What changed in this filing

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Item 1. Financial Statements

2021-07-26 compared with 2021-04-26 · 200 added, 134 removed, 677 unchanged (33% of the section changed)

3 unchanged sentences

(Dollars in thousands)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(Unaudited) (Audited)

4 unchanged sentences

Due from affiliates 20,619 14,807

Fair value of derivatives 12 —

Other current assets 6,913 8,991

30 unchanged sentences

(Dollars and units in thousands, except per unit amounts)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Terminalling and storage * $ 18,702 $ 19,908 $ 37,080 $ 40,382

25 unchanged sentences

Total other expense ( 13,310 ) ( 9,373 ) ( 26,263 ) ( 15,811 )

Net income before taxes 2,733 9,162

Net income (loss) before taxes ( 5,677 ) ( 1,413 ) ( 2,944 ) 7,749

Income tax expense ( 935 ) ( 790 ) ( 1,157 ) ( 1,137 )

Net income 2,511 8,815

Less general partner's interest in net (income) ( 50 ) ( 176 )

Less (income) allocable to unvested restricted units ( 10 ) ( 55 )

Net income (loss) ( 6,612 ) ( 2,203 ) ( 4,101 ) 6,612

Less general partner's interest in net (income) loss 132 44 82 ( 132 )

Less (income) loss allocable to unvested restricted units 20 10 10 ( 45 )

Limited partners' interest in net income (loss) $ ( 6,460 ) $ ( 2,149 ) $ ( 4,009 ) $ 6,435

Net income per unit attributable to limited partners - basic $ 0.06 $ 0.22

Net income per unit attributable to limited partners - diluted $ 0.06 $ 0.22

Net income (loss) per unit attributable to limited partners - basic $ ( 0.17 ) $ ( 0.06 ) $ ( 0.10 ) $ 0.17

Net income (loss) per unit attributable to limited partners - diluted $ ( 0.17 ) $ ( 0.06 ) $ ( 0.10 ) $ 0.17

Weighted average limited partner units - basic 38,687,874 38,661,852 38,690,228 38,651,357

6 unchanged sentences

* Related Party Transactions Included Above

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Terminalling and storage $ 15,569 $ 15,942 $ 30,875 $ 31,816

17 unchanged sentences

Net income — 6,480 132 6,612

Issuance of common units, net — — — —

Issuance of restricted units 81,000 — — —

Forfeiture of restricted units ( 84,134 ) — — —

General partner contribution — — — —

Cash distributions — ( 4,825 ) ( 98 ) ( 4,923 )

1 unchanged sentence

Purchase of treasury units ( 7,748 ) ( 9 ) — ( 9 )

Balances - March 31, 2020 38,852,507 $ ( 31,774 ) $ 2,273 $ ( 29,501 )

Balances - June 30, 2020 38,852,507 $ ( 35,987 ) $ 2,180 $ ( 33,807 )

Balances - January 1, 2021 38,851,174 $ ( 48,776 ) $ 1,905 $ ( 46,871 )

Net income — 2,461 50 2,511

Net loss — ( 4,019 ) ( 82 ) ( 4,101 )

Issuance of restricted units 42,168 — — —

3 unchanged sentences

Purchase of treasury units ( 7,156 ) ( 17 ) — ( 17 )

Balances - March 31, 2021 38,802,750 $ ( 46,285 ) $ 1,951 $ ( 44,334 )

Balances - June 30, 2021 38,802,750 $ ( 52,912 ) $ 1,815 $ ( 51,097 )

See accompanying notes to consolidated and condensed financial statements.

