What changed in this filing

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Item 1A. Risk Factors

2022-03-01 compared with 2021-03-03 · 145 added, 69 removed, 584 unchanged (27% of the section changed)

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We have significant capital needs, and our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level, industry conditions, and financial covenants in our debt instruments.

7 Fluctuations in interest rates could materially affect our financial results, and the phase-out of LIBOR may adversely affect interest expense related to our floating rate debt.

Fluctuations in interest rates could materially affect our financial results, and the phase-out of LIBOR may increase interest expense related to our floating rate debt.

We are exposed to counterparty risk in our credit facility and related interest rate protection agreements and we may not be able to access funds under our credit facility if there is a default.

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Gulf Coast and offshore and the facilities of our customers, which could adversely affect our operations and financial condition.

13 Adverse weather conditions, including droughts, hurricanes, tropical storms and other severe weather, could reduce our results of operations and ability to make distributions to our unitholders.

Adverse weather conditions, including droughts, hurricanes, tropical storms, ice storms, extreme cold weather and other severe weather, could reduce our results of operations and ability to make distributions to our unitholders.

If we incur material liabilities that are not fully covered by insurance, such as liabilities resulting from accidents on rivers or at sea, spills, fires or explosions, our results of operations and ability to make distributions to our unitholders could be adversely affected.

The price volatility of petroleum products and by-products could reduce our liquidity and results of operations and ability to make distributions to our unitholders.

We could incur losses due to impairment in the carrying value of our long-lived assets

Increasing energy prices could adversely affect our results of operations.

Decreasing energy prices could adversely affect our results of operations.

The natural decline in production in our operating regions and in other regions from which we source NGL supplies means our long-term success depends on our ability to obtain new sources of supplies of natural gas, NGLs and crude oil, which depends on certain factors beyond our control.

Any decrease in supplies of natural gas, NGLs or crude oil could adversely affect our business and operating results.

Our NGL and sulfur-based fertilizer products are subject to seasonal demand and could cause our revenues to vary.

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Our business is subject to compliance with environmental laws and regulations that could expose us to significant costs and liabilities and adversely affect our results of operations and ability to make distributions to our unitholders.

Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.

The loss or insufficient attention of key personnel could negatively impact our results of operations and ability to make distributions to our unitholders.

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Our business could also be adversely affected if the operations of our customers and suppliers experienced significant interruptions.

If third-party pipelines and other facilities interconnected to our terminals become partially or fully unavailable to transport natural gas, NGLs and crude oil, our revenues could be adversely affected.

NASDAQ does not require a publicly traded partnership like us to comply with certain of its corporate governance requirements, and therefore, unitholders do not have the same protections afforded to shareholders of corporations subject to all NASDAQ requirements.

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Our interest rate swap activities could have a material adverse effect on our earnings, profitability, liquidity, cash flows and financial condition.

A downgrade of our credit ratings could impact our liquidity, access to capital and costs of doing business, and maintaining credit ratings is under the control of independent third parties.

The industry in which we operate is highly competitive, and increased competitive pressure could adversely affect our business and operating results.

Information technology systems present potential targets for cyber security attacks, which could adversely affect our business.

Our business is subject to complex and evolving U.S.

laws and regulations regarding privacy and data protection (“data protection laws”).

Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, increased cost of operations, or otherwise harm our business.

Units available for future sales by us or our affiliates could have an adverse impact on the price of our common units or on any trading market that may develop.

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Many of such factors are beyond our ability to control or predict.

Unitholders are cautioned not to put undue reliance on forward-

looking statements.

Unitholders are cautioned not to put undue reliance on forward-looking statements.

Additional risks that we do not yet know of or that we currently think are immaterial may also impair our business operations, financial condition and results of operations.

The reduction in demand for refined products resulting from measures taken to prevent the spread of the COVID-19 virus has and is likely to continue to adversely affect our results of operations, cash flows and financial condition for an indeterminate amount of time.

The markets have experienced a decline in oil prices in response to oil demand concerns due to the economic impacts of the COVID-19 pandemic, greatly impacting the demand for refined products resulting in a significant reduction in refinery utilization.

The markets experienced a decline in oil prices in response to oil demand concerns due to the economic impacts of the COVID-19 pandemic, greatly impacting the demand for refined products resulting in a significant reduction in refinery utilization.

As demand for our services and products decline, we could experience a reduction in the utilization of our assets.

The continued spread of COVID-19 or a similar pandemic could result in further instability in the markets and decreases in commodity prices resulting in further adverse impacts on our results of operations, cash flows, and financial condition.

In addition, the continued spread of the COVID-19 virus, or similar pandemic, and the continuation of the measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns, may further impact our workforce and operations, the operations of our customers, and those of our vendors and suppliers.

