What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-03-03 · 332 added, 419 removed, 1080 unchanged (41% of the section changed)

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(Partnership) are listed below:

Report of Independent Registered Public Accounting Firm 66

Report of Independent Registered Public Accounting Firm (KPMG LLP, Dallas, TX, Auditor Firm ID 185 )

Consolidated Balance Sheets as of December 31, 2021 and 2020 71

Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019 72

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020 and 2019 75

Consolidated Statements of Changes in Capital (Deficit) for the years ended December 31, 2021, 2020 and 2019 76

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We have audited the accompanying consolidated balance sheets of Martin Midstream Partners L.P.

and subsidiaries (the Partnership) as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in capital (deficit), and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Partnership) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in capital (deficit), and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

Change in Accounting Principle

As discussed in note 3 to the consolidated financial statements, the Partnership has changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Codification 842, Leases .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2022 expressed an unqualified opinion on the effectiveness of the Partnership’s internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of goodwill for the terminalling and storage reporting unit

As discussed in Notes 2 and 9 to the consolidated financial statements, the goodwill balance as of December 31, 2020 was $16,823 thousand, of which $10,985 thousand related to the terminalling and storage reporting unit.

The Partnership performs goodwill impairment testing on an annual basis and more often if events or circumstances indicate there may be impairment.

During the first quarter of 2020, the Partnership determined that triggering events, including declines in the market price of its units and the economic downturn, required an evaluation of goodwill at March 31, 2020.

The fair value of the reporting unit was determined using a combination of income and market approach methods.

The Partnership determined that goodwill was not impaired based on both its interim and annual evaluations.

We identified the evaluation of the goodwill impairment assessments for the terminalling and storage reporting unit as a critical audit matter.

Significant auditor judgment was required to evaluate the discounted cash flow projections used in the determinations of fair value, specifically assumptions related to forecasted revenues, earnings before interest, taxes, depreciation, and amortization (EBITDA), and the discount rates.

These assumptions were challenging to test as the estimated fair values of the terminalling and storage reporting unit were sensitive to possible changes to such assumptions.

The audit effort to evaluate the discount rates used in the income approaches and the market multiples used in the market approaches required specialized skills and knowledge.

Evaluation of the recoverability of certain long-lived assets

As discussed in Note 2 to the consolidated financial statements, the Partnership reviews long-lived assets, such as property, plant and equipment and intangible assets with definite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated future cash flows, the Partnership measures the amount of the impairment by comparing the carrying amount to its estimated fair value.

The carrying value of property, plant and equipment at December 31, 2021 was $345,470 thousand.

We identified the evaluation of the recoverability of a certain long-lived asset group in the transportation segment as a critical audit matter.

A higher degree of subjective auditor judgement was required to evaluate the forecasted revenue used in the asset group’s future undiscounted cash flows.

Specifically, the forecasted revenue was challenging to evaluate as the

future undiscounted cash flows were sensitive to minor changes in certain assumptions in the development of forecasted revenue that could have a significant effect on the Partnership’s assessment of the recoverability of the long-lived asset group.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the Partnership’s forecasted revenues and EBITDA by comparing them to historical results and analyst reports, considering the portion of revenues and EBITDA projections supported by long-term, fixed fee contracts and the portion impacted by current market conditions.

We compared historical forecasts of revenues and EBITDA to actual results to assess the Company’s ability to estimate such amounts.

We performed sensitivity analyses over forecasted revenues and EBITDA and the discount rates to assess their impact on the Partnership’s determinations of the fair value of the reporting unit.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

– evaluating the discount rates used in the terminalling and storage reporting unit’s discounted cash flow models, by comparing them against discount rate ranges that were independently developed using publicly available market data for comparable entities

– evaluating the market multiples used within the guideline public company methods, by developing independent calculations of the guideline comparable companies’ multiples using publicly available market data

– evaluating the market multiples used within the guideline transaction methods, by comparing against independent transaction searches of publicly available market data from the previous two years

– evaluating the control premiums implied in reconciling the sum of the fair values of the individual reporting units with the Partnership’s market capitalizations, by comparing against implied control premiums based on publicly available market data.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Partnership’s long-lived asset impairment assessment process.

This included controls related to the development of the certain asset group’s future undiscounted cash flows, including the development of forecasted revenue.

We performed sensitivity analyses to assess the impact of reasonably possible changes to certain revenue assumptions.

We assessed the Partnership’s forecasted revenue by comparing to historical results, existing long-term contracts, and industry forecasts.

We examined quarterly trends of actual financial results within the most recent fiscal year and compared those trends with the asset group’s forecasted financial results.

We have served as the Partnership’s auditor since 2002.

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March 1, 2022

Report of Independent Registered Public Accounting Firm

To the Unitholders and Board of Directors

Martin Midstream Partners L.P.

and Martin Midstream GP LLC:

Opinion on Internal Control Over Financial Reporting

We have audited Martin Midstream Partners L.P.

and subsidiaries' (the Partnership) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in capital (deficit), and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated March 1, 2022 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Dallas, Texas

March 1, 2022

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

$ 4,958 $ 2,856

Trade and accrued accounts receivable, less allowance for doubtful accounts of $ 311 and $ 261 , respectively

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Other current assets

Assets held for sale — 5,052

Total current assets

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Partners’ capital (deficit) ( 48,853 ) ( 46,871 )

Accumulated other comprehensive income 816 —

Total partners’ capital (deficit)

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41,012 40,900 41,433

Impairment of long-lived assets

Impairment of goodwill

Depreciation and amortization

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824,813 643,035 803,601

Other operating income, net 12,488 14,587 1,041

Other operating income (loss), net ( 534 ) 12,488 14,587

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

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Income (loss) from continuing operations ( 211 ) ( 6,771 ) 4,520

( 6,771 ) 4,520 ( 7,831 )

Income (loss) from discontinued operations, net of income taxes

— ( 179,466 ) 63,486

Net income (loss)

( 6,771 ) ( 174,946 ) 55,655

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

135 3,499 ( 882 )

Less pre-acquisition income allocated to the general partner

— — ( 11,550 )

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

Net loss ( 211 ) ( 6,771 ) ( 174,946 )

Less general partner's interest in net loss 4 135 3,499

Less (income) loss allocable to unvested restricted units — 21 ( 41 )

Limited partners' interest in net income (loss)

$ ( 6,615 ) $ ( 171,488 ) $ 43,195

Limited partners' interest in net loss $ ( 207 ) $ ( 6,615 ) $ ( 171,488 )

*Related Party Transactions Shown Below

See accompanying notes to consolidated financial statements.

1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation.

See Note 2 – Significant Accounting Policies and Practices.

MARTIN MIDSTREAM PARTNERS L.P.

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See accompanying notes to consolidated financial statements.

1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation.

See Note 2 – Significant Accounting Policies and Practices.

MARTIN MIDSTREAM PARTNERS L.P.

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See accompanying notes to consolidated financial statements.

1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation.

See Note 2 – Significant Accounting Policies and Practices.

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

Year Ended December 31,

2021 2020 2019

Net loss $ ( 211 ) $ ( 6,771 ) $ ( 174,946 )

Changes in fair values of commodity cash flow hedges $ 816 $ — $ —

Comprehensive income (loss) $ 605 $ ( 6,771 ) $ ( 174,946 )

See accompanying notes to consolidated financial statements.

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (DEFICIT)

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Partners’ Capital (Deficit)

Parent Net Investment Common General Partner

Units Amount Amount Total

Parent Net Investment Common General Partner Amount Accumulated Other Comprehensive Income

Units Amount Total

Balances – December 31, 2018 $ 23,720 39,032,237 $ 258,085 $ 6,627 $ — 288,432

$ 24,240 38,444,612 $ 290,927 $ 7,314 $ 322,481

Net income 11,550 — 43,223 882 55,655

Net loss — — ( 171,447 ) ( 3,499 ) — ( 174,946 )

Issuance of common units, net — — ( 289 ) — — ( 289 )

Issuance of time-based restricted units — 16,944 — — — —

Issuance of performance-based restricted units 317,925 —

Forfeiture of restricted units — ( 154,288 ) — — — —

General partner contribution — — — — —

Cash distributions — — ( 48,111 ) ( 982 ) — ( 49,093 )

Deemed distribution from Martin Resource Management Corporation ( 12,070 ) — — — ( 12,070 )

Reimbursement of excess purchase price over carrying value of acquired assets

Excess carrying value of the assets over the purchase price paid by Martin Resource Management

— — ( 102,393 ) — — ( 102,393 )

Deferred taxes on acquired assets and liabilities — — 24,781 — 24,781

Unit-based compensation — — 1,424 — — 1,424

Purchase of treasury units — ( 31,504 ) ( 392 ) — — ( 392 )

Contribution to parent ( 23,720 ) — — — — ( 23,720 )

Balances – December 31, 2019 — 38,863,389 ( 38,342 ) 2,146 — ( 36,196 )

23,720 39,032,237 258,085 6,627 288,432

Net loss — — ( 6,636 ) ( 135 ) — ( 6,771 )

Issuance of common units, net — — ( 289 ) — ( 289 )

Issuance of time-based restricted units — 81,000 — — — —

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Cash distributions — — ( 5,211 ) ( 106 ) — ( 5,317 )

Excess purchase price over carrying value of acquired assets — — ( 102,393 ) — ( 102,393 )

Deferred taxes on acquired assets and liabilities — — 24,781 — 24,781

Unit-based compensation — — 1,422 — — 1,422

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

Contribution to parent ( 23,720 ) — — — ( 23,720 )

Balances – December 31, 2020 — 38,851,174 ( 48,776 ) 1,905 — ( 46,871 )

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Forfeiture of restricted units — ( 83,436 ) — — — —

General partner contribution — — — 3 — 3

Cash distributions — — ( 775 ) ( 16 ) — ( 791 )

Changes in fair values of commodity cash flow hedges — — — — 816 816

Excess purchase price over carrying value of acquired assets — — ( 1,350 ) — — ( 1,350 )

Unit-based compensation — — 384 — — 384

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See accompanying notes to consolidated financial statements.

