What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-03-01 compared with 2021-03-03 · 197 added, 181 removed, 366 unchanged (51% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are a publicly traded limited partnership with a diverse set of operations focused primarily in the U.S.

Gulf Coast region.

We are a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the U.S.

Our four primary business lines include:

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In addition to these major and independent oil and gas companies, our primary customers include independent refiners, large chemical companies, and other wholesale purchasers of these products.

We operate primarily in the U.S.

Gulf Coast region.

We operate primarily in the Gulf Coast region of the U.S.

This region is a major hub for petroleum refining, natural gas gathering and processing, and support services for the exploration and production industry.

Significant Recent Developments

Sale of Mega Lubricants.

On December 22, 2020, we entered into an asset purchase and sale agreement to sell Mega Lubricants to Stone Oil for $22.4 million.

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

The transaction closed on December 22, 2020.

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

Exchange Offer and Cash Tender Offer

On August 12, 2020, we successfully completed our exchange offer and consent solicitation to certain eligible holders of our 2021 Notes and separate but related cash tender offer and consent solicitation to certain other holders of our 2021 Notes.

Please see Note 15 in Part II of this Form 10-K for more information about the exchange offer and related transactions.

COVID-19 surfaced in late 2019 and has spread around the world, including to the United States.

In March 2020, the World Health Organization declared COVID-19 a pandemic.

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

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

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

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

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

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

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.

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

This should ultimately improve refined product demand as people get back to work and begin traveling again.

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

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

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

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

Hurricane Ida.

On August 29, 2021, Ida made landfall in Southeast Louisiana as a category 4 hurricane.

Ida impacted our transportation and sulfur services segments due to the effects on refinery utilization in the Lake Charles, Louisiana area resulting from the storm.

We did not experience any material storm-related damage.

We spent approximately $0.1 million on restoration and recovery costs as a result of Ida.

Winter Storm Uri.

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

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

Additionally, our Smackover Refinery was down approximately nine days due to Uri, during which time we began preparations for the previously scheduled turnaround in March of 2021.

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

We continue to monitor the impacts of the COVID-19 pandemic (including variants of the virus) on all aspects of our business.

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

Looking forward, we expect to continue to experience some adverse impacts of COVID-19 in our marine transportation segment, but we believe that refinery utilization will continue to increase as a result of widespread vaccinations and a rebounding economy.

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

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

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

Accordingly, it is possible that the impact of the pandemic, including the impact of variants of COVID-19, could have a material adverse effect on the Partnership's results of operations, financial position and cash flows in 2022, including the recoverability of long-lived assets and goodwill, the valuation of inventory, and the amount of expected credit losses.

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

A sustained reduction in refinery demand and utilization could lead to future asset impairments as well as

adversely affect access to capital and financing to be able to meet future obligations.

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

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

Regulatory Developments .

On January 20, 2021, the Biden Administration came into office and immediately issued a number of executive orders related to climate change and the production of oil and gas that could affect our operations and those of our customers.

On his first day in office, President Biden signed an instrument reentering the U.S.

into the Paris Agreement, effective February 19, 2021, and issued an executive order on “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” seeking to adopt new regulations and policies to address climate change and suspend, revise, or rescind prior agency actions that are identified as conflicting with the Biden Administration’s climate policies.

In addition, on January 27, 2021, President Biden issued an executive order indefinitely suspending new oil and natural gas leases on public lands or in offshore waters pending completion of an ongoing comprehensive review and reconsideration of federal oil and gas permitting and leasing practices.

On June 15, 2021, however, a judge in the U.S.

District Court for the Western District of Louisiana issued a nationwide temporary injunction blocking the suspension.

The Department of the Interior appealed the U.S.

District Court’s ruling but resumed oil and gas leasing pending resolution of the appeal.

In November 2021, the Department of the Interior completed its review and issued a report on the federal oil and gas leasing program.

The Department of the Interior’s report recommends several changes to federal leasing practices, including changes to royalty payments, bidding, and bonding requirements.

Furthermore, on April 22, 2021, at a global summit on climate change, President Biden committed the U.S.

to target emissions reductions of 50-52% of 2005 levels by 2030.

Lastly, on June 30, 2021, President Biden signed into law a reinstatement of regulations put in place during the Obama administration regarding methane emissions.

The Company had previously complied with these regulations during the Obama administration and does not expect the reinstatement to have a material effect on the Company or its operations.

The Biden Administration could also seek, in the future, to put into place additional executive orders, policy and regulatory reviews, or seek to have Congress pass legislation that could adversely affect the production of oil and natural gas, and our operations and those of our customers.

