EXHIBIT 99.1
MARTIN MIDSTREAM PARTNERS L.P. REPORTS
THIRD QUARTER 2003 RESULTS
KILGORE, Texas, November 10, 2003 /PRNewswire-FirstCall via COMTEX/ --
Martin Midstream Partners L.P. (Nasdaq: MMLP) announced today its results of
operations for the third quarter ended September 30, 2003.
Third Quarter Results
MMLP commenced the reporting of its own financial results on November
6, 2002, the date of its initial public offering. Prior to such date, MMLP's
financial results are reported through the financial statements of its
predecessor.
MMLP reported net income for the third quarter of 2003 of $2.2
million(1), on revenues of $40.2 million, compared to predecessor net income
before income taxes for the third quarter of 2002 of $1.2 million, on revenues
of $33.0 million. MMLP's net income per limited partner unit for the third
quarter of 2003 was $0.30.
MMLP reported net income for the nine months ended September 30, 2003
of $8.3 million*, on revenues of $140.1 million, compared to predecessor net
income before income taxes for the nine months ended September 30, 2002 of $4.9
million, on revenues of $101.3 million. MMLP's net income per limited partner
unit for the nine months ended September 30, 2003 was $1.14.
The Company's distributable cash flow for the third quarter of 2003 was
$3.45 million, or 0.94 times the amount required under its partnership agreement
to cover the minimum quarterly distribution of $3.65 million on its common and
subordinated units for such quarter. The Company's distributable cash flow for
the nine months ended September 30, 2003 was $11.36 million, or 1.04 times the
amount required under its partnership agreement to cover the minimum quarterly
distribution of $10.95 million on its common and subordinated units for such
nine month period. Distributable cash flow is a non-GAAP financial measure which
is explained in greater detail below under "Use of Non-GAAP Financial
Information". The Company 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 MMLP's Consolidated Condensed
Balance Sheets as of September 30, 2003 and December 31, 2002, its Consolidated
and Combined Condensed Statements of Operations for the three months and nine
months ended September 30, 2003 and 2002 and its Consolidated and Combined
Condensed Statements of Cash Flows for the nine months ended September 30, 2003
and 2002. These financial statements should be read in
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(1) Contains no effect of income taxes since MMLP is a non-taxable partnership.
1
conjunction with the information contained in the Company's Quarterly Report on
Form 10-Q, filed with the Securities and Exchange Commission on November 10,
2003.
Ruben Martin, President and Chief Executive Officer of Martin Midstream
GP LLC, the general partner of Martin Midstream Partners, said "Our financial
results were in line with our expectations considering the seasonality of our
business. The third quarter is traditionally the offseason for our LPG and
fertilizer segments."
Recent Events
As previously announced, on October 27, 2003, MMLP signed a definitive
agreement with Tesoro Marine Services LLC ("Tesoro"), a subsidiary of Tesoro
Petroleum Corporation, for the purchase of certain assets associated with
Tesoro's shore based marine activities for $25 million plus the value of
Tesoro's lube oil inventories, estimated to be $1.5 million. The assets to be
acquired include marine transportation assets, terminalling and storage tank
assets, and associated real estate at 14 terminals along the Gulf Coast from
Venice, Louisiana to Corpus Christi, Texas, as well as Tesoro's lube oil sales
and distribution business. Acquisition financing will be provided through an
expansion of MMLP's existing credit facility. Closing of the transaction, which
is subject to a number of conditions as well as the closing of the Midstream
Fuel agreement referenced below, is expected before December 31, 2003.
In a parallel transaction, Midstream Fuel Services LLC signed a
definitive agreement with Tesoro for the purchase of Tesoro's fuel oil
distribution business for $2 million plus the value of Tesoro's diesel fuel
inventories, estimated to be $3.5 million. Midstream Fuel Services LLC is a
subsidiary of privately held Martin Resource Management Corporation ("MRMC"),
the owner of MMLP's general partner. MRMC is acquiring these assets from Tesoro
because fuel oil distribution generates non-qualifying income under Internal
Revenue Service regulations applicable to master limited partnerships such as
MMLP. However, following the closings, pursuant to contractual arrangements
between MRMC and Martin Midstream Partners, MMLP will utilize its midstream
assets to provide transportation and storage services for the fuel oil
distribution business which is being acquired by MRMC. Closing of the
transaction, which is subject to a number of conditions as well as the closing
of the Martin Midstream Partners agreement referenced above, is also expected
before December 31, 2003.