1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation.

See Note 2 – Significant Accounting Policies and Practices.

MARTIN MIDSTREAM PARTNERS L.P.

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Cash flows from operating activities:

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

(Income) loss from discontinued operations — 179,466 ( 63,486 )

Net loss $ ( 211 ) $ ( 6,771 ) $ ( 174,946 )

Loss from discontinued operations — — 179,466

Net income (loss) from continuing operations ( 211 ) ( 6,771 ) 4,520

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Deferred income tax expense 2,432 1,169 1,360

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

(Gain) loss on disposition or sale of property, plant, and equipment 534 ( 9,788 ) ( 13,332 )

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

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

Derivative (income) loss 8,209 5,137 ( 14,024 )

Net cash (paid) received for commodity derivatives ( 8,669 ) ( 4,466 ) 13,948

Derivative income 5,593 8,209 5,137

Net cash paid for commodity derivatives ( 4,984 ) ( 8,669 ) ( 4,466 )

Unit-based compensation 384 1,422 1,424

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Net cash provided by (used in) continuing investing activities ( 19,241 ) 2,604 ( 34,327 )

Net cash provided by (used in) discontinued investing activities — 209,155 173,287

Net cash provided by discontinued investing activities — — 209,155

Net cash provided by (used in) investing activities ( 19,241 ) 2,604 174,828

Cash flows from financing activities:

Payments of long-term debt and finance lease obligations ( 338,199 ) ( 729,514 ) ( 559,201 )

Payments of long-term debt ( 333,790 ) ( 333,637 ) ( 724,000 )

Payments under finance lease obligations ( 2,707 ) ( 4,562 ) ( 5,514 )

Proceeds from long-term debt 316,500 282,019 638,000

Proceeds from issuance of common units, net of issuance related costs — — ( 289 )

Deemed contribution from (distribution to) Martin Resource Management — — ( 12,070 )

General partner contributions 3 — —

Excess purchase price over carrying value of acquired assets — — ( 102,393 )

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Net cash used in financing activities ( 21,394 ) ( 65,287 ) ( 248,087 )

Net increase in cash 2,102 2,556 211

Net increase (decrease) in cash ( 4,906 ) 2,102 2,556

Cash at beginning of year 4,958 2,856 300

1 unchanged sentence

See accompanying notes to consolidated financial statements.

1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation.

See Note 2 – Significant Accounting Policies and Practices.

MARTIN MIDSTREAM PARTNERS L.P.

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Martin Midstream Partners L.P.

(the "Partnership") is a publicly traded limited partnership with a diverse set of operations focused primarily in the United States ("U.S.") Gulf Coast region.

(the "Partnership") is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the U.S.

Its four primary business lines include:

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The petroleum products and by-products the Partnership gathers, transports, stores and markets are produced primarily by major and independent oil and gas companies who often rely on third parties, such as the Partnership, for the transportation and disposition of these products.

On August 30, 2013, Martin Resource Management Corporation completed the sale of a 49 % non-controlling voting interest ( 50 % economic interest) in MMGP Holdings, LLC ("Holdings"), a newly-formed sole member of Martin Midstream GP LLC ("MMGP"), the general partner of the Partnership, to certain affiliated investment funds managed by Alinda Capital Partners ("Alinda").

Upon closing the transaction, Alinda appointed two representatives to serve on the board of directors of the general partner of the Partnership.

On December 28, 2021, Martin Resource Management Corporation indirectly acquired, through its wholly owned subsidiary, Martin Resource LLC, the remaining 49 % voting interest ( 50 % economic interest) in MMGP Holdings, LLC ("Holdings"), which is the sole member of Martin Midstream GP LLC ("MMGP"), the general partner of the Partnership.

As a result, Martin Resource Management Corporation indirectly owns 100 % of MMGP.

On November 23, 2021, MMGP contributed to the Partnership all of the outstanding incentive distribution rights for no consideration, whereupon the incentive distribution rights were cancelled and cease to exist.

SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

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If the determination is made that the Partnership is the primary beneficiary, then that entity is included in the consolidated financial statements in accordance with ASC 810-10.

No such variable interest entities exist as of December 31, 2020 or 2019.

Impact of COVID-19 Pandemic.

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 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 the Partnership's 2020 performance.

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

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

As the volume of products produced or purchased by refineries has been reduced, demand for the Partnership's 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.

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.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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

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

Management identified triggering events requiring the performance of impairment testing of long-lived assets and goodwill related to both the performance of the Partnership's unit price during the first quarter of 2020 and certain of the Partnership's businesses that are sensitive to reductions in refined product demand and refinery utilization.

As a result, the Partnership recorded impairment charges totaling $ 4,352 related to long-lived assets during the first quarter of 2020.

See Note 5 for more information.

No impairments were identified related to goodwill.

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 the Partnership's results as of December 31, 2020.

No such variable interest entities existed as of December 31, 2021 or 2020.

Divestiture of Natural Gas Storage Assets.

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In consideration of the sale of the Natural Gas Storage Assets, the Partnership received cash proceeds of $ 210,067 after transaction fees and expenses.

The net proceeds were used to reduce outstanding borrowings under the Partnership's revolving credit facility.

The Partnership concluded the disposition represents a strategic shift and will have a major effect on its financial results going forward.

As a result, the Partnership has presented the results of operations and cash flows relating to the Natural Gas Storage Assets as discontinued operations for the years ended December 31, 2019 and 2018.

See Note 5 for more information.

Acquisition of Martin Transport, Inc.

On January 2, 2019, the Partnership acquired all of the issued and outstanding equity interests of MTI from Martin Resource Management Corporation.

MTI operates a fleet of trucks providing transportation of petroleum products, liquid petroleum gas, chemicals, sulfur and other products, as well as owns 23 terminals located throughout the U.S.

Gulf Coast and Southeastern United States.

The acquisition of MTI was considered a transfer of net assets between entities under common control.

As a result, the acquisition of MTI was recorded at amounts based on the historical carrying value of these assets at January 1, 2019, and the Partnership is required to update its historical financial statements to include the activities of MTI as of the date of common control.

See Note 4 for more information.

The Partnership’s accompanying historical financial statements have been retrospectively updated to reflect the effects on financial position, cash flows and results of operations attributable to the activities of MTI as if the Partnership owned these assets for the periods presented.

See Note 4 for separate results of MTI for the year ended December 31, 2018.

Net income attributable to MTI for periods prior to the Partnership’s acquisition of the assets is not allocated to the limited partners for purposes of calculating net income per limited partner unit.

Divestiture of WTLPG Partnership Interest.

On July 31, 2018, the Partnership completed the sale of its 20 percent non-operating interest in West Texas LPG Pipeline L.P.

("WTLPG") to ONEOK, Inc.

WTLPG owns an approximate 2,300 mile common-carrier pipeline system that primarily transports NGLs from New Mexico and Texas to Mont Belvieu, Texas for fractionation.

A wholly-owned subsidiary of ONEOK, Inc.

is the operator of the assets.

The net proceeds were used to reduce outstanding borrowings under the Partnership's credit facility.

The Partnership concluded the disposition represents a strategic shift and will have a major effect on its financial results going forward.

As a result, the Partnership has presented the results of operations and cash flows relating to its equity method investment in WTLPG as discontinued operations for the year ended December 31, 2018.

As a result, the Partnership has presented the results of operations and cash flows relating to the Natural Gas Storage Assets as discontinued operations for the year ended December 31, 2019.

See Note 5 for more information.

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Delivery of product is invoiced as the transaction occurs and is generally paid within a month.

Natural Gas Liquids – Revenue is recognized when product is delivered by truck, rail, or pipeline to the Partnership's NGL customers.

Revenue is recognized on title transfer of the product to the customer.

Delivery of product is invoiced as the transaction occurs and is generally paid within a month.

Sulfur Services – Revenue from sulfur and fertilizer product sales is recognized when the customer takes title to the product.

Delivery of product is invoiced as the transaction occurs and is generally paid within a month.

Revenue from sulfur services is recognized as services are performed during each monthly period.

The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

Transportation – Revenue related to land transportation is recognized for line hauls based on a mileage rate.

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The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

Sulfur Services – Revenue from sulfur and fertilizer product sales is recognized when the customer takes title to the product.

Delivery of product is invoiced as the transaction occurs and is generally paid within a month.

Revenue from sulfur services is recognized as services are performed during each monthly period.

The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

Natural Gas Liquids – NGL distribution revenue is recognized when product is delivered by truck, rail, or pipeline to the Partnership's NGL customers.

Revenue is recognized on title transfer of the product to the customer.

Delivery of product is invoiced as the transaction occurs and is generally paid within a month.

(e) Equity Method Investments

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Owned property, plant, and equipment is stated at cost, less accumulated depreciation.

Owned buildings and equipment are depreciated using straight-line method over the estimated lives of the respective assets.

Owned buildings and equipment are depreciated using the straight-line method over the estimated lives of the respective assets.

Equipment under finance leases is stated at the present value of minimum lease payments less accumulated amortization.

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Of the Partnership's four reporting units, the terminalling and storage, transportation, and sulfur services reporting units contain goodwill.

No goodwill impairment was recorded for the years ended December 31, 2020, 2019, or 2018.

In performing a quantitative analysis, recoverability of goodwill for each reporting unit is measured using a weighting of the discounted cash flow method and two market approaches (the guideline public company method and the guideline transaction method).

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Changes to these estimates and assumptions can include, but may not be limited to, varying commodity prices, volume changes and operating costs due to market conditions and/or alternative providers of services.