For more information about the potential physical effects of climate change and environmental regulation on our business, see our environmental and climate change related risk factors in Section 1A “Risk Factors.”

Subsequent Events

Retirement of 2021 Notes.

On February 15, 2021, our 2021 Notes matured and we retired the outstanding balance of $28.8 million using our revolving credit facility.

Quarterly Distribution.

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

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

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

generally accepted accounting principles ("U.S.

GAAP" or "GAAP").

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Our impairment analyses require management to use judgment in estimating future cash flows and useful lives, as well as assessing the probability of different outcomes.

Applying this impairment review methodology, we recorded an impairment charge of $3.1 million and $1.3 million in our Terminalling and Storage and Transportation segments, respectively, during the year ended December 31, 2020.

No impairment of long-lived assets was recorded during the years ended December 31, 2019 or 2018.

Applying this impairment review methodology, no impairment was recorded during the year ended December 31, 2021.

We recorded an impairment charge of $3.1 million and $1.3 million in our Terminalling and Storage and Transportation segments, respectively, during the year ended December 31, 2020.

No impairment of long-lived assets was recorded during the year ended December 31, 2019.

Impairment of Goodwill

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We conduct impairment testing using present economic conditions, as well as future expectations.

Applying this impairment review methodology, we considered the impact that COVID-19 had on our cash flows and the value our unit price during 2020 and elected to bypass the qualitative assessment and perform a quantitative assessment.

Applying this impairment review methodology, we considered the impact that COVID-19 had on our cash flows and the value our unit price during 2021 and 2020 and elected to bypass the qualitative assessment and perform a quantitative assessment during each of those years.

Based upon the most recent annual review as of August 31, 2021, no goodwill impairment exists within our reporting units for the year ended December 31, 2021.

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Our Relationship with Martin Resource Management Corporation

Martin Resource Management Corporation directs our business operations through its ownership and control of our general partner and under the Omnibus Agreement.

Martin Resource Management Corporation directs our business operations through its ownership of our general partner and under the Omnibus Agreement.

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

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Certain Relationships and Related Transactions, and Director Independence."

How We Evaluate Our Operations

Non-GAAP Financial Measures

To assist management in assessing our business, we use the following non-GAAP financial measures:

earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below), distributable cash flow available to common unitholders (“Distributable Cash Flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("Adjusted Free Cash Flow").

Our management uses a variety of financial and operational measurements other than our financial statements prepared in accordance with U.S.

GAAP to analyze our performance.

These include:

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

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

We believe investors benefit from having access to the same financial measures that our management uses.

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

EBITDA and Adjusted EBITDA .

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

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

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

our operating performance and return on capital as compared to those of other similarly situated entities;

and the viability of acquisitions and capital expenditure projects.

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

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

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

Adjusted EBITDA is used as a supplemental performance and liquidity measure by our management and by external users of our financial statements, such as investors, commercial banks, research analysts, and others, to assess:

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

• the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness, and make cash distributions to our unitholders;

• our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing methods or capital structure.

The GAAP measures most directly comparable to adjusted EBITDA are net income (loss) and net cash provided by operating activities.

Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by operating activities, or any other measure of financial performance presented in accordance with GAAP.

Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate Adjusted EBITDA in the same manner.

Adjusted EBITDA does not include interest expense, income tax expense, and depreciation and amortization.

Because we have borrowed money to finance our operations, interest expense is a necessary element of our costs and our ability to generate cash available for distribution.

Because we have capital assets, depreciation and amortization are also necessary elements of our costs.

Therefore, any measures that exclude these elements have material limitations.

To compensate for these limitations, we believe that it is important to consider net income (loss) and net cash provided by operating activities as determined under GAAP, as well as adjusted EBITDA, to evaluate our overall performance.

Distributable Cash Flow.

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

We define Distributable Cash Flow as Net Cash Provided by (Used in) Operating Activities less cash received (plus cash paid) for closed commodity derivative positions included in Accumulated Other Comprehensive Income (Loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital expenditures and plant turnaround costs.

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

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

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

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

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

Adjusted Free Cash Flow.

We define Adjusted Free Cash Flow as Distributable Cash Flow less growth capital expenditures and principal payments under finance lease obligations.

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

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

Our calculation of Adjusted Free Cash Flow may or may not be comparable to similarly titled measures used by other entities.

The GAAP measure most directly comparable to Distributable Cash Flow and Adjusted Free Cash Flow is Net Cash Provided by (Used in) Operating Activities.

