Martin Midstream Partners Reports Fourth Quarter and Full Year 2022 Financial Results and Releases 2023 Financial Guidance

• Debt refinancing significantly improves maturity profile
• Reported net loss of $0.4 million and $10.3 million for the fourth quarter and year ended December 31, 2022, respectively
• Reported adjusted EBITDA of $17.8 million and $114.9 million for the fourth quarter and year ended December 31, 2022
• Exiting butane optimization business, which reported net loss of $4.7 million and $20.0 million for the fourth quarter and year ended December 31, 2022, respectively, and negative adjusted EBITDA of $10.7 million and $7.2 million, for the same respective periods
• In January 2023, S&P Global Ratings upgraded its issuer credit ratings of Martin Midstream Partners L.P. from CCC to B- with a stable outlook. Additionally, in January 2023, Fitch Ratings assigned an initial issuer rating of B- with a stable outlook. In February 2023, Moody’s Investor Services upgraded its issuer credit rating from Caa1 to B3 with a stable outlook.
• Expects full year 2023 Adjusted EBITDA of approximately $115.3 million after giving effect to the exit of the butane optimization business, growth capital expenditures of approximately $17.5 million with $12.5 million dedicated to the DSM Semichem joint venture, and maintenance capital expenditures of $26.6 million
• Additional 2023 Financial Guidance assumptions include debt reduction of approximately $55 million as the Partnership liquidates the remaining inventory attributable to the butane optimization business resulting in projected year-end leverage of 4.0x

KILGORE, Texas--(BUSINESS WIRE)-- Martin Midstream Partners L.P. (Nasdaq:MMLP) ("MMLP" or the "Partnership") today announced its financial results for the fourth quarter and year ended December 31, 2022.

Bob Bondurant, President and Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, stated, "Despite the challenges we faced in the second half of 2022 due to fluctuating commodity prices, the Partnership had another solid year. While results were slightly lower than our guidance range, all of our business segments, with the exception of the NGL segment, outperformed compared to our internal forecast; with the Transportation segment leading the way. During the last month we announced our intent to exit the butane optimization business which will substantially lower our working capital needs, reduce volatility in our earnings, and lessen our exposure to commodity prices in the future. We anticipate that by the end of the second quarter of 2023, all remaining butane inventory volumes will be sold. We intend to redeploy our underground butane storage assets by utilizing them in a fee-based business model, providing our customers reliable storage and logistics services, while minimizing the impact to our employees.

“In January of 2023, we announced our plan to refinance the Partnership’s capital structure. On February 8, 2023, we closed and funded $400 million of new second lien notes due 2028, and used a portion of the proceeds to repay all of our outstanding notes due in 2024 and 2025, with the remainder being used to pay down borrowings under our revolving credit facility. Concurrently, we amended our revolving credit facility lowering the bank commitments to $200 million and extending the maturity to 2027.

“In summary, with the planned exit from the butane optimization business and the extension of our debt maturities, we have substantially lowered the risk profile of the Partnership. We remain committed to capital discipline and continued strengthening of our balance sheet through meaningful debt reduction.”

FOURTH QUARTER 2022 OPERATING RESULTS BY BUSINESS SEGMENT

TERMINALLING AND STORAGE ("T&S")

T&S operating income was $4.3 million and $3.9 million for the three months ended December 31, 2022 and 2021, respectively.

Adjusted segment EBITDA for T&S was $10.5 million and $11.0 million for the three months ended December 31, 2022 and 2021, respectively, reflecting higher employee-related expenses at our specialty terminals coupled with lower volumes in our lubricant and specialty products divisions, offset by increased throughput revenue at our shore-based terminals and Smackover Refinery.

TRANSPORTATION

Transportation operating income was $11.1 million and $5.1 million for the three months ended December 31, 2022 and 2021, respectively.

Adjusted segment EBITDA for Transportation was $14.7 million and $8.8 million for the three months ended December 31, 2022 and 2021, respectively, reflecting robust demand for land transportation services coupled with improving marine fleet utilization and higher day rates.