In a separate transaction, on October 27, 2003, MMLP acquired a marine
terminal and associated assets located in Ouachita County, Arkansas from Cross
Oil Refining & Marketing, Inc. ("Cross") for a purchase price of $2 million. At
the same time, Martin Midstream and Cross entered into a five year terminalling
agreement, with two five year renewal terms, whereby Cross will have the right
to use the acquired terminal for the storage of bulk crude oil and/or finished
oil products. MMLP and Cross also entered into a five year marine transportation
agreement, with two five year renewal terms, whereby MMLP will provide two
vessels on a full time basis for the marine transportation of bulk crude oil and
finished oil products owned by Cross or owned by others and in transit for sale
to Cross at its Smackover, Arkansas refinery.
In another separate transaction, on October 16, 2003, Martin Midstream
Partners purchased a push boat and two barges from a third party for a purchase
price of $1 million. These vessels are being used by the Company to transport
petroleum products.
2
As noted above, MMLP intends to finance its proposed acquisition of
marine services assets from Tesoro through an expansion of its existing credit
facility. In connection with that transaction, Martin Midstream has received a
written commitment, which is subject to a number of conditions, from Royal Bank
of Canada under which MMLP's credit facility would be increased from $60 million
to $80 million.
Ruben Martin stated, "We are pleased to announce these transactions and
we believe they will complement our current marine transportation, terminalling
and distribution operations in the Gulf Coast and will be financially accretive
to our unitholders. Post acquisition, we believe we will be one of the largest
shore based service providers and distributors in the Gulf Coast region."
Mr. Martin continued, "Based on currently available information, we
anticipate that these transactions will generate between $23 to $25 million of
additional revenues for MMLP in 2004, including approximately $7 million in our
marine transportation segment and approximately $17 million in our terminalling
segment. The anticipated terminalling revenues are expected to be comprised of
approximately $8 million of fee based terminalling revenues and approximately $9
million from lubricant distribution and sales. Expected operating margins for
the anticipated additional marine transportation and fee based terminalling
revenues should approximate our historical operations. Expected operating
margins for the anticipated additional lube oil sales will be lower than those
applicable to the other revenue streams in our terminalling segment."
Conference Call
A conference call to review the third quarter 2003 results will be held
on Tuesday, November 11, 2003, at 4:00 p.m. Central Time. The conference call
can be accessed by calling (877) 407-9205. An audio replay of the conference
call will be available by calling (877) 660-6853 from 6:00 p.m. Central Time on
November 11, 2003 through 10:59 p.m. Central Time on November 18, 2003. The
access codes for the conference call and the audio replay are as follows:
Account No. 1628; Conference ID No. 81060. The audio replay of the conference
call will also be archived on the Company's website at
http://www.martinmidstream.com.
About Martin Midstream Partners
Martin Midstream Partners provides marine transportation, terminalling,
distribution and midstream logistical services for producers and suppliers of
hydrocarbon products and by-products, specialty chemicals and other liquids. The
Company also manufactures and markets sulfur-based fertilizers and related
products and owns an unconsolidated non-controlling 49.5% limited partnership
interest in CF Martin Sulphur L.P., which operates a sulfur storage and
transportation business. MMLP operates primarily in the Gulf Coast region of the
United States.
Additional information concerning the Company is available on the
Company's website at http://www.martinmidstream.com.
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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. These factors include, but are not
limited to: the ability of MMLP to complete its recently announced acquisition
of a marine services business from a third party; adverse weather conditions;
reliance on its unconsolidated non-controlling interest in CF Martin Sulphur
L.P.; the incurrence of material liabilities that are not fully covered by
insurance; the price volatility and the supply availability of hydrocarbon
products and by-products; restrictions in its debt agreements; the prospects for
future acquisitions and its ability to make future acquisitions; the performance
of recently acquired businesses; the seasonality of its business; the
competition in the industry; changes in regulations on the federal, state and
local level that are applicable to its business; the cost of attracting and
retaining highly skilled personnel; the loss of significant commercial
relationships with Martin Resource Management Corporation ("MRMC"), the owner of
MMLP's general partner; interruption in operations at its facilities; federal
regulations applicable to its marine vessels and regulations effecting the
domestic tank vessel industry; cost reimbursements it is required to pay to
MRMC; conflicts of interest and competition with MRMC; the decisions made by and
the control of its general partner; and a decision by the IRS to tax MMLP as a
corporation. A discussion of these factors, including risks and uncertainties,
is set forth in the Company'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
event, or otherwise.