The continued spread of COVID-19 (including its variants) or a similar pandemic could result in further instability in the markets and decreases in commodity prices resulting in further adverse impacts on our results of operations, cash flows, and financial condition.

In addition, the continued spread of the COVID-19 virus (including its variants), or similar pandemic, and the continuation of the measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns, may further impact our workforce and operations, the operations of our customers, and those of our vendors and suppliers.

There is considerable uncertainty regarding such measures and potential future measures, which would have a material adverse effect on our results of operations, cash flows, and financial condition.

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In addition, our credit facility and the indentures governing our secured notes severely restrict our ability to make distributions until our total leverage ratio (as defined in the applicable debt instruments) is less than 3.75 to 1.0.

After deleveraging, the covenants in our debt instruments will continue to restrict our ability to make distributions, including a prohibition in our credit facility from making cash distributions during a default or an event of default under our credit facility

or if the payment of a distribution would cause a default or an event of default thereunder.

Our leverage and various limitations in our debt instruments may reduce our ability to incur additional debt, engage in certain transactions, and capitalize on acquisition or other business opportunities that could increase cash flows and distributions to our unitholders.

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Debt we owe or incur in the future could limit our flexibility to obtain financing, to pursue other business opportunities, and to pay distributions to our unitholders.

As of December 31, 2020, we had approximately $525.5 million in principal amount of debt outstanding (including $148.0 million outstanding under our revolving credit facility).

As of December 31, 2021, we had approximately $505.5 million in principal amount of debt outstanding (including $159.5 million outstanding under our credit facility).

Our indebtedness could have important consequences, including the following:

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Our primary sources of liquidity to meet operating expenses, service our indebtedness, pay distributions to our unitholders and fund capital expenditures have historically been provided by cash flows generated by our operations, borrowings under our revolving credit facility and access to the debt and equity capital markets.

Our primary sources of liquidity to meet operating expenses, service our indebtedness, pay distributions to our unitholders and fund capital expenditures have historically been provided by cash flows generated by our operations, borrowings under our credit facility and access to the debt and equity capital markets.

Accessing capital in the capital markets has become difficult for many companies in the energy industry, in particular leveraged companies similar to us.

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The covenants in our debt instruments restrict our ability to incur additional indebtedness.

For instance, while our revolving credit facility has $300.0 million in lender commitments, the amount we are able to borrow is limited by the financial covenants contained therein.

As of December 31, 2020, we had the ability to borrow approximately $20.5 million under our revolving credit facility due to such financial covenants.

Fluctuations in interest rates could materially affect our financial results, and the phase-out of LIBOR may adversely affect interest expense related to our floating rate debt.

Borrowings under our revolving credit facility are at variable rates and include a LIBOR floor of 1.00%.

For instance, while our credit facility has $275.0 million in lender commitments, the amount we are able to borrow is limited by the financial covenants contained therein.

However, as of December 31, 2021, we had the ability to borrow approximately $92.9 million under our credit facility and were not constrained by such financial covenants.

Fluctuations in interest rates could materially affect our financial results, and the phase-out of LIBOR may increase interest expense related to our floating rate debt.

Borrowings under our credit facility are at variable rates and include a LIBOR floor of 1.00%.

Because a significant portion of our debt bears interest at variable rates, increases in interest rates could materially increase our interest expense.

Based on our debt outstanding as of December 31, 2021, if LIBOR exceeds the 1.00% floor the impact of a 100 basis point increase in interest rates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $1.6 million annually.

Further, the U.S.

Dollar London Interbank Offered Rate ("LIBOR") and certain other interest rate "benchmarks" are the subject of recent national, international, and other regulatory guidance and proposals for reform.

These reforms may cause such benchmarks to perform differently than in the past or have other consequences which cannot be predicted.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, publicly announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.

On November 30, 2020, ICE Benchmark Administration, the current administrator of LIBOR, announced that it intends to cease publication of 1-week and 2-month LIBOR at the end of 2021 and, subject to compliance with applicable regulations, including as to representativeness, it does not intend to cease publication of the remaining LIBOR tenors until June 30, 2023.

Further, on March 5, 2021, the Financial Conduct Authority in the U.K.

issued an announcement on the future cessation or loss of representativeness of LIBOR benchmark settings currently published by ICE Benchmark Administration.

That announcement confirmed that LIBOR will either cease to be provided by any administrator or will no longer be representative after December 31, 2021 for all non-USD LIBOR reference rates, and for certain short-term USD LIBOR reference rates, and after June 30, 2023 for other reference rates.

It is uncertain whether LIBOR will be available as a benchmark for pricing our floating rate indebtedness until, or after, June 30, 2023.

Our revolving credit facility includes a mechanism to amend the facility to reflect the establishment of an alternative rate of interest upon the occurrence of certain events related to the phase-out of LIBOR.

