Martin Midstream Partners LP’s Sulfur Services segment, which includes both sulfur and fertilizer, outperformed during the third quarter ending Sept. 30, 2023. Operating income was $2.74 million on revenues of $32.6 million, up from the year-ago loss of $6.7 million on revenues of $28.9 million.
Third-quarter fertilizer volumes shot up 142%, to 58,000 lt from the year-ago 24,000 lt, while sulfur was up 63%, to 155,000 lt from 95,000 lt. Combined volumes were up 79%, to 213,000 lt from 119,000 lt.
“The partnership’s financial results for the third quarter met guidance as both the Specialty Products and Sulfur Services segments outperformed but were offset by the Transportation segment as certain industrial customers experienced challenges that negatively impacted the ground transportation business,” said MMLP President and CEO Bob Bondurant.
“This segment had adjusted EBITDA of $5.4 million compared to guidance of $3.1 million,” he told analysts, referring to Sulfur Services. “Our fertilizer group had adjusted EBITDA of $2.2 million, exceeding third-quarter guidance by $2.1 million, as we had forecasted a break-even quarter.”
MMLP’s overall fertilizer sales volume exceeded forecast by 13%, Bondurant said, fueled by unforecasted liquid fertilizer sales to the South American export market. “We also had unforecasted dispersal sales to the US markets as our customer base began to perceive the continued decline in dispersal pricing had floored due to upward pressure in sulfur commodity prices, the primary feedstock for dispersal,” he added.
Bondurant said the unforecasted liquid and dispersal sales allowed the
company to improve manufacturing utilization at two of its fertilizer plants,
which also contributed to improved profitability.
“The pure sulfur side of our Sulfur Services segment had adjusted EBITDA of
$3.2 million, which exceeded guidance by $0.2 million,” he noted. “We continue
to see strong sulfur production from our refinery suppliers, which continues to
support this business line with greater volumes and profitability than originally
forecasted.”
Nine-month Sulfur Services operating income was off 17%, to $12.6 million on revenues of $108.6 million, down from the year-ago $15.1 million and $144.9 million, respectively. Combined volumes were 9% ahead of year-ago levels at 544,000 lt from 497,000 lt. Fertilizer volumes were up 13%, to 192,000 lt from 170,000 lt, while sulfur increased 8%, to 352,000 lt from 327,000 lt.
Company-wide, MMLP reported a third-quarter loss of $1.06 million on revenues of $176.7 million, an improvement over the year-ago loss of $28.04 million and $229.3 million, respectively. The company reported a nine-month net loss of $5.07 million on revenues of $616.9 million, up from a year-ago loss of $10 million and $775.5 million, respectively.
“Our full year 2023 adjusted EBITDA outlook, which does not include losses related to the butane optimization business, remains unchanged at $115.4 million, confirming the recent operational restructuring of our refinery services business model to deliver stable and sustainable cash flows,” Bondurant said.
Looking ahead, Bondurant said he anticipates increased earnings related to the joint venture with Samsung C&T America and Dongjin USA, even as delays in the construction of semiconductor manufacturing facilities may result in deferred demand for electronic grade sulfuric acid.
He noted that during the first nine months, MMLP reduced total debt by $53.6 million, utilizing free cash flow and a significant reduction in working capital due to the exit from the butane optimization business.