Distributable Cash Flow and Adjusted Free Cash Flow should not be considered alternatives to, or more meaningful than, Net Income (Loss), Operating Income (Loss), Net Cash Provided by (Used in) Operating Activities , or any other measure of liquidity presented in accordance with GAAP.

Distributable Cash Flow and Adjusted Free Cash Flow have important limitations because they exclude some items that affect Net Income (Loss), Operating Income (Loss), and Net Cash Provided by (Used in) Operating Activities.

Distributable Cash Flow and Adjusted Free Cash Flow may not be comparable to similarly titled measures of other companies because other companies may not calculate these non-GAAP metrics in the same manner.

To compensate for these limitations, we believe that it is important to consider Net Cash Provided by (Used in) Operating Activities determined under GAAP, as well as Distributable Cash Flow and Adjusted Free Cash Flow, to evaluate our overall liquidity.

Non-GAAP Financial Measures

The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the years ended December 31, 2020, 2019, and 2018, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow from continuing operations.

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the years ended December 31, 2021 and 2020, which represents EBITDA, Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

Year Ended December 31,

2020 2019 2018

(in thousands)

Net income (loss) $ (6,771) $ (174,946) $ 55,655

(Income) loss from discontinued operations, net of income taxes — 179,466 (63,486)

Income (loss) from continuing operations (6,771) 4,520 (7,831)

Net loss $ (211) $ (6,771)

Interest expense 54,107 46,210

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Depreciation and amortization 56,751 61,462

EBITDA from Continuing Operations 102,637 118,170 106,579

Gain on sale of property, plant and equipment (9,788) (13,332) (1,041)

EBITDA 114,027 102,637

(Gain) loss on disposition of property, plant and equipment 534 (9,788)

Gain on involuntary conversion of property, plant and equipment (196) (4,907)

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Unit-based compensation 384 1,422

Transaction costs associated with acquisitions — 224 465

Adjusted EBITDA from Continuing Operations 94,857 108,290 107,151

Adjusted EBITDA 114,542 94,857

Reconciliation of Net Cash provided by Operating Activities to Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow

Year Ended December 31,

(in thousands)

Net cash provided by operating activities $ 35,729 $ 64,785

Interest expense 1

50,740 42,979

Current income tax expense 948 567

Lower of cost or market adjustments — 370

Loss on exchange of senior unsecured notes — 8,817

Non-cash impact related to exchange of senior unsecured notes — 749

Non-cash insurance related accrual — 250

Net cash (received) paid for closed commodity derivative positions included in AOCI (816) —

Changes in operating assets and liabilities which (provided) used cash:

Accounts and other receivables, inventories, and other current assets 42,936 (33,204)

Trade, accounts and other payables, and other current liabilities (14,346) 8,074

Other (649) 1,470

Adjusted EBITDA 114,542 94,857

Interest expense (54,107) (46,210)

Income tax expense (3,380) (1,736)

Amortization of deferred debt issuance costs 3,422 4,041 3,445

Amortization of debt premium (191) (306) (306)

Deferred income taxes 2,432 1,169

Amortization of debt premium — (191)

Amortization of deferred debt issuance costs 3,367 3,422

Payments for plant turnaround costs (4,109) (1,478)

Maintenance capital expenditures (14,115) (10,138)

Distributable Cash Flow from Continuing Operations $ 39,695 $ 41,750 $ 36,126

Income (loss) from discontinued operations, net of income taxes $ — $ (179,466) $ 63,486

Depreciation and amortization $ — $ 8,161 $ 18,795

EBITDA from Discontinued Operations $ — $ (171,305) $ 82,281

Equity in earnings of unconsolidated entities $ — $ — $ (3,382)

Distributions from unconsolidated entities $ — $ — $ 3,500

Gain on disposition of Investment in WTLPG $ — $ — $ (48,564)

Loss on sale of property, plant and equipment, net $ — $ 178,781 $ 824

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

Adjusted EBITDA from Discontinued Operations $ — $ 10,689 $ 34,659

Maintenance capital expenditures $ — $ (912) $ (1,952)

Distributable Cash Flow from Discontinued Operations $ — $ 9,777 $ 32,707

Distributable Cash Flow 44,630 39,695

Principal payments under finance lease obligations (2,707) (4,562)

Expansion capital expenditures (4,705) (10,828)

Adjusted Free Cash Flow 37,218 24,305

1 Net of amortization of debt issuance costs and discount and premium, which are included in interest expense but not included in net cash provided by operating activities.

Results of Operations

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

The Natural Gas Liquids segment information below excludes the discontinued operations of the Natural Gas Storage Assets and WTLPG partnership interests disposed of on June 28, 2019 and July 31, 2018, respectively, for the years ended December 31, 2019 and 2018.

