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Martin Midstream Partners Reports 2010 Fourth Quarter And Annual Financial Results

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 December 31, 2010, 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 $3.0 million, respectively. For the year ended December 31, 2010, the Partnership's distributions from unconsolidated entities, return of investments from unconsolidated entities and distributions in-kind from equity investments were $0.0 million, $2.5 million and $10.5 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 December 31, 2010, the Partnership's distributions from (contributions to) unconsolidated entities for operations and capital expenditures in unconsolidated entities were $(1.4) million and $1.2 million, respectively. For the year ended December 31, 2010, the Partnership's distributions from (contributions to) unconsolidated entities for operations and capital expenditures in unconsolidated entities were $(0.7) million and $3.2 million, respectively.

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
   
  December 31,
  2010 2009
  (Dollars in thousands)
Assets    
     
Cash $ 11,380  $ 5,956
Accounts and other receivables, less allowance for doubtful accounts of $2,528 and $481, respectively 95,276 77,413
Product exchange receivables 9,099 4,132
Inventories 52,616 35,510
Due from affiliates 6,437 3,051
Fair value of derivatives 2,142 1,872
Other current assets  2,784  1,340
Total current assets  179,734  129,274
     
Property, plant and equipment, at cost 632,456 584,036
Accumulated depreciation  (200,276)  (162,121)
Property, plant and equipment, net  432,180  421,915
     
Goodwill 37,268 37,268
Investment in unconsolidated entities 98,217 80,582
Debt issuance costs, net 13,497 10,780
Other assets  24,582   6,120
  $ 785,478 $ 685,939
Liabilities and Partners' Capital    
     
Current installments of long-term debt and capital lease obligations $ 1,121 $ 111
Trade and other accounts payable 82,837 71,911
Product exchange payables 22,353 7,986
Due to affiliates 6,957 13,810
Income taxes payable 811 454
Fair value of derivatives 282 7,227
Other accrued liabilities     10,034  5,000
Total current liabilities 124,395 106,499
     
Long-term debt and capital leases, less current maturities 372,862 304,372
Deferred income taxes 8,213 8,628
Fair value of derivatives 4,100
Other long-term obligations  1,102  1,489
Total liabilities  510,672  420,988
     
Partners' capital 273,387 267,027
Accumulated other comprehensive loss  1,419  (2,076)
Total partners' capital  274,806  264,951
Commitments and contingencies    
  $ 785,478 $ 685,939
     
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K filed with the SEC on March 2, 2011.  
 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
   
  Year Ended December 31,
  2010 2009 2008
  (Dollars in thousands, except per unit amounts)
Revenues:      
Terminalling and storage *  $67,117 $69,710 $68,552
Marine transportation *  77,642 68,480 76,349
Product sales: *      
Natural gas services  554,482 408,982 679,375
Sulfur services  165,078 79,629 371,949
Terminalling and storage  47,799 35,584 50,219
  767,359 524,195 1,101,543
Total revenues  912,118 662,385 1,246,444
       
Costs and expenses:      
Cost of products sold: (excluding depreciation and amortization)       
Natural gas services *  527,232 382,542 657,662
Sulfur services *  122,121 43,386 313,143
Terminalling and storage  44,549 31,331 42,721
  693,902 457,259 1,013,526
Expenses:      
Operating expenses *  116,402 117,438 126,808
Selling, general and administrative *  21,118 19,775 19,062
Depreciation and amortization  40,656 39,506 34,893
Total costs and expenses  872,078 633,978 1,194,289
Other operating income  136 6,013 209
Operating income  40,176 34,420 52,364
       
Other income (expense):      
Equity in earnings of unconsolidated entities  9,792 7,044 13,224
Interest expense   (33,716)  (18,995)  (21,433)
Other, net   287  326  801
Total other income (expense)   (23,637)  (11,625)  (7,408)
Net income before taxes   16,539  22,795  44,956
Income tax benefit (expense)   (517)  (592)  (1,398)
Net income  $16,022 $22,203 $43,558
       