Our credit facility includes a mechanism to amend the facility to reflect the establishment of an alternative rate of interest upon the occurrence of certain events related to the phase-out of LIBOR.

However, we have not yet pursued any technical amendment or other contractual alternative to address this matter and are currently evaluating the impact of the potential replacement of LIBOR.

If no such amendment or other contractual alternative is established on or prior to the phase-out of LIBOR, interest under our revolving credit facility will bear interest at higher rates based on the prime rate until such amendment or other contractual amendment is established.

If no such amendment or other contractual alternative is established on or prior to the phase-out of LIBOR, interest under our credit facility will bear interest at higher rates based on the prime rate until such amendment or other contractual amendment is established.

Even where we have entered into interest rate swaps or other derivative instruments for purposes of managing our interest rate exposure, our hedging strategies may not be effective as a result of the replacement or phasing out of LIBOR, and our earnings may be subject to volatility.

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Our and our customers’ operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs and reduced demand for our services.

The threat of climate change continues to attract considerable attention in the United States and in foreign countries.

The threat of climate change continues to attract considerable attention in the U.S.

and in foreign countries.

Numerous proposals have been made and could continue to be made at the international, national, regional, and state levels to monitor and limit existing emissions of GHGs as well as to restrict or eliminate such future emissions.

As a result, our operations, as well as the operations of our customers, are subject to a series of regulatory, political, financial, and litigation risks associated with the processing, terminalling, storage, and transportation of fossil fuels, petroleum products, and emission of GHGs.

In the United States, no comprehensive climate change legislation has been implemented at the federal level.

However, the EPA has adopted rules that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and implement New Source Performance Standards directing the reduction of methane from certain new, modified, or reconstructed facilities in the oil and natural gas sector, including midstream sources.

In the U.S., no comprehensive climate change legislation has been implemented at the federal level.

However, the EPA has adopted rules that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the U.S., and implement New Source Performance Standards directing the reduction of methane from certain new, modified, or reconstructed facilities in the oil and natural gas sector, including midstream sources.

Despite potential changes with respect to the federal regulation of GHGs, various states and groups of states have adopted or are considering adopting legislation, regulations, or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and various other measures that would restrict emissions of GHGs from different industrial sectors.

At the international level, pursuant to the Paris Agreement, over 190 countries have committed to limiting their GHG emissions through individually-determined reduction goals every five years after 2020.

In November 2020, the United States formally withdrew from the Paris Agreement.

However, on January 20, 2021, President Biden signed an “Acceptance on Behalf of the United States of America” that will allow the U.S.

to rejoin the Paris Agreement.

The newly signed acceptance, deposited with the United Nations on January 20, 2021, reverses the prior withdrawal.

The United States will officially rejoin the Paris Agreement on February 19, 2021.

In November 2020, the U.S.

formally withdrew from the Paris Agreement.

However, on January 20, 2021, President Biden signed an “Acceptance on Behalf of the U.S.,” and the U.S.

officially rejoined the Paris Agreement on February 19, 2021.

As part of rejoining the Paris Agreement, President Biden announced that the U.S.

would commit to a 50 to 52 percent reduction from 2005 levels of GHG emissions by 2030 and set the goal of reaching net-zero GHG emissions by 2050.

State, federal, and international regulatory measures have the potential to increase our operating costs through direct regulation of GHG emissions resulting from our operations, and could also indirectly adversely affect our operations by decreasing demand for our services and products.

For example, our business could be impacted by initiatives to address greenhouse gases and climate change and incentives to conserve energy or use alternative energy sources.

For example, the Build Back Better Act, passed by the U.S.

House of Representatives and supported by President Biden, includes incentives to increase wind and solar electric generation and encourage consumers to use these alternative energy sources.

At this time, it is uncertain whether, and in what form, the Build Back Better Act may become law.

However, the Build Back Better Act or similar state or federal initiatives to incentivize a shift away from fossil fuels could reduce demand for hydrocarbons, thereby reducing demand for our products and services and negatively impacting our business.

Additionally, there are increasing potential financial risks for fossil fuel energy companies as environmental activists concerned about the potential effects of climate change are focusing intensive lobbying efforts on institutional lenders, including financial institutions and institutional investors, not to provide funding to such companies.

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Moreover, societal pressures or political or other factors may shape the success of such claims, without regard to the company’s causation of or contribution to the asserted damage, or to other mitigating factors.

The adoption and implementation of new or more stringent international, federal, or state legislation, regulations, or other regulatory initiatives that impose more stringent standards for GHG emissions from oil and natural gas producers or their midstream services providers such as ourselves could result in increased costs of compliance or costs of consuming, and thereby reduce demand for or erode value for, the petroleum products and by-products that we process, store and transport.

midstream services providers such as ourselves could result in increased costs of compliance or costs of consuming, and thereby reduce demand for or erode value for, the petroleum products and by-products that we process, store and transport.