The Natural Gas Liquids segment information below excludes the discontinued operations of the Natural Gas Storage Assets disposed of on June 28, 2019, for the year ended December 31, 2019.

See Item 8, Note 5.

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Services revenues.

Services revenue decreased $6.3 million, of which $3.8 million was primarily a result of expiring capital recovery fees at our Smackover refinery and decreased fees related to a crude pipeline gathering rate adjustment.

In addition, revenue from shore-based terminals decreased $2.1 million primarily due to decreased throughput of $3.2 million and consigned lube revenue of $0.6 million, offset by $1.0 million related to contract termination fees, and $0.8 million in space rental income.

Revenue from specialty terminals decreased $0.3 million due to $1.2 million in decreased throughput rates, offset by $0.8 million related to a new contract.

Services revenues decreased $5.9 million, of which $4.6 million was primarily a result of the disposition of the consigned lube business as part of the Mega Lubricants sale as well as a $1.0 million decrease related to contract termination fees and $0.2 million in decreased throughput fees at our shore-based terminals.

In addition, revenue at the Smackover refinery decreased $1.1 million primarily due to the expiring capital recovery fees of $2.6 million, offset by contractually prescribed, index-based fee adjustments of $1.1 million and natural gas surcharge revenue of $0.3 million.

Offsetting these decreases were increases at our specialty terminals related to storage revenue of $0.5 million, service revenue of $0.3 million and throughput revenue of $0.3 million.

Products revenues.

A 22% decrease in lubricant sales volumes combined with a 13% decrease in average sales price at our shore-based terminals resulted in a $10.3 million decrease to products revenues.

In addition, a 7% decrease in average sales price combined with a 2% decrease in sales volumes at our blending and packaging facilities resulted in an $8.8 million decrease in products revenues.

A 22% increase in average sales price combined with a 4% increase in sales volumes at our blending and packaging facilities resulted in a $22.2 million increase in products revenues.

Offsetting these increases, the disposition of our Mega Lubricants business resulted in a $21.3 million decrease in products revenues at our shore-based terminals.

Cost of products sold.

A 22% decrease in sales volumes combined with a 14% decrease in average cost per gallon at our shore-based terminals resulted in a $9.8 million decrease in cost of products sold.

In addition, an 11% decrease in average cost per gallon combined with a 2% decrease in sales volume at our blending and packaging facilities resulted in a $9.7 million decrease in cost of products sold.

The disposition of our Mega Lubricants business resulted in a $24.3 million decrease in cost of products sold at our shore-based terminals.

Offsetting this decrease, a 26% increase in average cost per gallon combined with a 4% increase in sales volume at our blending and packaging facilities resulted in a $20.3 million increase in cost of products sold.

Operating expenses.

Operating expenses decreased $2.9 million, primarily as a result of decreases in repairs and maintenance of $1.0 million, miscellaneous operating expenses of $0.8, compensation expense of $0.7 million, and professional fees of $0.3 million across our terminals.

Operating expenses increased primarily as a result of increased natural gas utilities across all of our terminals.

Selling, general and administrative expenses.

Selling, general and administrative expenses increased primarily as a result of an increase in legal expenses.

Selling, general and administrative expenses decreased primarily as a result of decreased compensation expense.

Depreciation and amortization.

The decrease in depreciation and amortization is due to the disposition of assets at several closed shore-based facilities, offset by recent capital expenditures.

The decrease in depreciation and amortization is due to recent disposals, offset by recent capital expenditures.

Other operating income (loss), net.

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Gain on involuntary conversion of property, plant and equipment.

The $0.1 million gain on involuntary conversion of property, plant and equipment is due to insurance proceeds received related to structural damage of terminalling assets during a weather incident at our Neches Terminal in May of 2019.

The $0.2 million gain for the year ended December 31, 2021 is due to insurance proceeds received related to structural damage at one of our shore-based terminals.

The $0.1 million gain for the year ended December 31, 2020 is due to insurance proceeds received related to structural damage at one of our specialty terminals during a weather incident at our Neches Terminal in May of 2019.

Transportation Segment

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8,342 2,471 5,871 238%

Other operating loss, net (690) (1,691) 1,001 59%

Other operating income (loss), net 74 (690) 764 111%

Operating income $ 8,416 $ 1,781 $ 6,635 373%

Marine Transportation Revenues .

Inland revenues decreased $11.2 million, primarily related to a decrease in tows, transportation rates and utilization.

In addition, offshore revenue decreased $2.4 million due to a decrease in transportation rates and utilization.

