What changed in this filing

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Item 1. Financial Statements

2022-07-25 compared with 2022-04-26 · 188 added, 123 removed, 753 unchanged (29% of the section changed)

3 unchanged sentences

(Dollars in thousands)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(Unaudited) (Audited)

4 unchanged sentences

Due from affiliates 16,558 14,409

Fair value of derivatives 175 —

Other current assets 29,554 12,908

30 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Terminalling and storage * $ 20,439 $ 18,702 $ 39,852 $ 37,080

40 unchanged sentences

* Related Party Transactions Included Above

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Terminalling and storage $ 17,416 $ 15,569 $ 33,620 $ 30,875

12 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Net income $ 6,606 $ ( 6,612 ) $ 18,084 $ ( 4,101 )

Changes in fair values of commodity cash flow hedges 167 — 167 —

Commodity cash flow hedging (gains) losses reclassified to earnings 440 — ( 816 ) —

Comprehensive income $ 7,213 $ ( 6,612 ) $ 17,435 $ ( 4,101 )

13 unchanged sentences

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

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

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

Balances - January 1, 2022 38,802,750 $ ( 50,741 ) $ 1,888 $ 816 $ ( 48,037 )

4 unchanged sentences

Gain reclassified from AOCI into income on commodity cash flow hedges — — — ( 816 ) ( 816 )

Loss recognized in AOCI on commodity cash flow hedges — — — ( 440 ) ( 440 )

Balances - March 31, 2022 38,836,950 $ ( 39,652 ) $ 2,113 $ ( 440 ) $ ( 37,979 )

Gain recognized in AOCI on commodity cash flow hedges — — — 167 167

Excess purchase price over carrying value of acquired assets

Balances - June 30, 2022 38,850,750 $ ( 33,263 ) $ 2,242 $ 167 $ ( 30,854 )

See accompanying notes to consolidated and condensed financial statements.

2 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net income $ 11,478 $ 2,511

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

Net income (loss) $ 18,084 $ ( 4,101 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 29,286 28,917

28 unchanged sentences

Payment of debt issuance costs ( 26 ) ( 307 )

Excess purchase price over carrying value of acquired assets ( 1,285 ) —

Cash distributions paid ( 396 ) ( 396 )

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

24 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

The following table disaggregates our revenue by major source:

Three Months Ended March 31,

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

2022 2021 2022 2021

Terminalling and storage segment

32 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

Sulfur Services Segment

20 unchanged sentences

Total $ 33,184 $ 65,341 $ 64,969 $ 53,925 $ 51,226 $ 252,771 $ 521,416

Components of inventories at March 31, 2022 and December 31, 2021 were as follows:

Components of inventories at June 30, 2022 and December 31, 2021 were as follows:

2022 December 31,

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

At March 31, 2022 and December 31, 2021, long-term debt consisted of the following:

June 30, 2022

At June 30, 2022 and December 31, 2021, long-term debt consisted of the following:

2022 December 31,

$ 275,000 Credit facility at variable interest rate ( 4.50 % 1 weighted average at March 31, 2022), due August 2023 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 $ 2,224 and $ 2,613 , respectively 2

$ 275,000 Credit facility at variable interest rate ( 5.00 % 1 weighted average at June 30, 2022), due August 2023 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 $ 1,851 and $ 2,613 , respectively 2

$ 147,149 $ 156,887

11 unchanged sentences

The margin is set every three months.

All amounts outstanding at December 31, 2021 and March 31, 2022 were at LIBOR plus an applicable margin with LIBOR having a floor of 1.00 % per annum.

All amounts outstanding at December 31, 2021 and June 30, 2022 were at LIBOR plus an applicable margin with LIBOR having a floor of 1.00 % per annum.

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

The applicable margin for LIBOR borrowings at March 31, 2022 is 3.50 %.

The applicable margin for LIBOR borrowings effective April 20, 2022 is 3.25 %.

The applicable margin for LIBOR borrowings at June 30, 2022 is 3.25 %.

The applicable margin for LIBOR borrowings effective July 20, 2022 is 3.00 %.

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

4 unchanged sentences

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

2 The Partnership was in compliance with all debt covenants as of March 31, 2022 and December 31, 2021, respectively.

2 The Partnership was in compliance with all debt covenants as of June 30, 2022 and December 31, 2021, respectively.

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

4 unchanged sentences

4 On April 14, 2022, the Partnership completed the payment of an aggregate principal amount of approximately $ 589 , or approximately 0.20 %, of its 11.50 % Senior Secured Second Lien Notes due 2025 (the “2025 Notes”), pursuant to its cash tender offer (the “Excess Cash Flow Offer”) to purchase up to $ 9,305 aggregate principal amount of the 2025 Notes.