Additionally, political, financial, and litigation risks may result in our customers restricting or cancelling oil and natural gas production activities, which could result in reduced demand for our services.

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Such costs could adversely affect our business, financial condition, results of operations, and cash flows.

Adverse weather conditions, including droughts, hurricanes, tropical storms and other severe weather, could reduce our results of operations and ability to make distributions to our unitholders.

Our distribution network and operations are primarily concentrated in the U.S.

Gulf Coast region and along the Mississippi River inland waterway.

Our distribution network and operations are primarily concentrated in the Gulf Coast region of the U.S.

and along the Mississippi River inland waterway.

Weather in these regions is sometimes severe (including tropical storms and hurricanes) and can be a major factor in our day-to-day operations.

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Demand for our lubricants and the diesel fuel we throughput in our Terminalling and Storage segment can be affected if offshore drilling operations are disrupted by weather in the Gulf of Mexico.

In addition, our assets are vulnerable to winter storms and extreme cold weather.

For example, 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.

National weather conditions have a substantial impact on the demand for our products.

Extreme weather conditions (either wet or dry) has in recent years decreased the demand for fertilizer.

Extreme weather conditions (either wet or dry) have in recent years decreased the demand for fertilizer.

For example, an unusually wet spring can delay planting of seeds, which can leave insufficient time to apply fertilizer at the planting stage.

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Changes in the insurance markets attributable to the effects of hurricanes and their aftermath may make some types of insurance more difficult or expensive for us to obtain.

As a result, we may be unable to secure the levels and types of insurance

we would otherwise have secured prior to such events.

As a result, we may be unable to secure the levels and types of insurance we would otherwise have secured prior to such events.

Moreover, the insurance that may be available to us may be significantly more expensive than our existing insurance coverage.

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Future price volatility could have an adverse impact on our liquidity and results of operations, cash flow and ability to make distributions to our unitholders.

We could incur losses due to impairment in the carrying value of our long-lived assets.

We periodically evaluate goodwill and long-lived assets for impairment.

Our impairment analyses for long-lived assets require management to apply judgment in evaluating whether events and circumstances are present that indicate an impairment may have occurred.

If we believe an impairment may have occurred judgments are then applied in estimating future cash flows and useful lives, as well as assessing the probability of different outcomes.

To perform the impairment assessment for goodwill, we use a discounted cash flow analysis, supplemented by a market approach analysis.

Key assumptions in the analysis include industry and economic factors, future operating results and discount rates.

In estimating cash flows, we use present economic conditions, as well as future expectations.

If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to impairment charges.

Adverse changes in our business or the overall operating environment may affect our estimate of future operating results, which could result in future impairment due to the potential impact on our operations and cash flows.

Increasing energy prices could adversely affect our results of operations.

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For example, due to the economic impacts of the COVID-19 pandemic in 2020, the markets experienced a decline in oil prices in response to oil demand concerns.

These concerns were further exacerbated by the price war among members of the OPEC and other non-OPEC producer nations during the first quarter of 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, which has impacted our 2020 performance.

This impact started in February of 2020 and continued through the end of the year, during which time we have seen unfavorable trends in certain key metrics across several of our business lines compared to historical periods.

These concerns were further exacerbated by the price war among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations during the first quarter of 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 U.S., greatly impacted the demand for refined products resulting in a significant reduction in refinery utilization, which impacted our 2020 performance and continued to impact our marine transportation business in 2021.

This impact started in February of 2020 and continued through the end of 202, during which time we saw unfavorable trends in certain key metrics across several of our business lines compared to historical periods.

The significant reduction in refinery utilization as a result of reduced refined products demand significantly impacted our Transportation and NGL segments.

As the volume of products produced or purchased by refineries has been reduced, demand for our services has decreased.

As the volume of products produced or purchased by refineries reduced, demand for our services decreased.

Any decrease in supplies of natural gas, NGLs or crude oil could adversely affect our business and operating results.

Our terminalling and storage, transportation and NGL services depend on crude oil and natural gas wells from which production will naturally decline over time, which means that the cash flows associated with these sources of natural gas and crude oil will likely also decline over time.

To maintain or increase our levels of operation, we must continually obtain new natural gas, NGL and crude oil supplies.

A material decrease in natural gas or crude oil production from producing areas on which we rely, as a result of depressed commodity prices or otherwise, could result in a decline in the volume of petroleum products for which we provide terminalling, storage and transportation service or NGL products delivered to our facilities.

Our ability to obtain additional sources of natural gas, NGLs and crude oil depends, in part, on the level of successful drilling and production activity near our terminals and other areas from which we source NGL and crude oil supplies.

