KILGORE, Texas -- Martin Midstream Partners LP (NASDAQ: MMLP) on Feb. 29 announced its financial results for the fourth quarter and year ended Dec. 31, 2011.
According to a company news release, the Partnership reported net income for the fourth quarter of 2011 of $2.9 million, or $0.06 per limited partner unit. This compared to net income for the fourth quarter of 2010 of $6.5 million, or $0.30 per limited partner unit. Revenues for the fourth quarter of 2011 were $345.5 million compared to $262.1 million for the fourth quarter of 2010. Fourth quarter 2011 net income was positively impacted by a $0.1 million, or $0.00 per limited partner unit, non-cash derivative gain from certain commodity and interest rate swaps that are not accounted for using hedge accounting. Fourth quarter 2010 net income was negatively impacted by a $4.0 million, or $0.23 per limited partner unit, non-cash derivative loss from certain commodity and interest rate swaps that are not accounted for using hedge accounting.
The Partnership reported net income for the year ended Dec. 31, 2011 of $24.3 million, or $0.92 per limited partner unit. This compared to net income for the year ended Dec. 31, 2010, of $16.0 million, or $0.63 per limited partner unit. Revenues for the year ended Dec. 31, 2011, were $1.2 billion, compared to revenues of $912.1 million for the year ended Dec. 31, 2010. Net income for the year ended Dec. 31, 2011, was positively impacted by a $3.3 million, or $0.17 per limited partner unit, non cash derivative gain from certain commodity and interest rate swaps that are not accounted for using hedge accounting. Net income for the year ended Dec. 31, 2011, was positively impacted by $2.8 million, or $0.14 per limited partner unit, due to payments received in the third quarter for the early extinguishment of interest rate swaps. Net income for the year ended December 31, 2010 was negatively impacted by $4.2 million, or $0.24 per limited partner unit, due to the payment of fees for the early extinguishment of interest rate swaps in the first quarter 2010 ($3.8 million) and non-cash derivative losses from certain commodity and interest rate swaps that are not accounted for using hedge accounting ($0.4 million).
The Partnership's distributable cash flow for the three months ended Dec. 31, 2011, was $16.1 million and for the year ended December 31, 2011 was $62.7 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.
Ruben Martin, president and chief executive officer of MMGP, the general partner of the Partnership, said, "The fourth quarter 2011 demonstrated again the effectiveness of our diverse operations. For the quarter we finished with a distribution coverage ratio of 0.98 times. For the year ended Dec. 31, 2011, our distribution coverage was 0.97 times. While these levels are not where we need to be long-term, we have invested and will continue to invest heavily in future growth. Much of this growth is organic and requires long lead times. Accordingly, we are incurring indebtedness that impacts our coverage during the construction periods of our projects. Since the beginning of the fourth quarter, we have spent approximately $50 million of growth capital yet to realize full cash flow potential. These include previously announced projects such as our Corpus Christi crude oil terminal, the Cross vacuum tower and the Waskom rail rack and capacity expansion. We expect these projects will enhance the cash flow of the Partnership for 2012.
"During the fourth quarter we saw one very strong segment; two segments performed at or near plan and one segment fell short of expectations. As we have seen over time, the portfolio effect of having such a diverse set of operations serves our unit holders well.
"Our Sulfur Services segment was strong during the fourth quarter. Margins were strong in both molten sulfur handling and in our fertilizer division. Sulfur based fertilizer had its best year for the Partnership during 2011. We saw strong demand for our products that continued well beyond the normal seasonal trough we see outside of the growing season.
"Our Terminalling and Storage segments performed close to plan during the quarter. Terminalling and Storage, as our largest and most stable segment, is itself also diverse. For most of 2011, throughput volumes at our shore-based terminals remained challenged by lower overall offshore Gulf of Mexico activity. We believe we are well positioned as drilling permits and rig count slowly begin to gain traction. For the year ended 2011, our specialty terminals division provided a stable offset to the shore-based terminal weakness. Contracts for storage of hard-to-handle products tend to be longer-term in nature providing for more stable, fee-based cash flow. This includes our naphthenic lube oil processing facility that performed well during 2011.
"Our Marine Transportation segment was stable for the quarter and performed near expectations. We saw continued high utilization of our inland fleet, partially offset by slightly weaker conditions for our offshore assets throughout 2011. We expect our inland marine assets to be nearly fully utilized in 2012. Further, we believe liquids off-take from the shale plays like the Eagle Ford will ultimately result in increased demand and stability for offshore tows like ours which have been historically more volatile working in the spot market.
"Our Natural Gas Services segment experienced the most head wind in the fourth quarter. Like others, we are not immune to the current market conditions seen in natural gas. Continued low natural gas prices and migration of producers' capital spending to liquids-rich plays have resulted in underperformance within this segment. In addition, we recently lost a key producer whose volume was dedicated to our Waskom facility. This resulted in our processing levels at Waskom coming in below plan. In this pricing environment, we continue to believe producers will seek liquids-rich production areas which are central to our gathering systems and the Waskom facility."
Included with this press release are the Partnership's consolidated financial statements as of and for the quarter and year ended Dec. 31, 2011, and certain prior periods. These financial statements should be read in conjunction with the information contained in the Partnership's Annual Report on Form 10-K, filed with the SEC on March 5, 2012.
Investors' Conference Call
An investors' conference call to review the fourth quarter and fiscal year results will be held on Thursday, March 1, 2012 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 (855) 859-2056 from 11:00 a.m. Central Time on March 1, 2012 through 10:59 p.m. Central Time on March 15, 2012. The access code for the conference call and the audio replay is Conference ID No. 47532709. The audio replay of the conference call will also be archived on Martin Midstream Partners' website at www.martinmidstream.com.