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

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

No goodwill impairment was recorded during the years ended December 31, 2019 or 2018.

No goodwill impairment was recorded for the years ended December 31, 2020 or 2019.

MARTIN MIDSTREAM PARTNERS L.P.

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(h) Debt Issuance Costs

Debt issuance costs relating to the Partnership’s revolving credit facility and senior notes are deferred and amortized over the terms of the debt arrangements and are shown, net of accumulated amortization, as a reduction of the related long-term debt.

Debt issuance costs relating to the Partnership’s credit facility and senior notes are deferred and amortized over the terms of the debt arrangements and are shown, net of accumulated amortization, as a reduction of the related long-term debt.

In connection with the issuance, amendment, expansion and restatement of debt arrangements, the Partnership incurred debt issuance costs of $ 592 , $ 3,781 and $ 4,406 in the years ended December 31, 2021, 2020 and 2019, respectively.

7 unchanged sentences

The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

The Partnership identified triggering events related to a certain asset group in its transportation segment in 2021.

The Partnership performed a recoverability test and concluded the estimated undiscounted cash flows expected to be generated by the asset group exceeded the carrying value of the asset group and no impairment was recorded.

(j) Asset Retirement Obligations

Under ASC 410-20, which relates to accounting requirements for costs associated with legal obligations to retire tangible, long-lived assets, the Partnership records an asset retirement obligation ("ARO") at fair value in the period in which it is incurred by increasing the carrying amount of the related long-lived asset.

Under ASC 410-20, which relates to accounting requirements for costs associated with legal obligations to retire tangible, long-lived assets, the Partnership records an asset retirement obligation at present value based upon estimated costs to retire the asset in the period in which it is incurred by increasing the carrying amount of the related long-lived asset.

In each subsequent period, the liability is accreted over time towards the ultimate obligation amount and the capitalized costs are depreciated over the useful life of the related asset.

3 unchanged sentences

Derivative instruments not designated as hedges are marked to market with all market value adjustments being recorded in the Consolidated Statements of Operations.

(l) Use of Estimates

Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with accounting principles generally accepted in the U.S.

Actual results could differ from those estimates.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

(l) Use of Estimates

Actual results could differ from those estimates.

(m) Environmental Liabilities and Litigation

17 unchanged sentences

Prior to the acquisition of MTI on January 2, 2019, MTI was a Qualified Subchapter S subsidiary (“QSub”) of Martin Resource Management Corporation, a qualifying S Corporation.

A QSub is not treated as a separate corporation for federal income tax purposes as it is deemed liquidated into its S Corporation parent.

A QSub is disregarded and not treated as a corporation separate from its S Corporation parent for federal income tax purposes.

S Corporations are generally not subject to income taxes because income and losses flow through to shareholders and are reported on their individual returns.

1 unchanged sentence

Subsequent to the acquisition, the QSub election terminated resulting in MTI being taxed as a stand-alone C Corporation.

The Partnership's financial statements recognize the current and deferred income tax consequences that result from MTI’s activities during the current period pursuant to the provisions of ASC 740 related to income taxes.

As a result of the common control transaction with the Partnership, the deferred tax consequences of the changes in the tax bases of MTI’s assets and liabilities were included in equity under the provisions of ASC 740-20-45-11.

With respect to the Partnership’s taxable subsidiary (MTI), income taxes are accounted for under the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years those temporary differences are expected to be recovered or settled.

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

In the ordinary course of business, there may be many transactions and calculations where the ultimate tax outcome is uncertain.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax laws.

In accordance with the provisions of ASC 740, we use a two-step approach for recognizing and measuring tax benefits taken or

Deferred tax assets and liabilities are measured using enacted tax rates expected to

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

expected to be taken in a tax return.

apply to taxable income in the years those temporary differences are expected to be recovered or settled.

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

In the ordinary course of business, there may be many transactions and calculations where the ultimate tax outcome is uncertain.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax laws.

In accordance with the provisions of ASC 740, we use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return.

In the first step, “recognition”, the Partnership determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position.

5 unchanged sentences

Comprehensive income includes net income and other comprehensive income.

There are no items of other comprehensive income or loss in any of the years presented.

Other comprehensive income for the Partnership includes unrealized gains and losses on derivative instruments.

In accordance with ASC 815-10, the Partnership records deferred hedge gains and losses on its derivative instruments that qualify as cash flow hedges as other comprehensive income.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2019, FASB issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which removes certain exceptions to general principles in ASC 740 and clarifies and amends existing guidance within US generally accepted accounting principles (US GAAP).

The standard is effective for the Partnership’s financial statements issued for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

The Partnership will adopt this ASU beginning January 1, 2021 and plans to use the modified retrospective approach, with a cumulative-effect adjustment recorded through retained earnings, for hybrid tax regimes.

All other applicable amendments will be applied on a prospective basis.

The result of this adoption will have no material impact on the Partnership’s consolidated financial statements.

On January 1, 2021, the Partnership adopted FASB Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Accounting Standards Codification (“ASC”) Topic 740):

Simplifying the Accounting for Income Taxes , which removes certain exceptions to general principles in ASC 740 and clarifies and amends existing guidance within U.S.

Adoption of the new standard did not have a material impact on the Partnership’s consolidated financial statements.

On January 1, 2020, the Partnership adopted ASU 2016-13, "Financial Instruments - Credit Losses," which required the Partnership to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

13 unchanged sentences

The Partnership adopted this ASU on January 1, 2019, electing the transition option provided under ASU 2018-11.

Consequently, financial information was not updated and the disclosures required under the new standard are not provided for dates and periods before January 1, 2019.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

The new standard provides a number of optional practical expedients in transition.

2 unchanged sentences

The Partnership elected the short-term lease recognition exemption for all leases that qualify.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

This means, for those assets that qualify, the Partnership did not recognize Right-of-Use ("ROU") assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition.

See Note 10 for more information.

In May 2014, the FASB issued ASU No.

2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.

The ASU replaced most existing revenue recognition guidance in U.S.

The new standard was effective for the Partnership on January 1, 2018.

The standard permits the use of either the retrospective or cumulative effect transition method.

The Partnership adopted the new standard utilizing the cumulative effect method which resulted in no cumulative effect of the adoption being recorded as of January 1, 2018.

The Partnership did not identify any significant changes in the timing of revenue recognition when considering the amended accounting guidance.

Additional disclosures related to revenue recognition appear in "Note 6.

Martin Transport, Inc.

1 unchanged sentence

On January 2, 2019, the Partnership acquired all of the issued and outstanding equity interests of MTI, a wholly-owned subsidiary of Martin Resource Management Corporation, which operates a fleet of trucks providing transportation of petroleum products, liquid petroleum gas, chemicals, sulfur and other products, as well as owns 24 terminals located throughout the U.S.

Gulf Coast and Southeastern United States for total consideration as follows:

Gulf Coast and Southeastern U.S.

for total consideration as follows:

Purchase price 1

4 unchanged sentences

The performance threshold related to financial results for the years ended December 31, 2020 and 2019 was not achieved, which resulted in a reduction in the potential earn-out by $ 6,666 .

The transaction closed on January 2, 2019 and was effective as of January 1, 2019 and was funded with borrowings under the Partnership's revolving credit facility.

For the year ended December 31, 2021, the performance threshold related to financial results was exceeded, resulting in an earn-out payment of $ 1,350 , which, pursuant to the terms of the stock purchase agreement, will be paid in the second quarter of 2022.

The transaction closed on January 2, 2019 and was effective as of January 1, 2019 and was funded with borrowings under the Partnership's credit facility.

This acquisition is considered a transfer of net assets between entities under common control.

13 unchanged sentences

The excess purchase price over the historical carrying value of the assets at the acquisition date was $ 102,393 and was recorded as an adjustment to "Partners' capital (deficit)".

The earn out-payment discussed above was recorded as additional excess purchase price over the historical carrying value of the assets, resulting in an adjustment to "Partners' capital (deficit)" of $ 1,350 .

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

The separate results of operations related to MTI for the year ended December 31, 2018, which was recast as part of the Partnership's Consolidated Statements of Operations, were as follows:

For the Year Ended December 31,

Transportation revenue $ 125,333

Operating expenses 105,212

Selling, general and administrative 5,246

Depreciation and amortization 3,413

Total costs and expenses 113,871

Other operating income, net 596

Operating income 12,058

Other income (expense):

Interest expense ( 312 )

Other, net 12

Income before income taxes 11,758

Income tax expense 208

Net income $ 11,550

DISCONTINUED OPERATIONS, DIVESTITURES, AND ASSETS HELD FOR SALE

DISCONTINUED OPERATIONS AND DIVESTITURES

Divestiture of Mega Lubricants.

On December 22, 2020, the Partnership completed the sale of Mega Lubricants for $ 22,400 .

On December 22, 2020, the Partnership completed the sale of its Mega Lubricants shored-based terminals business (“Mega Lubricants”) for $ 22,400 .

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 Partnership recorded a gain on the disposition of $ 10,101 , which was included in "Other operating income, net" on the Partnership's Consolidated Statements of Operations.

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

The proceeds from the transaction were used to reduce outstanding borrowings under the Partnership’s credit facility.

The divestiture of Mega Lubricants did not qualify for discontinued operations presentation under the guidance of ASC 205-20.

2 unchanged sentences

The Partnership recorded a gain on the disposition of $ 16,154 , which was included in "Other operating income, net" on the Partnership's Consolidated Statements of Operations.

The net proceeds were used to reduce outstanding borrowings under the Partnership's revolving credit facility.

The net proceeds were used to reduce outstanding borrowings under the Partnership's credit facility.

The divestiture of the East Texas Pipeline assets did not qualify for discontinued operations presentation under the guidance of ASC 205-20.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Divestiture of Natural Gas Storage Assets.