We have no control over the level of such activity in the areas of our operations, the amount of reserves associated with the wells or the rate at which production from a well will decline.

In addition, we have no control over producers or their drilling, completion or production decisions, which are affected by, among other things, prevailing and projected energy prices, demand for hydrocarbons, the level of reserves, geological considerations, governmental regulations, the availability of drilling rigs, other production and development costs and the availability and cost of capital.

Fluctuations in energy prices can greatly affect production rates and investments by third parties in the development of new oil and natural gas reserves.

Drilling and production activity generally decreases as crude oil and natural gas prices decrease.

Prices of crude oil and natural gas have been historically volatile, and we expect this volatility to continue.

Consequently, even if new natural gas or crude oil reserves are discovered in areas served by our assets, producers may choose not to develop those reserves.

For example, current low prices for natural gas combined with relatively high levels of natural gas in storage could result in curtailment or shut-in of natural gas production similar to the production shut-ins we experienced in 2020 due to the impacts of the COVID-19 pandemic.

Furthermore, in response to depressed commodity prices, many operators have announced substantial reductions in their estimated capital expenditures, rig count and completion crews.

Reductions in exploration and production activity, competitor actions or shut-ins by producers in the areas in which we operate may prevent us from obtaining supplies of natural gas or crude oil to replace the natural decline in volumes from existing wells, which could result in reduced volumes through our facilities and reduced utilization of our assets.

Our NGL and sulfur-based fertilizer products are subject to seasonal demand and could cause our revenues to vary.

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The continuing trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment, and, thus, any changes in environmental laws and regulations that result in more stringent and costly waste handling, storage, transport, disposal or remediation requirements could have a material adverse effect on our operations and financial position.

Companies across all industries are facing increasing scrutiny from stakeholders related to their environmental, social, and governance (“ESG”) practices.

Investor advocacy groups, certain institutional investors, investment funds, and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments.

Regardless of the industry, investors’ increased focus and activism related to ESG and similar matters may hinder access to capital, as investors may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices.

Companies that do not adapt to or comply with investor or stakeholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition, and/or stock price of such a company could be materially and adversely affected.

Our stakeholders may require us to implement ESG procedures or standards in order to remain invested in us or before they may make further investments in us.

Additionally, we may face reputational challenges in the event our ESG procedures or standards do not meet the standards set by certain constituencies.

If we do not meet our stakeholders’ expectations, our business, ability to access capital, and/or our common unit price could be harmed.

Additionally, adverse effects upon the oil and gas industry related to the worldwide social and political environment, including uncertainty or instability resulting from climate change, changes in political leadership and environmental policies, changes in geopolitical-social views toward fossil fuels and renewable energy, concern about the environmental impact of climate change and investors’ expectations regarding ESG matters, may also adversely affect demand for our services.

Any long-term material adverse effect on the oil and gas industry could have a significant financial and operational adverse impact on our business.

The loss or insufficient attention of key personnel could negatively impact our results of operations and ability to make distributions to our unitholders.

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Any significant interruptions at our facilities, facilities owned or operated by our suppliers or customers, or in the oil and gas industry as a whole caused by such attacks or acts could have a material adverse effect on our results of operations, cash flow and ability to make distributions to our unitholders.

We depend upon third-party pipelines, storage and other facilities that provide delivery options to and from our terminals.

Since we do not own or operate these pipelines or other facilities, their continuing operation in their current manner is not within our control.

If any of these third-party facilities become partially or fully unavailable, or if the quality specifications for their facilities change so as to restrict our ability to utilize them, our revenues could be adversely affected.

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The trucking industry is subject to possible regulatory and legislative changes that may impact our operations, such as changes in fuel emissions limits, hours of service regulations that govern the amount of time a driver may drive or work in any specific period, and limits on vehicle weight and size.

maintenance, impairment of equipment productivity, a decrease in the residual value of vehicles, and an increase in operating expenses.

As the federal government continues to develop and propose regulations relating to fuel quality, engine efficiency and GHG emissions, we may experience an increase in costs related to truck purchases and maintenance, impairment of equipment productivity, a decrease in the residual value of vehicles, and an increase in operating expenses.

Increased truck traffic may contribute to deteriorating road conditions in some areas where we operate.

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If such events occur, our results of operations may be adversely affected.

A downgrade of our credit ratings could impact our liquidity, access to capital and costs of doing business, and maintaining credit ratings is under the control of independent third parties.

A downgrade of our credit ratings may increase our cost of borrowing and could require us to post collateral with third parties, negatively impacting our available liquidity.

Our and our subsidiaries’ ability to access capital markets could also be limited by a downgrade of our credit ratings.

Credit rating agencies perform independent analysis when assigning credit ratings.

The analysis includes a number of criteria including, but not limited to, business composition, market and operational risks, as well as various financial tests.