2 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net Income $ 2,511 $ 8,815

Net income (loss) $ ( 4,101 ) $ 6,612

Adjustments to reconcile net income to net cash provided by operating activities:

6 unchanged sentences

Derivative (income) loss 884 ( 1,463 )

Net cash paid for commodity derivatives ( 1,655 ) ( 636 )

Net cash received (paid) for commodity derivatives ( 679 ) 796

Unit-based compensation 288 709

33 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

June 30, 2021

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

24 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

June 30, 2021

The following table disaggregates our revenue by major source:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Terminalling and storage segment

32 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

June 30, 2021

Sulfur Services Segment

15 unchanged sentences

Throughput and storage $ 21,046 $ 40,394 $ 41,605 $ 42,854 $ 44,197 $ 294,141 $ 484,237

Natural Gas Services

Natural Gas Liquids 3,288 6,048 5,391 5,405 5,391 3,131 28,654

Sulfur services

1 unchanged sentence

Total $ 32,916 $ 62,721 $ 62,229 $ 49,234 $ 50,563 $ 297,272 $ 554,935

Components of inventories at March 31, 2021 and December 31, 2020 were as follows:

Components of inventories at June 30, 2021 and December 31, 2020 were as follows:

2021 December 31,

Natural gas liquids $ 41,805 $ 27,878

Sulfur 222 24

Fertilizer 8,216 10,854

5 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

At March 31, 2021 and December 31, 2020, long-term debt consisted of the following:

June 30, 2021

At June 30, 2021 and December 31, 2020, long-term debt consisted of the following:

2021 December 31,

$ 300,000 Revolving credit facility at variable interest rate ( 5.00 % 1 weighted average at March 31, 2021), due August 2023 4 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries, net of unamortized debt issuance costs of $ 3,541 and $ 3,826 , respectively 2

$ 300,000 Revolving credit facility at variable interest rate ( 5.00 % 1 weighted average at June 30, 2021), due August 2023 4 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries, net of unamortized debt issuance costs of $ 3,392 and $ 3,826 , respectively 2

$ 176,108 $ 144,174

12 unchanged sentences

The margin is set every three months.

All amounts outstanding at December 31, 2020 were at LIBOR plus an applicable margin.

All amounts outstanding at December 31, 2020 and March 31, 2021 were at LIBOR plus an applicable margin with LIBOR having a floor of 1.0 % per annum.

All amounts outstanding at December 31, 2020 and June 30, 2021 were at LIBOR plus an applicable margin with LIBOR having a floor of 1.0 % per annum.

The applicable margin for revolving loans that are LIBOR loans currently ranges from 2.75 % to 4.00 %, and the applicable margin for revolving loans that are base prime rate loans currently ranges from 1.75 % to 3.00 %.

The applicable margin for LIBOR borrowings at March 31, 2021 is 4.00 %.

The applicable margin for LIBOR borrowings at June 30, 2021 is 4.00 %.

The credit facility contains various covenants that limit the Partnership’s ability to make distributions;

3 unchanged sentences

and make certain amendments to the Partnership's omnibus agreement with Martin Resource Management Corporation (the "Omnibus Agreement").

2 The Partnership is in compliance with all debt covenants as of March 31, 2021 and December 31, 2020, respectively.

The credit facility was amended on July 16, 2021 to, among other things, reduce the commitments thereunder from $ 300,000 to $ 275,000 .

2 The Partnership is in compliance with all debt covenants as of June 30, 2021 and December 31, 2020, respectively.

3 The indentures for each of the outstanding series of senior notes restrict the Partnership’s ability to sell assets;

3 unchanged sentences

and consolidate, merge or transfer all or substantially all of its assets.

4 On February 15, 2021, the 2021 Notes matured and the Partnership retired the outstanding balance of

$ 28,790 using funds borrowed under its revolving credit facility.

The Partnership paid cash interest, net of capitalized interest, in the amount of $ 23,347 and $ 16,736 for the three months ended March 31, 2021 and 2020, respectively.

Capitalized interest was $ 0 and $ 4 for the three months ended March 31, 2021 and 2020, respectively.

4 On February 15, 2021, the 2021 Notes matured and the Partnership retired the outstanding balance of $ 28,790 using funds borrowed under its revolving credit facility.

The Partnership paid cash interest, net of capitalized interest, in the amount of $ 2,648 and $ 2,376 for the three months ended June 30, 2021 and 2020, respectively.

The Partnership paid cash interest, net of capitalized interest, in the amount of $ 25,995 and $ 19,113 for the six months ended June 30, 2021 and 2020, respectively.

