What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-04-26 compared with 2020-10-26 · 157 added, 399 removed, 322 unchanged (63% of the section changed)

16 unchanged sentences

Martin Resource Management Corporation is an important supplier and customer of ours.

As of September 30, 2020, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units.

As of March 31, 2021, Martin Resource Management Corporation owned 15.8% of our total outstanding common limited partner units.

Furthermore, Martin Resource Management Corporation controls Martin Midstream GP LLC ("MMGP"), our general partner, by virtue of its 51% voting interest in MMGP Holdings, LLC ("Holdings"), the sole member of MMGP.

1 unchanged sentence

Martin Resource Management Corporation directs our business operations through its ownership interests in and control of our general partner.

We entered into an omnibus agreement dated November 1, 2002, with Martin Resource Management Corporation (the "Omnibus Agreement") that governs, among other things, potential competition and indemnification obligations among the parties to the agreement, related party transactions, the provision of general administration and support services by Martin Resource Management Corporation and our use of certain of Martin Resource Management Corporation’s trade names and trademarks.

We entered into the Omnibus Agreement that governs, among other things, potential competition and indemnification obligations among the parties to the agreement, related party transactions, the provision of general administration and support services by Martin Resource Management Corporation and our use of certain of Martin Resource Management Corporation’s trade names and trademarks.

Under the terms of the Omnibus Agreement, the employees of Martin Resource Management Corporation are responsible for conducting our business and operating our assets.

4 unchanged sentences

Significant Recent Developments

Exchange Offer and Cash Tender Offer

On August 12, 2020, we successfully completed our previously announced Exchange Offer and consent solicitation to certain eligible holders of our 2021 Notes and separate but related Cash Tender Offer and consent solicitation to certain other

holders of our 2021 Notes.

Please see Note 6 in Part I of this Form 10-Q for more information about the Exchange Offer and related transactions.

The Partnership continues to prioritize the health and safety of our employees, the businesses we serve, and the communities where we live and work.

To support the safety of all of our employees and operations, precautionary measures were implemented to prevent the COVID-19 virus from spreading in our workplace or the locations we serve, including suspending non-essential travel, limiting the number of employees attending meetings, reducing the number of people at our locations at any one time, monitoring the health of all employees, and implementing work-from-home initiatives for all eligible employees.

Further, we continue to provide awareness training for all of our drivers, vessel crews, blending operators and other affected personnel regarding preventative measures in or around our docks, vessels, and trucks and locations to which they are delivering.

Our communication lines are open 24/7 for the environmental health and safety division, land and marine logistics, and sales and marketing teams.

Due to the economic impacts of the COVID-19 pandemic, the markets have experienced a decline in oil prices in response to oil demand concerns.

These concerns were further exacerbated by the price war among members of OPEC and other non-OPEC producer nations during the first quarter 2020 and global storage considerations.

Travel restrictions and stay-at-home orders implemented by governments in many regions and countries across the globe, including the United States, have greatly impacted the demand for refined products resulting in a significant reduction in refinery utilization.

The COVID-19 pandemic has impacted our 2020 performance to date.

The impact of this outbreak started in February and continued through the third quarter, during which time we have seen unfavorable trends in certain key metrics across several of our business lines compared to recent periods.

We expect to continue to experience the adverse impacts of COVID-19 on our business throughout the remainder of 2020 as a result of an expected continued reduction in refined product demand across the industries we serve.

While the Gulf Coast Region where the majority of our refinery services is focused has reopened their economies, the increase in COVID-19 cases and the impact on refinery utilization due to demand destruction is not clear.

As we look forward in our Terminalling and Storage segment, we continue to expect minimal impact on the storage component of this business due to minimum volume commitment contracts.

However, downside risk remains in our packaged lubricant and grease businesses due to reduced demand from our oil and gas production customers and our construction customers.

In our Transportation segment, reduced demand for refined products and chemicals is expected to continue to impact our marine and land transportation businesses.

In our Natural Gas Liquids segment, our butane optimization business could be impacted by reduced butane production out of third-party refineries as they run at lower utilization rates during the economic shutdown.

Looking forward in our Sulfur Services segment, we believe our molten sulfur business will not be affected as we are paid a monthly logistics fee by our primary customer.

However, we continue to believe there will be reduced overall sulfur volumes from third-party refineries, which will negatively impact our prilling volume, reducing our operating fee revenue.

We expect, however, to continue to receive our reservation fees regardless of the amount of sulfur volume processed through our prillers.

The extent to which the duration and severity of the pandemic impacts our business, results of operations, and financial condition, will depend on future developments, which are highly uncertain and cannot be predicted at this time.

Accordingly, the full impact of COVID-19 will not be reflected in our results of operations and overall financial performance until future periods.

In an effort to conserve capital in the near-term, we are actively considering, planning and executing expense reduction initiatives and have elected to defer certain maintenance and growth capital expenditures until 2021.

Management also assessed the extent to which the current macroeconomic events brought about by COVID-19 and significant declines in refined product demand impacted the valuation of expected credit losses on accounts receivable and certain inventory items or resulted in modifications to any significant contracts.

Ultimately the results of these assessments did not have a material impact on our results as of September 30, 2020.

Winter Storm Uri.

In February 2021, we experienced Winter Storm Uri ("Uri"), an unprecedented storm bringing extreme cold temperatures to Texas and the surrounding areas, which resulted in gulf coast refineries running at reduced rates or halting operations entirely.

The majority of the impact we experienced was centered around our transportation and sulfur services segments where we saw reduced activity due to Uri's impact on Gulf Coast refinery utilization.

Additionally, our Smackover Refinery was down approximately nine days due to Uri, during which time we began preparations for the

previously scheduled turnaround in March of 2021.

This allowed us to minimize the amount of downtime at the Smackover Refinery which was back in operation by March 9, 2021.

We continue to monitor the impacts of the COVID-19 pandemic on all aspects of our business.

Travel restrictions and stay-at-home orders implemented by governments in many regions and countries across the globe, including the U.S., have greatly impacted the demand for refined products resulting in a significant reduction in refinery utilization, which impacted our 2020 performance and continues to impact our marine and land transportation businesses in 2021.

Looking forward, we expect to continue to experience some adverse impacts of COVID-19 in our transportation segment through the middle part of the year but we believe that refinery utilization will continue to increase in the second half of 2021 as a result of widespread vaccinations, government stimulus, and a rebounding economy.

This should ultimately improve refined product demand as people generally return to in-person work and resume travel.

We expect this will positively impact our transportation segment as demand for our services improves.

Overall, the extent to which the duration and severity of the pandemic impacts our business, results of operations, and financial condition, will depend on future developments, which are highly uncertain and cannot be predicted at this time.

Accordingly, it is possible that the impact of the pandemic could have a material adverse effect on the Partnership's results of operations, financial position and cash flows for the year ended December 31, 2021 including the recoverability of long-lived assets and goodwill, the valuation of inventory, and the amount of expected credit losses.

Management considered the impact of the pandemic on the assumptions and estimates used in the preparation of the financial statements.

A sustained reduction in refinery demand and utilization could lead to future asset impairments as well as adversely affect access to capital and financing to be able to meet future obligations.

Management also assessed the extent to which the current macroeconomic events brought about by the pandemic and significant declines in refined product demand impacted the valuation of expected credit losses on accounts receivable and certain inventory items or resulted in modifications to any significant contracts.

Ultimately the results of these assessments did not have a material impact on our results as of March 31, 2021.

Sale of Mega Lubricants.

On December 22, 2020, we entered into an asset purchase and sale agreement to sell certain assets used in connection with our Mega Lubricants shore-based terminals business ("Mega Lubricants") to John W.

Stone Oil Distributor, LLC ("Stone Oil") for $22.4 million.

Mega Lubricants is engaged in the business of blending, manufacturing and delivering various marine application lubricants, sub-sea specialty fluids, and proprietary commercial and industrial products.

The transaction closed on December 22, 2020.

The proceeds from the transaction were used to reduce outstanding borrowings under our revolving credit facility.

Subsequent Events

Quarterly Distribution.