Credit rating agencies continue to review the criteria for industry sectors and various debt ratings and may make changes to those criteria from time to time.

Credit ratings are not recommendations to buy, sell or hold investments in the rated entity.

Ratings are subject to revision or withdrawal at any time by the rating agencies, and we cannot assure you that we will maintain our current credit ratings.

The industry in which we operate is highly competitive, and increased competitive pressure could adversely affect our business and operating results.

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We are reliant on technology to improve efficiency in our business.

Information technology systems are critical to our operations.

Information technology systems are critical to our operations and those of our third-party providers with whom we are connected.

These systems could be a potential target for a cyber security attack as they are used to store and process sensitive information regarding our operations, financial position, and information pertaining to our customers and vendors.

Dependence on automated systems may increase the risks related to operational systems failures and breaches of critical operational or financial controls, and tampering or deliberate manipulation of such systems may result in losses that are difficult to detect.

While we take the utmost precautions, we cannot guarantee safety from all threats and attacks.

Any successful breach of security could result in the spread of inaccurate or confidential information, disruption of operations, environmental harm, endangerment of employees, damage to our assets, and increased costs to respond.

Some individuals and groups, including criminal organizations and state-sponsored groups, have attempted to gain unauthorized access to computer networks of U.S.

businesses and mounted so-called “cyberattacks” to disable or disrupt computer systems, disrupt operations, and steal funds or data including through so-called “phishing” schemes, which are attempts to obtain unauthorized access by targeted acts of deception against individuals with legitimate access to physical locations or information.

For example, in 2021, a company in the midstream industry suffered a ransomware cyberattack that impacted computerized equipment managing a pipeline and resulted in the halt of the pipeline’s operations in order to contain the attack.

Any successful breach of security with respect to us or our third-party providers could result in the spread of inaccurate or confidential information, disruption of operations, environmental harm, endangerment of employees, damage to our assets, and increased costs to respond.

Any of these instances could have a negative impact on cash flows, litigation status and/or our reputation, which could have a material adverse effect on our business, financial conditions and operations.

Due to COVID-19 protocols, many of our employees and those of our service providers, vendors and customers have been accessing computer systems remotely where their cybersecurity protections may be less robust and our cybersecurity procedures and safeguards may be less effective.

While we make significant investments in technology security and we carefully evaluate the security of selected cloud system providers and cloud storage providers, there can be no guarantee that information security efforts will be totally effective.

Moreover, as cyberattacks continue to evolve, we may be required to expend significant additional resources to further enhance our digital security or to remediate vulnerabilities.

In addition, cyberattacks against us or others in our industry could result in additional regulations, which could lead to increased regulatory compliance costs, insurance coverage cost, or capital expenditures and any failure by us to comply with these additional regulations could result in significant penalties and liability to us.

In May and July 2021, following ransomware attacks on a major petroleum pipeline, the Department of Homeland Security issued security directives to certain midstream pipeline companies that require such companies to appoint cybersecurity personnel, perform cybersecurity assessments and complete specific network enhancements, and report incidents and other information to the Department’s Cybersecurity and Infrastructure Security Agency.

We cannot predict the potential impact to our business or the energy industry resulting from additional regulations.

Our business is subject to complex and evolving U.S.

laws and regulations regarding privacy and data protection (“data protection laws”).

Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, increased cost of operations, or otherwise harm our business.

The regulatory environment surrounding data privacy and protection is constantly evolving and can be subject to significant change.

New data protection laws pose increasingly complex compliance challenges and potentially elevate our costs.

Complying with varying jurisdictional requirements could increase the costs and complexity of compliance, and violations of applicable data protection laws can result in significant penalties.

Any failure, or perceived failure, by us to comply with applicable data protection laws could result in proceedings or actions against us by governmental entities or others, subject us to significant fines, penalties, judgments, and negative publicity, require us to change our business practices, increase the costs and complexity of compliance, and adversely affect our business.

As noted above, we are also subject to the possibility of cyberattacks, which themselves may result in a violation of these laws.

Risks Relating to an Investment in the Common Units

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• the conversion of units of equal rank with the common units into common units under some circumstances;

• the conversion of our general partner's general partner interest in us and its incentive distribution rights into common units as a result of the withdrawal of our general partner.

• the conversion of our general partner's general partner interest in us as a result of the withdrawal of our general partner.

Our Partnership Agreement does not restrict our ability to issue equity securities ranking junior to the common units at any time.

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Our general partner generally may not be removed except upon the vote of the holders of at least 66 2/3% of the outstanding units voting together as a single class.

As of December 31, 2020, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units.

As of December 31, 2021, Martin Resource Management Corporation owned 15.8% of our total outstanding common limited partner units and all of the ownership interests in MMGP, our general partner.