Capitalized interest was $ 0 and $ 6 for the three months ended June 30, 2021 and 2020, respectively.

Capitalized interest was $ 0 and $ 9 for the six months ended June 30, 2021 and 2020, respectively.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

June 30, 2021

The Partnership has numerous operating leases primarily for terminal facilities and transportation and other equipment.

5 unchanged sentences

The Partnership includes extension periods and excludes termination periods from its lease term if, at commencement, it is reasonably likely that the Partnership will exercise the option.

The components of lease expense for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended March 31,

The components of lease expense for the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Operating lease cost $ 2,199 $ 2,767 $ 4,501 $ 5,611

5 unchanged sentences

Total lease cost $ 4,729 $ 6,893 $ 10,272 $ 13,887

Supplemental balance sheet information related to leases at March 31, 2021 and December 31, 2020 was as follows:

Supplemental balance sheet information related to leases at June 30, 2021 and December 31, 2020 was as follows:

2021 December 31, 2020

14 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

The Partnership’s future minimum lease obligations as of March 31, 2021 consist of the following:

June 30, 2021

The Partnership’s future minimum lease obligations as of June 30, 2021 consist of the following:

Operating Leases Finance Leases

9 unchanged sentences

The Partnership has non-cancelable revenue arrangements that are under the scope of ASC 842 whereby we have committed certain terminalling and storage assets in exchange for a minimum fee.

Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of March 31, 2021 are as follows:

Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of June 30, 2021 are as follows:

2021 - $ 11,559 ;

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

June 30, 2021

SUPPLEMENTAL BALANCE SHEET INFORMATION

9 unchanged sentences

The schedule below summarizes the changes in our asset retirement obligations:

March 31, 2021

June 30, 2021

Beginning asset retirement obligations $ 8,759

10 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

June 30, 2021

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

7 unchanged sentences

In addition, the Partnership has focused on utilizing counterparties for these transactions whose financial condition is appropriate for the credit risk involved in each specific transaction.

The Partnership has entered into hedging transactions as of March 31, 2021, to protect a portion of its commodity price risk exposure.

The Partnership has entered into hedging transactions as of June 30, 2021, to protect a portion of its commodity price risk exposure.

These hedging arrangements are in the form of swaps for NGLs.

At March 31, 2021, the Partnership had instruments totaling a gross notional quantity of 225,000 barrels settling during the period from April 30, 2021 through June 30, 2021.

At June 30, 2021, the Partnership had instruments totaling a gross notional quantity of 390,000 barrels settling during the period from July 31, 2021 through December 31, 2021.

At December 31, 2020, the Partnership had instruments totaling a gross notional quantity of 137,000 barrels settling during the period from January 31, 2021 through February 28, 2021.

7 unchanged sentences

Balance Sheet Location

March 31, 2021 December 31, 2020 Balance Sheet Location

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020 Balance Sheet Location

June 30, 2021 December 31, 2020

Derivatives not designated as hedging instruments:

5 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

June 30, 2021

Effect of Derivative Instruments on the Consolidated and Condensed Statements of Operations

For the Three Months Ended March 31, 2021 and 2020

For the Three Months Ended June 30, 2021 and 2020

Location of Gain (Loss)

5 unchanged sentences

Total effect of derivatives not designated as hedging instruments $ 552 $ ( 162 )

Effect of Derivative Instruments on the Consolidated and Condensed Statements of Operations

For the Six Months Ended June 30, 2021 and 2020

Location of Gain (Loss)

Recognized in Income on

Derivatives Amount of Gain (Loss) Recognized in

Income on Derivatives

Derivatives not designated as hedging instruments:

Commodity contracts Cost of products sold $ ( 884 ) $ ( 129 )

Total effect of derivatives not designated as hedging instruments $ ( 884 ) $ ( 129 )

PARTNERS' CAPITAL

As of March 31, 2021, Partners’ capital consisted of 38,802,750 common limited partner units, representing a 98 % partnership interest, and a 2 % general partner interest.