On October 21, 2020, we declared a quarterly cash distribution of $0.005 per common unit for the third quarter of 2020, or $0.020 per common unit on an annualized basis, which will be paid on November 13, 2020 to unitholders of record as of November 6, 2020.

On April 21, 2021, we declared a quarterly cash distribution of $0.005 per common unit for the first quarter of 2021, or $0.020 per common unit on an annualized basis, which will be paid on May 14, 2021 to unitholders of record as of May 7, 2021.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on the historical consolidated and condensed financial statements included elsewhere herein.

We prepared these financial statements in conformity with United States generally accepted accounting principles ("U.S.

We prepared these financial statements in conformity with U.S.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

3 unchanged sentences

Changes in these estimates could materially affect our financial position, results of operations or cash flows.

See the "Critical Accounting Policies and Estimates" section in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 2, "Significant Accounting Policies" in Notes to Consolidated Financial Statements included within our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 14, 2020.

Our Relationship with Martin Resource Management Corporation

7 unchanged sentences

• supplying employees and services for the operation of our business;

• operating, solely for our account, the asphalt facilities in each of Hondo, South Houston and Port Neches, Texas and Omaha, Nebraska.

• operating, solely for our account, the asphalt facilities in Omaha, Nebraska, Port Neches, Texas, and South Houston, Texas

We are and will continue to be closely affiliated with Martin Resource Management Corporation as a result of the following relationships.

8 unchanged sentences

The Omnibus Agreement requires us to reimburse Martin Resource Management Corporation for all direct expenses it incurs or payments it makes on our behalf or in connection with the operation of our business.

We reimbursed Martin Resource Management Corporation for $29.9 million of direct costs and expenses for the three months ended September 30, 2020 compared to $34.8 million for the three months ended September 30, 2019.

We reimbursed Martin Resource Management Corporation for $94.5 million of direct costs and expenses for the nine months ended September 30, 2020 compared to $105.4 million for the nine months ended September 30, 2019.

We reimbursed Martin Resource Management Corporation for $30.5 million of direct costs and expenses for the three months ended March 31, 2021 compared to $34.4 million for the three months ended March 31, 2020.

There is no monetary limitation on the amount we are required to reimburse Martin Resource Management Corporation for direct expenses.

In addition to the direct expenses, under the Omnibus Agreement, we are required to reimburse Martin Resource Management Corporation for indirect general and administrative and corporate overhead expenses.

For the three months ended September 30, 2020 and 2019, the conflicts committee of the board of directors of the general partner of the Partnership (the "Conflicts Committee") approved reimbursement amounts of $4.2 million and $4.2 million, respectively.

In each of the nine months ended September 30, 2020 and 2019, the Conflicts Committee approved reimbursement amounts of $12.5 million and $12.6 million, respectively.

In each of the three months ended March 31, 2021 and 2020, the Conflicts Committee approved reimbursement amounts of $3.5 million and $4.1 million, respectively.

The Conflicts Committee will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.

5 unchanged sentences

For a more comprehensive discussion concerning the Omnibus Agreement and the other agreements that we have entered into with Martin Resource Management Corporation, please refer to "Item 13.

Certain Relationships and Related Transactions, and Director Independence" set forth in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 14, 2020.

Certain Relationships and Related Transactions, and Director Independence" set forth in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 3, 2021.

We have been and anticipate that we will continue to be both a significant customer and supplier of products and services offered by Martin Resource Management Corporation.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 23% and 23% of our total costs and expenses during the three months ended September 30, 2020 and 2019, respectively.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 23% and 20% of our total costs and expenses during the nine months ended September 30, 2020 and 2019, respectively.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 19% and 21% of our total costs and expenses during the three months ended March 31, 2021 and 2020, respectively.

Correspondingly, Martin Resource Management Corporation is one of our significant customers.

Our sales to Martin Resource Management Corporation accounted for approximately 14% and 14% of our total revenues for the three months ended September 30, 2020 and 2019, respectively.

Our sales to Martin Resource Management Corporation accounted for approximately 13% and 12% of our total revenues for both the nine months ended September 30, 2020 and 2019, respectively.

Our sales to Martin Resource Management Corporation accounted for approximately 10% and 11% of our total revenues for both the three months ended March 31, 2021 and 2020, respectively.

For a more comprehensive discussion concerning the agreements that we have entered into with Martin Resource Management Corporation, please refer to "Item 13.

Certain Relationships and Related Transactions, and Director Independence" set forth in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 14, 2020.

Certain Relationships and Related Transactions, and Director Independence" set forth in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 3, 2021.

Approval and Review of Related Party Transactions

1 unchanged sentence

If the board of directors of our general partner is involved in the approval process, it determines whether to refer the matter to the Conflicts Committee of our general partner's board of directors, as constituted under our limited partnership agreement.

If a matter is referred to the Conflicts

Committee, it obtains information regarding the proposed transaction from management and determines whether to engage independent legal counsel or an independent financial advisor to advise the members of the committee regarding the transaction.

If a matter is referred to the Conflicts Committee, it obtains information regarding the proposed transaction from management and determines whether to engage independent legal counsel or an independent financial advisor to advise the members of the committee regarding the transaction.

If the Conflicts Committee retains such counsel or financial advisor, it considers such advice and, in the case of a financial advisor, such advisor’s opinion as to whether the transaction is fair and reasonable to us and to our unitholders.

3 unchanged sentences

These include:

(1) net income before interest expense, income tax expense, and depreciation and amortization ("EBITDA"), (2) adjusted EBITDA and (3) distributable cash flow.

(1) net income before interest expense, income tax expense, and depreciation and amortization ("EBITDA"), (2) adjusted EBITDA, (3) distributable cash flow and (4) adjusted free cash flow.

Our management views these measures as important performance measures of core profitability for our operations and the ability to generate and distribute cash flow, and as key components of our internal financial reporting.

1 unchanged sentence

EBITDA and Adjusted EBITDA .

We define Adjusted EBITDA as EBITDA before unit-based compensation expenses, gains and losses on the disposition of property, plant and equipment, impairment and other similar non-cash adjustments.

Certain items excluded from EBITDA and adjusted EBITDA are significant components in understanding and assessing an entity's financial performance, such as cost of capital and historical costs of depreciable assets.

We have included information concerning EBITDA and adjusted EBITDA because they provide investors and management with additional information to better understand the following:

We have included information concerning EBITDA and adjusted EBITDA because it provides investors and management with additional information to better understand the following:

financial performance of our assets without regard to financing methods, capital structure or historical cost basis;

2 unchanged sentences

Our method of computing adjusted EBITDA may not be the same method used to compute similar measures reported by other entities.

The economic substance behind our use of adjusted EBITDA is to measure the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness and make distributions to our unit holders.

Distributable Cash Flow.

Distributable cash flow is a significant performance measure used by our management and by external users of our financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay our unitholders.

We define Distributable Cash Flow as Adjusted EBITDA less cash paid for interest, cash paid for income taxes, maintenance capital expenditures, and plant turnaround costs.

Distributable cash flow is also an important financial measure for our unitholders since it serves as an indicator of our success in providing a cash return on investment.

1 unchanged sentence

Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.

EBITDA, adjusted EBITDA and distributable cash flow should not be considered alternatives to, or more meaningful than, net income, cash flows from operating activities, or any other measure presented in accordance with U.S.

Adjusted Free Cash Flow.

Adjusted free cash flow is defined as distributable cash flow less growth capital expenditures and principle payments under finance lease obligations.

Adjusted free cash flow is a significant performance measure used by our management and by external users of our financial statements and represents how much cash flow a business generates during a specified time period after accounting for all capital expenditures, including expenditures for growth and maintenance capital projects.

We believe that adjusted free cash flow is important to investors, lenders, commercial banks and research analysts since it reflects the amount of cash available for reducing debt, investing in additional capital projects, paying distributions, and similar matters.

Our calculation of adjusted free cash flow may or may not be comparable to similarly titled measures used by other entities.

EBITDA, adjusted EBITDA, distributable cash flow and adjusted free cash flow should not be considered alternatives to, or more meaningful than, net income, cash flows from operating activities, or any other measure presented in accordance with U.S.

