updated 5/4/2011 4:16:54 PM ET 2011-05-04T20:16:54

KILGORE, Texas, May 4, 2011 (GLOBE NEWSWIRE) -- Martin Midstream Partners L.P. (Nasdaq:MMLP) announced today its financial results for the first quarter ended March 31, 2011.

Martin Midstream Partners L.P. ("the Partnership") reported net income for the first quarter of 2011 of $7.1 million, or $0.30 per limited partner unit. This compared to net income for the first quarter of 2010 of $1.8 million, or $0.04 per limited partner unit. Revenues for the first quarter of 2011 were $283.0 million compared to $242.7 million for the first quarter of 2010.

For the quarter ended March 31, 2011, net income was negatively impacted by $0.5 million, or $0.02 per limited partner unit, in non-cash derivatives net losses from certain commodity and interest rate hedges that are subject to mark-to-market accounting,

The Partnership's distributable cash flow for the first quarter of 2011 was $12.5 million. Distributable cash flow is a non-GAAP financial measure which is explained in greater detail below under "Use of Non-GAAP Financial Information." The Partnership has also included below a table entitled "Distributable Cash Flow" in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measurement.

Included with this press release are the Partnership's consolidated financial statements as of and for the quarter ended March 31, 2011 and certain prior periods. These financial statements should be read in conjunction with the information contained in the Partnership's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 4, 2011.       

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of Martin Midstream Partners, said, "The Partnership's distributable cash flow coverage as viewed on a trailing twelve-month basis remains healthy. Further, our outlook is strong given the additional cash flow we anticipate in the coming quarters. On that basis, our board of directors voted to increase our distribution to unit holders for the second consecutive quarter. Looking ahead, our new ammonium sulfate plant came on line in mid-March of this year. Built on a low cost multiple, we expect strong performance from this new asset given the high demand from agricultural sources. Elsewhere, we have begun to conceptualize logistic chains for customers who expect high future liquid transport needs from Eagle Ford shale production. We believe we can play a meaningful role given our terminalling assets and marine transportation expertise.

"Now, let me discuss our first quarter coverage of .84 times. Although this is below our expectations, we can reconcile the performance back to our forecast and affirm that the Partnership is well-positioned for stronger coverage in coming quarters. Several factors were present during the quarter that adversely affected our distributable cash flow. First, our maintenance capital expenditures of approximately $7.3 million in the first quarter reflects nearly half of the anticipated expenditures for 2011. As previously mentioned, we have forecasted abnormally high maintenance expenditures for the year driven primarily from our marine equipment. During 2011, our entire off-shore barge fleet has scheduled or completed regulatory dry-docking work-overs. To date, approximately two-thirds of the marine equipment work-overs have been completed. Secondly, our terminalling and storage segment experienced a weaker than expected quarter due to higher than expected operating expenses for our specialty terminals. Also, we experienced lower than anticipated through-put volumes at our marine shore base terminals as a result of weaker offshore drilling activity. Activity levels during the quarter improved due to increases in new deep water offshore permits issued after BOEMER. Through-put volumes have been stronger during March and April as the overall Gulf of Mexico activity increases coming out of the winter months.

"In conclusion, I am pleased to announce that in mid-April, we successfully closed a new upsized revolving credit facility. We saw very good demand in the bank market and were able to achieve improved pricing and structure. We expect the new credit facility will have a positive impact on our distributable cash flow of approximately $2.0 million annualized versus our previous bank facility. The facility gives MMLP ample liquidity and flexibility for continued growth." 

Investors' Conference Call

An investor's conference call to review the first quarter results will be held on Thursday, May 5, 2011, at 8:00 a.m. Central Time. The conference call can be accessed by calling (877) 878-2695. An audio replay of the conference call will be available by calling (800) 642-1687 from 11:00 a.m. Central Time on May 5, 2011 through 10:59 p.m. Central Time on May 19, 2011. The access codes for the conference call and the audio replay are as follows: Conference ID No. 63291052. The audio replay of the conference call will also be archived on the Partnership's website at www.martinmidstream.com .

About Martin Midstream Partners

Martin Midstream Partners is a publicly traded limited partnership with a diverse set of operations focused primarily in the United States Gulf Coast region. The Partnership's primary business lines include: terminalling and storage services for petroleum products and by-products; natural gas gathering, processing and NGL distribution; sulfur and sulfur-based products processing, manufacturing, and distribution; and marine transportation services for petroleum products and by-products.           