As of June 30, 2021, Partners’ capital consisted of 38,802,750 common limited partner units, representing a 98 % partnership interest, and a 2 % general partner interest.

Martin Resource Management Corporation, through subsidiaries, owns 6,114,532 of the Partnership's common limited partner units representing approximately 15.8 % of the Partnership's outstanding common limited partner units.

9 unchanged sentences

This excess of the purchase price over the historical cost of the net assets received has resulted in cumulative distributions of $ 287,734 reflected as reductions to Partners' capital.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2021

Incentive Distribution Rights

2 unchanged sentences

The Partnership is required to distribute all of its available cash from operating surplus, as defined in the Partnership Agreement.

The general partner was allocated no incentive distributions during the three months ended March 31, 2021 and 2020.

The general partner was allocated no incentive distributions during the six months ended June 30, 2021 and 2020.

The target distribution levels entitle the general partner to receive 2 % of quarterly cash distributions from the minimum of $ 0.50 per unit up to $ 0.55 per unit, 15 % of quarterly cash distributions in excess of $ 0.55 per unit until all unitholders have received $ 0.625 per unit, 25 % of quarterly cash distributions in excess of $ 0.625 per unit until all unitholders have received $ 0.75 per unit and 50 % of quarterly cash distributions in excess of $ 0.75 per unit.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

Distributions of Available Cash

14 unchanged sentences

The following is a reconciliation of net income allocated to the general partner and limited partners for purposes of calculating net income attributable to limited partners per unit:

Three Months Ended March 31,

Net income $ 2,511 $ 8,815

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2021

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income (loss) $ ( 6,612 ) $ ( 2,203 ) $ ( 4,101 ) $ 6,612

Less general partner’s interest in net income (loss):

1 unchanged sentence

General partner interest in undistributed income (loss)

Less income allocable to unvested restricted units 10 55

Limited partners’ interest in net income $ 2,451 $ 8,584

( 136 ) ( 48 ) ( 90 ) 79

Less income (loss) allocable to unvested restricted units ( 20 ) ( 10 ) ( 10 ) 45

Limited partners’ interest in net income (loss) $ ( 6,460 ) $ ( 2,149 ) $ ( 4,009 ) $ 6,435

The following are the unit amounts used to compute the basic and diluted earnings per limited partner unit for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Basic weighted average limited partner units outstanding

3 unchanged sentences

38,687,874 38,661,852 38,690,228 38,651,897

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

All outstanding units were included in the computation of diluted earnings per unit and weighted based on the number of days such units were outstanding during the periods presented.

All common unit equivalents were antidilutive for the three and six months ended June 30, 2021 and the three months ended June 30, 2020 because the limited partners were allocated a net loss in this period.

UNIT BASED AWARDS

1 unchanged sentence

Amounts recognized in selling, general, and administrative expense in the consolidated and condensed financial statements with respect to these plans are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Employees $ — $ 301 $ 194 $ 602

1 unchanged sentence

Total unit-based compensation expense $ 48 $ 363 $ 288 $ 709

All of the Partnership's outstanding awards at March 31, 2021 met the criteria to be treated under equity classification.

All of the Partnership's outstanding awards at June 30, 2021 met the criteria to be treated under equity classification.

Long-Term Incentive Plans

2 unchanged sentences

2017 Restricted Unit Plan (the "2017 LTIP").

The plan currently permits the grant of awards covering an aggregate of 3,000,000 common units, all of which can be awarded in the form of restricted units.

The plan is administered by the compensation committee of the general partner’s board of directors (the "Compensation Committee").

The 2017 LTIP currently permits the grant of awards covering an aggregate of 3,000,000 common units, all of which can be awarded in the form of restricted units.

The 2017 LTIP is administered by the compensation committee of the general partner’s board of directors (the "Compensation Committee").

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2021

A restricted unit is a unit that is granted to grantees with certain vesting restrictions, which may be time-based and/or performance-based.

1 unchanged sentence

The Compensation Committee may determine to make grants under the plan containing such terms as the Compensation Committee shall determine under the plan.