See “Note 17 – Subsequent Events” for more information on the Excess Cash Flow Offer.

The Partnership paid cash interest in the amount of $ 21,851 and $ 23,347 for the three months ended March 31, 2022 and 2021, respectively.

There was no capitalized interest for the three months ended March 31, 2022 and 2021, respectively.

The purchase price for the tendered 2025 Notes was 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest to, but not including, the purchase date.

The Partnership paid cash interest in the amount of $ 2,258 and $ 2,648 for the three months ended June 30, 2022 and 2021, respectively.

There was no capitalized interest for the three months ended June 30, 2022 and 2021, respectively.

The Partnership paid cash interest in the amount of $ 24,109 and $ 25,995 for the six months ended June 30, 2022 and 2021, respectively.

There was no capitalized interest for the six months ended June 30, 2022 and 2021, respectively.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

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

5 unchanged sentences

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

The components of lease expense for the three months ended March 31, 2022 and 2021 were as follows:

Three Months Ended March 31,

The components of lease expense for the six months ended June 30, 2022 and 2021 were as follows:

Three Months Ended June 30, Six Months Ended June 30, 2022

2022 2021 2022 2021

Operating lease cost $ 2,540 $ 2,199 $ 4,811 $ 4,501

5 unchanged sentences

Total lease cost $ 5,496 $ 4,729 $ 10,457 $ 10,272

Supplemental balance sheet information related to leases at March 31, 2022 and December 31, 2021 was as follows:

Supplemental balance sheet information related to leases at June 30, 2022 and December 31, 2021 was as follows:

2022 December 31, 2021

14 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

The Partnership’s future minimum lease obligations as of March 31, 2022 consist of the following:

June 30, 2022

The Partnership’s future minimum lease obligations as of June 30, 2022 consist of the following:

Operating Leases Finance Leases

9 unchanged sentences

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

Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of March 31, 2022 are as follows:

Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of June 30, 2022 are as follows:

2022 - $ 10,740 ;

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

SUPPLEMENTAL BALANCE SHEET INFORMATION

6 unchanged sentences

Operating lease liabilities 8,207 6,600

Other 732 250

$ 31,513 $ 29,850

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

March 31, 2022

Beginning asset retirement obligations $ 9,072

June 30, 2022

Asset retirement obligations as of December 31, 2021 $ 9,072

Additions to asset retirement obligations —

9 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

19 unchanged sentences

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

The Partnership has entered into hedging transactions as of March 31, 2022, to protect a portion of its commodity price risk exposure.

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

At March 31, 2022, the Partnership had instruments totaling a gross notional quantity of 80,000 barrels settling during the period from April 30, 2022 through May 31, 2022.

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

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

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

At June 30, 2022 and December 31, 2021, the Partnership had instruments totaling a gross notional quantity of 0 barrels.

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

4 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

Derivative Assets Derivative Liabilities

1 unchanged sentence

Balance Sheet Location

March 31, 2022 December 31, 2021 Balance Sheet Location

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021 Balance Sheet Location

June 30, 2022 December 31, 2021

Derivatives designated as hedging instruments:

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

The following table summarizes the loss recognized in AOCI at March 31, 2022 and December 31, 2021, respectively, and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the three months ended March 31, 2022 and 2021, respectively, for derivative financial instruments designated as cash flow hedges:

The following table summarizes the gain (loss) recognized in AOCI at June 30, 2022 and December 31, 2021, respectively, and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the three months ended June 30, 2022 and 2021, respectively, for derivative financial instruments designated as cash flow hedges:

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

3 unchanged sentences

Total $ 167 $ 816 $ ( 440 ) $ —

The following tables summarize the loss recognized in earnings for derivative instruments not designated as hedging instruments during the three months ended March 31, 2022 and 2021, respectively:

The following table summarizes the gain (loss) recognized in AOCI at June 30, 2022 and December 31, 2021, respectively, and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the six months ended June 30, 2022 and 2021, respectively, 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

2022 2021 2022 2021

Commodity contracts $ 167 $ 816 Cost of products sold $ 816 $ —

Total $ 167 $ 816 $ 816 $ —

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

The following tables summarize the gain (loss) recognized in earnings for derivative instruments not designated as hedging instruments during the three months ended June 30, 2022 and 2021, respectively:

Location of Gain (Loss)

5 unchanged sentences

Total effect of derivatives not designated as hedging instruments $ — $ 552

The following tables summarize the gain (loss) recognized in earnings for derivative instruments not designated as hedging instruments during the six months ended June 30, 2022 and 2021, respectively:

Location of Gain (Loss)

Recognized in Income on

Derivatives Amount of Gain (Loss) Recognized in

Income on Derivatives

Derivatives not designated as hedging instruments:

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

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

PARTNERS' CAPITAL (DEFICIT)

As of March 31, 2022, Partners’ capital consisted of 38,836,950 common limited partner units, representing a 98 % partnership interest, and a 2 % general partner interest.

As of June 30, 2022, Partners’ capital consisted of 38,850,750 common limited partner units, representing a 98 % partnership interest, and a 2 % general partner interest.

Martin Resource Management Corporation, through subsidiaries, owned 6,114,532 of the Partnership's common limited partner units representing approximately 15.7 % of the Partnership's outstanding common limited partner units.

2 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

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.

4 unchanged sentences

This excess of the purchase price over the historical cost of the net assets received has resulted in cumulative distributions of $ 289,019 reflected as reductions to Partners' capital.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

Incentive Distribution Rights

3 unchanged sentences

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.

The general partner was allocated no incentive distributions during the three months ended March 31, 2022 and 2021.

The general partner was allocated no incentive distributions during the six months ended June 30, 2022 and 2021.

Distributions of Available Cash

12 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

Three Months Ended March 31,

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

2022 2021 2022 2021

Net income $ 6,606 $ ( 6,612 ) $ 18,084 $ ( 4,101 )

4 unchanged sentences

Limited partners’ interest in net income $ 6,453 $ ( 6,460 ) $ 17,671 $ ( 4,009 )

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Basic weighted average limited partner units outstanding

8 unchanged sentences

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Restricted unit Awards

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

Long-Term Incentive Plans

14 unchanged sentences

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.

On April 20, 2022, the board of directors of the general partner of the Partnership and the Compensation Committee approved the First Amendment to the Plan, effective as of the same date, which amendment increased the total number of phantom units available for grant under the Plan from 2,000,000 units to 5,000,000 units.

On April 20, 2022, 365,000 phantom units and 1,097,500 phantom unit appreciation rights were granted to employees of the general partner and its affiliates who perform services for the Partnership.

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 and Condensed Statements of Operations.

All of the Partnership's outstanding phantom unit awards at March 31, 2022 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.

All of the Partnership's outstanding phantom unit awards at June 30, 2022 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.

1 unchanged sentence

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

As of March 31, 2022, there was a total of $ 3,251 of unrecognized compensation costs related to non-vested phantom unit awards.

These costs are expected to be recognized over a remaining life of 2.31 years.

As of June 30, 2022,

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

there was a total of $ 9,309 of unrecognized compensation costs related to non-vested phantom unit awards.

These costs are expected to be recognized over a remaining life of 2.57 years.

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

1 unchanged sentence

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

17 unchanged sentences

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

All of the Partnership's outstanding restricted unit awards at March 31, 2022 met the criteria to be treated under equity classification.

All of the Partnership's outstanding restricted unit awards at June 30, 2022 met the criteria to be treated under equity classification.

In February 2022, the Partnership issued 11,400 TBRUs to each of the Partnership's three independent directors under the 2017 LTIP.

5 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

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

A summary of the restricted unit activity for the three months ended March 31, 2022 is provided below:

A summary of the restricted unit activity for the six months ended June 30, 2022 is provided below:

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

5 unchanged sentences

Aggregate intrinsic value, end of period $ 495

A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three months ended March 31, 2022 and 2021 is provided below:

Three Months Ended March 31,

A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three and six months ended June 30, 2022 and 2021 is provided below:

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

2022 2021 2022 2021

Aggregate intrinsic value of units vested $ — $ — $ 92 $ 257

Fair value of units vested — — 188 1,418

As of March 31, 2022, there was $ 318 of unrecognized compensation cost related to non-vested restricted units.

As of June 30, 2022, there was $ 275 of unrecognized compensation cost related to non-vested restricted units.

That cost is expected to be recognized over a weighted-average period of 2.39 years.

RELATED PARTY TRANSACTIONS

As of March 31, 2022, Martin Resource Management Corporation owns 6,114,532 of the Partnership’s common units representing approximately 15.7 % of the Partnership’s outstanding limited partner units.