Forward-Looking Statements

Statements about Martin Midstream Partners' outlook and all other statements in this release other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all references to financial estimates rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside its control, which could cause actual results to differ materially from such statements. While MMLP believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in anticipating or predicting certain important factors. A discussion of these factors, including risks and uncertainties, is set forth in the Partnership's annual and quarterly reports filed from time to time with the Securities and Exchange Commission. Martin Midstream Partners disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financial Information

The Partnership reports its financial results in accordance with United States generally accepted accounting principles (GAAP). However, from time to time, the Partnership uses certain non-GAAP financial measures such as distributable cash flow because the Partnership's management believes that this measure may provide users of this financial information with meaningful comparisons between current results and prior reported results and a meaningful measure of Partnership's cash available to pay distributions. Distributable cash flow should not be considered an alternative to cash flow from operating activities or any other measure of financial performance in accordance with GAAP. Distributable cash flow is not intended to represent cash flows for the period, nor is it presented as an alternative to income from continuing operations. Furthermore, it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. This information may constitute non-GAAP financial measures within the meaning of Regulation G adopted by the Securities and Exchange Commission. Accordingly, the Partnership has presented herein, and will present in other information it publishes that contains this non-GAAP financial measure, a reconciliation of this measure to the most directly comparable GAAP financial measure.

The Partnership has included below a table entitled "Distributable Cash Flow" in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measure. The Partnership calculates distributable cash flow as follows: net income (as reported in statements of operations), plus depreciation and amortization, amortization of debt discount and amortization of deferred debt issue costs (as reported in statements of cash flows), less deferred taxes (as reported in statements of cash flows), less payments of installment notes payable and capital lease obligations expenditures (as reported in statements of cash flows), plus distribution equivalents from unconsolidated entities (as described below), less invested cash in unconsolidated entities (as described below), less equity in earnings of unconsolidated entities (as reported in statements of operations), plus non-cash mark-to-market on derivatives (as reported in statements of cash flows), less payments for plant turnaround costs (as reported in statements of cash flows), less maintenance capital expenditures (as reported under the caption "Liquidity and Capital Resources" in the Partnership's Quarterly Report on Form 10-Q filed with the SEC on May 4, 2011), plus unit-based compensation (as reported in statements of changes in capital).

The Partnership's distribution equivalents from unconsolidated entities is calculated as distributions from unconsolidated entities (as reported in statements of cash flows), plus return of investments from unconsolidated entities (as reported in statements of cash flows), plus distributions in-kind from unconsolidated entities (as reported in statements of cash flows). For the quarter ended March 31, 2011, the Partnership's distributions from unconsolidated entities, return of investments from unconsolidated entities and distributions in-kind from equity investments were $0.0 million, $0.1 million and $3.9 million, respectively.

The Partnership's invested cash in unconsolidated entities is calculated as distributions from (contributions to) unconsolidated entities for operations (as reported in statements of cash flows), plus expansion capital expenditures in unconsolidated entities (as reported under the caption "Liquidity and Capital Resources" in the Partnership's Annual Report on Form 10-K filed with the SEC on March 2, 2011). For the quarter ended March 31, 2011, the Partnership's distributions from (contributions to) unconsolidated entities for operations and expansion capital expenditures in unconsolidated entities were ($3.7) million and $2.2 million, respectively.

Additional information concerning the Partnership is available on the Partnership's website at www.martinmidstream.com .

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
     
     
  March 31, December 31,
  2011 2010
  (Unaudited)  (Audited)
Assets    
Cash  $10,819 $11,380
Accounts and other receivables, less allowance for doubtful accounts of $2,576 and $2,528, respectively  94,699 95,276
Product exchange receivables  5,254 9,099
Inventories  50,296 52,616
Due from affiliates  9,229 6,437
Fair value of derivatives  2,138 2,142
Other current assets  3,245 2,784
Total current assets  175,680 179,734
     
Property, plant and equipment, at cost  684,413 632,456
Accumulated depreciation  (210,627) (200,276)
Property, plant and equipment, net  473,786 432,180
     
