 2022. Revenues were $181.1 million for the three months ended December 31, 2023 compared to $243.4 million for the three months ended December 31, 2022. Revenues associated with our butane optimization business were $0.0 million for the three months ended December 31, 2023 and $55.9 million for the three months ended December 31, 2022. Revenues were $798.0 million for the year ended December 31, 2023 compared to $1.019 billion for the year ended December 31, 2022. Revenues associated with our butane optimization business were $70.5 million for the year ended December 31, 2023 and $172.8 million for the year ended December 31, 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 fourth quarter 2023 to the Partnership's adjusted EBITDA guidance for the fourth quarter 2023. 2024 FINANCIAL GUIDANCE The Partnership expects full year 2024 Adjusted EBITDA of approximately $116.1 million, growth capital expenditures of approximately $17.4 million, with $16.9 million dedicated to the DSM Semichem joint venture, and maintenance capital expenditures of $32.0 million. More detailed 2024 Financial Guidance is provided as an attachment included in the Current Report on Form 8-K to which this press release is included. MMLP does not intend at this time to provide financial guidance beyond 2024. The Partnership has not provided comparable GAAP financial information on a forward-looking basis because it would require the Partnership to create estimated ranges on a GAAP basis, which would entail unreasonable effort as the adjustments required to reconcile forward-looking non-GAAP measures cannot be predicted with a reasonable degree of certainty but may include, among others, costs related to debt amendments and unusual charges, expenses and gains. Some or all of those adjustments could be significant. 2023 K-1 TAX PACKAGES The timing of the availability of MMLP’s K-1 tax packages for 2023 is dependent upon whether and/or when recently proposed legislation (H.R. 7024), which includes proposed changes in tax law which would be applied retroactively to the 2023 tax year, is enacted. As currently written, certain provisions in H.R. 7024 would lower MMLP’s taxable income for 2023 compared to existing tax law. Barring any changes in tax law, MMLP’s K-1 tax packages, including all information to fiduciaries for common units owned in tax exempt accounts, could be made available online through our website at www.MMLP.com on or before February 29, 2024 and the mailing of the tax packages would be completed by March 8, 2024. Should deliberations over the passage of H.R. 7024 impact this timeline, we will issue a press release to update our investors on the timing of the availability of the K-1 tax packages. INVESTORS CONFERENCE CALL Date: Thursday, February 15, 2024 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 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 Martin Midstream Partners LP, headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s primary business lines include: (1) terminalling, processing, and storage services for petroleum products and by-products; (2) land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; (3) sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and (4) marketing, distribution, and transportation services for natural gas liquids and blending and packaging services for specialty lubricants and grease. To learn more, visit www.MMLP.com. Follow Martin Midstream Partners L.P. on LinkedIn, Facebook, and X (formerly known as 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 and adjusted free 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. 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 BALANCE SHEETS (Dollars in thousands) December 31, 2023 2022 Assets Cash $ 54 $ 45 Trade and accrued accounts receivable, less allowance for doubtful accounts of $530 and $496, respectively 53,293 79,641 Inventories 43,822 109,798 Due from affiliates 7,924 8,010 Other current assets 9,220 13,633 Total current assets 114,313 211,127 Property, plant and equipment, at cost 918,786 903,535 Accumulated depreciation (612,993 ) (584,245 ) Property, plant and equipment, net 305,793 319,290 Goodwill 16,671 16,671 Right-of-use assets 60,359 34,963 Deferred income taxes, net 10,200 14,386 Intangibles and other assets, net 