Revenue was also impacted by a decrease in pass-through revenue (primarily fuel) of $3.3 million.

Inland revenues decreased $13.1 million, primarily related to a reduction in marine equipment.

In addition, offshore revenue decreased $0.6 million due to decreased utilization related to regulatory inspections.

Revenue was also impacted by an increase in pass-through revenue (primarily fuel) of $0.3 million.

Land Transportation Revenues.

An 11% decrease in miles of product transported resulted in a decrease to freight revenue of $11.5 million.

Transportation rates increased 2% resulting in an offsetting increase of $1.5 million.

Additionally, fuel surcharge revenue decreased $6.6 million.

Transportation rates increased 14%, resulting in an increase of $13.1 million.

A 3% increase in miles of product transported resulted in an additional increase to freight revenue of $3.4 million.

Additionally, fuel surcharge revenue increased $7.9 million.

Operating expenses .

The decrease in operating expenses is primarily a result of decreased pass through expenses (primarily fuel) of $8.5 million, compensation expense of $8.1 million, repairs and maintenance of $2.1 million, and outside services of $0.7 million.

The increase in operating expenses is primarily a result of increased pass through expenses (primarily fuel) of $4.4 million and compensation expense of $2.9 million.

Selling, general and administrative expenses .

Selling, general and administrative expenses remained relatively consistent.

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

Depreciation and amortization .

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

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

Other operating income (loss), net.

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

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

Sulfur Services Segment

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Products Revenues.

Products revenues decreased $2.7 million as a result of a 3% decline in average sulfur services sales prices.

Products revenues decreased an additional $0.8 million due to a 1% decrease in sales volumes, primarily related to a 3% decr ease in sulfur volumes.

Products revenues increased $65.0 million as a result of a 68% rise in average sulfur services sales prices.

Products revenues decreased an offsetting $28.2 million due to a 17% decrease in sales volumes, primarily related to a 29% decrease in sulfur volumes.

Cost of products sold.

A 12% decline in product cost impacted cost of products sold by $8.3 million, resulting from a decrease in commodity prices.

A 1% decrease in sales volumes resulted in an additional decrease in cost of products sold of $0.5 million.

Margin per to n increased $6.09, or 20%.

An 83% increase in product cost impacted cost of products sold by $52.5 million, resulting from an increase in commodity prices.

A 17% decrease in sales volumes resulted in an offsetting decrease in cost of products sold of $20.1 million.

Margin per ton increased $13.67, or 37%.

Operating expenses.

Our operating expenses increased $0.4 million due to insurance claims and $0.4 million due to outside towing.

Offsetting were decreases in marine fuel and lube of $0.3 million, assist tugs of $0.1 million and repairs and maintenance of $0.1 million.

Operating expenses decreased due to a decrease in outside towing of $0.3 million, repairs and maintenance of marine assets and railcars of $0.2 million, insurance premiums and claims of $0.2 million, employee related expenses of $0.1 million, assist tugs of $0.1 million, and lease expense of $0.1 million.

Offsetting was an increase in utilities of $0.2 million, contract labor of $0.1 million and harbor agency fees of $0.1 million.

Selling, general and administrative expenses.

Selling, general and administrative expenses remained relatively consistent.

Selling, general and administrative expenses increased $0.3 million in employee related expenses and $0.2 million in corporate overhead.

Depreciation and amortization.

Depreciation and amortization expense increased $0.7 million as a result of recent capital expenditures.

Other operating income (loss), net.

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

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

Depreciation and amortization decreased as a result of certain assets being fully depreciated in the prior period as well as a transfer of assets between segments during the three months ended June 30, 2021.

A further decline was attributable to reduced amortization of turnaround costs.

Other operating income, net.

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

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

Gain on involuntary conversion of property, plant and equipment.

The $4.8 million gain is primarily due to insurance proceeds received related to structural damage of our ship-loader assets during a weather incident at our Neches Terminal in May of 2019.

The $4.8 million gain for the year ended December 31, 2020 is primarily due to insurance proceeds received related to structural damage of our ship-loader assets during a weather incident at our Neches Terminal in May of 2019.

Natural Gas Liquids Segment

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26,255 9,662 16,593 172%

Other operating income (loss), net (2) 16,402 (16,404) (100)%

Other operating loss, net (689) (2) (687) (34,350)%

Operating income $ 25,566 $ 9,660 $ 15,906 165%

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Products Revenues.

Our NGL average sales price per barrel decreased $10.51, or 28%, resulting in a decrease to products revenues of $103.2 million.

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

Our NGL average sales price per barrel increased $26.73, or 85%, resulting in an increase to products revenues of $210.6 million.