2 unchanged sentences

In consideration of the sale of these assets, the Partnership received cash proceeds of $ 210,067 after transaction fees and expenses.

The net proceeds were used to reduce outstanding borrowings under the Partnership's revolving credit facility.

The net proceeds were used to reduce outstanding borrowings under the Partnership's credit facility.

The Partnership concluded the disposition represents a strategic shift and will have a major effect on its financial results going forward.

As a result, the Partnership has presented the results of operations and cash flows relating to the Natural Gas Storage Assets as discontinued operations for the year ended December 31, 2019.

The operating results, which are included in income (loss) from discontinued operations, were as follows:

1 unchanged sentence

Total revenues

$ 22,836 $ 52,108

Total costs and expenses and other, net, excluding depreciation and amortization

( 15,360 ) ( 20,703 )

Depreciation and amortization

( 8,161 ) ( 18,795 )

Other operating loss, net 1

( 178,781 ) ( 824 )

Income (loss) from discontinued operations before income taxes

( 179,466 ) 11,786

Income tax expense

2 unchanged sentences

1 The year ended December 31, 2019 includes a loss on the disposition of the Natural Gas Storage Assets of $ 178,781 .

Divestiture of WTLPG Partnership Interest.

On July 31, 2018, the Partnership completed the sale of its 20 percent non-operating interest in WTLPG to ONEOK.

WTLPG owns an approximate 2,300 mile common-carrier pipeline system that primarily transports NGLs from New Mexico and Texas to Mont Belvieu, Texas for fractionation.

A wholly-owned subsidiary of ONEOK is the operator of the assets.

In consideration for the sale of these assets, the Partnership received cash proceeds of $ 193,705 , after transaction fees and expenses.

The proceeds from the sale were used to reduce outstanding borrowings under the Partnership's revolving credit facility.

The Partnership concluded the disposition represents a strategic shift and will have a major effect on its financial results going forward.

As a result, the Partnership has presented the results of operations and cash flows relating to its equity method investment in WTLPG as discontinued operations for the years ended December 31, 2018 and 2017.

The operating results, which are included in income from discontinued operations, were as follows:

For the Year Ended December 31,

Total costs and expenses and other, net, excluding depreciation and amortization 1

Other operating income 2

Equity in earnings

Income from discontinued operations before income taxes

Income tax expense

Income from discontinued operations, net of income taxes

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

1 These expenses represent direct operating expenses as a result of the Partnership's ownership interest in WTLPG.

2 Other operating income represents the gain on the disposition of the investment in WTLPG.

Long-Lived Assets Held for Sale

At December 31, 2019, certain terminalling and storage and transportation assets met the criteria to be classified as held for sale in accordance with ASC 360-10 and are presented at the lower of the assets' carrying amount or fair value less cost to sell by segment in current assets in the table below.

These assets are considered non-core assets to the Partnership's operations and did not qualify for discontinued operations presentation under the guidance of ASC 205-20.

December 31, 2020 December 31, 2019

Terminalling and storage $ — $ 3,552

Transportation — 1,500

Assets held for sale $ — $ 5,052

In the first quarter of 2020, the Partnership identified a triggering event related to a decline in the fair value related to the assets classified as held for sale at December 31, 2019.

As a result, an impairment charge of $ 3,052 and $ 1,300 was recorded in the Terminalling and Storage and Transportation segments, respectively, during the year ended December 31, 2020 and was recorded in "Other operating income (loss)" in the Partnership's Consolidated Statements of Operations.

At December 31, 2020, the remaining assets previously classified as held for sale in the amount of $ 700 no longer met the criteria to be classified as held for sale in accordance with ASC 360-10.

The non-core assets discussed above did not qualify for discontinued operations presentation under the guidance of ASC 205-20.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

The following table disaggregates our revenue by major source:

28 unchanged sentences

Natural Gas Liquids Segment

Natural Gas Liquids ("NGL") distribution revenue is recognized when product is delivered by truck, rail, or pipeline to the Partnership's NGL customers.

NGL revenue is recognized when product is delivered by truck, rail, or pipeline to the Partnership's NGL customers.

Revenue is recognized on title transfer of the product to the customer.

20 unchanged sentences

Throughput and storage $ 43,527 $ 42,041 $ 43,360 $ 44,661 $ 45,940 $ 251,349 $ 470,878

Natural Gas Services

Natural Gas Liquids $ 6,047 $ 5,391 $ 5,406 $ 5,391 $ 3,131 $ — $ 25,366

Sulfur services

34 unchanged sentences

Equipment purchased under capital lease obligations was $ 0 , $ 83 , and $ 1,308 for the years ended December 31, 2021, 2020, and 2019, respectively.

In the first quarter of 2020, the Partnership identified a triggering event related to a decline in the fair value related to the assets classified as held for sale at December 31, 2019.

At December 31, 2020, the remaining assets previously classified as held for sale in the amount of $ 700 no longer met the criteria to be classified as held for sale in accordance with ASC 360-10.

The following table represents the goodwill balance by reporting unit at December 31, 2021 and 2020 as follows:

1 unchanged sentence

Terminalling and storage $ 10,985 $ 10,985

$ 10,985 $ 11,867

Sulfur services 5,349 5,349

1 unchanged sentence

Total goodwill $ 16,823 $ 16,823

1 This change represents goodwill disposed of as part of the Partnership's divestiture of Mega Lubricants.

See Note 5 for more information.

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

The leases generally provide that all expenses related to the equipment are to be paid by the lessee.

Operating lease Right-of-Use ("ROU") assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date.

Because most of the Partnership's leases do not provide an implicit rate of return, the Partnership uses its imputed collateralized rate based on the information available at commencement date in determining the present value of lease payments.

The estimated rate is based on a risk-free rate plus a risk-adjusted margin.

Our leases have remaining lease terms of 1 year to 16 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

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

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

The Partnership's leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

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

The components of lease expense for the years ended December 31, 2021, 2020, and 2019 were as follows:

2021 2020 2019

Operating lease cost $ 9,266 $ 10,672 $ 10,805

6 unchanged sentences

Supplemental cash flow information for the years ended December 31, 2021, 2020, and 2019 related to leases were as follows:

2021 2020 2019

Cash paid for amounts included in the measurement of lease liabilities:

5 unchanged sentences

Finance leases 0 83 1,309

Supplemental balance sheet information related to leases was as follows:

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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

Operating Leases

16 unchanged sentences

Finance leases 5.74 % 6.04 %

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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

9 unchanged sentences

Total lease liability $ 22,304 $ 289

As of December 31, 2021, we have additional operating leases for land, buildings and equipment that have not yet commenced of $ 1,184 .

These operating leases will commence during the first quarter of 2022 with lease terms of 3 to 5 years.

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

6 unchanged sentences

subsequent years - $ 30,670 .

INVESTMENT IN WTLPG

As discussed in Note 5, on July 31, 2018, the Partnership completed the sale of its 20 % non-operating interest in WTLPG.

Prior to the sale, the Partnership owned a 19.8 % limited partnership and 0.2 % general partnership interest in WTLPG.

A wholly-owned subsidiary of ONEOK is the operator of the assets.

WTLPG owns an approximate 2,300 mile common-carrier pipeline system that primarily transports NGLs from New Mexico and Texas to Mont Belvieu, Texas for fractionation.

The Partnership accounted for its ownership interest in WTLPG under the equity method of accounting.

Selected financial information for WTLPG during the period of ownership is as follows:

As of July 31,

Seven Months Ended July 31,

Total Assets Long-Term Debt Members’ Equity/Partners' Capital Revenues Net Income

WTLPG $ 928,349 $ — $ 868,894 $ 55,534 $ 16,642

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

FAIR VALUE MEASUREMENTS

9 unchanged sentences

Unobservable inputs that reflect the entity's own assumptions and are not corroborated by market data.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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

7 unchanged sentences

• Current and non-current portion of long-term debt:

The carrying amount of the revolving credit facility approximates fair value due to the debt having a variable interest rate and is in Level 2.

The carrying amount of the credit facility approximates fair value due to the debt having a variable interest rate and is in Level 2.

The estimated fair value of the 2021 Notes, 2024 Notes, and 2025 Notes (collectively, the "senior notes") is considered Level 2, as the fair value is based upon quoted prices for identical liabilities in markets that are not active.

5 unchanged sentences

Total $ 341,984 $ 362,366 $ 369,213 $ 372,487

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Partnership’s results of operations could be materially impacted by changes in NGL prices and interest rates.

The Partnership’s results of operations could be materially impacted by changes in commodity prices and interest rates.

In an effort to manage its exposure to these risks, the Partnership periodically enters into various derivative instruments, including commodity and interest rate hedges.

All derivatives and hedging instruments are included on the balance sheet as an asset or a liability measured at fair value and changes in fair value are recognized currently in earnings.

All of the Partnership's derivatives are non-hedge derivatives and therefore all changes in fair values are recognized as gains and losses in the earnings of the periods in which they occur.

At the time derivative contracts are entered into, the Partnership assesses whether the nature of the instrument qualifies for hedge accounting treatment according to the requirements of ASC 815 – Derivatives and Hedging .

For those transactions designated as hedging instruments for accounting purposes, the Partnership documents all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking the various hedge transactions.

The Partnership also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flows or fair value of hedged items.

All derivatives and hedging instruments are included on the balance sheet as an asset or a liability measured at fair value.

Changes in fair value for hedging instruments are recognized on the balance sheet through Accumulated Other Comprehensive Income ("AOCI").

Settlements related to effective hedging relationships will be reclassified from AOCI to earnings during the period in which the hedged transactions are reflected on the income statement.

From time to time, derivatives designated for hedge accounting may be closed prior to contract expiration.