SULFUR SERVICES

Sulfur Services operating income was $9.1 million and $8.9 million for the three months ended December 31, 2022 and 2021, respectively.

Adjusted segment EBITDA for Sulfur Services was $5.7 million and $11.4 million for the three months ended December 31, 2022 and 2021, respectively, due to decreased fertilizer sales volumes related to continued pricing instability. Additionally, the Sulfur Services segment saw reduced adjusted EBITDA of $0.5 million related to the sale of our Stockton, California, Sulfur prilling terminal on October 7, 2022.

NATURAL GAS LIQUIDS ("NGL")

NGL operating income (loss) was $(3.7) million and $12.2 million for the three months ended December 31, 2022 and 2021, respectively. Butane optimization operating income (loss) was $(4.7) million and $11.0 million for the three months ended December 31, 2022 and 2021, respectively.

Adjusted segment EBITDA for NGL was $(9.1) million and $12.8 million for the three months ended December 31, 2022 and 2021, respectively, primarily reflecting decreased NGL sales volumes and margins. Included in the NGL results is adjusted EBITDA of $(10.7) million and $11.0 million for the three months ended December 31, 2022 and 2021, respectively, attributable to the butane optimization business that the Partnership intends to exit.

UNALLOCATED SELLING, GENERAL AND ADMINISTRATIVE EXPENSE ("USGA")

USGA expenses included in operating income were $4.1 million and $4.3 million for the three months ended December 31, 2022 and 2021, respectively.

USGA expenses included in adjusted EBITDA were $4.1 million and $4.3 million for the three months ended December 31, 2022 and 2021, respectively, primarily reflecting an increase in employee-related expenses.

CAPITALIZATION

At December 31, 2022, the Partnership had $516 million of total debt outstanding, including $171 million drawn on its $275 million revolving credit facility, $54 million of senior secured 1.5 lien notes due 2024 and $291 million of senior secured second lien notes due 2025. At December 31, 2022, the Partnership had liquidity of approximately $63 million from available capacity under its revolving credit facility. The Partnership’s adjusted leverage ratio, as calculated under the revolving credit facility, was 4.27 times and 3.63 times on December 31, 2022 and September 30, 2022, respectively. The Partnership was in compliance with all debt covenants as of December 31, 2022.

On January 30, 2023 the Partnership announced its intent to offer $400 million in new 5-year senior secured second lien notes due 2028 and announced an amendment to its revolving credit facility effective upon the close of the note offering. Concurrently, the Partnership announced a cash tender for all its then outstanding 1.5 lien notes due 2024 and its second lien notes due 2025. On February 8, 2023, the Partnership announced its $400 million 5-year senior secured second lien notes offering closed and funded, all validly tendered notes were accepted and paid, and as such the revolving credit facility amendment was effective with the maturity extended to 2027. Also on February 8, 2023, the Partnership exercised its optional redemption rights with respect to the existing notes due 2024 and 2025 that remained outstanding following the tender offer, and satisfied and discharged its obligations under the indentures governing such notes.

For more detailed information on the $400 million senior secured second lien notes, and the amended and extended credit facility, see the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on February 8, 2023 or at the Partnership’s website www.MMLP.com.

RESULTS OF OPERATIONS

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. The Partnership had net income of $10.8 million, or $0.27 per limited partner unit, for the three months ended December 31, 2021. Adjusted EBITDA was $17.8 million for the three months ended December 31, 2022 compared to $39.7 million for the three months ended December 31, 2021. Net cash provided by operating activities was $32.9 million for the three months ended December 31, 2022 compared to $48.1 million for the three months ended December 31, 2021. Distributable cash flow was $(1.7) million for the three months ended December 31, 2022 compared to $19.3 million for the three months ended December 31, 2021.