Our method of computing these measures may not be the same method used to compute similar measures reported by other entities.

Reconciliation of Non-GAAP Financial Measures

The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and nine months ended September 30, 2020 and 2019.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

(in thousands) (in thousands)

Net income (loss) $ (10,819) $ 13,250 $ (4,207) $ (181,588)

Loss from discontinued operations, net of income taxes

— — — 179,466

Income (loss) from continuing operations (10,819) 13,250 (4,207) (2,122)

The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three months ended March 31, 2021 and 2020.

Reconciliation of EBITDA, Adjusted EBITDA, Distributable Cash Flow and Adjusted Free Cash Flow

Three Months Ended

(in thousands)

Net income $ 2,511 $ 8,815

Interest expense, net 12,953 9,925

1 unchanged sentence

Depreciation and amortization 14,434 15,239

EBITDA from Continuing Operations 17,773 40,469 75,406 85,077

(Gain) loss on sale of property, plant and equipment, net (22) (16,302) 153 (13,949)

Gain on involuntary conversion of property, plant and equipment (4,522) — (4,522) —

EBITDA 30,120 34,326

Loss on sale of property, plant and equipment, net 760 190

Unrealized mark-to-market on commodity derivatives (219) (669)

Transaction costs associated with acquisitions — — — 224

Non-cash insurance related accruals — — 250 500

Lower of cost or market adjustments — 335

Loss on exchange of senior unsecured notes 8,516 — 8,516 —

Gain on repurchase of senior unsecured notes — (3,484)

Unit-based compensation 240 346

Adjusted EBITDA from Continuing Operations 22,534 22,018 77,483 72,794

Adjusted EBITDA 30,901 31,044

Interest expense, net (12,953) (9,925)

5 unchanged sentences

Maintenance capital expenditures (4,071) (3,026)

Distributable Cash Flow from Continuing Operations $ 8,065 $ 8,291 $ 38,894 $ 21,027

Loss from discontinued operations, net of income taxes $ — $ — $ — $ (179,466)

Depreciation and amortization — — — 8,161

EBITDA from Discontinued Operations — — — (171,305)

Loss on sale of property, plant and equipment, net — — — 178,781

Non-cash insurance related accruals — — — 3,213

EBITDA and Adjusted EBITDA from Discontinued Operations — — — 10,689

Maintenance capital expenditures — — — (912)

Distributable Cash Flow from Discontinued Operations $ — $ — $ — $ 9,777

Distributable Cash Flow $ 12,811 $ 18,297

Expansion capital expenditures $ (830) $ (5,346)

Principal payments under finance lease obligations (2,431) (1,864)

Adjusted Free Cash Flow $ 9,550 $ 11,087

Results of Operations

The results of operations for the three and nine months ended September 30, 2020 and 2019 have been derived from our consolidated and condensed financial statements.

The results of operations for the three months ended March 31, 2021 and 2020 have been derived from our consolidated and condensed financial statements.

We evaluate segment performance on the basis of operating income, which is derived by subtracting cost of products sold, operating expenses, selling, general and administrative expenses, and depreciation and amortization expense from revenues.

The following table sets forth our operating revenues and operating income by segment for the three and nine months ended September 30, 2020 and 2019.

The following table sets forth our operating revenues and operating income by segment for the three months ended March 31, 2021 and 2020.

The results of operations for these interim periods are not necessarily indicative of the results of operations which might be expected for the entire year.

2 unchanged sentences

These items, including interest expense and indirect selling, general and administrative expenses, are discussed following the comparative discussion of our results within each segment.

Three Months Ended September 30, 2020 Compared to the Three Months Ended September 30, 2019

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

after Eliminations Operating Income (Loss) Operating Income (Loss) Intersegment Eliminations Operating

Income (Loss)

Three Months Ended September 30, 2020 (in thousands)

Terminalling and storage $ 48,188 $ (1,823) $ 46,365 $ 6,975 $ (549) $ 6,426

Transportation 35,712 (3,774) 31,938 1,127 (3,800) (2,673)

Sulfur services 21,880 — 21,880 5,580 1,535 7,115

Natural gas liquids 52,350 — 52,350 1,854 2,814 4,668

Indirect selling, general and administrative

— — — (4,523) — (4,523)

Total $ 158,130 $ (5,597) $ 152,533 $ 11,013 $ — $ 11,013

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

after Eliminations Operating Income (Loss) Operating Income (Loss) Intersegment Eliminations Operating

Income (Loss)

Three Months Ended September 30, 2019 (in thousands)

Terminalling and storage $ 55,376 $ (1,630) $ 53,746 $ 5,576 $ (183) $ 5,393

Transportation 44,631 (4,420) 40,211 4,446 (4,446) —

Sulfur services 23,072 — 23,072 291 2,093 2,384

Natural gas liquids 60,871 — 60,871 19,663 2,536 22,199

Indirect selling, general and administrative

— — — (4,515) — (4,515)

Total $ 183,950 $ (6,050) $ 177,900 $ 25,461 $ — $ 25,461

Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019

Three Months Ended March 31, 2021 Compared to the Three Months Ended March 31, 2020

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

1 unchanged sentence

Income (Loss)

Nine Months Ended September 30, 2020 (in thousands)

Three Months Ended March 31, 2021 (in thousands)

Terminalling and storage $ 39,834 $ (1,595) $ 38,239 $ 3,430 $ (1,122) $ 2,308

8 unchanged sentences

Income (Loss)

Nine Months Ended September 30, 2019 (in thousands)

Three Months Ended March 31, 2020 (in thousands)

Terminalling and storage $ 51,134 $ (1,726) $ 49,408 $ 1,029 $ (271) $ 758

6 unchanged sentences

Terminalling and Storage Segment

Comparative Results of Operations for the Three Months Ended September 30, 2020 and 2019

Three Months Ended September 30, Variance Percent Change

(In thousands, except BBL per day)

Services $ 22,512 $ 22,806 $ (294) (1) %

Products 25,676 32,570 (6,894) (21) %

Total revenues 48,188 55,376 (7,188) (13) %

Cost of products sold 20,381 27,439 (7,058) (26) %

Operating expenses 12,064 12,947 (883) (7) %

Selling, general and administrative expenses 1,537 1,724 (187) (11) %

Depreciation and amortization 7,294 7,690 (396) (5) %

6,912 5,576 1,336 24 %

Other operating income, net 1 — 1

Gain on involuntary conversion of property, plant and equipment 62 — 62

Operating income $ 6,975 $ 5,576 $ 1,399 25 %

Shore-based throughput volumes (guaranteed minimum) (gallons) 20,000 20,000 — — %

Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — %

Services revenues.

Services revenues decreased $0.3 million, of which $1.1 million was primarily a result of expiring capital recovery fees at our Smackover refinery and decreased fees related to a crude pipeline gathering rate adjustment.

Offsetting this decrease, a $0.5 million increase at our shore-based terminals was primarily a result of $1.0 million in contract termination fees and $0.2 million in space rental income, offset by decreased throughput revenue of $0.6 million.

In addition, an increase of $0.3 million was a result of increased throughput revenue at our specialty terminals.

Products revenues.

A 4% decrease in sales volumes combined with a 13% decrease in average sales price at our blending and packaging facilities resulted in a $4.4 million decrease to products revenues.

In addition, a 30% decrease in sales volumes combined with a 10% decrease in average sales price at our shore-based terminals resulted in a $2.5 million decrease to products revenues.

Cost of products sold.

A 4% decrease in sales volumes combined with a 20% decrease in average cost per gallon at our blending and packaging facilities resulted in a $4.8 million decrease in cost of products sold.

In addition, a 30% decrease in sales volumes combined with a 10% decrease in average cost per gallon at our shore-based terminals resulted in a $2.3 million decrease in cost of products sold.

Operating expenses.

Operating expenses decreased $0.9 million as a result of decreased compensation expense of $0.5 million, repairs and maintenance of $0.2 million, $0.1 million in wharfage fees, and outside services of $0.1 million.

Selling, general and administrative expenses.