The accounting treatment of closed positions depends on whether the closure occurred due to the hedged transaction occurring early or if the hedged transaction is still expected to occur as originally forecasted.

For hedged transactions that occur early, the closure results in the realized gain or loss from closure being recognized in the same period the accelerated hedged transaction affects earnings.

For hedged transactions that are still expected to occur as originally forecasted, the closure results in the realized gain or loss being deferred until the hedged transaction affects earnings.

If it is determined that hedged transactions associated with cash flow hedges are no longer probable to occur, the gain or loss associated with the instrument is recognized immediately into earnings.

From time to time, we may have derivative financial instruments for which we do not elect hedge accounting.

Changes in fair value for derivatives not designated as hedges are recognized as gains and losses in the earnings of the periods in which they occur.

(a) Commodity Derivative Instruments

3 unchanged sentences

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

The Partnership has entered into hedging transactions as of December 31, 2020 to protect a portion of its commodity price risk exposure.

The Partnership enters into hedging transactions to protect a portion of its commodity price risk exposure.

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

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

At December 31, 2021, the Partnership has instruments totaling a gross notional quantity of 0 barrels.

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

These instruments settle against the applicable pricing source for each grade and location.

For information regarding gains and losses on commodity derivative instruments, see "Tabular Presentation of Gains and Losses on Derivative Instruments" below.

(b) Tabular Presentation of Gains and Losses on Derivative Instruments

The following table summarizes the fair value and classification of the Partnership’s derivative instruments in its Consolidated Balance Sheets:

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

(b) Tabular Presentation of Gains and Losses on Derivative Instruments

The following table summarizes the fair values and classification of the Partnership’s derivative instruments in its Consolidated Balance Sheets:

Fair Values of Derivative Instruments in the Consolidated Balance Sheet

Derivative Assets Derivative Liabilities

3 unchanged sentences

December 31, 2021 December 31, 2020

Derivatives designated as hedging instruments:

Commodity contracts Fair value of derivatives $ — $ — Fair value of derivatives $ — $ —

Derivatives not designated as hedging instruments:

Commodity contracts Fair value of derivatives $ — $ — Fair value of derivatives $ — $ 207

Total derivatives not designated as hedging instruments

$ — $ — $ 207 $ 667

Effect of Derivative Instruments on the Consolidated Statement of Operations For the Years Ended December 31, 2020, 2019, and 2018

Location of Gain or (Loss) Recognized in Income on Derivatives Amount of (Gain) or Loss Recognized in Income on Derivatives

The following table summarizes the loss recognized in AOCI at December 31, 2021 and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the year ended December 31, 2021 for derivative financial instruments designated as cash flow hedges:

Amount of Gain (Loss) Recognized in AOCI Location of Gain (Loss)

Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income

2021 2020 2021 2020

Commodity contracts $ 816 $ — Cost of products sold $ ( 3,768 ) $ —

Total $ 816 $ — $ ( 3,768 ) $ —

The following tables summarize the loss recognized in earnings for derivative instruments not designated as hedging instruments during the year ended December 31, 2021:

Location of Gain (Loss)

Recognized in Income on

Derivatives Amount of Gain (Loss) Recognized in

Income on Derivatives

Derivatives not designated as hedging instruments:

Commodity contracts Cost of products sold $ ( 1,825 ) $ ( 8,209 )

Total derivatives not designated as hedging instruments $ 8,209 $ 5,137 $ ( 14,024 )

Total effect of derivatives not designated as hedging instruments $ ( 1,825 ) $ ( 8,209 )

RELATED PARTY TRANSACTIONS

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

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

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

Martin Resource Management Corporation controls the Partnership's general partner by virtue of owning 100 % of the membership interests in

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Holdings, the sole member of the Partnership's general partner.

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

The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of December 31, 2021 of approximately 15.8 % of the Partnership’s outstanding limited partnership units, effectively gives Martin Resource Management Corporation the ability to veto some of the Partnership’s actions and to control the Partnership’s management.

7 unchanged sentences

Martin Resource Management Corporation has agreed for so long as it controls the general partner of the Partnership, not to engage in the business of:

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

• providing terminalling and storage services for petroleum products and by-products including the refining, blending and packaging of finished lubricants;

12 unchanged sentences

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

◦ operating, solely for the Partnership's account, the asphalt facilities in Omaha, Nebraska, Port Neches, Texas, and South Houston, Texas.

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

• any business that Martin Resource Management Corporation acquires or constructs that has a fair market value of less than $ 5,000 ;

6 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Effective January 1, 2021, through December 31, 2021, the board of directors of our general partner approved an annual reimbursement amount for indirect expenses of $ 14,386 .

16 unchanged sentences

The Omnibus Agreement, other than the indemnification provisions and the provisions limiting the amount for which the Partnership will reimburse Martin Resource Management Corporation for general and administrative services performed on its behalf, will terminate if the Partnership is no longer an affiliate of Martin Resource Management Corporation.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Master Transportation Services Agreement

4 unchanged sentences

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

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

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

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

4 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Terminal Services Agreements

2 unchanged sentences

At such time, the per-gallon throughput fee the Partnership charged under this agreement was increased when compared to the previous agreement and may be adjusted annually based on a price index.

This agreement was further amended on January 1, 2017, October 1, 2017, April 1, 2019, and January 1, 2020 to modify its minimum throughput requirements and throughput fees.

This agreement was further amended on April 1, 2019 and January 1, 2020 to modify its minimum throughput requirements and throughput fees.

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

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The fees the Partnership charges Martin Resource Management Corporation are based on applicable market rates.

The Partnership is a party to an agreement with Martin Resource Management Corporation dated November 1, 2002 under which Martin Resource Management Corporation provides the Partnership with marine fuel from its locations in the Gulf of Mexico at a fixed rate in excess of a price index.

The Partnership is a party to an agreement with Martin Resource Management Corporation dated November 1, 2002, under which Martin Resource Management Corporation provides the Partnership with marine fuel from its locations in the Gulf of Mexico at a fixed rate in excess of the Platt's U.S.

Gulf Coast Index for #2 Fuel Oil.

Under this agreement, the Partnership agreed to purchase all of its marine fuel requirements that occur in the areas serviced by Martin Resource Management Corporation.

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("Cross") dated October 20, 2021, under which the Partnership processes crude oil into finished products, including naphthenic lubricants, distillates, asphalt and other intermediate cuts for Cross.

The tolling agreement expires November 25, 2031.

The tolling agreement

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

expires November 25, 2031.

Under this tolling agreement, Cross agreed to process a minimum of 6,500 barrels per day of crude oil at the facility at a fixed price per barrel.

4 unchanged sentences

An additional $ 2,586 of capital recovery fee reimbursement expired on December 31, 2020.

All of these fees (other than the fuel surcharge and capital recovery fee) are subject to escalation annually based upon the greater of 3 % or the increase in the Consumer Price Index for a specified annual period.

All of these fees (other than the fuel surcharge) are subject to escalation annually based upon two-thirds of any increase in the Consumer Price Index for a specified annual period.

In no event shall the fees charged under the agreement ever decrease below the amounts which existed as of October 20, 2021.

Also, the Partnership renegotiated a crude transportation contract set to expire in the first half of 2022 resulting in a reduction in revenue of $ 2,145 annually beginning January 1, 2020.

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The tables below summarize the related party transactions that are included in the related financial statement captions on the face of the Partnership’s Consolidated Statements of Operations.

The revenues, costs and expenses reflected in these

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

tables are tabulations of the related party transactions that are recorded in the corresponding caption of the Consolidated Statements of Operations and do not reflect a statement of profits and losses for related party transactions.

The revenues, costs and expenses reflected in these tables are tabulations of the related party transactions that are recorded in the corresponding caption of the Consolidated Statements of Operations and do not reflect a statement of profits and losses for related party transactions.

The impact of related party revenues from sales of products and services is reflected in the Consolidated Statements of Operations as follows:

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$ 83,202 $ 86,137 $ 96,907

$ 86,137 $ 96,907 $ 108,022

The impact of related party cost of products sold is reflected in the Consolidated Statements of Operations as follows:

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$ 78,607 $ 80,075 $ 88,194

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

The impact of related party selling, general and administrative expenses is reflected in the Consolidated Statements of Operations as follows:

13 unchanged sentences

Components of "Intangibles and other assets, net" at December 31, 2021 and 2020 were as follows:

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Catalyst and turnaround costs $ 687 $ 803

2 unchanged sentences

$ 2,198 $ 2,805

Other intangible assets consist of covenants not-to-compete and technology-based assets.

Other intangible assets consist of technology-based assets.

Amortization expense, included in "Depreciation and amortization" on the Partnership's Consolidated Statements of Operations includes amortization of intangible assets, turnaround expenses, and deferred charges.

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2025 - $ 84 ;

2025 - $ 33 ;

subsequent years - $ 0 .