2,039 2,414 $ 509,375 $ 598,851 Liabilities and Partners’ Capital (Deficit) Current portion of long term debt and finance lease obligations $ — $ 9 Trade and other accounts payable 51,653 68,198 Product exchange payables 426 32 Due to affiliates 6,334 8,947 Income taxes payable 652 665 Other accrued liabilities 41,499 33,074 Total current liabilities 100,564 110,925 Long-term debt, net 421,173 512,871 Operating lease liabilities 45,684 26,268 Other long-term obligations 6,578 8,232 Total liabilities 573,999 658,296 Commitments and contingencies Partners’ capital (deficit) (64,624 ) (59,445 ) Total partners’ capital (deficit) (64,624 ) (59,445 ) $ 509,375 $ 598,851 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit amounts) Year Ended December 31, 2023 2022 2021 Revenues: Terminalling and storage * $ 86,514 $ 80,193 $ 75,223 Transportation * 223,677 219,008 144,314 Sulfur services 13,430 12,337 11,799 Product sales: * Specialty products 346,777 540,513 517,852 Sulfur services 127,565 166,827 133,243 474,342 707,340 651,095 Total revenues 797,963 1,018,878 882,431 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products * 305,903 503,225 443,896 Sulfur services * 83,702 120,062 89,134 Terminalling and storage * 75 19 68 389,680 623,306 533,098 Expenses: Operating expenses * 252,211 251,886 193,952 Selling, general and administrative * 40,826 41,812 41,012 Depreciation and amortization 49,895 56,280 56,751 Total costs and expenses 732,612 973,284 824,813 Other operating income (loss), net 1,373 5,669 (534 ) Gain on involuntary conversion of property, plant and equipment — — 196 Operating income 66,724 51,263 57,280 Other income (expense): Interest expense, net (60,290 ) (53,665 ) (54,107 ) Loss on extinguishment of debt (5,121 ) — — Other, net 56 (5 ) (4 ) Total other income (expense) (65,355 ) (53,670 ) (54,111 ) Net income (loss) before taxes 1,369 (2,407 ) 3,169 Income tax expense (5,918 ) (7,927 ) (3,380 ) Net loss (4,549 ) (10,334 ) (211 ) Less general partner's interest in net loss 91 207 4 Less loss allocable to unvested restricted units 14 40 — Limited partners' interest in net loss $ (4,444 ) $ (10,087 ) $ (207 ) Net loss per unit attributable to limited partners - basic and diluted $ (0.11 ) $ (0.26 ) $ (0.01 ) Weighted average limited partner units - basic and diluted 38,771,657 38,726,048 38,689,041 *Related Party Transactions Shown Below MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit amounts) *Related Party Transactions Included Above Year Ended December 31, 2023 2022 2021 Revenues: Terminalling and storage $ 72,138 $ 66,867 $ 62,677 Transportation 29,276 28,393 20,046 Product sales 8,767 554 479 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Specialty products 35,930 39,356 27,856 Sulfur services 11,182 10,717 9,980 Terminalling and storage 75 19 10 Expenses: Operating expenses 100,851 93,630 78,607 Selling, general and administrative 32,021 31,758 32,924 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Dollars in thousands Year Ended December 31, 2023 2022 2021 Net loss $ (4,549 ) $ (10,334 ) $ (211 ) Changes in fair values of commodity cash flow hedges $ — $ (816 ) $ 816 Comprehensive income (loss) $ (4,549 ) $ (11,150 ) $ 605 MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF CAPITAL (Dollars in thousands) Partners’ Capital (Deficit) Common General Partner Amount Accumulated Other Comprehensive Income Units Amount Total Balances – December 31, 2020 38,851,174 $ (48,776 ) $ 1,905 $ — (46,871 ) Net loss — (207 ) (4 ) — (211 ) Issuance of time-based restricted units 42,168 — — — — General partner contribution — — 3 — 3 Cash distributions — (775 ) (16 ) — (791 ) Changes in fair values of commodity cash flow hedges — — — 816 816 Excess carrying value of the assets over the purchase price paid by Martin Resource Management — (1,350 ) — — (1,350 ) Unit-based compensation — 384 — — 384 Purchase of treasury units (7,156 ) (17 ) — — (17 ) Balances – December 31, 2021 38,802,750 (50,741 ) 1,888 816 (48,037 ) Net loss — (10,127 ) (207 ) — (10,334 ) Issuance of time-based restricted units 48,000 — — — — Cash distributions — (777 ) (16 ) — (793 ) Changes in fair values of commodity cash flow hedges — — — (816 ) (816 ) Excess purchase price over carrying value of acquired assets — 374 — — 