Selling, general and administrative expenses decreased $0.2 million primarily as a result of decreased professional fees.

Depreciation and amortization.

The decrease in depreciation and amortization is the result of assets becoming fully depreciated.

Other operating income, net.

Other operating income, net represents gains and losses from the disposition of property, plant and equipment.

Gain on involuntary conversion of property, plant and equipment.

The $0.1 million gain is due to insurance proceeds received related to structural damage of terminalling assets during a weather incident at our Neches Terminal in May of 2019.

Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019

Nine Months Ended September 30, Variance Percent Change

Comparative Results of Operations for the Three Months Ended March 31, 2021 and 2020

Three Months Ended March 31, Variance Percent Change

(In thousands, except BBL per day)

7 unchanged sentences

3,496 4,080 (584) (14) %

Other operating income (loss), net (3,053) 17 (3,070) (18,059) %

Gain on involuntary conversion of property, plant and equipment 62 — 62

Other operating loss, net (66) (3,051) 2,985 98 %

Operating income $ 3,430 $ 1,029 $ 2,401 233 %

2 unchanged sentences

Services revenues.

Services revenue decreased $4.5 million, of which $2.8 million was primarily a result of expiring capital recovery fees at our Smackover refinery and decreased fees related to a crude pipeline gathering rate adjustment.

In addition, a decrease of $1.3 million was primarily a result of decreased throughput at our shore-based terminals combined with a decrease of $0.3 million as a result of decreased throughput rates at our specialty terminals.

Services revenue decreased $2.2 million, of which $1.5 million was primarily a result of the disposition of the consigned lube business as part of the Mega Lubricants sale as well as decreases in throughput revenue of $0.2 million at our shore-based terminals.

In addition, revenue at the Smackover refinery decreased $0.5 primarily due to the expiration of the capital recovery fee.

Products revenues.

A 16% decrease in sales volumes combined with a 16% decrease in average sales price at our shore-based terminals resulted in a $7.2 million decrease in products revenues.

In addition, a 6% decrease in sales volumes combined with a 5% decrease in average sales price at our blending and packaging facilities resulted in a $7.9 million decrease to products revenues.

The disposition of our Mega Lubricants business resulted in a $7.7 million decrease in product revenues at our shore-based terminals.

In addition, a 4% decrease in average sales price combined with a 3% decrease in sales volumes at our blending and packaging facilities resulted in a $1.4 million decrease to products revenues.

Cost of products sold.

A 16% decrease in sales volumes combined with a 17% decrease in average cost per gallon at our shore-based terminals resulted in a $6.8 million decrease in cost of products sold.

In addition, a 6% decrease in sales volumes combined with a 9% decrease in average cost per gallon at our blending and packaging facilities resulted in an $8.5 million decrease in cost of products sold.

The disposition of our Mega Lubricants business resulted in an $8.4 million decrease in cost of products sold at our shore-based terminals.

In addition, an 8% decrease in average cost per gallon combined with a 3% decrease in sales volumes at our blending and packaging facilities resulted in a $1.7 million decrease in cost of products sold.

Operating expenses.

Operating expenses decreased $2.3 million primarily as a result of decreased compensation expense of $0.5 million, utilities of $0.4 million, operating supplies of $0.4 million, chemicals of $0.3 million, professional fees of $0.2 million, and other operating expenses of $0.2 million across our terminals.

Operating expenses decreased $0.2 million primarily as a result of decreased compensation expense of $0.4 million, and repairs and maintenance of $0.1 million, offset by an increase in utilities of $0.3 million.

Selling, general and administrative expenses.

Selling, general and administrative expenses remained relatively consistent.

Selling, general and administrative expenses decreased $0.2 million primarily as a result of decreased legal fees.

Depreciation and amortization.

The decrease in depreciation and amortization is primarily the result of assets becoming fully depreciated.

Other operating income (loss), net.

Other operating income (loss), net represents gains and losses from the disposition of property, plant and equipment.

Gain on involuntary conversion of property, plant and equipment.

The $0.1 million gain is due to insurance proceeds received related to structural damage of terminalling assets during a weather incident at our Neches Terminal in May of 2019.

The decrease in depreciation and amortization is primarily the result of asset disposals, offset by recent capital expenditures.

Other operating loss, net.

Other operating loss, net represents gains and losses from the disposition of property, plant and equipment.

Transportation Segment

Comparative Results of Operations for the Three Months Ended September 30, 2020 and 2019

Three Months Ended September 30, Variance Percent Change

(In thousands)

Revenues $ 35,712 $ 44,631 $ (8,919) (20) %

Operating expenses 28,144 34,281 (6,137) (18) %

Selling, general and administrative expenses 2,050 2,177 (127) (6) %

Depreciation and amortization 4,412 3,877 535 14 %

1,106 4,296 (3,190) (74) %

Other operating income, net 21 150 (129) (86) %

Operating income $ 1,127 $ 4,446 $ (3,319) (75) %

Marine Transportation Revenues .

Inland revenue decreased $3.5 million, primarily related to decreased utilization and transportation rates.

Offshore revenue decreased $0.8 million primarily due to a decrease in transportation rates.

Additionally, ancillary revenue (primarily fuel) decreased $0.8 million.

Land Transportation Revenues.

Freight revenue decreased $2.0 million.

Miles decreased 9%, resulting in a $2.2 million decrease.

Offsetting this decrease, transportation rates increased 1%, resulting in a $0.2 million increase.

Additionally, fuel surcharge revenue decreased $1.8 million.

Operating expenses .

The decrease in operating expenses is primarily a result of decreases in compensation expense of $2.3 million, pass through expenses (primarily fuel) of $1.9 million, repairs and maintenance of $1.1 million, lease expense of $0.3 million, and regulatory taxes and related expenses of $0.3 million.

Selling, general and administrative expenses .

Selling, general and administrative expenses remained relatively consistent.

Depreciation and amortization .

Depreciation and amortization increased as a result of recent capital expenditures offset by asset disposals.

Other operating income, net.

Other operating income, net represents gains from the disposition of property, plant and equipment.

Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019

Nine Months Ended September 30, Variance Percent Change

Comparative Results of Operations for the Three Months Ended March 31, 2021 and 2020

Three Months Ended March 31, Variance Percent Change

(In thousands)

5 unchanged sentences

Other operating loss, net (4) (1,208) 1,204 100 %

Operating income $ 4,071 $ 11,290 $ (7,219) (64) %

Operating income (loss) $ (1,337) $ 2,389 $ (3,726) (156) %

Marine Transportation Revenues.

Inland revenues decreased $6.7 million, primarily related to a decrease in tows, utilization and transportation rates.

In addition, offshore revenue decreased $1.5 million primarily due to a decrease in transportation rates.

In addition, offshore revenue decreased $0.9 million primarily due to a decrease in utilization.

Additionally, ancillary revenue (primarily fuel) decreased $0.8 million.

Land Transportation Revenues.

Freight revenue decreased $8.1 million primarily due to an 11% decrease in miles.

Freight revenue decreased primarily due to a 10% decrease in miles resulting in a $2.5 million decrease, offset by a 2% increase in transportation rates resulting in a $0.5 million increase.

Additionally, fuel surcharge decreased $0.7 million.

Operating expenses.

The decrease in operating expenses is primarily a result of decreases in pass through expenses (primarily fuel) of $5.4 million, compensation expense of $5.2 million, repairs and maintenance of $1.9 million, lease expense of $0.9 million, and regulatory taxes and related expenses of $0.5 million.

The decrease in operating expenses is primarily a result of decreases in compensation expense of $3.2 million, pass through expenses (primarily fuel) of $0.9 million, outside services of $0.7 million, repairs and maintenance of $0.4 million, and other operating expenses of $0.4 million.

Selling, general and administrative expenses.

Selling, general and administrative expenses remained relatively consistent.

Selling, general and administrative expenses decreased primarily due to decreased compensation expense.

Depreciation and amortization.

Depreciation and amortization increased as a result of recent capital expenditures, offset by asset disposals.

Depreciation and amortization decreased as a result of recent disposals and assets being fully depreciated.

