Martin Midstream Partners: Life After The Failed Acquisition

2025-01-05 22:17:37 ET

Summary

• To the surprise of investors, the acquisition of Martin Midstream Partners was called off.
• Despite the turbulence this caused to their unit price, at least their underlying cash flow performance was solid during 2023 and 2024.
• Looking ahead into 2025, they have strong prospects for higher distributions thanks to their outlook for relatively significant free cash flow.
• Their units trade with an extremely high forward free cash flow yield of 20%+ on current cost, which I believe presents very desirable value.
• After selling my investment following the now-failed acquisition bid, I will look to re-enter my former position soon.

Background

The turbulence for Martin Midstream Partners ( MMLP ) and their unitholders just does not seem to end. After suffering throughout the COVID-19 crash that started five years ago and ultimately saw their distributions being cut to the bare-bones, unitholders have sat patiently waiting whilst they spent the subsequent years fighting to repay debt. By early 2023, I suspected the worst was over, with my previous article also expressing my hopes that higher distributions were on the horizon. Even though I was correct about 2023 and 2024 not being as bad as the previous years, disappointingly, their distributions remain stuck at the same bare-bones level as we now begin 2025....

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