EXHIBIT 99.1
MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On June 28, 2019, Martin Midstream Partners L.P. (the “Partnership”) completed the previously announced sale of its membership interests in Arcadia Gas Storage, LLC, Cadeville Gas Storage LLC, Monroe Gas Storage, LLC and Perryville Gas Storage LLC (the “Natural Gas Storage Assets”). In consideration of the sale of these assets, the Partnership received cash proceeds of $215.0 million at closing, before transaction fees and expenses.
The following unaudited pro forma condensed consolidated financial information is based upon the historical financial statements of the Partnership, adjusted to reflect the disposition of the Natural Gas Storage Assets. Pro forma financial information is presented as of and for the three months ended March 31, 2019 and the years ended December 31, 2018, 2017, and 2016.
The following unaudited pro forma condensed consolidated financial information of the Partnership should be read in conjunction with the related notes and with the historical consolidated financial statements of the Partnership and the related notes included in previous filings with the Securities and Exchange Commission. The unaudited pro forma condensed consolidated balance sheet reflects the disposition of Natural Gas Storage Assets as if it occurred on March 31, 2019, while the unaudited pro forma condensed consolidated statements of operations give effect to the disposition as if it occurred on January 1, 2016. The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that the Partnership’s management believes are reasonable.
The unaudited pro forma condensed consolidated financial information is presented for informational purposes only and do not purport to be indicative of the actual operating results or financial position that would have occurred if the transaction described above had occurred as presented in such statements. In addition, future results may vary significantly from the results reflected in such statements. For example, this financial information does not reflect any potential earnings from the use of the proceeds from the disposition or reductions of previously allocated corporate costs.
MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2019
(Dollars in thousands)
|
| | | | | | | | | | | | |
| | | | Adjustments for Natural Gas Storage Assets | | |
| | MMLP | | | Pro Forma |
| | Historical | | | Consolidated |
| Assets | | | | | | |
| Cash | $ | 227 |
| | $ | 215,000 |
| A | | $ | 227 |
|
| | | | (215,000 | ) | C | | |
| Accounts and other receivables, less allowance for doubtful accounts of $453 | 77,420 |
| | (3,173 | ) | B | | 74,247 |
|
| Product exchange receivables | 181 |
| | — |
| | | 181 |
|
| Inventories | 70,541 |
| | (1,512 | ) | B | | 69,029 |
|
| Due from affiliates | 27,035 |
| | — |
| | | 27,035 |
|
| Fair value of derivatives | 150 |
| | | | | 150 |
|
| Other current assets | 7,135 |
| | (361 | ) | B | | 6,774 |
|
| Assets held for sale | 5,502 |
| | — |
| | | 5,502 |
|
| Total current assets | 188,191 |
| | (5,046 | ) | | | 183,145 |
|
| | | | | | | |
| Property, plant and equipment, at cost | 1,311,020 |
| | (425,474 | ) | B | | 885,546 |
|
| Accumulated depreciation | (498,138 | ) | | 52,297 |
| B | | (445,841 | ) |
| Property, plant and equipment, net | 812,882 |
| | (373,177 | ) | | | 439,705 |
|
| | | | | | | |
| Goodwill | 17,785 |
| | — |
| | | 17,785 |
|
| Right-of-use assets | 28,109 |
| | (221 | ) | B | | 27,888 |
|
| Deferred income taxes, net | 24,412 |
| | | | | 24,412 |
|
| Other assets, net | 23,689 |
| | (17,533 | ) | B | | 6,156 |
|
| Total assets | $ | 1,095,068 |
| | $ | (395,977 | ) | | | $ | 699,091 |
|
| | | | | | | |
| Liabilities and Partners’ Capital (Deficit) | |
| | |
| | | |
|
| Current installments of long-term debt and finance lease obligations | $ | 406,650 |
| | $ | (215,000 | ) | C | | $ | 191,650 |
|
| Trade and other accounts payable | 76,488 |
| | (1,734 | ) | B | | 74,754 |
|
| Product exchange payables | 14,234 |
| | (201 | ) | B | | 14,033 |
|
| Due to affiliates | 4,103 |
| | (10 | ) | B | | 4,093 |
|
| Income taxes payable | 989 |
| | — |
| | | 989 |
|
| Other accrued liabilities | 22,150 |
| | (669 | ) | E | | 21,481 |
|
| Total current liabilities | 524,614 |
| | (217,614 | ) | | | 307,000 |
|
| | | | | | | |
| Long-term debt, net | 377,976 |
| | — |
| | | 377,976 |
|
| Operating lease liabilities | 19,734 |
| | (111 | ) | B | | 19,623 |
|
| Other long-term obligations | 8,953 |
| | (300 | ) | B | | 8,653 |
|
| Total liabilities | 931,277 |
| | (218,025 | ) | | | 713,252 |
|
| | | | | | | |
| Commitments and contingencies | | | | | |
|
|
| Partners’ capital (deficit) | 163,791 |
| | (177,952 | ) | D | | (14,161 | ) |
| Total partners’ capital (deficit) | 163,791 |
| | (177,952 | ) | | | (14,161 | ) |
| Total liabilities and partners' capital (deficit) | $ | 1,095,068 |
| | $ | (395,977 | ) | | | $ | 699,091 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial information.
MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2019
(Dollars in thousands, except per unit amounts)
|
| | | | | | | | | | | | |
| | | | Adjustments for Natural Gas Storage Assets | | |
| | MMLP | | | Pro Forma |
| | Historical | | | Consolidated |
| Revenues: | | | | | | |
| Terminalling and storage | $ | 23,104 |
| | $ | — |
| | | $ | 23,104 |
|
| Transportation | 37,795 |
| | — |
| | | 37,795 |
|
| Natural gas services | 10,934 |
| | (10,934 | ) | E | | — |
|
| Sulfur services | 2,859 |
| | — |
| | | 2,859 |
|
| Product sales: | | | | | | |
| Natural gas services | 116,474 |
| | — |
| | | 116,474 |
|
| Sulfur services | 28,734 |
| | — |
| | | 28,734 |
|
| Terminalling and storage | 31,067 |
| | — |
| | | 31,067 |
|
| | 176,275 |
| | — |
| | | 176,275 |
|
| Total revenues | 250,967 |
| | (10,934 | ) | | | 240,033 |
|
| | | | | | | |
| Costs and expenses: | |
| | |
| | | |
|
| Cost of products sold: (excluding depreciation and amortization) | |
| | |
| | | |
|
| Natural gas services | 106,190 |
| | — |
| | | 106,190 |
|
| Sulfur services | 19,696 |
| | — |
| | | 19,696 |
|
| Terminalling and storage | 26,871 |
| | — |
| | | 26,871 |
|
| | 152,757 |
| | — |
| | | 152,757 |
|
| Expenses: | |
| | |
| | | |
|
| Operating expenses | 56,656 |
| | (4,806 | ) | E | | 51,850 |
|
| Selling, general and administrative | 11,144 |
| | (945 | ) | E | | 10,199 |
|
| Depreciation and amortization | 18,982 |
| | (4,081 | ) | E | | 14,901 |
|
| Total costs and expenses | 239,539 |
| | (9,832 | ) | | | 229,707 |
|
| | | | | | | |
| Other operating loss | (720 | ) | | — |
| | | (720 | ) |
| Operating income | 10,708 |
| | (1,102 | ) | | | 9,606 |
|
| | | | | | | |
| Other income (expense): | |
| | |
| | | |
|
| Interest expense, net | (13,671 | ) | | 2,817 |
| F | | (10,854 | ) |
| Other, net | 3 |
| | — |
| | | 3 |
|
| Total other expense | (13,668 | ) | | 2,817 |
| | | (10,851 | ) |
| | | | | | | |
| Net loss before taxes | (2,960 | ) | | 1,715 |
| | | (1,245 | ) |
| Income tax expense | (696 | ) | | — |
| | | (696 | ) |
| Net loss | (3,656 | ) | | 1,715 |
| | | (1,941 | ) |
| Less general partner's interest in net loss | 73 |
| | (34 | ) | | | 39 |
|
| Less loss allocable to unvested restricted units | 2 |
| | (1 | ) | | | 1 |
|
| Limited partners' interest in net loss | $ | (3,581 | ) | | $ | 1,680 |
| | | $ | (1,901 | ) |
| | | | | | | |
| Net loss per limited partner unit - basic and diluted | $ | (0.09 | ) | | | | | $ | (0.05 | ) |
| Weighted average limited partner units - basic | 38,681,925 |
| | | | | 38,681,925 |
|
| Weighted average limited partner units - diluted | 38,681,925 |
| | | | | 38,681,925 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial information.
MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2018
(Dollars in thousands, except per unit amounts)
|
| | | | | | | | | | | | |
| | | | Adjustments for Natural Gas Storage Assets | | |
| | MMLP | | | Pro Forma |
| | Historical | | | Consolidated |
| Revenues: | | | | | | |
| Terminalling and storage | $ | 96,204 |
| | $ | — |
| | | $ | 96,204 |
|
| Transportation | 150,121 |
| | — |
| | | 150,121 |
|
| Natural gas services | 52,109 |
| | (52,109 | ) | E | | — |
|
| Sulfur services | 11,148 |
| | — |
| | | 11,148 |
|
| Product sales: | | | | | | |
| Natural gas services | 496,007 |
| | — |
| | | 496,007 |
|
| Sulfur services | 121,388 |
| | — |
| | | 121,388 |
|
| Terminalling and storage | 145,236 |
| | — |
| | | 145,236 |
|
| | 762,631 |
| | — |
| | | 762,631 |
|
| Total revenues | 1,072,213 |
| | (52,109 | ) | | | 1,020,104 |
|
| | | | | | | |
| Costs and expenses: | |
| | |
| | | |
|
| Cost of products sold: (excluding depreciation and amortization) | |
| | |
| | | |
|
| Natural gas services | 449,124 |
| | (21 | ) | E | | 449,103 |
|
| Sulfur services | 83,641 |
| | — |
| | | 83,641 |
|
| Terminalling and storage | 126,562 |
| | — |
| | | 126,562 |
|
| | 659,327 |
| | (21 | ) | | | 659,306 |
|
| Expenses: | |
| | |
| | | |
|
| Operating expenses | 233,140 |
| | (16,958 | ) | E | | 216,182 |
|
| Selling, general and administrative | 42,841 |
| | (3,725 | ) | E | | 39,116 |
|
| Depreciation and amortization | 80,279 |
| | (18,795 | ) | E | | 61,484 |
|
| Total costs and expenses | 1,015,587 |
| | (39,499 | ) | | | 976,088 |
|
| | | | | | | |
| Other operating income | 217 |
| | 824 |
| E | | 1,041 |
|
| Operating income | 56,843 |
| | (11,786 | ) | | | 45,057 |
|
| | | | | | | |
| Other income (expense): | |
| | |
| | | |
|
| Interest expense, net | (52,349 | ) | | 10,583 |
| F | | (41,766 | ) |
| Other, net | 38 |
| | 1 |
| E | | 39 |
|
| Total other expense | (52,311 | ) | | 10,584 |
| | | (41,727 | ) |
| | | | | | | |
| Net income before taxes | 4,532 |
| | (1,202 | ) | | | 3,330 |
|
| Income tax expense | (577 | ) | | — |
| | | (577 | ) |
| Income (loss) from continuing operations | 3,955 |
| | (1,202 | ) | | | 2,753 |
|
| Income from discontinued operations, net of income taxes | 51,700 |
| | — |
| | | 51,700 |
|
| Net income | 55,655 |
| | (1,202 | ) | | | 54,453 |
|
| Less general partner's interest in net income | (882 | ) | | 19 |
| | | (863 | ) |
| Less pre-acquisition income allocated to the general partner | (11,550 | ) | | — |
| | | (11,550 | ) |
| Less income allocable to unvested restricted units | (28 | ) | | 1 |
| | | (27 | ) |
| Limited partners' interest in net income | $ | 43,195 |
| | $ | (1,182 | ) | | | $ | 42,013 |
|
| | | | | | | |
| Net income per limited partner unit - basic and diluted | $ | 1.11 |
| | | | | $ | 1.08 |
|
| Weighted average limited partner units - basic | 38,907,000 |
| | | | | 38,907,000 |
|
| Weighted average limited partner units - diluted | 38,922,678 |
| | | | | 38,922,678 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial information.
MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2017
(Dollars in thousands, except per unit amounts)
|
| | | | | | | | | | | | |
| | | | Adjustments for Natural Gas Storage Assets | | |
| | MMLP | | | Pro Forma |
| | Historical | | | Consolidated |
| Revenues: | | | | | | |
| Terminalling and storage | $ | 99,643 |
| | $ | — |
| | | $ | 99,643 |
|
| Transportation | 135,350 |
| | — |
| | | 135,350 |
|
| Natural gas services | 58,817 |
| | (58,817 | ) | E | | — |
|
| Sulfur services | 10,952 |
| | — |
| | | 10,952 |
|
| Product sales: | | | | | | |
| Natural gas services | 473,860 |
| | (543 | ) | E | | 473,317 |
|
| Sulfur services | 123,732 |
| | — |
| | | 123,732 |
|
| Terminalling and storage | 130,392 |
| | — |
| | | 130,392 |
|
| | 727,984 |
| | (543 | ) | | | 727,441 |
|
| Total revenues | 1,032,746 |
| | (59,360 | ) | | | 973,386 |
|
| | | | | | | |
| Costs and expenses: | |
| | |
| | | |
|
| Cost of products sold: (excluding depreciation and amortization) | |
| | |
| | | |
|
| Natural gas services | 406,851 |
| | (463 | ) | E | | 406,388 |
|
| Sulfur services | 76,119 |
| | — |
| | | 76,119 |
|
| Terminalling and storage | 112,168 |
| | — |
| | | 112,168 |
|
| | 595,138 |
| | (463 | ) | | | 594,675 |
|
| Expenses: | |
| | |
| | | |
|
| Operating expenses | 244,220 |
| | (15,442 | ) | E | | 228,778 |
|
| Selling, general and administrative | 43,114 |
| | (4,034 | ) | E | | 39,080 |
|
| Impairment of long lived assets | 2,225 |
| | — |
| | | 2,225 |
|
| Depreciation and amortization | 87,478 |
| | (22,370 | ) | E | | 65,108 |
|
| Total costs and expenses | 972,175 |
| | (42,309 | ) | | | 929,866 |
|
| | | | | | | |
| Other operating income | 2,014 |
| | 82 |
| E | | 2,096 |
|
| Operating income | 62,585 |
| | (16,969 | ) | | | 45,616 |
|
| | | | | | | |
| Other income (expense): | |
| | |
| | | |
|
| Interest expense, net | (47,770 | ) | | 8,568 |
| F | | (39,202 | ) |
| Other, net | 1,131 |
| | (3 | ) | E | | 1,128 |
|
| Total other expense | (46,639 | ) | | 8,565 |
| | | (38,074 | ) |
| | | | | | | |
| Net income before taxes | 15,946 |
| | (8,404 | ) | | | 7,542 |
|
| Income tax expense | (158 | ) | | — |
| | | (158 | ) |
| Income (loss) from continuing operations | 15,788 |
| | (8,404 | ) | | | 7,384 |
|
| Income from discontinued operations, net of income taxes | 4,128 |
| | — |
| | | 4,128 |
|
| Net income | 19,916 |
| | (8,404 | ) | | | 11,512 |
|
| Less general partner's interest in net income | (343 | ) | | 145 |
| | | (198 | ) |
| Less pre-acquisition income allocated to the general partner | (2,781 | ) | | — |
| | | (2,781 | ) |
| Less income allocable to unvested restricted units | (42 | ) | | 18 |
| | | (24 | ) |
| Limited partners' interest in net income | $ | 16,750 |
| | $ | (8,241 | ) | | | $ | 8,509 |
|
| | | | | | | |
| Net income per limited partner unit - basic and diluted | $ | 0.44 |
| | | | | $ | 0.22 |
|
| Weighted average limited partner units - basic | 38,101,583 |
| | | | | 38,101,583 |
|
| Weighted average limited partner units - diluted | 38,164,901 |
| | | | | 38,164,901 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial information.