With respect to time-based restricted units ("TBRU's"), the Compensation Committee will determine the time period over which restricted units granted to employees and directors will vest.

The Compensation Committee may also award a percentage of restricted units with vesting requirements based upon the achievement of specified pre-established performance targets ("Performance Based Restricted Units" or "PBRU's").

With respect to time-based restricted units ("TBRUs"), the Compensation Committee will determine the time period over which restricted units granted to employees and directors will vest.

The performance targets may include, but are not limited to, the following:

revenue and income measures, cash flow measures, net income before interest expense and income tax expense ("EBIT"), net income before interest expense, income tax expense, and depreciation and amortization ("EBITDA"), distribution coverage metrics, expense measures, liquidity measures, market measures, corporate sustainability metrics, and other measures related to acquisitions, dispositions, operational objectives and succession planning objectives.

PBRU's are earned only upon our achievement of an objective performance measure for the performance period.

PBRU's which vest are payable in common units.

PBRUs are earned only upon our achievement of an objective performance measure for the performance period.

PBRUs which vest are payable in common units.

Unvested units granted under the 2017 LTIP may or may not participate in cash distributions depending on the terms of each individual award agreement.

The performance conditions related to the PBRU's awarded on March 1, 2018 were not achieved and the Partnership, as such, did not recognize compensation expense for the vesting of the units.

The performance conditions related to the PBRUs awarded on March 1, 2018 were not achieved and the Partnership treated these units as forfeited at expiration on March 31, 2021.

As such, the Partnership did not recognize compensation expense related to these units.

The restricted units issued to directors generally vest in equal annual installments over a four-year period.

Restricted units issued to employees generally vest in equal annual installments over three years of service.

In February 2021, the Partnership issued 14,056 TBRU's to each of the Partnership's three independent directors under the 2017 LTIP.

In February 2021, the Partnership issued 14,056 TBRUs to each of the Partnership's three independent directors under the 2017 LTIP.

These restricted common units vest in equal installments of 3,514 units on January 24, 2022, 2023, 2024, and 2025.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

The restricted units are valued at their fair value at the date of grant, which is equal to the market value of common units on such date.

A summary of the restricted unit activity for the three months ended March 31, 2021 is provided below:

A summary of the restricted unit activity for the six months ended June 30, 2021 is provided below:

Number of Units Weighted Average Grant-Date Fair Value Per Unit

5 unchanged sentences

Aggregate intrinsic value, end of period $ 347

A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three months ended March 31, 2021 and 2020 is provided below:

Three Months Ended March 31,

A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three and six months ended June 30, 2021 and 2020 is provided below:

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Aggregate intrinsic value of units vested $ — $ — $ 257 $ 151

Fair value of units vested — — 1,418 1,427

As of March 31, 2021, there was $ 395 of unrecognized compensation cost related to non-vested restricted units.

As of June 30, 2021, there was $ 344 of unrecognized compensation cost related to non-vested restricted units.

That cost is expected to be recognized over a weighted-average period of 2.42 years.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2021

RELATED PARTY TRANSACTIONS

As of March 31, 2021, Martin Resource Management Corporation owns 6,114,532 of the Partnership’s common units representing approximately 15.8 % of the Partnership’s outstanding limited partner units.

As of June 30, 2021, Martin Resource Management Corporation owns 6,114,532 of the Partnership’s common units representing approximately 15.8 % of the Partnership’s outstanding limited partner units.

Martin Resource Management Corporation controls the Partnership's general partner by virtue of its 51 % voting interest in Holdings, the sole member of the Partnership's general partner.

The Partnership’s general partner, MMGP, owns a 2 % general partner interest in the Partnership and the Partnership’s IDRs.

The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of March 31, 2021, effectively gives Martin Resource Management Corporation the ability to veto some of the Partnership’s actions and to control the Partnership’s management.

The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of June 30, 2021, effectively gives Martin Resource Management Corporation the ability to veto some of the Partnership’s actions and to control the Partnership’s management.