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Components of "Other accrued liabilities" at December 31, 2021 and 2020 were as follows:

26 unchanged sentences

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

$ 300,000 Revolving credit facility at variable interest rate ( 4.75 % 1 weighted average at December 31, 2020), due August 2023 4 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries, net of unamortized debt issuance costs of $ 3,826 and $ 4,586 , respectively 2,6

$ 275,000 1 Credit facility at variable interest rate ( 5.00 % 1 weighted average at December 31, 2021), due August 2023 4 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries, net of unamortized debt issuance costs of $ 2,613 and $ 3,826 , respectively 2

$ 156,887 $ 144,174

$ 400,000 Senior notes, 7.25 % interest, net of unamortized debt issuance costs of $ 0 and $ 770 respectively, including unamortized premium of $ 0 and $ 344 , respectively, issued $ 250,000 February 2013 and $ 150,000 April 2014, $ 26,200 repurchased during 2015,$ 9,344 repurchased during 2020, and $ 335,666 refinanced as part of the August 2020 Exchange offer, due February 2021, unsecured 2,3,4,5

$ 400,000 Senior notes, 7.25 % interest, net of unamortized debt issuance costs of $ 0 and $ — respectively, including unamortized premium of $ 0 and $ 344 , respectively, issued $ 250,000 February 2013 and $ 150,000 April 2014, $ 26,200 repurchased during 2015, $ 9,344 repurchased during 2020, and $ 335,666 refinanced as part of the August 2020 Exchange offer, $ 28,790 repaid at maturity in February 2021, unsecured 2,3,4,5

$ 53,750 Senior notes, due February 2024, 10.0 % interest, net of unamortized debt issuance costs of $ 2,433 and $ 3,577 , respectively 2,3

$ 51,317 $ 50,173

$ 53,750 Senior notes, 10.0 % interest, net of unamortized debt issuance costs of $ 3,577 and $ 0 , respectively, due February 2024 2,3,4

$ 291,970 Senior notes, 11.5 % interest, net of unamortized debt issuance costs of $ 1,720 and $ 0 , respectively, due February 2025 2,3,4

$ 291,970 Senior notes, due February 2025, 11.5 % interest, net of unamortized debt issuance costs of $ 1,303 and $ 1,720 , respectively 2,3

$ 290,667 $ 290,250

7 unchanged sentences

The margin above LIBOR is set every three months.

Indebtedness under the credit facility bears interest at LIBOR plus an applicable margin or the base prime rate plus an applicable margin.

All amounts outstanding at December 31, 2020 were at LIBOR plus an applicable margin of 3.75 %, with LIBOR having a floor of 1.0 % per annum in accordance with the July 8, 2020 amendment to the Partnership's revolving credit facility described in further detail below.

At December 31, 2020 the applicable margin for revolving loans are LIBOR loans ranges from 2.75 % to 4.00 % and the applicable margin for revolving loans that are base prime rate loans ranges from 1.75 % to 3.00 %.

All amounts outstanding at December 31, 2021 were at LIBOR plus an applicable margin of 4.00 %, with LIBOR having a floor of 1.00 %.

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

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

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

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

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

2 The Partnership was in compliance with all debt covenants as of December 31, 2021.

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

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

4 On August 12, 2020 (the "Settlement Date"), the Partnership and Martin Midstream Finance Corp.

(collectively, the "Issuers") completed an exchange offer (the "Exchange Offer") and consent solicitation to certain eligible holders of the 2021 Notes and separate but related cash tender offer (the "Cash Tender Offer" and, together with the Exchange Offer, the "Offers") and consent solicitation to certain other holders of the 2021 Notes.

Pursuant to the Exchange Offer, in exchange for $ 334,441 in aggregate principal amount of 2021 Notes, representing approximately 91.76 % of the outstanding aggregate principal amount of the 2021 Notes, the Issuers (i) paid $ 41,967 in cash, plus $ 11,854 of accrued and unpaid interest from and including February 15, 2020 until the Settlement Date, (ii) issued $ 291,970 in aggregate principal amount of the Issuers’ 11.50 % senior secured second lien notes due 2025 (the "2025 Notes"),

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

and (iii) pursuant to the rights offering in connection with the Exchange Offer, issued $ 53,750 aggregate principal amount of the Issuers’ 10.00 % senior secured 1.5 lien notes due 2024 (the "2024 Notes"), which amount includes the previously disclosed $ 3,750 backstop commitment fee which was paid in 2024 Notes.

Pursuant to the Cash Tender Offer, in exchange for $ 1,225 in aggregate principal amount of 2021 Notes, representing approximately 0.34 % of the outstanding aggregate principal amount of 2021 Notes, the Issuers paid $ 791 in cash, plus $ 43 of accrued and unpaid interest on such existing 2021 Notes from February 15, 2020 up to, but not including, the Settlement Date.

Whether a debt exchange should be accounted for pursuant to ASC 470-60, Troubled Debt Restructurings by Debtors, or pursuant to ASC 470-50, Modifications and Extinguishments, requires judgments to be made with respect to whether or not an entity is experiencing financial difficulty and if a concession was granted by the creditor.

As it was determined that the Partnership did not experience a decrease in the effective borrowing rate of the Partnership’s restructured debt when compared to the Partnership’s existing debt, a concession was not provided and the accounting for troubled debt restructuring was not applied.

Further, the Partnership applied the provisions of ASC 470-50 in determining whether to account for the debt exchange as a modification or extinguishment and concluded the debt instruments were not substantially different.

Accordingly, the Partnership accounted for the debt exchange as a modification.

In conjunction with the transactions above, the Partnership recorded a loss on the Exchange Offer in the amount of $ 8,817 , which includes $ 9,566 in transaction costs related to the Exchange Offer, plus $ 189 in net unamortized issuance costs and premiums related to the 2021 Notes, offset by a gain on retirement of the 2021 Notes of $ 938 .

In accordance with ASC 470-50 related to debt modifications, the Partnership capitalized certain lender related costs of $ 5,883 (including the backstop commitment fee described above), which was allocated between the respective senior note issuances and will be amortized over the contractual terms of the 2025 Notes and 2024 Notes.

As of December 31, 2020, the remaining portion of the 2021 Notes were due within twelve months and have therefore been presented as a current liability on the Consolidated Balance Sheets at December 31, 2020.

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

4 On February 15, 2021, our 2021 Notes matured and we retired the outstanding balance of $ 28,790 using proceeds from our credit facility.

5 In March 2020, the Partnership repurchased on the open market an aggregate $ 9,344 of the 2021 Notes, resulting in a gain on retirement of $ 3,484 .

6 Amendment to Credit Facility.

On July 8, 2020, the Partnership amended its revolving credit facility (the "Credit Facility Amendment") to, among other things, permit the Exchange Offer.

On August 12, 2020, upon the closing of the Exchange Offer and Cash Tender Offer and satisfaction of certain other conditions set forth in the Credit Facility Amendment, the Credit Facility Amendment, among other things:

• reduced the aggregate amount of commitments under the revolving credit facility from $ 400 million to $ 300 million;

• requires an additional $ 25 million reduction in the commitments under the revolving credit facility if the Partnership receives $ 25 million or more in net cash proceeds from any asset sale;

• limits the Partnership’s ability to make quarterly distributions to its unitholders in excess of $ 0.005 per unit unless the Partnership’s Total Leverage Ratio (as defined in the Credit Facility Amendment) is below 3.75 :1:00;

• increases the pricing under the revolving credit facility and adds a 1.0 % LIBOR floor;

• requires the Partnership to maintain a minimum Interest Coverage Ratio (as defined in the revolving credit facility) of 2.0 :1.0 with respect to the fiscal quarters ending in September and December of 2020, 1.75 :1.0 with respect to each fiscal quarter ending in 2021, and 2.0 :1.0 with respect to each fiscal quarter thereafter;

• requires the Partnership to maintain a maximum Total Leverage Ratio of not more than 5.75 :1.0 with respect to the fiscal quarters ending in September and December of 2020 and March and June of 2021, 5.50 with respect to the fiscal quarter ending in September of 2021, 5.00 with respect to the fiscal quarter ending in December of 2021 and the fiscal quarters ending in March, June and September of 2022, and 4.50 :1.0 with respect to each fiscal quarter thereafter, which financial covenant replaces the existing maximum Leverage Ratio (as defined in the revolving credit facility in effect prior to the Credit Facility Amendment);

• requires the Partnership to maintain a maximum First Lien Leverage Ratio (as defined in the Credit Facility Amendment) of not more than 2.25 :1.0 with respect to the fiscal quarters ending in September and December of 2020

The Partnership paid cash interest, net of capitalized interest, in the amount of $ 51,708 , $ 37,678 , and $ 48,025 for the years ended December 31, 2021, 2020 and 2019, respectively.

Capitalized interest was $ 0 , $ 43 , and $ 5 for the years ended December 31, 2021, 2020 and 2019, respectively.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

and each fiscal quarter ending in 2021, and 2.0 :1.0 with respect to each fiscal quarter thereafter, which financial covenant replaces the existing maximum Senior Leverage Ratio (as defined in the revolving credit facility in effect prior to the Credit Facility Amendment).

In conjunction with the Credit Facility Amendment, the Partnership expensed $ 1,063 in unamortized debt issuance costs related to the revolving credit facility for the year ended December 31, 2020, the amount of which is included in "Interest expense" in the Partnership's Consolidated Statements of Operations.

The Partnership paid cash interest, net of capitalized interest, in the amount of $ 37,678 , $ 48,025 , and $ 50,543 for the years ended December 31, 2020, 2019 and 2018, respectively.

Capitalized interest was $ 43 , $ 5 , and $ 624 for the years ended December 31, 2020, 2019 and 2018, respectively.

PARTNERS' CAPITAL (DEFICIT)

3 unchanged sentences

The Partnership Agreement contains specific provisions for the allocation of net income and losses to each of the partners for purposes of maintaining their respective partner capital accounts.

Impact on Partners' Capital (Deficit) Related to Transactions Between Entities Under Common Control

Under ASC 805, assets and liabilities transferred between entities under common control are accounted for at the historical cost of those entities' ultimate parent, in a manner similar to a pooling of interests.

Any difference in the amount paid by the transferee versus the historical cost of the assets transferred is recorded as an adjustment to equity (contribution or distribution) by the transferee.

This is in contrast with a business combination between unrelated parties, where assets and liabilities are recorded at their fair values at the acquisition date, with any excess of amounts paid over the fair value representing goodwill.

From time to time, the most recent being in 2019, the Partnership has entered into common control acquisitions from Martin Resource Management Corporation.

The consideration transferred totaling $ 552,123 exceeds the historical cost of the net assets received.

This excess of the purchase price over the historical cost of the net assets received has resulted in cumulative distributions of $ 289,084 reflected as reductions to Partners' capital.