Other operating loss, net.

1 unchanged sentence

Sulfur Services Segment

Comparative Results of Operations for the Three Months Ended September 30, 2020 and 2019

Three Months Ended September 30, Variance Percent Change

(In thousands)

Services $ 2,915 $ 2,859 $ 56 2 %

Products 18,965 20,213 (1,248) (6) %

Total revenues 21,880 23,072 (1,192) (5) %

Cost of products sold 14,141 15,807 (1,666) (11) %

Operating expenses 2,501 2,883 (382) (13) %

Selling, general and administrative expenses 1,166 1,260 (94) (7) %

Depreciation and amortization 2,953 2,831 122 4 %

1,119 291 828 285 %

Other operating income (loss), net 1 — 1

Gain on involuntary conversion of property, plant and equipment 4,460 — 4,460

Operating income $ 5,580 $ 291 $ 5,289 1,818 %

Sulfur (long tons) 154 180 (26) (14) %

Fertilizer (long tons) 44 59 (15) (25) %

Total sulfur services volumes (long tons) 198 239 (41) (17) %

Services revenues.

Services revenues increased slightly as a result of renegotiation of contract terms effective January 2020.

Products revenues.

Products revenues decreased $3.9 million as a result of a 17% decrease in sales volumes, primarily attributable to a 25% decrease in fertilizer volumes.

A 13% increase in average sales price resulted in an offsetting $2.7 million increase in products revenues.

Cost of products sold.

A 17% decrease in sales volumes decreased our cost of products sold by $2.9 million.

An 8% increase in average cost of products sold per ton resulted in an offsetting $1.2 million increase to our cost of products sold.

Margin per ton increased $5.93, or 32%.

Operating expenses.

Operating expenses decreased $0.4 million.

Marine fuel expense, assist tugs, marine repairs and maintenance, and insurance claims each decreased $0.1 million.

Selling, general and administrative expenses.

Selling, general and administrative expenses remained relatively consistent.

Depreciation and amortization.

Depreciation and amortization increased as a result of recent capital expenditures.

Gain on involuntary conversion of property, plant and equipment.

The $4.5 million gain is due to insurance proceeds received related to structural damage of our ship-loader assets during a weather incident at our Neches Terminal in May of 2019.

Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019

Nine Months Ended September 30, Variance Percent Change

Comparative Results of Operations for the Three Months Ended March 31, 2021 and 2020

Three Months Ended March 31, Variance Percent Change

(In thousands)

7 unchanged sentences

6,442 4,525 1,917 42 %

Other operating income (loss), net 6,777 (1) 6,778 677,800 %

Gain on involuntary conversion of property, plant and equipment 4,460 — 4,460

Other operating income, net — 6,771 (6,771) (100) %

Operating income $ 6,442 $ 11,296 $ (4,854) (43) %

3 unchanged sentences

Services revenues.

Services revenues increased $0.2 million as a result of renegotiation of contract terms effective January 2020.

Services revenues increased slightly as a result of a contractually prescribed, index-based fee adjustment.

Products revenues.

Products revenue decreased $9.9 million as a result of a 12% decrease in average sales price.

A 4% increase in sales volumes, primarily attributable to a 7% increase in sulfur volumes, resulted in an offsetting increase of $2.8 million.

Products revenue increased $23.4 million as a result of a 92% rise in average sulfur services sales prices.

Products revenues decreased $16.9 million due to a 35% decrease in sales volumes, primarily related to a 60% decr ease in sulfur volumes.

Cost of products sold.

A 22% decrease in average cost of products sold per ton reduced cost of products sold by $13.4 million.

A 4% increase in sales volumes resulted in an offsetting increase in cost of products sold of $1.9 million.

A 104% increase in product cost impacted cost of products sold by $17.5 million, resulting from a rise in commodity prices.

A 35% decrease in sales volumes resulted in an offsetting decrease in cost of products sold of $11.9 million.

Margin per ton increased $22.79, or 68%.

Operating expenses.

Operating expenses increased as a result of a $0.3 million increase in insurance premiums and claims, a $0.4 million increase in outside towing, and a $0.2 million increase in harbor and agency fees.

Offsetting was a decrease of $0.1 million in both marine fuel and assist tugs.

Operating expenses decreased as a result of a decrease in marine fuel of $0.4 million, a decrease in assist tugs of $0.2 million, decreased outside towing of $0.2 million , and decreased repairs and maintenance of $0.1 million.

Selling, general and administrative expenses.

1 unchanged sentence

Depreciation and amortization.

Depreciation and amortization increased as a result of recent capital expenditures.

Other operating income (loss), net.

Other operating income, net increased $2.7 million as a result of business interruption recoveries related to downtime associated with the Neches ship-loader insurance claim received in the first quarter of 2020.

An additional $4.1 million increase is related to a net gain from the disposition of property, plant and equipment.

Gain on involuntary conversion of property, plant and equipment.

The $4.5 million gain is due to insurance proceeds received related to structural damage of our ship-loader assets during a weather incident at our Neches Terminal in May of 2019.

Natural Gas Liquids Segment

Comparative Results of Operations for the Three Months Ended September 30, 2020 and 2019

Three Months Ended September 30, Variance Percent Change

(In thousands)

Products Revenues $ 52,350 $ 60,871 $ (8,521) (14) %

Cost of products sold 47,723 54,273 (6,550) (12) %

Operating expenses 1,039 1,624 (585) (36) %

Selling, general and administrative expenses 1,117 852 265 31 %

Depreciation and amortization 617 611 6 1 %

1,854 3,511 (1,657) (47) %

Other operating income, net — 16,152 (16,152) (100) %

Operating income $ 1,854 $ 19,663 $ (17,809) (91) %

NGL sales volumes (Bbls) 2,572 1,905 667 35 %

Products Revenues.

Our average sales price per barrel decreased $11.60, or 36%, resulting in a decrease to revenues of $22.1 million.

The decrease in average sales price per barrel was a result of a decrease in market prices.

Sales volumes increased 35%, increasing revenues by $13.6 million.

Cost of products sold .

Our average cost per barrel decreased $9.94, or 35%, decreasing cost of products sold by $18.9 million.

The decrease in average cost per barrel was a result of a decrease in market prices.

The increase in sales volume of 35% resulted in a $12.4 million increase to cost of products sold.

Our margins decreased $1.67 per barrel, or $2.0 million during the period.

Operating expenses .

Operating expenses decreased $0.6 million related to the divestiture of assets and the elimination of the associated expenses.

Selling, general and administrative expenses .

Selling, general and administrative expenses increased primarily due to increased compensation expense.

Depreciation and amortization.

Depreciation and amortization remained relatively consistent.

Depreciation and amortization decreased as a result of decreased amortization of turnaround costs.

Other operating income, net.

Other operating income, net represents gains and losses from the disposition of property, plant and equipment.

Comparative Results of Operations for the Nine Months Ended September 30, 2020 and 2019

Nine Months Ended September 30, Variance Percent Change

Other operating income, net decreased $2.7 million as a result of business interruption recoveries related to downtime associated with the Neches ship-loader insurance claim received in the first quarter of 2020.

An additional $4.1 million decrease is related to a net gain from the disposition of property, plant and equipment during first quarter 2020.

Natural Gas Liquids Segment

Comparative Results of Operations for the Three Months Ended March 31, 2021 and 2020

Three Months Ended March 31, Variance Percent Change

(In thousands)

5 unchanged sentences

11,760 5,260 6,500 124 %

Other operating income (loss), net (2) 16,168 (16,170) (100) %

Other operating loss, net (690) (2) (688) (34,400) %

Operating income $ 11,070 $ 5,258 $ 5,812 111 %

1 unchanged sentence

Products Revenues.

Our average sales price per barrel decreased $13.73, or 37%, resulting in a decrease to revenues of $86.1 million.

The decrease in average sales price per barrel was a result of a decrease in market prices.

Sales volumes increased 11%, increasing revenues by $16.2 million.

Our average sales price per barrel increased $12.10, or 36%, resulting in an increase to revenues of $29.6 million.

The increase in average sales price per barrel was the result of an increase in market prices.