General partner's interest in net income¹  $3,869 $3,249 $3,301
Limited partners' interest in net income¹  $11,045 $17,179 $39,509
       
Net income per limited partner unit - basic and diluted  $0.63 $1.17 $2.72
Weighted average limited partner units - basic  17,525,089 14,680,807 14,529,826
Weighted average limited partner units - diluted  17,525,989 14,684,775 14,534,722
       
¹ General and limited partner's interest in net income includes net income attributable to the Cross assets since the date of the acquisition noted above.
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K filed with the SEC on March 2, 2011.
       
*Related Party Transactions Included Above
Revenues:      
Terminalling and storage  $46,823 $19,998 $18,362
Marine transportation  28,194 19,370 24,956
Product Sales  14,998 5,838 26,704
Costs and expenses:      
Cost of products sold: (excluding depreciation and amortization)      
Natural gas services  79,321 56,914 92,322
Sulfur services  16,061 12,583 13,282
Expenses:      
Operating expenses  49,286 37,284 37,661
Selling, general and administrative  10,918 7,162 6,284
 
 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
For the years ended December 31, 2010, 2009 and 2008
 
       
  Partners' Capital    
          Accumulated  
        General Comprehensive  
  Parent Net Common Subordinated Partner Income  
  Investment Units Amount Units Amount Amount Amount Total
  (Dollars in thousands)
                 
Balances – December 31, 2007 $ 10,917 12,837,480 $244,520 1,701,346 $ (6,022) $ 4,112 $ (6,762) $ 246,765
                 
Net Income 748 34,978 4,531 3,301 43,558
                 
Cash distributions ($2.91 per unit) (37,357) (4,951) (3,409)  (45,717)
                 
Conversion of subordinated units to common units  850,672 (2,754) (850,672)  2,754
                 
Unit-based compensation 3,000 39 39
                 
Purchase of treasury units   (3,000) (93) (93)
                 
Adjustment in fair value of derivatives  —  —   —  —  —  —  1,827  1,827
                 
Balances – December 31, 2008 $ 11,665 13,688,152 $ 239,333  850,674 $ (3,688) $ 4,004 $ (4,935) $ 246,379
                 
Net Income 1,664 16,310 980 3,249 22,203
                 
General partner contribution 1,324 1,324
                 
Units issued in connection with Cross acquisition   804,721 16,523 889,444 16,434 32,957
                 
Recognition of beneficial conversion feature (111) 111
                 
Issuance of common units 714,285 20,000 20,000
                 
Cash distributions ($3.00 per unit) (41,064) (2,552) (3,846)  (47,462)
                 
Conversion of subordinated units to common units 850,674 (5,328) (850,674)  5,328
                 
Unit-based compensation 3,000 98 98
                 
Purchase of treasury units (3,000) (78) (78)
                 
Contributions to parent (13,329) (13,329)
                 
Adjustment in fair value of derivatives  —   —  —  —  —  —  2,859  2,859
                 
Balances – December 31, 2009 $ —  16,057,832 $ 245,683  889,444 $ 16,613 $ 4,731 $ (2,076) $ 264,951
                 
Net Income 12,151 3,871 16,022
                 
Recognition of beneficial conversion feature (1,108) 1,108
                 
Follow-on public offerings 2,650,000 78,600 78,600
                 
Redemption of common units (1,000,000) (28,070) (28,070)
                 
General partner contribution 1,089 1,089
                 
Distributions to parent (4,590) (4,590)
                 
Cash distributions ($3.00 per unit) (51,886)  — (4,810)  (56,696)
                 
Unit-based compensation 3,500 113  — 113
                 
Purchase of treasury units  (3,500) (108)  — (108)
                 
Adjustment in fair value of derivatives  —  —  —  —  —  —  3,495   3,495
                 
Balances – December 31, 2010 $ —  17,707,832 $ 250,785  889,444 $ 17,721 $ 4,881 $ 1,419 $ 274,806
                 
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K filed with the SEC on March 2, 2011.
 