Goodwill  37,268 37,268
Investment in unconsolidated entities  100,236 98,217
Deferred debt costs  12,357 13,497
Other assets, net  25,851 24,582
  $825,178 $785,478
Liabilities and Partners' Capital    
Current portion of capital lease obligations  $1,148 $1,121
Trade and other accounts payable  80,504 82,837
Product exchange payables  19,703 22,353
Due to affiliates  11,271 6,957
Income taxes payable  1,037 811
Fair value of derivatives  1,093 282
Other accrued liabilities  13,333 10,034
Total current liabilities  128,089 124,395
     
Long-term debt and capital leases, less current maturities  344,655 372,862
Deferred income taxes  8,210 8,213
Fair value of derivatives  5,064 4,100
Other long-term obligations  1,947 1,102
Total liabilities  487,965 510,672
     
Partners' capital  337,117 273,387
Accumulated other comprehensive income  96 1,419
Total partners' capital  337,213 274,806
Commitments and contingencies     
  $825,178 $785,478
     
     
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 4, 2011.
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
 (Unaudited)
 (Dollars in thousands, except per unit amounts)
     
     
  Three Months Ended
  March 31,
  2011 2010
Revenues:    
Terminalling and storage *  $18,123 $16,041
Marine transportation *  19,399 17,877
Sulfur services  2,850
Product sales: *    
Natural gas services  167,211 165,229
Sulfur services  56,908 34,409
Terminalling and storage  18,545 9,120
  242,664 208,758
Total revenues  283,036 242,676
     
Costs and expenses:    
Cost of products sold: (excluding depreciation and amortization)     
Natural gas services *  158,204 157,664
Sulfur services *  44,442 24,735
Terminalling and storage  16,560 8,446
  219,206 190,845
Expenses:    
Operating expenses *  34,349 29,195
Selling, general and administrative *  5,028 5,270
Depreciation and amortization  11,183 9,905
Total costs and expenses  269,766 235,215
Other operating income   — 102
Operating income  13,270 7,563
Other income (expense):    
Equity in earnings of unconsolidated entities  2,376 2,176
Interest expense  (8,402) (8,003)
Other, net  60 60
Total other income (expense)  (5,966) (5,767)
Net income before taxes  7,304 1,796
Income tax benefit (expense)  (223) (25)
Net income  $7,081 $1,771
     
General partner's interest in net income  $1,224 $863
Limited partners' interest in net income  $5,580 $631
     
Net income per limited partner unit – basic and diluted  $0.30 $0.04
     
Weighted average limited partner units - basic  18,760,861 17,708,165
Weighted average limited partner units - diluted  18,761,611 17,709,027
     
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 4, 2011.
     
* Related Party Transactions Included Above    
Revenues:    
Terminalling and storage  $12,938 $10,694
Marine transportation  6,565 6,060
Product Sales  5,399 307
Costs and expenses:    
Cost of products sold: (excluding depreciation and amortization)    
Natural gas services  23,205 18,706
Sulfur services  4,152 3,317
Expenses:    
Operating expenses  12,042 10,633
Selling, general and administrative  3,031 1,802
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Unaudited)
(Dollars in thousands)
               
  Partners' Capital      
            Accumulated  
             Other   
          General  Comprehensive  
  Common Subordinated Partner Income  
  Units Amount Units Amount Amount (Loss) Total
Balances – January 1, 2010  16,057,832 $245,683 889,444  $ 16,613  $ 4,731  $ (2,076)  $ 264,951
               
Net income   — 908 863 1,771
               
Recognition of beneficial conversion feature (277) 277
               
Follow-on public offering  1,650,000 50,530 50,530
               
General partner contribution  1,089 1,089
               
Cash distributions   — (12,043)  — (1,121) (13,164)
               
Unit-based compensation   — 27  — 27
               
Adjustment in fair value of derivatives   —  —  —  —  — 2,512 2,512
               
Balances – March 31, 2010  17,707,832 $284,828 889,444 $16,890 $5,562 $436 $307,716
               
               
Balances – January 1, 2011  17,707,832 $250,785 889,444 $17,721 $4,881 $1,419 $274,806
               
Net income   — 5,857 1,224 7,081
               
Recognition of beneficial conversion feature (277) 277
               
Follow-on public offering  1,874,500 70,329 70,329
               
General partner contribution  1,505 1,505
               
Cash distributions   — (13,458)  — (1,416) (14,874)
               