As of June 30, 2022, Martin Resource Management Corporation owns 6,114,532 of the Partnership’s common units representing approximately 15.7 % of the Partnership’s outstanding limited partner units.

Martin Resource Management Corporation controls the Partnership's general partner by virtue of its 100 % voting interest in MMGP Holdings, LLC ("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 March 31, 2022 of approximately 15.7 % 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.

The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of June 30, 2022 of approximately 15.7 % 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.

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

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

Non-Competition Provisions .

24 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

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

1 unchanged sentence

Effective January 1, 2022, through December 31, 2022, the Conflicts Committee approved an annual reimbursement amount for indirect expenses of $ 13,491 .

The Partnership reimbursed Martin Resource Management Corporation for $ 3,373 and $ 3,542 of indirect expenses for the three months ended March 31, 2022 and 2021, respectively.

The Partnership reimbursed Martin Resource Management Corporation for $ 3,373 and $ 3,652 of indirect expenses for the three months ended June 30, 2022 and 2021, respectively.

The Partnership reimbursed Martin Resource Management Corporation for $ 6,746 and $ 7,193 of indirect expenses for the six months ended June 30, 2022 and 2021, respectively.

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

26 unchanged sentences

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

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

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

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

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

June 30, 2022

subcontractors.

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

Marine Agreements

33 unchanged sentences

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

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended March 31, 2022 and 2021 were $ 310 and $ 236 , respectively.

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended June 30, 2022 and 2021 were $ 453

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

and $ 282 , respectively.

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the six months ended June 30, 2022 and 2021 were $ 763 and $ 518 , respectively.

Other Miscellaneous Agreements.

3 unchanged sentences

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Terminalling and storage $ 17,416 $ 15,569 $ 33,620 $ 30,875

4 unchanged sentences

95 71 416 185

$ 24,974 $ 20,529 $ 47,787 $ 39,959

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Cost of products sold:

3 unchanged sentences

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Operating expenses:

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

June 30, 2022

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Selling, general and administrative:

13 unchanged sentences

There is no allocation of interest expense.

Three Months Ended March 31, 2022 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Three Months Ended June 30, 2022 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage 58,410 ( 1,779 ) 56,631 7,731 4,068 2,501

3 unchanged sentences

Indirect selling, general and administrative — — — — ( 4,390 ) —

— — — — ( 4,122 ) —

Total $ 273,845 $ ( 6,849 ) $ 266,996 $ 14,800 $ 21,490 $ 4,775

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

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

Transportation 38,349 ( 3,423 ) 34,926 4,331 ( 2,709 ) 1,091

Sulfur services 38,286 — 38,286 2,568 8,249 799

Natural gas liquids 67,232 — 67,232 588 3,297 140

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

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

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

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

June 30, 2022

Six Months Ended June 30, 2022 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 112,793 $ ( 3,357 ) $ 109,436 $ 15,337 $ 6,935 $ 6,445

5 unchanged sentences

Total $ 559,814 $ ( 13,617 ) $ 546,197 $ 29,286 $ 46,939 $ 14,710

The Partnership's assets by reportable segment as of March 31, 2022 and December 31, 2021, are as follows:

March 31, 2022 December 31, 2021

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

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

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

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

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

Indirect selling, general and administrative

— — — — ( 7,699 ) —

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

The Partnership's assets by reportable segment as of June 30, 2022 and December 31, 2021, are as follows:

June 30, 2022 December 31, 2021

Total assets:

10 unchanged sentences

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”).

Accordingly, on January 7, 2016, the Partnership filed a Complaint for Declaratory

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

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 “Litigation”).

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

1 unchanged sentence

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.

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

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.

On December 17, 2021, at the request of the customer, the Tennessee Court reopened the Litigation 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.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

The Partnership intends to vigorously defend the counterclaims asserted by the customer in the Litigation.

The trial for the Litigation is expected to be held in December of 2023.

FAIR VALUE MEASUREMENTS

10 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Commodity derivative contracts, net $ — $ —

7 unchanged sentences

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.

March 31, 2022 December 31, 2021

The estimated fair value of the 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.

June 30, 2022 December 31, 2021

Value Carrying

3 unchanged sentences

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

The Partnership's operations are conducted by its operating subsidiaries as it has no independent assets or operations.