 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
       
  Year Ended December 31,
  2010 2009 2008
  (Dollars in thousands)
Net income  $16,022 $22,203 $43,558
Changes in fair values of commodity cash flow hedges  143 14 4,219
Commodity cash flow hedging (gains) losses reclassified to earnings   (617)  (2,646)  3,043
Changes in fair value of interest rate cash flow hedges   (241)  (1,854)  (5,435)
Interest rate cash flow hedging losses reclassified to earnings  4,210 7,345  —
       
Comprehensive income  $19,517 $25,062 $45,385
       
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K filed with the SEC on March 2, 2011.
 
 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
       
  Year Ended December 31,
  2010 2009 2008
  (Dollars in thousands)
Cash flows from operating activities:      
Net income  $16,022 $22,203 $43,558
       
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization  40,656 39,506 34,895
Amortization of deferred debt issue costs  4,814 1,689 1,120
Amortization of discount on notes payable  269
Deferred income taxes   (415)  294  2,442
Gain on disposition or sale of property, plant, and equipment   (136)  (4,996)  (131)
Gain on involuntary conversion of property, plant, and equipment   —   (1,017)  (65)
Equity in earnings of unconsolidated entities   (9,792)  (7,044)  (13,224)
Distributions from unconsolidated entities   —   650  500
Distribution in-kind from unconsolidated entities   10,545  5,826  9,725
Non-cash mark-to-market on derivatives   380  2,526  (2,327)
Other   113  98  39
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:      
Accounts and other receivables   (17,863)  (10,471)  19,753
Product exchange receivables   (4,967)  2,792  3,988
Inventories   (17,106)  7,135  9,398
Due from affiliates   (3,386)  1,560  1,770
Other current assets   (1,444)  2,461  (992)
Trade and other accounts payable   10,918  (15,874)  (14,904)
Product exchange payables   14,366  (2,938)  (13,629)
Due to affiliates   (6,853)  4,133  5,966
Income taxes payable   357  569  (453)
Other accrued liabilities   5,382  871  101
Change in other non-current assets and liabilities   (4,342)  (2,381)  (1,190)
Net cash provided by operating activities   37,518  47,592  86,340
       
Cash flows from investing activities:      
Payments for property, plant, and equipment   (17,907)  (35,846)  (101,450)
Acquisitions, net of cash acquired   (46,352)  (327)  (5,983)
Payments for plant turnaround costs   (1,090)  —   — 
Proceeds from sale of property, plant, and equipment   2,419  19,445  463
Insurance proceeds from involuntary conversion of property, plant and equipment   —   2,224  1,503
Investments in unconsolidated entities   (20,110)  —   — 
Return of investments from unconsolidated entities   2,470  877  1,225
(Contributions to) unconsolidated entities for operations   (748)  (1,048)  (2,379)
Net cash used in investing activities   (81,318)  (14,675)  (106,621)
Cash flows from financing activities:      
Payments of long-term debt   (441,979)  (431,982)  (257,191)
Proceeds from long-term debt   503,856  433,700  327,170
Net proceeds from follow on public offering   78,600  —   — 
General partner contribution   1,089  1,324  — 
Redemption of common units   (28,070)  —   — 
Contributions to parent   —   —   — 
Purchase of treasury units   (108)  (78)  (93)
Proceeds from issuance of common units   —   20,000  — 
Payments of debt issuance costs   (7,468)  (10,446)  (18)
Cash distributions paid   (56,696)  (47,462)  (45,717)
Net cash provided by (used in) financing activities   49,224  (34,944)  24,151
       
Net increase(decrease) in cash   5,424  (2,027)  3,870
Cash at beginning of period   5,956  7,983  4,113
Cash at end of period  $11,380 $5,956 $7,983
       
Supplemental schedule of non-cash investing and financing activities:      
Purchase of assets under capital lease obligations  $ — $7,764 $ —
Issuance of common and subordinated units in connection with Cross acquisition $ — $32,957 $ —
Purchase of assets under note payable  $7,354 $ — $ —
       
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K filed with the SEC on March 2, 2011.
 
 
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
     
  4 th Quarter 4 th Quarter
  2010 2009
  (Dollars in thousands) (except per unit amounts) (Unaudited)
Revenues:    
Terminalling and storage $ 17,055 $ 16,039
Marine transportation 20,184 19,258
Product sales:    
Natural gas services 156,627 140,233
Sulfur  51,133  18,600
Terminalling and storage  17,112  6,731
   224,872  165,564
Total revenues  262,111  200,861
     
Costs and expenses:    
Cost of products sold:    
Natural gas services 147,799 133,849
Sulfur  35,266  8,644
Terminalling and storage  15,778  5,773
  198,843 148,266
Expenses:    
Operating expenses 30,088 32,790
Selling, general and administrative 6,468 6,023
Depreciation and amortization  10,590  10,250
Total costs and expenses  245,989  197,329
Other operating income (loss)  (314)  962
Operating income  15,808  4,494
     
Other income (expense):    
Equity in earnings of unconsolidated entities 2,323 1,817
Interest expense (11,468) (5,408)
Other, net  170  (19)
Total other income (expense)  (8,975)  (3,610)
     
Income tax expense (benefit)    (293)  (1,072)
     
Net income $  6,540 $  1,956
     
General partner's interest in net income¹ $ 1,037 $ 774
Limited partners' interest in net income¹ $  5,226 $ 2,342
Net income per limited partner unit — basic and diluted    $    0.30   $ 0.15
Weighted average limited partner units 17,701,094 15,149,731
     
¹ General and limited partner's interest in net income includes net income of the Cross assets since the date of the acquisition.
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in the Partnership's Annual Report on Form 10-K filed with the SEC on March 2, 2011.
 
 
DISTRIBUTABLE CASH FLOW 
(Dollars in thousands)
(Unaudited Non-GAAP Financial Measure)
     
  Three Months Ended Year Ended
   December 31, 2010 December 31, 2010
     
Net income  $6,540 $16,022
Adjustments to reconcile net income to distributable cash flow:     
Depreciation and amortization  10,590 40,656
Amortization of deferred debt issue costs   1,139  4,814
Amortization of discount on notes payable   88  269
Deferred income taxes   59  (415)
Early extinguishments of interest rate swaps   —   3,850
Distribution equivalents from unconsolidated entities ¹  3,061  13,015
Invested cash in unconsolidated entities ²  (154)  2,469
Equity in earnings of unconsolidated entities   (2,323)  (9,792)
Non-cash mark-to-market on derivatives   3,973  380
Maintenance capital expenditures   (1,181)  (4,653)
Payments for plant turnaround costs   —   (1,090)
Gain on disposition or sale of property, plant and equipment   314  (136)
Unit based compensation   48  113
Distributable cash flow  $22,154 $65,502
 
  Three Months Ended Year Ended
   December 31, 2010 December 31,  2010
¹Distribution equivalents from unconsolidated entities:    
Distributions from unconsolidated entities  $ — $ —
Return of investments from unconsolidated entities  40 2,470
Distributions in-kind from unconsolidated entities  3,021 10,545
Distribution equivalents from unconsolidated entities $3,061 $13,015
²Invested cash in unconsolidated entities:    
Distributions from (contributions to) unconsolidated entities for operations  $ (1,377)  $ (748)
Expansion capital expenditures in unconsolidated entities 1,223 3,217
Invested cash in unconsolidated entities  $ (154) $2,469
CONTACT: Robert D. Bondurant, Executive Vice President
         and Chief Financial Officer
         Martin Midstream GP LLC, the Partnership's general partner
         (903) 983-6200

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