Martin Midstream Partners LP (MMLP) reported net income of $24.9 million ($1.67 per lp unit) on sales of $765.8 million for the year ending Dec. 31, 2007, versus 2006’s $22.2 million ($1.69 per unit) and $576.4 million. Sulfur services revenues were $131.3 million in 2007 versus 2006’s $102.6 million. Operating income from the segment were up at $9.2 million from 2006’s $4.7 million.
MMLP said overall full-year net income was negatively impacted by a $3.9 million non-cash derivative loss.
Increased sulfur services revenues were attributed to a 39 percent increase in sales volume. This was due to a new molten sulfur sales contract negotiated in 2007 and increased demand for sulfur-based products. MMLP said that in 2007 it handled approximately 1.7 million lt of molten sulfur.
MMLP fourth-quarter net income was $7.7 million ($.49 per unit) on sales of $262.9 million versus the year-ago $8.4 million ($.64 per unit) and $149 million, respectively. The fourth quarter saw a $1.9 million non-cash derivative loss.
Fourth-quarter sulfur services revenues were $41.7 million versus the year-ago $22.5 million.
“We are looking forward to a strong 2008 in all our business segments,” said Ruben Martin, president and CEO of Martin Midstream GP LLC, MMLP’s general partner. “We will continue to focus on long term distribution growth as our cash flow should continue to grow as a result of our 2007 growth capital investments of $108 million and our planned growth capital expenditures of $100 million in 2008.” He said major 2007 investments, including MMLP’s sulfuric acid plant, have all exceeded expectations. MMLP is focusing on buying strategic assets at reasonable multiples of cash flow.
MMLP noted that in the fourth quarter 2007 it effected a significant internal reorganization of the sulfur and fertilizer businesses and implemented a new financial reporting system which grouped and reported financial results differently to management for sulfur and sulfur-based fertilizer products formerly reported in separate segments in its financial statements. As a result, the previously reported financial information for the sulfur and fertilizer segments have been combined into one segment known as the sulfur services. The prior-period segment data previously reported in the sulfur and fertilizer segments have been combined and restated in the new reporting segment to conform to the current period’s presentation.
MMLP said in January it acquired 7.8 acres of land, a deep water dock and two sulfuric acid tanks at the Stanolind terminal in Beaumont, from Martin Resource Management (MRM). In connection with this acquisition, it entered into a lease agreement with MRM for use of the sulfuric acid tanks. MRM owns 34.9 percent LP interest in MMLP as well as a 2 percent general partnership interest in all of the company’s distribution rights.
Effective Dec. 28, 2007, MMLP increased its revolving credit facility $75.0 million resulting in a committed $195.0 million revolving credit facility. As of Dec. 31, 2007, MMLP had approximately $95.0 million in revolving credit borrowings and $0.1 million in letters of credit outstanding under the revolving credit facility and $130.0 million under its term loan facility.
In late September 2007, MMLP completed construction of a sulfuric acid production facility at its Plainview, Texas, location. This facility processes molten sulfur to produce approximately 500 st/d of sulfuric acid. It provides the company’s Plainview fertilizer plant with acid and it uses approximately one third of the acid produced by the Plainview facility. The remaining acid is sold to Martin Resource Management, which markets the product to third parties.
MMLP said its annual fertilizer and industrial sulfur products sales have grown from approximately 62,000 tons in 1997 to approximately 286,000 tons in 2007 as a result of acquisitions and internal growth.
In other news, MMLP reported that as a result of an inspection by the U.S. Coast Guard of its tug Martin Explorer at the Freeport Sulfur Dock Terminal in Tampa, Fla., it has been informed that an investigation has been commenced concerning a possible violation of the Act to Prevent Pollution from Ships, 33 USC 1901, et seq., and the MARPOL Protocol 73/78. In connection with this matter, two employees of MRM who provide services to MMLP were served with grand jury subpoenas during the fourth quarter of 2007. MMLP says it is cooperating with the investigation and so far no formal charges, fines and/or penalties have been asserted against it.