374 Unit-based compensation — 161 — — 161 Balances – December 31, 2022 38,850,750 (61,110 ) 1,665 — (59,445 ) Net loss — (4,458 ) (91 ) — (4,549 ) Issuance of time-based restricted units 64,056 — — — — Cash distributions — (777 ) (16 ) — (793 ) Unit-based compensation — 163 — — 163 Balances – December 31, 2023 38,914,806 $ (66,182 ) $ 1,558 $ — $ (64,624 ) MARTIN MIDSTREAM PARTNERS L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net loss $ (4,549 ) $ (10,334 ) $ (211 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 49,895 56,280 56,751 Amortization and write-off of deferred debt issue costs 3,978 3,152 3,367 Amortization of discount on notes payable 2,200 — — Deferred income tax expense 4,186 5,744 2,432 (Gain) loss on disposition or sale of property, plant, and equipment (1,373 ) (5,669 ) 534 Gain on involuntary conversion of property, plant and equipment — — (196 ) Loss on extinguishment of debt 5,121 — — Derivative (income) loss — (901 ) 5,593 Net cash received (paid) for commodity derivatives — 85 (4,984 ) Unit-based compensation 163 161 384 Change in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and other receivables 26,348 4,579 (31,448 ) Inventories 65,976 (47,678 ) (8,334 ) Due from affiliates 86 6,399 398 Other current assets 4,739 (1,479 ) (3,552 ) Trade and other accounts payable (17,539 ) 486 14,331 Product exchange payables 394 (1,374 ) 1,033 Due to affiliates (2,613 ) 7,123 1,389 Income taxes payable (13 ) 280 (171 ) Other accrued liabilities 2,880 (2,087 ) (2,236 ) Change in other non-current assets and liabilities (2,411 ) 1,381 649 Net cash provided by operating activities 137,468 16,148 35,729 Cash flows from investing activities: Payments for property, plant, and equipment (34,317 ) (27,237 ) (16,059 ) Payments for plant turnaround costs (4,825 ) (5,176 ) (4,109 ) Proceeds from sale of property, plant, and equipment 5,482 7,769 643 Proceeds from involuntary conversion of property, plant and equipment — — 284 Net cash used in investing activities (33,660 ) (24,644 ) (19,241 ) Cash flows from financing activities: Payments of long-term debt (632,197 ) (393,740 ) (333,790 ) Payments under finance lease obligations (9 ) (279 ) (2,707 ) Proceeds from long-term debt 543,489 404,650 316,500 General partner contributions — — 3 Excess purchase price over carrying value of acquired assets — (1,285 ) — Purchase of treasury units — — (17 ) Payments of debt issuance costs (14,289 ) (64 ) (592 ) Cash distributions paid (793 ) (793 ) (791 ) Net cash provided by (used in) financing activities (103,799 ) 8,489 (21,394 ) Net increase (decrease) in cash 9 (7 ) (4,906 ) Cash at beginning of year 45 52 4,958 Cash at end of year $ 54 $ 45 $ 52 MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Dollars and volumes in thousands, except BBL per day) Terminalling and Storage Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Revenues $ 95,459 $ 92,612 $ 2,847 3 % Cost of products sold 75 19 56 295 % Operating expenses 57,393 63,177 (5,784 ) (9 )% Selling, general and administrative expenses 2,070 1,967 103 5 % Depreciation and amortization 21,030 26,094 (5,064 ) (19 )% 14,891 1,355 13,536 999 % Other operating loss, net (359 ) (166 ) (193 ) (116 )% Operating income $ 14,532 $ 1,189 $ 13,343 1,122 % Shore-based throughput volumes (gallons) 162,363 85,017 77,346 91 % Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — % Transportation Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Revenues $ 240,926 $ 239,275 $ 1,651 1 % Operating expenses 184,334 176,198 8,136 5 % Selling, general and administrative expenses 9,787 8,215 1,572 19 % Depreciation and amortization 14,879 14,567 312 2 % 31,926 40,295 (8,369 ) (21 )% Other operating income, net 1,775 1,062 713 67 % Operating income $ 33,701 $ 41,357 $ (7,656 ) (19 )% MARTIN MIDSTREAM PARTNERS L.P. SEGMENT OPERATING INCOME (Dollars and volumes in thousands, except BBL per day) Sulfur Services Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 Variance Percent Change (In thousands) Revenues: Services $ 13,430 $ 12,337 $ 1,093 9 % Products 127,565 166,827 (39,262 ) (24 )% Total revenues 140,995 179,164 (38,169 ) (21 )% Cost of products sold 93,842 127,018 (33,176 ) (26 )% Operating expenses 13,143 15,335 (2,192 ) (14 )% Selling, general and administrative expenses 