In the 4thQtr statement, President and CEO Ruben Martin summarized, “Our Marine Transportation segment encountered soft market conditions during 2016. Day rates for our assets continue to be weak even as the Partnership successfully reduced operating, general and administrative expenses during the year. Additionally, the Partnership has reduced its fleet size by divesting of non-commercially competitive equipment. This resulted in a non-cash asset impairment of approximately $11.7 million, negatively impacting the Partnership’s net income for 2016.”

On Oct. 20, Martin took action on two fronts. First they announced the sale of their Corpus Christi crude terminal to NuStar Energy. In its own announcement, NuStar said it was paying $93 million for the facility, which has 900,000 bbl (900 kbl) of crude storage and 250 kbl of refined product storage. When combined with NuStar’s adjacent terminal, the Martin terminal raises NuStar capacity on the Corpus Christi Ship Channel to 3,100 kbl of crude storage and 577 kbl refined product storage.

Secondly, Martin slashed the distribution rate from 81.25cts to 50cts a quarter, effective with the 3rdQtr distribution announced that day. Thus, the company was reducing annual payout on the limited partner units from $3.25 to $2.00, a 38.5% reduction. Thus, realized payout during 2016 came to $2.625, and will drop to $2.00 in 2017.

Martin said at the time, “Given our focus on reduction of leverage, we feel this asset sale and distribution right-sizing are prudent moves for the Partnership at this time. Together, these two actions should provide a sound catalyst to reducing our currently elevated cost of capital by de-levering and improving increased distribution coverage to our unitholders. Looking ahead, we anticipate that these efforts will improve the balance sheet and result in estimated distribution coverage of at least 1.20 times in 2017 and 2018.”

The way all this played out in the 4thQtr and full-year results was complicated. The company says it booked a $37 million gain on the sale of the terminal. But it incurred an impairment of $27 million made up of a $15.3 million loss on cancellation of projects under development, and $11.7 million on disposition transportation assets [perhaps barges].

However, the way it all played out on the Marine Transportation bottom line was a $20 million operating loss for the year.

Comparing results in Martin’s three operating segments between 2016 and 2015, we find that operating income for the natural gas services segment was flat at $38.4 million year on year (YOY), and up 26% from $30.6 million in 2014. Op income from sulfur and fertilizer terminal and storage services was flat at $27 million, and up slightly from $25.7 million in 2014. Finally, marine transportation op income went from $3.3 million in 2014 to $4.6 million in 2015 to the $20 million loss in 2016.

Put it all together, and adjusted EBITDA on the year was down 6% from $188.3 to $176.6 million YOY, the sum of segment operating income was down 36% from $70.4 to $45.3 million YOY, and company-wide net income dropped 15% from $37.2 to $31.7 million.