Sales volumes decreased 12%, decreasing revenues by $13.7 million.

Cost of products sold .

Our average cost per barrel decreased $14.20, or 40%, decreasing cost of products sold by $89.0 million.

The decrease in average cost per barrel was a result of a decrease in market prices.

The increase in sales volume of 11% resulted in a $14.6 million increase to cost of products sold.

Our margins increased $0.47 per barrel, or $4.5 million, during the period.

Our average cost per barrel increased $8.10, or 27%, increasing cost of products sold by $19.8 million.

The increase in average cost per barrel was the result of an increase in market prices.

The decrease in sales volume of 12% resulted in a $11.5 million decrease to cost of products sold.

Our margins increased $4.01 per barrel, or 123%, during the period.

Operating expenses .

Operating expenses decreased $1.9 million related to the divestiture of assets and the elimination of the associated expenses.

Operating expenses remained relatively consistent.

Selling, general and administrative expenses .

Selling, general and administrative expenses remained relatively consistent.

Selling, general and administrative increased $1.1 million as a result of increased compensation expense.

Depreciation and amortization.

3 unchanged sentences

Interest Expense, Net

Comparative Components of Interest Expense, Net for the Three Months Ended September 30, 2020 and 2019

Three Months Ended September 30, Variance Percent Change

(In thousands)

Revolving loan facility $ 2,200 $ 3,566 $ (1,366) (38) %

Senior notes 8,528 6,851 1,677 24 %

Amortization of deferred debt issuance costs 1,683 1,080 603 56 %

Amortization of debt discount (38) (77) 39 51 %

Other 526 390 136 35 %

Finance leases 61 164 (103) (63) %

Capitalized interest (17) — (17)

Interest income — (1) 1 100 %

Total interest expense, net $ 12,943 $ 11,973 $ 970 8

Comparative Components of Interest Expense, Net for the Nine Months Ended September 30, 2020 and 2019

Nine Months Ended September 30, Variance Percent Change

Comparative Components of Interest Expense, Net for the Three Months Ended March 31, 2021 and 2020

Three Months Ended March 31, Variance Percent Change

(In thousands)

6 unchanged sentences

Capitalized interest — (4) 4 100 %

Interest income — (91) 91 100 %

Total interest expense, net $ 12,953 $ 9,925 $ 3,028 31 %

Indirect Selling, General and Administrative Expenses

Three Months Ended September 30, Variance Percent Change Nine Months Ended September 30, Variance Percent Change

2020 2019 2020 2019

(In thousands) (In thousands)

Three Months Ended March 31, Variance Percent Change

(In thousands)

Indirect selling, general and administrative expenses

$ 3,919 $ 4,372 $ (453) (10) %

Indirect selling, general and administrative expenses remained consistent for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Indirect selling, general and administrative expenses decreased for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 primarily due to transaction expenses incurred in the first quarter of 2019 related to the acquisition of MTI of $0.2 million and decreased professional fees of $0.2 million.

Indirect selling, general and administrative expenses decreased for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to a decrease in the indirect expenses allocated from Martin Resource Management.

Martin Resource Management Corporation allocates to us a portion of its indirect selling, general and administrative expenses for services such as accounting, legal, treasury, clerical, billing, information technology, administration of insurance, engineering, general office expense and employee benefit plans and other general corporate overhead functions we share with Martin Resource Management Corporation retained businesses.

This allocation is based on the percentage of time spent by Martin Resource Management Corporation personnel that provide such centralized services.

GAAP also permits other methods for

allocation of these expenses, such as basing the allocation on the percentage of revenues contributed by a segment.

GAAP also permits other methods for allocation of these expenses, such as basing the allocation on the percentage of revenues contributed by a segment.

The allocation of these expenses between Martin Resource Management Corporation and us is subject to a number of judgments and estimates, regardless of the method used.

2 unchanged sentences

Under the Omnibus Agreement, we are required to reimburse Martin Resource Management Corporation for indirect general and administrative and corporate overhead expenses.

The Conflicts Committee of our general partner approved the following reimbursement amounts during the three and nine months ended September 30, 2020 and 2019:

Three Months Ended September 30, Variance Percent Change Nine Months Ended September 30, Variance Percent Change

2020 2019 2020 2019

(In thousands) (In thousands)

The Conflicts Committee of our general partner approved the following reimbursement amounts during the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, Variance Percent Change

(In thousands)

Conflicts Committee approved reimbursement amount

5 unchanged sentences

Set forth below is a description of our cash flows for the periods indicated.

Cash Flows - Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

The following table details the cash flow changes between the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30, Variance Percent Change

Cash Flows - Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

The following table details the cash flow changes between the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, Variance Percent Change

(In thousands)

5 unchanged sentences

Net cash provided by operating activities.

The decrease in net cash provided by operating activities for the nine months ended September 30, 2020 includes a $7.8 million decrease in net cash received from discontinued operating activities, a decrease in operating results of $2.1 million, an unfavorable variance in working capital of $2.2 million, and an unfavorable variance in other non-current assets and liabilities of $0.1 million.

Offsetting this decrease was and a $5.7 million increase in other non-cash charges.

Net cash provided by (used in) investing activities.

Net cash provided by (used in) investing activities for the nine months ended September 30, 2020 decreased $188.6 million.

Cash received from discontinued investing activities decreased $209.2 million.

Net proceeds from the sale of property, plant and equipment decreased $13.9 million offset by $7.2 million in proceeds received from the involuntary conversion of property, plant and equipment.

A decrease in cash used of $3.6 million resulted from higher payments for capital expenditures and plant turnaround costs in 2019 as well as a decrease of $23.7 million in cash used resulting from assets acquired from MTI in January of 2019.

The decrease in net cash provided by operating activities for the three months ended March 31, 2021 includes a decrease in operating results of $6.3 million and an unfavorable variance in working capital of $39.0 million.

Offsetting this decrease was a $3.7 million increase in other non-cash charges and a favorable variance in other non-current assets and liabilities of $0.6 million.

Net cash used in investing activities.

Net cash used in investing activities for the three months ended March 31, 2021 decreased $2.1 million.

A decrease in cash used of $8.2 million resulted from higher payments for capital expenditures and plant turnaround costs in 2020.

Net proceeds from the sale of property, plant and equipment decreased $4.3 million and proceeds received from the involuntary conversion of property, plant and equipment decreased $1.8 million.

Net cash used in financing activities.

Net cash used in financing activities for the nine months ended September 30, 2020 decreased primarily as a result of a $102.4 million decrease in cash used related to excess purchase price over the carrying value of acquired assets in common control transactions during 2019.

Additionally, net payments of long-term borrowings decreased $54.7 million and cash distributions paid decreased $34.1 million.

Costs associated with our credit facility decreased $0.7 million.

Net cash used in financing activities for the three months ended March 31, 2021 decreased primarily as a result of a $36.1 million decrease in net payments of long-term borrowings.

Further, cash distributions paid decreased $2.3 million and costs associated with our credit facility decreased $0.1 million.

Offsetting was an increase in payments of finance lease obligations of $0.6 million.

Total Contractual Obligations

A summary of our total contractual cash obligations as of September 30, 2020, is as follows:

A summary of our total contractual cash obligations as of March 31, 2021, is as follows:

Payments due by period

2 unchanged sentences

Revolving credit facility $ 176,000 $ — $ 176,000 $ — $ —

7.25% senior unsecured notes, due 2021 28,790 28,790 — — —

11.5% senior secured notes, due 2025 291,970 — — 291,970 —

8 unchanged sentences

Letters of Credit .

At September 30, 2020, we had outstanding irrevocable letters of credit in the amount of $17.4 million, which were issued under our revolving credit facility.

At March 31, 2021, we had outstanding irrevocable letters of credit in the amount of $20.4 million, which were issued under our revolving credit facility.

Off Balance Sheet Arrangements.

2 unchanged sentences

Revolving Credit Facility

At September 30, 2020, we maintained a $300.0 million revolving credit facility, after giving effect to the Credit Facility Amendment.

The revolving credit facility matures on August 31, 2023.