4 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2022

Three Months Ended March 31,

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

2022 2021 2022 2021

Provision for income taxes $ 2,037 $ 935 $ 3,578 $ 1,157

The operations of a partnership are generally not subject to income taxes, except for Texas margin tax, because its income is taxed directly to its partners.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 176 and $ 120 were recorded in income tax expense for the three months ended March 31, 2022 and 2021, respectively.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 80 and $ 61 were recorded in income tax expense for the three months ended June 30, 2022 and 2021, respectively.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 256 and $ 180 were recorded in income tax expense for the six months ended June 30, 2022 and 2021, respectively.

Deferred taxes applicable to the Texas margin tax relating to the operation of the Partnership are immaterial.

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

Total income tax expense of $ 1,365 and $ 102 , related to the operation of the Taxable Subsidiary, for the three months ended March 31, 2022 and 2021, resulted in an effective income tax rate ("ETR") of 22.03 % and 29.32 %, respectively.

The decrease in the ETR for the income taxes during the three months ended March 31, 2022 was primarily due to significantly larger pretax income recorded for the three months ended March 31, 2022, compared to the same period in 2021.

The increase in the provision for income taxes for the three months ended March 31, 2022, compared to the same period in 2021, was primarily due to an increase in income before income taxes in the current period.

A current federal income tax expense of $ 320 and $ 15 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended March 31, 2022 and 2021, respectively.

A current state income tax expense of $ 124 and $ 12 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended March 31, 2022 and 2021, respectively.

Total income tax expense of $ 1,957 and $ 874 , related to the operation of the Taxable Subsidiary, for the three months ended June 30, 2022 and 2021, resulted in an effective income tax rate ("ETR") of 21.58 % and 40.22 %, respectively.

Total income tax expense of $ 3,322 and $ 977 , related to the operation of the Taxable Subsidiary, for the six months ended June 30, 2022 and 2021, resulted in an effective income tax rate ETR of 21.77 % and 38.73 %, respectively.

The decrease in the ETR for the income taxes during the three and six months ended June 30, 2022 was primarily due to significantly larger pretax income recorded for both the three and six months ended June 30, 2022, compared to the same periods in 2021.

The increase in the provision for income taxes for both the three and six months ended June 30, 2022, compared to the same periods in 2021, was primarily due to an increase in income before income taxes in the current period.

A current federal income tax expense of $ 404 and $ 108 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended June 30, 2022 and 2021, respectively.

A current federal income tax expense of $ 723 and $ 123 , related to the operation of the Taxable Subsidiary, was recorded for the six months ended June 30, 2022 and 2021, respectively.

A current state income tax expense of $ 170 and $ 83 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended June 30, 2022 and 2021, respectively.A current state income tax expense of $ 295 and $ 96 , related to the operation of the Taxable Subsidiary, was recorded for the six months ended June 30, 2022 and 2021, respectively.

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

2 unchanged sentences

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

A deferred tax expense related to the MTI temporary differences of $ 921 and $ 75 was recorded for the three months ended March 31, 2022 and 2021, respectively.

A net deferred tax asset of $ 18,900 and $ 19,821 , related to the cumulative book and tax temporary differences, existed at March 31, 2022 and December 31, 2021, respectively.

A deferred tax expense related to the MTI temporary differences of $ 1,383 and $ 683 was recorded for the three months ended June 30, 2022 and 2021, respectively.

A deferred tax expense related to the MTI temporary differences of $ 2,304 and $ 758 was recorded for the six months ended June 30, 2022 and 2021, respectively.

A net deferred tax asset of $ 17,517 and $ 19,821 , related to the cumulative book and tax temporary differences, existed at June 30, 2022 and December 31, 2021, respectively.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

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

SUBSEQUENT EVENTS

Excess Cash Flow Offer.

On April 14, 2022, the Partnership completed the payment of an aggregate principal amount of approximately $ 589 , or approximately 0.20 %, of its 2025 Notes, pursuant to its Excess Cash Flow Offer to purchase up to $ 9,305 aggregate principal amount of its outstanding 2025 Notes.

The purchase price for the tendered 2025 Notes was 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest to, but not including, the purchase date.

Quarterly Distribution.

On April 20, 2022, the Partnership declared a quarterly cash distribution of $ 0.005 per common unit for the first quarter of 2022, or $ 0.020 per common unit on an annualized basis, which will be paid on May 13, 2022 to unitholders of record as of May 6, 2022.

On July 20, 2022, the Partnership declared a quarterly cash distribution of $ 0.005 per common unit for the second quarter of 2022, or $ 0.020 per common unit on an annualized basis, which will be paid on August 12, 2022 to unitholders of record as of August 5, 2022.

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

What changed 10-Q

Item 1. Financial Statements