Unitholders' voting rights are further restricted by our Partnership Agreement provision prohibiting any units held by a person owning 20% or more of any class of units then outstanding, other than our general partner, its affiliates, their transferees and persons who acquired such units with the prior approval of our general partner's directors, from voting on any matter.

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Our Partnership Agreement requires our general partner to deduct from operating surplus cash reserves that it determines in its reasonable discretion to be necessary to fund our future operating expenditures.

In addition, our Partnership Agreement permits our general partner to reduce available cash by establishing cash reserves for the proper conduct of our

business, to comply with applicable law or agreements to which we are a party, or to provide funds for future distributions to partners.

In addition, our Partnership Agreement permits our general partner to reduce available cash by establishing cash reserves for the proper conduct of our business, to comply with applicable law or agreements to which we are a party, or to provide funds for future distributions to partners.

These cash reserves will affect the amount of cash available for distribution to our unitholders.

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• the conversion of units of equal rank with the common units into common units under some circumstances;

◦ the conversion of our general partner's general partner interest in us and its incentive distribution rights into common units as a result of the withdrawal of our general partner.

• the conversion of our general partner's general partner interest in us as a result of the withdrawal of our general partner.

We may issue an unlimited number of limited partner interests of any type without the approval of our unitholders.

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Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal controls over financial reporting addressing these assessments.

During the course of our testing we may identify deficiencies, which we may not be able to address in time to meet the deadline imposed by the Sarbanes-Oxley Act for

compliance with the requirements of Section 404.

During the course of our testing we may identify deficiencies, which we may not be able to address in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404.

In addition, if we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

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Martin Resource Management Corporation has conflicts of interest and limited fiduciary responsibilities, which may permit it to favor its own interests to the detriment of our unitholders.

As of December 31, 2020, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units and a 51% voting interest in Holdings, the sole member of MMGP.

MMGP owns a 2% general partnership interest in us and all of our incentive distribution rights.

As of December 31, 2021, Martin Resource Management Corporation owned 15.8% of our total outstanding common limited partner units and 100% of the ownership interests in MMGP.

MMGP owns a 2% general partnership interest in us.

Conflicts of interest may arise between Martin Resource Management Corporation and our general partner, on the one hand, and our unitholders, on the other hand.

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Although we intend to meet this gross income requirement, we may not find it possible, regardless of our efforts, to meet this gross income requirement or may inadvertently fail to meet this gross income requirement.

If we do not meet this

gross income requirement for any taxable year and the IRS does not determine that such failure was inadvertent, we would be treated as a corporation for such taxable year and each taxable year thereafter.

If we do not meet this gross income requirement for any taxable year and the IRS does not determine that such failure was inadvertent, we would be treated as a corporation for such taxable year and each taxable year thereafter.

If we were treated as a corporation for federal income tax purposes, we would owe federal income tax on our income at the corporate tax rate, which is currently a maximum of 21%, and would likely owe state income tax at varying rates.

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Treatment of us as a corporation would result in a reduction in the anticipated cash flow and after-tax return to unitholders and therefore would likely result in a reduction in the value of the common units.

Our Partnership Agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or otherwise subjects us to entity-level taxation for federal, state or local income tax purposes, then the minimum quarterly distribution amount and the target distribution amount will be adjusted to reflect the impact of that law on us.

The tax treatment of publicly traded partnerships or an investment in our units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.

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federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units, may be modified by administrative, legislative or judicial interpretation at any time.

At the federal level, members of Congress and the President of the United States have periodically considered substantive changes to the existing U.S.

At the federal level, members of Congress and the President of the U.S.

have periodically considered substantive changes to the existing U.S.

tax laws that would have affected certain publicly traded partnerships, including the elimination of partnership tax treatment for publicly traded partnerships.

At the state level, because of widespread state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise and other forms of taxation.

For example, we are required to pay a Texas margin tax at a maximum effective rate of 0.525% of our gross income apportioned to Texas in the prior year.

For example, we are required to pay a Texas margin tax at a maximum effective

rate of 0.525% of our gross income apportioned to Texas in the prior year.

Imposition of any such tax on us by any other state will reduce the cash available for distribution to our unitholders.

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If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties and interest as a result of audit adjustments cash available for distribution to our unitholders may be substantially reduced.

These rules are not applicable to us for tax years beginning on or prior to December 31, 2017.

Additionally, we are required to designate a partner, or other person, with a substantial presence in the United States as the partnership representative ("Partnership Representative").

Additionally, we are required to designate a partner, or other person, with a substantial presence in the U.S.

as the partnership representative ("Partnership Representative").

The Partnership Representative will have the sole authority to act on our behalf for purposes of, among other things, U.S.