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

Product sales volumes decreased 10%, decreasing revenues $44.0 million.

Cost of products sold .

Our average cost per barrel decreased $10.07, or 29%, decreasing cost of products sold by $98.9 million.

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

Our average cost per barrel increased $23.71, or 82%, increasing cost of products sold by $186.8 million.

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

The decrease in sales volume of 10% resulted in a $39.9 million decrease to cost of products sold.

Our margins decreased $0.44 per barrel, or 18% during the period.

Our margins increased $3.02 per barrel, or 124% during the period.

Operating expenses .

Operating expenses decreased $2.3 million related to the divestiture of assets and the elimination of the associated expenses.

In addition, operating expenses decreased $1.0 million related to the settlement of an insurance claim for less than anticipated.

Operating expenses increased $1.1 million related to the 2020 settlement of an insurance claim for less than anticipated with no corresponding transaction in 2021.

Selling, general and administrative expenses .

Selling, general and administrative expenses decreased $0.7 million as a result of decreased compensation expense.

Selling, general and administrative expenses increased $2.1 million as a result of increased compensation expense.

Other operating income loss, net.

Other operating income (loss), net represents the gains associated with the disposition of the East Texas Pipeline in 2019.

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

Interest Expense

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(In thousands)

Revolving credit facility $ 8,719 $ 18,550 $ (9,831) (53)%

7.250% senior unsecured notes 16,969 27,101 (10,132) (37)%

11.5% senior secured notes 13,151 — 13,151

10.0% senior secured notes 2,105 — 2,105

Credit facility $ 9,498 $ 8,719 $ 779 9%

Senior notes 39,303 32,225 7,078 22%

Amortization of deferred debt issuance costs 3,367 3,422 (55) (2)%

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Capitalized interest — (43) 43 100%

Interest income — (91) 91 100%

Total interest expense, net $ 54,106 $ 46,210 $ 7,896 17%

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Indirect selling, general and administrative expenses $ 16,129 $ 17,909 $ (1,780) (10)%

Indirect selling, general and administrative expenses remained consistent from 2019 to 2020.

Indirect selling, general and administrative decreased primarily due to a decrease in the indirect expenses allocated from Martin Resource Management Corporation.

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

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Liquidity and Capital Resources

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

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

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

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Financing activities (21,394) (65,287) 43,893 67%

Net decrease in cash and cash equivalents $ 2,102 $ 2,556 $ (454) (18)%

Net increase (decrease) in cash and cash equivalents $ (4,906) $ 2,102 $ (7,008) (333)%

Net cash provided by operating activities.

The decrease in net cash provided by operating activities for the year ended December 31, 2020 includes a $7.8 million decrease in net cash received from discontinued operating activities, a decrease in operating results of $11.3 million, and an unfavorable variance in other non-current assets and liabilities of $0.9 million.

An additional $6.0 million decrease in other non-cash charges was primarily due to a $4.9 million gain on involuntary conversion of property, plant and equipment.

Offsetting this decrease was a favorable variance in working capital of $15.0 million.

Net cash provided by investing activities.

The decrease in net cash provided by operating activities for the year ended December 31, 2021 includes an unfavorable variance in working capital of $53.7 million, primarily related to a decrease in accounts receivable when comparing the year ended December 31, 2019 to the year ended December 31, 2020, offset by an increase in accounts receivable when comparing the year ended December 31, 2020 to the year ended December 31, 2021.

Offsetting this decrease was an increase in operating results of $6.6 million and a favorable variance in other non-current assets and liabilities of $2.1 million.

An additional $16.0 million increase in other non-cash charges was primarily due to a $10.3 million gain on sale of property, plant and equipment and a $4.7 million gain on involuntary conversion of property, plant and equipment, both during year ended December 31, 2020.

Net cash provided by (used in) investing activities.

Net cash provided by investing activities for the year ended December 31, 2021 decreased $21.8 million.

Cash received from discontinued investing activities decreased $209.2 million.

Offsetting such decrease, net proceeds from the sale of property, plant and equipment increased $4.5 million and proceeds received from the involuntary conversion of property, plant and equipment increased $2.5 million.

A decrease in cash used of $6.2 million resulted from higher payments for capital expenditures and plant turnaround costs in 2019 as well as a decrease of $23.7 million in cash used resulting from assets acquired from MTI in January of 2019.

Net proceeds from the sale of property, plant and equipment decreased $24.5 million and proceeds received from the involuntary conversion of property, plant and equipment decreased $7.3 million.

A reduction in cash used of $9.9 million resulted from higher payments for capital expenditures and plant turnaround costs in 2020.