Please see Note 6 in Part I of this Form 10-Q for more information about the Credit Facility Amendment.

As of September 30, 2020, we had $205.0 million outstanding under the revolving credit facility and $17.4 million of outstanding irrevocable letters of credit, leaving a maximum amount available to be borrowed under our credit facility for future revolving credit borrowings and letters of credit of $77.6 million.

After giving effect to our then current borrowings, outstanding letters of credit and the financial covenants contained in our revolving credit facility, we had the ability to borrow approximately $77.6 million in additional amounts thereunder as of September 30, 2020.

At March 31, 2021, we maintained a $300.0 million revolving credit facility that matures on August 31, 2023.

As of March 31, 2021, we had $176.0 million outstanding under the revolving credit facility and $20.4 million of outstanding irrevocable letters of credit, leaving a maximum available to be borrowed under our credit facility for future revolving credit borrowings and letters of credit of $103.6 million.

After giving effect to our then current borrowings, letters of credit to the extent drawn, and the financial covenants contained in our revolving credit facility, we had the ability to borrow approximately $29.3 million in additional amounts thereunder as of March 31, 2021.

The revolving credit facility is used for ongoing working capital needs and general partnership purposes, and to finance permitted investments, acquisitions and capital expenditures.

During the nine months ended September 30, 2020, the level of outstanding draws on our credit facility has ranged from a low of $170.0 million to a high of $223.0 million.

During the three months ended March 31, 2021, the level of outstanding draws on our credit facility has ranged from a low of $148.0 million to a high of $201.0 million.

The credit facility is guaranteed by substantially all of our subsidiaries.

1 unchanged sentence

We may prepay all amounts outstanding under the credit facility at any time without premium or penalty (other than customary LIBOR breakage costs), subject to certain notice requirements.

The credit facility requires mandatory prepayments of amounts outstanding thereunder with excess cash (as defined in the revolving credit facility) that exceeds $25.0 million and the net proceeds of certain asset sales, equity issuances and debt incurrences.

The credit facility requires mandatory prepayments of amounts outstanding thereunder with excess cash that exceeds $25.0 million and the net proceeds of certain asset sales, equity issuances and debt incurrences.

If we sell assets and receive net cash proceeds in excess of $25.0 million, the commitments of the lenders under the revolving credit facility will be reduced by $25.0 million.

Indebtedness under the credit facility bears interest at our option at the Eurodollar Rate (the British Bankers Association LIBOR Rate) plus an applicable margin, with a floor for LIBOR of 1%) or the Base Rate (the highest of the Federal Funds Rate plus 0.50%, the 30-day Eurodollar Rate plus 1.0%, or the administrative agent’s prime rate) plus an

applicable margin.

We pay a per annum fee on all letters of credit issued under the credit facility, and we pay a commitment fee per annum on the unused revolving credit availability under the credit facility.

The letter of credit fee, the commitment fee and the applicable margins for our interest rate vary quarterly based on our Total Leverage Ratio (as defined in the Credit Facility Amendment, being generally computed as the ratio of total funded debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) and are as follows as of September 30, 2020:

Indebtedness under the credit facility bears interest at our option at the Eurodollar Rate (LIBOR), with a floor for LIBOR of 1%, plus an applicable margin, or the Base Rate (the highest of the Federal Funds Rate plus 0.50%, the 30-day Eurodollar Rate plus 1.0%, or the administrative agent’s prime rate) plus an applicable margin.

We pay a per annum fee on all letters of credit issued under the credit facility, and we pay a commitment fee per annum on the unused revolving credit commitments under the credit facility.

The letter of credit fee, the commitment fee and the applicable margins for our interest rate vary quarterly based on our Total Leverage Ratio (as defined in the credit facility, being generally computed as the ratio of total funded debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) and are as follows as of March 31, 2021:

Leverage Ratio

7 unchanged sentences

Greater than or equal to 5.00 to 1.00 3.00 % 4.00 % 4.00 %

At September 30, 2020, the applicable margin for revolving loans that are LIBOR loans ranges from 2.75% to 4.00%, with a 1% floor for LIBOR, and the applicable margin for revolving loans that are base prime rate loans ranges from 1.75% to 3.00%.

The applicable margin for LIBOR borrowings at September 30, 2020 is 3.75%.

The applicable margin for LIBOR borrowings at March 31, 2021 is 4.00%, with a 1% floor for LIBOR.

The credit facility includes financial covenants that are tested on a quarterly basis, based on the rolling four quarter period that ends on the last day of each fiscal quarter.

5 unchanged sentences

(v) sell, transfer, assign or convey assets;

(vi) repurchase our equity, make distributions (including a limit on our ability to make quarterly distributions to unitholders in excess of $0.005 per unit unless our Total Leverage Ratio (as defined in the Credit Facility Amendment) is below 3.75:1:00) and certain other restricted payments;

(vi) repurchase our equity, make distributions (including a limit on our ability to make quarterly distributions to unitholders in excess of $0.005 per unit unless our Total Leverage Ratio (as defined in the credit facility) is below 3.75:1:00) and certain other restricted payments;

(vii) change the nature of our business;

2 unchanged sentences

(x) make certain amendments to the Omnibus Agreement and our material agreements;

(xi) make capital expenditures;

and (xii) permit our joint ventures to incur indebtedness or grant certain liens.

and (xi) permit our joint ventures to incur indebtedness or grant certain liens.

The credit facility contains customary events of default, including, without limitation:

15 unchanged sentences

In addition, if any event of default exists under our credit facility, the lenders may commence foreclosure or other actions against the collateral.

2025 Senior Notes and Indenture

The 2025 Notes were issued to eligible holders that participated in the Exchange Offer pursuant to an indenture, dated as of August 12, 2020 (the "2025 Notes Indenture"), among the Issuers, the guarantors party thereto, U.S.

Bank National Association, as trustee, and U.S.

Bank National Association as collateral trustee.

The 2025 Notes are guaranteed on a full, joint and several basis by each of the Partnership’s existing domestic restricted subsidiaries (other than Finance Corp.

and Talen’s Marine & Fuel, LLC) (the "Guarantors") and will be guaranteed in the future by any domestic restricted subsidiaries, in each case, if and so long as such entity guarantees (or is an obligor with respect to) any other indebtedness for borrowed money of either the Issuers or any Guarantor.

The 2025 Notes and the guarantees thereof are secured on a third-priority basis by a lien on substantially all assets of the Issuers and the Guarantors, subject to the terms of an intercreditor agreement (the "Intercreditor Agreement") and certain other exceptions.

The 2025 Notes and the guarantees thereof are, pursuant to the Intercreditor Agreement, secured by third-priority liens and thus are effectively junior to any obligations under the Credit Facility, which are secured on a "first-lien" basis, and effectively junior to any obligations under the 2024 Notes Indenture (as defined below), which are secured on a "second-lien" basis, in each case, to the extent of the value of the collateral securing such first-lien obligations, second-lien obligations and third-lien obligations.

The 2025 Notes and the guarantees thereof rank effectively senior to all of the Partnership’s existing and future unsecured indebtedness (including the 2021 Notes) to the extent of the value of the collateral securing the 2025 Notes and such guarantees.

Maturity and Interest

The 2025 Notes will mature on February 28, 2025.

Interest on the 2025 Notes accrues at a rate of 11.50% per annum and is payable semi-annually in cash in arrears on February 15 and August 15 of each year, commencing on February 15, 2021.

At any time prior to August 12, 2022, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount of the 2025 Notes issued under the 2025 Notes Indenture at a redemption price of 111.5% of the principal amount of the 2025 Notes, plus accrued and unpaid interest to the redemption date, with an amount of cash equal to the net cash proceeds of certain equity offerings.

On or after August 12, 2022, the Issuers may redeem all or part of the 2025 Notes at redemption prices equal to 100%, plus accrued and unpaid interest up to, but not including, the redemption date.

In addition, at any time prior to August 12, 2022, the Issuers may redeem all or a part of the 2025 Notes at a redemption price equal to 100% of the principal amount of the 2025 Notes to be redeemed plus a make-whole premium, plus accrued and unpaid interest up to, but not including, the redemption date.