Use of Non-GAAP Financial Information
MMLP reports its financial results in accordance with generally
accepted accounting principles. However, from time to time, MMLP uses certain
non-GAAP financial measures such as distributable cash flow because 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 MMLP's cash flow after it has satisfied the capital and
related requirements of its operations. Distributable cash flow is not a measure
of financial performance or liquidity under GAAP. It should not be considered in
isolation or as an indicator of MMLP's performance. 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, MMLP 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.
4
The Company 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. MMLP calculates
distributable cash flow as follows: net income (as reported in its Consolidated
and Combined Condensed Statements of Operations), plus depreciation and
amortization and amortization of deferred debt issue costs (as reported in its
Consolidated and Combined Condensed Statements of Cash Flows), less maintenance
capital expenditures (as defined below), plus distributions from unconsolidated
partnership (as reported in its Consolidated and Combined Condensed Statements
of Cash Flows), less equity in earnings from unconsolidated entities (as
reported in its Consolidated and Combined Condensed Statements of Operations).
MMLP's maintenance capital expenditures, along with its expansion capital
expenditures, are components of payments for property, plant, and equipment
included in its Consolidated and Combined Condensed Statements of Cash Flows.
For the three months and nine months ended September 30, 2003, MMLP had $0.1
million and $0.1 million in expansion capital expenditures.
Contacts:
Robert D. Bondurant, Executive Vice President and Chief Financial Officer of
Martin Midstream GP LLC, (903) 983-6200.
5
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
2003 2002
(UNAUDITED) (AUDITED)
------------- ------------
ASSETS
Cash ........................................................................... $ 5,956 $ 1,734
Accounts and other receivables, less allowance for doubtful accounts of $280
and $355 .................................................................. 18,187 20,225
Product exchange receivables ................................................... 2,285 1,040
Inventories .................................................................... 17,248 15,511
Due from affiliates ............................................................ 795 332
Other current assets ........................................................... 352 273
------------ ------------
Total current assets ...................................................... 44,823 39,115
------------ ------------
Property, plant, and equipment, at cost ........................................ 84,691 83,345
Accumulated depreciation ....................................................... (30,934) (27,488)
------------ ------------
Property, plant and equipment, net ........................................ 53,757 55,857
------------ ------------
Goodwill ....................................................................... 2,922 2,922
Investment in unconsolidated entities .......................................... 716 1,081
Other assets, net .............................................................. 1,056 1,480
------------ ------------
................................................................................. $ 103,274 $ 100,455
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Trade and other accounts payable ............................................... $ 11,850 $ 14,007
Product exchange payables ...................................................... 8,478 2,285
Due to affiliates .............................................................. 770 --
Other accrued liabilities ...................................................... 1,278 2,057
------------ ------------
Total current liabilities ................................................. 22,376 18,349
Long-term debt ................................................................. 35,000 35,000
------------ ------------
Total liabilities ......................................................... 57,376 53,349
------------ ------------
Partners' capital .............................................................. 45,898 47,106
Commitments and contingencies...................................................
------------ ------------
$ 103,274 $ 100,455
============ ============
</Table>
These financial statements should be read in conjunction with the accompanying
notes and other information included in MMLP's Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on November 10, 2003.
6
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- -------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
(PARTNERSHIP) (PREDECESSOR) (PARTNERSHIP) (PREDECESSOR)
Revenues:
Marine transportation .............................. $ 6,470 $ 6,176 $ 19,582 $ 17,827
Terminalling ....................................... 1,769 1,349 5,038 3,741
Product sales:
LPG distribution ............................... 26,617 20,838 95,335 59,217
Fertilizer ..................................... 5,384 4,639 20,143 20,557
------------ ------------ ------------ ------------
32,001 25,477 115,478 79,774
------------ ------------ ------------ ------------
Total revenues ............................ 40,240 33,002 140,098 101,342
------------ ------------ ------------ ------------
Costs and expenses:
Cost of products sold:
LPG distribution ............................... 25,728 19,855 92,116 55,606
Fertilizer ..................................... 4,933 4,337 17,579 17,061
------------ ------------ ------------ ------------
30,661 24,192 109,695 72,667
Expenses:
Operating expenses ................................. 4,977 4,707 14,908 14,725
Selling, general and administrative ................ 1,444 1,579 4,576 4,953
Depreciation and amortization ...................... 1,192 1,140 3,515 3,356
------------ ------------ ------------ ------------
Total costs and expenses ....................... 38,274 31,618 132,694 95,701
------------ ------------ ------------ ------------
Operating income ............................... 1,966 1,384 7,404 5,641
------------ ------------ ------------ ------------
Other income (expense):
Equity in earnings of unconsolidated entities ...... 580 766 2,308 2,236
Interest expense ................................... (394) (937) (1,442) (2,976)
Other, net ......................................... 29 21 68 36
------------ ------------ ------------ ------------
Total other income (expense) ................... 215 (150) 934 (704)
------------ ------------ ------------ ------------
Income before income taxes ..................... 2,181 1,234 8,338 4,937
Income taxes ............................................ -- 485 -- 1,818
------------ ------------ ------------ ------------
Net income ......................................... $ 2,181 $ 749 $ 8,338 $ 3,119
============ ============ ============ ============
General partner's interest in net income ................ $ 44 $ 167
Limited partners' interest in net income ................ $ 2,137 $ 8,171
Net income per limited partner unit ..................... $ 0.30 $ 1.14
Weighted average limited partner units .................. 7,153,362 7,153,362
</Table>
These financial statements should be read in conjunction with the accompanying
notes and other information included in MMLP's Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on November 10, 2003.
7
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
2003 2002
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(PARTNERSHIP) (PREDECESSOR)
Cash flows from operating activities:
Net income ............................................................................... $ 8,338 $ 3,119
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ........................................................ 3,515 3,356
Amortization of deferred debt issuance costs ......................................... 355 --
Deferred income taxes ................................................................ -- 2,269
Gain on sale of property, plant, and equipment ....................................... -- (12)
Equity in earnings of unconsolidated entities ........................................ (2,308) (2,236)
Change in current assets and liabilities, excluding effects of acquisitions and
dispositions:
Accounts and other receivables ................................................... 2,038 (1,427)
Product exchange receivables ..................................................... (1,245) (228)
Inventories ...................................................................... (1,737) (5,193)
Due from affiliates .............................................................. (463) --
Other current assets ............................................................. (79) (125)
Trade and other accounts payable ................................................. (2,157) 2,605
Product exchange payables ........................................................ 6,193 2,236
Due to affiliates ................................................................ 770 --
Other accrued liabilities ...................................................... (779) 268
Change in other noncurrent assets, net ............................................... -- (53)
------------ ------------
Net cash provided by operating activities ..................................... 12,441 4,579
------------ ------------
Cash flows from investing activities:
Payments for property, plant, and equipment .............................................. (1,346) (2,216)
Proceeds from sale of property, plant and equipment ...................................... -- 444
Distributions from unconsolidated partnership ............................................ 2,673 --
Cash paid for acquisition ................................................................ -- (103)
------------ ------------
Net cash provided by (used in) investing activities ........................... 1,327 (1,875)
------------ ------------
Cash flows from financing activities:
Payments of long-term debt ............................................................... -- (640)
Cash distributions paid .................................................................. (9,546) --
Borrowings from affiliates ............................................................... -- 35,750
Payments to affiliates ................................................................... -- (37,751)
------------ ------------
Net used in by financing activities ........................................... (9,546) (2,641)
------------ ------------
Net increase in cash and cash equivalents ..................................... 4,222 63
Cash at beginning of period ................................................................... 1,734 62
------------ ------------
Cash at end of period ......................................................................... $ 5,956 $ 125
============ ============
</Table>
These financial statements should be read in conjunction with the accompanying
notes and other information included in MMLP's Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on November 10, 2003.
8
MARTIN MIDSTREAM PARTNERS L.P.
DISTRIBUTABLE CASH FLOW
(DOLLARS IN THOUSANDS)
(UNAUDITED NON-GAAP FINANCIAL MEASURE)
<Table>
<Caption>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2003
------------- -------------
Net income ............................................ $ 2,181 $ 8,338
Adjustments to reconcile net income to
distributable cash flow:
Depreciation and amortization .................... 1,192 3,515
Amortization of deferred debt issue costs ........ 118 355
Maintenance capital expenditures(2) .............. (357) (1,215)
Distributions from unconsolidated partnership .... 891 2,673
Equity in earnings of unconsolidated entities .... (580) (2,308)
------------- -------------
Distributable cash flow ............................... $ 3,445 $ 11,358
============= =============
</Table>
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(2) Maintenance capital expenditures, along with expansion capital expenditures,
are components of payments for property, plant, and equipment set forth in
MMLP's Consolidated and Combined Condensed Statements of Cash Flows. MMLP had
$0.5 million and $1.3 million in capital expenditures for the three months and
nine months ended September 30, 2003.
9