Incentive Distribution Rights

MMGP holds a 2 % general partner interest and certain incentive distribution rights ("IDRs") in the Partnership.

MMGP holds a 2 % general partner interest and, until November 23, 2021, MMGP held certain incentive distribution rights ("IDRs") in the Partnership.

IDRs are a separate class of non-voting limited partner interest that may be transferred or sold by the general partner under the terms of the Partnership Agreement, and represent the right to receive an increasing percentage of cash distributions after the minimum quarterly distribution and any cumulative arrearages on common units once certain target distribution levels have been achieved.

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

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

On November 23, 2021, MMGP contributed to the Partnership all of the outstanding IDRs for no consideration, whereupon the IDRs were cancelled and cease to exist (the “IDR Elimination”).

Until the IDR Elimination, the Partnership was required to distribute all of its available cash from operating surplus, as previously defined in the Partnership Agreement.

For the years ended December 31, 2021, 2020 and 2019, the general partner was allocated no incentive distributions.

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Undistributed earnings are allocated to the general partner and limited partners utilizing the contractual terms of the Partnership Agreement.

Distributions to the general partner pursuant to the IDRs are limited to available cash that will be distributed as defined in the Partnership

Distributions to the general partner pursuant to the IDRs are limited to available cash that will be distributed as defined in the Partnership Agreement.

Accordingly, the Partnership does not allocate undistributed earnings to the general partner for the IDRs because the general partner's share of available cash is the maximum amount that the general partner would be contractually entitled to receive if all earnings for the period were distributed.

When current period distributions are in excess of earnings, the excess

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

When current period distributions are in excess of earnings, the excess distributions for the period are to be allocated to the general partner and limited partners based on their respective sharing of losses specified in the Partnership Agreement.

distributions for the period are to be allocated to the general partner and limited partners based on their respective sharing of losses specified in the Partnership Agreement.

Additionally, as required under FASB ASC 260-10-45-61A, unvested share-based payments that entitle employees to receive non-forfeitable distributions are considered participating securities, as defined in FASB ASC 260-10-20, for earnings per unit calculations.

6 unchanged sentences

Income (loss) from continuing operations $ ( 211 ) $ ( 6,771 ) $ 4,520

Less pre-acquisition income allocated to Parent — — ( 11,550 )

Less general partner’s interest in net income:

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

Distributions payable on behalf of IDRs — — —

1 unchanged sentence

General partner interest in undistributed income (loss) ( 20 ) ( 196 ) 111

Less income allocable to unvested restricted units ( 21 ) ( 1 ) ( 12 )

Limited partners’ interest in net income $ ( 6,615 ) $ 4,430 $ ( 18,982 )

Less income (loss) allocable to unvested restricted units — ( 21 ) ( 1 )

Limited partners’ interest in net income (loss) $ ( 207 ) $ ( 6,615 ) $ 4,430

Years Ended December 31,

1 unchanged sentence

Discontinued operations:

Income (loss) from discontinued operations $ — $ ( 179,466 ) $ 63,486

Less general partner’s interest in net income:

Loss from discontinued operations $ — $ — $ ( 179,466 )

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

Distributions payable on behalf of IDRs — — —

2 unchanged sentences

Less income allocable to unvested restricted units — — 42

Limited partners’ interest in net income $ — $ ( 175,918 ) $ 62,177

The Partnership allocates the general partner's share of earnings between continuing and discontinued operations as a proportion of net income from continuing and discontinued operations to total net income.

Limited partners’ interest in net loss $ — $ — $ ( 175,918 )

The Partnership allocates the general partner's share of earnings between continuing and discontinued operations as a proportion of net income (loss) from continuing and discontinued operations to total net income (loss).

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

6 unchanged sentences

38,689,041 38,656,559 38,658,881

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

All common unit equivalents were antidilutive for the years ended December 31, 2021, 2020 and 2019 because the limited partners were allocated a net loss in this period.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

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

All common unit equivalents were antidilutive for the years ended December 31, 2020 and 2019 because the limited partners were allocated a net loss in this period.

UNIT BASED AWARDS

UNIT BASED AWARDS - LONG-TERM INCENTIVE PLANS

The Partnership recognizes compensation cost related to unit-based awards to both employees and non-employees in its consolidated financial statements in accordance with certain provisions of ASC 718.

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

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

For the Year Ended December 31,

2021 2020 2019

Restricted unit awards

Employees $ 194 $ 1,204 $ 1,226

Non-employee directors 190 — —

Phantom unit Awards

Employees 415 — —

Non-employee directors — 218 198

Total unit-based compensation expense $ 799 $ 1,422 $ 1,424

All of the Partnership's outstanding awards at December 31, 2020 met the criteria to be treated under equity classification.

Long-Term Incentive Plans

The Partnership's general partner has a long-term incentive plan for employees and directors of the general partner and its affiliates who perform services for the Partnership.

On May 26, 2017, the unitholders of the Partnership approved the Martin Midstream Partners L.P.

The Partnership's general partner has long-term incentive plans for employees and directors of the general partner and its affiliates who perform services for the Partnership.

Phantom Unit Plan

On July 21, 2021, the board of directors of the general partner of the Partnership and the compensation committee of the general partner’s board of directors (the "Compensation Committee") approved the Martin Midstream Partners L.P.

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

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

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

The award of a phantom unit entitles the participant to a cash payment equal to the value of the phantom unit on the vesting date or dates, which value is the fair market value of a common unit of the Partnership (a “Unit”) on such vesting date or dates.

The award of a phantom unit appreciation right entitles the recipient to a cash payment equal to the difference between the value of a phantom unit on the vesting date or dates in excess of the value assigned by the Compensation Committee to the phantom unit as of the grant date.

Phantom units and phantom unit appreciation rights granted to participants do not confer upon participants any right to a Unit.

On July 21, 2021, the Compensation Committee approved forms of time-based award agreements for phantom units and phantom unit appreciation rights, both of which awards vest in full on the third anniversary of the grant date.

The grant date value of a phantom unit under a phantom unit appreciation right award is equal to the average of the closing price for a Unit during the 20 trading days immediately preceding the grant date of the award.

Generally, vesting of an award is subject to a participant remaining continuously employed with the Partnership through the vesting date.

However, if prior to the vesting date (i) a participant is terminated without cause (as defined in the award agreement) or terminates employment after the participant has attained both the age of 65 and ten years of employment (“retirement-eligible”), a prorated portion of the award will vest and be paid in cash no later than the 30 th day following such termination date (subject to a six-month delay in payment for certain retirement-eligible participants) or (ii) there is a change in control of the Partnership (as defined in the Plan), the award will vest in full and be paid in cash no later than the 30 th day following the date of the change of control;

provided, that the participant has been in continuous employment through the termination or change in control date, as applicable.

On July 21, 2021, 620,000 phantom units and 1,245,000 phantom unit appreciation rights were granted to employees of the general partner and its affiliates who perform services for the Partnership.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Phantom unit awards are recorded in operating expense and selling, general and administrative expense based on the fair value of the vested portion of the awards on the balance sheet date.

The fair value of these awards is updated at each balance sheet date and changes in the fair value of the vested portions of the awards are recorded as increases or decreases to compensation expense within operating expense and selling, general and administrative expense in the Consolidated Statements of Operations.

All of the Partnership's outstanding phantom unit awards at December 31, 2021 met the criteria to be treated under liability classification in accordance with ASC 718, given that these awards will settle in cash on the vesting date.

Compensation expense for the phantom awards is based on the fair value of the units as of the balance sheet date as further discussed below, and such costs are recognized ratably over the service period of the awards.

As the fair value of liability awards is required to be re-measured each period end, stock compensation expense amounts recognized in future periods for these awards will vary.

The estimated future cash payments of these awards are presented as liabilities within "Other current liabilities" and "Other long-term obligations" in the Consolidated Balance Sheets.

As of December 31, 2021, there was a total of $ 1,233 of unrecognized compensation costs related to non-vested phantom unit awards.

These costs are expected to be recognized over a remaining life of 2.56 years.

The fair value of the phantom unit awards was estimated using a Monte Carlo valuation model as of the balance sheet date.

The Monte Carlo valuation model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment.

Expected volatility was calculated based on the historical volatility of the Partnership’s common units as well as set of peer companies.

Restricted Unit Plan

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

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

On May 26, 2017, the unitholders of the Partnership approved the Martin Midstream Partners L.P.

2017 Restricted Unit Plan (the “2017 LTIP”).

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

The 2017 LTIP is administered by the Compensation Committee.

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

Once these restrictions lapse, the grantee is entitled to full ownership of the unit without restrictions.

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

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

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

The Compensation Committee may determine to make grants under the 2017 LTIP containing such terms as the Compensation Committee shall determine under the 2017 LTIP.

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

The Compensation Committee may also award a percentage of restricted units with vesting requirements based upon the achievement of specified pre-established performance targets ("PBRUs").

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

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

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

PBRU's which vest are payable in common units.

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

PBRUs which vest are payable in common units.

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

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

On February 12, 2020, the Partnership issued 27,000 TBRU's to each of the Partnership's three independent directors under the 2017 LTIP.

On February 22, 2021, the Partnership issued 14,056 TBRUs to each of the Partnership's three independent directors under the 2017 LTIP.

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

On March 1, 2018, the Partnership issued 301,550 TBRU's and 317,925 PBRU's to certain employees of Martin Resource Management Corporation.

The TBRU's vest in equal installments over a three-year service period.

The PBRU's will vest at the conclusion of a three-year performance period based on certain performance targets.

In addition, the PBRU's awarded on March 1, 2018 that are achieved will only vest if the grantee is employed by Martin Resource Management

On March 1, 2018, the Partnership issued 301,550 TBRUs and 317,925 PBRUs to certain employees of Martin Resource Management Corporation.

The TBRUs vested in equal installments over a three-year service period.

The PBRUs would have vested at the conclusion of a three-year performance period based on certain performance targets.

In addition, the PBRUs awarded on March 1, 2018 would have only vested if the grantee was employed by Martin Resource Management Corporation on March 31, 2021.

However, the performance conditions related to the PBRUs awarded on March 1, 2018 were

MARTIN MIDSTREAM PARTNERS L.P.

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(Dollars in thousands, except where otherwise indicated)

Corporation on March 31, 2021.

As of December 31, 2020, the Partnership is unable to ascertain if certain performance conditions will be achieved and, as such, has not recognized compensation expense for the vesting of the units.

The Partnership will record compensation expense for the vested portion of the units once the achievement of the performance condition is deemed probable.

not achieved and the Partnership treated these units as forfeited at expiration on March 31, 2021.

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

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

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$ 455 $ ( 174 ) $ 174

2,142 1,027 882

State 290 142 478

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The Texas margin tax is considered a state income tax and is included in income tax expense on the Consolidated Statements of Operations.

Since the tax base on the Texas margin tax is derived from an income-based measure, the margin tax is construed as income tax, and therefore, the recognition of deferred taxes applies to the margin

Since the tax base on the Texas margin tax is derived from an income-based measure, the margin tax is construed as income tax, and therefore, the recognition of deferred taxes applies to the margin tax.

The impact on deferred taxes as a result of this provision is immaterial.

State income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 300 , $ 468 and $ 458 were recorded in income tax expense for the years ended December 31, 2021, 2020 and 2019, respectively.

MARTIN MIDSTREAM PARTNERS L.P.

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(Dollars in thousands, except where otherwise indicated)

The impact on deferred taxes as a result of this provision is immaterial.

State income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 468 , $ 458 and $ 369 were recorded in income tax expense for the years ended December 31, 2020, 2019 and 2018, respectively.

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

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S Corporations are generally not subject to income taxes because income and losses flow through to shareholders and are reported on their individual returns.

State income taxes attributable to the preacquisition QSub of $ 0 were recorded in income tax expense for the year ended December 31, 2018.

The principal component of the difference between the expected state tax expense and actual state tax expense relates to taxes incurred in states that do not recognize S corporation status.

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Significant components of deferred tax assets and liabilities at December 31, 2021 and 2020 are as follows:

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Deferred tax assets:

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Deferred tax assets are regularly reviewed for recoverability and a valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The ultimate realization of deferred tax assets is dependent upon future taxable income during the periods in which those temporary differences become deductible.

The ultimate realization of deferred tax assets

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

is dependent upon future taxable income during the periods in which those temporary differences become deductible.

In assessing the need for a valuation allowance, management considers all available positive and negative evidence, including the ability to carryback operating losses to prior periods and the expected future utilization of net operating loss carryforwards, the reversal of deferred tax liabilities, projected taxable income, and tax-planning strategies.

On the basis of these considerations, as of December 31, 2021, management believes it is more likely than not that the Taxable Subsidiary will realize the benefit of the existing deferred tax assets.

"Income taxes payable" includes a state income tax liability related to the operation of the Partnership of $ 455 and $ 298 for the years ended December 31, 2020 and 2019, respectively.

Also included in "Income taxes payable" is a federal income tax liability related to the operation of the Taxable Subsidiary of $ 0 and $ 174 for the years ended December 31, 2020 and 2019, respectively, and state income tax liabilities related to the operation of the Taxable Subsidiary of $ 101 for the year ended December 31, 2020.

State income taxes refundable related to the operation of the Taxable Subsidiary of $ 117 for the year ended December 31, 2019 are included in "Other current assets".

Federal income taxes refundable related to the operation of the Taxable Subsidiary of $ 70 and $ 0 for the years ended December 31, 2021 and 2020, respectively, are included in “Other current assets”."Income taxes payable" includes a state income tax liability related to the operation of the Partnership of $ 304 and $ 455 for the years ended December 31, 2021 and 2020, respectively.

Also included in "Income taxes payable" are state income tax liabilities related to the operation of the Taxable Subsidiary of $ 81 and $ 101 for the years ended December 31, 2021 and 2020, respectively.

At December 31, 2021, MTI had net operating loss carryforwards for income tax purposes of approximately $ 67,681 related to federal and state taxes.

8 unchanged sentences

The operating income of these segments is reviewed by the chief operating decision maker to assess performance and make business decisions.

The accounting policies of the operating segments are the same as those described in Note 2.

The Partnership evaluates the performance of its reportable segments based on operating income.

There is no allocation of interest expense.

MARTIN MIDSTREAM PARTNERS L.P.

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(Dollars in thousands, except where otherwise indicated)

The accounting policies of the operating segments are the same as those described in Note 2.

The Partnership evaluates the performance of its reportable segments based on operating income.

There is no allocation of administrative expenses or interest expense.

Operating Revenues Intersegment Eliminations Operating Revenues After Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

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$ 579,861 $ 579,638

COMMITMENTS AND CONTINGENCIES

MARTIN MIDSTREAM PARTNERS L.P.

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(Dollars in thousands, except where otherwise indicated)

QUARTERLY FINANCIAL INFORMATION

Consolidated Quarterly Income Statement Information

First Quarter Second Quarter Third Quarter Fourth

(Dollar in thousands, except per unit amounts)

Revenues $ 198,883 $ 140,638 $ 152,533 $ 180,088

Operating income 15,600 7,960 11,013 11,928

Income (loss) from continuing operations 8,815 ( 2,203 ) ( 10,819 ) ( 2,564 )

Income (loss) from discontinued operations — — — —

Net income (loss) 8,815 ( 2,203 ) ( 10,819 ) ( 2,564 )

Income (loss) from continuing operations per unit 0.23 ( 0.06 ) ( 0.28 ) ( 0.07 )

Limited partners' interest in net income (loss) per limited partner unit 0.22 ( 0.06 ) ( 0.27 ) ( 0.06 )

First Quarter Second Quarter Third Quarter Fourth

(Dollar in thousands, except per unit amounts)

Revenues $ 240,033 $ 187,323 $ 177,900 $ 241,862

Operating income 9,606 5,010 25,461 18,027

Income (loss) from continuing operations ( 4,758 ) ( 10,614 ) 13,250 6,642

Income from discontinued operations 1,102 ( 180,568 ) — —

Net income (loss) ( 3,656 ) ( 191,182 ) 13,250 6,642

Income (loss) from continuing operations per unit ( 0.12 ) ( 0.27 ) 0.34 0.17

Limited partners' interest in net income (loss) per limited partner unit 0.09 ( 4.82 ) 0.33 0.14

COMMITMENTS AND CONTINGENCIES

Contingencies

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In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Partnership.

On December 31, 2015, the Partnership received a demand from a customer in its lubricants packaging business for defense and indemnity in connection with lawsuits filed against it in various United States District Courts, which generally allege that the customer engaged in unlawful and deceptive business practices in connection with its marketing and advertising of its private label motor oil.

The Partnership disputes that it has any obligation to defend or indemnify the customer for its conduct.

Accordingly, on January 7, 2016, the Partnership filed a Complaint for Declaratory Judgment in the Chancery Court of Davidson County, Tennessee requesting a judicial determination that the Partnership does not owe the customer the demanded defense and indemnity obligations.

The lawsuits against the customer have been transferred to the United States District Court for the Western District of Missouri for consolidated pretrial proceedings.

On March 1, 2017, at the request of the parties, the Chancery Court of Davidson County, Tennessee administratively closed the Partnership's lawsuit pending rulings in the United States District Court for the Western District of Missouri.

In the event that either party moves the Chancery Court of Davidson County, Tennessee to reopen the case, we expect the Court would grant such motion and reopen the case.

Further, the same customer has made a claim under the Partnership’s insurance policy.

The insurer has denied the claim.

However, in the event that the customer is successful in pursuing the claim, such action would negatively impact the Partnership because the Partnership may have certain reimbursement obligations it would owe the insurance company.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

case is reopened or the insurance claim by the customer is successful, we are currently unable to determine the exposure we may have in this matter, if any.

On December 31, 2015, the Partnership received a demand from a customer in its lubricants packaging business for defense and indemnity in connection with various lawsuits filed against it, which generally alleged that the customer engaged in unlawful and deceptive business practices in connection with its marketing and advertising of its private label motor oil (the “Marketing Lawsuits”).

The Partnership disputed and continues to dispute that it has any obligation to defend or indemnify the customer for the customer’s conduct.

Accordingly, on January 7, 2016, the Partnership filed a Complaint for Declaratory Judgment in the Chancery Court of Davidson County, Tennessee (the “Tennessee Court”), under Case No.

16-0018-BC, requesting a judicial determination that the Partnership did not owe the customer the demanded defense and indemnity obligations (the “Declaratory Judgment Action”).

The Marketing Lawsuits pending in federal court against the customer were transferred to the U.S.

District Court for the Western District of Missouri under the consolidated case MDL No.

2709 for pretrial proceedings (the “Consolidated Lawsuits”).

On March 1, 2017, at the joint request of the customer and the Partnership, the Tennessee Court administratively closed the Declaratory Judgment Action.

Recently, the customer settled the Consolidated Lawsuits.

On December 17, 2021, at the request of the customer, the Tennessee Court reopened the Declaratory Judgment Action and the customer asserted various counterclaims against the Partnership seeking, among other things, to recover its costs of defending and settling the Consolidated Lawsuits.

At this time, we are unable to determine what ultimate exposure we may have in this matter, if any.

The Partnership intends to vigorously defend the counterclaims asserted by the customer in the Declaratory Judgment Action.

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

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SUBSEQUENT EVENTS

Retirement of 2021 Notes.

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

Quarterly Distribution.

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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 8. Financial Statements and Supplementary Data