MARTIN MIDSTREAM PARTNERS L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2016
(Dollars in thousands, except per unit amounts)
|
| | | | | | | | | | | | |
| | | | Adjustments for Natural Gas Storage Assets | | |
| | MMLP | | | Pro Forma |
| | Historical | | | Consolidated |
| Revenues: | | | | | | |
| Terminalling and storage | $ | 123,056 |
| | $ | — |
| | | $ | 123,056 |
|
| Transportation | 149,869 |
| | — |
| | | 149,869 |
|
| Natural gas services | 61,133 |
| | (61,043 | ) | E | | 90 |
|
| Sulfur services | 10,800 |
| | — |
| | | 10,800 |
|
| Product sales: | | | | | | |
| Natural gas services | 330,192 |
| | (190 | ) | E | | 330,002 |
|
| Sulfur services | 130,258 |
| | — |
| | | 130,258 |
|
| Terminalling and storage | 113,447 |
| | — |
| | | 113,447 |
|
| | 573,897 |
| | (190 | ) | | | 573,707 |
|
| Total revenues | 918,755 |
| | (61,233 | ) | | | 857,522 |
|
| | | | | | | |
| Costs and expenses: | |
| | |
| | | |
|
| Cost of products sold: (excluding depreciation and amortization) | |
| | |
| | | |
|
| Natural gas services | 272,415 |
| | (242 | ) | E | | 272,173 |
|
| Sulfur services | 81,539 |
| | — |
| | | 81,539 |
|
| Terminalling and storage | 96,604 |
| | — |
| | | 96,604 |
|
| | 450,558 |
| | (242 | ) | | | 450,316 |
|
| Expenses: | |
| | |
| | | |
|
| Operating expenses | 266,319 |
| | (15,540 | ) | E | | 250,779 |
|
| Selling, general and administrative | 38,156 |
| | (3,486 | ) | E | | 34,670 |
|
| Impairment of long lived assets | 26,953 |
| | — |
| | | 26,953 |
|
| Impairment of goodwill | 4,145 |
| | — |
| | | 4,145 |
|
| Depreciation and amortization | 93,894 |
| | (25,708 | ) | E | | 68,186 |
|
| Total costs and expenses | 880,025 |
| | (44,976 | ) | | | 835,049 |
|
| | | | | | | |
| Other operating income | 33,234 |
| | 103 |
| E | | 33,337 |
|
| Operating income | 71,964 |
| | (16,154 | ) | | | 55,810 |
|
| | | | | | | |
| Other income (expense): | |
| | |
| | | |
|
| Interest expense, net | (46,101 | ) | | 7,165 |
| F | | (38,936 | ) |
| Other, net | 1,174 |
| | (3 | ) | E | | 1,171 |
|
| Total other expense | (44,927 | ) | | 7,162 |
| | | (37,765 | ) |
| | | | | | | |
| Net income before taxes | 27,037 |
| | (8,992 | ) | | | 18,045 |
|
| Income tax expense | (723 | ) | | — |
| | | (723 | ) |
| Income (loss) from continuing operations | 26,314 |
| | (8,992 | ) | | | 17,322 |
|
| Income from discontinued operations, net of income taxes | 4,649 |
| | — |
| | | 4,649 |
|
| Net income (loss) | 30,963 |
| | (8,992 | ) | | | 21,971 |
|
| Less general partner's interest in net (income) loss | (8,419 | ) | | 184 |
| | | (8,235 | ) |
| Less pre-acquisition income allocated to the general partner | 689 |
| | — |
| | | 689 |
|
| Less (income) loss allocable to unvested restricted units | (90 | ) | | 26 |
| | | (64 | ) |
| Limited partners' interest in net income (loss) | $ | 23,143 |
| | $ | (8,782 | ) | | | $ | 14,361 |
|
| | | | | | | |
| Net income per limited partner unit - basic and diluted | $ | 0.65 |
| | | | | $ | 0.41 |
|
| Weighted average limited partner units - basic | 35,347,032 |
| | | | | 35,347,032 |
|
| Weighted average limited partner units - diluted | 35,375,263 |
| | | | | 35,375,263 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial information.
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
Pro Forma Adjustments and Assumptions:
| |
| (A) | To reflect the Partnership's cash proceeds of $215,000. |
| |
| (B) | To reflect the disposition of the Natural Gas Storage Assets as set forth in the membership interest purchase agreement. |
| |
| (C) | To reflect the application of the Partnership's net cash proceeds from the disposition of the Natural Gas Storage Assets to reduce outstanding borrowings under the revolving credit facility. |
| |
| (D) | To reflect the loss incurred at the time of disposition of approximately $177,952 from the disposition of the Natural Gas Storage Assets. |
|
| | | |
| Net proceeds | $ | 215,000 |
|
| Less: | |
| Carrying value of assets sold | 392,952 |
|
| Impact on equity | $ | (177,952 | ) |
| |
| (E) | To reflect the removal of the operating results of the Natural Gas Storage Assets as if the transaction occurred on January 1, 2016. |
| |
| (F) | To reflect the reduction in interest expense due to repayment of borrowings under the revolving credit facility using the net cash proceeds from the disposition of the Natural Gas Storage Assets. The interest rates used for the pro forma adjustment were 5.24%, 4.92%, 3.99%, and 3.33% for the three months ended March 31, 2019, and years ended December 31, 2018, 2017, and 2016, respectively. The interest rates used were calculated using a weighted average interest rate applicable during the period being presented. |