Unit-based compensation  9,100 36  — 36
               
Purchase of treasury units  (9,100) (347) (347)
               
Adjustment in fair value of derivatives   —  —  —  —  — (1,323) (1,323)
               
Balances – March 31, 2011  19,582,332 $312,925 889,444 $17,998 $6,194 $96 $337,213
               
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 4, 2011.
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
     
  Three Months Ended
  March 31,
  2011 2010
Cash flows from operating activities:    
Net income  $7,081 $1,771
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization  11,183 9,905
Amortization of deferred debt issuance costs  1,140 1,467
Amortization of debt discount  88 6
Deferred taxes  (3) (147)
Gain on sale of property, plant and equipment  (102)
Equity in earnings of unconsolidated entities  (2,376) (2,176)
Distributions in-kind from equity investments  3,948 3,741
Non-cash mark-to-market on derivatives  456 (3,142)
Other  36 27
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:    
Accounts and other receivables  577 3,306
Product exchange receivables  3,845 3,871
Inventories  2,320 1,560
Due from affiliates  (2,792) (2,271)
Other current assets  (461) (1,331)
Trade and other accounts payable  (2,333) (525)
Product exchange payables  (2,649) (2,526)
Due to affiliates  4,314 (454)
Income taxes payable  226 286
Other accrued liabilities  3,299 (1,898)
Change in other non-current assets and liabilities  155 (20)
Net cash provided by operating activities  28,054 11,348
Cash flows from investing activities:    
Payments for property, plant and equipment  (14,874) (3,475)
Acquisitions  (36,500)
Payments for plant turnaround costs  (1,995) (1,043)
Proceeds from sale of property, plant and equipment  625
Investment in unconsolidated entities  (20,110)
Return of investments from unconsolidated entities  60 115
Distributions from (contributions to) unconsolidated entities for operations  (3,651) (568)
Net cash used in investing activities  (56,960) (24,456)
Cash flows from financing activities:    
Payments of long-term debt  (101,500) (284,127)
Payments of notes payable and capital lease obligations  (268)
Proceeds from long-term debt  73,500 273,093
Net proceeds from follow on offering  70,329 50,530
Treasury units purchased  (347)
General partner contribution  1,505 1,089
Payments of debt issuance costs  (6,969)
Cash distributions paid  (14,874) (13,164)
Net cash provided by financing activities  28,345 20,452
Net increase (decrease) in cash  (561) 7,344
Cash at beginning of period  11,380 5,956
Cash at end of period  $10,819 $13,300
     
     
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 4, 2011.
MARTIN MIDSTREAM PARTNERS L.P.
DISTRIBUTABLE CASH FLOW
Unaudited Non-GAAP Financial Measure
(Dollars in thousands)
  Three Months

Ended
  March 31, 2011
   
Net income  $7,081
   
Adjustments to reconcile net income to distributable cash flow:  
Depreciation and amortization  11,183
Amortization of debt discount  88
Amortization of deferred debt issuance costs  1,140
Deferred taxes  (3)
Payments of installment notes payable and capital lease obligations  (268)
Distribution equivalents from unconsolidated entities1 4,008
Invested cash in unconsolidated entities2 (1,486)
Equity in earnings of unconsolidated entities  (2,376)
Non-cash mark-to-market on derivatives  456
Payments for plant turnaround costs  (1,995)
Maintenance capital expenditures  (5,355)
Unit-based compensation  36
Distributable cash flow  $12,509
 
   
1 Distribution equivalents from unconsolidated entities:  
Distributions from unconsolidated entities  $ —
Return of investments from unconsolidated entities  60
Distributions in-kind from equity investments  3,948
Distributions equivalents from unconsolidated entities  $4,008
   
   
Invested cash in unconsolidated entities:   
Distributions from (contributions to) unconsolidated entities for operations   $ (3,651)
Expansion capital expenditures in unconsolidated entities  2,165
Invested cash in unconsolidated entities   $ (1,486)
CONTACT:  Joe McCreery,
          Vice President - Finance and Head of Investor Relations,
          Martin Midstream Partners L.P.
          Phone (903) 812-7989
          joe.mccreery@martinmlp.com

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