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However, under the Tax Cuts and Jobs Act, for taxable years beginning after December 31, 2017, the deduction for "business interest" is limited to the sum of the Partnership’s business interest income and 30% of its "adjusted taxable income." For the purposes of this limitation, the Partnership’s adjusted taxable income is computed without regard to any business interest expense or business interest income, and in the case of taxable years beginning before January 1, 2022, any deduction allowable for depreciation, amortization, or depletion to the extent such depreciation, amortization, or depletion is not capitalized into cost of goods sold with respect to inventory.

For our 2020 taxable year, the Coronavirus Aid, Relief, and Economic Security Act increases the 30% adjusted taxable income limitation to 50%, unless we elect not to apply such increase, and for purposes of determining our 50% adjusted taxable income limitation, we may elect to substitute our 2020 adjusted taxable income with our 2019 adjusted taxable income.

For our 2020 tax year only, the Coronavirus Aid, Relief, and Economic Security Act increased the 30% adjusted taxable income limitation to 50%.

If the Partnership’s "business interest" is subject to limitation under these rules, unitholders will be limited in their ability to deduct their share of any interest expense that has been allocated to them.

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federal income tax returns and pay tax on their share of our taxable income.

In addition,.

under the Tax Cuts and Jobs Act, if a unitholder sells or otherwise disposes of a unit, the transferee is required to withhold 10% of the amount realized by the transferor unless the transferor certifies that it is not a foreign person, and we are required to deduct and withhold from the transferee amounts that should have been withheld by the transferee but were not withheld.

In addition, if a unitholder sells or otherwise disposes of a unit, the transferee is required to withhold 10% of the amount realized by the transferor unless the transferor certifies that it is not a foreign person, and we are required to deduct and withhold from the transferee amounts that should have been withheld by the transferee but were not withheld.

However, the U.S.

Treasury and the IRS have suspended these rules for transfers of certain publicly traded partnership interests, including transfers of our common units that occur before January 1, 2023.

Under recently finalized Treasury Regulations, in the case of transfers of our common units occurring on or after January 1, 2022, such withholding will be required on open market transactions, but in the case of a transfer made through a broker, the obligation to withhold will be imposed on the broker instead of the transferee (and we will generally not be required to withhold from the transferee amounts that should have been withheld by the transferee but were not withheld).

Under recently finalized Treasury Regulations and a recent IRC Notice, in the case of transfers of our common units occurring on or after January 1, 2023, such withholding will be required on open market transactions, but in the case of a transfer made through a broker, the obligation to withhold will be imposed on the broker instead of the transferee (and we will generally not be required to withhold from the transferee amounts that should have been withheld by the transferee but were not withheld).

We treat a purchaser of our common units as having the same tax benefits without regard to the seller's identity.

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Entity level taxes on income from C corporation subsidiaries will reduce cash available for distribution, and an individual unitholder’s share of dividend and interest income from such subsidiaries would constitute portfolio income that could not be offset by the unitholder’s share of our other losses or deductions.

A portion of our taxable income is earned through Martin Transport Inc.(“MTI”), which is a C corporation for federal tax purposes.

A portion of our taxable income is earned through MTI, which is a C corporation for federal tax purposes.

C corporations are subject to federal income tax on their taxable income at the corporate tax rate, which is currently 21%, and will likely pay state (and possibly local) income tax at varying rates on their taxable income.

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Unitholders may be required to file state, local and foreign income tax returns and pay state and local income taxes in some or all of the various jurisdictions in which we do business or own property and may be subject to penalties for failure to comply with those requirements.

We own property and/or conduct business in Alabama, Arizona, Arkansas, California, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Nebraska, Nevada, Oklahoma, Pennsylvania, Tennessee, Texas, Utah, and West Virginia.

We own property and/or conduct business in Alabama, Arizona, Arkansas, California, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Nebraska, Oklahoma, Pennsylvania, Tennessee, Texas, Utah, and West Virginia.

We may do business or own property in other states or foreign countries in the future.

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Unused losses may be deducted when the unitholder disposes of its entire investment in us in a fully taxable transaction with an unrelated party.

A unitholder's share of our net passive income may be offset by unused losses from us carried over from prior years but not by losses from other passive activities, including losses from other publicly traded partnerships.

A unitholder's share of our net passive income may be offset by unused losses from us carried over from prior years but not by losses from other

passive activities, including losses from other publicly traded partnerships.

Other limitations that may further restrict the deductibility of our losses by a unitholder include the at-risk rules, the excess loss limitation rules for non-corporate unitholders that applies until January 1, 2026, and the prohibition against loss allocations in excess of the unitholder's tax basis in its units.

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The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders.

We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is

Treasury regulations permit publicly traded partnerships to use a monthly simplifying convention that is similar to ours, but they do not specifically authorize all aspects of the proration method we have adopted.

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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-K

Item 1A. Risk Factors