Also, if at any time the Total Leverage Ratio (as defined in the Credit Facility Amendment) is greater than 3.75:1:00, Issuers will use 25% of any excess cash flow (as defined in the 2025 Notes Indenture) to make an offer to all holders of the 2025 Notes to purchase the 2025 Notes at 100% of the principal amount thereof;

provided, however, the Issuers, in their sole discretion, can allocate up to 100% of excess cash flow to offer to repurchase the 2025 Notes at 100% of the principal amount thereof, subject to restrictions in the revolving credit facility on prepaying junior debt.

Certain Covenants and Events of Default

The 2025 Notes Indenture contains customary covenants restricting the Partnership’s ability and the ability of its restricted subsidiaries to:

(i) pay distributions on, purchase or redeem its common units or purchase or redeem its subordinated debt;

(ii) incur or guarantee additional indebtedness or issue certain kinds of preferred equity securities;

(iii) create or incur certain liens securing indebtedness;

(iv) sell assets, including dispositions of the collateral securing the 2025 Notes;

(v) consolidate, merge or transfer all or substantially all of its assets;

(vi) enter into transactions with affiliates;

and (vii) enter into agreements that restrict distributions or other payments from its restricted subsidiaries to the Partnership.

The 2025 Notes Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the 2025 Notes Indenture, U.S.

Bank National Association, as trustee, or the holders of at least 25% in aggregate principal amount of the then outstanding 2025 Notes may declare all of the 2025 Notes to be due and payable immediately and subject to the terms of the Intercreditor Agreement, foreclose upon the collateral for the 2025 Notes.

2024 Senior Notes and Indenture

The 2024 Notes were issued to eligible holders that participated in the Exchange Offer pursuant to an indenture, dated as of August 12, 2020 (the "2024 Notes Indenture"), among the Issuers, the guarantors party thereto, U.S.

Bank National Association, as trustee, and U.S.

Bank National Association as collateral trustee.

The 2024 Notes are guaranteed on a full, joint and several basis by the Guarantors and will be guaranteed in the future by any domestic restricted subsidiaries, in each case, if and so long as such entity guarantees (or is an obligor with respect to) any other indebtedness for borrowed money of either the Issuers or any Guarantor.

The 2024 Notes and the guarantees thereof are secured on a second-priority basis by a lien on substantially all assets of the Issuers and the Guarantors, subject to the terms of the Intercreditor Agreement and certain other exceptions.

The 2024 Notes and the guarantees thereof are, pursuant to the Intercreditor Agreement, secured by second-priority liens and thus are effectively junior to any obligations under the Credit Facility, which are secured on a "first-lien" basis, and are effectively senior to the obligations under the 2025 Notes Indenture, which are secured on a "third-lien" basis, in each case, to the extent of the value of the collateral securing such first-lien, second-lien obligations and third-lien obligations.

The 2024 Notes and the guarantees thereof rank effectively senior to all of the Issuers’ existing and unsecured indebtedness (including the 2021 Notes) to the extent of the value of the collateral securing the 2024 Notes and such guarantees.

Maturity and Interest

The 2024 Notes will mature on February 29, 2024.

Interest on the 2024 Notes accrues at a rate of 10.00% per annum and will be payable semi-annually in cash in arrears on February 15 and August 15 of each year, commencing on February 15, 2021.

At any time prior to August 12, 2021, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount of the 2024 Notes issued under the 2024 Notes Indenture at a redemption price of 110% of the principal amount of the 2024 Notes, plus accrued and unpaid interest to the redemption date, with an amount of cash equal to the net cash proceeds of certain equity offerings.

On or after August 12, 2021, the Issuers may redeem all or part of the 2024 Notes at redemption prices (expressed as percentages of the principal amount) equal to (i) 102% for the twelve-month period beginning on August 12, 2021;

(ii) 101% for the twelve-month period beginning on August 12, 2022 and (iii) 100% at any time thereafter, plus accrued and unpaid interest up to, but not including, the redemption date.

In addition, at any time prior to August 12, 2021, the Issuers may redeem all or a part of the 2024 Notes at a redemption price equal to 100% of the principal amount of the 2024 Notes to be redeemed plus a make-whole premium, plus accrued and unpaid interest up to, but not including, the redemption date.

Certain Covenants and Events of Default

The 2024 Notes Indenture contains covenants that are substantially the same as those contained in the 2025 Notes Indenture described above.

2021 Senior Notes

For a description of our 7.25% senior unsecured notes due 2021, see "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations — Description of Our Long-Term Debt" in our Annual Report on Form 10-K for the year ended December 31, 2019, as amended.

In connection with the completion of the Exchange Offer and consent solicitation to certain eligible holders of the 2021 Notes, on August 12, 2020, we entered into a supplemental indenture to eliminate substantially all of the restrictive covenants in the indenture governing the 2021 Notes.

Senior Secured Notes due 2025 and 2024

For a description of our 11.50% senior secured second lien notes due 2025 and 10.00% senior secured 1.5 lien notes due 2024, see "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Description of Our Long-Term Debt" in our Annual Report on Form 10-K for the year ended December 31, 2020.

Capital Resources and Liquidity

Historically, we have generally satisfied our working capital requirements and funded our debt service obligations and capital expenditures with cash generated from operations and borrowings under our revolving credit facility.

At September 30, 2020, we had cash and cash equivalents of $1.9 million and available borrowing capacity of $77.6 million under our revolving credit facility with $205.0 million of borrowings outstanding.

On March 31, 2021, we had cash and cash equivalents of $1.1 million and available borrowing capacity of $103.6 million under our revolving credit facility with $176.0 million of borrowings outstanding.

After giving effect to our current borrowings, outstanding letters of credit and the financial covenants contained in our revolving credit facility, we had the ability to borrow approximately $29.3 million in additional amounts thereunder as of March 31, 2021.

Our revolving credit facility matures on August 31, 2023

2 unchanged sentences

For a discussion of such risks, please read "Item 1A.

Risk Factors" of our Form 10-K for the year ended December 31, 2019, filed with the SEC on February 14, 2020, as updated and supplemented in Part II, Item 1A of our Quarterly Report on Form 10-Q for the fiscal quarters ended March 31, 2020 and June 30, 2020, and as may be further updated and supplemented from time to time in our future Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Risk Factors" of our Form 10-K for the year ended December 31, 2020, filed with the SEC on March 3, 2021.

In addition, due to the covenants in our revolving credit facility, our financial and operating performance impacts the amount we are permitted to borrow under that facility.

We are in compliance with all debt covenants as of September 30, 2020 and expect to be in compliance for the next twelve months.

We are in compliance with all debt covenants as of March 31, 2021 and expect to be in compliance for the next twelve months.

Interest Rate Risk

1 unchanged sentence

A substantial portion of our revenues is dependent on sales prices of products, particularly NGLs and fertilizers, which fluctuate in part based on winter and spring weather conditions.

The demand for NGLs is strongest during the winter heating season and the refinery blending season.

The demand for NGLs is strongest during the winter heating season and refinery blending season.

The demand for fertilizers is strongest during the early spring planting season.

However, our Terminalling and Storage and Transportation business segments and the molten sulfur business are typically not impacted by seasonal fluctuations and a significant portion of our net income is derived from our Terminalling and Storage, Sulfur Services and Transportation business segments.

Further, extraordinary weather events, such as hurricanes, have in the past, and could in the future, impact our Terminalling and Storage and Transportation business segments.

Further, extraordinary weather events, such as hurricanes, have in the past, and could in the future, impact our Terminalling and Storage, Sulfur Services, and Transportation business segments.

Impact of Inflation

Inflation did not have a material impact on our results of operations for the nine months ended September 30, 2020 or 2019.

Inflation did not have a material impact on our results of operations for the three months ended March 31, 2021 or 2020.

Although the impact of inflation has been insignificant in recent years, it is still a factor in the U.S.

7 unchanged sentences

Our operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which these operations are conducted.

We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during the nine months ended September 30, 2020 or 2019.

We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during the three months ended March 31, 2021 or 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis