Martin Midstream Partners LP reported improved earnings for both the fourth quarter and year 2008. However, giving a nod to the current economic climate, the company said it is cutting back growth capital and is looking to shed non-strategic assets.
MMLP net income more than doubled, going to $16.7 million ($1.08 per lp unit) on sales of $228.4 million for the fourth quarter ending Dec. 31, 2008, from the year-ago $7.7 million ($.49 per unit) and $262.9 million.
“Given the overall challenging economic conditions, I am pleased to say that we performed extremely well in the fourth quarter,” said Ruben Martin, Martin Midstream GL LLC president and CEO. “As expected, our Sulfur Services segment had an outstanding quarter due to the advantageous movement in sulfur prices coupled with favorable contract terms. In addition, our shorebase terminals benefited from our broad-based Gulf Coast footprint as we gained new business as a result of Hurricane Ike in September.”
Fourth-quarter sales from MMLP’s Sulfur Services segment, which includes both sulfur and fertilizer products, doubled to $82.4 million from the year-ago $41.7 million. Martin told analysts that the segment’s operating income, which includes depreciation and amortization, was $16.7 million, up from the third quarter’s $8.1 million. Volumes decreased six percent, while margins increased 81 percent. Although sulfur prices fell $467 per ton in the fourth quarter, Martin said this had a positive impact due to its contract structure with its major customer. This is because for a portion of any quarter’s contract, the customer pays previous quarter pricing. This provides improved margins to MMLP when prices are falling.
For the year, MMLP reported net income of $42.8 million ($2.72 per unit) on sales of $1.2 billion, up from 2007’s $24.9 million ($1.67 per unit) and $765.8 million. Sulfur Services sales almost tripled for the year at $371.9 million, up from 2007’s $131.3 million.
“Looking ahead to 2009, however, we are facing headwinds that were not present in the first half of 2008,” said Martin. “We expect the capital markets to remain closed to us in the near term as a result of the current financial malaise coupled with existing litigation at the parent company of our general partner. Therefore, we have committed to a reduction of growth capital in 2009 to allow for more balance sheet flexibility. In addition, we are pursuing certain asset sales that are non-strategic in nature and represent minimal contribution to the historical cash flow of our company. Despite these challenges, however, we expect our unique diversified business model to continue to perform relatively well in a difficult environment. We continue to remain focused on our existing operations to ensure that we are poised to take advantage of opportunities once these headwinds are behind us.”
Martin is expecting 2009 capital expenditures of $30 million, down from 2008’s $84 million. Assets likely to be sold include a terminal that could generate $24 million in cash, as well as a few tugboats and barges.