Net cash used in financing activities.

Net cash used in financing activities for the year ended December 31, 2020 decreased primarily as a result of a $102.4 million decrease in cash used related to excess purchase price over the carrying value of acquired assets in common control transactions during 2019.

Additionally, net payments of long-term borrowings decreased $35.3 million and cash distributions paid decreased $43.8 million.

Offsetting such decrease, costs associated with our credit facility increased $0.6 million.

Net cash used in financing activities for the year ended December 31, 2021 decreased primarily as a result of a $34.3 million increase in net proceeds from long-term debt.

Further, cash distributions paid decreased $4.5 million, costs associated with the credit facility decreased $3.2 million, and payments of finance lease obligations decreased $1.9 million.

Total Contractual Obligations

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Obligation Less than

Revolving credit facility $ 148,000 $ — $ 148,000 $ — $ —

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

Credit facility $ 159,500 $ — $ 159,500 $ — $ —

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

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Total contractual cash obligations $ 652,800 $ 49,860 $ 294,492 $ 301,628 $ 6,820

The interest payable under our revolving credit facility is not reflected in the above table because such amounts depend on the outstanding balances and interest rates, which vary from time to time.

Letter of Credit .

At December 31, 2020, we had outstanding irrevocable letters of credit in the amount of $16.7 million, which were issued under our revolving credit facility.

The interest payable under our credit facility is not reflected in the above table because such amounts depend on the outstanding balances and interest rates, which vary from time to time.

Letters of Credit .

At December 31, 2021, we had outstanding irrevocable letters of credit in the amount of $22.6 million, which were issued under our credit facility.

Off Balance Sheet Arrangements.

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Description of Our Indebtedness

Revolving Credit Facility

At December 31, 2020, we maintained a $300.0 million revolving credit facility which matures on August 31, 2023.

On July 8, 2020, the Partnership amended its revolving credit facility to, among other things, permit the Exchange Offer.

Please see Note 16 in Part II of this Form 10-K for more information about the July 8, 2020 amendment to our revolving credit facility ("the Credit Facility Amendment")..

As of December 31, 2020, we had $148.0 million outstanding under the revolving credit facility and $16.7 million of outstanding irrevocable letters of credit, leaving a maximum available to be borrowed under our credit facility for future revolving credit borrowings and letters of credit of $135.3 million.

After giving effect to our then current borrowings, outstanding letters of credit and the financial covenants contained in our revolving credit facility, we had the ability to borrow approximately $20.5 million in additional amounts thereunder as of December 31, 2020.

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

During the year ended December 31, 2020, the outstanding balance of our revolving credit facility has ranged from a low of $148.0 million to a high of $223.0 million.

Credit Facility

At December 31, 2021, we maintained a $275.0 million credit facility that matures on August 31, 2023.

As of December 31, 2021, we had $159.5 million outstanding under the credit facility and $22.6 million of outstanding irrevocable letters of credit, leaving a maximum available to be borrowed under our credit facility for future credit borrowings and letters of credit of $92.9 million.

After giving effect to our then current borrowings, outstanding letters of credit and the financial covenants contained in our credit facility, we had the ability to borrow approximately $92.9 million in additional amounts thereunder as of December 31, 2021.

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

During the year ended December 31, 2021, the outstanding balance of our credit facility has ranged from a low of $148.0 million to a high of $230.5 million.

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

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

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

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

Eurodollar Rate plus 1.0%, or the administrative agent’s prime rate) plus an applicable margin.

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

The letter of credit fee, the commitment fee and the applicable margins for our interest rate vary quarterly based on our Total Leverage Ratio (as defined in the Credit Facility Amendment, being generally computed as the ratio of total funded debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) and are as follows as of December 31, 2020:

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

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

Leverage Ratio

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

On July 16, 2021, the credit facility was amended to, among other things:

• require us to maintain a minimum Interest Coverage Ratio (as defined in the credit facility) of 1.75:1.0 with respect to the fiscal quarter ended in December of 2021, 1.85:1.0 with respect to the fiscal quarters ending in March and June of 2022, and 2.0:1.0 with respect to each fiscal quarter thereafter;

• require us to maintain a maximum Total Leverage Ratio (as defined in the credit facility) of not more than 5.25:1.0 with respect to the fiscal quarter ended in December of 2021, and 5.0:1.0 with respect to each fiscal quarter thereafter;

• require us to maintain a maximum First Lien Leverage Ratio (as defined in the credit facility) of not more than 2.25:1.0 with respect to the fiscal quarter ended in December of 2021, 1.75:1.0 with respect to each fiscal quarter ending in 2022, and 1.5:1.0 with respect to each fiscal quarter thereafter.

