Martin Midstream Partners LP (MMLP), Kilgore, Texas, on Feb. 14 reported that full-year adjusted EBITDA exceeded company expectations by $2.5 million. It also said construction is underway so that a joint venture can produce electronic-level sulfuric acid for the semiconductor industry.
Fourth-quarter adjusted EBITDA for MMLP’s Sulfur Services segment, which includes fertilizer, also exceeded expectations at $7.4 million versus $6 million. The year-ago figure was $5.7 million. MMLP cited increased fertilizer sales and operating fees associated with higher prilled sulfur volume. Despite the uptick, the unit’s fourth-quarter operating income was off at $4.8 million from $9.1 million.
Full-year Sulfur Services adjusted EBITDA was $28.1 million, up from expectations of $26.6 million. The year-ago figure was $30.1 million.
Sulfur Services had full-year operating income of $17.4 million on revenues of $141 million, down from 2022’s $24.2 million and $179.2 million. Fertilizer volumes were up 20%, to 254,000 lt from 2023’s 211,000 lt, while sulfur was up 6%, to 478,000 lt from 452,000 lt.
“Fiscal year 2023 was significant for the partnership as we focused on debt reduction and stability in our earnings by concentrating on our diversified refinery services assets and exiting the butane optimization business,” said Bob Bondurant, President and CEO of Martin Midstream GP LLC, the general partner of the partnership.
“We exceeded our full year adjusted EBITDA guidance by $2.5 million, excluding losses related to the exit of our butane optimization business, and met our long-term goal of adjusted leverage at or below 3.75 times,” he continued. “The partnership had a strong fourth quarter, as each of our four operating segments either met or exceeded guidance, even as we experienced headwinds in the lubricants business and downtime in our marine transportation business due to accelerated regulatory inspections, demonstrating the value of our diversified business model.”
Bondurant noted as well that the company in 2023 started construction on an oleum tower located within its Plainview, Texas, sulfuric acid plant, which will provide feedstock to its joint venture DSM Semichem LLC (GM Oct. 21, 2022) to produce electronic level sulfuric acid (ELSA) for applications in the semiconductor industry.
“We anticipate the project to be complete in the first half of 2024 with a capital spend of $10.4 million this year, which along with our $6.5 million of cash contribution to the joint venture, makes up the majority of our anticipated growth capital expenditures for the year,” he said. “We anticipate this project will begin returning cash flows to the partnership by the fourth quarter of 2024.”
In addition to owning a 10% non-controlling interest in DSM, MMLP will be the exclusive provider of feedstock to the ELSA facility, and its affiliate Martin Transport Inc. will provide ELSA transportation services to end-users. MMLP is partnering with Samsung C&T America Inc. and Dongjin USA Inc. in the venture. The partners said the new facility will incorporate technology currently being utilized to produce ELSA in Taiwan, which exceeds the quality of sulfuric acid being produced in the US.
MMLP-wide fourth-quarter adjusted EBITDA was $29.2 million after giving effect to the May 2023 exit of the butane optimization business, up from the year-ago $28.5 million. The company posted fourth-quarter net income of $500,000 on revenues of $181.1 million, compared to a year-ago net loss of $400,000 and $243.4 million.
Full-year adjusted EBITDA was off at $117.7 million from the year-ago $122 million. The company reported a net loss of $4.5 million on revenues of $798 million, an improvement over the 2023 loss of $10.3 million and $1.02 billion, respectively.
MMLP expects full-year 2024 adjusted EBITDA of approximately $116.1 million, growth capital expenditures of approximately $17.4 million with $16.9 million dedicated to the DSM Semichem jv, and maintenance capital expenditures of $32 million.