The following is a description of the Partnership’s material related party agreements and transactions:

4 unchanged sentences

The Omnibus Agreement was amended further on October 1, 2012, to permit the Partnership to provide certain lubricant packaging products and services to Martin Resource Management Corporation.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

Non-Competition Provisions .

2 unchanged sentences

• providing land and marine transportation of petroleum products, by-products, and chemicals;

• distributing NGL's;

• distributing NGLs;

• manufacturing and selling sulfur-based fertilizer products and other sulfur-related products.

8 unchanged sentences

◦ operating an environmental consulting company;

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2021

◦ supplying employees and services for the operation of the Partnership's business;

6 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

monetary limitation on the amount the Partnership is required to reimburse Martin Resource Management Corporation for direct expenses.

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

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

Effective January 1, 2021, through December 31, 2021, the Conflicts Committee approved an annual reimbursement amount for indirect expenses of $ 14,386 .

The Partnership reimbursed Martin Resource Management Corporation for $ 3,542 and $ 4,103 of indirect expenses for the three months ended March 31, 2021 and 2020, respectively.

The Partnership reimbursed Martin Resource Management Corporation for $ 3,652 and $ 4,103 of indirect expenses for the three months ended June 30, 2021 and 2020, respectively.

The Partnership reimbursed Martin Resource Management Corporation for $ 7,193 and $ 8,261 of indirect expenses for the six months ended June 30, 2021 and 2020, respectively.

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

9 unchanged sentences

The Omnibus Agreement may be amended by written agreement of the parties;

provided, however, that it may not be amended without the approval of the Conflicts Committee if such amendment would adversely affect the unitholders.

provided, however, that it may not be amended without the approval of the Conflicts Committee if such amendment would

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2021

adversely affect the unitholders.

The Omnibus Agreement was first amended on November 25, 2009, to permit the Partnership to provide refining services to Martin Resource Management Corporation.

9 unchanged sentences

The agreement will continue unless either party terminates the agreement by giving at least 30 days' written notice to the other party.

These rates are subject to any adjustments which are mutually agreed upon or in accordance with a price index.

The rates under the agreement are subject to any adjustments which are mutually agreed upon or in accordance with a price index.

Additionally, shipping charges are also subject to fuel surcharges determined on a weekly basis in accordance with the U.S.

3 unchanged sentences

Martin Resource Management Corporation has agreed to indemnify MTI against all claims arising out of the negligence or willful misconduct of Martin Resource Management Corporation and its officers, employees, agents, representatives and subcontractors.

In the event a claim is the result of the joint negligence or misconduct of MTI and Martin Resource

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

Management Corporation, indemnification obligations will be shared in proportion to each party’s allocable share of such joint negligence or misconduct.

In the event a claim is the result of the joint negligence or misconduct of MTI and Martin Resource Management Corporation, indemnification obligations will be shared in proportion to each party’s allocable share of such joint negligence or misconduct.

Marine Agreements

12 unchanged sentences

The term of this agreement is currently evergreen and it will continue on a month to month basis until terminated by either party by giving 60 days’ written notice.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2021

Miscellaneous Terminal Services Agreements.

19 unchanged sentences

Certain of our directors or officers are owners of East Texas Mack, including entities affiliated with Ruben Martin, who owns approximately 46 % of the issued and outstanding stock of East Texas Mack.

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended March 31, 2021 and 2020 were $ 236 and $ 105 , respectively.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended June 30, 2021 and 2020 were $ 282 and $ 154 , respectively.

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the six months ended June 30, 2021 and 2020 were $ 518 and $ 259 , respectively.

Other Miscellaneous Agreements.

3 unchanged sentences

The impact of related party revenues from sales of products and services is reflected in the consolidated and condensed financial statements as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Terminalling and storage $ 15,569 $ 15,942 $ 30,875 $ 31,816

4 unchanged sentences

71 38 185 130

$ 20,529 $ 21,373 $ 39,959 $ 43,233

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2021

The impact of related party cost of products sold is reflected in the consolidated and condensed financial statements as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Cost of products sold:

3 unchanged sentences

The impact of related party operating expenses is reflected in the consolidated and condensed financial statements as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Operating expenses:

4 unchanged sentences

$ 19,590 $ 19,440 $ 37,958 $ 41,211

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

The impact of related party selling, general and administrative expenses is reflected in the consolidated and condensed financial statements as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Selling, general and administrative:

13 unchanged sentences

There is no allocation of administrative expenses or interest expense.