In addition, the credit facility contains various covenants, which, among other things, limit our and our subsidiaries’ ability to:

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

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

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

(vii) change the nature of our business;

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2025 Senior Secured Notes and Indenture

Pursuant to the Exchange Offer, we and Martin Midstream Finance Corp., our wholly owned subsidiary (collectively the "Issuers") issued $292.0 million in aggregate principal amount of the Issuers’ 11.50% senior secured second lien notes due 2025 (the "2025 Notes"), the 2025 Notes were issued to eligible holders that participated in the Exchange Offer pursuant to an indenture, dated as of August 12, 2020 (the "2025 Notes Indenture"), among the Issuers, the guarantors party thereto, U.S.

Pursuant to our exchange offer (the “the Exchange Offer”) to certain eligible holders of our 7.25% senior unsecured notes due 2021 (the “2021 Notes”), we and Martin Midstream Finance Corp., our wholly owned subsidiary (collectively the "Issuers") issued $292.0 million in aggregate principal amount of the Issuers’ 11.50% senior secured second lien notes due 2025 (the "2025 Notes").

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

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

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

Also, if at the end of any fiscal year (commencing with the fiscal year ending December 31, 2021) the Total Leverage Ratio (as defined in the Credit Facility Amendment) is greater than 3.75:1:00, the Issuers will use 25% of any excess annual cash flow (as defined in the 2025 Notes Indenture) to make an offer to all holders of the 2025 Notes to purchase the 2025 Notes at 100% of the principal amount thereof;

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

Also, if at the end of any fiscal year (commencing with the fiscal year ended December 31, 2021) the Total Leverage Ratio (as defined in the Credit Facility Amendment) is greater than 3.75:1:00, the Issuers will use 25% of any excess annual cash flow (as defined in the 2025 Notes Indenture) to make an offer to all holders of the 2025 Notes to purchase the 2025 Notes at 100% of the principal amount thereof;

Certain Covenants and Events of Default

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

Bank National Association, as trustee, or the holders of at least 25% in aggregate principal amount of the then outstanding 2025 Notes may declare all of the 2025 Notes to be due

and payable immediately and, subject to the terms of the Intercreditor Agreement, foreclose upon the collateral for the 2025 Notes.

Bank National Association, as trustee, or the holders

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

2024 Senior Secured Notes and Indenture

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

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

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

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

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

2021 Senior Notes and Indenture

The Issuers entered into an Indenture, dated as of February 11, 2013.

among the Issuers, certain subsidiary guarantors and Wells Fargo Bank, National Association, as trustee, under which the Issuers issued $400.0 million in aggregate principal amount of their 7.25% senior unsecured notes due 2021 (the "2021 Notes").

In 2015, we repurchased on the open market and subsequently retired an aggregate $26.2 million of our outstanding 2021 Notes.

In 2020, we repurchased on the open market and subsequently retired an aggregate $9.3 million of our outstanding 2021 Notes.

On August 12, 2020, we completed the Exchange Offer and Cash Tender Offer.

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

substantially all of the restrictive covenants in the indenture governing the 2021 Notes.

On February 15, 2021, our 2021 Notes matured and we retired the outstanding balance of $28.8 million using proceeds from our revolving credit facility.

Capital Resources and Liquidity

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

At December 31, 2020, we had cash and cash equivalents of $5.0 million and available borrowing capacity of $20.5 million under our revolving credit facility with $148.0 million of borrowings outstanding.

Our revolving credit facility matures on August 31, 2023.

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

At December 31, 2021, we had cash and cash equivalents of $0.1 million and available borrowing capacity of $92.9 million under our credit facility with $159.5 million of borrowings outstanding.

Our credit facility matures on August 31, 2023.

We expect that our primary sources of liquidity to meet operating expenses, service our indebtedness, pay distributions to our unitholders and fund capital expenditures will be provided by cash flows generated by our operations, borrowings under our credit facility and access to the debt and equity capital markets.

Our ability to generate cash from operations will depend upon our future operating performance, which is subject to certain risks.

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Risk Factors" of this Form 10-K.

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

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

The Partnership is in compliance with all debt covenants as of December 31, 2021 and expects to be in compliance for the next twelve months.

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

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

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

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

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Inflation did not have a material impact on our results of operations in 2021, 2020 or 2019.

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

economy and may increase the cost to acquire or replace property, plant and equipment.

Inflation may increase the cost to acquire or replace property, plant and equipment.

It may also increase the costs of labor and supplies.

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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 7. Management’s Discussion and Analysis