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. The Partnership had a net loss of $0.2 million, a loss of $0.01 per limited partner unit, for the year ended December 31, 2021. Adjusted EBITDA was $114.9 million for the year ended December 31, 2022 compared to $114.5 million for the year ended December 31, 2021. Net cash provided by operating activities was $16.1 million for the year ended December 31, 2022 compared to $35.7 million for the year ended December 31, 2021. Distributable cash flow was $37.9 million for the year ended December 31, 2022 compared to $44.6 million for the year ended December 31, 2021.

Revenues were $243.4 million for the three months ended December 31, 2022 compared to $285.9 million for the three months ended December 31, 2021. Revenues were $1.019 billion for the year ended December 31, 2022 compared to $882.4 million for the year ended December 31, 2021.

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 2022 to the Partnership's adjusted EBITDA for the fourth quarter 2021.

2023 FINANCIAL GUIDANCE

The Partnership expects full year 2023 Adjusted EBITDA of approximately $115.3 million after giving effect to the exit of the butane optimization business, growth capital expenditures of approximately $17.5 million with $12.5 million dedicated to the DSM Semichem joint venture, maintenance capital expenditures of $26.6 million, and projected year-end leverage of 4.0x. More detailed 2023 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 2023.

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.

2022 K-1 TAX PACKAGES

The MMLP K-1 tax packages are expected to be available online through our website at www.mmlp.com or www.taxpackagesupport.com/martinmidstream after 5:00 p.m. Central Standard Time on February 28, 2023. Mailing of the tax packages is currently expected to be complete the week of March 6, 2023. In an effort to be environmentally friendly, the Partnership encourages its unitholders to sign up for electronic delivery of their MMLP tax package.

INVESTORS CONFERENCE CALL

Date: Thursday, February 16, 2023 Time: 8:00 a.m. CT (please dial in by 7:55 a.m.) Dial In #: (888) 330-2384 Conference ID: 8536096 Replay Dial In # (800) 770-2030 – Conference ID: 8536096

A webcast of the conference call will also be available by visiting the Events and Presentations section under Investor Relations on our website at www.MMLP.com.

About Martin Midstream Partners

MMLP, headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s four primary business lines include: (1) terminalling, processing, storage, and packaging services for petroleum products and by-products, including the refining of naphthenic crude oil; (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) natural gas liquids marketing, distribution, and transportation services. To learn more, visit www.MMLP.com. Follow Martin Midstream Partners L.P. on LinkedIn, Twitter, and Facebook.

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 the Partnership's management in assessing its business, it uses 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"). The Partnership's management uses a variety of financial and operational measurements other than its financial statements prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") to analyze its 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. The Partnership defines 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 the Partnership's management and by external users of its financial statements, such as investors, commercial banks, research analysts, and others, to assess:

• the financial performance of the Partnership's assets without regard to financing methods, capital structure, or historical cost basis;
• the ability of the Partnership's assets to generate cash sufficient to pay interest costs, support its indebtedness, and make cash distributions to its unitholders; and
• its 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 the Partnership has borrowed money to finance its operations, interest expense is a necessary element of its costs and its ability to generate cash available for distribution. Because the Partnership has capital assets, depreciation and amortization are also necessary elements of its costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, the Partnership believes 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 its overall performance.

Distributable Cash Flow. The Partnership defines 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 the Partnership's management and by external users of its financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions it expects to pay unitholders. Distributable cash flow is also an important financial measure for the Partnership's unitholders since it serves as an indicator of its success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not the Partnership is generating cash flow at a level that can sustain or support an increase in its quarterly distribution rates. Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.

Adjusted Free Cash Flow. The Partnership defines 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 the Partnership's management and by external users of its 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. The Partnership believes 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. The Partnership's 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, the Partnership believes 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 its overall liquidity.

MMLP-F

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, 2022 and 2021, which represents EBITDA, Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230215005607/en/

Sharon Taylor - Vice President & Chief Financial Officer (877) 256-6644 ir@martinmlp.com

Source: Martin Midstream Partners L.P.