Three Months Ended March 31, 2021 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2021

Three Months Ended June 30, 2021 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage 45,524 ( 1,675 ) 43,849 6,996 2,576 1,507

3 unchanged sentences

Indirect selling, general and administrative — — — — ( 3,780 ) —

Total $ 189,391 $ ( 5,098 ) $ 184,293 $ 14,483 $ 7,633 $ 3,537

Three Months Ended June 30, 2020 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage 46,976 ( 1,542 ) 45,434 7,272 2,969 3,427

Transportation 35,259 ( 3,774 ) 31,485 4,328 ( 2,078 ) 772

Sulfur services 33,420 — 33,420 3,131 8,814 1,739

Natural gas liquids 30,300 ( 1 ) 30,299 612 2,616 70

Indirect selling, general and administrative — — — — ( 4,361 ) —

Total $ 145,955 $ ( 5,317 ) $ 140,638 $ 15,343 $ 7,960 $ 6,008

Six Months Ended June 30, 2021 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 85,358 $ ( 3,270 ) $ 82,088 $ 14,101 $ 4,884 $ 4,172

Transportation 72,318 ( 7,577 ) 64,741 8,329 ( 8,212 ) 1,616

Sulfur services 73,121 — 73,121 5,288 16,602 3,863

Natural gas liquids 165,317 — 165,317 1,199 17,744 461

Indirect selling, general and administrative

— — — — ( 7,699 ) —

Total $ 396,114 $ ( 10,847 ) $ 385,267 $ 28,917 $ 23,319 $ 10,112

Three Months Ended March 31, 2020 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Six Months Ended June 30, 2020 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 98,110 $ ( 3,268 ) $ 94,842 $ 14,728 $ 3,727 $ 7,022

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

The Partnership's assets by reportable segment as of March 31, 2021 and December 31, 2020, are as follows:

March 31, 2021 December 31, 2020

June 30, 2021

The Partnership's assets by reportable segment as of June 30, 2021 and December 31, 2020, are as follows:

June 30, 2021 December 31, 2020

Total assets:

32 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

June 30, 2021

Assets and liabilities measured at fair value on a recurring basis are summarized below:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Commodity derivative contracts, net $ ( 412 ) $ ( 207 )

8 unchanged sentences

The estimated fair value of the 2021 Notes, 2024 Notes, and 2025 Notes (collectively, the "Senior Notes") is considered Level 1, as the fair value is based on quoted market prices in active markets.

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Value Carrying

10 unchanged sentences

Substantially all of the Partnership's operating subsidiaries are subsidiary guarantors of its Senior Notes and any subsidiaries other than the subsidiary guarantors are minor.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Provision for income taxes $ 935 $ 790 $ 1,157 $ 1,137

1 unchanged sentence

MTI, a wholly owned subsidiary of the Partnership, is subject to income taxes due to its corporate structure (the "Taxable Subsidiary").

Total income tax expense of $ 102 and $ 347 , related to the operation of the Taxable Subsidiary, for the three months ended March 31, 2021 and 2020, resulted in an effective income tax rate ("ETR") of 29.32 % and 32.17 %, respectively.

Total income tax expense of $ 874 and $ 590 , related to the operation of the Taxable Subsidiary, for the three months ended June 30, 2021 and 2020, resulted in an effective income tax rate ("ETR") of 40.22 % and ( 472.00 )%, respectively.

Total income tax expense of $ 977 and $ 937 , related to the operation of the Taxable Subsidiary, for the six months ended June 30, 2021 and 2020, resulted in an ETR of 38.73 % and 98.32 %, respectively.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2021

The decrease in the effective income tax rate for the income taxes during the three months ended March 31, 2021, compared to the three months ended March 31, 2020, is primarily due to a decrease in permanent differences.

The decrease in the provision for income taxes during the three months ended March 31, 2021, compared to the similar period in 2020, was primarily due to the impact of a decrease in income before income taxes in the current period.

A current federal income tax expense of $ 15 and $ 133 , related to the operation of the Taxable Subsidiary, were recorded for the three months ended March 31, 2021 and 2020, respectively.

A current state income tax expense (benefit) of $ 12 and $( 72 ), related to the operation of the Taxable Subsidiary, was recorded for the three months ended March 31, 2021 and 2020, respectively.

June 30, 2021

The increase in the effective income tax rate during the three months ended June 30, 2021 compared to the three months ended June 30, 2020 was primarily due to pretax income recorded for the three months ended June 30, 2021 compared to pretax losses recorded for the similar period in 2020.

The decrease in the effective income tax rate during the six months ended June 30, 2021, compared to the six months ended June 30, 2020, was primarily due to a decrease in permanent differences in the current period.

The increase in the provision for income taxes for the three and six months ended June 30, 2021, compared to similar periods in 2020, was primarily due to an increase in income before income taxes in the current period.

A current federal income tax expense (benefit) of $ 108 and $( 307 ), related to the operation of the Taxable Subsidiary, was recorded for the three months ended June 30, 2021 and 2020, respectively.

A current federal income tax expense (benefit) of $ 123 and $( 174 ), related to the operation of the Taxable Subsidiary, was recorded for the six months ended June 30, 2021 and 2020, respectively.

A current state income tax expense of $ 83 and $ 164 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended June 30, 2021 and 2020, respectively.

A current state income tax expense of $ 96 and $ 93 , related to the operation of the Taxable Subsidiary, was recorded for the six months ended June 30, 2021 and 2020, respectively.

With respect to MTI, income taxes are accounted for under the asset and liability method pursuant to the provisions of ASC 740 related to income taxes.

2 unchanged sentences

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

A deferred tax expense related to the MTI temporary differences of $ 75 and $ 286 was recorded for the three months ended March 31, 2021 and 2020, respectively.

A net deferred tax asset of $ 22,178 and $ 22,253 , related to the cumulative book and tax temporary differences, existed at March 31, 2021 and December 31, 2020, respectively.

A deferred tax expense related to the MTI temporary differences of $ 683 and $ 733 was recorded for the three months ended June 30, 2021 and 2020, respectively.

A deferred tax expense related to the MTI temporary differences of $ 758 and $ 1,018 was recorded for the six months ended June 30, 2021 and 2020, respectively.

A net deferred tax asset of $ 21,495 and $ 22,253 , related to the cumulative book and tax temporary differences, existed at June 30, 2021 and December 31, 2020, respectively.

All income tax positions taken for all open years are more likely than not to be sustained based upon their technical merit under applicable tax laws.

SUBSEQUENT EVENTS

Amendment to Revolving Credit Facility.

On July 16, 2021, the Partnership amended its revolving credit facility to, among other things, reduce the commitments thereunder from $ 300,000 to $ 275,000 , and modify the financial covenants.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Significant Recent Developments – Amendment to Revolving Credit Facility” for more information regarding this amendment.

2021 Phantom Unit Plan.

On July 21, 2021, the board of directors of the general partner of the Partnership and the Compensation Committee approved the Martin Midstream Partners L.P.

2021 Phantom Unit Plan (the “Plan”), effective as of the same date.

The Plan permits the awards of phantom units and phantom unit appreciation rights to any employee or non-employee director of the Partnership, including its executive officers.

The awards may be time-based or performance-based and will be paid, if at all, in cash.

See “Part II – Item 5.

Other Information” for more information regarding the Plan.

Quarterly Distribution.

On April 21, 2021, the Partnership 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.

On July 22, 2021, the Partnership declared a quarterly cash distribution of $ 0.005 per common unit for the second quarter of 2021, or $ 0.020 per common unit on an annualized basis, which will be paid on August 13, 2021 to unitholders of record as of August 6, 2021.

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 1. Financial Statements