5,925 6,081 (156 ) (3 )% Depreciation and amortization 10,690 11,099 (409 ) (4 )% 17,395 19,631 (2,236 ) (11 )% Other operating income, net 17 4,555 (4,538 ) (100 )% Operating income $ 17,412 $ 24,186 $ (6,774 ) (28 )% Sulfur (long tons) 478.0 452.0 26.0 6 % Fertilizer (long tons) 254.0 211.0 43.0 20 % Sulfur services volumes (long tons) 732.0 663.0 69.0 10 % Specialty Products Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 Variance Percent Change (In thousands) Products revenues $ 346,863 $ 540,636 (193,773 ) (36 )% Cost of products sold 319,200 526,043 (206,843 ) (39 )% Operating expenses 78 118 (40 ) (34 )% Selling, general and administrative expenses 7,120 8,728 (1,608 ) (18 )% Depreciation and amortization 3,296 4,520 (1,224 ) (27 )% 17,169 1,227 15,942 1,299 % Other operating income (loss), net (60 ) 218 (278 ) (128 )% Operating income $ 17,109 $ 1,445 $ 15,664 1,084 % NGL sales volumes (Bbls) 3,681 5,791 (2,110 ) (36 )% Other specialty products volumes (Bbls) 367 391 (24 ) (6 Total specialty products volumes (Bbls) 4,048 6,182 (2,134 ) (35 )% Non-GAAP Financial Measures The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the quarter and years ended December 31, 2023 and 2022, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow: Reconciliation of Net Loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 (in thousands) Net income (loss) $ 517 $ (375 ) $ (4,549 ) $ (10,334 ) Adjustments: Interest expense 14,376 14,484 60,290 53,665 Income tax expense 2,299 2,458 5,918 7,927 Depreciation and amortization 12,224 13,273 49,895 56,280 EBITDA 29,416 29,840 111,554 107,538 Adjustments: Gain on disposition of property, plant and equipment (277 ) (4,619 ) (1,373 ) (5,669 ) Loss on extinguishment of debt — — 5,121 — Lower of cost or net realizable value and other non-cash adjustments — (7,476 ) (12,850 ) 12,850 Unit-based compensation 36 36 163 161 Adjusted EBITDA 29,175 17,781 102,615 114,880 Adjustments: Plus: net loss associated with butane optimization business — 4,736 2,256 20,015 Plus: lower of cost or net realizable value and other non-cash adjustments — 5,976 12,850 (12,850 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business $ 29,175 $ 28,493 $ 117,721 122,045 Reconciliation of Net Cash Provided by 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 December 31, Year Ended December 31, 2023 2022 2023 2022 (in thousands) (in thousands) Net cash provided by operating activities $ 31,403 $ 32,904 $ 137,468 $ 16,148 Interest expense 1 13,004 13,688 54,112 50,513 Current income tax expense 435 325 1,732 2,183 Lower of cost or net realizable value and other non-cash adjustments — (7,476 ) (12,850 ) 12,850 Commodity cash flow hedging gains reclassified to earnings — — — 901 Net cash received for closed commodity derivative positions included in AOCI — — — (85 ) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets 1,336 (21,071 ) (97,149 ) 38,179 Trade, accounts and other payables, and other current liabilities (18,394 ) (324 ) 16,891 (4,428 ) Other 1,391 (265 ) 2,411 (1,381 ) Adjusted EBITDA 29,175 17,781 102,615 114,880 Plus: net loss associated with butane optimization business — 4,735 2,256 20,015 Plus: lower of cost or net realizable value and other non-cash adjustments — 5,976 12,850 (12,850 ) Adjusted EBITDA after giving effect to the exit of the butane optimization business 29,175 28,492 117,721 122,045 Adjustments: Interest expense (14,376 ) (14,484 ) (60,290 ) (53,665 ) Income tax expense (2,299 ) (2,458 ) (5,918 ) (7,927 ) Deferred income taxes 1,864 2,133 4,186 5,744 Amortization of deferred debt issuance costs 772 796 3,978 3,152 Amortization of discount on notes payable 600 — 2,200 — Payments for plant turnaround costs (2,458 ) (914 ) (4,825 ) (5,176 ) Maintenance capital expenditures (4,689 ) (4,526 ) (24,277 ) (19,074 ) Distributable Cash Flow 8,589 9,039 32,775 45,099 Principal payments under finance lease obligations — (99 ) (9 ) (279 ) Expansion capital expenditures (4,908 ) (1,401 ) (11,034 ) (6,883 ) Adjusted Free Cash Flow $ 3,681 $ 7,539 $ 21,732 37,937 (1) Net of amortization of debt issuance costs and discount and premium, which are included in interest expense but not included in net cash provided by operating activities. 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